The Dim-Post

January 28, 2012

I know it’s rude to point this out . . .

Filed under: economics — danylmc @ 7:56 am

But while China is a rising economic super-power and a close trade partner of New Zealand, it’s also a totalitarian military dictatorship. People are allowed to feel apprehensive about such a state building its own vertical supply chains within the New Zealand economy without being labeled xenophobic and racist.

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63 Comments »

  1. Where you making the same noises when Labour was busy selling?

    Comment by cheesefunnel — January 28, 2012 @ 8:02 am

  2. Yes, this is so true.

    Well said, Sir. Well said indeed

    Comment by Andrei — January 28, 2012 @ 8:42 am

  3. Where you making the same noises when Labour was busy selling?

    Errr….since when have Britain, Canada, the US, France and Germany been totalitarian military dictatorships?

    Comment by Neil — January 28, 2012 @ 9:42 am

  4. I dunno . I’ve always wanted to live in a totalitarian dictatorship. seriously, having dealt with quite a few refugees from China over the last three years. it’s a scary place and you can go to prison for years for practising your religion or distributing pamphlets. so, something to look forward to.

    Comment by Amy — January 28, 2012 @ 9:44 am

  5. The National trolls have well and truly discovered the Dimpost, distraction and personal attacks to avoid discussing the issue.

    Anyway, my view is we shouldn’t be selling ANY land to foreigners. Lease them some for a home for 100 years but never sell them any.

    That would make coastal property suddenly a lot more affordable and make a lot of farmers suddenly a lot poorer, which is a fine starter for guessing from what quarters hysterical opposition to such a law would come from.

    Comment by Sanctuary — January 28, 2012 @ 9:50 am

  6. Should we also feel uneasy doing business with companies from countries like the US, UK, and Australia because those countries were part of the coalition forces that invaded Iraq? Or, again, US companies because the US still uses the death penalty as punishment for certain criminal activity. France bombed a ship in Auckland and we rolled over and said thank you very much and continued to trade with them. People can point to the Chinese regime but after decades of trading with dubious regimes, you should expect the charges of xenophobia when people Really only start objecting when the Chinese get involved.

    Comment by Joshua — January 28, 2012 @ 10:05 am

  7. In right-wing terms, it’s racist and xenophobic to get in the way of cashed-up darkies. Refugees, immigration applicants and local darkies on the other hand are a free fire zone.

    Comment by Psycho Milt — January 28, 2012 @ 10:14 am

  8. Then by the same token I expect no one who reads this site to visit Fiji for a holiday until it returns to a democracy.

    Comment by Nick K — January 28, 2012 @ 10:20 am

  9. You try controlling 1.5 billion people and then come back and say how nasty they are!

    Comment by XChequer — January 28, 2012 @ 10:30 am

  10. Nick K – I refuse to visit Fiji for exactly that reason.

    Comment by Sanctuary — January 28, 2012 @ 10:32 am

  11. I know it’s not the only choice, but given a choice between a Chinese billionaire capitalist or Michael Fay, I would take the Chinese billionaire capitalist. Fay would only be a temporary holder anyway. He would load the farms up with debt, pay massive dividends, under-invest and then sell to artificial legal entities that are technically OIO complying but in reality beneficially owned by dodgy characters who would never get approval to buy in the first place. He’s done it before, and we should never let him do it again. Most of the 500 million (each) Fay and Richwhite plus the hundreds of millions their FR&Co colleagues now have belongs to the NZ taxpayer. Now it lives in Zug, free of any NZ taxation.

    I am a pragmatic capitalist – a modest amount of regulation in order to create an environment where true capitalism can thrive – is the only way society can survive, but people like Fay give capitalism a bad name. Cronyism, influence buying, secret dealings etc are not capitalism.

    Does anyone know why the receivers would only sell the Crafar farms as a block? Did they comment at all about why they would not sell as individual farms?

    Comment by nadis — January 28, 2012 @ 10:37 am

  12. “But while China is a rising economic super-power and a close trade partner of New Zealand, it’s also a totalitarian military dictatorship.”

    China didn’t buy these farms.. a Chinese company bought them, and there are no known links to the Govt. of China. Saying that this company reflects a totalitarian military dictatorship is drawing a pretty long bow.

