By Bernard Hickey
With 46 days until the September 20 election, here's my daily round-up of political news from in and around Wellington on Tuesday August 5, including Prime Minister John Key's accusation that Labour and New Zealand First were inconsistent opponents of the sale of Lochinver Station to Shanghai Pengxin and Labour Finance Spokesman David Parker's pledge that a Labour Government would ban sales of land to overseas buyers in almost all cases.
Key was questioned about the sale of Lochinver to Shanghai Pengxin at his post-cabinet news conference, including whether National would block the sale after the election to win the support of New Zealand First Leader Winston Peters, who said over the weekend a ban on such sales was a bottom line in any such government-forming talks.
Key said it would be difficult for the Government to block the bid, which was now subject to an Overseas Investment Office process under Overseas Investment Act, which was tightened in 2010 to include tests that require any overseas buyer to demonstrate wider economic benefits.
"I don't think you can just say: we don't like you because you're from China or we don't like you because we need to stitch up a political deal with another party," Key said.
"You actually have to have a reason in law. There's a cover-all provision in the Act, which gives ministers some flexibility," he said. "But, we as a government try to be both predictable and consistent and I think that's really important when it comes to foreign investors. They actually underpin hundreds of thousands of jobs."
Key criticised the opposition of Labour and New Zealand First to the deal, given they supported the 2007 approval of a sale to an overseas buyer of the 6,500 ha Poronui Station that neighbours Lochinver Station.
"The opposition parties, particularly Labour and New Zealand First, could answer the question: 'If it was OK back in 2007, why is it not OK for the station that's right next door today?'," he said, adding that the National Government had approved land sales to foreign buyers at half the rate of the previous Labour Government.
The March 2007 announcement by then Finance Minister Michael Cullen and Land Information Minister David Parker noted that the sale was from one overseas owner to another, and included the transfer of river-beds for the Mohaka and Taharua rivers to the Crown, and a guarantee of legal access to rivers to the public.
Key also pointed to a lack of opposition when US movie director James Cameron bought land in the Wairarapa.
"I didn't see the Opposition parties screaming from the rooftops that James Cameron shouldn't be welcomed to New Zealand and shouldn't be able to buy those properties," he said.
'Don't spook foreign capital'
Key also said politicians should be careful in an election campaign not to discourage foreign investors.
"We've all got to be a little bit careful in an election period that we don't lose sight of the fact New Zealand imports a fair bit of capital and needs it," he said.
He said politicians should be thoughtful about suggesting bans, given the complications around land ownership under other assets such as warehouses.
"This thing is a minefield when you start getting into defining all of this stuff."
He said Lochinver was a big station, but only a relatively small percentage of New Zealand's land mass had been sold to overseas owners. He pointed to a Sunday Star Times article that suggested the amount was less than 1% of New Zealand's land mass.
"If there was a really serious run on New Zealand land, that would be unacceptable to most New Zealanders. If we were the Government, we would act to try and slow that down. We've been allowing sales of land at a much slower rate than Labour ever did in the last five or six years of their Government," Key said.
He was then asked what levels of buying would suggest a 'run'.
"It would be where we got to a level where people intuitively felt it was extremely frequent event which was challenging New Zealand's ownership of its underlying land," he said.
National register?
Key also downplayed a suggestion from Federated Farmers that the Government create a register of foreign land ownership.
He said a register already effectively existed because overseas buyers had to apply to the OIO for parcels over 4.5 ha, although he also noted that overseas owners selling to local owners did not have to declare the sale.
"The bottom line is I don't think anyone could claim at the moment that we have an amount that is making New Zealanders tenants in their own land, but it's one of those things that you constantly monitor," he said.
"Overall, that number is very low, and overall New Zealand has tended to benefit from it," pointing to the ownership by Julian Robertson of golf resorts at Kauri Cliffs in Northland and at Cape Kidnappers in the Hawkes Bay.
