By Bernard Hickey
Prime Minister John Key has floated the idea of a land tax or stamp duty on foreign buyers in an effort to control some of the demand side pressures driving Auckland house price inflation well over 20%.
His comments came as fresh research showed Auckland's housing shortfall could grow to over 300,000 houses by 2041, given current predictions of population growth and the current proposed rules on housing density in Auckland.
Key made the suggestion in an interview with Corin Dann on TVNZ's Q+A on Sunday morning.
He began by ruling out a ban on foreign buyers, arguing New Zealand's Free Trade Agreements with Korea and China effectively ruled them out, and the TPP was also likely to make such a ban impossible.
"The issue with China is that when Labour signed the free trade agreement, they put in a clause in that contract that said, ‘If anybody else gets conditions, we get it as well,'" Key said.
"And so because we’re signing the Korean FTA, it means that that stops us banning Koreans from buying residential property either," he said.
"But the point here is simply this – I don’t want to ban foreigners from buying residential property. I don’t think that’s actually good public policy that works. And actually, around New Zealand, there would be a whole lot of people who’d say, ‘I don’t want to stop an Australian buying a house in Queenstown or an American buying a place in the Bay of Islands or actually people buying a house in Wellington."
However, Key said the Government had to "have control of the situation."
"It has to have tools in the toolbox. And we will have that. For instance, we could put a land tax on a non-resident. If you put in a high enough land tax on an annual basis on a non-resident, you can make it completely prohibitive of owning a home," he said.
He later confirmed that stamp duties on foreign buyers, similar to those used in Singapore and Hong Kong, were also an option already allowed under New Zealand's FTAs.
Key's suggestion indicates he is aware of the electoral support building for a ban on foreign buyers after Labour's revelation of partial sales data for February to April in Auckland showing buyers with Chinese sounding names were responsible for 39.5% of purchases.
Three polls over the last fortnight have shown combined support for the three Opposition parties edging ahead of National.
3News' Reid Research poll from July 15-22 found Labour's support rose 0.7% to 31.1% from a month earlier, while National's support rose 0.6% to 47%. Green support rose 0.3% to 11.4% and NZ First rose 0.3% to 8.4%, giving the three opposition parties a higher share (50.9%) than National. Conservative fell 1.2% to 0.7%.
The poll also found 61% supported a ban on non-residents buying property, while 35% opposed a ban. It found 54% of National voters also supported a ban on foreign buyers, while 43% did not.
John Key's support as preferred Prime Minister fell again by 1.1% to 38.3%, while Winston Peters rose 0.1% to 11.3% and ahead of Andrew Little on 10.2%, down 1.4%.
Massive supply shortfall forecast
Meanwhile, the move to bolster efforts to reduce demand-side pressure in Auckland can't come soon enough if the latest indications of the supply-side problems in Auckland are anything to go by.
A report by a special experts group for the Independent Hearings Panel on the Auckland Unitary Plan showed their combined modelling of supply and demand under the existing Proposed Auckland Unitary Plan rules.
It found the Auckland Plan would need to accommodate an extra 1 million people in 400,000 households by 2041, but that its models showed just 83,420 homes could be developed under the plan. That's just 26% of the possible demand and would leave a shortfall of over 300,000 houses by then.
The modelling was based on the density rules in place in the Proposed Unitary Plan, which had provisions to encourage density of housing close to the CBD removed before the 2013 election. However, that ground is shifting.
Last week, Auckland Council revised its proposals to the Independent Hearings panel to allow more density, although it is not clear how many extra houses would be accommodated by the changes. See more here in my article from last week.
This latest projection is on top of the Productivity Commission's projection of a shortage of 60,000 homes by 2020.
These projections call into question whether the Government's supply-side strategy for dealing with Auckland's housing crisis will be nearly enough to slow house price inflation.
The Government may however challenge these forecasts. In Parliament last week, Building and Housing Minister Nick Smith previewed an official Construction Pipeline report due this week, which he said would show different figures to those cited by the Commission.
