How many foreign buyers are there?

July 29th, 2013 at 1:00 pm by David Farrar

Tony Alexander in May 2013 looked at this issue. He found the following from sales data:

From these numbers we can derive the proportion of all house sales in NZ which go to buyers from offshore
who have no intention of shifting here – including half of the “Don’t Know” responses.

  • Australia 0.4% 
  • China 0.6% 
  • Europe excl. UK 0.4% 
  • India 0.4% 
  • Other Asia 0.5% 
  • South Africa 0.3% 
  • United Kingdom 0.3% 
  • United States 0.4% 
  • Other 0.4% 
  • All 3.6%

So if you exclude Australia, Labour’s policy may reduce the number of buyers by 3.2%.

However also of note is 4.5% of sellers were based overseas.

Now remember this is based on actual sales data. Alexander summarises:

This is interesting because taking the many sampling uncertainties into account the proportion comes close to the proportion of sales we estimate are to people offshore who do not intend shifting to New Zealand – some 3.6%. The implication? There could be close to zero net transfer of NZ home ownership occurring to offshore investors.

I’d tempted to call the policy a snake oil solution.  The data suggests it may have no impact at all on prices.

 

Tags: , ,

Labour’s proposed ban on foreigners buying houses

July 29th, 2013 at 5:19 am by David Farrar

The Herald reports:

Housing Minister Nick Smith said it was a sign of how desperate Labour and Mr Shearer had become.

“The oldest trick in the political book, whether it be over crime or unemployment or affordable housing, is always to blame the foreigners.

“There’s no evidence that overseas buyers are having any discernible affect over house prices.”

It was an “unprincipled” policy because it exempted Australia, Dr Smith said.

“They are the largest group of non-resident home buyers.”

Property commentator Olly Newland said the policy would not work.

Australians would be exempted from the scheme, because of a reciprocal arrangement where New Zealanders were able to buy properties there.

Mr Newland said that made the policy “a bit of a nonsense” because Australians bought the highest number of properties here of all foreign buyers.

“Secondly, of course, any overseas buyer would very quickly find somebody else to buy a house for them here in their name and hold it in trust for them.

“There are a thousand ways to get around it if they want to come here,” he said.

“It sounds good but in practice it just won’t work.”

Sounds attractive to some, but likely to make almost no difference. Increasing the supply of land for housing is what will make the largest difference to house prices.

Tags: , ,

KPMG on foreign investment

June 21st, 2013 at 2:00 pm by David Farrar

KPMG report:

Ask your average Kiwi which country is currently dominating foreign investment into New Zealand, and their answer would probably be China.

But the reality shows quite a different picture, according to research undertaken by KPMG NZ.

KPMG has analysed trends in foreign direct investment through a review of the Overseas Investment Office (OIO) approvals over the period July 2010 to December 2012.

This research showed that Asia accounted for only 16% of gross foreign direct investment over the last two years. Australia remains our main single source of capital, at 46%. Combined, North America, Europe and Australia accounted for approximately 70% of investment.

And of the 16% which is Asian:

Among Asian countries, Japan (53%) was a bigger investor in New Zealand than China and Hong Kong (33%). Significant acquisitions made by Japan in the last two years included beverage companies Independent Liquor and Charlie’s.

So China is one third of 18% which is 6%.

The full report states:

The growth of Asia represents a great opportunity for NZ. However, in an economic sense kiwi’s need to realise that Asia is more important to NZ than NZ is to Asia. Given that Asia’s consumer market is about 3.8 billion people and NZ’s is about 4.4million, it is easy to see why.

Joint ventures, partnerships and other innovative arrangements with foreign investors should be considered as ways to commercialise Kiwi innovation and to gain access to overseas markets.

Some parties demonise foreign investment. They seem to view the economy as a closed shop, and promote a view that every dollar of foreign investment is somehow crowding out domestic investment. But it isn’t. Foreign investment helps the economy grow, and creates jobs and more investment opportunities locally.

Tags: ,

Buyers also sell

May 18th, 2013 at 10:00 am by David Farrar

The Dom Post reports:

A Large chunk of Porirua’s MegaCentre has been sold for over $30 million to Nelson-based property investor Gaire Thompson.

It is the second recent local major retail property deal where big Australian corporates have sold to local buyers.

The Xenophobes get all worked up when foreign companies buy almost anything in New Zealand. I love hearing Russel Norman rail against foreign investment in his Australian accent.

But foreign investors can’t take land and buildings with them. And as we see here, they do not just buy NZ assets – in time they often sell them also. If you ban them from buying, it means you actually reduce options for NZ buyers and sellers.

