Overseas Investment Office

ᔥ NZ Herald

David Fisher is very cosy with Kim Dotcom…he writes about it again today. But what is interesting is the involvement of Simon Power. One thing doesn’t ring true to me though:

Officials at Immigration NZ and the Overseas Investment Office investigated Megaupload, raising no concerns about its operation. They also investigated Dotcom’s wealth, saying it had been earned legitimately. Prime Minister John Key said Mr Power’s rejection of the application was simply because he was conservative and believed it did not have the right feel.

Unfortunately that statement bears no resemblance to the truth. Simon Power was and is a lily livered liberal panty-waist. He could never be, nor should he ever be referred to as “conservative”. I mean for goodness sake the Labour party waxed lyrical about Simon Power leaving like he was a lost friend…and given his shabby back-room deal with them over electoral finance law I can imagine why.

One thing that hasn’t happened yet is anyone drawing the link between all the failing Crown Law cases and the former Solicitor-General, Dr David Collins. He has been intimately involved in the Dotcom case, and also the Urewera trial, where he authorised the warrants and then scuppered the evidence some time later…the same Judge is also involved.

I’m not one prone to conspiracy theories but the recent cases where Crown Law has acted illegally, given poor or wrong advice to police and their appearance of those cases before the same Judge may well be pure coincidence, but now with the revealing of the close involvement of Simon Power in the Dotcom case, I do wonder if Simon Power was behind the appointment of David Collins to the bench of the High Court.

Then there is the same involvement of Simon Power in appointing close associates to the Board of the FMA…it is all starting to get a decidedly whiffy odor about it…no wonder Simon Power bolted for the corporate comfort of Westpac Private Banking.

ᔥ Scoop.co.nz

Tony Ryall continues to hand Labour a history lesson:

Remember when Labour sold 49 per cent of state owned Spring Creek Mine for millions of dollars to American multi-national Cargill Coal?

In 2007 Labour was happy to sell state owned businesses to foreign interests, now they even oppose everyday New Zealanders buying a share in these companies”, says State Owned Enterprises Minister Tony Ryall.

According to the Chairman of Solid Energy in a letter to the editor, the 2007 sale of Spring Creek Mine had approval from the Labour Government’s Minister of Finance, and Trevor Mallard, their Minister for State Owned Enterprises.

And, because it was sold to a foreign company, it needed Overseas Investment Office approval.

The National led Government has always been upfront about its minority share offer. We announced it in January 2011.

ᔥ Stuff.co.nz

The government has approved the sale of the Westpac Farms formerly owned by the Crafar Family to Shanghai Pengxin. It looks like Coleman found his testicles after all:

Land Information Minister Maurice Williamson and Associate Finance Minister Jonathan Coleman this morning announced they had approved the new recommendation of the Overseas Investment Office (OIO) to grant consent to the Chinese-owned Milk New Zealand Holding Limited to acquire the 16 Crafar farms.

Fay said the decision was “wrong” and not good for the economy.

“It shows the Government has no commitment to the people who live and work in the rural sector. Sixteen dairy farms – an area the size of Hamilton – and a minimum $20 million per year of Fonterra milk payouts are lost to the Central North Island economy for good.

On the flip side, a Chinese official says Kiwis should “be happy” that foreigners want to buy land and invest here.

Good stuff…I imagine Fay will now spit the dummy and try and sue again so he can get a cheap deal.

If the Shanghai Pengxin bid for the Westpac farms formerly owned by the Crafar family doesn’t meet OIO requirements because it doesn’t add any value to New Zealand then presumably James Cameron’s purchase of a farm doesn’t either?

Shanghai Pengxin was going to spend $100 million upgrading the farms, it wouldn’t have been leveraged money wither like Fay’s bid…they were also going to open up markets in China and spend millions developing that as well for products other than milk powder.

Whereas Jame Cameron in his favour was going to live on the farm….looks like his little sale is rooted too now by this new interpretation of the law by an activist judge.

The Sunday Star-Times has the facts on farm sales to foreigners:

Fears that China is gobbling up New Zealand land are misplaced, official figures show.

Americans, Canadians and even Liechtensteinians are buying far more land.

Figures released by the Overseas Investment Office show that of the 872,313 hectares of gross land sold to foreign interests over the past five years, only 223ha were sold to Chinese.

People from the landlocked principality of Liechtenstein had purchased 10 times more land than the Chinese - 2,144ha in the same period.

The top buyers were the United States, Canada, United Kingdom, Australia and Israel. The United States had 194 purchases for a total of 193,208ha.

