KEY POINTS:
New Zealand has worked long and hard to present a welcoming face to much-needed foreign investment. Stable policies and pronouncements have been an integral part of that, whatever the make-up of the government. But recently, signs that are bound to trouble investors, present and potential, have emerged. First, there was the Finance Minister suggesting he may not be averse to interfering in the working of the Reserve Bank. Now, the Trade Minister says the Government agrees with local opposition to a deal under which Dubai Aerospace would take a controlling stake in Auckland International Airport.
Phil Goff said: "The Government's view is very much in line with that of 80 per cent of the Auckland public. They don't want to see key public utilities - the airport and the ports authority, the shares in those bodies - sold off". His remarks were unwise. This is an area where the Government should not tread. Every propensity, except its political instincts, would have told it so. It is no coincidence, therefore, that Mr Goff's comments were uttered at the launch of the centre-left City Vision ticket for October's local-body elections.
These local polls often give a strong pointer to what will happen in the general election a year later. A rebuff for City Vision would be psychologically damaging to the Labour Party. It recognises as much, thus Mr Goff's entreaty to City Vision candidates to tap into popular opposition by grabbing the airport issue with both hands. It had, he said, been handed to "us" on a plate.
The minister would also have been aware that it would do Labour no harm to grasp the same sentiment, in light of its faltering fortunes in Auckland. A Herald-Digipoll survey of 400 people in Auckland City, published this month, showed National with 50.2 per cent support and Labour with 38.6 per cent, a marked difference from a wider poll two weeks earlier that showed Labour 6.5 points behind National.
In effect, Mr Goff and Prime Minister Helen Clark, who later reinforced his comments, have chosen to try to score political points at the expense of the country's credibility in matters of international finance. This is particularly inappropriate at the start of negotiations for a free trade pact, including investment, with a group of Arab states, including the United Arab Emirates. The Government, like many of its American and European counterparts before it, is venturing into that murky world where free trade is fine, but only when it suits.
Obviously, those advising Dubai Aerospace expected better from local and central government. They might have expected opposition from the centre-left, but not from the likes of John Banks, who, as mayor, sold half of Auckland City's airport shares in 2002. He says now that he would not sell the rest if the people of Auckland did not want them sold. In the face of such a reaction, the key issue of what benefits Dubai Aerospace would bring to the airport and the tourism industry has been submerged. Had the company's advisers anticipated this reception, they would have cautioned against tabling the bid until the local-body elections had run their course.
Therein lies the damage of this episode. Investors should not have to tip-toe around minefields to place their money in this country, the more so because New Zealanders' wretched savings record makes an unequivocal welcome imperative. The Government's short-sighted politicking has muddied that. Foreign investors are never short of suitors, many of them countries offering greater incentives than does New Zealand. The investors will make their own judgment.
