by Russel Norman
This has become a bit of a live issue for the Govt. Originally when the review of overseas investment rules was announced Bill English and John Key made it clear that they wanted to weaken the rules protecting land from overseas ownership. Now they seem to be backtracking after the Greens and others have been campaigning on it.
It’s worth noting that the current rules are way too weak – over the last 5 years around 150,000 ha of farm land has gone into overseas ownership. That’s under the current overseas investment rules, the size of Stewart island.
It was these rules that National wanted to weaken and Labour wanted to keep the same – Phil Goff said in March 2009 that “there were some “technical issues” that could be improved in the overseas investment regime, but its fundamentals were sound.”
Of course they are not sound.
The ridiculous thing is that Bill set up a technical reference group to give him secret advice on the issue and one of those who met with him to give him secret advice was the lawyer acting for the Chinese company trying to buy the crafar farms. There were no minutes taken of the meeting – at least that’s what they have told the Finance and Expenditure Committee when we tried to get them – which is pretty weird. How exactly does Treasury take their views into account when no notes are taken of their views?
Bill got very grumpy when I asked him about ths in the House today.
Published in Environment & Resource Management by Russel Norman on Wed, July 28th, 2010
Tags: Bill English, Crafar, Overseas Investment, Russel Norman
More posts by Russel Norman | more about Russel Norman
on the trolls and those who are unable to keep on topic
It’s a lot more than 150,000 Ha.
Effectively foreign banks have invested in (and have a part ownership of) the vast majority of houses in NZ.
It’s a great investment for them.
The farms you are currently worried about are but a drop in the bucket compered to foreign ownership of most of the houses in NZ.
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I am looking at a map of Lake Coleridge district where I live and that is almost the square area of Stewart Island.
Nearly all the farms are now forriegn owned, so the 150,000 Ha seems to me to be on the low side.
Pahaps if we look at New Zealand land that went into foreign since 1994 I think that we would be horrified.
I was listening to the National radio today on the news where it was revealed that in China virtually zero land is owned by foreigners.
All companies who set up shop there lease the land (could be for 99 years)that way the chinese government (1)owns the land (2)collects rent and (3)collects tax and dare I say (4)provides cheap labour (which is a contentious point with me.)
I have mentioned this before on another thread.
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photonz1,
I sometimes wonder if you believe what you write.. this banks’ ownership of most of the houses in enzed. Explain. How so, do they own such properties..?
Keep it straight and preferably simple puh-leeese. After all, fee simple is incredibly simple. And why so termed.
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Your name might be on the title, but if you don’t keep up with the payments, it’s theirs.
And you can’t do anything like sell it, unless they get every cent owed.
You can get all anal and say they don’t technically “own” the houses, but in a lot of houses they have more financial interest in it than the owner.
So effectively foreign banks part own most of our houses and run them as interest bearing businesses, just like a foreign owner buys a farm as a business.
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Interesting point photon. Are you saying that overseas ownership of NZ farms is a good thing for NZers or a bad thing or indifferent?
Bearing in mind, as you’ve stated, that ownership of NZ houses by overseaes banks is “a great investment for them”;
so foreign ownership of NZ farms would be a an even better invetment for the investors. Isn’t the obvious thing to do, keep ownership of the ‘golden goose’?
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fin – still trying to work out the pros and cons of what’s good and bad.
There’s a certain feeling that it’s just wrong for foreign ownership of our farms, but why? Is it ok for some foreign ownership, but not a lot?
We don’t seem to mind foreign ownership of our houses.
And if there wasn’t all this money poored in by foreign banks, then our houses would be worth much much less (which would also have good and bad points – house owners would be much poorer, but houses would be more affordable).
Then you can look at the investments put into some farms by some foreign owners, and there’s clearly a huge benefit to NZ of much higher incomes, higher tax, more jobs etc.
Yes some profits flow out, but what’s left is far greater than the previous profits that stayed in NZ.
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So you’re in favour of selling NZ farmland to foreign companies, Photon?
