Doubletalk

September 27th, 2010 at 12:52 pm by David Farrar

has just done a press release (not online yet):

Ministers will have extra flexibility to consider a wider range of issues – including large-scale ownership of farmland – when assessing overseas investment applications for sensitive land, Finance Minister Bill English says.

At the same time, a new ministerial directive letter to the Overseas Investment Office will provide extra clarity and certainty for potential investors about the Government’s general approach to in sensitive assets.

“In recent months, ministers have carefully reviewed the current framework for considering overseas investment applications – particularly in light of issues with respect to farmland ownership,” Mr English says.

“Overall, the measures I’m announcing today strike an appropriate balance. They increase ministerial flexibility to consider a wide range of issues when assessing overseas investments in sensitive land, while at the same time they provide extra clarity and certainty for potential investors and the Overseas Investment Office.”

Ha. In my experience wider criteria to decline an application on, will lead to less clarity and certainty for potential investors.

But I guess it will keep the NZ First potential voters happy. I understadn the politics, but don’t like the economics.

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28 Responses to “Doubletalk”

  1. berend (1,690 comments) says:

    Why not simply forbid all foreign owned land? Works for Samoa, if all you want to be is a Pacific Island.

    PS: I didn’t know John Key could get his head even deeper in the sand. But clearly he has managed.

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  2. tvb (4,553 comments) says:

    I am sure any owners of farmland will be irritated they cannot sell to a willing overseas buyer, so we take them out of the market and therefore prices must drop. I am unsure whether this is good politics. It might be with those who do not own farmland and like to interfere with the ownership rights of those that do.

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  3. campit (467 comments) says:

    What are the economics you don’t like exactly DPF?

    [DPF: When you stop owners of NZ assets from selling to the highest bidder, you do two things. You reduce the amount of wealth the current owners can make from selling them and you may block a new oener who would invest far more into capital,technology etc than a NZ bidder. Thirdly I like the fact NZ companies can buy assets in other countries, so hypocriticial if we stop foreigners investing here.]

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  4. CJD (333 comments) says:

    Why would any country-especially a small one like us want to sell off big chunks of a strategic asset like productive farm land. What is wrong with a long-term lease? Why does a foreign entitiy need to own land to participate in dairy (or any other) production? Surely current owneres can participate in resultant economic gains withour necessarilly selling?

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  5. RRM (10,099 comments) says:

    GOOSE FOR SALE

    Lays golden eggs. Once in a lifetime opportunity!

    Starting bid: The rateable value of the nest [Place Bid]

    Buy now: 5 blankets [Buy Now]

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  6. BlairM (2,340 comments) says:

    CJD – because it injects millions of dollars into the New Zealand economy that wasn’t there before. New Zealanders can then invest that money overseas and draw profits back to New Zealand, creating even more wealth. Trade is good. Wealth is good. Capitalism is good. Free trade is good. And if the farm fails in foreign hands, they sell it right back to New Zealanders and someone else can have a go. There are no negatives. Why are you worried about other people’s farms? If you don’t want dirty foreigners owning your farm and want to be a racist motherfucker, DON’T SELL YOUR FARM!!!! But don’t stop more enlightened and economically aware people from doing it.

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  7. CJD (333 comments) says:

    BlairM have you heard yourself?? You sound like one of those crazy ACT people. You sell it once and it is GONE! There are other more intelligent ways of injecting millions into the economy.

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  8. ben (2,279 comments) says:

    Doubletalk – exactly. You can;’t have it both ways, Bill. Either you provide certainty by constraining what Ministers can do, or you give them added discretion and necessarily reduce certainty for investors. That includes buyers and current owners.

    Sigh. The Government giving the Government yet more power. Colour me unsurprised.

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  9. mpledger (425 comments) says:

    India is buying up arable land in Africa (China too, I believe), China and European Conglomerates are buying up the Australian wheatfields. This is a result of the food shortages caused a few years ago.

    What will happen if there is a food shortage again – the Australian food will go back to China and Europe, the African food will go back to India. Why do I think this is so? Because it’s all happened before e.g. the Anglo-Irish exported their food to England during the potato famine.

    It’s insane to sell productive land to foreign entities. They have little obligation to care for it because if they stuff it up then they can high tail it back to their home country and leave the locals to bear the consequences. One semi-serious stuff up could ruin the New Zealand reputation for clean green/high quality food. That’s our big advantage over mass produced crops/food from other countries.

