Grant Robertson: TPP adds to housing problem

Labour MP Grant Robertson. Photo / Jason Oxenham.

Opinion

Labour MP Grant Robertson says not enough was done to protect New Zealand land and housing during TPP negotiations

Despite years of negotiations and months of intense, do-or-die haggling, the Government never once considered protecting the right of New Zealanders to restrict foreign ownership of our housing and land. Stephen Joyce himself admitted that.

In fact, the right of TPP partners to buy land in each other's countries is enshrined in the deal, apart from nations which already had restrictions in place - Brunei, Singapore, Australia, Vietnam and Malaysia.

The cost of this to New Zealand in coming years could be significant and has to make you wonder what it was the Government was bargaining for in the deal. For a trade deal there are a lot of trade-offs.

After the dismantling of our trade restrictions in the eighties and nineties New Zealand had few bargaining chips on the table. That's clear from the way we achieved very little on dairy. If the Government had the foresight it would have put appropriate protections for housing and land in place so that, at the least, we had more to bargain with.

Labour believes that an important part of reducing the speculation in our housing market that is shutting out first home buyers is to say overseas buyers can only build a new house, not buy a house from the existing housing stock. This is the same law Australia currently has, but because the National government has chosen not to do this, it appears the TPPA will prevent a future government from enacting such a provision.

New Zealand is unusual in the Asia-Pacific region in having minimal restrictions on the purchase of housing by overseas investors. For farmland, while you need approval for any land sold over 5 hectares only one application has been turned down in recent years.

Instead of recognising the potential pitfalls of foreign speculators buying our land, resources and the companies that develop them, the Government has made it easier than ever for them to do so.

Under the TPP the threshold requiring approval for overseas speculators buying New Zealand companies will be doubled to $200 million.

Failing to restrict investment can put New Zealanders at a distinct disadvantage.

Making New Zealand buyers compete with wealthy overseas speculators pushes up the price. This means that first home buyers may not be able to afford to make it into their own home or first time farmers cannot afford the land to start their own farm. It also makes it harder for national interests to compete with overseas buyers when New Zealand companies seek further capital - Silver Fern Farms is a classic example.

Sellers getting a higher price for land or houses is a short term win. New Zealanders still need houses to live in and land to live on so unless people leave New Zealand they cannot take advantage of the higher house and land prices caused by offshore speculation. What you see instead is a generation locked out of ownership.

Already we have seen the disastrous impacts of speculation on our housing market and farmland. We have the lowest rate of home ownership in more than 60 years. In Auckland house prices went up $165,000 in the last year alone meaning it now costs nearly $900,000 to buy the average house. In agriculture the high cost of land pushed many farmers further into debt when the milk price dropped because a lower dairy price can no longer pay their mortgage costs.

It is also a question of New Zealand's sovereignty. When land goes into a TPP citizen's hands it will be much harder for New Zealand to place public interest regulations on it, such as purchasing it to develop new infrastructure.

Overseas speculators will be able to use TPP dispute settlement provisions to challenge these decisions and potentially stall major infrastructure programs.

Unfortunately it seems New Zealand negotiators primarily focussed on removing trade barriers and neglected the erosions to our right to legislate in the public interest to protect the home ownership dream, keep land in Kiwi farmers' hands and prevent New Zealand companies' profits going offshore.

When the TPP negotiations began way back in 2002 in the form of the P4 the goal was for a gold-standard trade agreement that opened up access to new markets for our key industries. Unfortunately as that original grouping expanded those goals were left behind and we have a trade deal with a lot of trade-offs.

Giving New Zealanders a fair go at owning our land and fulfilling the Kiwi dream of owning a home are core values of New Zealand. Labour will reserve the right to regulate and legislate to make this happen.