Heather Roy's Diary: Melodrama And Auckld Airport
Heather Roy's Diary
"Heather Roy's Diary" is the weekly newsletter from Heather Roy MP.
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Melodrama And Auckland Airport
Auckland International Airport Limited is a well-functioning company: it makes money; is expanding, as anyone who's recently travelled through Auckland will know; and shares are for sale - but not just anyone can buy them it would seem.
In July last year Dubai Aerospace sought to acquire a majority stake in Auckland Airport but, following a public uproar and local government disapproval, it withdrew its offer. This week another interested party, a Canadian pension fund, had the rules changed suddenly on them when Finance Minister Dr Michael Cullen announced regulations put in place by 'Order in Council' - meaning Parliament is unable to scrutinise, debate and vote on an issue - to change the rules around the proposed sale.
What exactly is the problem? Do we really believe that no-one, other than Kiwis, should be allowed to invest in New Zealand? If so, then we will severely limit our growth options. Would it really harm us if foreigners want to buy shares here? They can't exactly pick the airport up and take it to Dubai, or Canada - or anywhere else, for that matter - so the physical assets are safe. They might adopt a policy of only employing their own people, but that's most unlikely. In actual fact, a growing company means more jobs for local Kiwis.
The perceived concern is that profits will be taken offshore - maybe some will, but a thriving company knows that re-investment is essential and will do so. The real harm in this situation is being done to local investors - a fact summed up beautifully on Thursday by 'Dominion Post' cartoonist Tom Scott (www.stuff.co.nz/683577a17218.html).
Sir Robert Muldoon took a lot of criticism for once saying that New Zealand's foreign policy was "trade", but at one level he was absolutely correct as New Zealand exports a much larger proportion of our production than most countries. At the same time we're also large importers - New Zealand was a global trader long before the term 'global economy' became popular.
Unfortunately, however, we have a habit of running a deficit - which simply means we buy more than we sell. Last year we were behind by eight percent. The effect of this trend of importing more than we export over many years has been to make interest repayment a major part of our outgoings, and many international commentators have wondered how long we can keep it up.
Predictions abound that international investors will tire of funding our deficit and the New Zealand dollar will fall precipitously. Yet our economy has defied the pessimists for a long time and there is a lot of interest in investing in New Zealand. We are a stable democracy with little corruption, and we are on the fast developing Pacific rim- we remain an attractive destination for investment capital.
While I believe there's nothing wrong with foreign investment, we need to act to improve our balance of trade to ensure we are not dependent on foreign investors - but, at the moment, the fact is that a loss of international confidence would be very damaging.
To put things in more familiar terms: I could fund my debt with a loan or with a mortgage. With a mortgage the bank has an interest in my house but, if it lost confidence in me, it could foreclose and force me to pay cash up front for everything. To put it mildly, this would be very difficult. Things are no different for a business, a large company or a country when they want to buy things they don't have the ready cash for.
Given the large amounts of foreign investment in New Zealand and its importance to filling our deficit, the Government's hysterics over Auckland Airport have a distinctly cynical element. Asset sales to foreigners have always been unpopular but, in recent years, the Labour Party has preferred to leave the policies of economic illiteracy and foreign investment scaremongering to New Zealand First. However, with its poll ratings in a tailspin, Labour is now reaching back to its socialist past - according to Labour, foreign investment in "strategic assets" is now apparently a bad thing.
The Government this week didn't need to do anything about changing the rules to try to affect the sale of Auckland Airport: there was already a process in place to establish whether overseas ownership of New Zealand property is desirable and that only entitles the overseas investor to make an offer. The New Zealand owner is under no compulsion to sell.
The attempt by a Canadian pension fund to buy a 40 percent share of Auckland Airport is about as benign as it gets; for this organisation to have the rules changed on it at the last moment does great harm to our reputation as an investment destination.
Lest We Forget
On March 4 1945, Princess Elizabeth - now Queen Elizabeth II - managed to convince her father that she should be allowed to make a direct contribution to the World War II effort.
As such, she joined the Women's Auxiliary Territorial Service - in which she was known as No 230873 Second Subaltern Elizabeth Windsor, trained as a driver and drove a military truck while she served.
This training was the first time the princess had been taught together with other students - an experience she is said to have enjoyed immensely and which prompted her later decision to send her own children to school rather than have them educated at home.
While every monarch is nominally named Commander-in-Chief of both the British and Canadian Armed Forces, and other royal women have been given honorary ranks, Queen Elizabeth was the first - and, to date, the only - female member of the Royal Family to actually serve in the armed forces.