Yesterday we saw the announcement of the long signalled change to the Labour Party’s policy on foreign investment.
Put pretty simply, land sales to foreigners will no longer be automatically approved. There has to be a very very good reason to approve them. There has to be a big value add to New Zealand. That almost certainly couldn’t happen with farms because we do farming so much better than foreigners.
This will mean a few things.
First, farm prices will not continue to spiral upwards out of the range of sharemilkers and others who have traditionally been buyers.
Secondly, the balance of payments will improve because the profits won’t head offshore.
Thirdly, products are more likely to be processed here rather than as part of a massive overseas based integrated operation.
Fourthly, Fonterra will not be a risk of becoming foreign controlled.
The announcement has been widely welcomed.
But Labour is confident that mainstream opinion favours a far more managed economy.
On top of that, the new framework’s emphasis on “owning our future” and restoring the country’s economic sovereignty has potent electoral appeal.
Bernard Hickey and his team are running hard on the issue.
And they are running a poll :-
Do you support Labour’s new policy of blocking foreign ownership of farmland and monopoly assets?
Click on the question to go straight to the poll
Yeeeee haaaaa, great move by Labour Trev
yes it’s definitely needed now that the predators are circling NZ!
Trevoe I also think that you should have quoted the other part of John Armstrong’s column
“the Labour Party has dumped on free-market-based solutions to economic problems and flagged a much more interventionist style of economic management.”
With Labour proposing to save the consumer 13 cents per day by taking GST off food, increasing the tax over $100k to 38% (10% difference between compant and personal tax) and a few other measures that were last seen under the good old days of Muldoon then Labour is taking a massive lurch to the left. While that will give the extreme factions on the left a reason to celebrate, it will free up the entire centre of the spectrum for National – so thanks.
This article on which you have written in interesting given that Labour signed off 650,000 hectres to foreign owners during their 9 years of government. Is this not a knee jerk reaction and a bid for the votes left up for grabs since the demise of Winston First? (Note here Trevor – that 4% of votes will not be enough to get you over 35%)
All the policy releases of recent weeks and at the conference, reek of desperation for votes. Elections are won in the centre ground – thanks for the gift.
So you are saying the rule is going to be
a) own a bit of land with some sheep, grass and storage sheds on it – you can’t sell it to a foreigner
b) own a piece of land with some sheep carcasses, asphalt and some large storage sheds – foreigners please line up.
Where is the difference and why is the difference material in terms of who can buy?
A couple of other things
First, how many sales of agricultural land have taken Place in New Zealand this year to local and overseas buyers, and which transactions do you really think are driving the underlying cost of land?
Secondly, How will you ensure profits from local industry are invested locally and not invested in offshore entities.
Thirdly, How many logs from NZ owned forests being processed here? Where does the alumina processed in Bluff come from? How much of Fonterra’s total throughput gets processed beyond milk powder stage in NZ?
Fourthly, tell us exactly how much land would have to be sold for Fonterra to be at risk of becoming foreign controlled? How realistic is this?
Just as an aside, regarding the land sales to ‘foreigners’ during Labours time. Would not a good proportion of that be to farmers from overseas who were coming here to live. be it Australia, UK (mostly) or even Germany
Reading the title of Trevor’s post shows this new policy is more and more becoming just another excuse for hollow jingoistic nationalism, not principled policy.
I have to agree with insider. Great idea on principle but the devil is in the detail. I consider that if something is for sale then it is for sale to anyone. The person selling has a right to get the best price available to them regardless of where the buyer comes from.
I think the real problem is the way that the world economy operates and the inherent nature of capitalism.
Monty said:
“Is this not a knee jerk reaction and a bid for the votes left up for grabs since the demise of Winston First?”
Could you get any more insular?
Could it be possible that Labour has seen how neo-liberal policies have failed AROUND THE WORLD, has seen the error of their own ways, and have decided significant change is needed?
No, the entire policy shift is just a knee-jerk reaction to a Chinese bid for some farms and the loss of a nationalistic politician.
The announcement has been widely welcomed.
By whom Trevor? Armstrong was reporting on the announcement, not welcoming it.
First, farm prices will not continue to spiral upwards out of the range of sharemilkers and others who have traditionally been buyers.
