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Labour joins NZ First’s Lochinver block party

Labour leader David Cunliffe has lined up with New Zealand First’s Winston Peters in vowing that Labour would block the proposed sale of Lochinver Station to Chinese company Shanghai Pengxin.

"We don't believe that it will add value to New Zealand,” Mr Cunliffe says, “and we share the concerns of the vast majority of New Zealanders who do not want to see us become tenants in our own country."

Mr Cunliffe says a Labour-led government would utilise ministerial discretion under the Overseas Investment Act to stop the sale.

Mr Cunliffe also says the purchase of more than five hectares of New Zealand farmland would be restricted to all foreigners under a Labour government.

Approval of the sale of the 13,800ha property near Taupo, considered one of New Zealand’s largest and most valuable farms, is being considered by the Overseas Investment Office.

Earlier this year the Chinese company took a 75% stake in the 4500ha hectare Synlait Farms in Canterbury, a deal that also included some conservation land.

In 2012, Shanghai Pengxin received government approval to buy 16 central North Island Crafar farms (totally almost 8000ha), a decision that sparked public controversy and prompted what the government described as a tightening of OIO criteria.

Since then no application to the OIO has been refused, which Labour claims is because the changes rendered the criteria all but meaningless.

Prime Minister John Key responded to Mr Cunliffe’s announcement by saying the Labour leader was "effectively in a dangerous position.”

"The government would almost certainly be open to legal action if they pre-judge the decision made by the Overseas Investment Office without knowing the facts," Mr Key says.

Since the Conservative Party’s Colin Craig revealed the pending Lochinver Station sale on Friday, NZ First’s Winston Peters has promised to make blocking the transaction a deal breaker in post-election coalition talks.

NZ First has also adopted a policy of buying back “strategically important farms” that have been sold to foreigners.

Although opposed to the sale, Mr Craig says the Conservative Party won’t match NZ First’s buy-back policy because “it’s not financially viable” at a time New Zealand is “up to our eyeballs” in debt.

More by Nick Grant

Comments and questions
32

Cunliffe should be ashamed and so should every New Zealander who votes for his party or any of the others who selectively block these sales. The only reason they oppose is that the xenophobic nature of New Zealanders to the Chinese is what is driving this. And I thought New Zealanders prided themselves on not being racist. They cry wolf when those like Hone accuse them of such, perhaps he has some founding to his argument.
Two questions to Cunliffe and Peters Craig Norman etc, , would they extend their no sale to all foreigners or just those from Asia? And if Shanghai Pengxin was sold a 100 year lease of the property, with all the bells and whistles attached per a purchase agreement, would they be against this?
Come on people stop being racist ‘do unto others as you would have done unto you!’

Not a case of racism at all.. simply shutting the gate on economically strategic systems. You can be as PC as you like and scream "racist" or whatever... fact of matter is that PengXin are positioning to create a vertical supply structure within NZ to outflank our ability to benefit from value adding to a raw commodity. I don't care if it's PengXin or Cadbury or Nestle or Parmalat... allowing a combination of Crafar Farms and Lochinvar's dairy potential to create the critical mass to build an independent dairy production facility is just plain madness. We can say what we like, but PengXin's intentions and strategy here is obvious, despite what we want to beleive. Ask any chinese businessman here... they'll tell you behind their hand, that NZ is crazy to let this happen. I am personally very welcoming of our business relationship with China... but some things just aint negotiable, and economic sovereignty is at the top of that list. Agriculture is our only sure future-proof asset... and these clowns would sell it?

Indeed. I fear we are being short-sighted.

How about you get some New Zealanders together to create new production plants, et ... hmmm ... because you can't and New Zealand needs growth.

[Prime Minister] Geingob advised Chinese businesspeople seeking land in Namibia to consider leasing such land, as they will not be able to purchase it. “A businessperson who intends to set up shop in Namibia can lease land for a maximum period of 99 years. So, do not despair. If you intend to set up factory shops in Namibia, you can do so provided you are doing so within the framework of the applicable laws. Land is a very sensitive issue in Namibia,” he said.
http://namibiansun.com/government/nam-will-not-follow-zim-style-land-grab.65023

"do unto others as you would have done unto you!"

