KEY POINTS:
Vector, the Auckland electricity line company, did very well to complete the sale of its Wellington network to Cheung Kong Infrastructure Holdings of Hong Kong. The bidding was well advanced when the Government suddenly blocked a foreign bid for control of Auckland Airport a few weeks ago - a national policy reversal move that would have chilled Vector's suitors.
Questioned at the time about the implications for the Wellington power line sale, the Finance Minister would say only, "The Vector network isn't exactly the same as Auckland," which might have been enough to keep investors interested.
The sale completed, he was a little more forthcoming yesterday on the distinction the Government sees. The Wellington electricity network could not be described as a strategic asset, he said, because, unlike Auckland Airport, sensitive land was not involved.
"Sensitive land", he added, was defined in the Overseas Investment Act. "It borders reserves, or foreshore and seabed, or whatever it might be. We can't just say we think this is sensitive land because it's Wellington," he went on. "We have to obey the law and the law is quite clear - this doesn't involve sensitive land. I can't change the law on that. It would require legislation."
If he sounds shrill, no wonder. It is hard to find in these decisions any consistent policy that might guide foreign investors. The sensitivity of Auckland Airport had nothing do with its land, abutting Manukau Harbour, and it is hard to believe the Government's comfort with the Vector sale has anything whatsoever to do with the land under the power lines.
Furthermore, Dr Cullen could have changed the law if he had wanted to. The Greens and New Zealand First, pathologically opposed to foreign capital, would have supported the Government. But for reasons that remain unexplained, Labour does not regard an urban electricity network as "strategic infrastructure".
If that phrase has any meaning it must apply to power lines. A line network cannot be practically duplicated for the sake of competition. It is the classic natural monopoly. If line networks are not kept in public ownership they require careful regulation, as Telecom has shown, to prevent them gouging consumers or denying access to competing traffic.
Vector, as it happens, is a quasi-public entity, owned by a trust elected by Auckland consumers, whom it rewards at the expense of its consumers elsewhere. Wellington's network has not been sold from this form of ownership wholly into the hands of a private company. It is a privatisation in anyone's language. Yet the Government was more concerned about the partial sale of an airport in which two Auckland councils would have retained significant stakes. It will defy investors' understanding.
Capricious public policy on foreign investment does untold harm. Companies with the capital and expertise the country needs are less likely to risk money on sales bids that may fail for reasons impossible to predict. The Treasury, we now know, warned of exactly that peril when it advised Dr Cullen to let the airport bid proceed.
The Government has steadfastly declined to publish a list of assets it regards as "strategic" because it has no consistent definition in mind. The public and potential investors are left to conclude that a property becomes "strategic" simply when it suits politicians to regard it so. At least that means that assets as vital as power lines can attract foreign investment when their luck is in. But this country's process of approval should be better than a lottery.
