Kiwiblog

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.

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.

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.

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.

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.

Richard Meadows at Stuff reports:

Sir Michael Fay’s band of farmers has launched legal proceedings today in an ongoing battle to prevent the Crafar farms group from being sold to Chinese firm Shangai Pengxin.

Represented by legal heavyweights Alan Galbraith QC and Bell Gully, the group filed proceedings in the High Court at Wellington to try and get the Official Investment Office’s (OIO) recommendation to be made public. A final decision on the OIO recommendation will be made by Government because it involves sensitive land.

There is no chance of this court action succeeding, in my opinion. The legal action is being done as part of a PR strategy designed to allow Sir Michael to pick up the Crafar farms cheaply.

Fay is a very crafty investor and businessman who has made hundreds of millions out of cunning deals, and is cleverly manipulating Labour’s xenophobia and public opinion to get a a great bargain. Good luck to him with that, but let’s be clear about the motives.

Fay’s alternative purchase group comprises several trusts as well as Aitchison Farms, Donovan Group and Brent Cook. The group had offered $171.5 million for the 16 central and southern North Island dairy farms, which KordaMentha rejected as too low.

Pengxin, which applied to the OIO to buy the farms nine months ago, is the preferred bidder with an offer believed to be around $210m.

So the Fay group is trying to pick up the farms for $40m less than others are willing to pay. What a great bargain, and definitely worth spending a few hundred thousand on PR and law suits, to pressure the Government into making the receiver sell them the farms at a $40m discount.

And here is the interesting thing. If the Fay group do pick up the farms, they will not have any obligations or conditions around their purchase. In fact they will be at total liberty to sell the farms a few months later – including to foreign investors. If they sell them one farm at a time, there will be less of a hurdle with OIO approval, and they’ll make a very tidy profit. So the end result will be the farms end up (inevitably) with those willing to pay the most for them, but the extra $40 million goes to Sir Michael and colleagues rather than the existing owners of the farms.

You can see why Sir Michael is such a cunning businessman, who has made so much money. And good on him – nothing wrong with that. What I am less clear on is why Labour are so keen to help him make a $40m profit at the expense of the actual owners?

Stuff reports:

New Labour leader David Shearer will visit one of the 16 Crafar farms in Taupo today and is throwing down the gauntlet as the Government prepares to make a decision on the politically charged sale.

“We believe foreign investment should add value to New Zealand. We don’t believe this does,” Mr Shearer said yesterday on the eve of a two-day caucus retreat.

“It asks a fundamental question about who owns New Zealand.”

No it does not. Labour during their nine years in office approved the equivalent of the Crafar farms being sold to foreign owners every single month! Yes the Crafar farms are around 9,000 hectares and Labour approved 650,000 hectares – equal to 75 Crafar farms.

So this is not a huge chuck of NZ land. It is not a fundamental question on anything.

And the politicians often neglect to mention the rights of the owner to get the best price they can for their land. If the owners are forced to accept an inferior offer which is $40m less than their best offer, then those owners have $40m less to invest elsewhere. That $40m may have ended up capital for a couple of small businesses employing 100 people each. It may have been used to invest in an Australian company, hence bringing dividend flows back into NZ.

I should state my view on the Pengxin bid. It is:

1. Ministers should follow the recommendations of the Overseas Investment Office. If they recommend approval, they should approve it and if they recommend it is declined, they should decline it. Ministers should not over-rule decisions based on the law, because of a PR campaign by Sir Michael Fay and Labour.
2. The current criteria for approving purchases by foreign owners, being that it be in the national interest, seems sound to me. But I’m not against some modification to the criteria for future decisions – however they can not be retrospective, and hence the Pengxin bid should be judged on the current law, not what the law might be changed to.
3. The free trade agreement with China has been hugely beneficial to New Zealand. Our exports to China have soared in the last three years, and it has reduced our trade and current account deficits. The xenophobia against this bid has dangerous economic risks. We all know that if this was a British company bidding, it wouldn’t have had one tenth the publicity. It seems silly to spit in the face of our largest growing export market.
4. With regards to (3) this does not mean the bid should be accepted if the OIO say it does not meet the criteria set down under law. It means that the bid should be judged on its economic case, not on the colour of the skin of the proposed investors.

