Phil Goff has announced a change in policy which he says will mean most sales of land to foreigners will fail.
“Buyers will have to prove that selling land to them will be good for our economy,” he told the conference.
“We will force would-be buyers of New Zealand rural land to invest in New Zealand and our people by bringing jobs, transferring technology, increasing exports or bringing other benefits.”
Force is a very strong word but he doesn’t explain how he’ll measure the benefits required of would-be buyers nor what will happen if promised benefits don’t eventuate.
That could be because Goff spent 15 years in past governments when thousands of hectares of farmland were sold to foreigners and he knows there is more to be gained than lost from it.
That isn’t stopping him from talking tough though:
“Labour will reverse the current approach to overseas sales of land,” he said at the party’s annual conference in Auckland.
“Instead of the overwhelming majority of farm sales being approved, the overwhelming majority will be declined.”
They would be rejected unless the overseas buyer of farm or forestry land also invested in significant further processing of primary products and brought new technology into New Zealand.”
About 75% of our forestry is already foreign-owned and most of our wool is sold unprocessed. But only a tiny percentage of farmland is the property of overseas investors who already have to pass strict criteria before they buy.
Goff”s rhetoric will touch a chord with the xenophobes but it might not make much difference to what happens now.
The Overseas Investment Office runs a very strict ruler over any applications from foreign-based buyers of farmland.
Applicants for consent must satisfy a number of criteria, including the core “investor test” criteria. In addition, consent to acquire sensitive land will only be granted if:
- the transaction will, or is likely to, benefit New Zealand, or alternatively
- the relevant overseas person intends to reside in New Zealand indefinitely.
Some types of land (such as farm land) also have specific consent criteria.
Applicants have to jump some high hurdles and those who get approval already bring in capital, introduce technology, employ locals, increase exports and/or bring other benefits.
Friends sold their farm to an international company which owns a lot of land in New Zealand and overseas.
This year they budgeted $980,000 for depreciation and will be spending $2.33 million on farm improvements, excluding maintenance fertiliser. That means things like machinery, houses and fences. It also includes planting tree seedlings on several hundred hectares of erosion prone land. These trees aren’t being planted for forestry, they may earn some carbon credits but they won’t be harvested, they are being planted to protect the land.
There wouldn’t be many New Zealand owned farms spending more than twice their depreciation on improvements and prepared to do that much for an environmental rather than economic return. If they did it would be a lot less than $2.33 million.
Some controls over foreign purchases is sensible. What we have now balances vendors’ rights to get the best price with the national interest.
Goff is responding to the xenophobic opposition to foreign ownership with strong rhetoric based on very fuzzy logic. Applying it to Australians, as he says he will, also contravenes our CER agreement and the reciprocal rights we have for land purchases there.
If he and his party really want most sales to foreigners to fail they need to explain how they will compensate for the lost investment and the cost of that to individual farmers and the country.