New Zealand's railway assets were sold in 1993. Photo/Duncan Brown
New Zealand's railway assets were sold in 1993. Photo/Duncan Brown
The Government is proposing to block the sale of big infrastructure assets to foreigners.
Associate Finance Minister David Parker today announced the next phase of overseas investment rule reviews, following the house sale ban which takes effect from next week.
"It is likely that a broad, but rarely used, discretion to decline approval for significant foreign investment, such as infrastructure assets with monopoly characteristics, will be introduced," Parker said.
Treasury would lead the review and the terms of reference have also been released.
Stephen Selwood, Infrastructure New Zealand chief executive, expressed concern about the proposal, while PwC economics director Geoff Cooper welcomed it and Property Council advocacy head Matt Paterson hoped it might ease commercial asset sale pathways.
David Parker announced the next stage of the review. Photo/Mark Mitchell
Selwood said such a move might not be our ultimate national interest.
"New Zealand should always keep all its options open with the potential to sell infrastructure to foreigners if there is a benefit to New Zealanders in doing so," Selwood said.
He cited potential sales of water, port, airport and electricity businesses as potentially falling into the monopolistic infrastructure asset field.
He cited the rail sale when in 1990, the operating assets of the Railways Corporation were transferred to a limited liability company under government ownership, New Zealand Rail. In 1993, the company was sold to a private consortium comprising Wisconsin Central Transportation Corporation and two investment groups.
Selwood also cited the telecommunications sale and said that and the railway sale had "mixed results".
Stephen Selwood expressed concern about the act's review. Photo/Duncan Brown
Asset sales which have been talked about included Auckland Council's Watercare, the Ports of Auckland and Auckland International Airport, Selwood said.
"But with the ports, the operations could be sold but the council would keep the land," Selwood said.
Last year, Ngāti Whātua announced it wanted to buy the $1.1b Ports of Auckland and talked of joining other iwi and a financial giant to mount an approach to Mayor Phil Goff. Ngāti Whātua Orākei Trust spokesman Ngarimu Blair said the entity has long harboured an ambition to buy back our former land and Waitemata seabed.
Selwood today cited the controversial proposal in 2008 when government ministers vetoed a Canadian bid to buy a stake in Auckland airport. The Canada Pension Plan Investment Board had wanted to own 40 per cent of the airport and shareholders, with around 63 per cent of the company, had been willing to sell to it. But the then-Land Information Minister David Parker and then-Associate Finance Minister Clayton Cosgrove used their power under the Overseas Investment Act to veto the sale. They cited a lack of benefit to New Zealand as the key reason for declining the bid.
Geoff Cooper of PwC sees benefits in the review.
Cooper, who for the last four years has lived in the United States where he was an associate in international financial institutions for the US Federal Reserve Bank, was more open to Parker's review which he said was potentially in this country's interests when it came to monopolistic infrastructure assets.
"I lived in the US for four years and saw many people not doing so well from globalisation. New Zealand should be judicious about asset sales in areas that are of strategic importance and particularly where there are monopolies," Cooper said.
Paterson said today the Property Council hoped the Overseas Investment Act review would "provide a more efficient system for foreigners to buy non-sensitive commercial, industrial or retail property so it's quicker".
The Overseas Investment Office was slow compared with systems in other countries, Peterson said, leading to frustration.
"The system is now quite an impediment to the sale of these assets because it takes so long to get approval," he said.
The assets were particularly large - $100m-plus - "yet there's a very limited pool of capital in New Zealand to buy such assets," Paterson said.
Many NZX listed businesses including Precinct Properties, Goodman Property Trust, Fletcher Building and Kiwi Property had to go through the overseas investment regime, "caught by the act, even though they were majority owned by New Zealanders," Peterson said.