A few people are discussing whether Red Alert should be closed down. Just in case it is, I’ll respond now to a blog from Trevor Mallard on the Crafar farms:

And to make it clear, it is my view that there is no reason whatsoever to sell these farms offshore. To anyone.

That’s an interesting view, but that is like me having a view on who Sam Morgan should have sold Trade Me to. Labour do not own the Crafar farms. The Government does not own them. The taxpayers do not own them.

The reason the farms may be sold offshore is because someone offshore offered the owners more money for them.

Landcorp could probably hock off a couple of its non core farms and then buy Them all using its very strong balance sheet to raise debt finance for the balance.

Yes they could. And all they have to do is offer more money than any other bidder. Nice and simple, and that way the owners do not end up out of pocket, just so politicians feel better.

The Overseas Investment Act has criteria on which a sale to non-residents should or should not be approved. The Crafar farms are a small fraction of the farm land sold to non-residents and approved under the last Labour Government. One can have a sensible debate about amending the criteria, but a poling of banning all sales is just appealing to xenophobia and racism. I can guarantee you if it was an Australian farmer bidding for the farms, we’d be rolling out the welcome mat.

Labour has just said:

Why no answer on Crafar farms before election?

National is concealing its intention to sell off our farmland to foreign buyers well under the radar before the election, says Labour’s Economic Development and Associate Finance spokesperson David Parker.

“National is not just about selling our power companies, inevitably into foreign ownership,” David Parker said.

“It’s about selling productive farmland overseas as well.”

More hypocrisy in the hope that the media will not do any fact checking. Some facts:

1. Labour approved sales of more than 650,000 hectares of land to foreign owners when in Government. Yes 650,000 hectares – that is the equivalent of 75 Crafar farms. That work out to the Crafar farms every month. Yes, every month.
2. For the first 20 months of National (seeking latest data), the total amount of land sales to foreigners was 31,000 hectares. That is 1/4 the rate Labour approved sales at. Under 25%.
3. The National-led Government has already turned down one offer from foreign interests for the farms
4. The OIO office is independent from the Executive and Ministers can not direct them to delay a recommendation.

So just remember these facts. The last Labour Government (and every member of the current Labour front bench was a Minister in it) approved the sale of the equivalent of the Crafar Farms every single month for nine years. Under National the rate of approvals has fallen to under 25% that of Labour.

David Fisher reports in the HoS:

One of the country’s richest men has emerged as a white knight investor with a $105 million bid for big dairy farms that could otherwise be sold to China.

Sir Michael Fay has declared his interest in buying nine of the 16 farms once owned by Reporoa’s Alan Crafar.

This amuses me, as the sort of people who passionately don’t want Chinese interests buying the farms, tend to also passionately hate Sir Michael. If he turns out to be their white knight, it will be a bitter medicine for them.

Brian Gaynor writes:

The Government has to convince the public that these companies will remain majority Crown and New Zealand controlled. This should be easy to achieve because under the Takeovers Code, which wasn’t introduced until 2001, a shareholder must go from 19.99 per cent to 50.01 per cent in one step and this will be impossible to achieve if the Government has at least 50 per cent ownership.

So if I understand this correctly, even if NZers sell shares they buy to an overseas company (presumably for a higher price which means those Kiwi Mums and Dads have made a profit), no company could gain a 20% or greater stake.

Combine this with the liklihood that the NZ Super Fund will also buy significant stakes in the SOEs, and it will be harder for xenophobic opposition to be whipped up.

This won’t stop Labour trying though. Look at this blog post by Labour MP Damien O’Connor which demands the Government stop Asians from buying a private listed company – Wrightsons:

A recent announcement that Agria, an Asian company is applying to raise it’s stake in PGWrightsons from 19% to 51% is one more such move.

So Labour is now against Asians even being able to buy shares in a listed private company. At this rate, they will be able to merge with Winston First.

People must realize that the land is important but only part of our rural economy. The businesses that operate on and associated with it need also to be owned by us unless we are prepared to be servants to our future, not the owners of it.

The translation is that it is not enough that we keep our land out of Asian hands, but also our businesses.

