Foreign land sales hotly debated

21:09, Aug 28 2014
Lochinver station
PRIME PLOT: Lochinver Station, near Taupo, is one of New Zealand's largest and most valuable stations.

Foreign ownership of farms stirred birthright rhetoric from Labour leader David Cunliffe but gave Prime Minister John Key some of his most assured moments in last night's TVNZ debate.

Cunliffe shifted his position on the proposed $70-million sale of Lochinver Station near Taupo to Chinese agribusiness Shanghai Pengxin.

Labour had been saying it would block the sale of the station if elected. However, Cunliffe accepted this might not be possible under current law.

"Ministers considering Lochinver in an incoming government would have to act within the law," Cunliffe said.

"If we can change the law in time to prevent the sale within the law, we will."

The sale of the 13,800-hectare station would be the second-largest of New Zealand farmland by value. The biggest was the $200m sale of the Crafar farms, bought by a subsidiary of Shanghai Pengxin in December 2012.

The Crafar farms sale triggered some of the land-purchase rules Lochinver will be subject to.

Cunliffe moved to bury the suggestion that a Labour clamp on international sales would target Chinese investors.

"This is not a China issue; this is an owning our future issue", he said.

He and Key agreed that sale restrictions in the Overseas Investment Act should apply to any nationality.

But Chinese investment was still to the fore.

Key suggested Labour didn't support New Zealand's free trade agreement with China but Cunliffe shot back: "We signed the free trade agreement."

Moderator Mike Hosking asked Cunliffe, in principle, what Lochinver would be worth if Labour taxed capital gain on the sale, then "stood at the end of the driveway" telling foreigners they couldn't buy it.

Cunliffe said: "A government that I lead believes that we owe a duty to the people who are already here, and to the people that might want to come here, to treat them both fairly.

"Land is our birthright, it is the basis of our current and our future economy. We inherit it and we need to pass it on - that's not happening at the moment."

Under Labour, Lochinver's owners, the Stevenson family, "would potentially be able to sell it to a foreign buyer, only if it created significant additional value to the New Zealand economy", Cunliffe said.

Key said this requirement was already law.

Hosking asked Labour's leader whether it was fair to deny a sale to a New Zealand family like the Stevensons. As owners of an engineering, mining and quarrying firm, they wanted to plough the farm proceeds into a huge industrial development that could create up to 8000 new jobs.

Cunliffe said if foreign buyers had more cash to buy productive farming assets than New Zealanders, then it was even more important to have rules to ensure Kiwis could still buy property.

"This is not just about so-called sensitive land, this is about productive New Zealand farmland that, amongst other things, supports our greatest industry - dairy."

If farm prices went too high on the back of international sales, New Zealand young farmers and sharemilkers would never be able to buy their own farm because they would be competing against "zero per cent credit from Shanghai, Vancouver or Belgium or wherever", Cunliffe said.

"That is not the kind of New Zealand that I want to see our young families growing up in".

Key said that was "great rhetoric", but it didn't stack up economically.

New Zealand needed two-way trade to grow and build its prosperity, he said, giving the example of Fonterra moving on a big deal in China.

The wholly NZ-owned co-op had decided to invest $655m in a Chinese business partnership, using capital flows. From its kitty Fonterra was also spending just over $500m on developing two plants in New Zealand.

Key: "If you go and look at the very tiny amount of land that's sold offshore, you have to ask yourself ... are we better off for a bit of capital coming in? I have always said as prime minister, I will not support foreign investment in New Zealand unless it creates jobs for our children.

"We don't have enough capital to underpin our economy and grow those jobs solely on our own. If we say no to foreign capital, whether it's ultimately going into businesses or a little bit into land, we have to say no to a stronger economy - and the things [that] delivers." Healthcare and education would be top of that list.

Key said Labour was wrong to claim the National government had sold 1 million hectares to foreign buyers, and he asked "for a little bit of perspective" on existing OIO rules.

"The OIO has to look at every application for property larger than 5 hectares," Key said.

"There's 1 to 2 per cent of farmland in New Zealand that's owned by foreign investors".