Labour would ban almost all sales
Labour Finance Spokesman David Parker said sales of land to overseas owners would be banned by a Labour Government in "all but the rarest of cases."
"New Zealanders are sick of seeing their farms and homes sold to overseas buyers with the profits and opportunities going offshore. No overseas person has the right to buy our land," he said.
"Changing who owns what already exists does nothing to increase New Zealand’s output. It just sells off New Zealand’s profit stream and kills off the Kiwi dream of owning our farms and homes," he said.
“Labour will reverse the current approach so that overseas buyers of rural land will have to prove they will create more jobs and exports than any New Zealand investor. We will also limit the discretion of the minister to ignore recommendations from the Overseas Investment Office. Labour will also restrict sales of residential homes to any non-residents unless they intend to move here, helping to keep the Kiwi home ownership dream alive, especially for young New Zealanders currently locked out of the housing market."
See all my previous election diaries here.
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46 Comments
How does Globilisation work in a recession. Our dairy prices keep dropping. So do we sell our good dairy land to foreigners cheap??? This is madness, There must be restrictions on overseas investment. So that our own companies can benefit from changes in market prices. These policies are not good for NZ..
What signal is John Key sending to the property market? Buy land quick before the foreigners get it! And he wonders why the Auckland property market is out of control. Key has got it all wrong. Selling land and businesses to the "rich" could come back and bite us . Many of these businesses are not economic and are hobbies for the super rich . The wine industry is an example of this. I know someone who works for a rich foreigner on his New Zealand vineyard. The wages he receives are more than the gross annual sales for the business! (He is one of four staff). It's not a real business, it's a hobby for a rich person. So the danger of this,as I see it as , many of us won't have proper jobs, we'll just be wiping the bums of rich people. James Cameron's farm is another example of this. Some one told me the other day they were going to stop milking cows and grow organic vegetables. The person remarked that it was a nice idea but wouldn't make money, but that James Cameron didn't care. So we'll be training in jobs that don't make money? What's going to happen when there is a global recession and the rich give up their hobbies? We shouldn't be encouraging these sorts of investments from flakey super rich people.
So John K. will wait until something becomes "too much" and then may do something,meanwhile rape and pillage and do your worst fellow global traders.
This is not money trading John,it`s birthright stuff.If any person or company wants to buy NZ land then have them take up NZ citizenship , if they`re suitable immigrants, and show their loyalty to NZ.
Maybe we as a country lose a little ,but we gain so much more..The wars our parents fought to stop fascism will be for nought if we don`t stand up on this issue.
Kinda hypocritical for James and his wife to own a dairy farm when they only eat plants and no dairy. So it has to go.
http://www.rawstory.com/rs/2014/07/04/james-cameron-and-wife-to-launch-…
"difficult for the Government to block the bid, "...."I don't think you can just say":....... "This thing is a minefield when you start getting into defining all of this stuff" ..... "where people intuitively felt it was extremely frequent event ...I don't think anyone could claim at the moment.....
What a lot of waffle. Is he deliberately trying to hand brake harry the facts? I can just see him smirking as he says all this. National needs to show some leadership here. The market just does not know what is really happening. Create a register, get some real facts on the table. With all their bureacrats can no one can manage to get these details? National has resisted this for their whole term so what are they hiding? Perhaps Labour are no better but National is the government and at the moment Key's legacy seems to be the Asiafucation of NZ.
And for gods sake explain satisfactorily to ol thicko me how all these foreigners buying up NZ increase jobs. Surely a kiwi owned these parcels before and employed just as many people - well apart from the examples above of Cameron and the vineyard. Its like the black magic of the money spent on the rugby world cup that supposedly generated billions for NZ..........
It's the difference between knowing something and understanding it. People think they "know" something by producing facts and figures, understanding is something far more complex, but is in some ways far more important as it can look forward whereas facts and figures really only look backward
Are you going to try and tell me that pumice land is not extremely free draining and if not are you then going to try and tell me that only water drains from it.