    JC

    Comment by JC — January 28, 2012 @ 10:46 am

  13. Good old Fran, scrutable as ever: “Fearless leader captures immense wealth prospects running green racist dogs” while in the same breath admitting that he had no choice and that we’ve been in China’s pocket for years.
    Along with the rest of the world. A smug little ball of lint that thinks it’s important, aptly represented by its press and government. The fun will start when the host resumes its periodic practice of emptying those pockets, or the cheaper lint now in development comes on stream: within five years.

    Comment by ak — January 28, 2012 @ 11:03 am

  14. Sanctuary, what is the effective difference between leasing a piece of land for 100 years, and selling it – when a government can acquire land by compulsion at any time (if it deems it in the national interest – eg. the Public Works Act)? Genuine question.

    Comment by Adze — January 28, 2012 @ 11:34 am

  15. Re the Public Works Act, the Act is used only to make public works possible (such as a road, or a cemetery), and the section of land not used for that work is then offered back. There may not be much land offered back if something like a cemetery is built, but only a narrow section of property would be needed for a road or a pipeline.

    Comparing the PWA use of a section of land with the leasing of an entire property isn’t an accurate comparison.

    Comment by Ataahua — January 28, 2012 @ 12:49 pm

  16. “Comparing the PWA use of a section of land with the leasing of an entire property isn’t an accurate comparison.”

    The PWA was just an example, hence my use of “eg”. Perhaps the Seabed and Foreshore Act 2004 is a better one?

    My point is, the government can legislate acquisition of land within its territories, if it has the political support to do so.

    Comment by Adze — January 28, 2012 @ 1:00 pm

  17. One thing is for certain: there is no stopping them; the Chinese will soon be here. And I for one welcome our new oriental overlords. I’d like to remind them that as a trusted TV personality, I can be helpful in rounding up others to toil in their underground sugar caves.

    Comment by Simon — January 28, 2012 @ 1:16 pm

  18. “Should we also feel uneasy doing business with companies from countries like the US, UK, and Australia because those countries were part of the coalition forces that invaded Iraq?”

    As far as I’m aware, none of these countries (except maybe the USA) have anywhere near the kind of human rights issues that China has. We’re talking about a country where the state is intimately involved in every level of your life, any type of religious or political dissent is persecuted, and there are (nobody knows how many) but at least tens of thousands of people in jail or compulsory re-education for political/religious reasons. A place where stories like this are commonplace http://www.amnesty.org/en/news/china-must-reveal-whereabouts-uighur-children-detained-after-deadly-clash-2012-01-06 or this http://www.amnesty.org/en/for-media/press-releases/china-christmas-crackdown-against-activists-continues-2011-12-28

    Should we be concerned that as the Chinese government gathers economic influence in other countries, it may use that influence to put pressure on those countries, to perhaps “adjust” their own human rights legislation to be more in line with China’s? Or to extradite “criminals” to China rather than accepting them as residents? I would say yes, absolutely.

    Comment by Amy — January 28, 2012 @ 1:19 pm

  19. Adze – foreigners, or companies with less than 50% NZ ownership, should not be allowed to own land here. Individuals should be able to lease an amount of space required for house and grounds – say up to a couple of hectares – but only citizens can own.

    That article by Fran O’Sullivan is a remarkable read. Her palpable delight makes me wonder if she hasn’t in some way been engaged to lobby on behalf of the Chinese government. She certainly seems to be going out of her way to let the Chinese know where to find a nice little local Quisling.

    And anyone who celebrates “economic rationalism” as an article of faith with the fervent religiosity that Fran O’Sullivan does ought to be writing in the religions and philosophy section of the paper, not it’s business pages.

    Comment by Sanctuary — January 28, 2012 @ 1:32 pm

  20. Speaking of Quislings and playing the man and diversionary tactics, Sanctuary, you seem to be hitting the mark with you’re little series of spin running the ‘no land sales to Johny Foreigner (especially if they’re yellow bastards)’ meme.

    Comment by will — January 28, 2012 @ 2:12 pm

  21. “Labour has described the sale of the land as gutless and unpatriotic, with its leader David Shearer saying the farms should have been sold to New Zealanders.”
    http://www.radionz.co.nz/news/national/96917/crafar-pledges-fight-to-get-his-farms-back

    I’m amazed Shearer didn’t call the sale “un New Zealandian”, oi, oi, oi.

