KEY POINTS:
The Government's rejection of a Canadian bid for part of Auckland Airport has been applauded in some quarters but attacked by its major political rival - opening up a clear demarcation between Labour and National before this year's election.
As expected, Cabinet ministers David Parker and Clayton Cosgrove yesterday vetoed the Canada Pension Plan Investment Board's bid for 40 per cent of the airport.
They said they were not satisfied that the $1.8 billion deal was of benefit to New Zealand.
Their decision went against a recommendation from independent officials at the Overseas Investment Office, who said the deal did offer benefits and that they were likely to be substantial and identifiable.
The Canadian bidders have now walked away from the airport, and the chance of any other foreign investor taking a significant stake in the business under the present government appears non-existent.
Mr Parker and Mr Cosgrove remain silent, but Labour is confident its rejection of the airport bid will be a vote-winner
Finance Minister Michael Cullen said he felt the ministers had made the right decision, and they might have arrived at the same conclusion even without the Cabinet's regulation change last month, making it harder for foreign investors to buy stakes in "strategic assets".
"We've not had a good experience of selling strategic assets overseas," Dr Cullen said.
"Telecom - a long defensive game held out the advance of telecommunications in NZ. Rail - a disaster for NZ's rail network. Air NZ - ended up with the Government having to buy back majority ownership."
But National, after looking uncertain on the issue weeks ago, yesterday ripped into the decision.
Leader John Key said the Government was playing with NZ's reputation among overseas investors.