So you're saying that we should only lease the land to foreigners like China does? I agree. Idiot.

Also, the racist card is boring.

Isn't the reciprical of the question "Should foreignors be allowed to buy NZ farms?" "Should NZers be allowed to sell there assets to whomever they choose?"? Looks like private property rights have been forgotten in this debate. If a farmer cannot sell their farm to a foreigner, what does that do to the value of all the farm land in NZ? Will the NZ banks be comfortable with the resulting loss of equity on the farms where they hold large mortgages?

Well said. We hear, especially from some politicians, that we should not be selling 'our' land to foreigners. Absolutely correct if you own the land then you can decide not to sell it to foreigners that is your choice. But it is very dangerous for our property rights when the government dictates who you can sell your property to. What if the best local offer is less than what you owe on the land - will the government top up the price to keep you out of bankruptcy?
In my view if as taxpayers we block the sale to foreigners then we have a moral commitment, through the government, to match that price.

If the best offer is less than you owe then you have over capitalised and made a bad decision. Why should overseas interests have to bail out bad decisions.The laws of economics will set the true value. Supply verse demand.

Very good question. The reality is if the land ownership had to stay within in NZ then it's value would clearly be much more realisitic and as such NZ interests would be better placed to buy Lochinvar.

Much the same view with the Auckland property prices. If it was only NZers buying them their true value would soon become clear rather than the over inflated values of current. Then our children could buy their first house before we died and left it to them in our wills.

These xenophobic calls are wholly political in intent and cross the boundary of good governance. Time to 'call out' the jingoistic politicians who make them. There is an independent process which the OIO are going through - don't try and jawbone the outcome in a mis-guided attempt to gain a foothold at the seat of power. Labour, Conservatives and NZ First - none of you will get my vote.

Ironic that Labour & the Greens use this dog-whistle stunt as a soapbox to try and get some relevance out from under the shadow of all the failed policy launches Cunliffe delivered for Labour... in the hope it might reverse the polls out of the sub-basement.

So foreigners can't buy land in NZ under Labour now, but Labour are perfectly ok with enabling a convicted fraudster foreigner to hijack our democratic election process - and all for the hope he can buy a "Get out of extradition" card if he's brought the correct politicians? In fact, Labour will even sacrifice a loyal comrade in the TTT electorate to enable a racist and a convicted fraudster proxy into Parliament - they just can't buy land now that Labour need a platform to appear relevant and maybe even semi-credible.

Labour & Cunliffe's double standards and hypocracy are only exceeded by all the vast tracts of land Labour sold to foreigners when they were last in government...

Net land sales approved to foreign investors
Under National:
2014: (year to date) 11,274ha
2013: 65,610ha
2012: 33,517ha
2011: 68,054ha
2010: 17,040ha
2009: 22,345ha

Under Labour:
2008: 13,842ha
2007: 16,102ha
2006: 198,574ha
2005: 48,287ha
(New Zealand Herald)

This is more racist than xenophobia. After all what is going to change post sale? A change of name on the letter box, the Stevenson family have increased their employing power and NZ is $70 mil. richer!

I don't think we are 70m richer John. The farm is already an asset on our balance sheet and is probably geared pretty high as well. The delta between its "true" worth and the price SP are willing to pay is the "richer" part.

The reality is we are already tenants in our own country as the Australian banks hold security over most of our assets anyway.

Labour and the Greens have not only now wiped hundreds of millions off the power companies value, they now threaten to wipe literally billions off property values.

It seems to me that some of those posting here did not listen to what Mr Cunliffe actually said. I didn't hear him say (on Morning Report) that "foreigners can't buy land in NZ under Labour" and I did hear him say that he needed to check what NZ's position was under CER legislation because he was mindful of not wanting to be xenophobic.

