24 Jul 2009

NZ needs to restore credibility with investors - English

3:07 pm on 24 July 2009

Finance Minister Bill English says New Zealand needs to restore its credibility as a worthy option for overseas investors.

The Government wants to scrap rules protecting the sale of strategic assets to foreign investors.

The rules were rushed through last year by the previous Government to block a takeover of Auckland International Airport Ltd by a Canadian pension fund.

At the time, Labour said the takeover would not be of sufficient benefit to New Zealand.

However, Mr English says low savings levels mean New Zealand is reliant on an ongoing stream of overseas cash until New Zealanders change their savings habits

Mr English says overseas rules should ease any public concerns, be simple and provide certainty to investors. He says at present, too much investment risks being lost to other countries who might go elsewhere.

Mr English indicated that so-called strategic infrastructure assets, such as Auckland airport, should instead be judged on whether they have a national interest.

He says there are few present assets which require the protection of strategic importance as many are already either foreign or Government-owned.

Fears that assets will be vulnerable

Labour and the Green parties say there are some assets that should not be considered for sale as monopolies, particularly in infrastructure, allow huge profits to be extracted from New Zealand.

The Government says if a monopoly already exists, it makes no difference who owns the asset.

Mr English says part of the new regime is likely to mean the Government will not be able to substantially alter rules on overseas investment while applications are being considered.

He says that is what happened during the Auckland airport company negotiations and a national interest test would provide more certainty.

Mayor wants Auckland Airport protected

Manukau Mayor Len Brown wants Auckland International Airport Ltd to be protected from foreign ownership.

Manukau City is a part-owner of the airport company and Mr Brown told Morning Report there are other assets around Auckland owned by local bodies which should be protected.

He said Ports of Auckland, water suppliers and the electricity network company Vector should all remain in local body hands and he is opposed to any rule changes that would affect them.

Mr Brown said Auckland International Airport Ltd has been a good investment for the council, delivering returns of about 24% per year.