Latest overseas investment decision ABBAsolutely stink

The Overseas Investment Office has just approved the sale of eight Waikato dairy farms comprising 3,205 hectares of land to a Swedish consortium.

This decision follows last year’s contentious decision to allow Chinese Company Shanghai Pengxin to purchase the Crafar farms.  The 16 Crafar farms comprised nearly 8000 hectares of farmland.

An overseas purchaser must show that they are bringing significant economic benefit to New Zealand.

The Swedish consortium that has purchased the farms has stated it wants to lift milk production and develop the farms.  Presumably this is the substantial economic benefit to New Zealand from allowing this purchase.

This argument is reminiscent of the one Shanghai Pengxin used in the High Court after an legal challenge by a consortium of Iwi and Sir Michael Fay.

Shanghai Pengxin’s argued that they would bring the rundown Crafar farms up to working order.

Here we have a Swedish consortium arguing that they will follow standard farming best practice and lift milk production.

Of course the woefully understaffed Overseas Invest Office are unlikely to monitor if any substantial economic benefit does flow from this purchase.

This test is simply a way of allowing overseas investors to buy up prime New Zealand land. Decisions such as this mean any overseas investor that can outbid New Zealand farmers will be able to buy up land in New Zealand.

Perhaps the significant economic benefit to New Zealand is keeping former Shanghai Pengxin spokesperson Cedric Allan in business.  Mr Allan is handling the media for the new owners.

3 Comments Posted

  1. That $ucks! The Overseas Investment Act needs to be drastically tightened up, so as to blanket-exclude ALL purchases of rural land (at least over 1 ha in size, less than which would be rural-residential or rural-industrial) by absentee foreign interests! Existing owners would only be able to sell their holdings to NZ citizens and permanent residents. Only leases for finite terms of rural land should be allowed. This would also lessen the need to considerably increase the staff of the OIO so that they could visit foreign-owned farms to see whether they are “bringing significant economic benefit” to NZ.
    Also, in view of the way in which house prices in Auckland are being inflated by purchases of houses there by wealthy non-residents, mostly Chinese, who have no intention of applying for permanent residence in NZ (which may not even be granted anyway), the OI Act should also bar purchases of all residential properties in urban areas by non-residents, and allow them to only rent or lease such properties.
    After all, if China does not permit sales of rural lands to foreigners, only allowing leases, there is every reason why NZ should adopt the same policy toward foreign non-residents. Foreign purchases of land contribute practically nothing to increased production, and merely artificially inflate prices, thereby also reducing the rate of return from both farming and rents to below an economic rate of return, and pricing properties beyond the reach of ordinary NZers.

  2. Allowing foreign ownership of land only increases its value and diminishes the productive return against land cost. And New Zealand buyers being forced to borrow larger and larger amounts from offshore – increasing our foreign debt.

    No doubt a foreign corporate will claim that any attempt by government to limit milk production increase, via such as stocking limits, is in breach of corporate rights should they be included in the TPP agreement.

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