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.
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Comments and questions106
It is depressing that such stupid legislation was supported by so many deluded people and parties.
Well said, John. At last you are stating clear principles based on sound logic. Keep it up and you might even get some votes for Act.
Very well written - couldn't agree more. One other point that astounds me though - this constant reference to selling "our" land - the land is no more or no less "ours" no matter who has legal title. Ironically, when a foreign investor buys land, public access to said land usually increases!
Foreign buyers have deeper pockets and their actions push up the price of property.
Patriotism is not in anyones vocab here is it?
If the Chinese want to put money into this country they should stick to buying our milk.
Tell me again why should I prefer stupid, lazy New Zealanders to intelligent, hard working Chinese?
So you think people who want to be treated fairly be their bosses are lazy and stupid. If people like you had your way, we would be working 12 hour days for $5 an hour with no sick leave.
No, I just think everyone should be treated on their merits, not on their race, ethnicity or location. You obviously differ.
Rich is the new white, Allan.
Showed your true colors there, white trash.
Nope, just saying that the right now sees income as the measure of a man, not the colour of one's skin (Louis Crimp and John Ansell the exceptions).
The Left sees income as something to steal along with property and freedom.
Nope the right sees self reliance and taking responsibility the measure of a man whereas the left feels that everyone owes them a handout.
On the one hand a giant generalisation that New Zealanders are lazy while Chinese are intelligent and hard working, and on the other you think that everyone should be judged on their merits rather than race. Nice logic mate.
No, some NZers are lazy and some Chinese are the opposite. I am simply pointing out the gross fallacy of blind patriotism and my preference for judging everyone strictly on their merits. Sorry it was too subtle for you.
Except that's not your approach to your fellow countrypeople who you have already decided are "lazy" and "stupid".
Some are, and too many for my liking, but certainly not all.
Exceept Alan that's not what you said in your comment #5 when you were wanting to make emotive generakisations!
Oh dear, I do have to spell it out for you. I was criticizing the notion of patriotism or nationalism - the notion that your country is some kind of extended family that must be favoured over the rest of the world. But there are good and bad people everywhere and I identify with the good people wherever they come from. Accordingly I have no wish to discriminate against foreigners en masse as patriotism requires. Is that clear now? I had hoped my original comment expressed it succinctly. I am sure a lot of Chinese would have understood.
Do you love your country Alan?
I do not wish to turn away all overseas investment but it seems you NBR rednecks advocate 100% of land and assets in overseas hands. Something that is unacceptable
I love truth, honesty and good people more. I would like to see NZ 100% owned by good people. I don't care about their ethnicity or nationality.
Are you serious in what you are saying? You'd be happy to have New Zealand100% owned by non-New Zealanders as long as they are good people???!!!
I would be much happier than if it were owned by bad New Zealanders.
If that was your argument, what a shame you expressed it so badly in your original comment: "Tell me again why should I prefer stupid, lazy New Zealanders to intelligent, hard working Chinese?".
If I talk about rich NZers do you think I am saying all NZers are rich? I expect to be read with a basic understanding of the language even by Lefties.
With your apparent qualifications Alan, I would expect you to express yourself better. But on reviewing your comments, your approach is to make wild emotive generalisations which you are not prepared to be held accountable for, prefering abuse instead. I think you vent rather than think, which contributes nothing to discussing issues.
Frankly I don't care what you think from your anonymous perch. When you contribute some substance rather than silly misinterpretations it might be different.
Why should the Chinese be allowed to buy our land when this is not reciprocated? Most of China is unpopulated.
Because NZ doesn't have to imitate a communist State, nor should it want to.
Notice how stupid kiwis like "Millsy 4" are quite happy to let New Zealand companies buy land overseas and exploit foreign resources but not let foreign countries do the same here.Completely ignorant of the fact that a high proportion of money used to support New Zealand's beneficiaries comes from capital exploited overseas.
Bang on Banksie - bullseye !
I despise the constant negativity of the Greens who appear to be absolutely bereft of any actual policy whatsoever.