Can we have your promise on that, Trevor? The house-price explosion that occurred under Labour wasn’t because of foreigners.
Do you have any proof of the above assertions- or did you just make them up to suit the argument? Do you feel sharemilkers will be capable of running the huge businesses that dairy operations are becoming? Where are we going to get the technology and green solutions that we need?
According to the logic of these arguments- we would need to buy BNZ back from the foreigners too, not to mention all our wineries that are owned by the French and Australian wine companies. What is so special about dairy farms? What about the thosuasands od Australian and Kiwi expats who own property in NZ? Surely they are also contributing to teh problems you suggest are occurring as well?
I am in favour of this policy, but if we want New Zealanders to invest in themselves, they will have to have appropriate access to capital. On the one hand, we don’t want the fast and loose finance companies of the first decade of this century resulting in a repeat of the Crafar debacle, on the other hand, we don’t want farmers and entrepreneurs frozen out by over-cautious banks.
Perhaps there can be some government shared equity scheme to give New Zealanders a hand-up.
Gonna buy back the 600,000+ hectares you sold off when last in government?
Your track record in land sales is disgraceful.
Hi Trev,
Which of the hundreds of thousands of hectares of land sales to foreigners by Labour when you were last in Government did you oppose?
In part it was – the part where foreign money was flooding into NZ allowing banks to massively boost the amount of money that they were printing. This led to massive speculation on the housing market.
And there was also people coming in from outside NZ buying up homes. I heard of one that owned ~500 such homes and rented them out. He’d hadn’t built them – just bought them, so all it was was rent seeking producing no economic benefit for NZ at all.
Well, we could do it the old fashioned way and just do the research and development ourselves. We actually can do these things without being dependent upon foreign resources.
Can the banks – they’re the ones that caused the GFC. Get the government printing money (no interest component and offset with appropriate taxes) and spending it directly into the economy where we want it to be developed.
As for the farmers – they’ve been more farming for capital gains than actual farming for a long time now. If they lose because they backed the wrong horse then that’s their problem.
Have your say: Most foreign land sales would not go through under Labour, Goff says.
http://www.interest.co.nz/news/have-your-say-most-foreign-land-sales-would-not-go-through-under-labour-goff-says
About 45% of all dairy farms would have to be sold to a coordinated group of “foreigners”…
The problem I see is if NZ investors are hit with reciprical bans, also existing farm owners won’t be too happy with a loss of land value and finally we are very, very dependent on foreign investment at the moment – this could lead to an even greater slide in productivity and wages…
@Trevor
Good start, just to address the issue of lack of saving and local capital! This need policy need to be part of a bigger change.
The real issue still is cheap overseas money that lead to speculation. It drove prices beyond they actually value of the production!
Trouble is the banks are to tight with there moneys, so you need to reform the finance sector so it more willing to lend to farmers at better interest rates!
@Pete
Brought up some very important issue, I see that same problems as well.
@Monty
at least labour admits it need to change and to get ahead. Also its politics and your on the new right fringe. I wouldn’t call your views center.
“Is this not a knee jerk reaction and a bid for the votes left up for grabs” lol
Yes, your right monty, just like your beloved national accepted working for families, kiwi saver so it could get votes too…
@TopCat
Have you herd of cows, no herd of chickens. Clearly you don’t have even the slightest idea on how dairy farms work!
Share milkers can run dairy farms! Why, becuase they all ready run the day to day stuff plus the manage a lot of the business side as well as most share milkers have to supply there own farm equipment and do there own books etc.. (tractors, bikes, trailers etc..)!
@Insider
“Reading the title of Trevor’s post shows this new policy is more and more becoming just another excuse for hollow jingoistic nationalism, not principled policy.”
So is the USA, EU, China and Russia are jingoistic. Maybe, but they have more strict controls than we do right now.
In China and some EU nations foreigner aren’t allowed own land and the USA and Russia have very strict controls.
Yet all these nations are buying up NZ because we dumb enough to think some how it will make NZ better. No, instead we become a share cropping society. It maybe this idea isn’t principled but right now the current policy isn’t working!
@sean14
“The house-price explosion that occurred under Labour wasn’t because of foreigners.”
Well, cheap infinite (at the time) foreign capital that was being lent willy nilly to New Zealand that lead to speculation, plus the low intrest rates and no captial gains tax didn’t help the situation either.
