Restrict foreign investment at our peril
OPINION - FOREIGN OWNERSHIP OF LAND
Until around 1000 years ago there were no people in New Zealand, nor was there any economic activity. Then people started to bring their resources here to create economic prosperity.
In fact, the history of New Zealand could be written as a history of foreign investment.
We are simultaneously the most remote country and the most widely travelled people on earth. It is quintessentially Kiwi to embrace the world, just as sure as closing off to the world would mean death for our island economy.
Foreign investment is in our DNA but we might forgive Green Party leader Dr Russel Norman if he doesn’t quite understand that.
Dr Norman was ruffled when he was tagged in Parliament for his hypocrisy in presenting a private members’ bill to restrict the foreign ownership of land.
As a recent immigrant he is a participant in New Zealand’s globalisation and yet he wants to pull up the draw bridge on foreign investors.
There is a dog whistling tone to his comments, which we should not allow to pass us by. He didn’t miss the chance to remind people that recent controversial land sales have been to Chinese buyers.
Winston Peters may have some unexpected competition in the form of green economic nationalism and xenophobia.
Instead of the Green Party’s economics of restriction, New Zealand needs to do better at welcoming investment to our shores.
The background music to New Zealand policy discussions these days is that Sir Roger Douglas liberalised the economy so comprehensively that there is little liberalising left to be done.
In truth, he did not liberalise quite everything, and we have slid back on some important measures. One such measure is the Organisation for Economic Cooperation and Development’s Foreign Direct Investment Restrictiveness Index.
Out of 55 countries measured we have the sixth most restrictive regime. Only Saudi Arabia, India, Indonesia, China and Japan have regimes more restrictive than ours.
What is more, Australia, Canada, Korea, Mexico, and Turkey have overtaken us in this index over the past decade. Interestingly enough, we have suffered partly because of methodological changes in the index that raise the emphasis on investments in land.
ACT has always been the pro-investment party. We know that foreign investment is good for New Zealand. That is why our finance ministers visit the world’s financial capitals to drum up confidence in our economy, just as our 19th century premiers visited London to secure loans.
Examples of beneficial foreign investment are all around us.
Take James Cameron, a man who is arguably one of the world’s finest film makers. Mr Cameron has bought, from willing sellers, an estate in Wairarapa well in excess of the 5ha Dr Norman’s Restriction of Foreign Ownership of Land Amendment Bill would have allowed.
Good for Mr Cameron. And good for us too. Most countries in New Zealand’s position, with a small but world beating film industry, would welcome a film maker of his calibre.
They might even actively seek him out. To have him come here is a god-send for our film industry. Only the Greens would try to stop him.
Some complain that the people investing in our country are from countries which do not allow New Zealanders to buy land. I understand the sentiment, but allowing foreign investment is either good or it is not. If it’s not then we should not allow it.
I believe foreign investment is good and if other countries do not understand its benefits then we should pity them, not join them.
Others worry that we will lose our sovereignty if we allow foreigners to buy land. It should be clear that land in New Zealand is under the sovereignty of the New Zealand Parliament, no matter who owns it.
Foreign land owners are bound by our rules just as surely as an Aucklander, like myself, who bought a business in Christchurch would be bound by the bylaws of the Christchurch City Council.
I would pay rates there, and employ locals there. I might bring home a profit if my business added value.
However, unlike members of the Green Party, I’ve been in business for almost 50 years and I know very well that investment carries risks always and losses often.
When it comes to sovereignty and political control, foreign land owners have fewer rights precisely because they are foreign. They cannot vote and they face barriers for donating to political parties.
If we are worried about the rights of New Zealanders, we should think carefully about which right concerns us.
Is it the right of New Zealand property owners to get the best possible price for their land on a world market and use their funds for other opportunities?
Or is it the perceived right of the Greens to prevent owners from getting the best price by excluding investors from other countries?
ACT supports the right of the property owner. It believes that free markets give us the best combinations of investors, ideas, and resources to create a wealthy country.
We believe that this is the New Zealand way. The alternative is the economics of restriction. Restricted opportunity, restricted business, and restricted prosperity.
The ACT Party believes in lifting restrictions, not creating more.
John Banks is ACT leader, Minister for Regulatory Reform, Minister for Small Business, Associate Minister of Commerce and Associate Minister of Education.
ABOVE: Banks speaks to the bill in parliament on Wednesday.
The Green’s Party's Overseas Investment (Restriction on Foreign Ownership of Land) Amendment Bill was defeated at its first reading:
Ayes - 59: Labour 34; Green Party 14; New Zealand First 8; Maori Party 2; Mana 1.
Noes - 61: National 59; ACT 1; United Future 1.