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Stop stealing to make us roar

HIDESIGHT

The prime minister is right: it would be great to make New Zealand a magnet for investment.

There’s nothing better: Foreigners buying up New Zealand businesses, freeing up Kiwis’ money for more productive uses, and still getting to benefit from the companies. 

It’s perfect. In fact, it’s better than perfect: the foreigners only make money if they do a standout job.

It’s like foreigners undertaking to repair and maintain your house, paying you to live there and only taking rent for the improvements they make and pay for. You can’t get a better deal than that.

Of course, the Left hates foreign investment. It’s deaf to 200 years of economic theory and blind to how the world about them works.

The Left thinks owners run businesses by dictate. They don’t. It’s the customers who boss businesses around.

Business owners must pander to our every need, our every want and our every whim. That’s just to keep their investment. If they don’t, business owners go bust. 

The market’s great success is that it makes consumers king and queen. The Left doesn’t like the result but that’s because it is elitist and wants to dictate what the common man and woman eat and drink, how and when they take their entertainment, what work they do and when, and where and how they live.

The Left would also like to take charge of what they think.

The anti-market, anti-investment sentiment within New Zealand is the biggest impediment to more investment and increased opportunity and prosperity. I have no solution to the problem: it just is.

The next impediment is high tax and heavy red tape. The government eats into prospective returns and heightens dramatically the risk of investment. Who can tell how long a resource consent application will take and what the outcome will be?

We also have two further unsavoury developments. The first is the literal extortion that the Resource Management Act enables Maori groups to exploit to ruthless advantage. It’s disgusting and a big investment turnoff.

The switch here is simple enough: Maori groups should have no more say than anyone else over how owners use their own land and resources – and that say should be next to none.

The second development is the government’s ever-increasing willingness to take private property and dictate its use. At least it was controversial when Helen Clark ordered Telecom to allow its competitors to use the copper wire Telecom had bought and paid for.

But now John Key’s government has designated 840 properties in Christchurch for an “Innovation precinct”. There’s been no outcry. In fact, the plan has been declared “bold and innovative”.

Imagine it: “We need innovation!” “How are we ever going to make that happen?” “Not sure.”

“I know, I know! We will make a precinct. And declare it for innovation.” “How you going to do that?” “Not sure. But we could make a start by pinching everyone’s property!”

“Do it in Christchurch. It will look like we’re doing something.” And so it was.

That’s not an auspicious start for an innovation boost. Or for making the country a magnet for investment. And the criticism from the opposition? The Key government is too “hands-off”. 

It’s simple to make New Zealand a magnet for investment: Don’t steal! Don’t steal! Don’t steal! That means low flat tax, no red tape, no Treaty squabbles and no “designating” property willy nilly.

Mr Key should sign up for that. Get David Shearer to do the same. And they both could sit back and watch the country roar.

But I guess that’s the problem: what would politics do? Nothing. And that’s not politically sustainable.

More by Rodney Hide

Comments and questions
42

Rodney, all the left want is an efficient, undistorted market, people sharing in the wealth we generate as a community and a clean, sustainably utilised environment to live in. Its as simple as that. Globally, what have we got? In New Zealand what are we getting? Whats the problem? I think it is something to do with principles and values.

You see, when you start, quote: 'all the left want is an efficient, undistorted market...' everyone is laughing so much, even lefties, they won't make it through the rest of your post. Might pay to hit the text books and understand what you're advocating Marxist.

You fool. You fell into my cunning trap. A market undistorted by corporates and monopolies. Revise your own tunnel vision.

Pandering to their customers, just like the power companies, Telecom, Fletcher's, and the Banks all do. What a wonderful world you believe in Rodney, just as make believe as anyone Marxists or the Religious live in.

Yes, and the definition of each of those vague values differs from leftist to leftist. That's why we need fundamental property laws where don't steal means just that and applies equally to the State.

John, they are universal human values. If you don't know what they are you are the face of the problem. Property laws. Oh yeah, they are the ones the Waitangi Tribunal are trying to apply and everyone gets all upset about them.

Hi Marxist,

An "efficient, undistorted market" occurs where we respect each other's property and let people get on with their lives and trade their property as they best see fit.

Is that all the Left want? Sign me up!