Even when you add the Westpac farms formerly owned by the Crafars China is still lagging behind the round eyes in land investment in New Zealand.

Where was Labour’s concern as all the land sold in the previous 5 years to non-Chinese? Where was Winston Peters as seppos, canuks, poms, ockers and the evil Juice stole or birthright at market rates?

Oh that’s right…those sales are ok because they look like us.

The thing that galls me is that everyone opposed to these sales thought nothing of the fact that they were privately owned, and were like any other private sale sold to the highest bidder. I suspect that those who cried the loudest had the least.

Labour now has a bizarre policy that sales to foreigners are ok if they live here…and after all the racist outrage over the past month you have to wonder why any rich lister Chinese investor would even bother.

The missing component in all this is the fact that if a Kiwi buyer bought the farms…oh I don’t know…someone like Michael Fay…the purchase would be highly leveraged and the “profits”, such as they are, would flow offshore anyway to the Aussie banks that financed the purchase.

As for the facetious arguments that Chinese buyers of land won’t spend money in new Zealand…well just where are they supposing they are going to vet services from, or fencing supplies, or mechanics for their farm implements, or tankers to pick up the milk, or drivers to drive the tankers?

Chris Trotter has written about the Crafar Farms decision:

AT THE RISK of being branded a “traitor”, I’m declaring my support for the Crafar Farms sale. Not because I like seeing productive New Zealand farmland pass into the hands of foreigners, I don’t. The reason I’m in favour of the sale is because I believe New Zealanders should keep their promises and fulfil their undertakings.

In 2008 this country ratified a Free Trade Agreement (FTA) with the Peoples’ Republic of China. That agreement was hailed as the most important foreign policy and trade achievement of the Helen Clark-led government of 1999-2008. Not only was it the first such agreement to be signed between China and a western-style democracy, but it also offered New Zealand businesses immense economic opportunities.

Those opportunities were, of course, reciprocal. The Chinese have been merchants and traders for the best part of three thousand years. They needed no reminding that in this world you don’t get something without giving something in return. And what we gave China was “Most Favoured Nation” (MFN) status.

In the context of the Crafar Farms Sale, MFN means: “If it’s okay to sell New Zealand farmland to Americans, Englishmen, Germans and Indonesians, then it must also be okay to sell farmland to the Chinese.” Under the terms of the NZ-China FTA, the Peoples’ Republic is legally entitled to no lesser consideration than that shown to the most favoured of our trading partners.

That’s what Prime Minister John Key meant when he said “our hands are tied”. It’s what New Zealand’s leading critic of the NZ-China FTA, Professor Jane Kelsey, meant when she stated:

“If the New Zealand government had declined the Shanghai Pengxin purchase of the Crafar farm it could have faced an international law suit for breaching its free trade agreement with China […] The government cannot treat applications from Chinese investors differently from similar applications from other countries’ investors under what is known as the ‘most-favoured-nation’ or MFN rule.”

And that’s not all. Had the application from Shanghai Pengxin been declined by the Overseas Investment Office that decision would almost certainly have been challenged in a New Zealand court. And rightly so. We’d have broken our own rules.

This is why I read and enjoy Chris Trotter’s writing. He is partisan but not so blinkered that he can actually see reality before him.

Labour has been surprisingly silent on the latest farm sales to a foreign investor:

Hollywood movie mogul James Cameron is coming to live in Wairarapa – and he is bringing his family with him.

The director of blockbuster films Titanic and Avatar has purchased two large plots of land along Western Lake Rd in south Wairarapa, where he is expected to arrive and live later this year.

Records released today from the Overseas Investment Office show that James F Cameron, of Canada, was given consent in December to purchase two separate properties, one 817 hectares and the other nearly 250 hectares.

Why the silence from Labour on the sale of valuable and profitable farm land to foreign investors. Surely they must be consistent and decry this purchase too?

Or is Labour’s threshold for outrage being a Chinee?

Submitted via the tipline:

Budget 2012 ought to reflect a commitment to do certain things:

1. Improve the productive potential of competitive enterprise;
2. Transform the learning journey of New Zealand children; and
3. Reduce the size of both central and local government.

To achieve these things the Government needs to deliver a Budget and subsequent legislation that is transformation in its design and impact.  This is also necessary to ensure that New Zealand can compete and win against its major OECD trading partners.

New Zealand’s business community creates jobs.  Supporting business starts with creating a tax environment that is neutral rather than favouring different types of investment categories based on tax advantages and disadvantages.  Secondly the business community needs to trade in an environment where the rights of property owners are sacrosanct.  Finally, businesses need less rules and less regulation so as to enable growth and investment.