Why were restrictions placed on cow numbers around Lake Taupo?
And last but not least, does every scrap of land HAVE to be converted to dairying
As I said earlier, if pumice in its raw state it is free draining. Once it has been farmed on for a while, humus and compost build up in the soil and it changes. Yes, only water does drain from it - it contains all sorts of nutrients. More to the point is how far down are the underground aquafiers. Read the court case that Glen Crafar won against his prosecution by Environment Waikato. This very thing was central to the case.
We farmed on land opposite the Te Rapa Dairy factory back in the early 80's, that soil was more free draining than our farm in the Central Plateau.
Restrictions were not placed on cow numbers per se, they were placed on nutrient leaching - quite a different thing. There are more dairy cows around lake Taupo now after the restrictions came in than before.
Ask the farmers selling out to dairy why they do it.
Here's some stats;
http://www.odt.co.nz/news/business/306226/foreign-buyers-still-market
And there was this high profile one by the Fed Farmers dairy chairman;
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=111…
No foreigner can remove the land from NZ which also means that it can be bought again by a local at some point of time in the future.
In the meantime they have to show that the investment benefits the economy and provides jobs for locals. The land can not be used for some development or other without a raft of government agencies having their say so, which probably means that this particualr one will stay a farm forever.
The money they spend is paid to, in most cases, a local who can if he/she sees fit invest it again in the local economy or invest overseas to further the local economy or that of another country. Even if they just put it in the bank it will help the local economy.
By the way, where do you or your forebears come from.
Get real people, we need foreign investment to grow the economy, the naysayers now are also the ones who will say next week that they want better jobs, higher wages etc. We are better off to sell land to a "foreigner" and what has to stay in the country by it's very nature then a company which is then moved overseas resulting in job losses here.
Can't grow NZ Inc without the foreign capital just like the company you work for can't grow without attracting capital, local money or otherwise.
And if you do live off your taxpaying neighbours you rely on them continuing to be able to pay tax or you will face a cut in benefit, no matter which party is the political flavour of the election.
No foreigner can remove the land from NZ which also means that it can be bought again by a local at some point of time in the future.
I doubt China is going to sell the land. They're much more likely to keep any land they acquire indefinitely as their culture places strong value on ownership of such. Should NZ ever want to regain control of it I'd be highly surprised if China doesn't use economic or military measures to ensure their ongoing ownership. That land is as good as theirs.
Good on them for looking after number one I suppose.
A couple of points Jake. Farming is'nt a high wages industry. I don't see that changing with foreign investment. I don't see how a farm that has been well run Like Lochinvar can really benefit from foreign investment . I don't see the benefit for NZ. All I can see is the benefit for the Chinese . It's a great farm. A blue chip property.(that's why people are getting upset about it).Our loss their gain.
Does anyone seriously think that foreigners are buying farms in order to make nice in NZ, sorry but it is to make dollars, and all this money that particulary Shanghai Pengxin (I am singling them out because of the state the Crafar farms were in) I believe has not shown any return, in fact, it may very much be the opposite. You now have to ask yourself why are they so prepared to spend all this money, even buy another huge farm and not rule out even more.
There can only be one reason and that is the end game, something Chinese play very well. The end game is the whole vertical integration thing, and you'd have to be crazy to think that is being done to benefit NZ.
I find it really concerning that just about every aspect of food production is going into the hands of huge corporations and I do have to count Fonterra in there. I see they are cosied up to Nestle in South America. Truly, I wanted to be sick reading that, as Nestle would have to be the prime example of why giant corporations need to be totally wiped out.
I kind of like the idea of James Cameron turning his land over vege growing. At least it might supplant the Hawkes Bay land that will see all its orchards dug up and the land going into dairying once the Ruataniwha dam is in action.