Hi Rodney

The distortions don't generally come from Governments. They come from the inherent nature of the market itself where people getting on with efficient, unprincipled activities in the market place result in the development of massive, distorting corporations and monopolies. Good corporate citizenship is principled and esteems human values. Bad corporate citizenship occurs more often and Governments, depending on their links with business (and their red lines) are obliged to intervene or regulate. The seeds for capitalism's destruction are sown from within. Principles and human values are the great moderators. Respect is one of them.

"The distortions don't generally come from governments" - you must know this is untrue. Look at Fannie Mae/Freddie Mac's role in the US housing crisis to see how government interference can have disastrous consequences.

The new deal was all about the US Government intervening because of market distortions that the market caused themselves. The Government didn't cause the distortion. The market did. The government intervened to try and "undistort" it. If the market was more influenced by adherence to those human values and principles we were talking about, would the market crises that we regularly experience happen? If markets don't want regulation and intervention by governments, purportedly acting in the best interests of ALL their people, then they should act ethically. Sub prime mortgages became an issue because of poverty ie a distortion of the market.

Again, government trade protectionism messed up the markets and prolonged ressecion into depression.

What the left wants is control and now that they are in the ascendancy thanks to Obama, they aren't even trying to hide that fact.

What they are doing is the old "never let the opportunity of a good crisis go to waste" mantra, even the wording "manufacturing crisis" is front and centre (for sure manufacturing is struggling for some businesses, yet does that mean "crisis" or just the cycle of business?)

What people need to do is read history.

Despite the cool Split Enz song, history does repeat if people are let to forget what has happened in the past.

A flat tax is certainly the way to go and I'm pretty sure the polititians know that it works and is the most equal way to go (I hate the word fair used in this regard).

As Dr Carson said in his speech last week, if a billionaire has to pay 10%, and has 10 billion then that's a billion dollars. If someone else has 10K then it's a thousand.

Those that oppose this type of tax often say that it doesn't hurt the billionaire enough (not enough is stolen in the context of today's article) but, a billion dollars has just been taken. Why hurt someone that's just coughed up a billion in tax?

Naturally all loopholes will have to go in such a scheme which means less fees for tax consultants and accountants, in that area but the money people earned and can keep can be used for more investment and growth.

Obama a leftist? You are as deranged as the Tea Party in the US of A. Obama is a stooge of the Bankers and Oligarchs who run the US through their Lobbyists and paid for politicians. He just belongs to the slightly less Reactionary wing of the Rep/demo duopoly party that has strangled the American Republic for decades.

I struggle to take seriously anyone who uses the phrase reactionary in this way *i.e. is serious...)

Reminds me of the earnest political science students Rik Mayal modeled his Young Ones' character after.

..next you will be promoting "vegetable rights and peace..."

You ask. What have we got?
We have got a huge number of people who refuse to contribute to a co-operative society. These people believe that they are owed a living and will not contribute unless they get a job doing what they like where they like and when they like. That is what we have got and we have politicians encouraging that attitude.

Are you referring to the ones that are disillusioned by the unfairness behind the lack of wealth sharing and the lack of opportunity to express themselves as the people that they are? A revolution by stealth perhaps. Observe Greece.

Yes I am! For they are the same peeps that refuse to participate in society and demand a share of a workers income for nought in return.
What is, "a share of a workers income for nought in return"? I hear you ask.
It is a "welfare benefit".

Anybody who thinks that markets, sharing and the environment are simple hasn't begun to comprehend reality.

The characteristic of the Left is the demand to control stuff they don't have a clue about.

Alan you are obviously out of date with the evolution in thinking that is taking place in the new left.

Another well done Rodders...

There is plenty happening in the economy...yes, no where near enough action but certainly a lot better than most of Europe, the US and the UK, but still we can do more as a country.

I would so love for this government to take a practical outlook on "new" possibilities to help solve old issues... And medicinal marijuana is front and centre on the radar to turn lemon into lemonade.

Supposedly hemp seed has more Omega 3 than even King Salmon, making it more nutritious by size than just about anything else. Then there's the other practical uses for hemp... Rope, soap, textiles, paper/parchment, bio fuel giving better metrics per acre than palm oil, and then theres the medicinal alternatives to very harsh and toxic manufactured medicines.

Brash's message was right... Just not so the clumsy messenger.

Being completely realistic and pragmatic about this naturally growing herb, considering it has been here for decades despite untold efforts and costs trying to eradicate it... It's even more wide-spread, easier to get and more prolific than ever.

Prohibition has never worked, anywhere on anything. Fact.