    Comment by will — January 28, 2012 @ 2:32 pm

  22. I’d just like to point out (or maybe repeat, I got bored of reading the vitriol half way through the comment thread) that it’s not only *possible* to like Chinese people while disapproving of authoritarian governments, the two often *go together* (in my humble empirical experience). The opposite is also possible, though thankfully not common in my experience.

    Eg.

    A person protesting the sale of land or capital resources to a foreign government or corporation doesn’t necessarily harbour any grudge towards people who happen to come from that country. They *might*, but it’s not a condition of the other.

    Conversely, somebody striking a huge business deal with a guanxi’d up CCP member or a Canadian oil giant may themselves be a racist or a xenophobe, but [and it's more obvious in this example, I guess] one doesn’t necessarily follow from the other.

    This seems obvious to me, I’m sure it’s obvious to the trolls… please stop feeding them.

    Comment by kim — January 28, 2012 @ 2:53 pm

  23. @ Adze – owning land allows capital gains (untaxed in NZ – woohoo!), whereas you only lease land if you plan on actually coming here to live on it, or you want to run a business on it. Only allowing non-citizens to lease land forces a greater level of productivity – foreigners can’t just buy land and milk capital gains. This is important as rising land values can become a self-fuelling boom-bust cycle, as NZ has seen so often, and so recently.

    And before farmers bleat about the lower land prices they will get with govt restricting sales to Kiwis only, IIRC that was the situation until Douglas & co. took over in the 80s. So it really is only the last generation of boomer/WW2 farmers who cashed in on the land boom. My sympathy is limited if their ongoing ability to profit for no work is constrained.

    @ will – you didn’t read the post, did you? Or is your playing the xenophobe card a subtle kinda post-ironic thing?

    Comment by bob — January 28, 2012 @ 2:56 pm

  24. Clearly you don’t understand the meme that Labour and the left are running on this issue. Just so you understand, it goes something like:

    “Labour has described the sale of the land as gutless and unpatriotic, with its leader David Shearer saying the farms should have been sold to New Zealanders.
    The party’s primary industries spokesperson, Damien O’Connor, says there was ministerial discretion that has not been used and such sales need to stop.
    But John Key says Mr Shearer should say whether he would have broken the law to block the deal and tell the public if Labour has a new policy on not selling farms to foreigners.
    He says he doubts his political rival will be telling Chinese people at cultural events he attends, that they’re not welcome in this country.
    The Maori Party says iwi should have had first right of refusal on the land being sold, and New Zealand First says the decision is economic treason.
    The Green Party says its policy of selling no more than five hectares of land to foreign investors would have prevented the deal.”

    http://www.radionz.co.nz/news/national/96917/crafar-pledges-fight-to-get-his-farms-back

    Comment by will — January 28, 2012 @ 3:04 pm

  25. Unless the bank which called in the receivers was Kiwibank then the land was effectively already “owned” by foreigners. The reality is that following the wholesale transfer of the NZ banking sector to the Australians between 1990 & 1996 we’ve had little say in the matter. Of course the Aussies are the “right” colour so this issue wasn’t so important.

    Comment by TerryB — January 28, 2012 @ 3:40 pm

  26. will and TerryB seem to have no actual justification for the wholesale asset stripping of NZ … merely racist taunts.

    Comment by ropata — January 28, 2012 @ 4:36 pm

  27. “Should we be concerned that as the Chinese government gathers economic influence in other countries, it may use that influence to put pressure on those countries, to perhaps “adjust” their own human rights legislation to be more in line with China’s?”

    China has had the current system since 1949, has this ever happened?

    The Chinese system is certainly extremely unpleasant for those living there, but China no longer seems interested in exporting it, and would gain little from doing so.

    Comment by Hugh — January 28, 2012 @ 4:51 pm

  28. ropata – “wholesale asset stripping of NZ”

    Talk about frothing nationalistic hyperbole. In case you hadn’t noticed Pengxin is buying a few farms and setting up a dairy processing factory in a joint venture, hardly your quintessential ‘wholesale asset stripping of NZ’.

