John Key said last year :-
“As a general and broader principle I think New Zealanders should be concerned if we sell huge tracts of our productive land.
“Now, that’s a challenging issue given the state of the current law and quite clearly it’s evidentially possible and has been achieved that individual farms can be sold. Looking four, five, ten years into the future I’d hate to see New Zealanders as tenants in their own country and that is a risk I think if we sell out our entire productive base, so that’s something the Government will have to consider.”
Let us be absolutely clear. John Key can ensure the farms stay in NZ hands. English can reject the sale. He has grounds.
There is an alternative ragtag group of buyers around. But my preference would be for Landcorp to buy, bring the farms up to acceptable environmental and vetinerary standards and flick all those that don’t form a logical part of Landcorp’s ongoing operation onto Kiwis. Preferably sharemilkers not corporates. That is Landcorp’s principal role – farm development and sale. They could probably sell a few they currently hold to help finance the purchase.
I am very uneasy about wholesale ownership of land by foreigners, particularly these Chinese businesses who would like to run the farms, and process their own milk – essentially all the benefits are taken from New Zealanders. Ideally though, a (private) New Zealand group would buy the Crafar farms, however the farms are not considered up to scratch, as you allude to in your post, and are not worth the price the Chinese want to pay – not to New Zealanders anyway. If foreign bids are all turned down by the OIO, that might force a viable price for NZers, but that is more trouble for the receivers – I don’t want to see a SOE going into a bidding war with some cashed-up Chinese for sub-par assets.
Removing foreign buyers lowers the capital value to the owner, should we do the same to the housing estate to those that are not NZ citizens, so that your house or houses Trev get depreciated to a level that first home buyers like myself would be able to afford?
I doubt it is economic to take the milk from Crafar farms to supply a single factory owned by foreign interests – they are scattered all over the place.
Even if that was the case, load of BS to say all benefits accrue offshore – NZ’ers will benefit from money spent in the NZ economy from the farm, to the factory, to the port, i.e. inputs, wages and taxes etc.
Sure some of the economic surplus may head overseas, but thats the return on foreign capital invested – how different would this be to a NZer who has to finance the purchase through banks, who borrow the money from overseas, and send their profits back there.
Hey Trev, your mate Nash says NZ farmers pay no tax, ie no profit to do so – so whats the problem, if the foreign investor makes no money to take offshore?
Everything has its upsides and its downsides, and I would prefer New Zealanders to farm New Zealand land. It’s very nationalistic, and emotive to me for some reason. I don’t actually have the details of the new bidders on hand, but Natural Dairy Holdings/UBNZ, the former bidders, had a plan for vertical integration of the dairying operation with a strategy for more expansion, that I was concerned about. I support the Free Market, but New Zealand is here for New Zealanders. It’s definitely true that we won’t advance economically if we let overseas interests buy everything. We need some investment at times, but aggressive buy-outs of farming land are not the answer. If overseas people want to invest in New Zealand, they should also be investing in Kiwi know-how, and Kiwi people.
K1W1
Simple mate exclude foreigners from buying New Zealand land or houses.
And apply a CGT on all commercial activity, including rental property and farming. Much of the income/gain from both is in CG and is untaxed.
Why don’t you go one step further SPC and make it retrospective? You can take my house off me as i’m a foreigner, mind you it’s not worth much any more after it went ‘green-blue’. I have an English mate in Parklands, you can house his house too. Go across rural Canterbury and Otago and you’ll find heaps of South African’s who own farms or sharemilk. You could take their farms off them and remind them so much of why they left South Africa in the first place.
softstarter, foreigners don’t live here. Migrants are no longer foreigners.
Foreigners not buying land is not unique, the same applies in Oz but that does not stop New Zealands who want to farm in Oz from doing so.
Apparently the plan is to sell to Chinese (buying the land because we have no CGT) and have them rent the land to Landcorp.
Turning the state into an agent aiding and abetting tenant farming.
http://www.voxy.co.nz/politics/keys-kiwi-dream-tatters-cunliffe/5/112309
Why National has sold out is explained here, the Chinese are donating money to the National Party.
http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=10771749
Xenophobia was and is the backbone of NZ First. It should have no place in Labour. There are some disturbing nationalistic attitudes in this pending decision that reflect an underlying anti-Chinese racism dressed up as nationalistic interest.
I’m not sure you’re saying what you mean to say, Trevor, re “and flick all those…onto Kiwis. Preferably sharemilkers not corporates.”
Sharemilkers aren’t the opposite of corporates. A sharemilker is an entity that contracts to operate the dairy but doesn’t own the land. A sharemilker can be a company (corporate).
I think the meaning is that many farmers can only afford the deposit for a farm by working as sharemilkers first and many farmers choose this route to that end.
A similar concern is the affordability of first homes, this could be occuring in farming if foreign buyers etc bid up the price to make the untaxed CG.
I don’t think concern about foreigners bidding up the price of local assets (especially because we lack a CGT) is based on xenophobia about the Chinese or any other foreign nationality per se.
SPC many farmers simply finance their kids into farming with soft loans which is where the heart strings are tugged at generational farming. You want to subsidize that further so the land owning class becomes wealthier? I think not and I don’t think working class people should have to.
The problem of the increasing price of land and residential homes is a circular one. One team wants prices to increase, the other wants them to fall so they can afford to buy and then profit later. All parties are self interested. Government has no place in intervening in that.
Landcorp should be selling their farms not buying new ones. If Labour were consistent in their argument about wanting farm prices to drop they would support any mechanism to ensure the market isn’t distorted with Landcorp’s state intervention.