    Once gold and oil are gone, they’re gone. Food you can grow season after season – as long as you take care of the land.

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  10. JiveKitty (778 comments) says:

    BlairM: xenophobic, not racist.

    I would think the worry would be something along the lines of asset stripping (extract maximum short-term profit but in doing so gut the land of much of its future productive use then get the fuck out) because they have no or little emotional attachment to the land of NZ or the future viability of the NZ economy. But realistically, there’s no guarantee a New Zealand resident won’t do the same anyway, and furthermore, if one wants to stop asset stripping there are better ways of targeting than restricting foreign sales. Also possibly worried about the view of those selling such assets (Seems likely this is actually worry given they mooted a compulsory savings scheme a while back), i.e. premising a short-term liquidity hit which they may not invest but fritter away – and not necessarily in the NZ economy – over long-term asset building in NZ (so decrease the size of the market of buyers by making it more costly for foreign buyers to purchase NZ land – an effective tax on time and money for foreigners – advantaging non-foreign buyers, I would guess – and also restricting who can buy the land, which means that NZ land is more likely to stay in NZ hands). Bad policy, I believe.

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  11. Ed Snack (1,939 comments) says:

    Gone CJD, gone ? Where did it go ? Did the overseas owner pack it up and take it away ?

    Nope, it’s still here, still paying rates, generating (one expects) income and paying tax. Gutting the land Jivekitty, why, that is one good way to lose money on the whole thing. I think your issue is that you think NZ’ers are too stupid to be allowed to sell to just anyone, and that you and yours should have the decision making power on who is allowed to buy and sell. No dirty foreigners eh ?

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  12. JiveKitty (778 comments) says:

    Ed Snack, those were the reasons I suggested I could think for the people who are for restricting foreign ownership. Read what I said again and you will note that I am not for these restrictions on foreign ownership. Look out for “But realistically, there’s no guarantee a New Zealand resident won’t do the same anyway, and furthermore, if one wants to stop asset stripping there are better ways of targeting than restricting foreign sales.” and “Bad policy, I believe.”

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  13. george (269 comments) says:

    This is a recipe for corruption. The foreign buyer now needs to lobby politicians to get the land. The important thing is clear rules – “flexibility” is appalling. Even rules that said sales were banned would be better than this.

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  14. Pauleastbay (5,035 comments) says:

    Ed Snack (312) Says:
    September 27th, 2010 at 1:54 pm
    Gone CJD, gone ? Where did it go ? Did the overseas owner pack it up and take it away ?

    Excellent post Ed, it also generates jobs and provides work for the local service industries.

    etc etc

    We are at the stage in NZ were if I want to sell something I own I have to get permission from some elected Nob, its seriously fucked. We are very xenophobic here very, and it will get to the stage where no one will want to invest here and then its all over baby

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  15. Murray (8,803 comments) says:

    While psyco leftards want to punish people for actually daring to feed us how profitable do you think it will be to try and be a farmer in this country?

    The only people who will even be interested are overseas corprate organisations looking to exploit and run, not invest.

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  16. CJD (333 comments) says:

    It is good to see that intelligence still deserts this site at times. No-one used the term “dirty foreigners” I merely expressed the opinion that there are other ways of earning off our land than merely flogging it.

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  17. Gwilly (158 comments) says:

    An article recently written by Bernard Hickey is worth a read: http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10668466. An excert below…

    Why is rural land so special?

    Why is rural land more precious than say the intellectual capital of our iconic manufacturer? Fisher and Paykel Appliances, which is now controlled by China’s biggest appliance company, Haier, and only yesterday announced a new deal to license more New Zealand technology to this Chinese company.

    A Chinese company, Agria, recently bought a big stake in our biggest rural services company, PGG Wrightson, and NEXT Window, a touch screen technology company, has just been bought by a Canadian company SMART Technologies.

    Why is rural land so much more vulnerable and worthy of protection?

    After all, unlike these other more portable assets, land cannot be dug up and shipped offshore. It will always still be taxed here and legislated for here. Foreign owners are still subject to the same tax laws, the same Resource Management Act and the same employment laws as everyone else.

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  18. stephen (3,981 comments) says:

    I merely expressed the opinion that there are other ways of earning off our land than merely flogging it.

    Hmm. What if the owner decides that’s the best way to get ahead?