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Well since the banks which are mostly Australian owned hold the mortgage note on nearly all NZ farms. The vast majority of NZ farms are already foreign owned.
This policy reeks of NZ first type racist fear mongering in that its fine for (white) Australians to own NZ farm land but if (non-white) Chinese try it then we get angry.
Unless the greens are claiming that most NZ farms are freehold (which they are not btw) then the idea that the farm belongs to the farmer is absurd. As long as you have a mortgage with the bank then it belongs to the bank. These days no one pays off their mortgage instead they sell in order to receive some capital gains (Idiot farmers idea profits). Note most farmers don’t understand how to run a business and think the capital gains from selling there business is “profit”. Note profit is what is left over at the end of the year after meeting all your expenses.
Very few NZ dairy farms are going concerns anyway which means the vast majority of them have 0 economic value. The farmer only makes money when he sells the property, any revenue generated via dairying went to service the mortgage and the farm costs. This means there is no loss to NZ from having a foreigner own and the land to having a NZ doing it. Zero dollars from this process is leaving NZ. The money that is leaving NZ is from the interest on the mortgage which is the same in both cases.
This is just political vote buying by the greens and National nothing more.
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photonz1 says:
still trying to work out the pros and cons of what’s good and bad.
There’s a certain feeling that it’s just wrong for foreign ownership of our farms, but why?
And I’ve taken the liberty of highlighting the feeble bits.
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However, on reading Turnips explanation, I’m left thinking about the farmers he describes in a different way.
And not in a good way.
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robertguyton – at leaast I put forward ideas and opinion.
If you removed your posts attacking others, there’d be little intelligent comment left, if there’s any comment at all.
It’s obvious to anyone with even the slightest slither of economic nouse that there are both good and bad issues with foreign investment.
Anyone who thinks it is either all good or all bad can be placed on the extreme loony fringes on the far right and far left.
It’s a matter of taking a cold hard look at the advantages and disadvantages and weighing them up. We seem to have no problem with foreign banks investing in our houses, and taking away a profit. Same with investing in our businesses.
So despite you thiniking it’s feeble, I noticed you couldn’t answer the question.
Why are we worried about investment in farms, but not worried about the rest of NZ – houses, businesses, property, bonds etc?
Why is there a huge scream against Chineses ownership of Crafar Farms, but not a mouse squeak about a recent $20 million buy up of farms by Irish?
Surely if the questions are so feeble, it will be easy for you to change and actually try to have an input to the discussion instead doing exactly the same thing you do for every post – another predictable and boring attack.
To reiterate,
Why are we worried about investment in farms, but not worried about the rest of NZ – houses, businesses, property, bonds etc?
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photonz1 here you go.
http://robertguyton.blogspot.com/2010/07/turnip28-on-farms-farming-and-farmers.html
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robertguyton = wow – polite conversation discussing the issues. It CAN be done.
It seems you agree with my point that much of NZ housing is already effectively “foreign owned” because of mortgages, and you extend this to farms.
So is there much difference between a foreign bank owning a NZ farm, and the farmer operating it as is the case now, and a foreign company owning the farm and the farmer operating it?
In the former, the farmer has to pay interest, make a profit (some years) and takes his pay from that.
In the later, the farmer pays no interest, gets paid for his work every year, AND has a lump sum of money to invest/spend from sale (minus what was owed) of his farm.
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“robertguyton = wow – polite conversation discussing the issues. It CAN be done.”
Indeed. SouthernRight doesn’t employ the technique of peppering his comments with put-downs.
He’s good at debating issues.
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robert – surely peppering (lightly?) with put-downs is better than posts that are ONLY put-downs.
So to get the ball rolling again, any thoughts on any of the questions?
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“Investors in farmland are targeting countries with weak laws, buying arable land on the cheap and failing to deliver on promises of jobs and investments, according to the draft of a report by the World Bank.
“Investor interest is focused on countries with weak land governance,” the draft said. Although deals promised jobs and infrastructure, “investors failed to follow through on their investments plans, in some cases after inflicting serious damage on the local resource base”
In addition, “the level of formal payments required was low”, making speculation a key motive for purchases. “Payments for land are often waived … and large investors often pay lower taxes than smallholders … or none at all.”
