Crafar Farms Sale Approval Surprising Only In That It Took So Long To Rubberstamp

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The announcement yesterday of Ministerial and Overseas Investment Office approval of the sale of the bankrupt Crafar Farms to Chinese buyers is no surprise to the Campaign Against Foreign Control of Aotearoa (CAFCA). The only surprise is that it took them so long to rubber stamp it. This was all supposed to be a done deal back in 2010 when it was supposed to be sold to the first lot of would be Chinese buyers. That all turned to custard because of an even greater of lack of good character than usual of the company’s principals, who are now facing serious criminal charges in Hong Kong (but nothing in New Zealand, which tells you a lot about the diligence of NZ’s “regulatory” authorities).
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Sale a “political hot potato” prior to election 

So it became not only an embarrassment but a political hot potato, one which exposed deep rifts within National’s supporters and within the Government itself, at the highest levels. It was parked up out of sight until after the election. But it has still taken a further two months to find the cans of air freshener with which to mask the stink of what is yet another huge sale overseas of New Zealand’s comparative advantage in the global market – prime agricultural land (of which they ain’t making no more).
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The lily is being gilded by the announcement that Landcorp will manage it on behalf of the Chinese buyers. Everyone knows that there is the world of difference between being the owner and the property manager. Ownership is power; owners make the decisions (including onselling it); owners get the profits. The lily is being further gilded by a number of conditions being attached to it (Labour set the precedent for this in regard to the equally controversial Shania Twain land purchases when it was in office). Conditions such as the buyers remaining of good character (this could be renamed the May Wang clause) and paying millions of dollars to various worthy causes. These should be taken with a well deserved grain of salt. Why? Two words – Kim Dotcom.

Prime Minister “disingenuous”

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The Prime Minister keeps issuing soothing noises about foreign land purchases only totaling around 1% of the total land area. He is being disingenuous. What is important is what percentage of the total area of productive land is foreign-owned. These statistics are no longer issued by the Overseas Investment Office but when they were, last decade, CAFCA calculated the figure at 7% - and it was never officially denied or disputed. We’ve seen no evidence of that figure having gone down, quite the opposite. Plus the PM is stressing quantity when, once again, the key factor is the quality of the land being flogged off overseas. Foreign buyers are cherry picking, not buying the rubbish (that’s left for the locals).
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CAFCA stresses that the race of the buyers is irrelevant. Flogging the Crafar Farms overseas is reprehensible regardless of whether the foreign buyers are Chinese, Americans, British or Australians. Despite attempts to reorient the economy into other directions (finance companies, anyone?), New Zealand still remains an agricultural country. And we’re very good at it, which is why foreign buyers want to snap it up. CAFCA doesn’t carry any flag for Michael Fay’s rival bid. All we need say about him is that patriotism is the last refuge of the scoundrel. The opportunity to have the Crafar Farms genuinely stay in local hands was lost when the receivers rejected Landcorp’s bid to buy them (which gets the management contract as a consolation prize). The Prime Minister said in 2010, when controversy was raging about the original Chinese proposal to buy these farms; that he didn't want to see New Zealanders become tenants in our own land. A commendable sentiment, one with which CAFCA completely agrees. But yesterday’s decision by his Government ensures that is exactly what is happening.
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Visit the "Save The Farms" webpage 

Finlay McDonald on Overseas Investment Act

Bending over backwards for foreign coin

By FINLAY McDONALD - Sunday Star Times

Last updated 13:19 22/03/2009
When governments announce a "review" of some piece of policy or legislation you know what it really means: we're out to change this but, for appearances' sake, we'll go through the motions of inviting submissions and "opening it up for discussion".

If you doubt this, just wait for the "outcome" of the government's review of our overseas investment regime.

When I heard Bill English announce it, I almost laughed. After all, New Zealand already has one of the most liberal foreign investment regimes in the developed world. Claiming it needs further liberalisation is akin to saying bullrush has too many rules.

Or as Murray Horton of the Campaign Against Foreign Control of Aotearoa put it with characteristic wit: "If the door is already left permanently unlocked, with a sign saying 'Come On In and Help Yourselves', this proposed law change will simply remove the door - and probably offer it for sale as well."