I like how Damien talks about Wrightsons as if it is owned by the state. It is not. It is owned by private shareholders. And no one is forced to do business with it. If people don’t like its shareholders, they don’t have to deal with it.

Business Insider reports:

Peter Thiel, famous for making billions off Facebook, tells us he’s finally found “utopia” – New Zealand.

Thiel has been investing heavily in the country.

He’s already made two noteworthy venture investments there in the space of a few months. In October 2010, he invested $3 million in online accounting firm Xero, which is based (and publicly traded) in New Zealand. Then he invested $4 million in Pacific Fiber, an ambitious company that is building a fiber-optic cable from Australia to New Zealand to the US and is raising $300-400 million more to do so.

I’m a fan (and share holder) of Xero, and a fan of Pacific Fibre. I want them to suceed. But they need to attract capital to do so, and not enough capital exists in NZ.

 

These investments aren’t just one-offs. Thiel has set up a local venture firm called Valar Ventures. Valar Ventures LP was registered in New Zealand in July 2009, more than a year before Thiel’s first known New Zealand investment, and is managed by Valar Capital Management LLC, based in San Francisco, according to official records. Valar Ventures LP’s offices are at prominent New Zealand law firm Bell Gully, which suggests it doesn’t have full time staff yet. Peter Thiel founded two other companies in New Zealand: Second Star Limited, where he is sole shareholder, and Silverarc Advisors. …

Here’s a thought: maybe Peter Thiel wants to turn New Zealand into the next Silicon Valley. Or maybe even the libertarian utopia of his dreams.

Investing in a huge undersea fiber optic cable is typically a safe, low-return investment, which isn’t the kind of investments Thiel goes after. But bringing high speed internet into New Zealand would be a first step to turning the country into a new Silicon Valley.

The name of Thiel’s firm Valar Ventures comes from J.R.R. Tolkien’s Lord of the Rings universe. Thiel is a huge Tolkien fan and the Lord of the Rings movies were filmed in New Zealand. In Tolkien’s legendarium, the Valar are deities who created the world of Middle-Earth (portrayed by New Zealand in the movies) and then descended on it to help nurture its infancy and development.

Reached about this idea, Thiel said: “New Zealand is already utopia.  But Silicon Valley and New Zealand can learn a lot from each other, and we want to help make that happen.” So Thiel is clearly in it for the long run.

So when Labour and Winston First rail against foreign investment, think about this article and the fact we should be celebrating that someone like Thiel wants to invest in NZ.

Adam Bennett reports in the Herald:

The Government has turned down Hong Kong listed Natural Dairy NZ’s controversial bid to buy the Crafar dairy farms.

Land Information Minister Maurice Williamson and Conservation Minister Kate Wilkinson said they had declined Natural Dairy’s Overseas Investment Office application to buy the 16 farms from receivers in a deal thought to be worth about $200 million. …

“We concur with the Overseas Investment Office’s recommendation that consent should be declined,” the Ministers said.

Not exactly a surprise. It will be interesting to see what the receivers now do.

Adam Bennett in the Herald reports:

Prime Minister John Key has met with the Auckland-based Save the Farms group to discuss their concerns around farm sales to foreigners and says their proposed controls are “pretty hardcore” and more suited to North Korea than New Zealand. …

Later Mr Key told the meeting he had met with the Save The Farms group at their request and he believed it was not well understood what they were proposing.

The group wanted a ban on all sales and leases of farmland, orchards and vineyards to foreigners and constraints on forest ownership.

“It is pretty hardcore. Putting it bluntly I don’t think any country has that level of prohibition – maybe North Korea.”

While John McKearney who was backing Save Our Farms was “probably well intentioned” Mr Key noted he was a a property developer who had prospered by selling buildings to foreigners.

Hilarious.

What interests me about the Save Our Farms group, is whether any of them actually own farms? You see generally those who actually own the farms don’t want the state telling them they can not sell to the highest bidder. They are the ones who lose out – the current farm owners.

Mr Key yesterday addressed Federated Farmers National Council meeting in Wellington where president Don Nicolson had earlier given a speech railing against Save The Farms.