Tags:

Facts and myths on foreign investment

April 29th, 2013 at 9:00 am by David Farrar

The NZ Initiative have released today a comprehensive 75 page report detailing the facts and myths around foreign investment in New Zealand.

A summary of some key findings:

  • Despite popular myth, New Zealanders actually earn more than they spend. National resident unit savings has been positive for the last 38 of the last 41 years.
  • High debt is not the fault of the private sector. While levels of private debt may be high, these stem from the legacy of historical government policies between 1974 and mid-1980s.
  • The future debt burden will depend on future internal competitiveness and the gap between New Zealand’s growth rate and the yield in the debt.
  • Despite concerns to the contrary, Asians are not taking over New Zealand.  In fact, in 2012 Australians owned 55% of foreign investment in New Zealand, while ASEAN nations owned only 3.1%.
  • Offshore investment is a two-way street. New Zealand is not a ‘takeover’ target by foreign investors. In fact, the OECD regards New Zealand’s regime for screening inwards investment as one of the most restrictive in the world; and
  • New Zealand has been heavily dependent on international capital since colonial days, and this is normal for a young, growing country.

Some facts I found interesting are:

  • Foreign investments in NZ exceeded NZ investments abroad by 4.4% of GDP in 1973 and 64% in 1989. Today it is 72%.
  • The Australian share of FDI in NZ increased from 32% in 2001 to 56% in 2012.
  • The Asian share of FDI in NZ increased from 1.9% in 2001 to 3.1% in 2012.

The report is full of facts, figures and charts. A great contribution to our economic knowledge, and hopefully will improve the level of debate on foreign investment.

Tags: ,

Franks on Housing

March 3rd, 2013 at 9:00 am by David Farrar

Stephen Franks blogs:

Marcus Lush recorded an interview at 5-50am this morning with me on the pros and cons of banning foreigner purchases of houses here. …

I realised that the issues could be summed up simply. Prices go up when supply can’t increase to respond to demand. There is no a shortage of building supplies, or builders. So foreign buyers’ money can only affect prices if there is a shortage of land to build on. But New Zealand is not short of land. It is short of consents to use land. And probably more important than the supply of new land, is the cost, delay and risk in trying to intensify the use of land that is already built on, nearer the centre of our cities.

We need to build both upwards and outwards. We do need to intensify, but we also need more rational urban limits.

In other words, our housing problem is the inevitable consequence of the political success of selfish middle and upper class families, working with  their stupid green children. They enforce their aesthetic preferences for the status quo (labelled as ‘heritage’) by locking newcomers out of their leafy and quaint inner suburbs. The RMA has frozen the dynamic processes of rebuilding and intensification that have created all great cities (and our own towns and cities up till 3 decades ago. The result is that poorer people must pay for more expensive housing ever further from where the work is.

To blame the resulting prices on foreign money is a nice distraction from their own culpability, for the selfish generations, and the councillors and MPs who pander to them.

Nicely put. Blaming house prices on foreigners is just blatant xenophobia.

Tags: , ,

ODT on xenophobia

October 24th, 2012 at 10:00 am by David Farrar

An excellent ODT editorial:

Recently, control of Fisher & Paykel Appliances, the company which maintains a presence in Dunedin, passed quickly and almost quietly into the hands of the Chinese-owned Haier Group. Haier already owned 20% of FPA after effectively rescuing the company in 2009, when it acquired the holding as part of a capital raising that let FPA refinance its debt. FPA got distribution into China as a result of the deal and the ability to further licence its technology.

David Parker has said he wants Ministers to decide on private owners selling their shares to other private owners. What this may mean is companies going bankrupt, as F&P may have gone under if Haier hadn’t rescued them in 2009. We saw this under the last Labour Govt when they refused Singapore Air buying Air NZ, leading to the airline facing bankruptcy.

While the semantics would suggest that 52% ownership means the company is still in Kiwi hands, the reality is that a controlling interest is just that: controlling. (Haier’s offer is still subject to Overseas Investment Office approval, but it seems a formality.)Compare then the ease with which Haier took control of a long-established New Zealand company with the prolonged struggle by Chinese company Shanghai Pengxin to buy 16 central North Island Crafar farms. It now hopes to settle the purchase of the farms after the Supreme Court last week removed the last obstacle to the deal, an appeal by Maori trusts.

While it would be easy for Haier, a global whiteware group, to shift FPA to China, it is impossible for Shanghai Pengxin to shift 16 dairy farms anywhere. It seems xenophobia ruled in the farm debate. Why should the Chinese be allowed to buy New Zealand farms, the critics howled?