As usual, though, the cheerleaders of deregulation were pretending such an overhaul was vital for the public good. The head of the New Zealand International Business Forum offered this piece of highly researched wisdom: "Anecdotal evidence suggests that some foreign investors are deterred by our procedures even though most applications are in fact approved."
Say what? So just in case there are some impatient buyers out there who won't even form an orderly queue to snap up the local bargains, we should get that rubber stamp moving still faster . . . so sorry to have kept you waiting, sir!

And rubber-stamping it is. Before it was folded into Land Information New Zealand, the Overseas Investment Commission acted like a hotel doorman, ushering in everyone from billionaire kleptocrats shopping for scenery to multi- nationals in the market for repatriated profits.

In this the commission was ably assisted by laws designed to ease the process. The previous Labour government's Overseas Investment Act in 2005 bumped up the threshold for foreign buyers needing official approval from $50 million to $100m. If there was anything positive in that legislation it lay in marginally increased protection against foreigners buying land of "special heritage or environmental value". This was largely a sop to that annoying sentimental streak in many New Zealanders, who don't like the idea of flogging off bits of their birthright to any old Tommy Suharto, let alone Dick or Harry.

But while land sales have immediate symbolic resonance, it's the wholesale buying up of our commercial assets that the system has truly enabled. Since we put out the welcome mat in the 1980s, nearly half the sharemarket has fallen into foreign hands and nearly all of our major companies are substantially or totally foreign controlled. Billions in dividends and profits have flown offshore since.

Overseas investment rules are themselves part of a bigger picture - free trade deals and our bipartisan commitment to Gatt form the framework within which we are almost obliged to hustle for foreign money. The textbook justification for this, of course, is that capital, expertise and access to bigger markets flow in with the cash. Jobs and growth are created, we become part of the great global economy whose benefits should be obvious to all.

In truth, the massive hikes in foreign investment and ownership over the past decades have done little to improve our lot. New Zealanders have become increasingly indentured to foreign masters, working harder and longer for less. This is the process the current government wants to make even more "efficient".

So where's the outcry? Maybe the Maori Party will draw another line in the sand over mana whenua - if they're not too busy doing private prison deals with their new mates, that is. Don't expect much noise from Labour. It would be an act of considerable philosophical contortionism if they were to repudiate the essence of the very legislation they nurtured to its present state.
No, unless public sentiment is roused sufficiently by the prospect of another Auckland airport or similarly strategic asset being put on the block, review will duly become reality and, by the time the global economy picks up again, our overseas investment express lane will be open for business.

Greens Press Release on Overseas Investment Act

Dr Kennedy Graham

The Government seems keen to put the 'For Sale' sign up on land that is currently off-limits to foreign investment, said Green Party MP Dr Kennedy Graham.
Finance Minister Bill English this afternoon attacked the rules around foreign investment as too complex for business. Of particular concern to Mr English was the fact that processing a sensitive land application involves the assessment of 27 different criteria and factors.

"There is a reason that rules around overseas investment in sensitive land is complex – we don’t necessarily want overseas investors buying large chunks of pristine New Zealand land and turning them into golf courses or amusement parks – or coal mines" said Green Party’s Foreign Investment Spokesperson Dr Graham.

"The Government and Act seem intent on greater foreign ownership of New Zealand for the sake of uncritical economic growth. However, when New Zealand firms fall into foreign ownership, dividend payments flow offshore further worsening our current account deficit. "

"Passive investment into New Zealand should not be confused with productive investment. The former simply exploits our country's productive capacity doing nothing to enhance our productivity. New Zealand if anything actually needs smarter foreign investment rules not weaker ones as National is proposing," said Dr Graham.

The recent jobs summit and the calls for regulatory reform were given as major reasons behind the latest push to weaken regulation around what land foreign investors can purchase in New Zealand.

"Which criteria does the Government want to weaken? Is it the criterion that protect indigenous fauna and wildlife or is it kiwi jobs and technology that will be sacrificed for the sake of overseas investment?" asked Dr Graham.

"Perhaps the Government would like to drop protections relating to public access having just mooted a proposal for a nationwide cycleway?"

"I acknowledge the Government’s desire to attract investment in the belief that this is good for the New Zealand economy. But that desire has transformed into a fetish. It needs to be resisted."