Fran O'Sullivan: Look at NZ land sale facts

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Whatever the drumbeating politicians say, selling Lochinver to China can bring added value to New Zealand

It is a simple thing to do in the absence of facts - such as how much New Zealand land is held in foreign ownership. Photo / Thinkstock
It is a simple thing to do in the absence of facts - such as how much New Zealand land is held in foreign ownership. Photo / Thinkstock

It's not dog whistle politics when political leaders whip up opposition to the sale of Lochinver Station to Chinese interests weeks before the election.

There is nothing coded about this whistle. It is loud and clear and is being blown very hard indeed to create controversy.

So, let's call it what it is - an outright pitch for votes by whipping up opposition to the sale to the Chinese company when if the agreement had been signed with, for instance, the American Harvard Funds, it would have slipped under the radar.

That's why critics say the politicians are verging on xenophobia and racist reactions.

They have a point.

It's not surprising that Labour leader David Cunliffe, Conservative leader Colin Craig and NZ First's Winston Peters are all milking (pun intended) the issue.

It is a simple thing to do in the absence of facts - such as how much New Zealand land is held in foreign ownership.

Land ownership is something which should be registered, with the ownership of other natural New Zealand resources such as oil and gas, coal and minerals.

These are all assets for which the Government plays a custodial role by determining which foreign owner should be able to enjoy the privilege of owning and contributing to our national wealth.

Sure, the politicians will try to sugar-coat their opposition to the Shanghai Pengxin sale - they know the "we don't want to be reduced to tenants in our own country" refrain plays well.

Let's face it, John Key used it until he woke up to the fact that in international terms NZ owners still hold a great deal of our land.

The Stevenson Group, headed by the affable Mark Franklin, has not played the sale very well.

First, its timing ensures it is an election issue. Second, the secrecy ensured that once the sale was leaked (as Stevenson and Pengxin should have expected) it would become an even bigger political football.

My sources tell me an in-principle deal could have been publicly announced a month ago.

The Stevenson Group and Shanghai Pengxin would have had to weigh up whether disclosing the deal before the election would have caused a bigger furore than simply holding off until after the next government was formed.

They would probably have taken the view they would have a better chance of getting it through the Overseas Investment Office under a National-led government.

But they probably could have saved themselves more grief if they had just put out a release instead of taking the risk that the Wellington system (or opponents of the deal) would disgorge the sale for political reasons.

The deal will have to pass through the hoops at the Overseas Investment Office, and it will insist on stringent conditions so Shanghai Pengxin has to add significant value to New Zealand.

That is required by foreign investment rules, which were tightened when the Government introduced an "economic interests" factor for the OIO to consider.

The Lochinver station is large. If the sale goes ahead it will be the second largest sale of NZ farmland to a foreign owner in terms of value and one of the biggest by area.

But is it really madness to sell the farm as the opposition politicians claim?

If it leads to additional processing within New Zealand the answer would surely be no.

The interesting omission from the debate is the business perspective.

As Forbes pointed out this week in a column about the "slightly bizarre" argument over the ownership of the farm, the definition of private property is that you can dispose of it as you wish - if you can't it's not private property any more.

"More than that the basis of the argument against allowing the sale seems to be that the sale should be in New Zealand's economic interest as a whole," the column said.

"Which, of course, it is, there's 70 million benefits coming into the country in the form of the $70 million that's being paid for it. Why the debate continues after this is a mystery."

The Forbes stance has merit.

As Forbes points out, the sale will add $70 million to New Zealand's capital stock, the farm will continue to employ people, and the Stevenson Group will have $70 million to reinvest elsewhere.

The other interesting aspect is what happens to the overall value of farms - many of whose owners are heavily mortgaged - if foreign buyers are not allowed to add competitive pressure in the market. The way through this is to first get decent statistics on the ownership of our farmland, second, ensure foreign owners improve the holdings and third look at ways to ensure further processing of products from those farms is done in New Zealand.

Debate on this article is now closed.

- NZ Herald

Fran O'Sullivan

A columnist for the NZ Herald

Fran O'Sullivan has written a weekly column for the Business Herald since its inception in April 1997. In her early journalistic career she was a political journalist in Wellington and subsequently an investigative journalist who broke many major business stories including the first articles that led to the Winebox Inquiry in both NBR and the Sydney Morning Herald. She has specific expertise in relation to China where she has been a frequent visitor since the late 1990s. She is a former Editor of the National Business Review; has twice been awarded Qantas Journalist of the Year and is a multiple winner of the Westpac Financial Journalism Supreme Award.

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