Why try to swim against the current, like it or not, when a far more practice and life enhancing optIon for many terminally Ill people would be medicinal options this God-given herb provides?

Surely peer reviewed, safe for consumption and quantified medicinal marijuana as an added value butter product would reap huge, huge benefits for NZInc on the world stage and also as a first-mover advantage providing trusted and credible medicinal marijuana butter terminally ill patients could then use to bake medicine with.

Yep, some will abuse and use purely as an intoxicant... Just like alcohol, but that's not a valid arguement to deny NZ inc this opportunity to corner this market, whilst helping pain sufferers ease symptoms and side effects.

In the US, this fledgling industry is creating Billions in tax revenue for State and local governments, against Federal laws... And the industry is booming.

NZ has the biggest world advantage than any other country... We have Fonterra. Imagine cottage industry growers around NZ teaming up with the likes of Fonterra...and the final end product is medicinal marijuana products the world is screaming out for...

Practical solutions to numerous issues can be found here. It's about time we addressed the "politics of marijuana" and the propaganda the US feed to the world on this herb through the powerful alcohol industries, cotton/textile industies.

How about some unbiased,scientifically peer reviewed debate on the benefits or otherwise of the potential of this herb?

After all... It grows like weed.

Hear, hear!

He he Mr Hide. Looking forward to the reaction from your flurry of topics. I love it when you take a stick to a hornets nest.

We have so much regulation and yet a Tech co can be sold overseas after having the benefit of our taxpayer money to fund it and the money does not have to be paid back... how is that fair??
Richard Yan can take all the money from Mainzeal and buy Chinese property investments then simply wind up Mainzeal and leave all the NZ businesses with the debt.... how is that fair???
We need sensible regulation to stop the rorts

You've already said we have a ton of regulation and you want more?

Here's a question for you, do countries with a lot of regulation grow faster or slower than countries with less regulation?

I agree that we have a lot of regulation already. How about enforcing what we have in that area rather than creating more?

By your logic you prefer third world countries. However their fast growth usually comes from crushing corruption not deregulation. The highly regulated Scandinavian model outperforms the more corrupt Anglo Saxon one you so love.

A lot of third world countries are just that because they do not have the rule of law and property rights.

Corruption means that the regulators are not enforcing the regulations properly so you missed my point there.

Which Scandinavian model are you refering to, the one in the 70's and 80's with high tax and control (which was unsustainable) or the one they have now with school vouchers and a more Thatcherite model?

Helen Clark wanted NZ to be the Scandinavia of the South Pacific. I wonder if she still wants that now that they are going towards a more open market model?

This is a poorly written article. Rodney's prose and thinking are confused, although he is right about the fact that we are being ripped of by now frauduent iwi claims, and, as a result, are now being impoverished in so many of the areas that badly need addressing, and where funding is badly needed.

Moreover, the issue of New Zealanders being priced off their own land is not a minor one. Nor is the fact that foreign investment removes huge profits overseas that could have remained in New Zealand hands. Fact.

Worse, we are being colonised commercially by Chinese companies underpinned by a ruthless, aggressive and indeed predatory Communist government. New Zealanders are losing their jobs in hundreds weekly, and forced out of their own country to work.

Scandalously, how many know that the OIO has no mandate to consider the potential downside of overseas applications to buy New Zealand land? Why not?

Why is it is only mandated to consider the possible benefits - many of which don't even eventuate?!

As a people, we are being ripped off in so many ways. It is ridiculous to say that New Zealanders still own New Zealand.

This is not a question of left or right or any other extremist ideology. The facts trump all the self-serving rhetoric. New Zealand is suffering.

So what is your solution?

Rodney, A business does not need to buy land to operate -- in fact this is an unnecessary cost. So why the desire to buy land -- because it is cheap, a bolt hole and can be sold on to other foreign interest in the future for a good profit with no taxes to pay. Who misses out ---- the New Zealander who sees land prices soar away from the level he can participate.

No land sales to non residents and overseas interests, and encourage long term land leases. Then we will see if they want to invest in New Zealand or just snap land.

Think for the future and not your short term gain.

The non sale of land to overseas arguements perplexes me.

I mean, they can't take the ground with them, usually have to pay rates, and often have a comercial use that pays tax and employs local people.

If people really don't want the overseas people buying the land then don't sell it to them. If it is sold then it can always be bought back.

In terms of taxes to pay when selling well that depends on circumstances and there can be tax to pay on some property transactions.
NZ does have a capital gains tax on property which is something a lot of people do not seem to realise.