Exactly – you can’t move a farm or land. I’d point out that companies can move their manufacturing offshore also, regardless of who owns them.

And compare that reaction with the welcoming of recent news that Canadian film-maker James Cameron continues to expand his south Wairarapa property portfolio.

Incidentally, Mr Cameron’s neighbour, American billionaire Bill Foley, has won permission from the Overseas Investment Office to expand his Kiwi-based wine operation.

However, just like Haier, it is likely both Mr Cameron and Mr Foley paid market rates for their purchases. If the Maori trusts, and their benefactor Sir Michael Fay, had been truly serious about buying the Crafar farms, all they had to do was offer a higher price than that being offered by Shanghai Pengxin.

Xenophobia is not the determining factor in such sales: shareholders make their own decisions based on price and their own circumstances.

Not if Labour gets in. Their policy seems to be that Ministers will approve all sales that are not purely domestic. Decisions will be based on Ministerial opinion, not what is good for shareholders and investors.

Tags: , , ,

The Haier bid

October 19th, 2012 at 12:00 pm by David Farrar

The Dom Post reports:

Haier looks likely to succeed in its takeover bid for Fisher & Paykel Appliances after lifting its offer for the Kiwi whiteware maker, according to an institutional investor.

The Chinese firm yesterday announced it would raise its offer by 8 cents to $1.28 per share, a level that comes in at the bottom of the $1.28 to $1.57 per share value range independent adviser Grant Samuel put on the firm.

The new offer has won favour with institutional shareholders Accident Compensation Corporation, Harbour Asset Management and AMP Capital, who have all agreed to sell the 14.1 per cent of F&P Appliances they collectively hold.

Haier paid about 80c a share for its existing 20 per cent stake in 2009 as part of make-or-break capital raising by F&P Appliances to stave off a potential debt default.

Haier has already secured an agreement with Australian fund manager Allan Gray to buy its 17.46 per cent stake, and now has control of 51.56 per cent of F&P Appliances’ shares.

Haier’s offer was conditional on getting over 50 per cent, although it would prefer a full takeover.

“Our view is this price should enable Haier to get 100 per cent of the company and we think it is very fair from a shareholder’s point of view,” said John Phipps, deputy head of New Zealand equities at AMP Capital.

Never mind being fair to the shareholders. Labour has invented a new policy on the hoof, of fuck the shareholders. Labour have announced:

“The implications of its sale to New Zealand are too important leave the takeover approval to officials. Such a major decision must be made by Ministers. That’s Labour’s policy.

Labour’s view is that they will decide, who can buy a private company listed on public sharemarkets. Such decisions will of course be based on populism. Labour seem determined to retreat into a xenophobic fortress NZ policy that we last had in the 1970s.

Can you imagine the horror of Ministers personally deciding on all NZ takeovers? We’d become rife for corruption amongst other things. You want to be able to buy a company – make sure you look after the Minister.

Tags: ,

Foreign investment

August 29th, 2012 at 9:00 am by David Farrar

Stuff reports:

The OECD ranks New Zealand as among the most restrictive foreign investment regimes in the developed world – which dispels the popular view we are easy pickings for investors, says think-tank the New Zealand Initiative.

An NZI report analyses the Organisation for Economic Development’s Foreign Direct Investment regulatory restrictiveness index published in April. This shows New Zealand has the sixth most restrictive foreign investment regime of 55 developed economies.

NZI research fellow Luke Malpass said the view that New Zealand was really open for anyone to come and invest was not true.

The index measures statutory restrictions on a country’s FDI, including screening and prior approvals, key personnel and equity and operational restrictions. Most of New Zealand’s negative rating comes from its screening of investment applications, he said.

“New Zealand relies more than any other OECD country on ministries and ministers second-guessing investment intentions and possible outcomes on the most contrived criteria.”

Of the 55 countries measured, 35 didn’t have screening restrictions.

Investment in New Zealand is a good thing. It often creates jobs, and also frees up NZ capital for investment overseas. We don’t and can’t live in a silo.

Malpass said though New Zealand’s foreign investment regime restricted investment only in “sensitive land”, this category is absurdly broad. It includes any rural land of more than 5 hectares and anything larger than 0.4ha near inland water.

5 hectares is just 0.05 of a square kilometre. 0.4 hectares is a tony 0.004 of a square kilometre. Far too small.

Tags:

Hypocrisy

August 15th, 2012 at 3:00 pm by David Farrar

The Dom Post reports:

Greens co-leader Russel Norman says his member’s bill to restrict foreign land ownership is likely to be narrowly defeated
tonight by an ‘‘evil coalition’’.

