Labour plan could force Kiwis off land claims Key

Labour has changed its policy regarding the sale of farmland to overseas buyers. Photo / Christine Cornege

Labour's policy restricting foreigners from buying farms in this country would have the perverse effect of forcing New Zealanders off the land, Prime Minister John Key says.

Over the weekend, Labour leader Phil Goff outlined his party's intention to restrict foreigners from buying more than 5ha of farmland, and to cap foreign ownership of strategic assets such as airports and ports at 25 per cent unless there is compelling evidence proposed transactions are in New Zealand's economic interest.

The move comes just a couple of weeks after the Government said it was tightening up foreign investment rules around land as the prospective purchase of a large tract of dairy farms by Hong Kong Company Natural Dairy sparked public fears around foreign ownership of farms.

Mr Key said Labour's measures were in contrast to their approval of the sale of 650,000ha of land to foreigners while in government and as such marked a "road to Stalin experience" which went too far.

"There's a balance to be had here when it comes to foreign ownership of land. If we completely ban it land prices will fall.

"Those farmers that have a lot of debt on their property will find that they owe the bank more than their property is worth and will be forced off the land and I don't think that's healthy."

Furthermore, Mr Key said, there was actually nothing in what Mr Goff said on the weekend that differed from what was in Labour's 2005 Overseas Investment Act.

"It's already in the law that was the very law that didn't stop there being a record number of sales in 2006."

However, Labour associate finance spokesman David Parker defended the stance as a significant policy shift.

He said Labour was wrong to allow the sale of so much land, much of the wine industry and other assets, including Vector's Wellington lines company, which was purchased by Chinese billionaire Li Ka Shing.

However, the international environment had changed since the global financial crisis, resulting in international economic imbalances.

Mr Parker said Labour was not just concerned about New Zealand's economic sovereignty but also about preserving the opportunity for New Zealanders to become farmers.

"The world's moving on. The idea that governments should sit back and let these imbalances lead to the pricing of assets that puts them beyond the reach of their successful citizens is abhorrent."

He said Labour's proposals were not, as had been claimed, likely to run counter to New Zealand's trade agreements, including the China NZ free trade agreement or the Closer Economic Relations treaty with Australia.

Labour's new stance on foreign investment has parallels with the policies of Winston Peters' NZ First, which would cap foreign ownership of strategic assets at 24.9 per cent, and the Greens, who would also restrict foreigners to 5ha of farmland.

Federated Farmers said it was looking forward to seeing details of Labour's and the Government's policies around foreign ownership before considering the issue as "a major item" at its November council.

Natural Dairy welcomed Labour's policy that farm sales would be permitted only if they brought new jobs technologies and increased exports.

"Natural Dairy's plans to buy the Crafar farms involve a considerable increase in the number of jobs for New Zealanders," spokesman Bill Ralston said.