The report, The Global Land Rush: Can it yield sustainable and equitable benefits?’ is the broadest study yet of the so-called “farmland grab”, in which countries invest in overseas land to boost their food security, or investors – who are mostly locals – buy arable land. The “farmland grab” trend gained notoriety after an attempt in 2008 by South Korea’s Daewoo Logistics to secure a large chunk of land in Madagascar for a very low price and vague promises of investment. The deal contributed to a coup d’état in the African country.”
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photonz1 – you argue that since we don’t really own our houses we should sell them to someone in China, if they can offer enough money to make it worth our while. Presumably we can then move elsewhere and buy or rent. House prices, in the meantime, rocket up.
Same applies to farms. Your plan to allow foreign buyers to bid for New Zealand land means New Zealanders (probably) have to move off the land and will never be able to afford buy a farm again.
Yes?
Seems very unpatriotic. Are you an anti-patriot photonz1?
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robertguyton says “you argue that since we don’t really own our houses we should sell them to someone in China”
You completely made that up. I’ve never argued that.
“Your plan to allow foreign buyers to bid for New Zealand land…”
Again, you made that up. It’s not a plan, or even “my” plan.
I’m interested in discussing the pros and cons. However you talk of selling our houses to Chinese investors and renting them back. At current rates, this may not be as silly as it sounds and may have a lot of advantages.
Depending on house prices, interest rates and rents, renting can work out significantly cheaper.
It also frees up money tied up in unproductive housing to be used for productive investments in NZ.
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Photon said “I’ve never argued that.”
Indeed, you seem firmly planted on a picket.
You can only sell land once. And since you seem indifferent to the sale of farmland to foreigners (via mortgagee sale which is being termed ‘investment’ in NZ??); isn’t it prudent to not sell the land as if you develop an opinion in the future as to whether it’s a good or a bad thing, you still have the coice?
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photonz1 – goodness you’re a pedant! It gets in the way of a good discussion, imo.
Righty-o then.
The body of sleepyday’s post @ 1:36 completely destroys your pale argument. Let’s see you address the points he makes.
I doubt you can.
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photonz1,
Plainly the above reveals the greater need of simplification in your case. Having given you a clue toward this end — you either did not recognise it as such, or ducked it for your very own reasons – I’ll ask again in more pointed terms.. what do you understand as the fee in fee simple? Consider, too, who owns it and at what point in let’s say, an amortization schedule..
Careful now, don’t exert yo’self unnecessarily.. tho do by all means go for an answer to solve all of your problems ( so plainly seen by me and others above )..
Yes: stick with the subject of your original assertion about banks owning most of the properties in enzed; to date serviced in only “part” or reduced terms…
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robertguyton says” goodness you’re a pedant! It gets in the way of a good discussion,”
Don’t you mean it make it harder to aim put-downs at?
To have a good discussion, first you’d need to put forward some opinions and ideas.
Contrary to what you say Robert, the report that sleepyday refers to completely backs up my opinion – that there are both positive and negatives to foreign land investments.
The report states there are successes, but also a lot of exploitation, including problems like corrupt officials and the sale of land that isn’t even owned by the seller – not a big problem in NZ.
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tomfarmer – as I’ve said previously, I’m not interested in your anal semantics on technical ownership.
If you pay 10% and a bank pays 90% of a house, then the bank has a legal interest and can actually take the house in many sitautions, like if you don’t keep up with payments. In many cases they can take the house if the value of it goes below the value of the mortgage.
Everybody who bought a house in 2007 on a 10% deposit (or less) is likely to be in that situtaion now (mortgage higher than value of house) which can be a tipping point for Banks taking your house.
Your whole argeument is a pedantic sidetrack anyway. The point is that foreign banks have paid for a large part of the NZ housing market, and earn interest from it.
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photonz1 – let’s take this step by step then, for the sake of clarity.
“Investors in farmland are targeting countries with weak laws, buying arable land on the cheap and failing to deliver on promises of jobs and investments”
Your thouhts?