If anything is evil, it is xenophobia.

The bill aims to retain New Zealand ownership and control of sensitive land and has the support of Labour, NZ First, the Maori Party and Mana.

However, Dr Norman said it was likely to be opposed by National, UnitedFuture and ACT.

‘‘The job of Parliament is to represent the will of the people and people don’t want land going into overseas ownership,’’ he said.

What hypocrisy. One week after around 80% of New Zealanders voted that parental correctional smacking should not be a criminal offence, the Greens voted down a members’ bill that sought to do just that.

If people do not want land to go into overseas ownership, then they should not sell their land to someone overseas. But it is quite a different matter to ban fellow citizens from selling their property to the highest bidder.

Under this bill, James Cameron would be banned from buying his Wairarapa farm, even though the benefits to NZ of having one of the world’s most influential movie makers owning land here is huge.

Norman’s bill would ban any foreign investment in land over 0.05 of a square kilometer! It would not matter how great the benefits to NZ are – a total ban. It is xenophobic hysterical nonsense.

Applications for purchases over 0.05 of a square kilometer are assessed against the national interest, under the criteria in the Overseas Investment Act. Deciding on the merits if each application is far more sensible than a xenophobic ban.

Tags: , , ,

Labour on electricity assets

July 24th, 2012 at 7:00 am by David Farrar

Chris Trotter writes:

Speaking to a group of corporate head-hunters on July 11, Mr Parker spelled out the details of Labour’s policy on foreign investment. Concerned to prevent “infrastructure assets with monopoly characteristics” from being sold to offshore buyers, Labour, in the run-up to last year’s election, drew up a “closed list” – to keep a “bright line” between “what is to be sold and what is not”. Among the infrastructure that was not to be sold were any electricity line, water storage or irrigation networks; seaports or airports; and public hospitals, schools, railway lines or roads.

Not included in Labour’s “closed list” were telecommunications networks and – amazingly – “electricity generators”.

According to Labour’s policy: “While the electricity market is on the cusp of becoming uncompetitive and exhibits monopoly-like characteristics, generation assets are diverse in nature, location and ownership.”

What this means is that although Labour went into the last general election on a policy of “no asset sales”; and in spite of the fact that its campaign advertising showed a vast banner displaying that very message being draped over a hydro-electricity generating dam, the party was unwilling to include electricity generators on the list of state-owned infrastructure that “ought to be run in the New Zealand interest” – and never be sold to foreigners.

Am I alone in thinking that Labour’s foreign investment policy fatally compromises its current campaign against asset sales? If the generation of electricity is an activity which properly belongs to the market, and if New Zealand’s electricity generation assets are “diverse in nature, location and ownership” and, therefore, able to be purchased by foreign interests, then I’m at a loss to know why the Labour Party is opposed to their partial privatisation.

In one sense you can argue that there is no contradiction. The foreign investment policy deals with assets owned by the private sector while the privatisation policy is about assets owned by the Government.

However considering the hysteria from Labour over minority share-holdings in some SOE energy companies, it is interesting to contrast that with their policy that it would be fine for (for example) a foreign company to buy all of Contact Energy or Todd Energy.

Also useful to contrast to their record in office. They claim they are now against any foreign investment in electricity lines companies, yet they approved the sale of the Wellington lines company.

At the end of the day, you have to wonder if Labour actually stands for anything, apart from wanting to be in power.

Tags: , , ,

Foreign land ownership

July 9th, 2012 at 11:00 am by David Farrar

Bronwyn Torrie at Stuff reports:

Ninety-nine per cent of land in greater Wellington is still owned by Kiwis, according to an analysis of foreign ownership consents.

In the past seven years, overseas applications to buy 7500 hectares of land in the region were approved by the Overseas Investment Office.

“That’s less than 1 per cent of the region’s land area, so it dispels the myth Wellingtonians are becoming tenants in their own land,” said Mike Donald, managing director of land and property specialist Terralink International. …

LAND SALES

Wellington land sold to overseas buyers:

Dairying, 100 hectares – 0.28 per cent of total dairying land

So what is all the panic about?

 

Tags:

Dom Post on Crafar

April 21st, 2012 at 1:00 pm by David Farrar

The Dom Post editorial:

No application by a foreign investor looking to buy New Zealand land has attracted more attention than Chinese company Shanghai Pengxin’s bid for the Crafar farms.

It is hard to escape the conclusion that opposition to the deal, approved yesterday, is mostly driven by the nationality of the purchaser.

Of course it is. Not all of it, but much of it.