I should point out that "the purchase of more than five hectares of New Zealand farmland" is already restricted to foreigners because already such a purchase requires OIO approval. [http://www.linz.govt.nz/overseas-investment/applications/technical-resources/sensitive-land]

And I also think Mr Key was somewhat misleading when he said "the Labour leader was "effectively in a dangerous position.” "The government would almost certainly be open to legal action if they pre-judge the decision made by the Overseas Investment Office without knowing the facts".

While any Government would be in a dangerous position if they did that, I didn't hear any suggestion from Mr Cunliffe that this was what he was proposing to do. I think he said he'd need very good evidence of benefit to NZers before he'd approve the sale. That position is quite consistent with Ministerial approval only after an OIO assesment. Note that Ministers decide; not the OIO - it makes a recommendation but the Ministers have a good deal of discretion.

So I think there is a lot of mis-information and mis-informed comment about this issue. Readers might be interested in a Bell-Gully summary of recent Court decisions relating to the sale of the Crafar farms. Their summary: "The degree of Ministerial discretion which has been built into New Zealand's overseas investment regime provides the government of the day with flexibility to effectively alter the application of the legislation by altering its overseas investment policy without the need to also change the legislation."[http://www.bellgully.co.nz/resources/resource.03258.asp]

I heard that interview and I listened carefully, it was clear Cunliffe was wanting people to believe that he would stop the sale of Lochinvar without saying he would interfere with the OIO. Which means under labour the OIO is a waste of money.
He said he wanted to hum and haw a little more re Aussies as we have a free trade agreement with Aus.
What if an Aussie carrying Maori blood wanted to buy a farm?
What about an Australian born Chinese wanted to buy a NZ farm?
And, do we not also have a free trade agreement with China?

I think you're right - unless he heard compelling evidence to the contrary, I think he would veto the sale. That doesn't mean the OIO is a waste of money, however - it's just the test might be harder to meet under Labour. Doesn't mean it couldn't be met.

The interview is here: http://www.radionz.co.nz/national/programmes/morningreport/audio/20144744/pm-labour-risking-legal-action-over-farm-sale-veto.

Also of interest, Rod Oram on the same topic: http://www.radionz.co.nz/national/programmes/ninetonoon/audio/20144361/business-commentator-rod-oram.

Here is a list of free trade agreements of which New Zealand is part:
Australia: China: Thailand: Singapore: Brunei: Chile: ASEAN, Malaysia, Hong Kong, Taiwan. (Wikipedia)

Isn't the question being raised one of citizenship/residence?

Yes - I think citizenship or residency - and what these agreements contain - are key questions (if you will forgive the pun). Anyone who becomes a resident of NZ can buy land here, no matter where they were born. I don't think you even need to be a citizen. And under CER, I think the same is true for Australian citizens - they don't need NZ residency. Not sure what these other free trade agreements allow but someone will know.

what are the rules on domicile/tax residence for companies in NZ?

In law, domicile is the status or attribution of being a permanent resident in a particular jurisdiction. A person can remain domiciled in a jurisdiction even after they have left it, if they have maintained sufficient links with that jurisdiction or have not displayed an intention to leave permanently (i.e., if that person has moved to a different state, but has not yet formed an intention to remain there indefinitely). A corporation’s place of domicile is equivalent to its place of incorporation.Recently, Hertz Corp. v. Friend concluded that “principal place of business refers to the place where corporations high level officers direct, control and coordinate the corporations activities.” (wikipedia)

Tax residence in the United Kingdom for companies:
A company is generally treated as resident in the United Kingdom for tax purposes if it is incorporated in the United Kingdom or, if the company is not incorporated in the United Kingdom, if its central management and control are exercised in the United Kingdom. "Central management and control" refers to the highest level of oversight, usually as exercised by the board, rather than day-to-day management. (wikipedia)

That's an interesting question - when can companies, rather than individuals, buy NZ farm land? Beyond my pay scale I'm afraid...

Apparently "A company incorporated outside New Zealand is an overseas person regardless of who owns or controls it" - see http://www.linz.govt.nz/overseas-investment/applications/technical-resources/determining-ownership.

