18 Sep 2015

Land decision buys Govt few plaudits

8:46 am on 18 September 2015

Power Play - The Government really can not win when it comes to foreign land sales.

It has been accused of hypocrisy after declining a Chinese bid for Lochinver Station, after years of criticism for being too soft on foreign land sales.

Since it was elected in 2008, it has been accused of selling New Zealand out as it continued to sign-off applications for land sales to overseas buyers.

Associate Finance Minister Paula Bennett speaks in Wellington on 17 September 2015 following the government's rejection of a Chinese company's application to purchase Lochinver Station.

Associate Finance Minister Paula Bennett Photo: RNZ / Demelza Leslie

Chinese company Shanghai Pengxin signed an $88 million sale and purchase agreement for the large sheep and cattle Lochinver farm, near Taupo, last year.

As it was deemed sensitive land, it had to go through the Overseas Investment Act and get ministerial sign-off.

The long-awaited decision has been handed down by Associate Finance Minister Paula Bennett and Louise Upston, the Land Information Minister (who also happens to be National's MP for Taupo, the electorate where the Lochinver farm is stationed).

The two ministers rejected the recommendations of the Overseas Investment Office (OIO), which would have given the sale the green light.

Ms Bennett says it was a matter of "weighting" - or more simply that the ministers did not see that the purchase of Lochinver by the Chinese company would deliver the same level of benefits the OIO believed it would.

Jobs created, for example, would have been a couple of contractors and maybe a part-timer.

Hand on heart, Mrs Bennett said public opinion played no part in the outcome, but there is no getting around the fact this was a political decision, otherwise there would be no need for ministerial discretion.

There was an outcry from both public and political quarters when the potential purchase of Lochinver was announced last year, including a stalwart of National Party support, Federated Farmers.

Everywhere the Government turns sales to overseas investors are part of the story; in the Auckland housing market, in the woes of State-Owned Enterprises such as Landcorp, major investments in strategic companies, most notably Silver Fern Farms and for several years, tracts of farmland.

In the face of strong public opposition it has stayed staunch in its insistence of the benefits of foreign investment, while accusing those who disagree of xenophobia.

Disputed ground - an aerial view of Lochinver Station.

Disputed ground - an aerial view of Lochinver Station. Photo: SUPPLIED

The Prime Minister has had his 2010 comment that he didn't want New Zealanders to become "tenants in their own land" thrown back in his face, but aside from that has been consistent in his support for encouraging foreign investment.

Labour, New Zealand First and the Greens have lined up over the years to warn of the dangers - even if it was slightly out of kilter to hear the then Greens co-leader Russel Norman objecting to sales to "foreigners" in his Australian twang.

In Parliament this week a Government minister threw what was supposed to be a highly barbed attack at New Zealand First, exclaiming that if that party had its way, all land in this country would be owned by New Zealanders.

A perplexed Ron Mark, the deputy leader, replied that was exactly what his party wanted - demonstrating the extreme sides of the argument represented in the New Zealand Parliament.

With this latest decision, the Government has found itself accused of xenophobia, and of sending a negative message to potential foreign investors.

When that was put to Ms Bennett, she simply said the Government was not turning people away on the basis of their last names - an obvious dig at Labour over its claim foreigners were flooding the Auckland house market after producing a list of house buyers with Asian sounding names.

She argues the Lochinver decision was made purely on legal grounds; a careful consideration of the Overseas Investment Act requirements against the proposal from Shanghai Pengxin.

The main factor that tipped the balance, according to Ms Bennett, was the size and therefore national significance of Lochinver Station, compared with the benefits in terms of job creation and an increase in exports.

The Government copped a huge amount of criticism in 2012 when ministers gave the go-ahead for the same Chinese company to buy the Crafar farms, but Mrs Bennett says that was quite a different situation.

Not the least of which is the fact that Lochinver is very well run, and the Crafar farms were all but decrepit.

In terms of its attitude to foreign investment, more telling is the number of applications for purchases for land that have gone through the OIO for approval, 813 since the start of 2009, the year after the National Party came to power.

Out of those a mere eight have been declined, and none - except Lochinver - since 2012.

The two National Party ministers may have had the possibility of a public backlash in mind when erring on the side of caution in response to what the OIO described as the "finely balanced" application for the Lochinver purchase.

However, the question is not so much whether National has suddenly become averse to foreign investment, but rather are the rules for foreign land sales tight enough, and are they being enforced as rigourously as many New Zealanders would expect them to be?

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