When Canadian film director James Cameron purchased more than 1000ha of Wairarapa land, including a 250ha dairy farm, the news was generally welcomed, even though the residency requirements he must meet mean he has to live in New Zealand for only 44 days in each of the final two years of a three-year investment period. The sale of the Crafar farms, on the other hand, has met howls of protest, despite Shanghai Pengxin having to satisfy 27 stringent requirements.

These include establishing a farm school on one of the properties, to be run by state-owned enterprise Landcorp, which will also manage the farms, and providing $5000 university scholarships to two students. It must also provide public walking access across two of the farms, protect Maori archaeological sites and undertake significant conservation requirements.

The company has also, apparently on its own initiative, undertaken to spend at least $100 million over five years promoting New Zealand dairy products in China and elsewhere in Asia, a key developing market. The increased trade that could flow from that will benefit all New Zealand dairy farmers and, with it, the wider economy.

As I have said for some time, I see this sale as having huge opportunities for New Zealand.

Tags: , , ,

Another Hikoi

April 21st, 2012 at 9:52 am by David Farrar

Andrea Fox at Stuff reports:

Maori are promising the “biggest hikoi New Zealand has ever seen” following the Government’s second green light for a sale of the 8000-hectare Crafar dairy farming estate to Chinese company Shanghai Pengxin.

I do wish the term “Maori” would not be used when talking about presumably one person or Iwi.

Meanwhile, central North Island iwi who are part of Sir Michael Fay’s court action against the sale have confirmed they are talking to Pengxin in the hope of buying three of the 16 farms from the company.

As one can see, there is far from a common view.

Nigel Baker – who represents a group within the Taupo region’s Ngati Tuwharetoa iwi, which is part of Fay’s group and has met Pengxin twice seeking to buy the 1700-hectare Tauhara Crafar farm – considered ancestral land, said there would be a “very strong” Maori backlash against the latest land sale to foreigners.

But details of the protest action, which would be against the wider sovereignty issue of the sale of land to foreigners, were still secret, he said.

“This is an issue for all New Zealanders. It will be the biggest hikoi this country has ever seen.”

What a wonderful idea. A hikoi to allow Sir Michael Fay to buy up farms on the cheap.

Tags: ,

Crafar sale approved

April 20th, 2012 at 11:43 am by David Farrar

Maurice Williamson and Jonathan Coleman have announced:

Land Information Minister Maurice Williamson and Associate Finance Minister Jonathan Coleman have approved the new recommendation of the Overseas Investment Office (OIO) to grant consent to Milk New Zealand Holding Limited to acquire the 16 Crafar farms.

“New Zealand has a transparent set of laws and regulations around overseas investment,” Mr Williamson says.

“Those rules recognise the benefits that appropriate overseas investment can bring, while providing a range of safeguards to protect New Zealanders’ interests. They are applied evenly to all applications, regardless of where they are from.

“We have sought to apply the law in accordance with the provisions of the Overseas Investment Act and the guidance of the High Court.

“We have carefully considered the OIO’s new recommendation. The OIO sought advice from Crown Law and independent legal advice from David Goddard QC. The Ministers also sought advice and clarification from Mr Goddard.

“We are satisfied that on even the most conservative approach this application meets the criteria set out in the Act and is consistent with the High Court’s judgment.”

In other words, it would probably have been illegal to decline the application.

Dr Coleman said the consent came with stringent conditions.

“These 27 conditions have been imposed to ensure Milk New Zealand’s investment delivers substantial and identifiable benefits to New Zealand,” Dr Coleman says.

The conditions require Milk New Zealand to invest $16 million into the farms and to protect and enhance heritage sites.

“The combined effect of the benefits being delivered to New Zealand as a result of this transaction is substantial.”

It is worth noting that any NZ buyer would not have any binding conditions on them at all. They could hock them all off as individual farms.

A copy of the OIO’s new recommendation is at: http://www.linz.govt.nz/sites/default/files/docs/overseas-investment/oio-recommendation-crafar-farms-20120420.pdf

A copy of the OIO’s decision summary is at:  http://www.linz.govt.nz/sites/default/files/docs/overseas-investment/decision-summary-201110035.pdf

I’m glad the Government has approved the sale. Not just because it was the law, but because China is a huge opportunity for New Zealand. The partnership between Landcorp and Shanghai Pengxin could lead to significant more opportunities in the future.

Tags: ,

Allan Freeth on foreign investment

April 17th, 2012 at 2:00 pm by David Farrar

A good op-ed by Telstra-Clear CEO Allan Freeth:

During my involvement with the international activities and meetings of Save the Children and the World Economic Forum, I have been struck by the inner turmoil of stakeholders from the old superpowers, Britain and America.