Yes I am extremely uncomfortable with foreign ownership of land, but most concerned about this whole corporatization of everything, to me, the end game of that is no better than having to live in a totalitarian state. I do not want to be forced to buy imported food and avoid it wherever I can. You cannot imagine how difficult it is to avoid palm oil. I now pay a premium for Lewis Rd Creamery milk as they do not use PKE. Those sorts of options are getting fewer and further between. I am reduced to one brand of soap so that I can avoid sodium palmate. There are many things that I simply have no idea if palm oil is used or not. This is just an example of how I feel about some things.
Now, I even need to familiarize myself with every products that was Goodman Fielders now that the world's largest palm oil processor has bought it.
We are getting less and less say about the shape our world will take but far too few people can see that it is not just governments that control our lives. We are getting further and further away from our own footprints in places like rainforests, out of sight out of mind.
For me, it is all linked, and I really really think we have to consider what sort of world we want our descendents to live in.
So from that you can deduce that I may be more concerne about Shanghai Pengxin than some other sales to foregners but the reason is not simply because they are Chinese, it is most definitely because they are big, and big, I believe is truly the enemy of the entire planet
raegun
keep your eye on this one too
Van Diemen’s Land in $170m dairy arm sell-off by New Zealand firm
Van Diemen’s Land Company, considered Australia’s biggest dairy operation, is owned by New Zealand’s New Plymouth District Council
Among prospective buyers is a "consortium" that includes New Zealand’s Fonterra and the Chinese Government-owned China Investment Corporation
http://www.themercury.com.au/news/tasmania/iconic-tasmanian-company-van….
No company or individual invests anything, anywhere if not to make a profit.
That is from money as deposit in the bank to buying a company or farmland.
And of course there is always the risk of it turning into a loss. The higher the proposed return the bigger the risk.
With 7 billion of us going up to 9 we are sadly a bit beyond living locally and the don't bother us attitude. A severe population reduction may be able to get us back to all natural.
Who is first to put their hand up to do their bit preventing further over population? But I guess microbes will start to sort that out properly in the near future.
Once that is sorted we can all go back to owning our own 20 odd acres to survice and live up to the ripe old age of 42.
The current way of life may not be the most perfect but I do think it beats the way it was 500 years ago in all aspects of life
It is not as simple as less people, lower life span, in fact with all our comparitively rich living and eating ways, eating the junk produced by the corporations, we are looking down the barrel of going backwards in those terms.
Yes, eventually, nature will do something about our overpopulation of the planet, but boy oh boy, for all of our intelligence, ability to know that resources are finite, along with really effective birth control, you would think we could do this ourselves in an orderly manner, wouldn't you. So from that, I am prepared to deduce that alhough we may live longer it is only so we can be stupid for a greater length of time. The problem is, for me, that it is not in the interests of big business to be dealing with falling populations. I could fill pages with reasons why I think that, but anyone with an ounce of nous should be able to figure most of it out for themselves.
I don't really want to have to say to our grankids, oh sorry about the world's wild places, they kinda got in our way, soooooooo, we just had to get rid of them
The longest life spans we will look back an see went to those who live through the deprived, make do era of the mid 20th century
I will vote for whatever party is prepared to pop its head above the parapet and at least put population control on the agenda. The Greens are gingerly going that way.
4) Using banalities like, well Labour (supposedly) let more foreign ownership to happen than us, is below the level of the position of Prime Minister. How many ways is that childish and stupid?
He started first..............It wasn't my idea............well we lost it all, but the other guy did worse than me...........Well everyone else was doing it....................and on and on.
LOL. Is this not the underlying MO of fund managers operating the tracker/index model of pension investment?
How is it possible for voters to discern where the difference lies - hence the growing trend of low election turnouts by eligible voters.
My God it’s sad to see so much xenophobic economically literate commentary here no wonder popularist parasite politicians like Peters manages to readily find an audience.
