When Unintended Consequences Bite You In The Ass
I'm a huge fan of Podcasts and one of my favourite podcasts is EconTalk. Now this is an unashamedly free market oriented Economics podcast but it covers some great topics. Here is a great one on Unintended Consequences of Regulation. THe Library of Economics and Liberty also has a good article.
It's this very thing that has jumped up and bitten the New Zealand Government in the ass recently. Bernard Hickey discusses it a bit here but judgging from the comments maybe not in enough detail or in an easy enough form.
It's pretty simple really.
Auckland Airport has been an attractive target for a new cornerstone shareholder. In a fit of naked xenophobia we first scared of the Arabs bt the Canadians have been much more persistent.
First we threw sand in their eyes by chaning the rules around tax and stapled securities. The share priced fell hard.
Next we changed the investment rules for 'Strategic Assets'. The share price fell further.
With the share price falling so aggrresivly (helped in part by the fact that the markets including infrastructure assets have been hammered recently) the Canadian offer suddenly becomes VERY VERY attractive. The difference between the market price and the offer price grew to be quite large. This of course piqued the interest of investors who in turn all voted in favour of the sale.
So in seeking the intended consequence, that of shoring up New Zealand support and ownership, the Government has in fact done quite the opposite.
At the start of the process it was likely that at least one of the councils would have to be convinced to part with their shareholdings in order for the deal to fly. In the end the enthusiasm of the Mum and Dad private holders to take up the offer is what seems to have pushed it over the balance. In fact, I wouldn't be surprised if this late groundswell of domestic support doesn't see us end up with a higher degree of foreign ownership than might have resulted had a larger proportion of the sellers into this deal been foreign domiciled owners- i.e. I think if the Government had left well alone we'd have seen the Canadians buying more shares from foreigners and less shares from Aucklanders.
Politics|Friday, March 14, 2008 3:43:52 AM UTC||