In their heads they realise that the Indian and Chinese economies are coming into predominance. But in their hearts, they cannot give up the idea that they will continue to reign supreme.

Much the same is being seen in New Zealand with the current foreign investment debate.

In the Herald, Fran O’Sullivan reported on prospect of Fonterra partnering with a Chinese company to develop dairy farms in China. The company, Shanghai Pengxian, is the same one awaiting a government decision allowing it to buy the 16 Crafar dairy farms, around 8,000 hectares of land.

I have said for some time that the proposed partnership with Shanghai Pengxian and Landcorp, could result in massive economic opportunities for New Zealand.

I recognise that land has a special status in the eyes of many New Zealanders, but this is in the face of the sale of thousands of hectares to foreigners, particularly US citizens, over the past few years. I hesitate to suggest that the issue may be a cultural one as opposed to economic, but it is hard to see the extreme result being anything other than some type of xenophobic knee-jerk reaction.

Take just this week. When Bill English is over in Australia talking about how more and more Australian companies want to invest in New Zealand, and no politician says a word. But then you have a Chinese leader visit and promote investment from China, and the Greens rush out a press release. It is absolutely playing to xenophobia. Not all opposition is xenophobic, but much of it is – and politicians play to it.

Some of the anxiety about foreign investment is driven by laudable, but in my view misguided, concerns about the environment. But other concerns may be based on a fear that foreign investment, particularly in land, in some way erodes our sovereignty.

Even before the High Court ruling which sent back the Overseas Investment Commission’s decision on the Crafar farms sale, politicians, interest groups and individuals had expressed opposition to the sale of the farms to Chinese interests. Yet, as you read this, there is another New Zealand trade mission in China, from Auckland, seeking business and investment.

I am not sure we can continue a strategy of trying to have our cake and eating it, too!

More importantly, such protests fuel a growing public anxiety that foreign investment is a bad thing. In my view, foreign investment is not simply good for our economy, it is critical to our long term, sustainable economic future.

Exactly. China especially is a massive opportunity for us.

National went into the 2011 General Election promising more investment in infrastructure, and developing a more export-focused economy, delivering more jobs for young Kiwis.

It would be difficult to find fault with those objectives, and even more difficult to see how they might be met without the continued investment from overseas necessary to support the planned and sustainable development of our resources, including minerals, energy, forestry, agriculture and technical innovation.

Do those opposed to this investment want to tell the rest of the world that New Zealand isn’t open for business? Do they understand global trade and investment is reciprocal, or do they think it is just a one-way street? Do they know that of the $60 billion in FDI in New Zealand, around $40 billion, or two-thirds of the total, comes from Australia, $10 billion from the US and $5 billion from the UK?

Do they know that China’s investment in New Zealand is around $1.8 billion mostly in the forestry sector, followed by manufacturing and commercial construction? Do they really want to send one of the world’s biggest economies a message that their money is not welcome in New Zealand?

The economic nationalism put forward by Greens, NZ First and more recently Labour is reckless.

Those opposed to foreign investment in our enterprises should consider the investment made by British firms in the nineteenth and twentieth centuries in New Zealand’s meat processing industry.

British owners and shareholders profited by that investment, but if the investment hadn’t been made by them at that time, where would the money have come from to build the plant and infrastructure? And where would our economy be today, if that investment had not been made all those years ago?

But at least our carbon footprint would be smaller!

The economic contribution from foreign investment is as relevant today as it was then. New Zealanders need to learn more about the importance of foreign investment to our economy and take an active role in the debate on both sides.

Then, if they remain opposed to the idea, let the opposition be based on information and not ignorance, or the fact that they do not know how to deal with a global shift in economic and social power.

I won’t hold my breath waiting.

Tags: ,

Some sense on Crafars

April 8th, 2012 at 11:53 am by David Farrar

Q+A interviewed David Mahon, a Kiwi who has lived in China for the last 25 years and invests there. Some extracts from the interview:

SHANE      So can you tell us exactly what China wants? Is this just one deal or the start of China targeting our resources?

 DAVID       China actually wants resources – whether they’re fibre, timber, wool – or whether it is protein. In the case of the Crafar farm deal, it’s a search for protein. The Chinese aren’t looking to buy land and to own land around the world; they’re looking to secure the resources that their own narrow agriculture base doesn’t supply them. And given the fact that Chinese are urbanising in such great numbers, and the demand for food is increasing, there is an urgency for the Chinese to secure good lines of supply.

Jenny Shipley has said the same thing. They basically just want secure supply of food, to feed their own population. This is an opportunity, not a threat.