The idea that they can cruise in to power by just bitching all day is 100% sickening and cuts against the grain - I'd love to see em all outcaste to say Irian Jaya or suchlike notwithstanding concepts such as inter generational equity are compelling.
Some fine oratory skills on display by the Banskster - assume the Ocker Doctor has his own compost pit in Epsom !
Yes, because wanting clean air and water is 'negative'.
I think you should do and chuck some industrial waste in a river, you know that is what you want.
The Greens want to block everything, tax everything and control everyone.
Anyone who wants to live their own life finds that negative.
So you think it is acceptable for businesses to discharge toxic waste into our rivers?
Depends on quantity, quality, toxicity and impact.
So now you argue that some levels of pollution and toxic waste are acceptable?
Of course. Life is full of compromises isn't it? Have you ever seen how much crap ducks and birds deposit in sewage treatment oxidation ponds?
Of course. Life is full of compromises isn't it? Have you ever seen how much crap ducks and birds deposit in sewage treatment oxidation ponds?
Depends on quantity, quality, toxicity and impact.
Depends on quantity, quality, toxicity and impact.
By implication, do you therefore mean that everyone should be free to do whatever they like? Do you deny any sort of contract of social responsibility in your free market?
People should be free to do anything that doesn't cause significant harm to anyone else's life or property. No I don't believe in social contract crap usually spouted by those trying to control other people's lives - and property.
Every time you stupid hypocritical greenies drive your fossil fueled cars you are supporting the extraction of oil in possibly hazardous environmental conditions in other parts of the world.Youre happy to destroy environments elsewhere on the planet as long as its not your own backyard.
Why don't you chuck some industrial waste from the Persian Gulf in your own bath.Thats what you want you dopey clown.
Stay staunch John. A few more principled and common-sense outbursts like that, and I just might get back in behind you. Political support that is.
The mans perilous himself, what's he still doing in parliament after his lying amnesia?
Good on John Banks for speaking the truth.As soon as we rid New Zealand of ridiculous Green policy,the better off New Zealand will be.
When you look at the tone of John Banks' article and the comments here, it is clear that there will be no reasonable, rational debate on this issue that will allow most New Zealanders to form an opinion.
So our future will continue to be in the hands of idealogues of either ends of political persuasion who use highly emotive and inflammatory language to justify their dogmatism.
Little wonder people are turning off politics and disengaging from society.
W
There is no rational argument against foreign ownership just as there is no rational argument against the asset sales. All are entirely emotive nonsense.
How comfortable you must feel in your own surety Alan. Is there any issue that you think a rational discussion of both sides is possible or is rationality the exclusive domain of your own opinions?
So long as you fail to produce the said rational counter-argument I will continue to feel comfortable.
By always denying any rationality in anyone's opinion or contribution that differs to your own!
You've already said there can't be any rationality in counter-arguments so your mind is already closed.
And the end result is that by denying any discussion you miss the opportunity to perhaps convince people of your point of view.
My mind is never closed. I just await the missing argument which you delay producing. Instead we get all this irrelevant personal attack nonsense which you feign to be criticizing.
Bit of selective history there Alan. The very first comment on the article is yours and its rationality is easily judged by both its abusive adjectives.
Shame you didn't choose to start things off with as intelligent a contribution as you made to the "QC slams move to make judges more accountable" article.
Still waiting, still no rational counter-argument. When am I allowed to conclude you have none and my judgment was correct?
Sounds like someone has drunk deeply from the "Free" Market Kool Aid punchbowl.
Yes the exact "Free" market cool aid punch bowl that has provided you with every conceivable consumer device you have decked your house out with.
Of course you could say that the "use of highly emotive and inflammatory language to justify their dogmatism" is in itself your own highly emotive and inflammatory language to justify your own dogmatism.
Of course there has been reasonable and rational debate on this issue and the conclusion we have is that the green view is totally absurd and Chinese investment is in New Zealand is warranted.
Then why is the public debate lost with so many opposed?
I would suggest that it is because there has been so much emotion and associated abuse surrounding the issue - from both sides.
Is the future we accept for the public framework for policy development?
The public, along with most MSM journalists, are financially illiterate. Economics should be a compulsory school subject - for teachers as well.
