The Great Leap Backwards
Murray Horton
Campaign Against Foreign Control of Aotearoa
The issue of rural land sales to foreigners has to be put into perspective. It is only a small part of a much bigger picture. The dollar value of land sales totals in the high tens or low hundreds of millions per year. Whereas the overall foreign takeover of the New Zealand economy totalled nearly $16 billion last year. Buying businesses is where the real action is. One such takeover alone will dwarf all the land sales combined in any given year. Who owns businesses, such as banks, for example, has a direct impact on farmers. Any Canterbury farmer who was snowed in for weeks this winter without power or phone will have an unflattering opinion on Telecom.
The current law is the Overseas Investment Act 2005. Like its predecessors, dating back to 1973, it is ineffective in protecting New Zealand from a foreign economic takeover. The reason is simple - the law, and the Overseas Investment Office, exist to “facilitate” not “hinder” foreign investment. The Office functions very much as a doorman, not as the bouncer the country needs to more tightly control who gets in to our home.
The result? Open slather. $16 billion worth of NZ assets flogged off in the first year of the new regime, when the average for the 1993-2003 decade was $8 billion. In the case of rural land, it is a gold rush. The Act was touted as tightening up the sale of “sensitive” lands, and it does involve their buyers in having to jump through a few more hoops. But it wouldn’t have stopped any of the most controversial recent sales, such as that of Young Nick's Head or the high country stations to Shania Twain. The Act was aimed at mollifying widespread public opposition to such sales, without actually doing anything about them.
So what’s wrong with a holus bolus buy up of NZ farm land by foreigners? The resulting speculation and soaring cost of land prices it off the market for Kiwi farmers wanting to buy their own farms, particularly those seeking their first one. They face the same dilemma as first home buyers in the cities - it’s too dear. We have the absurd situation of NZ farmers checking out buying land in South America because it's affordable there. Then there’s absentee ownership, which is the norm in the case of many foreign owners (the law imposes no requirement that they live here). And some of those absentee owners of our prime land can be very dubious characters indeed. The classic example was Tommy Suharto, son of the former Indonesian dictator. Tommy owned Lilybank in the Mackenzie Country for a period in the 90s. Recently he has finished a prison sentence for arranging the contract murder of a judge. Nice guy!
Increasingly, rural land is being bought by agribusiness. Corporate farming brings its own problems, such as the imposition of a monoculture (forestry was all the go in the 90s, now it’s dairying). It brings practices such as vertical integration, whereby the company controls all stages of the process from paddock to table. Farmers learnt the pitfalls of that when British-owned meat companies dominated their industry in the past. Already, we have seen our wine industry bought up and used basically as a grower of grapes for foreign booze barons. The foreign buy up runs the risks of Kiwi cockies becoming like their Third World counterparts, with no control over their product or price beyond the farm gate.
To rectify this requires an act of political will. Plenty of other countries prohibit or restrict foreign ownership of land (for example, by allowing it to be leased, not bought). For a start we need an urgent review of our laissez faire land sales policy, and a much more rigorously enforced definition of “in the national interest”, because if we don’t we will wake up to find out that our comparative advantage in the world market has gone and that our agricultural sector has simply become one of tenant farmers for a new class of landlords, the very reason why our pioneer ancestors left their homelands in the first place. The great leap backwards.