[This article is an update of one we published in 2017 and uses new data for 2018 and revises 2016 and 2017 data.]
Fear of outsiders is apparently a natural response.
But New Zealanders have been tolerant of foreign investment here for a long time. It first came when we were a colony, and the benefits have long been obvious.
Most people seem to understand we could not have our standard of living and local services without it.
We need outside capital to build our base infrastructure. We need the skills, technology, and funding to build an economy that can compete in a globalised world.
One quick look at closed economies around the world is an instant validation for accepting foreign investment.
But that does not ease the fears. They are under the radar (except for a vocal strident minority) unless the foreigners bring their resources and ownership with a 'foreign culture', and then they bubble more vigorously. We even have a political party that trades on these fears.
In the nineteen years from 2001 when our total capital stock was NZ$326 bln and foreigners owned NZ$172 bln, foreign investment in New Zealand has surged by +$227 bln to an impressive $399 bln.
The absolute dollar amount of this high growth, by itself, is a worry for some. And it is a growth from when it represented 52.9% of all the country's assets.
Since then we have seen the rise of China and their aggressive acquisitiveness. They are 'buying up everything', or so it might seem.
But it is really true? All this needs to be put in the context of the overall growth of our economy and our overall capital stock.
The facts are far less worrisome.
Here is the data:
| Source: Stats NZ | Foreign ownership |
Total NZ capital stock |
| $ bln | $ bln | |
| 2001 | 172,479 | 326,011 |
| 2006 | 232,004 | 465,229 |
| 2011 | 301,228 | 576,039 |
| 2016 | 386,138 | 740,997 |
| 2018 | 398.870 | 828,801 |
| the increase 2001 to 2018 | +226,391 | +502,790 |
| % increase | +131% | +154% |
This data is drawn from Statistics NZ National Accounts series. See SNE055AA and IIP085AA. They are published for all years ended March, and were updated in June this year for the year to March 2018. The consistent data series began in 2001.
This table can also be used to see the relative changes, like this:
| Foreign ownership |
Foreign share |
Total NZ capital stock |
|
| $ bln | % | $ bln | |
| 2001 | 172,479 | 52.9 | 326,011 |
| 2006 | 232,004 | 50.3 | 465,229 |
| 2011 | 301,228 | 52.3 | 576,039 |
| 2016 | 386,138 | 52.1 | 740,997 |
| 2018 | 398,870 | 48.1 | 828,801 |
It reached its peak in 2009 at 53.4%.
The variances are not great, ranging +/-2% over a 15 year period, with the peak in the middle.
But is is very clear that rather than New Zealand being bought up by foreigners, in fact New Zealanders are buying back some of their holdings and New Zealanders now own a majority of our capital stock. Or maybe it is a sign that foreign investors are less attracted to New Zealand.
Further, we have now reached the lowest level of foreign ownership in this record (and probably ever, since colonisation, although this is hard to prove using the modern intensive economic data). The current trend of 'buying back the country' seems to have started in 2009 when foreign ownershiup peaked.
But there is more to this than just foreign investment in New Zealand; our investors are also active offshore. And the same data shows a steady rise.
New Zealand investment offshore is now near its highest level ever, as a proportion of our total local capital stock, at just under 30%.
The bottom lines are these:
1. foreign ownership of New Zealand's economic resources is not growing; it is growing slowly and as a proportion of all investment in the country, is probably at a record low.
2. New Zealand ownership of offshore assets are at record levels, although this proportion has level off in the past few years
Those who have a conclusion and are looking for 'evidence' to support the takeover of New Zealand by foreign capital that won't find it in the data. They will need to rely on selective anecdotes, and will find them in the churn.
41 Comments
One would think that 48% of foreign ownership in a small country, with some good natural resources and very few avenues for increasing export income, would be too much. Wonder which other small country has such a high percentage. What is there be happy about the reduction in percentage from 52 to 48% in 18 years ?
53% of the absolute increase in the amount of stock is taken by foreign sources ($214 bn out of $399 bn).
The absolute amount of foreign ownership at nearly $400 billion at 2018 is scary. The implications are very clear.
NZ have been tolerate of foreign investment for some time. Really?
The system is gamed by the sellers mate. Take the last public float of a strategic infrastructure asset. The Port of Napier.
My concerns are how overseas investment covertly grab their shareholdings. Take particular notice of those charged with selling the shares. Investment bank; like most here, are subsidiaries to larger overseas interests. Its clear these operators are working for the interests of overseas investors, rather than NZ inc. How else would these outside interests now control 23% of the Port of Napier, when its clearly been reported local investors had the financial will and muscle to absorb the entire 45% on offer.
Same thing with the Electricity companies that were sold off by Jonkey, on the lie it would be sold to the NZ public, who again clearly had the will and financial muscle to absorb the entire amount. We were only restricted to $4,000 each, while these overseas interests somehow got 15% on the companies straight off. Get the picture?
In this and a large number of strategic asset sales, its clear the NZ public wanted to purchase more, but overseas interests took preference. The Port of Napier Board is stacked with bankster interests, and yes politicians.
As long as we continue to sell off strategic assets to overseas interests, NZ inc with have to make up the difference in profits exported by borrowing from the banksters who sold off the shares in the first place.
Glass-Steagall anyone? Where the huge risk taking part of our banks are separated away from the core everyday banking needs of it’s customers. Reduces the need for bail in so customer deposits remain safe..... should reduce the requirement for government bail out should the customer deposits that the bank has stolen under the bail in not work.