Mr Nicolson said the group’s stance “reeks of hypocrisy” given the residential sector carried $192 billion in debt, whereas the agriculture sector’s debt was just $47 billion.

“So I ask why just save our farms and not save our homes too?”
“When I see a Remuera property developer part of this group, I have my doubts about the purity of their motives.”

You go Don. Too right.

Of course Labour have joined Save Our Farms in advocating North Korean policies. Labour are effectively going from having approved 600,000 heactares of land sales to saying they will not approve any sales at all. Have those guys never heard of a happy medium rather than bouncing from one extreme to another?

As Labour retreats to 1970s protectionism, Gareth Morgan points out the consequences:

If foreigners can’t use New Zealand dollars to buy New Zealand assets why would they be willing to hold New Zealand dollars? …

Foreigners who sell us the imports we covet don’t really want to be paid in our quaint currency. So a pass-the- parcel process occurs until some foreigner is found who will either extend us credit (by holding our Reserve Bank’s IOUs) or buys one of our assets, thus giving us the foreign currency to buy those imports we crave.

So what happens when you try and stop foreign investment?

Ban foreigners from buying our assets, though, and there certainly will be a sharp shock to the system.

If foreigners can’t use New Zealand dollars to buy New Zealand assets why would they be willing to hold New Zealand dollars?

Those dollars would become like debentures in just another New Zealand finance company, in quick time worth much less than their face value – in effect the kiwi would cease to have any asset backing. It would fall and that would deter further lending from overseas. …

A prohibition of land and business sales to foreigners would be one solution – it would drive down the currency and scare off foreign lenders and investors. Argentina is currently banning greater exports of its beef despite huge international prices, simply because they want to eat it themselves and at cheap prices.

I can’t imagine how that might do anything but damage the supply of Argentine beef but it shows these sorts of whacky interventions are not unheard of. Ban land sales to foreigners but expect lower incomes as a result.

Lower incomes and even lower purchasing power as a falling dollar will push up the prices of many goods.

I have a financial interest in a dairy farm and processing factory in Brazil. For that economy such foreign investment brings growth and jobs – and milk it would otherwise have to import.

It sees also a technology transfer from New Zealand to another country – the real worth after all in our dairy industry lies in the decades of intellectual capital, productivity and technology that we have been silly enough to roll up into our per hectare land price. The benefit to New Zealand from that activity is significant as well – an inflow of profits we wouldn’t otherwise have.

If instead I’d invested in dairying in New Zealand I would simply have pushed land prices up and, I’m reasonably sure, have made less money. So it’s being argued by the xenophobes that a win-win for New Zealand and Brazil is worse than if I’d spent my money developing a farm up the slopes of the Southern Alps.

Get real. Foreign investment is how countries develop.

Remember that every transaction needs a willing seller and a willing buyer. If you ban sellers from being able to sell to the highest bidder, you are reducing the value of farms to their current farmers. The PM has also pointed out that this may push the value of the farm below the equity in it – ie banks will be more likely to bankrupt struggling farmers under Labour’s policy.

The NZ Herald editorial:

Now, it says it would turn down big land sales to overseas buyers except in exceptional circumstances. That means Mr Goff, who was involved in many free trade deals, is overseeing a policy that would, for example, have big implications for the reciprocal provisions of the Closer Economic Relations agreement with Australia.

Labour’s policy is at a minimum against the spirit of CER, and is likely to kill off all the current work underway about further removing barriers between the two economies. It may well result in counter measures from Australia. If NZ bans Aussies from being able to buy land in NZ, then Australia may decide to end having an open labour market with New Zealand.

Unfortunately, this particular change, like the plan to axe GST on fresh fruit and vegetables, can be explained only in terms of populist appeal.

Populist and xenophobic.  They have stolen Winston’s policies. Next I suspect they will start to rail against immigrants.

Despite its claims, its policy would be governed by the prevailing fancy, not what is best for the country in terms of economic benefit. A subject as vital as foreign investment is in danger of losing a foundation of sound and consistent principle.

That is too harsh. The sound and consistent policy is the desire for election. Not that Labour is alone there – National is also in danger of being seen to weaken a principle based policy for a populist policy in this area.