72 Comments
Land Tax could also be a win-win for TLA's if there were to be a clip-the-ticket percentage in there for them: after all, who else is best placed to actually collect it?
Mind you, as Kumbel avers, there's enough discretion in the Rating Act 2002, right now, to differentially rate the bejasus out of properties with turquoise letterboxes or other unique characteristics.
But that would require local pollies with vertebrae: and they're rarer than rocking-horse poo.
Whereas if Big Bad Central Gubmint takes the political flak, and cuts the junior partner in on 'collection costs', this bird could just fly....
Quite frankly I'm over the shambolic state of housing supply......there is absolutely no reason for a shortfall in housing other than the lack of WILL to deal with ALL the people and ALL the Rules that are an impediment to supply....instead we get endless State messages.....in other words absolute waffle on a continuous basis....that you are looking into the problems/options.......STOP procrastinating you useless idiots that hide in Wellington and pull your finger out and get off your rear-ends and stop this senseless nonsense....if NZ was any good as a country we would have very affordable good quality housing for all!!
If National cannot control the local bodies and bureaucracies then quite simply they do not deserve to be in power.........TOO many policies that are anti SME's who are the one's who will build houses.
The planners and bureaucrats couldn't plan a bun fight in bun factory and your expecting them to plan something major like numerous housing development areas when most of them wouldn't get a job in private enterprise......the BS we have now is proof that all this higher education doesn't work!!
As a kiwi I don't want excuses I want results and I want results ASAP!!!
"If NZ was any good as a country we would have very affordable good quality housing for all" ... Its NZers (and dis-proportionally a certain generation) that are prepared to sell their houses and reaping the huge returns from them. If you were offered $750k for a house or $500k because a young NZ family without a lot of money wanted to buy - who would you sell to?
"If National cannot control the local bodies......." - If any government could control the local bodies then why would we need local bodies - they are there to represent locals????
The Government legislate because they are always first to be blamed or asked for solutions when something affects us.
We as NZers don't like risk, don't want to take self responsibility, want someone else to pay to fix something. Look at the leaky houses and the after effects, the health and safety we want etc etc.
We have ended up in this situation, because we have asked for it (albeit indirectly)
happyatwork. Actually I would argue the facts are the opposite of what you say. In New Zealand we have a very permissive legal regime, which covers commercial conduct and this actually increases risk taking and the associated moral hazard. It is very easy for those who make the decisions in a commercial opertion to avoid liability for poor quality of work. Unlike personal consumption goods, construction companies are not obliged to offer concrete guarantees for their products. Furthermore company directors who are found to have encouraged their employees to cut corners in order to save money are not held accountable in our legal system for the resultant poor quality of work, because through companies law and limited liability they are able to operate at arms length.
"Second, weathertight resolution service adjudicator Tony Dean has ruled Mr Manning had no personal liability as a director because he had not “worked at the coalface” at Ponsonby Gardens. “He may have encouraged his people to cut costs, time and corners, but he never instructed his people to build in contravention of the building code.”
So much for the captain being in charge of his ship and all that.
Instead, Mr Dean has pinned the blame further down the chain of command, on the site manager, project manager, architect, waterproofing contractor and Auckland City Council. The latter as guardians of the building codes. And that’s where you and I end up holding the can."
http://www.grimshaw.co.nz/2005/03/23/brian-rudman-leaky-building-law-ma…
LOL, "Instead, Mr Dean has pinned the blame further down the chain of command" rinse and repeat.
Then the adjudicator is/was stupid/naive. This is so typical, as the technical person 'further down the chain" I know full well some of those in management will act just like this until it goes wrong and then look for someone to blame when it does. That someone has been me often enough that I now cover myself by writing emails making notes of my concerns.
Happyatwork says :- Government is first to be blamed when something affects us
What Does China’s Stock Market Crash Tell Us?