In the same breath as Peters condemns the sale he says this sort of thing excludes young farmers from getting a start really what utter BS.
How many buyers do people seriously think exist for a property like Lochinver Station it has a rateable value of $70m if the Chinese are foolish enough to pay that much for let them
The owners the Stevens group intend to reinvest to proceeds into other job creating businesses
How many buyers do people seriously think exist for a property like Lochinver Station it has a rateable value of $70m if the Chinese are foolish enough to pay that much for let them
Chump change where I used to work.
But we don't need greater fools getting involved with our only chance of paying for some portion of our extravagant import needs.
The owners the Stevens group intend to reinvest to proceeds into other job creating businesses
They have taken their capital gains, but aren't going to use them where they give the best return (likely either speculation, finance or through the introducion of labour saving technologies)?
No, they are apparently going to put it into job creating businesses.
I doubt their shareholders will be happy. But why would they or I believe the group's stated intention?
They are going to develop 220 ha. of their 360 ha. South Drury quarrying site into an industrial site ... they estimate that 8000 jobs will be created in the mix of factories , warehousing , and other industrial uses ... this will free up land closer to Auckland city for housing projects as more industrial companies move south to Drury ....
... as their spokesman said , the group are not really farmers , they're focused on concrete production and quarrying ...
.... good for you , Colin ... where were these complainers when Americans ( Julian Robertson / Shania Twain / Harvard Endowment Fund ) , Germans , Russians , and Luxemburgians were buying up large tracts of our farm land ?
Dairy prices are herding down at a quick rate of knots , the boom is receding , I'm amazed at the poor timing of the Shanghai Penguins to buy the property for top dollar at this time ....
... in 5 years or so , the current advantage NZ dairying has over it's competitors will have dissipated , unless we keep moving smarter ...
We were there, don't you worry, right back to the sale to foreigners of Walter Peak the only difference was we only had the pub leaner to complain about, and there are some differences as well
I also recall, I think that Shania Twain initially, anyway, leased the land she had
Actually, given the continuing falls in dairy prices, it will probably be the Kiwis who come out on top here. "We" get their too high prices, "they" get an asset they will find it hard to earn a decent return on.
In a few years, I bet NZers will be buying these farms back at a discount. A 'win' for us. Its a cycle we have seen before.
It might be different if the foreign buyers were paying low prices, but they aren't. They are giving us top dollar for an asset they can't remove, at a time prices are falling. All I see is great timing by Kiwis. (And we don't lose the power to regulate.)
How much do you want to bet? I bet you that Pengxin will vertically intergrate and export NZ product for a far higher price than any NZ processor.
What are the benefits to NZ again of foreign ownership of our natural resources? Are they going to employ more people, pay higher wages, and show us a thing or two about farming productivity? More chance of transforming the Auckland waterfront into a world class university and exporting our abundent knowledge!
Agreed. It's not an asset play. It's a TAX play. BVI and Bahamas. Get real. All overseas businesses should be required to publish consolidated annual accounts, in the public domain, for all to see, and show how much tax they did or didn't pay
Don't recall Japanese investors from the 1980's, who were mainly passive investors in such things as golf clubs and resorts, arranging their affairs through the British Virgin Islands and the Bahamas
We always had the power to regulate David. Problem is this government does not see the need.
My view is that NZ land should only be owned by citizens. And given the economic and social powerhouse family owned farms has been for New Zealand for a 100 years, that pattern should be supported.
We have the regulatory power to do that. But I doubt we will.
In a few years, I bet NZers will be buying these farms back at a discount. A 'win' for us. Its a cycle we have seen before.
And what about the Auckland homeowners who borrowed their way to real estate heaven on the back of the 'white gold rush/rock star economy'?
Where is the capacity to buy them out at a discount and simultaneously bail out the banks? - its all so manageable on paper -right?
