Finance Minister Michael Cullen announcement that the Labour coalition government was immediately tightening the country's overseas investment rules with regard to stopping strategic assets falling into foreign ownership was an initial setback to the Canadian Pension Plan Investment Board (CPPIB) in its attempt to take over Auckland Airport: the country's international gateway.
Shares in Auckland Airport plummeted on the NZX on news of the changes. Initially shares fell by 19% as investors realised that the speculation of making a quick buck was probably over before clawing back its share price later in the week.
The Cabinet rushed through measures under an 'order-in-council' which bypasses parliament to enable a swift change to the rules. Stopping further strategic assets falling into foreign ownership is highly popular with the public, with a poll indicating 56% not in favour. No doubt such a populist move may help Labour in the polls as the Prime Minister Helen Clark decreed that Ports of Auckland and Tauranga are considered to be strategically important too.
Naturally, the so called 'Mum and Dad' investors, i.e. speculators, are not that concerned about who owns the asset, but what profit can they make from the takeover as the recovery in the share price shows
Interestingly the National Party kept relatively quiet about the issue. John Key when pressed on the issue admitted that the previous rules were quite adequate. In other words, the National party is naturally happy for further strategic assets to fall into foreign hands. Obviously a future National government would have no qualms about privatising further state assets either.
Such a protectionist manoeuvre will not stop Auckland Airport falling into foreign ownership. The Labour cabinet appears to be more than happy for CPPIB to obtain a 40% stake in Auckland Airport on the understanding that they will only exercise 24.9% of the shareholders votes! Obviously, a large say in what happens to the assets of the airport, and certainly a good base to gain more of the shares, should a National government be elected in September or October this year
However, despite the cosmetic change in the overseas investment rules, the only way to guarantee New Zealand assets remaining ours is through nationalisation. The nationalisation of Auckland Airport with compensation on proven need would have been a tremendous step forward for the labour movement. Such an act linked to a socialist programme would of gained a tremendous echo amongst workers and certainly improve Labour's chance at a fourth term.