People want economic freedom, but
People have high expectations that the government will protect them from the consequences of that freedom
Listen to BBC "The Inquiry" starting at the 18 minute mark
http://www.bbc.co.uk/programmes/p02x1hns#play
Listen to the whole broadcast for an insight into the transition from State Control to Freedom
Happyatwork - houses are only selling at these prices because the market is distorted....the high prices being achieved come from those distortions.....some people are reaping that advantage and that is fine by me.....but don't think they are achieving those prices because that is what the land and building is really worth!!!
That $750K debt is going to take a lot of business generation for that debt to be serviced isn't it?....and without a business somewhere generating income which ultimately pays that debt down we are screwed......it is false to think that we are wealthy as a nation by the price we obtain for our houses!!! The real price is double incomes to service these mortgages, Working for families and other housing supplements, state funded child care.......There is no where or no other system for users who don't share the same Utopian dream of Nanny State and National have ensured this left Labour induced crap continues....all the while piddling in the pockets of the Crony Capitalists and Fascists!!!
Local Government is a process.....and very few people actually understand the process!! Councillors and Council staff have on the whole a very poor understanding of the legislation that governs them so become ineffectual at representing the locals....if anyone ran their business like a local body then they wouldn't last very long!! Free access to the ratepayers purse should be banned!!
The fact is Councils can't do the basics well, let alone all the other roles they have their snouts in....about all they're capable of is filling up the space on a hard drive with drivel! And what's more they are content to fill up everyone else's hard drives. And this process is what Clark and her pals called a better, educated and skilled NZ !!!
NZ'ers are discouraged to take on risk and responsibility and this has happened over time....once if you made a stuff up and didn't do your own due diligence and it bit you on the arse then you wore that mistake and anything that went with it.....and then along come Nanny State who said she knew best and took all the people's right away from making their own mistakes...and that my friend is the biggest damn problem we have in the western world!!! And Nanny keeps stuffing up and more taxes are needed to repair her mistakes and all politicians are too gutless to break the cycle!!!
National has been all talk, the odd carefully directed carrot, increased bureaucratic nonsense and numbers, big-spending bloated idiots who are entrapping more and more NZ'ers into Nanny State reliance......flushing the people's freedoms further down the sewer is not a good thing!!!! What is wrong with building where you want and how you want!! Why do those who oppose such activity think their rights are more important than the next persons??...especially when nothing is physically hurting you!!
see Iconoclast's and my comments above notaneconomist. Kiwis are risk takers, but when things go tits up, people don't want to be held responsible for their actions. it's the government who is left holding the can. It's only understandable they wish to enact strengthened regulations which they hope will prevent it happening again.
it's the government who is left holding the can.
Are you sure?
External Debt in New Zealand increased to 247182 NZD Million in the first quarter of 2015 from 243036 NZD Million in the fourth quarter of 2014. Read more
Australia suffers under the same delusions.
Although S&P sees Australia’s public finances as “strong” with low debt and deficits, it said that public-sector savings are a “necessary countervailing force” for the high level of external indebtedness on the part of private borrowers, which the ratings firm views as the nation’s “key credit weakness.” Read more
The precipitous 25 % drop in the NZD/USD currency pair price over the last year confirms our reliance on the failing goodwill of foreigners, as they try to retrieve the vestiges of prior investment value.
why do you think investors are wanting to take a more direct stake in our country's "wealth: Stephen Hulme? I warned ages ago that the carry trade is going to unwind once foreigners realize our dismal economic prospects and they would be taking opportunity's to purchase more tangible assets.
I think i stated as much last week when I alluded to our local banking cartel financing the C/A deficit with NZD mortgage asset flows funding foreign wholesale debt via currency swaps. The foreign corporates in this case have the foreign currency as the default hedge, whereas the direct retail house buyers have outright credit and currency exposure.
Anarkist - is there something I don't know?.....is all this higher education undertaken in our Universities being done in gibberish??? Because from where I am looking what you are saying is that NZ'ers don't know the personal consequences of their actions or risk-taking......