I seriously wonder if Phil Goff believes a word of what he is promising. How can the man who was an enthusiastic backers of the 1980s reforms, really sincerely believe his rhetoric about putting up barriers to investment. How can the zealous trade minister who signed trade and investments deals galore, now be advocating policies that undermine them?

The Herald reports:

Labour has made a dramatic turnaround on its foreign investment policy, and now says it will turn down big land sales to overseas buyers except in exceptional circumstances. …

“Labour will reverse the current approach to overseas sales of land,” he said at the party’s annual conference in Auckland.“Instead of the overwhelming majority of farm sales being approved, the overwhelming majority will be declined.”

So he sat in a Cabinet which sold 650,000 hectares without blinking one’s eyes, yet he is now worried about a relatively small 31,000 hectares sold since the election?

Guyon Espiner exposed some of the problems in Goff’s massive shift to the left on Q+A. Goff seemed unaware his policy would be in breach of signed agreements with Australia.

The Herald has reported on a poll done by Curia for Natural Dairy, who are bidding to buy the Crafar farms.  They have placed online the full results.

The results were pretty interesting. There were three main things we were trying to ascertain:

1. The instinctive view of foreign ownership of farms
2. How that view may change under various scenarios
3. Whether the nationality of the foreign owner matters

The answer to (1) was pretty clear cut. 65% said that farms should only be able to be sold to NZ residents, with only 28% disagreeing.

With (2) three different scenarios were put about only employing NZ workers, paying tax in New Zealand and increasing exports. All of them reduce the level of opposition to some degree. Only 40% said the location of the owner matters if only NZ workers are employed. On the tax issue, only 42% said the location of the owner matters if tax is paid in NZ. But 52% would still be against foreign ownership even if the extra investment could triple output and exports.

So it showed that the level of opposition can reduce under various scenarios, but it still remains controversial.

The final aspect was finding out the level of comfort or discomfort based on the nationality of the intended buyer. In an ideal world, there would be no difference. So the first thing I looked for is how many people said they had the same level of comfort or discomfort for all five nationalities. It didn’t matter whether they were hostile to all five, or relaxed about all five – it was whether they treated them the same.

Only 42% rated all nationalities the same. 58% said that their level of comfort or discomfort varies by nationality.

We used a five point scale. If you define the net comfort result as the two most comfortable response options less the two most uncomfortable response options, then the net comfort results were:

1. Australian +31%
2. British +16%
3. American +1%
4. French -9%
5. Chinese -25%

This suggest to me that Maurice was not entirely incorrect when he said some opposition to foreign investment is fueled by racism. Certainly not all of it,m but for a fair few people, they are happy to have foreigners own NZ farms – so long as they are Australian and British, not Chinese.

Fuck they are getting more desperate. The latest in the Dom Post:

Labour is set to ratchet up the debate over sales of land to foreign investors, with figures showing the equivalent of 122 rugby fields of Kiwi farmland are approved for sale to foreign investors each day.

I assume that a rugby field is around equal to a hectare. So NZ has around 27  million rugby fields to sell. Over a year (assuming working days) that is 30 hectares sold, or around 0.1% of total land.

Over a decade, that would be a massive 1% sold. Oh fuck, how the hell would we cope with only the remaining 99%?

Even worse, by the year 3000 all the land may be gone. Well, only if you ignore that those overseas purchasers also sell their land eventually – sometimes back to NZ owners.

And in the past five years, 219 of the 222 applications lodged for a foreign purchase have been approved.

“Let’s send a clear message: We welcome your investment, but there are some things we don’t want your investment in and land is one of those,” Labour leader Phil Goff said.

Past five years? Hmmn. Who was in Government for most of that time? In fact who was the Minister in charge of promoting foreign investment into New Zealand? One Phil Goff?

Is there anything he will not turn his back on, in a desperate bid for relevance? Does he actually have a single core belief?

Labour sold NZ land at the rate of almost 300 rugby fields a working day – at three times the rate of sales under National.

So when exactly did Phil Goff decide this was wrong? When he was out there as Trade Minister encouraging foreign purchases of land?

Can he point to some memos he wrote as a Minister, pleading with his colleagues to clamp down on land sales?