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  19. redeye (633 comments) says:

    Out of curiosity, what’s to stop land foreign owners/companies from using their land to grow food and on sell that food to their own overseas companies at a loss?

    No profit generated in NZ?

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  20. lastmanstanding (1,310 comments) says:

    Bill English is sounding more like Dr William Sutch every day. Ahh the good ole days of Fortress New Zealand Pull up the drawbridge and tell all those Johhny Foreigners to FOXTROT OSCAR!!!!!!!!!

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  21. Gwilly (158 comments) says:

    @redeye – nothing at all, but why would any business want to do that in the long-run? And if you are thinking of the chinese, then there is no way they will accept making a loss, its not in their DNA.

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  22. redeye (633 comments) says:

    @Gwilly: “but why would any business want to do that in the long-run?”

    What if their tax position made it more favourable to create the profit in another country?

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  23. MT_Tinman (3,315 comments) says:

    Ministerial directive, property purchases by foreign nationals;

    White skin – good, yellow skin – bad, brown skin – good if smelling of oil.

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  24. Viking2 (11,672 comments) says:

    There are Laws on Transfer Pricing. to stop that.

    Today from MYOB.
    “The Government has demonstrated how quickly they can act in response to an emergency to provide essential lifelines for business,” MYOB general manager Julian Smith said.

    “In less than a week, they cut through red tape to provide wage assistance for employers, access to emergency funding, and a truly impressive level of flexibility from the IRD, with much of it managed through a central, local source.

    He applauded the Government for its “responsiveness”.

    “However, the kind of model they have put in place, and clearly demonstrated they have the capability to do so, is essentially one that businesses all around the country are asking for,” he said.

    Businesses had been struggling over the past year with the “sluggish pace” of the recovery and the implementation of a range of new legislation, which was clearly reflected in falling support for the Government’s business policies.

    http://www.stuff.co.nz/business/small-business/4170960/Help-for-quake-hit-businesses-applauded

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  25. CJD (333 comments) says:

    Stephn “Hmm. What if the owner decides that’s the best way to get ahead?”

    Then that is what they have a right to do in the same way I have a right to question the wisdom. Had we not stuffed up our own economy the owners would have a wider choice of buyers. We have a very real chance here to end up like the Hawaians-second class and dispossed in our own country.

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  26. side show bob (3,410 comments) says:

    For what it is worth I wouldn’t sell the farm to a foreigner or a local, why sell a permanent income earner and part of your heritage. As far as foreign ownership of farm land, why the bloody hell not. I’m not worried about farms sold to foreigners providing they follow the same environmental laws, employment conditions and standards set by government and industry and that the rest of us have to follow. One fear is that foreign farm owners could set their own terms and conditions, the playing field then is not level and then I would be against foreign ownership. Most farmers in NZ ain’t greedy or stupid and will watch any developments with a great deal of interest.

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  27. Rex Widerstrom (5,013 comments) says:

    It’s all about food security.

    Asian countries in particular have vastly denser population levels than does NZ. What land they have is devoted to housing their populace, and much of the rest isn’t arable (at least not without huge investment in irrigation schemes etc). Better and cheaper to buy vast tracts of arable NZ land and grow crops and animals there.

    And if they own it they can, naturally, do what they want with what’s grown on it. Why is our seafood, bountiful along our large (in relation to population size) coastline so unaffordable for many? Because of foreign demand. Why is milk more expensive per litre than Coke? Why is cheese a luxury in a land dotted with cows? Foreign demand.

    So yeah, let’s not risk being called xenophobic – a risk many foreign nations in Asia, Europe and the Middle East are more than happy to run due to their restrictions on foreign ownership. Let’s sell our productive land for short-term profit for a few and in exchange for minimum wage jobs for a few more, while those buying it up marvel at our stupidity and keep their own bans in place.

    Then let’s watch, as we do with our forests, as container ships loaded with our raw produce are shipped overseas and we become price takers on the world food market rather than price setters. Brilliant long term strategy. But hey, at least we can’t writhe with guilt if someone calls us racist for being economic rationalists, so that’s okay.

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  28. kaya (1,360 comments) says:

    What is the problem with leasing as an option? Selling land to overseas interests is the dumbest thing a country can do. Apart from that, most of the money floating round the world markets today isn’t worth the money it isn’t even printed on. Nice trade. Morons.

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