We cannot regulate for every eventuality - people who think that regulation is the answer should be receiving the services of a counsellor or something.........people who think they can solve all problems obviously have control issues......we can't let fear and what is nothing more than insane beliefs destroy the fabric of individual ancient rights!!
It is one thing to give the shirt off your back.....it is theft to use force and take the shirt !!!!
What does education in Uni's got directly to do with ppl ignoring the personal consequences? It is quite simple some ppl are prepared to gamble that things will not go wrong in order to profit, that is simply greed. A better level of education of the individual may decrease this, I cannot say off hand.
As an engineer on the other hand I know full well if I get something wrong I or someone else may die or suffer injury, having had the HSE up my a** a few times (and come out blameless) really it isnt something you want to go near, let alone having to live with injuring or killing someone. Financial whizzkids well I guess only see the loss of money often others and as a result not blink.
Regulations can and do work, if they dont they can be improved in light of experience.
Quite simply Steven if one has been educated one would expect a higher level of understanding of the English language and a high level of comprehension which would be severely lacking in someone who didn't know the meanings of words like risk etc. Do you get my point now ;-)
Now imagine if you can, if every engineer had your attitude and gave up the industry because they were scared of making an error........may I remind you that some people thought giving women the vote was something to be feared, or allowing homosexuals the same rights as etc, .....all the regulation has done is create a great big bureaucracy and higher costs for everyone!!!
The only thing regulation does is create big corporates....small operators get priced out of the market.....you will see this in the building industry in the near future as the small builder can't spread the costs.....but it is people like you with your attitude and understanding who are driving these small players under, so you actually deserve things like the TPP and other agreements because that is what you are demanding through sticking to the regulation is best motto!! As I said comprehension is obviously lacking!
I hope your masters have mercy over you and your children!!
I think it's your reading comprehension that's in question here notaneconomist, rather than my purported quality of education. Surely its more civil to seek clarification on the matter currently under discussion, rather than impugn the level of education of those you are engaging in debate with.
As normal you seem to take things to extremes to try and justify your point. I am not scared of taking risks but they are calculated risks. Simple when I cross the road I look both ways but I cross the road if I need to cross the road. Some people on the other hand put blinkers on and walk out, some even blindfolds.
"gave up the industry" I did just that because the returns were too poor for the reward. So at 40 I jumped into a new career, IT with no quals or education in it but Ive made my way quite well, certianly better than staying in engineering. Giving women the vote and risk as an engineer are simply in-compatible points.
BTW my wife tells me I am all for equality.
;]
In effect giving the women the vote was a move from "might is right" to a regulation/law enforcing the right for all to vote.
Regulation actually can and does protect the small player as large players power can be limited, if done properly. TPP is a con btw, then it isnt a regulation for NZ but for US corporations. However rejoice, once its in the RMA will probably be ransacked. I didn't say sticking to all regulation, I said have good regulation, you obviously didnt comprehend what I said.
Actually notaneconomicst, I've never attended university. I am merely a simple manual labourer and thereby subject to a body of protocols and work practice procedures which have been developed by my employer with associated penalties that are clearly defined in my employment contract and workplace agreement. I drive a forklift and face full liability for any workplace accident which may occur while I operate the machinery. Why should employers not be subject to similar duties, responsibilities and penalties?
Actually what I am saying is everybody wants the opportunity to reap all the rewards of their risk taking but face none of the costs. Who was left bearing the costs of the leaky building scandal? The Auckland City Council. Who was left bearing the costs of the Pike River Disaster? The New Zealand government. Who was left bearing the costs of people not doing due diligence while investing in South Canterbury Finance? The New Zealand government. Who bears the costs of our country's dismal workplace safety record? ACC Who bears the costs of reckless construction on land unsuitable for development in Christchurch? EQC ad infinitum
Anarchist we had regulation and regulators and still all those events happened!! There is no evidence that regulation stops undesired events from happening....