    Comment by will — January 28, 2012 @ 5:14 pm

  29. Should we be concerned that as the Chinese government gathers economic influence in other countries, it may use that influence to put pressure on those countries, to perhaps “adjust” their own human rights legislation to be more in line with China’s? Or to extradite “criminals” to China rather than accepting them as residents? I would say yes, absolutely.

    Now that is one dumb ass comment. Do the Chinese inquire as to the state of the indigenous people of New Zealand every time they meet John Key? Do the Chinese demand an update on the Ureweras trial everytime they meet a NZ goverment representative?

    Of course not.

    Yet how many times have you had Western leaders try and dress down China over China’s internal affairs?

    When was the last time China did the same of Western leaders over human rights or whatever in the West?

    How many military bases has the US the world over? How many does China have?

    Now who is the great ‘interferer’ or ‘intervener’ or self-appointed ‘world policeman’?

    Comment by Asiatic threat — January 28, 2012 @ 6:20 pm

  30. Bob @ 2.56

    What sort of a dil or dick are you?

    If a person acquires a 100 year lease and then sells the lease at a profit a few years later, the sale is subject to the exact same taxation rules as applies to fee simple.

    An asset is an asset whether it is leasehold or freehold title.

    Comment by Adolf Fiinkensein — January 28, 2012 @ 6:28 pm

  31. Sorry, that should have been Bob, not Adze.

    Comment by Adolf Fiinkensein — January 28, 2012 @ 6:29 pm

  32. From the OIC site, here are the actual approved transfers of *net* area to foreigners:

    2011

    Comment by JC — January 28, 2012 @ 6:56 pm

  33. Bugger.. start again:

    2011 64225ha
    2010 17040
    2009 22345
    2008 13842
    2007 15826
    2006 198574
    2005 3688

    Net area means the actual new area owned solely by NZers which has passed into foreign ownership.
    Talk of Labour allowing sales of 650000 ha ignores the effect of previously owned land by foreigners selling to other foreigners, ie, no net increase in foreign ownership.

    In yesterdays Herald, it shows recent land sales to foreigners which show the US the major buyer, the UK and Germany.. the Crafer farms are small beer compared to these other foreign purchases.

    Last night TV3 stated no-one knows how much NZ land is owned by foreigners because the OIC has only been in operation 20+ years, but TV3 quoted a 2007 Federated Farmers estimate (who historically have been xenophobic) as showing just 2% of farmland is owned by foreigners.

    Looking at comments here, listening to talkback and reading various other comments, it strikes me that NZers are not so much xenophobic and/or racist so much as woefully ignorant of the true area of land in foreign holdings.. and I’ve seen no official statistics that give the true position.. which likely means both official ignorance *and* a desire to avoid clarifying the situation.

    Incidentally, Australian agricultural land is over 11% owned by foreigners or held by companies with foreign investors. I doubt we are higher than that, and the chances are we are a good bit lower.

    JC

    Comment by JC — January 28, 2012 @ 7:43 pm

  34. Also Danyl, I would question your characterisation of China as a “military dictatorship”. The Chinese leadership are chiefly of civilian background.

    Comment by Hugh — January 29, 2012 @ 5:11 am

  35. The significant parts of “totalitarian military dictatorship” are “totalitarian” and “dictatorship” – the question of whether the murderers’ bosses are actually from the military or not doesn’t affect the meaning of the term for thi thread’s purposes.

    Comment by Psycho Milt — January 29, 2012 @ 7:06 am

  36. People are allowed to feel apprehensive about such a state building its own vertical supply chains within the New Zealand economy without being labeled xenophobic and racist.

    Yeah, but when it’s always those funny yellow people who attract attention when (oddly enough) they didn’t give a shit when those foreign owners were working out of Sydney or London? Well, if it quacks like a duck and tastes damn good in orange sauce – well, it’s a duck.

    Comment by Craig Ranapia — January 29, 2012 @ 8:21 am

  37. Ugh, I just spent 20 minutes writing a really long-winded reply, and it’s not showing. Moderation turned on?

    [translation: "test"]

    Comment by kim — January 29, 2012 @ 11:14 am

  38. Speculative investment in land has resulted in a transfer by proxy of much of New Zealand into foreign ownership by mortgage – the banks expropriate much of the productive benefit of our nation while taking very little of the risk – the Crafar’s were really only a front for foreign ownership via foreign debt. At least the Chinese are being transparent in their intentions.