Also - a minor correction to my previous post - "Australian citizens and the holders of a current Australian permanent residence visa or current Australian resident return visa will normally be eligible for consent [to buy sensitive land] on this concessional basis" - see http://www.linz.govt.nz/overseas-investment/applications/faqs.

As it looks more and more likely the political Left will need every single vote they can get and as many "supply partners" as possible, instead of swallowing the dead rat that is joining with Winston 1st - they're trying to erode his policy base by hijacking that policy too.

Why work with Winnie if you can just steal his policies and hope to steal his voter base also?

Wonder what would happen to Cunliffe and Peters tactics if the Chinese government decided to cancel all milk contracts with Fonterra and NZ.Blocking legal contracts works both ways.

Just stop and think it through what is happening with these land sales. Land is the key asset required for farming. Get that and the rest in time you can also control yourself. Those that say these views are racist are looking at this issue far to simplistically or possibly from a very short term capitalistic view.

Look seriously at the structures of some of the other working farms that have been taken over by foreign owners. In almost all cases those purchased by Chinese that originally transferred over the New Zealand staff are now slowly transitioning Chinese staff onto the farms as their knowledge level rises. Is this creating jobs. Not for New Zealanders as these people are then going back to China to run farming operations there. The NZ positions are then replaced with more trainees from China.

This is a training opportunity that NZ should be providing as a value added function not selling land to do this. Look at the 100 year picture and focus on that rather than short term gains. The answer is easy Stop selling New Zealand.

Totally agree!

Come-on New Zealand, let's be a bit more strategic about this please!

Those that don't understand the strategic ramifications of what it means to slowly sell of land that was acquired for muskets and blankets need to educate themselves quickly.

A good case study would be European high speed rail firms and their experience with China:

http://online.wsj.com/news/articles/SB10001424052748704814204575507353221141616

Only a country that would want to sell or erode its long term strategic advantage for some numbers on a screen is obviously full of people that would sell their own grandmother to make a quick buck...!

Spot on. I feel so strongly about the Nats attitude to this that I can no longer support them at the ballot box. To me this is the most defiining issue. Other Nats need to take their ideological blinkers off and consider the long game playing out against us. It is very very scary.

Using cheap accusations of xenophobia is basically the kind of name-calling that wants to prevents genuine debate. I have no respect for anyone banging around terms like this - and we've had too much of this verbal bullying in recent years.

it doesn't replace genuine debate. It doesn't replace the actual facts.

New Zealand is being sold out to the highest bidders - under the kind of government John Key is running - where it's all about money, money, money - not people, people, people - i.e. New Zealanders retaining their birthright.

This Land is your Land, This Land is my Land,
From Cape Reinga to Stewart Island.
From the Kauri Forests to our Southern oceans,
This Land belongs to you and me.

As I went roaming throughout NZ
I was surrounded by natural glory
I saw about me those endless pastures
That land belonged to you and me.

We have creation all there around us
With boundless beauty and natural greatness
With clear spring waters to our mountain glaciers
This land belongs to you and me

We now invite you to our South Sea Islands
To show you loving and caring ways
We will show you sounds and sights of nature
Of a wondrous southern land

This Land is my Land, This Land is our Land
It's given to us with God's own blessing
For us to treasure, For us to share
This Land belongs to you and me

This is a good discussion to have but it is not discussion to be had less than 6 weeks from an election with all the political implications from this.

Where do private property rights come into this discussion? How far should we let the government dictate who we can sell our property to and how much do we let them influence the price? The basis of our economic system is security of title over what we own. We don't want a situation as in some countries where the government just takes land or property.

This Communism at it's very best total control of everything!!
Clarke and her Labour cronies started this "Asian" invasion and opened up our borders, in a few years NZ will be just another suburb of Asia "HONGNZ" wait and see.
When I was a kid growing up, all of my Uncles at family gatherings used to always talk about beware of the Yellow Peril, 60 years later, I now understand what they were on about.

Forget about racism and all of the other emotive rubbish......it I as simple as AD says and it is about overseas entities establishing vertical supply structures which produce little benefit for NZ. It is about time all politicians including JK got their minds around this and find solid and sustainable solution.