'Major implications' in airport move

Business interests and investors have criticised the Government's late-night announcement to block the sale of Auckland International Airport to foreign investors.

Wellington Regional Chamber of Commerce chief executive Charles Finny said the regulatory amendment to the Overseas Investment Act, passed on Monday, should have been publicly debated in Parliament and not decreed from behind closed doors.

Shareholders Association chairman Bruce Sheppard said the Government was interfering with private property rights under the guise of protecting the national interest. "Last year Telecom got dealt to. This year it is Auckland airport. Next year who will it be?"

Mr Sheppard said he would now vote in favour of the Canadian deal. "Then I will let the Government tell tens of thousands of New Zealanders that they can't have their money."

New Zealand Exchange chief executive Mark Weldon said the Government's move should be viewed in a global context in which governments, such as the United States and Australia, were putting in protections to block foreign control of strategic assets.

"More than half of the ASX top 20, including Qantas, Telstra, the major banks and some of the larger mining companies, are protected as strategic by the Australian Government," he said.

"This is quite a shock to New Zealand simply because we have this open, anyone can buy anything, history. In the global context it [the Government's move] doesn't make us an outlier; it actually brings us into line."

Mr Weldon said there should be more certainty about measures to protect strategic New Zealand assets from being foreign-controlled.

"Global investors don't mind investing into a market that's protected. What they don't like is not knowing it's protected when they make their initial investment."

Mr Finny said New Zealand's foreign investment regime was relatively liberal. "But the decision has major implications for overseas perceptions of New Zealand's openness to foreign investment."

It also reflected on the Government's respect for property rights and private sector transactions, he said. "It suggests that the Government is too eager to step in and block private sector transactions which aren't seen as politically acceptable."

It sent a message to foreign investors to think twice before investing in New Zealand and could make it harder to attract private sector partners for infrastructure projects. Some observers said yesterday they believed the Government was trying to force the National Party to come out with its stance on the issue.

Macquarie New Zealand investment director Arthur Lim said any retrospective legislation or last-minute intervention was seen as negative by foreign investors.

Though they could show their frustration, New Zealand's foreign investment rules were not that onerous, Mr Lim said.

However, regulatory certainty was imperative to international investors.

"Changing the rules as we go along will have investors sitting on the sideline and that is not healthy," he said. In the case of the sale of Auckland airport, there had been a series of interventions, starting with the Government's comments against the original bid by Dubai Aerospace Enterprise and last week's urgent measures blocking a multimillion-dollar tax break that would have sweetened the Canadian bid.

Ironically, these moves had caused Auckland airport's share price to plunge, making the Canadian bid at nearly $3.66 a share even more attractive, Mr Lim said.

"This could very well lead to an avalanche of acceptances and approvals being lodged with the Canadians."

- © Fairfax NZ News