    It is time to transform the whole taxation system – taxes on labour and consumption load the entire cost of maintaining society onto only two elements of the economy. Taxation should be spread across land capital energy and labour and then these can be balanced to moderate the interactions between three. At present labour struggles under excess taxation while energy and capital are subsidised by the taxation system.

    Read the following for an example of how taxation on land is used in the Land Of The Free to avoid much of the current inflationary disease afflicting land ownership in this country.

    http://fleeingvesuvius.org/2011/06/02/why-pittsburgh-real-estate-never-crashes-the-tax-reform-that-stabilised-a-city’s-economy/

    There is much else in this publication that will be informative for those who visit your site

    Comment by Darkhorse — January 29, 2012 @ 11:59 am

  39. “Talk about frothing nationalistic hyperbole. In case you hadn’t noticed Pengxin is buying a few farms and setting up a dairy processing factory in a joint venture, hardly your quintessential ‘wholesale asset stripping of NZ’. Comment by will — January 28, 2012 @ 5:14 pm”

    Which means – in case you hadn’t noticed – that we will be missing out on (a) the dairy products manufactured from these farms, and (b) the profits from these exported products will end up in foreign bank accounts rather than here, in the pockets of our own farmers.

    The only thing we’ll end up with is a few dozen (?) people working on the farms, on behalf of offshore investors. (That is what is known as “tenants on our own land”.)

    “Also Danyl, I would question your characterisation of China as a “military dictatorship”. The Chinese leadership are chiefly of civilian background. Comment by Hugh — January 29, 2012 @ 5:11 am”

    Oh, well, that makes a difference then, doesn’t it? Can we split those “hairs” a bit more finely? Perhaps 90% Military Dictatorship? 50% Military Dictatorship? Or only a Little Bitty Military Dictatorship?

    Incredible how National Party supporters go to any lengths to support a foreign power gaining control of our productive land base – rather than our own up-and-coming farmrers, who have essentially been priced out of the market, as the NZ Real Estate Institute said in April 2010; http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10639700

    This whole talk of “xenophobia” and “racism” seems to have emanatated from the Ninth Floor of the Beehive. It’s definitly “spin”, from National’s “advisors”, and National supporters have latched onto it with glee.

    Why? Because, my fellow sleepy hobbits (luv that phrase), the Nats have lost the economic argument. So best to defer to “Plan B: label critics as Racists/Xenophobes”.

    I guess this shows now just the how naive we are as a society (other vcountries don’t permit land sales) – but that we are so cash-strapped for lack of savings, and indulging in property speculation – that we’ve taken to hocking of our assets; SOEs, businesses, and farmland. And we make damn sure we (or at least a million of us) elect a smiling liar to do it for us.

    Comment by fmacskasy — January 29, 2012 @ 12:41 pm

  40. Craig Ranapia wrote: “Yeah, but when it’s always those funny yellow people who attract attention when (oddly enough) they didn’t give a shit when those foreign owners were working out of Sydney or London?”

    I’ve heard plenty of concern about ‘Australian Baby Boomers’ controlling our banks, and ‘Rich Americans’ buying up our coastal property. Not so much about the English, but has much in New Zealand really been sold to English people lately?

    Comment by kahikatea — January 29, 2012 @ 1:57 pm

  41. if ownership of land by foreigners doesn’t matter, you have to answer why most other comparable countries have strict limits on it – or outright bans?

    Comment by deemac — January 29, 2012 @ 2:01 pm

  42. Which means – in case you hadn’t noticed – that we will be missing out on (a) the dairy products manufactured from these farms, and (b) the profits from these exported products will end up in foreign bank accounts rather than here, in the pockets of our own farmers.

    Of course, you’ve also conveniently ignored the fact that this sale gives NZ a great big wad of cash to do something useful and productive with.
    The previous Crafar ownership (and in all probability the alternative Fay consortium) were not especially productive. They certainly were not profitable.