@Decanker – so which capitalist countries are doing economically well? The good ole’ US of A a good example? The Scandinavians are all to the left and doing OK
@Red
I don’t know overseas investment rules, but it appears from what you say there are a range of policies and a range of outcomes and no consistency to them. What Goff and Trevor haven’t presented is what foreign investment was supposed to deliver and what it hasn’t. All they’ve done is make nationalistic statements like “Kiwiland”, which is frankly pretty mindless.
You say yourself “the current policy isn’t working” – but what is it, that is supposed to be working, that will change as result of more restrictions?
@Ian, that’s what I mean, maybe my comment needed better tone indicators.
Bastard,
Of course there are examples of people from overseas owning houses here, perhaps even 500+ in the extreme example.
However, I believe overseas owners only account for a small percentage of homes owned in NZ.
You are correct that overseas money flooded into NZ, allowing us to borrow a lot more to buy houses and pushing prices up as a result.
Even so, the blame for the bubble rests squarely with New Zealanders being willing to borrow silly amounts of money to buy houses, not with the people who lent it to us.
If you eat McDonalds three times a day and get fat, that’s your fault, not McDonalds’.
@insider
True, labour haven’t presented is what foreign investment was supposed to deliver and what it hasn’t.
What I mean by it not working is I thought the reason why where allow in foreign investment was to make the NZ economy better, high wages, high productivity, lower competitive prices (what has happened in some case’s!) and more efficient industries and economy.
Instead what we got is a low wage, low productivity economy. A lot of NZ industry that have become under foreign ownership have very little investment into them. Just look at telecoms, contact energy or our banking sector.
All that has happened is the asset striping what they can then run it a the very minimum of standard, just enough to keep it going and don’t bother to investing and ship all the profit back home. Just look what happened to our railway industry. There are many other issue to… but that should be enough.
Technically its ‘working’ but not in NZ favor! Kiwis should come first at the end of the day. I know that a jingoistic statement but we are the ones who actually live here and have to love it or lump it. These foreigners are just faceless owners who take the profit and walk away laughing to the bank and we are the ones who suffer the bad affect of this policy.
Foreigner Investor are the only ONES who have benefited from our policy, NZ got screwed! I’m not saying all foreigner investment is completely bad, it just the way it set up now, we getting rip off big time.
“appears from what you say there are a range of policies and a range of outcomes and no consistency to them”
What I mean is we need a who package, not just a new policy that just applies to property. NZ need economic reform, not more tinkering with a system that isn’t working that well.
whole* package
Absolutely no sale of monopoly assets. (power, water, ports etc.) Remember we haven’t made any progress since the last fire sale. (Telecom, rail, BNZ, network companies, Contact Energy etc) what did that prove. Absolute Zero. Selling the rest will achieve exactly the same.
@ red
Understand and I think you are right to look at ownership in context. Of course what you also have to consider is the possibility that FO has in fact delivered and things would have been a whole lot worse without it, and that new restrictions could make things really really bad.
Is this just to get Winston and his oldies on board? We need foreign investment if we are to grow and prosper.
@sean14
“Even so, the blame for the bubble rests squarely with New Zealanders being willing to borrow silly amounts of money to buy houses, not with the people who lent it to us.”
That is true but at the end of the day we will all get screwed and it would have gotten to the point it would be impossible to pay back the debt and that would even hurt the overseas lenders. Might I add its both parties fault, the lends and borrowers!
There no point risking the whole economy and every ones else money/income/etc.. just to fund silly speculation on the property market.
Remember, what might be good for that individual of concern is not always good for everyone else! We go to the point where we were throwing money down a back hole and nothing was coming up back out of it.
It was a illusion of progress and growth but just a con because we can be so short sighted, we had high levels of debt for no reason, we didn’t improve our productivity, wage or export income that much!
Humor
“If you eat McDonalds three times a day and get fat, that’s your fault, not McDonalds’.” lol Well go ask some Americans that who have sued McDonalds for making them fat and WON!
lol
@insider
“FO has in fact delivered and things would have been a whole lot worse without it, and that new restrictions could make things really really bad.”