In a few years, I bet NZers will be buying these farms back at a discount. A 'win' for us. Its a cycle we have seen before.
When was/which was that last cycle where farms were off loaded by off-shorers at discount prices.
We can recall times when the opposite has happened at the hand of mortgage lenders.
It needs cutting up, I'd never buy it, i'd rather buy coastal country, but I have friends who would and could afford 1000 to 1200 hectare blocks. Its easy to cut these places up, alot of houses on the property. Personaly I think the Chinese are over paying and they would be better off investing in better soils, increasing production on this country is going to be uneconomic.
There is a reason the chinese are over paying it's because they are a massive economic superpower and are manipulating our economy. They will buy up as much good land as they can with the promise of more good jobs for our bureaucrats. Wages for the farm wokers will drop. Less people will live in the country ( who wants to do a low wage job working for the Chinese government).
In business if you have something your customer wants and knows they will need more and more of , why would you sell them that business? This is not about investment. This is the Chinese government trying to control the price of food. The Chinese hate Fonterra, and would like to gain control.
This isn't about free market. Why couldn't they sell Lochinvar to a NZ company? Hasn't our milk price dropped by 30%? might that be the reason? What price has it been sold for? I believe the valuation is $70 million, but is this the price they paid? This is a dodgy deal. John Key will lose a lot of votes fro this in the rural regions. It's clear now what their agenda is.
Correct me if I am wrong but aren't all chinese companies controlled buy the Chinese government. They are a communist country after all. The Chinese will never sell land they buy here. I was told recently buy a person visiting chinese farms that their land is very poor by comparison. They are not investing here for capital gain. I think it is more about gaining more control over the supply of food and therefore the price. John Key is playing with fire with the Chinese we should not forget we are dealing with a communist superpower. The more they move in here the more the rules will change. I'm not being paranoid, we are already over commited with dairy in China. We have converted so much land into dairy, and are over commited to the Chinese market . I think the Chinese are gaining the upper hand and pressure us to sell more land to them.
Bernard there was another major political story today , which appears to have bypassed you , the veto by the NZ Labour Party on Kelvin Davis's website to raise election funds and to have a rip into the internet-Mana alliance ....
... has David Cunliffe now actually ceased to be a man , and lost his nads ?
Davis is correct to tear a strip off the cynical internet-Mana alliance , the use of our political system by a now increasingly annoying German-on-the-run .... political parties for hire , Laila !!!!
.... go Kelvin , you good thing , your spirit and fight are just what Labour need right now ; not the toady wishy-washy flip-flopping of it's leader ...
It is of little consequence to Shanghai Pengxin and all the other entities attached to them that they are paying over the odds money for these farms and over capitalizing them. What they are looking for is CONTROL of the market and profit as such is unimportant in the meantime.
It is probably even good for them that diary prices are falling, if foreing ownership remains unchecked it will just hasten the process for them
Spending all the money they have on upgrades I think everyone deep down understands is OTT and no-one else just running a business could or would go to that extent. I think it is fair enough to be a bit suspicious of motives when other non-farm related things are built as well. Do you seriously think this is all out of the goodness of their hearts.
I think we should ask the Tibetans for a view on it all, actually
There will be almost zero profit, declared in this country anyway, by the time the product hits the shelves in China it would gone through a few twists and turns and any profit will only be gained within China and by then it will not appear to be attached to NZ farms which will likely have made a paper loss
Anyone thinking that the Chinese corporations are operating in a similar way to others is probably kidding themselves and I think we need to look at this from a completely different point of view, not simply one of someone operating a business.
You need to remember that the Chinese govt still, to this day, retains interest in businesses and corporations in China, so we are dealing with a different beast that someone just looking for a good business opportunity.
I think we have a right to pop our heads above the xenophobia parapet and actually have a serious look at how the Chinese buy ups are a bit different, and accelerating extremely quickly as well, we will not be the first country to alter the settings to protect ourselves
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