    Comment by Phil — January 29, 2012 @ 3:00 pm

  43. @31,

    The UK has purchased over 20,000 ha in the last two years, the US more than that and several other countries have bought something similar to the area of the Crafer farms.

    http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10781521

    However, these appear to be gross figures, ie, include foreign owned land being sold to other foreigners.

    JC

    Comment by JC — January 29, 2012 @ 3:39 pm

  44. @ Phil – soooo, when can I expect my share of the Crafar farms sale booty, Phil? :) Me being a fully constituted member of NZ Inc, and all. What’s that? It all goes to the receivers and banks? bugger…. ;(

    @ A Fink – Leases are just contracts that guarantee your ability to rent the farms, so the value of a lease drops as it’s term runs out. While it is possible that the capital value of that lease may rise faster than it’s natural decline in value due to it’s term running down (so then you can make an untaxed capital gain on sale of that lease), that only happens in boom situations, which are usually followed shortly after by a bust (just like now).

    So unless your crystal ball rang it’s alarm and got you to sell the long-term lease just before the land price bubble burst, the value of that lease is unlikely to make you windfall (untaxed) capital gains.

    NZ’s latest real estate boom lasted from 2001-2007, just 6 years. Given NZ actually does tax capital gains if you sell in less than 2 years of buying, that means to make a windfall profit on a farm lease, you had to buy at the start of the boom, then sell between 2-6 years later (correctly picking the peak of the boom, which Treasury and millions of investors failed to do – good on ya!). Oh, and you needed no other constraints to kick in during that 4-6yr time, like more stringent council limits on water takes, or publicity about poor nutrient value of your leased land.

    So it is possible to make capital gains on land leases, but only if you’re willing to gamble like a Vegas poker player. Crafar couldn’t make that pig fly even though he owned the land (so didn’t have the natural decline in value of a lease). But you should give it a go….

    Comment by bob — January 29, 2012 @ 4:13 pm

  45. @ jc

    One of the big differences is the yanks and proms have been doing it largely invisibly for years. It’s a new thing for the Chinese and they look a bit different.

    Anyone got any actual evidence for the nasty foreigners overpricing land in nz? Most transactions appear to be between nzers and the crafars went bankrupt because they essentially paid too much for their land. They were kiwis last I read. The biggest foreign influence on our farm land price appears to be their willingness to pay large dollops of cash for milk powder. Maybe we should ask them to pay less.

    @ ataahua

    The pwa is much more comprehensive and less generous than you imply. It can be used for any public work, which is anything the govt wants to do. They dont have to give land back if it’s inconvenient or messy

    Comment by insider — January 29, 2012 @ 4:46 pm

  46. “the question of whether the murderers’ bosses are actually from the military or not doesn’t affect the meaning of the term for thi thread’s purposes.”

    It doesn’t undo the entire argument but throwing in inaccurate negative adjectives willy nilly does make it look like hyperbole is used, don’t you think? If Danyl had called China a “baby-eating dictatorship” should we all keep quiet about it because the fact that no babies are actually eaten doesn’t make everything they do OK?

    Comment by Hugh — January 29, 2012 @ 8:36 pm

  47. What goes better with a few power companies than a slice of NZ land? We are having a fire sale of our strategic assets you know.

    Comment by Tim — January 29, 2012 @ 8:57 pm

  48. “But while China is a rising economic super-power and a close trade partner of New Zealand, it’s also a totalitarian military dictatorship. People are allowed to feel apprehensive about such a state building its own vertical supply chains within the New Zealand economy without being labeled xenophobic and racist.”

    Er, excuse me , USA is not any of the above?

    Yeah ok not a military dictatorship, yet,
    Given the US government system, a billion $US to run for President suggests that very powerful corporate lobby groups have a disproportionate amount of political influence.
    Such power is all that is needed to activate military might.

    George dubw Bush, and his corporate cronies demonstrated that one does not to be a military dictatorship to throw one’s weight around

    China is to be feared because of its governance, So is the US.

    Russia is a simmering pot of repressed imperialism.

    The Pacific is becoming frontier territory. We may become a province of China or any other interested power bigger than us.

    Actually given Chinese logic over Tibet I could mount a very powerful argument about China taking over NZ, via Taiwan.

