A Pensioner's Open Letter to Michael Cullen

The Hive: Pensioner To Cullen: Certainty Please
As requested by the good folk at the Hive. Mr Sorely unfortunately will probably be attacked and defamed in parliament now as a result of his letter.

A Pensioner’s Open Letter To Michael Cullen

Certainty please

You may have heard a sigh of disbelief when three weeks ago or thereabouts (we old people lose track of time) you and your government colleagues decided to give yourselves the power to block the Canadian bid for 40% of Auckland International Airport.

What surprised we oldies was the timing. We are a generation who, in our time, did business against a backdrop of reasonable certainty: if we undertook in a contract to transfer a business or whatever to a purchaser in six months time, then we did it and knew that the civil law was behind us.

The people at the Canadian Pension Plan Investment Board appear to be a decent crowd. They want to buy 40% of our Auckland International Airport shares and add the investment to their portfolio. They gave all of us – including the Overseas Investment Office – notice last November; and they have spent, it seems, about $10 million on complying with the rules and sending their offer to every shareholder, big and small (among the latter are over 20,000 ordinary “mum and dad” – and granddad and grandma – shareholders.)

The Canadians were in familiar territory. They knew that their offer might be accepted and, then again, it might not – they had done their homework and had offered a good price which as time passed, was now worth a 40% premium on the market value of the AIA shares. Many shareholders could see that the shareprice would allow them to reinvest in other undertakings including stockmarket-quoted utilities at (if the NZ sock exchange index continues in the doldrums) bargain prices. Did Michael Cullen not say in August 2005 that we need foreign capital to develop the economy?

Then along came the government on March 3. An Order in Council was canvassed over the Cabinet table, was agreed to, but never put to a representative vote. The message went out: We now have the power to veto overseas investments.

Why the late retrospective Order-in-Council? You and your advisers could have given the Canadians – and the public – notice of your intentions back in November last year when the CPPIB lodged the application with the Overseas Investment Office. This was an issues of national importance according to the prime minister’s recent observations to journalists and surely it merited immediate attention.

We of the older generation are not at all keen on retrospective legislation or last-minute decisions. We prefer to live with certainty, respect for property rights and, within the law, the honouring of private contractual decisions. We expect reasonable notice of impending change; and we think the present and succeeding generations will want the same. And we who have studied your Parliamentary career and had the added pleasure of meeting you and hearing you speak (as I have) know that you are a man of traditional values.

If the government thinks that the recent polls show that the public has been impressed with its actions then it might think again. The 3% gain might have been 13% (who knows?) if they had not upset so many. At the end of the day 27,000 investors said “yes” to the Pension Board and cocked a snook at the Government and their last minute change of rules. How many of these voted Labour at the last election? Would 10,000 be a reasonable guess, extrapolating from the 2005 election results?

We would have been more impressed if the Government had said: “This Canadian investment worries us. We shall have to consider whether the rules should be changed to give us powers if there should, in future, be some similar overseas proposal.”

Now that the shareholders have made their decision might it be wise to let the sale take its course and hope that the last-minute intervention will soon be forgotten?

Rob Sorely
New Plymouth

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