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In many cases they can take the house if the value of it goes below the value of the mortgage.
Hmmmm… I have never seen that. If you pay on time I don’t think they have got a legal reason to go for the house… besides that, it would be nonsensical for them to take the house and monetize a theoretical paper loss.
The conditions under which I would allow foreign ownership of NZ property…
.
.
.
.
NONE
respectfully
BJ
BJ
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oooo! I could become a serf!
Carrots up ta ya standards me-lord?
I can’t wait.
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The conditions under which I would allow foreign ownership of NZ property…
)
.
.
.
.
NONE
.
BJ you’re my kind of Yank! Good on you bro!
(ps If you find “Yank” offensive I apologise in advance
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Maybe Kerry Knight is quietly advising Bill to reject foreign ownership while publicly working for the Chinese? MAybe he figures he’ll make more $ out of them if the purchase is rejected and he acts for them in a possible legal challenge? Or maybe he just figures he isn’t burning off enough bad karma chairing the Auckland branch of Kids Can?
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King John’s already eyeing up your forelock and thinking of you as a tugger Shunda.
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Actually not sure where I got that information about Kerry Knight and Kids Can. I just double-checked and can’t find any reference. So, apologies Kids Can if I’m wrong. However Kerry is obviously doing important and excellent work in wine, sailing, and property investment. Good stuff. Keep it up!
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robertguyton – so people are buying land on the cheap, and speculating on it, not investing anything new or creating new jobs.
That does nothing for an economy, but it’s been happening for years with local owners. And in most places the vast majority of people doing that will be local.
As I’ve said for the start, there are good and bad issues with foreign investment. Have a look at The Farm at Cape Kidnappers.
Millions and millions invested, way more jobs, winning world recogniition and awards for NZ, and bringing large sums of money into the country.
Like the report that you quote says, foreign investment CAN be very successful.
We could go down BJs zero ownership road, but our economy would step back a decade or two, and we’d have to cut benefits, health, education etc.
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“Investors in farmland are targeting countries with weak laws, buying arable land on the cheap and failing to deliver on promises of jobs and investments”
Your response is that ‘ foreign investment CAN be very successful’.
I can’t see how your response addresses the issue presented inside the quotation marks.
I am also very suspicious of your use of the term ‘foreign investment’ in place of ‘land purchase’. We are talking about overseas companies and individuals BUYING land here in New Zealand.
Your responses are not relevant to the discussion.
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robertguyton says “Your responses are not relevant to the discussion.”
Pot calling kettle.
You cherry pick a single quote (missing the bit about successful investments) on a report about corrupt third world countries who sell land that is not even theirs to sell, and which has no references to NZ, and think that THAT is relevant?
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Good article on the pros and cons of reducing foreign investment –
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10662320
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Houses and farm land have different issues – one is (hopefully) part of a productive economy, the other is effectively a service. In any case, having a mortgage on your house doesn’t mean you lose control (so long as you meet the payments) as outright ownership does.
Foreign investment and foreign ownership are also different issues – as was pointed out earlier, China refuses to allow foreign ownership, but still gets foreign investment.
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photonz1 @ July 29, 2010 at 6:13 PM
I’d started out wondering whether you believed what you write. Now I have an answer—that you can’t believe it because you don’t know what you are saying.
FYI you were pushed to the latest response out of my suspicion of that. And having been pushed you produced – actually produced – one word which, iterated 3 times, made you just capable of getting something important into your head on the topic of ownership.
Owning an interest is not the same as owning the property, the whole property and nothing but the property.
Regardless of your preferred ignorance and insults I’ll answer the question of why should I bother. I bother because just about everything you have said enables unscrupulous banksters perpetuate a myth. Which exists not in their minds but in banking’s customer (and in part client) base. To wit, a most efficient myth requiring no/minimal input by them whatsoever. Yet allows cash-in the prejudices and fears ill-informed knowalls spread throughout their multitudes.
Hey, are you sure you’re in the right place.? If not (sure) keep an eye out.. for that someone ready tip you for a job in shades on the southside.