    The Crafar sale is not so much about land sale (as Maurice (leaky homes) Williamson) blathered on about but about the sale of a large chunk of a very lucrative dairy farming business to aggressive overseas business companies.

    Nationalism is defunct.

    Corporate well being is all that matters.

    Democracy is dead.

    Capitalism rules.

    Comment by peterlepaysan — January 29, 2012 @ 9:22 pm

  49. And funny how those who decry anti-foreign ownership as racist are not above playing the race card towards ‘involuntary minorities’. I theorise an ‘honorary whites’ policy at work, as South Africa did with Japanese steel industry executives in the 1960s – it goes something like, “you can call yourself one of us, so long as you come in with a big fat chequebook.”

    Comment by DeepRed — January 29, 2012 @ 10:01 pm

  50. As I understand it, the People’s Liberation Army is formally under the command of the Central Military Commission of the Chinese Communist Party, rather than being an organ of the Chinese State. If being a governing party in a one party state with direct control of the world’s biggest standing army which you actively use to repress dissidents doesn’t make you a military dictatorship, then I don’t know what does.

    Comment by Dr Foster — January 29, 2012 @ 10:23 pm

  51. It’s true that concern over the sale is not necessarily racist.

    And by the same token support for the sale should not be labelled “unpatriotic”. Especially by the leader of a supposedly liberal party.

    Accusing people with different points of view of being unpatriotic is a characteristic of the far right. That Shearer is doing this is a sign that Labour has not changed at all. At the first opporuntity he stooped to a far right dog whistle.

    What point is there to this type of Labour Party.

    Comment by NeilM — January 29, 2012 @ 11:51 pm

  52. Dr Foster: Usually a “military dictatorship” refers to a dictatorship where the military rules directly, not a country where the military is used to suppress dissent by dictators. If it was the latter the term would be meaningless since it would apply to all dictatorships.

    Comment by Hugh — January 30, 2012 @ 4:44 am

  53. Jeez Danyl, you’ve ramped up the hyperbole a bit recently? This = a state building a vertically integrated supply chain inside our country? You know full well it’s none of that. There’s a few themes here to try and strip out – private ownership of an asset vs a belief in a joint “NZ Inc”, the nature of the underlying asset being purchased, the nationality of the purchasers. Used to be that you were quite well placed to cut through the hype and assess the reality?

    As an individual NZer, I will see zero change between Crafar owning these and Pengxin – the taxation paid on profits will stay in this country and any “reinvestment in the economy” that would have occurred from profits accruing to local ownership will occur through the $200m-odd in cash and whatever investment path that now takes instead. If anything, in this specific case, I’ll see more through the involvement of Landcorp rather than the Crafars who it seems were quite regularly imposing externalized costs on to me via their environmental degradation. This property was that of the “owners” – in this case being the contractually-owed debtors represented through the receivers – and forcing them to take $40m less for their asset where no benefit accrued to “us” seems outside any social remit we think we have. The repatriation of profits angle is a weak one to me – the $200m they received for the land will be burnt? Left under a mattress? They swapped one asset for another; you can have an argument about the nature of profitable returns from various investments but that’s not for society to decide upon surely?

    As to the “nature” of the purchasers – really? As opposed to the Crafar’s or Sir Asset-Stripper? Which leaves the nationality – unless someone can show me direct links to the political apparatus of the country and political decision-making behind the investment, I am loathe to treat any individual as some form of proxy for their entire country’s political approach. And to your argument – a vertical supply chain? That’s outright false – they’ve actually purchased a lot less of the supply chain than I thought they would and have involved a state agency of ours for the rest of it, particularly the higher-value stuff? This strikes me as one of the better foreign investments in farms that we’ve seen in that case.

    Having said all that, I agree with a general restriction to limit foreign land ownership (not ban, but limit). It is a particularly unique asset that historically underpins sovereignty itself and is the one thing we have traditionally been OK at generating a return from. I’m unsure how the nature of a limit should work – a set number of hectares a year? An incredibly high hurdle for national benefit? Much higher tax rates for any returns subsequently generated? Forced JVs with locals?

