In the past ten years the world has witnessed governments become corrupt and self-serving, grasping for power, then ineluctably slide towards tyranny. The result has been a rising tide of suffering of (initially) the poorest and most defenceless, then eventually the tide engulfs more, rising higher and higher.
Robert Mugabe and his ZanuPF thugs have systematically devastated and decimated Zimbabwe. It did not happen overnight. It happened gradually as the state elided from one corrupt and venal act to another. One thing can be said about Mugabe—the man has broken world records. Inflation now runs at 200,000% while the people starve. Bet that makes them feel better about it. At least their suffering and death has been dignified by the honour and glory of a world record.
In Venezuela, Hugo Chavez—less further along the road than Mugabe, but nevertheless closing fast—is grinding the poor in that country. Both “leaders” curried political favour by an appeal to envy. Both have targeted property as the main front of their political campaigns. Both have seized land to “redistribute” it to their political supporters. Then, as inflation started to mount and the food supplies grew thin, both have moved from one brutal extremity and abuse of power to the next.
Most New Zealanders look at these terrible abuses of power and crimes against humanity and believe them to be problems that other people—people on the other side of the world—suffer. Maybe they deserve it—who knows. Maybe they are just inferior and keep making silly mistakes. But New Zealand is different, better. Such things would never happen here.
Then last week we saw proto-Mugabeism rear its ugly head in our own back yard. We say “proto” because we don't want to be drowned in a chorus of objection to the effect that a comparison of Zimbabwe with New Zealand is so extreme as to be laughable. Yes maybe it is—at present. But it only took a short twenty years in Zimbabwe to move to tyranny. And it is our contention is that the same spirit that has animated Mugabe and Chavez to eventual brutal abuses of power is gnawing away and breeding in the caverns of power in this country.
Last week the Labour Government announced that it was blocking the partial sale of Auckland International Airport (“AIA”) to a Canadian pension investment fund. The government was able to do this because it changed the rules at the last moment, and engaged in a midnight quasi-legislative Order-in-Council change—a kind of executive decree outside of Parliament and legislative process—to provide the government with a veneer of authorization in its blocking of the sale.
Let us put this matter in context. In July 1988 the government of the day sold the airport to private investors. Let's be very clear on this: the government transferred ownership of the airport to others for a price consideration. The government was very happy to take the money and be relieved of an asset which had an insatiable demand for ongoing investment capital to keep up with the infrastructure demands of a modern economy.
The new owners duly faced up to their responsibilities and began to contribute the required capital for upgrading and expansion. AIA has been well managed and the new owners were rewarded for their commercial risk-taking in earnings growth, dividends and stock price appreciation. The whole country benefited indirectly as the expansion and development meant that AIA became the country's key commercial and travel gateway to the world.
But the demands for fresh capital only increased. Commercial jets were now larger, payloads greater, traffic numbers higher. New runways had to be build at huge costs. Terrorist threats and increased security brought additional plant requirements. Management and shareholders became aware of the need for a new capital source that would take the airport to the next required stages of development. Their cornerstone local council owners could not do it: they were cash strapped facing rate revolts among voters. There were a number of overseas investors, however that expressed interest. They were prepared not only to purchase a reasonable number of shares, but contribute to the on-going requirements for capital. They were prepared to take the commercial risks to enable the airport to move to the next stage.
The country has a vital, if indirect, interest in this. If capital cannot be found, AIA will lag behind providing the necessary infrastructure support services for the new bigger jumbos—which in turn will increasingly sideline New Zealand as a destination on global routes. When the planes don't call any more, exporting (including inward exports, such as tourism) becomes a lot more difficult. We all needed shareholders "standing on the wall" for us, putting increasing amounts of their capital at risk.
The Canadian pension fund offered a good price. Sixty-three pecent of the 50,000 shareholders—New Zealand mums and dads who had been prepared to take the commercial risks to date, yet were struggling to meet future demands for capital—decided to accept the price and sell their shares. This was their right, of course, because they owned the business and its assets. They had taken the airport business so far. Now it was time for additional help.
Now enter the Government. Remember, the government has no—absolutely no—property rights in the airport. It had sold them twenty years ago. But come the hour, cometh the clandestine, last minute, quasi-legal, Order-in-Council. Suddenly the Government invented a new category of assets which it decreed to be “strategic assets” over which the Government would hold final ownership sway, regardless of who owned them at the time. In other words, for a new class of assets deemed “strategic assets”—a term which it could not and would not subsequently define—the Government has claimed the prerogatives of uber-ownership, regardless of who actually, legally owned the assets, and who were facing and taking all the commercial risks.