If you look at the Crafar deal, already these farms have been owned by Australian banks. Effectively you’re transferring Westpac debt, largely, into Chinese equity. So the land was already lost to New Zealand by the time the company went into receivership. 

Exactly. The farms are now effectively Australian owned. Those who oppose the sale then are not really against foreign investment – just Chinese investment.

Tags: , , ,

Herald on Shearer bill blunder

March 13th, 2012 at 9:17 am by David Farrar

Derek Cheng at NZ Herald reports:

Labour leader David Shearer has admitted to embarrassing mistakes in his private member’s bill to restrict foreign ownership of farms, including giving the bill two names and unintentionally removing safeguards for native flora and fauna.

The bill was the first major policy release from Mr Shearer since taking over as party leader.

Under the bill, foreign bids would have to bring substantial increases in jobs or exports through new technology or products, and these must be additional to what would happen if a New Zealander bought the land.

The present law lists a number of factors ministers can consider in determining whether the bid would bring “substantial and identifiable” benefit to New Zealand. Among the factors are protection for native flora and fauna, heritage and cultural sites, and wildlife and walking access.

But Mr Shearer’s bill would wipe these factors completely, effectively meaning an application that ticked the box for more exports but destroyed the environment could get the green light.

I think the Greens just won some more votes off Labour.

Tags: , ,

Labour stuffs up Shearer bill

March 12th, 2012 at 12:57 pm by David Farrar

Alex Tarrant at interest.co.nz has exposed how David Shearer’s bill on foreign farm land is an incompetent PR stunt. This is typical Labour – they go for meaningless PR stunts rather than careful well considered policy.

Alex blogs:

For starters, you can’t even figure out what you want to call this law change.

Right at the top, in the space of eleven lines, you gave it two different names.

Overseas Investment (Owning our Own Rural Land) Amendment Bill is the initial title at the very top.

Then you decide that the new Act should be called the Overseas Investment (Owning our own Infrastructure) Amendment Act 2010

I presume the staff hadn’t yet decided which term rates better with the public.

But then we get to section 17.

In the rush to get this Bill written before Shearer appeared on Q&A on Sunday, you managed to indicate that you would repeal all environmental, heritage, conservation and walking access requirements on foreign landowners for Ministers when making their decisions.

Now I know you didn’t mean to do this – you told me so this morning – but if you’re going to go on national television and announce you’re presenting a member’s Bill to change one of this country’s laws, then I for one would be hoping you’ve given it serious consideration, had a few people look over it, and had another look at the actual legislation to figure out what you’ll be repealing.

Yep, the bill in the name of Labour’s leader does just that.  You can see over at the linked site the full details of all the existing criteria, that Shearer’s bill does away with.

This is amateur hour, and is a long way from convincing people you are up to running a country.

Tags: , ,

The Crafar dilemma

February 17th, 2012 at 1:31 pm by David Farrar

In my Herald column I look at the court judgement. First the political aspect:

On the political front the decision is as popular with the Government as a colonoscopy. It might turn out to be good for you in the long term, but it is making life very uncomfortable for now.

For the Opposition, it was like an early visit from the Easter Bunny, just as their chocolate supply was running out. The questioning in the first week of Parliament this year on the issue amounted to little as Ministers ran the line that they were merely applying the law, and that there were no lawful reasons to decline the application by Shanghai Pengxin.

And the economic aspect:

Putting aside the practicality aspects, it is hard to argue with the logic of the learned judge, that any benefit should be measured against a domestic buyer, rather than against the status quo. By measuring against the status quo, it is almost inevitable that net benefits will be found as new buyers always will have investment plans greater than the seller.

I conclude the the days of the OIO saying yes to most applications may be in the past.

Tags: , , , ,

NZ land sales 2007 – 2011

February 6th, 2012 at 9:17 am by David Farrar

I’ve had to do this over two graphs so one can see how miniscule the amount of land purchased by Chinese domiciled people or companies have been.

This strongly suggests to me that racism has been a significant factor in the opposition to the Crafar sales. There was nothing like this level of outcry when land was sold to people in Liechtenstein or Canada or the UK or Australia.

This is not to say all those against the Crafar sales were motivated by racism. Many opponents are genuinely against all foreign land purchases, but some opposition is clearly based on the race of the purchasers, or worse politicians playing to those sentiments.

Tags: , ,

Trotter on Crafar sale

February 3rd, 2012 at 12:04 pm by David Farrar

Chris Trotter writes at Stuff:

At the risk of being branded a “traitor”, I’m declaring my support for the Crafar farms sale. Not because I like seeing productive New Zealand farmland pass into the hands of foreigners, I don’t.