If we keep going the way we are, we will have sold off the entire countries land mass to a foreigner who will take on the risks....e.g. who the heck would want to farm in NZ when you have something go wrong, as in an accident of some sort you will be tarred and feathered......best to sell out to a foreign interest and import all food........and let the foreign investor worry about the bureaucracy.....let them bring in their cheaper labour.......and NZ'ers can have desk jobs where H&S is not such an issue........
The TPP might head us in that direction a little bit faster......
I never said regulations work. I am an anarchist after all. I am saying that its a rational response by public officials to minimize the chance they would be encumbered with the costs that private actors offload onto the government to be finally borne by taxpayer . Surely you would want the government to exercise the fiduciary duty of minimizing the financial burden that such costs have on the long suffering taxpayer?
builders/developers in auckland have probably realised there is more money to be made snapping up run down second hand properties and flicking them, while their collective absence from building new houses means worsening supply imbalance and even more gains for them on their second hand do-ups.
Councils are simply breaking all human rights law and international agreements and they get away with it simply because the legal avenues to rectify such issues are too expensive both financially and in time for those who should be challenging the system.
If I went and built a house without following all the councils processes.....I should be protected by a competent national tribunal (Article 10)........ and the following....
Article 12.
No one shall be subjected to arbitrary interference with his privacy, family, home or correspondence, nor to attacks upon his honour and reputation. Everyone has the right to the protection of the law against such interference or attacks.
I know what messages the phalanges would tap out at at the local council offices!
If you want evidence that free trade agreements destroy our sovereignty here it is. We cannot control who buys our property. We cannot buy property in China but they can buy the whole of NZ and we are effectively powerless. Heaven knows what they are signing away with the TPP.
Go on then, tell us about these repercussions.
In scenario 1 I sell my house to a New Zealander for $500,000. In scenario 2 I sell the same house to a foreigner for $600,000.
What repercussions are there for third parties, ie people who are neither the buyer or the seller, in each scenario?
MdM. .... The guy with the bidding power becomes the Market Maker...... In the conext of foreign buyers with bidding power... they are the ones setting the market price.
The repercussions for 3rd parties is that if they want to purchase then they have to meet the market price. ( If most foreign buyers are wealthy... then they tend to displace NZ buyers who are not wealthy )
In a sense ...even the seller is somewhat compelled to sell at the "market " price... if he is planning to rebuy in the same mkt..
When it comes to mkts ...a transaction can., obviously have repercussions for 3rd parties that are involved in that mkt... ???? don't you think...???
Why do u think small island Nations tend to disallow foreign ownership of land... Come to think of it.... most asian nations do as well..??? ( I'm guessing here )
Roelof - the market supply is constrained and it is this shortfall that is pushing prices higher.......and pricing people out of the market......do you think a foreign investor would want to invest here if houses were e.g. half the price because supply was plentiful?
Bead by bead, musket by musket, individual Maoris sold their country, birthright and culture. Individual actions do have impact on the whole nation and in NZ you are not free to do precisely as you please in many ways. This is no different. In the final analysis in law you only hold your ownership of land at the pleasure of the state.
Chris-M, they weren't exactly given any choice after the victory of the settlers and the British Empire in the Maori Land Wars and the establishment of the Native Land Courts. The Maori Tribal lands were broken up and the costs of the surveying had to be borne by the new land owners, with the implicit expectation that the owners would have to therefore sell the land to either the government or individual European settlers.
"From 1865 a system of land courts covering the whole country was set up, and land titles could include only 10 owners. The Native Land Court became known as ‘te kooti tango whenua’ (the land-taking court) because it provided the means for land to be transferred out of Māori ownership. The court was also involved in confiscating Māori land after the New Zealand Land Wars...The Native Land Court could be expensive for Māori. The court could only investigate land that had been surveyed, and owners had to pay for this. Court hearings were often long and complex, so travel and accommodation costs were high. Concerned Māori petitioned Parliament about the court.."
http://www.teara.govt.nz/en/te-kooti-whenua-maori-land-court
Karl Polayni, the neoliberal social historian acknowledged that formal markets have always been a creation of the State.