That is what the opposition has been able to exploit with emotive dog-whistling
Then I suggest Alan it is even more important for you to educate rather than abuse.
OK here's a couple for you to help the public on then.
When they are continuously being warned of the perils of the imbalance in our balance of payments, many are confused as to how repatriating New Zealand profits offshore will help this problem.
With increasing demand for food in the future, and New Zealand's efficiency in its production of food, there will be increased global interest in control of New Zealand production via purchase of the farmland on which it is produced. Many of the public realise New Zealanders can never compete with prices that overseas purchasers will be willing to pay and are therefore concerned at ever increasing overseas ownership.
No some of the New Zealand public ie greenies can't come to terms with globalization.The Chinese or anyone else for that matter have every right to out bid Kiwis when it comes to buying farmland in New Zealand.
Kiwi corporations,companies and individuals have been gobbling up offshore farmland for years and there hasnt been an ounce of concern,no opposition whatsoever from the greenies.All of a sudden the Chinese make a bid for New Zealand farmland big deal.....Well by your logic everyone else has every right to kick us out of just about every country in the world you jackass.
Your comments are nothing to do with my comments above about two issues of public concern and your accusation about me is untrue and I have not expressed any of the opinions you subscribe to me. Yet you still feel it appropriate to abuse me!
Alan, it seems you were being given a chance to offer your point of view re the above, so it is very disappointing in light of all your comments above that you have not done so.
I've just driven a 4 hr commute out of town so no chance to comment before. Catching up now.
Ok, first let's assume the BoP stats are valid though most official stats need to be taken with a pinch of salt as they depend on dubious assumptions, approximations and bad data. On top of that they are often a small difference between two large numbers estimated on different ways at different times. And I understand that the planet's BoP is also in overall deficit - presumably to the Martians.
Second, let's assume that this is something we should worry about - even though it is the result of other people's commitments, not ours, so it is their debts and investments at risk, not ours. Personally I think the only concern is to prevent the Government from wasting and risking our money by proxy.
So even with those big assumptions what effect will the sale to Chinese have on the BoP? The after tax profit will flow overseas. However that is more than compensated for by the purchase price which was greater than the NPV of the profit streams anticipated by the seller and by the alternative NZ purchasers. Therefore there is a net benefit to our BoP from the sale to the Chinese.
The net benefit is only in the short term, lost within three years. Then all of it is a loss to NZ.
Do you not understand NPV?
Yes, but your analysis using it is incorrect, as are your conclusions. If you are right, the purchase price will allow for ALL future profit streams!
You forget that the purchase price can be used to generate all kinds of alternative future profit streams. It is a balancing of risk and reward on the best judgments of the market participants.
So even with those big assumptions what effect will the sale to Chinese have on the BoP? The after tax profit will flow overseas. However that is more than compensated for by the purchase price which was greater than the NPV of the profit streams anticipated by the seller and by the alternative NZ purchasers. Therefore there is a net benefit to our BoP from the sale to the Chinese.
So the effect on the value of the NZ dollar is irrelevant and Bill English's concerns re the BoP are irrelevant and erroneous?
English is right to be concerned about debt, expenditure, productivity and efficiency. The BoP and NZ$ will look after themselves.
A classic purist free market perspective that basically identifies where you are coming from. You are entitled to your point of view. The fact that others, and many of the public, do not share it does not make them fools or lefties.
Correct, it is ideology that makes them Lefties and ignorance that makes them foolish.
Which is why most
Which is why most of the New Zealand public voted for National, a right of center classic purist free market conservative government.
Your second issue is ambiguous - I don't know if you are worried about the farms or their produce. However, it doesn't make any difference. In either case the same high international prices would fund NZers wishing to buy the farms just as much as foreigners, while high produce prices overseas would impact NZ produce buyers the same irrespective of who owns the farms.
I think the public concern is about the farms and increased international demand for those farms from countries seeking access to production that they don't otherwise have.
Such international demand is always likely to have greater access to capital and be willing to pay more for what they don't have.
That's fine. We can use their excessive payments to fund things we value more.