The reason I’m in favour is because I believe New Zealanders should keep their promises and fulfil their undertakings.

In 2008, this country ratified a free-trade agreement with the People’s Republic of China. It was hailed as the most important foreign policy and trade achievement of the 1999-2008 Helen Clark-led government. Not only was it the first such agreement to be signed between China and a Western-style democracy, but it also offered New Zealand businesses immense economic opportunities. …

It was all the more perplexing, then, to hear Opposition leader David Shearer declaring his and the Labour Party’s opposition to the sale. It’s simply inconceivable that Mr Shearer is unaware of the MFN prohibition against denying China the same right to buy land as the nations that bought upwards of 650,000 hectares of our national patrimony exercised when Helen Clark was Prime Minister, and Mr Shearer’s friend (and former boss) Phil Goff was the Minister of Trade.

To avoid the inevitable charges of rank hypocrisy and populist opportunism, Mr Shearer needed to accompany his statement opposing the sale with an announcement that Labour was committed, immediately on regaining office, to repudiating the New Zealand-China FTA and tightening up the legislation regulating overseas investment.

I’m still waiting for those other shoes to drop. And, frankly, I think I’ll go on waiting. Why? Because I simply don’t believe Labour is about to abandon its long-standing commitment to free trade. Nor am I confident Mr Shearer is any more willing to court the fury and retaliatory trade restrictions of the Chinese government than Mr Key. Both are well aware that this country’s future prosperity is inextricably bound up with China’s.

I actually see the deal as an exciting one. A partnership between Shanghai Pengxin and Landcorp has huge potential opportunities. The combination of their market contacts and capital, and our land and expertise could be golden.

Tags: , , ,

Joyce on foreign investment

February 3rd, 2012 at 10:00 am by David Farrar

Great to see a Minister sticking up for foreign investment. The Herald reports:

Not enough New Zealanders appreciate the benefits of foreign investment and economic growth, says Economic Development Minister Steven Joyce.

The reaction of too many people was “you can’t do this, you can’t do that, you can’t do the other thing”, he said, with little thought to the impact it had on potential jobs.

“The same people tend to turn around and demand more jobs one minute and then declare that they don’t want to see any things over here happen.”

Exactly.

Mr Joyce said that if people wanted more job growth, they had to take a more positive attitude to investment in the New Zealand environment, especially given the mobility of people and the mobility of capital. …

Economic growth required the use of capital, resources, skilled labour, infrastructure, innovation and a market.

“So all those things have to be managed. It’s not a case of carte blanche but every time you say ‘I don’t want that’ that shuts off another opportunity.”

Too many people see foreign investment as bad, or at best a necessary evil.

Tags: ,

Is Labour against this foreign purchase?

February 1st, 2012 at 8:40 pm by David Farrar

Seamus Boyer at Stuff reports:

Hollywood movie mogul James Cameron is coming to live in Wairarapa – and he is bringing his family with him.

The director of blockbuster films Titanic and Avatar has purchased two large plots of land along Western Lake Rd in south Wairarapa, where he is expected to arrive and live later this year.

Records released today from the Overseas Investment Office show that James F Cameron, of Canada, was given consent in December to purchase two separate properties, one 817 hectares and the other nearly 250 hectares.

That’s around 15% the size of the Crafar farms. where are the howls of outrage from Labour? I mean Cameron is a foreigner.

But the documents show that Cameron’s New Zealand connection will be more than just a working one.

”James F Cameron and his family intend to reside indefinitely in New Zealand and are acquiring the property to reside on and operate as a working farm,” it notes.

But but but what expertise do they have in farming?

Under Labour’s election policy on foreign investment, Mr Cameron’s application would be declined as they said all sales will be declined unless the purchaser “will also invest in significant further processing of related primary products and related jobs”.

So I look forward to Labour MPs forming a picket line at the airport waving “Cameron go home” placards.

Of course I think it is a good thing Cameron has been allowed to purchase land here. There are numerous way we may benefit from his presence in New Zealand.

Just as when Julian Robertson purchased rural land up north. Who would have thought that he would come to love this country so much (despite not being a citizen) that he would donate over $100 million of art to New Zealand galleries.

That is why I think the current test of “in the national interest” is the appropriate one rather than Labour’s highly restrictive criteria.

Tags: ,

Land sales

January 27th, 2012 at 10:00 am by David Farrar

The small circle represents the size of the Crafar farms at 8,000 hectares. The large circle represents the amount of land sold to foreign owners under the last Labour Government at 650,000 hectares.

Under Labour, the equivalent of the Crafar farms were sold each and every month they were in office.

 

Tags: ,