It has delivered things but nothing flash, I doubt we would be any worse off. Right now things are pretty sluggish as they are! I don’t understand why we should prescribe the same medicine again when it clear it didn’t fix the issue in the first place, it time to try something different.
The only way new restrictions could making things worse is if they screw up the implementation of the new policy. If carefully and pragmatically done it should work.
If you wanted a house you had no choice but to pay the going rate and borrow at the artificially inflated interest rates that were a gift of the reserve bank act to foreign banks.
Blaming people for wanting a house to live in is ridiculous.
So is blaming people for investing in real estate when most other types of investment were obviously being gamed by a few in the know. What else could we do??
Time the whole ponzi scheme was stopped. It would be good if a few more countries told the bankers to get stuffed. We are not going to pay you for your gambling debts.
This has been a long time coming. I feel as if many of Labours supporters over the last 20 years have been voting out of share loyalty, most Labour supporters I have talked to have said they would like to see Labour return more to the Left. I have even seen this message in the comments of Labour MPs themselves.
@insider – Kiwiland is a damn sight better than New China
Trev and Goffy boy are gunna save our country from looting rich foreign greedy grabbers
Dylan – Labour is great, any Labour is great, because a Labour government is a good government
@Sean14 – go to Taupo during winter and count how many empty houses there are (many owned by rich North American’s), down the road from me are two houses owned by English people that come for 3 months each year. How many of those time shares in Auckland (that went bust) are overseas owned?
The good old Nat’s first action was to remove NAG 5 which empowered board of trustees of schools to serve only healthy food – under national schools can, and do, offer KFC as treats, a wonderful public health measure!!
Trevor – and be honest here – what would be your reaction if the Nats suggested a policy such as this?
I guess the reaction from the left would be that it would be economic stupidity, putting at risk economic development and jobs, and would probably result in a deservedly large amount of mocking about such a foolish policy.
You know that this is a stupid policy born out of desperation for relevance.
Is this yet another sign that Labour have thrown in the towel on 2011?
You’re working late tonight, Monty,
Be sure to have some food while you’re at it. 
i see the usual gang of eye patch wearers are out in force tonight. it is so boring having to wade through shallow, half bake dross that is obviously the result of seriously limited intellects before coming across any thing worth reading.
smhead… i thought the ranger had caught up with you? who paid your bail?
gratifying to see there are still people around prepared to actually think three dimensionally about issues. why is it they are all on the left? should being a reactionary troll be a notifiable disease?
How is it Monty you always reckon that you can speak for the Left? I’m Left and there’s no way that I’d be brave enough to vouch for others might say.
So you’re probably making it all up.
The towel is there to help National strategists clean up after soiling their pants this weekend.
Monty.. you really need to stop taking those heart pills… they’re fogging your brain… the obvious answer is that if(in some kind of mary poppins world) the nats proposed this kind of solution, then we would all stand up and applaud. then check that the water hasn’t been spiked…
@Monty
I tell you what is stupid. Giving tax cuts while already running a deficit then spend spend on thin air and borrow even more to fund a even large deficit you have created.
While your at it declare you personal need a bigger allowance (more money) because you can’t balance you home budget and leave us all wondering if you can be balance the nations budget.
That English is a real bright star, he almost out shine you
*personally
Don’t rag on English, he’s smart enough to award his own household an extra $300-400 p.w. in tax cuts.
And we’re borrowing to pay for tax cuts?
Well, my reaction would be to ask what else they’re going to try to squeeze through under the radar. I’d also have to see the policy to see if it’s what they said it was – NACTs ETS is obviously a gift of taxpayers money to polluters and not a serious attempt to curb pollution.
Nope, this is recognition that we’ve been going the wrong way for the last three decades.
I think this policy will largely hurt investors and farmers (not exactly traditional abour voters) and reduce the money supply and potentially reduce trade in NZ – lowering economic growth…
@JMH
It will hurt some farmers and investors who brought up during the speculative boom.
But it the long run this while drive economic growth as we don’t need to take on so much debt to own some land. It leave more money spare for investment else where. Some short term pain for long term gain.
Also, it does benefit farmers overall as low prices mean less debt to pay off and more money to spend. For investors, well, a lot of them where only just speculators anyway so this will only lower prices more and bring some stability to property prices!
We don’t really have much to lose.