You are right they can't take the land but by allowing overseas investors to use land as a commodity to be traded is to create an artificial inflationary pressure on land and indeed property prices. If investor see real value in a business why do they need to own the land that the business operates on. This additional cost of investment just ties up capital that could be driving investment in the actual business that is creating value for the investor. For an overseas investor by allowing the purchase of land as well as the business is a double win. The IP in the business can be purchased, production moved offshore to create increased margin on the trading element of the business and they still own the land which is increasing in value as well. So NZ has lost the value of the trading business and then when the land is sod the profit on the land sale moves offshore as well. Profit offshore losses in NZ.

Generally foreign investment is a good thing, but excessive foreign investment of hot money that can leave quickly and precipitate volatile trading conditions, highly unstable exchange rates and financial crises has proven to be devastating for other countries in the recent past.

Be careful what you wish for?

Foreign hot money - doesn't matter, see monetarist economics

Volatile trading conditions - only matters in the short term, businesses are long term oriented, sorts the strong from the weak, overall not too much of an issue

Unstable exchange rate - the financial products are available to manage this, only matters for individual consumers

Financial crises - unrelated (in general), fear of crisis helps to manage the market and ensure stability (in theory, usually but not always the case in real life)

In 1938 Britain owned something like 25% of all US businesses - it was British investment that helped the USA to grow - certainly didn't hurt the US at all, even 'though profits went offshore to the UK. Would be the same if overseas interests invested in NZ.
(In passing, Britain sold it all to the US to buy armaments for the '39-'45 War - but that's another story.)

Hi Rodney.

Well said, Rodney
Another stellar article that presses all the right buttons.
When are you again going to take a political role; we need you!
liberte

Well said, Rodney.
No argument on your points but where do we find the person with enough courage and vision to make the necessary moves?
WG

there are so many small simple things that could be changed to better spend our tax payers money, limiting what they can spend on for one.
i t is supposed to be a hand up after all!. i know i cant go somewhere and get given money without it having terms associated with it, so why should they not live by the same real world rules as the rest of us?
i am at a loss as to why the Government can't stipulate that only only 95% of overseas owned companies profits can be shipped offshore, i mean would they really miss it? i doubt it.
at least then the balance could be invested in New Zealand.
it makes not one ounce of difference weather we choose left or right, its a balance of whats best for New Zealand and that will always involve a mix of both.

Oh, come on. Give Rodney a break. We know he doesn't really believe this nonsense. "Freeing up Kiwi's money for more productive uses'. We know he knows this isn't true, otherwise every time another foreign company gets bought up by a a foreign company we would move up the international rankings for wealth earned. But despite all those well-documented problems in other countries, we are not. The two fallacies in this are that the money the locals make from these sale will go into MORE productive uses instead of consumption.That's why Auckland housing prices keep powering up, despite overall NZ population growth being static and we the government is still borrowing nearly $1bn a month. Let's see what MORE productive use the guys who sold out the $500m Envirowaste business to Li Ka-shing do with the money. Rodney, diarise it for next year and tell the readers what happened to the money. This is is not to say that we don't need foreign investment. Not at all! It is to say that it must be part of an open international investment architecture where our investments are going out into the world and would, roughly speaking, balance out with foreigners coming in. Except, of course, they don't. As a nation we still are not saving, despite all that thas gone on in the last few years. Rodney, please focus like a laser on ways to fix that (since most of the developed world pay their way, including most of the undeveloped world there are plenty of models on how to do this). So before the last Kiwi business is bought up by foreigners please make sure that part of the equation is fixed.

"The switch here is simple enough: Maori groups should have no more say than anyone else over how owners use their own land and resources – and that say should be next to none."

Rubbish. We should all have a say as to how land is used...you are the caretaker of it and no more. For example, does Rodney think that if I own 2000 hecatres of high country i should be able to burn it bare and then let it erode to nothing? Should I be allowed to strip my topsoil until none is left so the land is useless in future? Go figure.

In considering what to do with your land/business/money the decision must be informed by principles, values, ethics and morality.

Foreigners buying land and other existing infrastructure as a passive investment does NZ no good at all. We need a land tax to make sure they do pay some tax. The Chinese especially are good at making sure they pay no income tax (on company earnings) at all.

Rodney is getting a little like Bill Ralston in that he lazily quotes facts that he hasn't really bothered to check.