Resources
13 April 2018
Chief Reporter
POLICY CHANGE PUTS BRAKES ON FOREIGN LAND GRAB GOOD!
The Campaign Against Foreign Control of Aotearoa (CAFCA) congratulated the Government when it announced that, as from December 2017, the rules around foreigners buying NZ farmland have been tightened up. Such buyers will now need Overseas Investment Office (OIO) permission for all purchases of more than five hectares (previously, that requirement only applied to purchases of sheep and beef farms of more than 7,000 hectares i.e. more than ten times the average farm size).
We've now had several months to assess the effect of this policy. It definitely seems to have put the brakes on the foreign land grab.
Don't take our word for it. Here's what leading law firm Chapman Tripp said on March 19th ("Overseas Investment Regime - Where Are We Now?"): "The new Directive Letter is clearly intended to raise the threshold for farm land acquisitions. What is not clear is whether Ministers intend to effectively close the door on future farm deals. What we do know is that no consents were issued for farm land between the date the Directive Letter entered into force (15 December) and the end of February" (our emphasis).
CAFCA receives the monthly Decisions of the OIO (and has done for decades). The most recent ones available are for February 2018 - OIO made a grand total of two approvals, neither of which involved farm land.
Further evidence of this now less welcoming policy to foreign land buyers came with the April announcement that the would be Chinese buyer of Landcorp's Jericho Station had withdrawn his application to the OIO, despite putting in the highest bid. A New Zealand farmer, who submitted a slightly lower bid, is now the likely buyer of this Southland property.
So, CAFCA is pleased that, for the first time in years, prime New Zealand farm land is not being routinely approved for sale to foreign buyers, whether individuals or corporations.
There are shortcomings in this new regime. It has different criteria for forestry, where the Government says that foreign investment is still necessary. There is still no provision for the public to make submissions (or for the OIO to give advance notice of applications from foreign would be buyers). People only find out after the event. The "good character" test for applicants is a joke. Most basically, the powers that be still don't know (and haven't made very much effort to find out) how much land is foreign-owned.
John Key used to say it was no more than 1% of the total. We can safely discard that. Statistics on sales of land to overseas interests are poorly recorded and incomplete. Our best estimate is that in 2011 at least 8.7% of New Zealand farmland including forestry, or 1.3 million hectares, was foreign-owned or controlled and it could have reached 10%. It's a safe bet that the figure will not have gone down in the years since.
And this new regime "does not change the rules regarding acquisitions of significant business assets", to quote from the Government's 2017 press release announcing it. But land sales, although they get a lot of attention, only involve tens of millions of dollars. The real guts of any modern economy, the high rollers' lounge of the capitalist casino, is the business sector. That's where the billion dollar deals are done.
And we've heard nothing from the Government about what, if anything, it plans to do about the transnational corporations that so dominate the NZ economy (apart from the commendable, but comparatively minor, aim of trying to get them to pay their fair share of tax. And even that has been kicked to touch, to be dealt with by the Tax Working Group).
For example, what does the Government plan to do about the cosy cartel of Australian-owned banks, who suck billions out of the NZ economy every year?
But this new regime on farmland sales is a long overdue start, for which the Government deserves credit.
What is needed now is a political willingness to consider NZ joining the list of countries which ban foreigners from buying rural land (not just farmland). Or just let them lease land, rather than buy it. If the Government is squeamish about doing this itself, then freeze all sales of rural land sales to foreigners and either set up a commission of inquiry into the subject or put it to a referendum.
There's nothing "radical" about considering a ban on foreigners owning rural land. None other than John Key said that he didn't want to see New Zealanders become tenants in our own country. Agriculture, in all its many facets, remains the most important sector of the NZ economy. It is our comparative advantage in the global market, to use the jargon. Land is the basic building block of agriculture; who owns, controls and profits from it is of vital national importance. The first step has been taken; much more please and quickly.
Murray Horton
Secretary/Organiser
Campaign Against Foreign Control of Aotearoa,
P.O. Box 2258
Christchurch.