Confusing and scattered official statistics show a better grip on overseas land ownership is needed.

The recent debate over how much of our farmland is overseas owned shows very large differences in estimates. I have estimated that 8.7 per cent is foreign-owned, including forestry, and could have reached 10 per cent.

Prime Minister John Key has used an estimate that less than 1 per cent of New Zealand farmland is foreign-owned. Terralink has been misquoted as saying that 1.5 per cent is overseas owned, but its analysis was only of sales since 2005.

Controversy over overseas ownership of land is not unique to New Zealand, with rural land in increased demand internationally. There is a heated debate raging in Australia where the push for tighter controls is being led by the conservative Opposition.

Australia's emphasis on control of foreign ownership has until now been on large businesses and residential properties rather than rural land. Ministers can refuse or impose conditions on overseas investors buying more than 15 per cent of businesses worth more than A$244 million ($295 million), or A$1062 million for US buyers. The same rule applies to rural land purchases. The Opposition wants to lower the threshold to A$15 million for farms.


Contrast this to New Zealand where the Government has virtually no power to stop the takeover of Fisher & Paykel but can, though rarely does, stop the sale of quite small areas of rural land.

Australian Prime Minister Julia Gillard has announced the creation of a register of foreign ownership of farmland. We could do with the same here: as Federated Farmers president Bruce Wills told the Herald, "We need to have a proper census of who owns what".

How did I get to my estimate? Both Terralink and I include forestry in our estimates. Statistics New Zealand include plantation forests in what they describe as the total "land under farming", which they estimate to cover 14,580,000ha. It is artificial to draw a distinction between agricultural and forestry land, because land use can swap between them.

Forestry is one of the few areas where we have good data on current land ownership, provided by the New Zealand Forest Owners Association. It shows the largest forest owners, many of which are overseas owned.

As at April 2010 at least 317,000ha of freehold forestry land was overseas owned, as was 654,000ha of land in other interests such as leases and forestry rights. That's at least 972,000ha of forestry land overseas owned or controlled. It could be more because a further 662,000ha had unidentified smaller owners which I have to assume were New Zealanders.

That 972,000 hectares is 6.7 per cent of New Zealand's farmland, of which 2.2 per cent is freehold and the other 4.5 per cent is in leases and forestry rights. Although Mr Key spoke about "foreign-owned" land when giving his 1 per cent estimate, I have confirmed it was based on Overseas Investment Office (OIO) statistics that included those other interests in land.

Estimating the figure for other farmland is more difficult. I'll just call it agricultural land, but it includes horticultural land and so on. I carefully analysed OIO land acquisition approvals for 2005-2011 from the publicly available data and looked at older statistics going back to 1991.

The problem with this data is that it tells us what was sold overseas but not what was sold back to New Zealand owners. It does remind us that large areas of land have been sold to overseas buyers for much more than 20 years.

However, the 2011 sales alone show at least 95,900ha of agricultural freehold and leased land in overseas ownership, which is 0.7 per cent of all land under farming. That makes an estimate of overseas ownership of agricultural land below 1 per cent very difficult to believe. Even doubling that to 1.5 per cent would be very conservative. I have therefore estimated that 2.0 per cent of agricultural land was overseas owned or leased in 2011. Adding that to the forestry, 8.7 per cent of our farmland is overseas owned in the sense the Prime Minister used. If half of the agricultural land is freehold (probably an underestimate), 3.2 per cent of farmland is overseas owned and 5.5 per cent in other forms of overseas control. The estimate is conservative. It is possible that we have reached a level of 10 per cent.

There is much more to confuse us in the statistics available. Just one example: the OIO's 2011 statistics show agricultural land sales to overseas buyers were a net 15,242ha. Yet that was exceeded by one 2011 sale alone - the 22,211ha bought by Shania Twain's former husband Mutt Lange. The OIO divided that into agricultural, recreational and heritage land. This doesn't give New Zealanders a clear understanding of what is happening.

It's time we followed the Australians and took up Bruce Wills' suggestion of establishing a proper database of overseas land ownership in New Zealand.

Bill Rosenberg is economist and policy director at the New Zealand Council of Trade Unions.