When this is considered in parallel with your statement that you don't mind who owns New Zealand as long as they are good people, your position is clear.
Yes, I would far rather the likes of Richard Branson owned NZ than those of Rod Petricevic or Hone Harawira.
Economic theory is mostly a matter of opinion and is not worthy of the elevated status that it currently has. Many of the problems afflicting the West stem from this silly belief that people who call themselves economists have a much better understanding of how the world works that everybody else. Every few decades a big shift takes place and everything taught in economics lectures suddenly is shown to be false, or at least a lot of it. We are witnessing one of those tectonic shifts at the moment.
That tectonic shift only seems to occur every hundred years,it is cyclical and highly significant but...things normally settle down and it's back to textbook economic theory as usual.
CORRECT. But at the end of it we will still be living in a democracy and will have politicians borrowing from future generations to buy votes in the following election.
#sigh# FFS beam me up scotty, I am convinced I'm on the wrong planet!! I just have to be,
Nice retort John.
What do you want perfection,no such thing.
Our current economic model is the only viable option as all the others are ultimately worse or just don't work.
You winge and complain about future debt and political corruption but your quite happy with all the consumer products and social services this system has provided you with.
Please explain what you would do.
I think you illustrate why it needs to be taught here. You might want to consider why Mr Noble thought it worth it's own prize.
Lets say NO foreign investment in NZ.
That will be great. Best we start getting used to using alternative energy as any listed electricity or gas generator will have to be funded by the local market, get use to having no oil or fuel companies as they are foreign owned and have invested in NZ. No airline as Singapore Airlines are a major security holder, no currency exchange system as we dont want other peoples filthy money, in fact we done want banking systems at all - after all, who do you think provides the capital for 'our' banks?? Not this third world country....so all the wantagreens out there, pull your heads in, we need foreign investment, otherwise, in about 3wks we would be just another broke pacific island with nothing that anyone wants....we wont have a diary industry as all the farmers will have their loans called on and then the wheels will fall off the rest of the economy.
NZ already has 75% renewable electricity, and is an oil and gas producer and exporter.
Inconvenient facts I know , especially for the Watermelons : Green on the outside ; Red in the middle.
An honest Green party would change its name to Socialist Unity.
And in case nobody has noticed , the RMA is being used to swiftly clean up the worst aspects of the dairy cowboys' abuse of the environment.
Expect to see the phasing out of nitrogen fertiliser; "dairy support" (nutrient overload on soils); and the introduction of a stocking rate limit based on soil type. One cow to the acre is a good start.
And about time too.
Most New Zealanders opposed to the Crafar farms sale are not saying no, never any foreign investment in NZ and it is mischievous to suggest that it is the mainstream argument.
Nonsense. Singapore Airlines bought 25% of Air NZ in 2000 and the following year the airline collapsed (while under private ownership) and was only saved from bankruptcy when the NZ government intervened and re-nationalised it. SIA's ownership stake was diluted to 4.5% as a result. SIA sold up in 2004, losing most of its investment. Our government now wants to sell you some shares in this glorious airline as it seeks to reduce its holdings from 80% to 50%.
Apart from possibly the Singapore Airlines comment everything from Anonymous #46 is exactly right.
"When they are continuously being warned of the perils of the imbalance in our balance of payments, many are confused as to how repatriating New Zealand profits offshore will help this problem.
With increasing demand for food in the future, and New Zealand's efficiency in its production of food, there will be increased global interest in control of New Zealand production via purchase of the farmland on which it is produced. Many of the public realise New Zealanders can never compete with prices that overseas purchasers will be willing to pay and are therefore concerned at ever increasing overseas ownership."
Farmer Brown muses :
It may be that the answer to both of those problems is the same; add value to NZ agricultural products.
NZ agriculture , and in particular the dairy industry , has failed to get out of the commodity trap , where low margins encourage more production leading, cetera paribus , to further lowering of margins.
As Bolger observed, NZ will never get rich by selling to the poor. If we want to be able to withstand the pressure from rich interests buying our land then we have to become rich ourselves.
