Joyce defends Chorus' Kiwi Share-busting
UPDATE May 3: Associate Finance Minister Steven Joyce is defending the Crown's decision to waive the 10% Kiwi Share restriction for AMP Capital, allowing the Australian-controlled company to lift its stake in Telecom spin-off Chorus to up to 15%.
“This request came about because of the merger between AMP and AXA, and the combined total of Chorus shares under the control of their various managed funds and investments," Mr Joyce told NBR ONLINE.
Why not require AMP Capital to sell-down its stake to stay below 10%?
"That would be an option," Mr Joyce responded.
"But it’s important to point out that the AMP shareholding is actually the aggregation of a whole lot of small investors who have invested through AMP and AXA. In that respect, the shareholding is not like that of a cornerstone investor."
Opposition parties say the AMP Capital exemption proves the government can't be trusted to stick to the rules with pending partial asset sales.
Mr Joyce implies the previous government was more guilty on Kiwi Share waivers.
He told NBR, “Previously the Crown has given approval to exceed former Kiwi Share ownership restrictions on Telecom to Franklin Resources (2002), ING Group (2006), and Commonwealth Bank of Australia (2007). It’s worth noting that all three of these occurred under the previous Labour Government."
The minister said the companies exemptions "Because these types of shareholders are generally considered as passive investors, and own shares on behalf of their individual clients.”
Chorus deal proves govt can't be trusted on asset sales - opposition
May 1: Opposition parties have waded into the government's decision to approve Australian-controlled AMP Capital taking a 15% stake in Chorus, breaking the 10% Kiwi Share cap.
"During the debate on the Telecommunications Amendment Bill last year, the then ICT Minister Steven Joyce dismissed out of hand suggestions that the removal of the Kiwishare obligation from Chorus would result in increased foreign ownership," Labour's ICT and broadcasting spokeswoman Clare Curran told NBR Online this afternoon.
"The question now is, how much more of Chorus will the government be prepared to sell? Chorus is charged with rolling out fast broadband to the New Zealand public using taxpayers' money What's for sale next?."
Green Party leader Russel Norman said the government's approval "proves it can't be trusted to limit foreign ownership in its planned asset sales programme."
Mr Norman said, "The 10% limit on ownership of Chorus by individual investors mirrors the limit in the Mixed Ownership Model Bill that the Government is passing to allow the sale of shares in Genesis, Meridian, Mighty River, Solid Energy, and Air New Zealand. Both limits are intended to curtail foreign ownership of strategic infrastructure.".
ICT Minister Amy Adams did not immediately respond to a request for comment.
The Telecommunications Amendment Act provided for the government's $1.35 billion Ultrafast Broadband (UFB) rollout, and the associated spin-off of network division Chorus from Telecom.
A last-minute change to the legislation saw the legislation saw the Kiwi Share provision removed from the Telecom. With Chorus, the foreign ownership prohibition was retained - but as a deed or contract between the government and the company, rather than enshrined in law.
Kiwi Share skirted
Earlier today, Chorus told the NZX that the Australian-controlled AMP Capital Investors New Zealand, which manages about $12 billion locally, has been granted government approval to build its stake in telecommunications network operator Chorus above the 10% cap.
The fund manager got Crown sign-off to lift its existing stake in Chorus from just under 10% to as much as 15%, the telecommunications lines company said.
Investors have to get government approval to buy hold more than 10% of Chorus' stock under its constitution.
AMP Capital has bucked the trend among fund managers by backing the network company when it was demerged from Telecom, with most institutional investors choosing to build unfettered stakes in the retailer.
Chorus was carved out of Telecom as a standalone entity last year in a deal that would let the network company tap $929 million of taxpayer funds to build high-speed broadband lines across 75% of the country.
That lifted regulatory burdens on Telecom, which is now operates as a retail company.
As part of the deal, Telecom shed its cap on ownership, freeing it up for a takeover, though Chorus retained the so-called kiwi share obligations, limiting international investment in the company.
Chorus' shares [NZX:CNU] were up 1.17% to $3.47 in trading yesterday, and have climbed 17% since listing last year.
With reporting by BusinessDesk.
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Comments and questions9
Presumably AMP must feel good about the Commerce Commission being told to take a hike over further attempts by them to regulate Chorus over the wholesale price of copper-wire based broadband.
The sooner the government sacks Patterson from the ComCom and enforces a light hand on the regulatory mix, the better.
Yes, because a light hand on the regulatory tiller worked so well for the 1990s and early 2000s during which time Ratcliffe and Moutter managed to squash competition, pillage the people of New Zealand and offer a second class service at nose-bleeding prices.
Congratulations, we've just reinvented the Telecom monopoly. Foreign ownership, foreign direction, New Zealanders missing out for another decade.
HAHAHAHA "Green Party leader Russel Norman said the government's approval "proves it can't be trusted to limit foreign ownership in its planned asset sales programme."
YET THESE GREENAZIS SUPPORT UN AGENDA 21 AND AN END TO ALL INDIVIDUAL RIGHTS AND PROPERTY OWNERSHIP!!!
Who said ANY Gov't could be trusted?
It should be noted that AMP Capital is an institutional investor that actually manages a significant amount of money for NEW ZEALAND investors
NOt a good look for the Government. They should come out and explain their reasons which I assume are (as noted above) that they are an institution which invests funds, at least in part, on behalf of NZ'ers.
Are they any conditions such as the proportion above the 10% cap must relate to the amount of funds invested on behalf of NZ'ers?
Fair comments from Joyce - but sick of politicans who say its is ok they did X because the previous guys did it.
Two wrongs do not make a right.
What it proves is that to be in government requires you to be pragmatic - as we are seeing now Labour taking a holier than thou stance in opposition, but were more pragmatic in Government, as we saw Key et al taking a holier than thou approach when in opposition and now being more pragmatic in Government and of course the Greens always taking a holier than thou approach because no one wants to have them in government - so far. It is rational, logical and probable that once in Government facing multi-issues with the responsibility to act that you will need to be more pragmatic than in the opposition where your job seems to be to stand on the side lines and throw rocks at every decision, to put forward ideas designed to destabilise the government, after all nowadays the sole purpose for an opposition party seems to be to position itself to be in government at the next election.
Who cares who owns Chorus as long as we get high quality services and the prices are controlled by effective regulation?
If we get too precious about who owns it , we may have to find large chunks more capital ourselves to keep the company going. We can tax the citizenry to fund more UFB investments, but that is very costly capital given that Treasury indicates that a dollar of taxpayer money invested in a company has to generate at least $1.20 of benefits in the firm to offset the additional deadweight loss costs associated with taxation. So $1 invested by a foreigner in an infrastrucutre company physically based in NZ delivering services in NZ delivers $1 of investment benefit to the country via the infrastructure, whereas it takes $1.20 of Government money to generate the same $1 infrastructure effect.
Those who complain about Telecom under foreign ownership need to remember that under government ownership, prices were much higher in real terms, were manipulated for political not economic purposes, you had one choice of phone handset (supplied by Telecom and in one colour only until the mid 1980s), you had to wait months to get a connection, book long distance calls during business hours in advance and as for phoning the UK on Xmas day - forget it if you hadn't booked your call before the (sea freighted) cards and gifts had been dispatched! In the words of Fred Dagg, "we don't know how lucky we are" to have foreign investors left in Chorus given the huge hit they've taken in share price over the past 6 years