""There was nothing natural about laissez-faire; free markets could never have come into being merely by allowing things to take their course. ... Laissez-faire itself was enforced by the state. The [1830s and 1840s] saw not only an outburst of legislation repealing restrictive regulations, but also an enormous increase in the administrational bureaucracy able to fulfil the tasks set by the adherents of liberalism. ... Laissez-faire was not a method to achieve a thing, it was the thing to be achieved."
http://keithrankin.co.nz/nzpr1998_4Polanyi.html
Chris-M, they weren't exactly given any choice after the victory of the settlers and the British Empire in the Maori Land Wars and the establishment of the Native Land Courts. The Maori Tribal lands were broken up and the costs of the surveying had to be borne by the new land owners, with the implicit expectation that the owners would have to therefore sell the land to either the government or individual European settlers.
"From 1865 a system of land courts covering the whole country was set up, and land titles could include only 10 owners. The Native Land Court became known as ‘te kooti tango whenua’ (the land-taking court) because it provided the means for land to be transferred out of Māori ownership. The court was also involved in confiscating Māori land after the New Zealand Land Wars...The Native Land Court could be expensive for Māori. The court could only investigate land that had been surveyed, and owners had to pay for this. Court hearings were often long and complex, so travel and accommodation costs were high. Concerned Māori petitioned Parliament about the court.."
http://www.teara.govt.nz/en/te-kooti-whenua-maori-land-court
Karl Polayni, the neoliberal social historian acknowledged that formal markets have always been a creation of the State.
""There was nothing natural about laissez-faire; free markets could never have come into being merely by allowing things to take their course. ... Laissez-faire itself was enforced by the state. The [1830s and 1840s] saw not only an outburst of legislation repealing restrictive regulations, but also an enormous increase in the administrational bureaucracy able to fulfil the tasks set by the adherents of liberalism. ... Laissez-faire was not a method to achieve a thing, it was the thing to be achieved."
http://keithrankin.co.nz/nzpr1998_4Polanyi.html
There's no sense trying to squeeze another million people into Akl without integrated plans for transport.
Just back from Sth Korea and they make us look like the banana republic we really are. High rise cities, big motorways, great train/metros..... (same in Japan)
Car ownership in KR is low as they have viable transport alternatives - 438 cars/1000 people vs 708/1000 for NZ.
I seriously doubt Akl infrastructure will match population growth and possible intensification. And will Kiwi's change ingrained driving and housing habits?
I don't buy Key's assertion that FTAs prevent laws against FHBs. A number of the countries who we have an FTA with already have those restrictions and therefore any FTA should allow a reciprocal arrangement.
I think that what we are seeing is the current Government digging deep for excuses to justify their head in sand hands in pocket stance. The Chinese Government expressing concern is just an effort to bully us. If the Chinese economic state is and indicator they may soon fall in importance as a trading partner anyway, but if we work hard to protect the quality of our products, it may not matter.
And ...
Deloitte's tax partner Peter Truman says IRD was now turning its attention to immigrants.
IRD has direct access to databases that enable it to monitor property transactions. People buying and selling property in quick succession, or who undertake multiple property transactions, should expect IRD to contact them. QV, LINZ, Councils Rate Rolls
http://www.odt.co.nz/news/business/350375/tax-audits-wealthy-widened
"PM rules out ban on foreign buyers of property due to FTAs and TPP" Do we actually believe that ? Or is it just another one of John Keys "explanations". He just runs those quietly through, when they often have no basis in fact.
If it is true, which I doubt, then it's a great reason not to sign those agreements.
The question over a Land Tax is how much and how to monitor it. To make it work it has to cover things like:
Absentee ownership
Unoccupied properties
Proxy ownership used to avoid its imposition
Above all it has to be punitive enough to make avoidance too great to try on. The IRD rules of penalty tax of 150% come to mind.
One real benefit is that it is retrospective to the extent that current owners get caught in the net.