Rich consumers don't actively seek out NZ milk powder, AMF or WPC : they still want clean green and FRESH. Not dairy products re-assembled from the aforementioned components and processed outside NZ.
The challege is still, after years and years of talk, (and they are still talking in some ivory tower think-tank) to produce the final consumer items in NZ. That means , in the case of the dairy industry, leaving the water in the milk , and selling the whole thing. That means far more cultured foods with adequate shelf-life being produced in N.Z.
It may also mean a more spread dairy season, which in turn will lessen the environmental damage of spring calving, and produce better utilisation of dairy factories.
What's the problem Fonterra?
Build a bridge y'all and play the ball and not the MAN
North Asians are animistic when it suits them you know - trees have their own souls and so on.
If for a second the thinking is that the Chinese will not ultimately own complete fully integrated milk ( products ) producing factories in NZ then sadly we are all naifs.
In any event and as ANZ's Shaghai CEO has explained its all a short term storm in a tea cup - in a decade or so the whole shooting match will be listed on the Shanghai stock exchange and our super fund(s) can buy it all back.
By then I assume Chinese will be at least 7 foot tall given our NZ milk products makes one tall and strong .
Cuppa Green tea anyone ?
Dead right Max, I am sure that vertical integration is the plan. But the farms formerly owned by Crafar will be losing a lot of money for quite some time if they continue to supply Fonterra , and Landcorp won't be much help.
Some of the farms will end up back in local ownership very soon, when it becomes clear that there is little or no profitability.
What is the nitrogen-absorbing capacity of pumice country that is being thrashed by overstocking? That's another can of worms that the regional council is about to open up.
There are a few more chapters yet in this little fable.
If free market only existed. Course it doesnt.
Different rules for different people/corporations. How can one buy into freemarket idealogy when its so flawed with monopolistics practises amongst other things.
One can only suggest that people who advocate freemarket policys must be either commercially/socially naive or have some personal gain from this. Follow the money and it will tell you everything.
Economies should be managed for the greater good of the masses, rather than the greater good of a select few.
Unfortunately modern capitalism doesnt work that way, so I'm all for protecting way NZ inc has left.
Bring your capital and live here for the majority of the time sounds like a fair tradeoff for foreign investment. People dont tend to destroy their immediate surroundings.
Unfortunately for your ideology even the Chinese and Indians and Russians have found that free markets, even when imperfect, benefit the masses best.
Ahh so youd prefer a planned economy where everyone is equally miserable apart from the select few.
Oh dear, here we go again, bouncing around from one extreme to another. Less ideology, more debate please.
I think the public concern is about the farms and increased international demand for those farms from countries seeking access to production that they don't otherwise have.
Such international demand is always likely to have greater access to capital and be willing to pay more for what they don't have.
Foreign criminal investors pay much better bribes
John Banks lives in a beautiful country but occupies la la land. We 'pakeha' got control in NZ by controlling land and through the superior fighting power of the English Crown.
History is coming round and our treatment of Maori is likely our ace in the hand.
Parliament has power because at present no one stands to take it from it.
Sell enough land, allow enough immigration or powerful governments far way away shift policy and things could be quite different.
How come the NOT-SO-HONOURABLE John Banks is still in Parliament?
Still waiting for an inquiry into why John Banks and Don Brash didn't have their 'one law for all' policy applied to themselves as former fellow Directors of Huljich Wealth Management Ltd, who both signed registered prospectuses for Huljich Kiwisaver Schemes which contained untrue statements?
How come neither the former (useless) Securities Commission, the Finance Markets Authority (FMA), the Serious Fraud Office (SFO) - nor the NZ Police equally applied 'one law for all' and charged Banks and Brash for a 'STRICT LIABILITY' offence?
(s.58(3) Securities Act)
Penny Bright
'Anti-corruption campaigner'
www.dodgyjohnhasgone.com
www.pennybright4epsom.org.nz
So we are to give credibility to a person who has only seen ten movies in his life and believes the book of genesis over science, you Epsom people are the living dead.
Isaac Newton hadn't seen any movies and believed some pretty strange stuff. But on some things he had a lot more insight than most of his contemporaries.
Judge the ideas, not the man.