National racing through the gears
OPINION: The John Key Government turned a corner this week.
Its mild murmuring in favour of foreign investment became an out-and-out cry for more.
First, Finance Minister Bill English left no-one in any doubt in a speech to the New Zealand Contemporary China Research Centre, in which he placed foreign investment alongside public investment in terms of importance in this country's historical growth. Much more than just wanting foreign investment, Mr English said, New Zealand "naturally relied" on it.
Later in the week, he was joined by Trade Minister Tim Groser and Economic Development Minister Steven Joyce in the seemingly innocuous release of the first of six Business Growth Agenda reports. Again, the message was crystal clear - NZ Inc is hungry for foreign capital and it's not ashamed to say so.
Little more than two years ago, such bullish notions on foreign investment would have been almost unthinkable.
The night before flying out on a 2010 mission to Korea, China and Vietnam, Mr Key was sending out messages to the electorate that he knew they wanted to hear, telling them, "I wouldn't want to see a wholesale sale of New Zealand's productive land" and "there is a genuine concern that we shouldn't sell out the golden goose".
On the first day of that trip, he stood at the New Zealand Embassy in Seoul and uttered the now infamous line about the need to avoid becoming tenants in our own land.
Before that, Agriculture Minister David Carter had got to the point of saying that the Crafar Farms deal, then slated for May Wang's Natural Dairy outfit, was "unlikely to go through". He was right, of course, because Natural Dairy turned out to be a dud, but Mr Carter's comments spoke to the more cautious approach of the time.
As if to prove the point, Mr English went on later that year to add a couple of new tests to the Overseas Investment Act. At that time, foreign investment - particularly in farmland - was considered too risky to be anything more than dead-pan neutral on.
It was obvious to everyone as the general election loomed in 2011 that the Shanghai Pengxin bid for the Crafar Farms, which overtook the failed Natural Dairy one, would have to wait until the next year. In the minutes of its September 2011 board meeting, Landcorp, which was a party to the Chinese bid, acknowledged a decision was "unlikely prior to the elections in November".
That was not because ministers had told them as much (that would have been very naughty), but simply because Landcorp's board was politically savvy enough to see the writing on the wall.
And sure enough, it was not until comfortably after the election and the Christmas break that the Shanghai Pengxin bid was confirmed. But that was just the beginning of a sticky quagmire for National as a legal back and forth carried on right up until last week, when the Sir Michael Fay-led consortium lost its appeal against the Crafar Farms sale.
Sir Michael's defeat was no surprise, but it was more than just a relief to senior ministers. As time went on, the Crafar Farms sale took on ever more significance for the country's reputation as an investment destination.
Before the ministerial decision on Crafar in April, New Zealand Trade and Enterprise (NZTE) pressed upon the ministers that China was "watching the outcome of the Pengxin/Crafar Farm case with great interest" and "looking for specific guidance on where the New Zealand investment regime is heading".
NZTE officials in China found the issue "very much front of mind" among investors. Chinese Commerce Minister Chen Deming raised it in a meeting with Trade Minister Tim Groser in March.
In Wellington, the Chinese Embassy became openly agitated by delays, which have reputedly cost Shanghai Pengxin more than $10 million.
There was, in the Chinese view, an incredible inequity about the way Fonterra had been welcomed in to farming their land but when the shoe was on the other foot, it turned in to a bitter battle to make the purchase.
All of that considered, it is easy to see why Cabinet arrived at a view that if the Chinese bid for the farms was finally scuppered, attracting foreign investment to New Zealand would get much tougher. So the circuit had to be broken, which was by last week's Appeal Court ruling.
But then what? Would National tread carefully onwards or follow its ideological instincts and roll out the welcome mat? The answer, very clearly exposed this week, has been the latter. The wind is at its back from the pressure finally coming off the Crafar decision, but also from a recovery in the polls.
Since the party conference last month, National has watched with glee as its internal polling climbed back in to the high 40s. The consensus from the published polls over the same period has them more or less recovered to their election night result of 47 per cent.
So ministers once again feel buoyed by the chance to get spending on some political capital. After taking the hits in a brutal first half of the year, they may feel entitled to be themselves a bit more. Focus groups seem to be telling them to have a crack, so why not?
Jonathan Coleman, one of two ministers to twice mandate the Shanghai Pengxin bid, illustrated the approach in a blistering first few minutes of a speech to Parliament this week. Speaking against Green Party co-leader Russel Norman's foreign investment stifling bill, Dr Coleman lashed out.
It was the stupidest bill ever to come before Parliament, he said. It looked like something cooked up over a joint at the Green Party conference. It was "spliff- onomics". It was "dak-onomics". It was "yokel-nomics".
Dr Coleman pivoted on that point to emphasise this was the type of lunatic stuff you would get from a Labour-Green coalition. Labour Cabinet ministers would have to sit alongside "these Green crazies" as they advanced such draconian measures.
Launching at the Opposition off a smearing of the Greens is almost daily fodder for National these days.
Flashing the proverbial knickers to foreign investors seems to be heading that way too. Which is remarkable, because both seemed either unproductive or downright mad not so long ago. But around new corners, National is taking new gears.
- © Fairfax NZ News