KEY POINTS:
The Government did not move sooner to nobble the sale of 40 per cent of Auckland International Airport to a Canadian pension fund because it didn't believe the sale would go ahead, the Herald understands.
The airport company's board recommended on February 25 that shareholders accept the Canadian Pension Plan Investment Board's offer.
At that point, the Government started thinking of ways to try to stop the deal.
On Monday night, after the Australian sharemarket closed, the Government changed overseas investment rules ensuring that if even the Overseas Investment Commission approved the sale, the two ministers with the final say, Clayton Cosgrove and David Parker, would be able to say "no" and withstand judicial review.
But new criteria in assessing foreign ownership of sensitive land are such that it is unlikely the Overseas Investment Commission would approve the sale.
The deal could be blocked if it did not "assist or maintain New Zealand control" of the asset in question.
The move on Monday followed a move last week to shut off a multi-million dollar tax break that would have allowed the Canadian Pension Plan Investment Board to get more from the deal at the expense of New Zealand's tax revenue.
It is clear that the Government does not want the sale to proceed, but cannot say so for fear of judicial review.
"You can't just say that, actually," Finance Minister Michael Cullen said yesterday.
"There's a legislative process, a proper process that has to be gone through by ministers."
Asked if he would have moved earlier in an ideal world, Dr Cullen said, "In an ideal world hopefully we would not have had the bid in the first place."
The issue also marks out differences between Labour and National.
After appearing to take no firm position, National leader John Key finally said he would have had no problem if the sale had been approved under the law before it was changed.
"It wasn't immediately clear to me that the law needed to change. It should have run its course and that process.
"If it had gone through that process and been approved, it would have been fine."
Prime Minister Helen Clark said yesterday that the changes were not specific to Auckland airport, and would apply to other strategically important infrastructure on sensitive land, such as the ports of Auckland and Tauranga.
"I'm an Aucklander. I've got no personal enthusiasm for seeing that hugely important piece of infrastructure go from New Zealand. The issue is to have it properly assessed with stronger criteria."
But it is clear that the new rule will be open to interpretation as to what "control" means and what constitutes a "strategically important infrastructure on sensitive land".
Finance Minister Michael Cullen and Mr Key disagree as to what weight to give the Canadian bid for 40 per cent of Auckland Airport.
Dr Cullen sees that as a controlling share because other shareholdings are in small lots.
Mr Key calls it a minority shareholding and does not see it a s a controlling share - especially not as the Canadians have limited themselves to 30 per cent voting rights on the board.
The bid must have 40 per cent acceptance and approval of 50 per cent of the shareholders who have until March 15 to return their ballots.
The Canadian board said yesterday it was confident its offer would be accepted, and was optimistic it would get overseas investment approval.