    Comment by garethw — January 30, 2012 @ 9:30 am

  54. There is a lot of hidden subtext behind Mr Shearer’s comments. He doesn’t want the deal to go ahead but is he prepared to give a $40M subsidy to Mr Fay, that evil capitalist (at least according to their previous posts by the Labour Party). (I also note on this issue that Winston has not made a comment yet that I know about – is he having trouble deciding who is the lesser of two evils?) He wants the government to stop the sale without saying how, and his party complains that the government doesn’t follow the rule of law. It is implied the Chinese are bad, but they are quite happy to buy our goods and much on sale here is made there.
    The Crafars were bad farmers and in trouble long before the receivers came in. The pollution of the Mohaka is mainly due to their farming practices. The banks continued to lend them money to buy more farms, even though they knew they were in trouble. That should be looked at. The receivers also would not consider splitting up the assets but wanted to sell it as a job lot. That effectively meant no NZ buyers. Our financial system has a lot of problems and is exploited by those in the know. However, the Chinese cannot be blamed for locals’ ineptitude.
    All indications are that the new owners will be good managers in for the long haul. The Asian business model seems to include a lot of capital investment rather than the Western asset stripping and short term profit mentality. One has only to look at the Japanese ownership of sawmills to see the potential benefits. Without proof (not prejudices) to the contrary, I suggest that the Pengxin be given the benefit of the doubt.

    Comment by ChrisM — January 30, 2012 @ 9:33 am

  55. In fact, forget my poorly written take above and just read Tim Watkins over on Pundit – much better delivered version of that argument :)

    Comment by garethw — January 30, 2012 @ 9:38 am

  56. “Which means – in case you hadn’t noticed – that we will be missing out on (a) the dairy products manufactured from these farms, and (b) the profits from these exported products will end up in foreign bank accounts rather than here, in the pockets of our own farmers.” Comment by me.

    “Of course, you’ve also conveniently ignored the fact that this sale gives NZ a great big wad of cash to do something useful and productive with.
    The previous Crafar ownership (and in all probability the alternative Fay consortium) were not especially productive. They certainly were not profitable.” Comment by Phil

    A “great wad of cash” that does not go to New Zealand. It goes to foreign owned banks, to repay Crafar’s debt-mountain.

    So, what was your point again?

    Comment by fmacskasy — January 30, 2012 @ 11:27 am

  57. So who really owned the Crafar farms when Crafar ran them?

    Whats your point fmacskasy?

    Comment by merv — January 30, 2012 @ 11:29 am

  58. I support this Chinese company’s purchase of the Crafar farms because I’m impressed with the plans they have and the style of farming they would like to implement.

    There are significant commitments that they will be making to New Zealand, such as $14.5million in looking after the land. They are paying for their own environmental damage which is a lot more than would be expect by a National Government of a foreign buyer a few decades back.

    Our Free Trade Agreement with China has seen our exports to China increase by somewhere between 300 and 400 percent. This is remarkable. The FTA was brokered by Labour, supported by National, has had astronomical results, and paves the way for a long-term bond between the two countries.

    Prime Minister Key has asserted that he will not hesitate to bring in the appropriate legislation, if there is a run on kiwi land by the chinese or any other foreign country, and I believe that he will live up to this promise if need be. This is not as much of a deal as it’s being made out to be; but no doubt the hard-core lefties will use it to try to unseat Key from his position as PM at the 2014 election.

    Comment by Daniel Lang — January 30, 2012 @ 11:48 am

  59. A “great wad of cash” [to do something useful and productive with] that does not go to New Zealand. It goes to foreign owned banks, to repay Crafar’s debt-mountain.

    I’m sorry, paying off debt isn’t useful and productive?!

    Comment by Phil — January 30, 2012 @ 1:05 pm

  60. Maybe useful Phil, but not technically productive.

    Comment by Gregor W — January 30, 2012 @ 8:24 pm

  61. are you fucking kidding me?

    Comment by Phil — January 30, 2012 @ 10:55 pm

  62. Not at all. Paying interest to the FIRE economy is not productive. It’s extractive ergo, not it of itself productive.

    Comment by Gregor W — January 31, 2012 @ 9:54 am

  63. I know it’s rude to point this out, but while James Cameron is a rising economic super-power and a close trade partner of New Zealand, he’s also a totalitarian military dictatorship.

    Comment by Miguel Sanchez — February 1, 2012 @ 11:49 pm


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