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Tomfarmer – why say something succinct and concise when you make it paragraphs longer?
“Owning an interest is not the same as owning the property”.
You’re stating the obvious – Clearly you’ve gone off on a tangent about the technical legalities of ownership, thereby missing the whole point.
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photonz1 – in answering tomfarmer you forgot to use your pet phrases:
“anal semantics” and “pedantic sidetrack”.
What’s wrong?
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robertguyton
- considering you have said on your blog that banks are the “real owners” of houses, perhaps you should take over the arguement with Tomfarmer
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There is no need for me to ‘take over from tomfarmer’.
His clear logic and argument has revealed you to be without depth.
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robertguyton – First, if you are going to use quote marks, you shouldn’t change the quote.
That’s being misleading as changing “with” to “from” completely changes the meaning.
Secondly, I was argueing exactly the same point you made in your blog.
So effectively you’ve just rubbished your own opinion.
Though your bit about clear logic is very funny.
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Goff says of Carter, “He doesn’t have a mandate”
hardy har har!
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You’re right photonz – I misspoke’.
I meant,
“Take over from tomfarmer’s shin-biting, mis-informed antagonist’.
Thanks for the ‘heads-up’.
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robertguyton
So now that you’ve stated on your blog that foreign banks effectively own part of NZ housing, and you’ve conversely backed tomfarmers arguement that they don’t -
- which side of the fence are you going to come down on?
Cause right now you look like you’ve got one foot planted firmly on each side of the picket fence, and it’s a painful sight.
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photonz1 – you say you see both sides:
“..my opinion – that there are both positive and negatives to foreign land investments.”
then criticise me for seeing both sides:
“right now you look like you’ve got one foot planted firmly on each side of the picket fence, and it’s a painful sight”
Too easy photonz1. Too easy.
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robertguyton – ha- obviously you’re embarrased by being caught arguing against your own point.
That is if you actually have one.
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photonz1,
there you go again – putting your words into my mouth! Take the shades—southside needs you.. besides don’t take them and you hang upon your very own point.
consider this advice an act of charity on my part.
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tomfarmer – english please
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We must find a better way to feed our hungry creditors than chopping off bits of our nation. Selling the farms is the last straw. Farming has long been known as the backbone of our economy. The numbskull right wing are so keen to cash in they have decided that we (those who cannot cash in) don’t need a backbone.
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This is the thin end of the wedge. Our land should not be for sale to non residents.
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philliptoms says “Our land should not be for sale to non residents.”
Right – the Crafars can take much better care of it.
And have shown that would always put the countries best interests first.
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This is our country not theirs.
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The (farm)land has only so much earning capacity and a higher capital value requires me to intensify my production to keep up the capital payments. My return on investment goes down.
The Crafars is a classic case of over-driving the land (and the animals) to meet the payments.
Sheep and beef have been suffering under over valued/under earning properties for a long time now as well.
Ditto real estate.
I’m with BJ. Reasons for foreign ownership?…..none!
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Quite right. Sale to a foreign economy makes the seller richer and NZ poorer. This is why the farmers (some of them) are so keen to sell us out. They don’t care about NZ.
Goes to the heart of our concept of sovereignty and how far “property rights” (as Fed Farmers would have it) extend and to what extent we value our nationhood and our local economy.
The very idea of a local economy and a collective “us” is now dismissed by the right wing as “nationalism” and by inference “fascism”. If you don’t want to be ruled by the Chinese they accuse you of having a disease which they call “xenophobia”.
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Overseas banks owning more and more of our economy is another problem that needs to be addressed before the whole banking system collapses. The people of NZ should be in control of our own economy, not a private banking cartel. Kiwi bank is a good start, but the whole concept of commoditised money and debt needs to change for sustainable societies.
http://www.chrismartenson.com/blog/destined-fail-magical-thinking-g20/41097
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I agree. The whole international money system is out of control. We are so far in debt we have to borrow to pay the interest. We need to stop using our land as collateral for loans we cannot repay.
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