Landcorp in my view should be hocked off well before power companies and dams as it is providing low returns but far more importantly distorting the market.
“They (Landcorp) could probably sell a few they currently hold to help finance the purchase”
Nice to see the author promotes asset sales where appropriate. Trading one asset for another. Kinda like the Mixed Ownership Model…
If the Chinese buy these farms, what guarantee do we have that the Company will export pure milk powder and will not doctor it with other substances for more profit – how would that affect NZ’s reputation in the Chinese market place? I don’t feel like trusting their honesty – corruption is a way of life in China!
@sbw What nonsense. Landcorp’s main role is to trade in farms. Buy develop sell. Lke Meridian selling electricity or offshore windfarms. Nothing to do with the companies ownership.
Jennifer the regulatory system will be ours.
@Pat. Don’t care if the buyers are Aussies, Yanks, Poms or Chinese. It shouldn’t be sold offshore.
Would the chinese government allow a NZ company to purchase large amounts of productive land in China?
If the answer is yes then we should allow them to purchase land here.
A somewhat inconsistent position. Labour had no problem selling Wellingtons electricity infrastructure to the Chinese.
Infact how much farm land was sold to foreign buyers under the last labour administration ??
I look forward to the answer of that question….
The garlic industry is gone..the tour bus industry is gone, Taiwanese and chinese are picking fruit here..the factories went years ago. It was the last labour govt which signed the FTA with China with all the provisions for Chinese workers to come here..that was the time to speak up..It is a bit late now.
@Cactus Kate
“The problem of the increasing price of land and residential homes is a circular one. One team wants prices to increase, the other wants them to fall so they can afford to buy and then profit later. All parties are self interested. Government has no place in intervening in that.”
That’s only true up to a point. If both buyers and sellers are subject to the constraints of a similar environment (both NZers), then both will have similar views of the return on investment and the price will end up at some sort of happy middle point. If one of the buyers is not in a similar environment, has access to a relatively unlimited pot of money and does not have the same constraints when it comes to return on investment, the market is distorted, which makes it appropriate for the government to have a hand in it.
…my preference would be for Landcorp to buy, bring the farms up to acceptable environmental and vetinerary standards and flick all those that don’t form a logical part of Landcorp’s ongoing operation onto Kiwis. Preferably sharemilkers not corporates. That is Landcorp’s principal role – farm development and sale.
Sounds eminently sensible to me – no doubt too sensible for right wing ideologues. I think the majority of NZers of all shades and ethnicities woudn’t quarrel with such a solution provided it was explained to them properly.
Bea
You mean say when there are two NZ buyers and the banks lend to one vs a cash buyer who fronts with the coin. The bank is the one pushing the price up due to liquidity leaving debt to the person who borrowed. A cash buyer has to compete with not only another buyer but the bank of that buyer as well. How unfair is that?
What you are saying is that NZ v NZ (that you define as a “similar environment”) to buy a piece of land is always equal and if it is not the government should intervene. What nonsense.
Lets say Landcorp (a billion dollar enterprise) and a NZ buyer bid for a piece of land. How fair a bid is that?
Land Corp usually invests in farms it will do up and then on sell to farmers wanting a viable going concern – this work is often beyond the resources of sharemilkers.
It does this at a profit to the taxpayer (thus the proceeds of the CG are retained by us the public) and to support the agricultural sector.
It was the last labour govt which signed the FTA with China with all the provisions for Chinese workers to come here..that was the time to speak up..It is a bit late now.
What rubbish. It’s never too late to speak up. Also, what’s ‘Chinese workers coming here to do work’ got to do with it. They’ve been coming here, on and off, for more than a century to do seasonal work of one kind or another. So have a multitude of other so-called foreign nationals.
Alright , the Wellington electricity infrastructure was all ready owned overseas. As well it was negligible land involved. If you didnt notice, the poles in the street are owned by the network company but not the land they sit on.
First law of thermodynamics
“The law states that energy can be transformed, i.e. changed from one form to another, but cannot be created or destroyed. It is usually formulated by stating that the change in the internal energy of a system is equal to the amount of heat supplied to the system, minus the amount of work performed by the system on its surroundings.”
Without inward investment we risk a state of entropy.
If New Zealand puts itself up for sale on a world market, bit by bit, it will all be owned by overseas owners. Stands to reason – many overseas shoppers have more money than locals do, and there are not too many countries that will let them buy up land and businesses holus-bolus. We can’t win this one, we’re too poor.
At a certain point our government has to draw the line for our own protection, and these farms are as good a point as any. Time we put some serious thought into protecting what’s ours.
We should want a better future for our kids than being cleaners and waiters for overseas overlords, and a better future for our country than being China’s farm.
It should also be remembered that Climate Change together with world population growth is going to increasingly place huge pressures on many countries who don’t have the type of resources so prevalent in NZ. I refer in particular to abundant water supplies and subsequently highly arable land. It is imperative therefore that we maintain full control of these resources both for local consumption and as an export commodity for future generations of NZers.
Cactus Kate, you might have confused my argument with your own argument. Your argument was that market forces always result in equilibrium: “The problem of the increasing price of land and residential homes is a circular one. One team wants prices to increase, the other wants them to fall so they can afford to buy and then profit later. All parties are self interested. Government has no place in intervening in that” My argument is that that isn’t the case, but is truer for those in a similar environment (NZ vs NZ) than those who are not.
“I don’t feel like trusting their honesty – corruption is a way of life in China!” Given the history of our treatment of Chinese immigrants to our fine country we ought to consider the old saying about glass houses. I’m not denying that bribing officials is part of life in China as an accepted way to get business done, but let’s not be too sanctimonious.