The meaning of the term “strategic asset” is was what the government decrees at the time. The vagueness is not dumbness—it is deliberate. It will emerge below what has, and will, inform that definition.
Now, back to Mugabe. Remember the pattern: a need to appeal to a certain section of political supporters leads Mugabe and his ilk to suspend property rights and—for the sake of the “higher good”—take their property from them. In Mugabe's case it was land for his ZanuPF thugs. In Labour's case it is votes in South Auckland.
There is no doubt at all that this effectual theft by the Labour Government has absolutely nothing to do with control or protection of strategic assets. As many commentators have pointed out such protections already exist (and are effective). For whatever reason—and probably as a result of polling key constituencies—the Government determined that blocking the sale and traducing the rights of thousands of New Zealanders in the process was going to bring them political advantage. Their own statements reflected this as they told everybody that the move would be popular with voters—yes, they actually did come out and say it. The ethics and tyranny of Robert Mugabe is breeding in the caverns.
As for those poor shareholders whose property has been terribly damaged as a result of Labour's mugabeism the political risk is worth taking—apparently. After all, there will be no heart wrenching scenes of farmers being physically beaten and forced from their land. No visceral images on the nightly news to worry about. Only a very real, tangible loss of wealth--but it won't be in public view. There is little political downside. And the loss will be ongoing. The deprivation of the shareholders' property is just beginning.
The AIA still needs capital if it is to keep pace. Where will it come from now? Overseas investors are prevented, and, even if Mugabe-Labour changed its mind, they will not come back in a hurry. Midnight clandestine Orders-in-Council do not encourage investor confidence and send risk profiles rocketing into the stratosphere.
Local investors? Nah, local investors are too savvy. They know now that the real owner of the airport is the Mugabeist Labour Government which will continue to toady to its political supporters in South Auckland. Meanwhile Mugabe-Labour just want some other stupid idiots to take all the commercial risks, while they retain effective control through a new mechanism known as “the strategic asset rule”. The commercial risks can now be written in large caps. The investment risk profile of the AIA business just rose substantially—by over ten percent on the day, if the share price fall is any indication—but that is just the beginning.
Where will the capital come from? Our guess is that it simply will not now come. And the outcome will be a long slow lingering decline of AIA. Mugabe-Labour has, with just one stroke of a midnight pen, severely weakened one of New Zealand's most important strategic assets. So, it hit the trifecta, really. Firstly, it damaged the wealth and assets of 50,000 New Zealanders; it severely compromised the ongoing commercial strength of the Auckland Airport, and it increased the risk profile for international capital investing in New Zealand. Expect interest rates to stay higher for much, much longer. Our banks are funded by offshore lenders: without their willingness to risk capital in New Zealand, the banks will run out of money to lend. The price of money will rise—that's higher interest rates folks. So much for the interests of voters in South Auckland. But then Mugabe-Labour probably thinks that most of them are too dumb to work out the connection anyway.
One might have had a certain sympathy for the Government if indeed national interests were genuinely under threat. But, let's be clear on this: what transpired over AIA was nothing more than pure political theatre, designed to appeal to a certain type of person upon which the government now depends for their on-going grasp for power. There was no real threat to New Zealand at all. Now, however, as a result of the chicanery and theft, there has been real damage and there are now genuine threats going forward.
The careful deliberate stage managing of the whole tawdry affair proves the case. Under the new “rules” two Mugabe-Labour Government ministers were “given” power to make the final decision on the Canadian pension funds offer to shareholders—which, it transpires, are now actually the pseudo-owners of AIA. Commentators could not work out why the decision of these two stool pigeons was being delayed—as was the case.
But last week all was revealed. The long-before-made-decision was announced on the day of the convocation of Mugabe-Labour in Wellington so that Ms Mugabe could receive thunderous applause (see how the sycophantic masses love me), and could announce the new defining issue for this forthcoming election—wait for it, wait for it—yes, asset sales!
As Dr Michael Bassett says:
There are times these days when the modern Labour Party seems beneath contempt. Be warned. There is worse to come. Because of the opinion polls, ministers are desperate and will do anything to hold on to office. “Whatever it takes”.Yes, the whole tawdry affair was carefully stage managed political theatre. If that were all that was at stake however, it would just be worth well-deserved derision. But the great sadness is that our country, our nation was weakened last week. It was hurt. In the national interest? No, desperate attempts to cling to power at all costs, and the nation be damned.
Ah, Ms Mugabe, aka Helen Clark, you are a true daughter of your spiritual father.
Disclosure of interest: We are not shareholders of Auckland Airport. There was a time when we aspired to become so--but no longer.
1 comment:
This is great info to know.
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