Guess this article is gearing up for the latest NZ census results which are due to be released tomorrow: https://www.stats.govt.nz/2018-census/
in the event of a major recession will the quality of the foreign owned assets hold its value against the total.if they own the banks,ports and airports,power companies,telecoms and casino and we have kiwirail and airnz and rural roads,then the percentage of foreign control will increase as will the strident minority who will feel that successive govts have signed them up to a reverse mortgage.
Nothing about the export of profits however. Thats where the real damage to NZ inc is done.
You see if locals own the business, the profits get circulated locally. The locals are then able to invest more locally, providing good local employment. Exported profits have taken alot of those options away, and left us with poor paying jobs, high house prices, underfunded infrastructure and public services; which are crippled if you havent noticed.
Enjoy the traffic jams wont you!!!
The Aussies have been gamed also.
Their big four banks are 65% owned by US interests. At least the Aussie public have the noose to call a royal commission of enquiry of banking behaviour which has been less than honest. Aid and abated by Jonkey, which most people now wish he would join other bandits like Fay Ritchwhite, Mark Hotchins, Eric Watson and co overseas. This lot don't deserve to have NZ citizenship.
it is true that we have a history of being happy with foreign ownership but that was more colonial servitude,vestey owned the freezing works,the ships that transported the carcasses to england and the butcher shops that sold the meat.I honestly thought the percentage would be higher as there is a strong sense that we are being taken over.
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Those who have a conclusion and are looking for 'evidence' to support the takeover of New Zealand by foreign capital that won't find it in the data. They will need to rely on selective anecdotes, and will find them in the churn.
It's not a takeover, in the sense of a foreign capital invasion. But there is a need to finance the ongoing NZ desire to consume foreign goods today before we can settle in the currency of their origin tomorrow - hence the perpetual current account deficit.
. . I wish we were tenants in our own land ... 10 years after the Christchurch earthquakes and there's still monster pot holes in the roads around New Brighton and Aranui ... the new foreign owners might fix things up . ..
As it currently is , a delivery van could crunch into a humongous pothole , and damage all the stolen flat screen TVs in the back
Who Owns New Zealand Now (Sep 12, 2017) Channel 3
Award-winning documentary maker Bryan Bruce investigates our housing crisis and what we might do to solve it.
While we might have to accept that foreign investment may be needed for such things as infrastructure, I think it is pretty fair to state we actually need zero invested as landlords here, nil, nada, zip.
Oh, and there is are different meanings to investment and ownership, the latter being far, far more concerning than the former
"Homes left empty for more than six months could be seized by councils under radical plans set to be endorsed by UK Labour this coming week. The motion also calls for the requisition of unoccupied tower blocks and cites Berlin and Vancouver as examples of where this has occurred. ..."
A template for us?
Yes, nice & fair are fine, but when they come with their big fat foreign wallets open wide, we always take the money. Such is life. However, I too would like to see some more data around this subject of ownership & investments & definitions thereof David. And the trip to one trillion NZ$ will be worth following as well. That's a bit of a milestone.
Good article about significant issue. It is worth contemplating the word foreign. For these stats it reflects citizenship so a asset reflects the owners passport: NZ, other & dual citizenship. But the word foreign as per normal usage is different. So in a rural area of NZ a welsh sheep farmer obsessed by rugby is less foreign than a NZ journalist from Wellington.
When the economy is ticking along asset ownership really doesn't matter; we all think that whoever has done the work and provided the capital deserves a suitable return. Foreignness matters when things get tough; does your employer lay you off or struggle on running at a loss to keep you on part time? Does it accept reduced profit margins on the items you buy? There is a real advantage in the concept of 'we are all in this together'. It is when times get tough for family or country that we look after one another and reject outsiders.
Oh honestly this article reads like the words that slip from a rapists mouth after committing a physical attack...it wasn't me...You asked for it....why are you crying you winked at me...Stop spinning the FI is good crap and face up to the immense damage it has done to this country...if you are brave enough.
Great round up of facts David, But really it's signing off an inflationary period of time which is part of the capital base growth and assists achieving less overseas exposure, now run the figures again with 10 years of zero and again 10 years of minus 5 inflation. we may well then show a period starting at 48% and going substantially higher. Hope I have stayed on track here, still getting my head around being active.
Anyone who is concerned about the level of foreign ownership the answer is very simple. Whenever you buy something or use a service, ask is this business kiwi owned? Where are the profits going? Look at where the product is made.
Instead of buying that coffee at S*******ks, or the takeaways at Mc*******ds, support the local business. Or better still, keep the money in your pocket and buy shares in kiwi companies.
I would wager most people who read this article and see that the country is 50% foreign owned would be horrified. Why, because the foreign investors have a 50% control of the direction of the economy and the subsequent profits that go with it, hence reducing the monies left to invest back into the country by taking the profits out of NZ.
With regard to banking it seems to me that as long as the banks are predominantly allowed by law to be owned by foreigners the money made from all these transactions will remain outside of the country and not available for continued investment within NZ. It is just a complete drain on the economy.
The notable difference in the last decade is the degree to which foreign capital has targeted real-estate. I seriously doubt that generation Y will be as sanguine about foreign ownership as this article suggests. There’s going to be a price to pay from knocking a generation off the housing ladder, even for the boomers. Who’s going to buy Boomer McMansions when it comes time to liquidate.
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