More slight of hand from Key - they have the ability to fix the problem with the South Korea FTA now (which then means we don't have a problem with the China FTA either);
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=114…
What Key is doing is purposefully committing future governments to his dogma/belief system on foreign direct investment in our residential RE market.
National just need to fix the South Korean FTA before it is too late - and it isn't too late presently.
David Parker is lying. Like I've said, the Free Trade agreement isn't retrospective. It's only binding on future legislation, which the respective governments may enact. You can't buy property in China, only the right of land use and even that only for a specified period of time.
The relevant clause of the China NZ FTA is.
"4. For greater certainty, the provisions of this Chapter do not bind either Party in relation to any act or fact that took place or any situation that ceased to exist before the date of entry into force of this Agreement.
5. This Chapter shall not apply to:
subsidies or grants provided by a Party; or
laws, regulations, policies or procedures of general application governing the procurement by government agencies of goods and services purchased for governmental purposes and not with a view to commercial resale or with a view to use in the production of goods or the supply of services for commercial sale."
http://www.chinafta.govt.nz/1-The-agreement/2-Text-of-the-agreement/12-…
I think you're talking about another matter (whether or not there are reciprocal rights for NZers in China, which there are not) - whereas he's talking about Articles 138 and 139 (most favoured nations provisions) which if we sign the South Korean FTA would 'kick in' for China as well;
The most favoured nation provision in article 139 does apply to existing investments and controls on new investments. If we want to further restrict the sale of farmland or houses to Chinese investors, we can. Article 139 simply requires NZ to treat China no less favourably than other countries. Clause 3 of article 139 means earlier agreements with our Australian and Pacific Island neighbours are not affected, and do not flow into the China FTA. Later agreements do flow through.
Are you saying at present, because of the provisions in the China FTA - that NZ could not put a blanket ban on foreign direct investment in our residential real estate?
Pretty convenient he uses Clause 139, when its Clause 138, which is relevant to the case. Sure they can impose a ban, but they will expose themselves to penalties which may be order under the auspices of the investor state dispute resolution process.
"Each Party shall accord to investments and activities associated with such investments, with respect to management, conduct, operation, maintenance, use, enjoyment or disposal, by the investors of the other Party treatment no less favourable than that accorded, in like circumstances, to the investments and associated activities by its own investors."
http://www.chinafta.govt.nz/1-The-agreement/2-Text-of-the-agreement/12-…
In a previous life, for a brief span of time, I was employed by govt as an enforcer, which meant I had to understand the intricacies of the ACT we were enforcing
Now, I haven't read the FTA and I won't, but my first response to ya'll is
(a) It's an FTA which sets out the terms and conditions of the FTA, and
(b) the term investment has to be read in terms of the "Heading" of the agreement
(c) unless it is otherwise re-defined within the body of the agreement
and so I would ask you to define what is an Investment under that agreement
I would want a crown law legal opinion whether it applies to residential housing
My initial knee-jerk reaction is it doesn't, and that's where I would be looking
It applies to "trade investments" such as businesses and farms etc
The Trade agreement defines investments as follows.
"Investment means every kind of asset invested, directly or indirectly, by the investors of a Party in the territory of the other Party including, but not limited to, the following:
movable and immovable property and other property rights such as mortgages and pledges;
shares, debentures, stock and any other kind of participation in companies;
claims to money or to any other contractual performance having an economic value associated with an investment;
intellectual property rights, in particular, copyrights, patents and industrial designs, trade-marks, trade-names, technical processes, trade and business secrets, know-how and good-will;
concessions conferred by law or under contract permitted by law, including concessions to search for, cultivate, extract or exploit natural resources;
bonds, including government issued bonds, debentures, loans and other forms of debt8 , and rights derived therefrom;
any right conferred by law or under contract and any licences and permits pursuant to law;
I'm still confused - so if you could clarify, that would be great. In your interpretation, can NZ put a blanket ban on Chinese foreign direct investment in our residential real estate market - bearing in mind the provisions of the China FTA?
As according to David Parker - we can (provided we don't also sign the South Korea FTA).