Some 158,588 hectares was approved for sale – equivalent to about 591ha a week or 122 rugby fields every day since July 2005.

Of that 160,000 hectares Phil sold 130,000 of it, and National has sold just 30,000. Actually the land owners sold it, so talking about the Governments that approved it.

Also under Labour, Canadian pop star Shania Twain was allowed to buy 24,731 hectares of high country near Wanaka. Mr Goff admitted he was uncomfortable with the 2005 sale to Twain, although it had included many conditions and some sweeteners for the country

Really – prove it? Where are your memos and file notes, expressing your discomfort and arguing against it?

What did Phil Goff say yesterday about National’s changes to policy on foreign ownership of land:

Labour leader Phil Goff said it was a half-hearted effort that did practically nothing.

“It will do nothing to discourage the increasing foreign ownership of New Zealand land.”

Now I wonder how much actual land has been sold under National. According to Maurice Williamson it is 31,000 hectares or 310 square kms. That is an average of around 20,000 hectares a year.

And how much land was sold under Labour to foreign owners?

Over nine years, you would expect it be 180,000 hectares, if at the same rate.  In fact it was a massive 650,000 hectares!!!

Now personally I think it is a good thing Labour allowed NZ land owners to sell their land to the highest bidder, rather than be forced to accept lower bids.

But the hypocrisy is just staggering.

In a profile on new UK Labour Leader Ed Milliband, The Independent said:

He is soft, cuddly and panders to every oppositional instinct in the party. There has been no position taken by the Labour Government of which he was a member that he was not prepared to trash if he thought Labour members would like it.

Is that not a perfect description of Phil Goff?

• One of the architects of GST campaigning against it
• One of the architects of our inflation focused monetary policy campaigning against it
• One of the Ministers who reaped $3b in profits from state power companies at a time of massive surpluses, now campaigning for them to be lower despite the record deficits
• One of the Ministers who refused time after time to reduce the blood alcohol limit, not campaigning for it to lower
• One of the Ministers who sold 650,000 hectares of land to foreigners, campaigning against 30,000 hectares of sales.

Someone should compile a fuller list of these. Feel free to add others to the comments.

The Herald editorial:

According to the Finance Minister, overseas investment regulations to be introduced in December will “provide extra clarity and certainty for potential investors”. More likely it will produce doubt and confusion.

The only thing more certain, is that Ministers are more likely to interfere if the political heat gets too much.

The regulations are an invitation for pressure groups to create as much fuss as possible to get the ministerial thumbs-down for what may well be desirable bids in terms of efficiency and economic benefit. Some opposition may be driven by xenophobia; others may not wish land sold to any overseas interests, whether they are Canadian or Chinese. Clearly, there will now be added uncertainty. Overseas investment policy, rather than being based on a clear set of principles that are applied without fear or favour and that recognise the limits on foreign control, will be hostage to the ministerial pen. …

Overseas investment, like immigration, has always been a key driver of the New Zealand economy. It also is far too important to be hostage to ad hoc politicking.

What people always forget, is that when you ban land owners from selling to the highest bidder, you are reducing their net wealth – and reducing the amount of money they may have to invest in other ventures.

Bill English 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 foreign investment 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.

Stuff reports:

An average of 82 hectares of agricultural land per day has been approved for sale to offshore investors, pushing the Government close to deciding on rules to tighten farm sales to foreigners.

Prime Minister John Key says the figures prove “significant foreign purchases” have taken place. The lion’s share of investment has come from the United States, the United Kingdom and elsewhere in Europe.

Key yesterday held talks with Finance Minister Bill English on possible changes to the Overseas Investment Act to protect farms.

“I think we’re making progress in this area,” Key said.

“My concern is about what I see potentially unfolding and that is quite large tracts of New Zealand land coming available for sale rapidly and the consolidation of those farms in foreign hands and whether that’s in New Zealand’s best interests, and my view is, it’s not.”

Foreign investment is generally beneficial to New Zealand. If you restrict foreign owners from purchasing land in NZ, there are two potential negative impacts:

1. The current owner of the land is unable to sell the land for as much as they otherwise would have got. This means less wealth in NZ.
2. The foreign owner of the land, as they valued it more highly, may be able to put it to better economic use (as they need higher returns to cover the higher capital) and this can contribute to a more efficient economy.

