Greens and Labour waging war on overseas investment

The Greens’ private members bill restricting, in other words banning, all sales of farm land of more than 5 hectares to an overseas investor was defeated last week by two votes. Under a Labour/Green coalition, ably assisted by NZ First and the Maori Party, the terrifying thought is this piece of xenophobic ignorance would be passed into law.

 

There’s a more than remote possibility of a change of Government in 2014, so this, or some variation of it, could become Government policy and would easily gain a majority in the house. Back in March David Shearer put up his first private member’s bill on the same issue which sought to ensure substantial extra jobs and exports from foreign investment. There were some embarrassing omissions, but the intent was clear, if not as draconian as Russel Norman’s bill.

 

It’s the nature of politics for opposition parties to vote against the government of the day, but it is a concern to see Labour tucking in behind the Greens, when the party’s original position was nothing like as jingoistic. There’s a world of difference between demanding added value and jobs from an investment, as in Shearer’s private member’s bill, and a total ban on foreign ownership. I sincerely hope Labour as presumably the lead party in any future coalition would dictate the policy and not allow itself to be wagged by the Greens’ tail.

 

The progress report Building Export Growth released last week says nothing significantly different from 2007’s Export Year issued by the two responsible Ministers at that time, Phil Goff and Pete Hodgson. Essentially both state a goal of increasing New Zealand’s exports to 40% of GDP from 30% where it has obstinately sat for 30 years.

 

Labour’s new position in support of the Greens’ xenophobic attempt suggests the party has moved light years away from its position of five years ago. Without overseas investment and shackled by our high debt level, New Zealand cannot possibly aspire to the optimistic export goals of successive Governments from both sides of the political divide.

 

Federated Farmers must of necessity be careful when taking a policy stand because it represents, and depends on subscriptions from, farmers who will clearly hold differing views on the benefits of overseas investment in land and agricultural assets. However Bruce Wills tells me Feds are generally in favour of foreign investment because of our high level of indebtedness, but with some caution with respect to acquisition of large holdings by foreign corporates. In fact he says our overseas investment criteria, toughened recently to satisfy Justice Miller’s Court of Appeal ruling on the Crafar farms deal, are the fifth strictest in the OECD.

 

He compares New Zealand’s position with that of Australia which has a more open overseas investment policy, while Australian farmers only have a third of the debt. New Zealand farms can carry a higher proportion of debt than their neighbours across the Tasman because our benign climate provides a bigger safety margin, although even this is less certain given the apparent increase in frequency of flooding and earthquake activity.

 

Interestingly the question of foreign investment conditions is now coming under closer scrutiny in Australia, where the Liberal and National Coalition have put out a policy discussion paper ‘Foreign Investment in AgriculturalLand and Agribusiness.’ This paper states upfront the Coalition’s support for foreign investment in Australian assets and its belief ‘heavy-handed restrictions on inward foreign investment could negatively affect debt and equity markets or potentially cause restrictions on Australia’s outward foreign investments.’ However the paper notes the sale of Australian land and agribusinesses are treated no differently from any other business at present.

 

The Australian opposition takes the view there should be some tightening up of the rules applying to the sale of land and agribusiness assets, but this position is still diametrically different from the one proposed by the Greens and, judging by the recent vote, Labour as well.

 

Federated Farmers’ Wills points to the likely $1 billion cost impost on our agricultural sector if Labour and the Greens get the chance to implement some of their key policies, specifically ETS and capital gains, not to mention preventing foreign investors from buying farm land. This would have the effect of reducing profits and as a result increasing debt levels in the agricultural sector.

 

In 2011 dairy, meat and wool, and horticulture accounted for 43% of export goods or 34% of goods and services. This suggests New Zealand can’t afford any reduction in their relative contribution to the economy, whether or not any progress is made towards the Government’s target. Changes of the kind presented to Parliament last week would present a massive head wind.

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Tags: David Shearer, exports, GDP, Greens, Labour, Maori Party, National, New Zealand First, Overseas Investment Act, Russel Norman