Yes, but it would be better if it was a blanket ban on all Foreign Direct investment in residential property with exemptions where negotiated. The one consideration is the Australian-NZ CER where Australia confers complete reciprocal rights with regard to residential property, including exemption from the purchase of existing property and the rights to apply for and obtain First Home Buyers grants which is unique to NZ. Chairman Moa is (Chinese or Vietnamese) and a naturalised kiwi who went to Brisbane and got a FHB grant immediately on arrival
Remember Beijing banned all non-residents from buying in Beijing and Shanghai in 2011
You can't buy land in China full stop. Foreigners were only forbidden from building villas in Shanghai and Chongqing. The government is free to ban foreign investment, but it WILL face repercussions under the ISDR process. The Chinese were calculating that no one has the resources to contest their law changes which would appear in an arbitration panel, under the auspices of the International Center for Settlement of Investment Disputes. These panels are presided over by lawyers who earn fees from the investors that appear before the panel.
"Yet investment arbitrators are hardly neutral guardians, who stand above the law. In fact, they are crucial actors in the arbitration industry, with a financial interest in the existence of investment arbitration. Arbitrators, to a far greater degree than judges, have a financial and professional stake in the system2. They earn handsome rewards for their services. Unlike judges, there is no flat salary, no cap on financial remuneration...Arbitrators’ fees can range from US$375 to US$700 per hour depending on where the arbitration takes place4. How much an arbitrator earns per case will depend on the case’s length and complexity, but for a US$100 million dispute, arbitrators could earn on average up to US$350,0005. It can be far more. The presiding arbitrator in the case between Chevron and Texaco v. Ecuador, received US$939,0006. In another case, the Tribunal president billed for 719 hours at an hourly rate of US$660 plus VAT7."
http://corporateeurope.org/trade/2012/11/chapter-4-who-guards-guardians…
"Third, three private individuals generally make up an international arbitration tribunal. That means that private individuals are entrusted with the power to review a government’s actions, such as laws. These arbitrators are appointed ad hoc, sometimes after having worked as lawyers for the investor which raises serious questions around conflict of interests."
http://itsourfuture.org.nz/the-devil-in-the-tppa-investor-state-dispute…
Still how many people have the sums of money required to protest against the People's Republic of China?
im am confused
from what I understand if we sign the FTA with korea that national are negotiating it has a clause meaning we can not restrict foreign house buyers
the FTA that labour signed with china (and national helped vote in) has a clause saying they should get the same treatment as any future FTA
so john key is saying its labours fault that they would have the same clause
how? its so typical to just blame and not do anything to fix it up.
either don't sign or take the clause out
but the very definition of trade in itself is very broad and can be interpreted in many ways. Its basically the act of buying and selling goods and services. One could easily argue that buying and selling houses is itself a trading activity, especially when done through a formal commercial institution.
http://www.stuff.co.nz/business/farming/70594420/TPP-could-allow-foreig…
a land tax could be quite lucrative for govt. when foreigners no longer need OIO approval. But Key says "on balance we'll all be better off", why don't I believe him? It will be too late by the time Kiwis realise we have been shafted.
So we learn that an "FTA" restricts sovereignty rights? Sure John, China and the others certainly also think of their FTAs first, when they make decisions on what is good for their citizens.
What a little whimp hiding behind a pile a paper that can be interpreted any way you like and in the worst case can also be changed.
New Zealand has just made a fool of itself throughout Asia. Key has signalled that FTAs with Asian countries are more relevant to him than his country's best interest. Welcome to the Chinese province of New Guangzhou.
"What a little whimp hiding behind a pile a paper that can be interpreted any way you like and in the worst case can also be changed."
Yes, but the agreement probably will have provisions which governs alterations to it or worst case reneging on it. You'll be sure that we'll be punished for doing so.
btw. It's not just John Key, it was the idiots in the Labour Party who signed us up to the China FTA. They're all a bunch of Quislings prepared to sell us all for 30 pieces of silver.
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