The Herald says:

John Key struck an odd note when he observed last week that he would be concerned if large tracts of New Zealand land were being sold to foreign investors. “Looking four, five, 10 years into the future, I’d hate to see New Zealanders as tenants in their own country, and that is a risk, I think, if we sell out our entire productive base, so that’s something the Government will have to consider,” he said.

Was this the same Prime Minister who, two months ago, reprimanded his Agriculture Minister for saying the sale of the Crafar family farms to a Chinese company was unlikely to go through? Mr Key has obviously discerned a groundswell of concern about such sales. Yet, as a Weekend Herald investigation revealed, we are already selling large tracts to overseas investors.

Minister Carter’s comments were about a specific sale going through the regulatory process, while the PM has been talking more generally.

Foreign investment involving agricultural land more than twice the size of Auckland City has won regulatory approval over the past five years.

That’s 150,000 hectares which is around 0.6% of total NZ land area.

First, New Zealanders can buy land in most regions, and have done so in the Americas, Australia, South Africa and Europe. Secondly, and most apposite, foreign investment has always been a driver of this country’s economy. Banning the sale of farm land would send entirely the wrong message to potential investors. Thirdly, placing restrictions on such investments is always apt to create considerable difficulties in terms of boundaries and interpretation.

As it is, non-urban land of five hectares or more is deemed sensitive, and applicants must refer their bids to the Overseas Investment Office. It must consider criteria including relevant business experience, financial commitment to the investment and good character. The office decides about 75 per cent of applications, but all those for sensitive land must go to the Ministers of Finance and Land Information. In the end, they must balance the protection of sensitive assets with the need to encourage investment.

I see foreign investment similar to immigration. Both are generally very positive for New Zealand and economic growth. But both need a regulatory pipe which can determine the speed, so it is sustainable. A net migration of 10,000 people a year is good. If you increased it to 100,000 a year it would be bad as our infrastructure could not cope.

Likewise foreign investment is good, but that doesn’t mean one would want to sell off say 50% of farm land in a year.

The contribution to the economy of efficient foreign or multinational ownership has, rightly, been the paramount concern. Indeed, the Government’s confidence in the system has seen it delegating more authority to the Overseas Investment Office. Mr Key may have been stricken by sudden doubt, but there seems no reason for dramatic change. Those spreading wildly alarmist sentiment misunderstand the factors underpinning this country’s farming success story.

I agree dramatic change is not needed.

Vernon Small reports:

The Labour Party is opening the door to policy change, including taking GST off food and clamping down on foreigners buying farms.

Phil Goff is trying to go to the left of Helen Clark. Taking GST off food is a daft idea. Mind you McDonalds will think it is a great policy.

And it is vital we must stop farmers from being able to sell their farms. Imagine if a foreigner buys a farm. One minute it is sitting there in the Waikato, and suddenly the foreigner has packed the farm up and moved it overseas. The dirt, the grass, the cows, the sheds – all gone. Just a big chasm left in the earth.

I wonder if Winston will sue Phil for stealing his policies? I mean they already share major funders, so sharing policies is next logical step. Maybe their shared name can be Labour First.

A reader writes:

The truly pavlovian response by the media to the statement yesterday about changes to overseas investment rules, makes me marvel that we have any decent public policies in NZ.

The English statement today sets out facts that competent journalists would have worked out for themselves, if they were professional and not dependent on recycling statements from politicians and others with little or no interest in the truth. Their coverage has been truly pathetic.

The statement the reader refers to is this:

Removing the strategic asset test from the overseas investment rules will reduce confusion and uncertainty for investors but will have little other practical effect, Finance Minister Bill English says.

“The strategic asset test has never been used to block a sale by any government in this country,” Mr English told the Shareholders Association Annual Conference in Wellington today.

So a never used ill defined test is going, and this got the headlines about everything for sale.

“Contrary to Labour’s spin, it did not use this test to block the sale of Auckland Airport. Instead it relied on nine existing criteria in the rules relating to the sale of sensitive land. They were applied as part of the normal screening process.

Yet many media reported that this test was used to block the sale.