It is said that New Zealand’s education system is one of the best in the world.  But any education system that does meet the needs of every child is one that requires work.  Seventy percent is not good enough.  Eighty per cent is not good enough.  The most important person in any classroom is the pupil, and their needs must take precedent over all other needs.

Here is the kind of Budget necessary to inspire transformational growth and improve living standards in New Zealand:

Labour Relations

Workers need the certainty of future employment.  The workplace should be defined by a contractual relationship between employers and employees, with a commitment to boost productivity so as to maintain the viability of firms.  The New Zealand Government should:

I.     Provide for greater freedom to negotiate individual employment conditions, including those provisions that relate to the dismissal of employees.
II.   Extend the enforceable mutually-agreed probationary periods for new employees from a maximum of 90 days to a new maximum of 180 days.
III.  Reintroduce youth minimum wages.

Foreign Direct Investment

New Zealand needs foreign capital to support the development of infrastructure.  Concurrent to a deepening of New Zealand’s capital market, foreign capital remains an important source of revenue when improving the productive potential of firms located in this country.  The New Zealand Government should:

IV.   Reform the Overseas Investment Act 2005 by restricting the arbitrary role of the Minister in determining applications lodged with the Overseas Investment Office.

Planning and resource management

The failure of the Resource Management Act 1991 starts with its ambiguity.  Effects-based law is appropriate.  But who determines those effects and the measures to be enacted to mitigate effects?  Empowering local government has been to the detriment of New Zealand’s ability to develop both public and private infrastructure that in turn could create jobs and livelihoods for young people.  The net effect of New Zealand’s planning laws has been the denial of opportunities to generate wealth and raise living standards.  The New Zealand Government should:

V.  Widen the scope for the Environment Court to determine consent applications, as well as award costs against territorial authorities and other parties that lodge unsuccessful objections deemed by the Court to by vexatious;
VI.  Deny elected councillors the ability to sit on notified resource consent hearings; and
VII.  Enable property owners to sue territorial authorities in lieu of plan changes that are proven to have a detrimental effect on the value of their land.

Accident Insurance

While New Zealand’s social insurance model provides a means for treating those who are subject to an accident, it does not deal with matters such as inequitable treatment costs and a loss of income due to sickness.  ACC is an unsophisticated model for insuring against the impact of an accident.  The New Zealand Government should:

VIII. Implement a schedule of ACC levies prior to the introduction of competition, which are based on a fair price so as to not undercut private insurers entering the new market;
IX. Mandate the competitive private delivery of compulsory accident compensation insurance in New Zealand through the Work, Earners, and Motor Vehicle account; and
X.  Allow for use of experience rating and self-insurance forms, with the requirement for stop-loss cover.

Mineral extraction

New Zealand is blessed with significant mineral resources, which if extracted could earn significant revenue, create new industry and jobs.   A modest amendment to the Crown Minerals Act would enable New Zealand to make significant progress in tapping its resource potential for the purpose of economic development.  The New Zealand Government should:

XI.   Remove up to 0.2 per cent of land from Schedule 4 of the Crown Minerals Act 1991 for the purpose of mineral prospecting.

Working for Families

Working for Families is a scheme that jeopardises the ability of New Zealand families to prosper independent of the State.  The scheme is grown to become very expensive over time.  The New Zealand Government should:

XII.   Lower the abatement threshold for Working for Families to $20,000
XIII.  Introduce a two-tier abatement rate to 35 cents in the dollar between $20,001 and $50,000, and 50 cents in the dollar for $50,001 and above.

General Taxation

New Zealand’s tax system needs to reward hard work, initiative and innovation.  It should also enable New Zealand’s productive sector to reinvest capital so as to grow the economy.  The New Zealand Government should:

XIV. Reintroduce depreciation deductibility for non-residential property classes to bring New Zealand back into line with other OECD countries;
XV.   Introduce tax deductibility for seismic strengthening in lieu of changes to the Building Act 2004 and Building Code following the 2010 and 2011 Canterbury Earthquakes; and
XVI.  Recommit the mutual recognition of imputation credits between New Zealand and Australia to support closer economic relations as well as investment between both countries.

Education

Education ought not to be a debate about the pay and work conditions of teachers.  Education should be about the learning journey of every child and young person.  Education should promote excellence in learning, academic and vocational achievement, and it should enable people to gain skills that will prepare them for life-long learning.  The New Zealand Government should:

XVII.  Adopt charter schools and the introduction of bulk funding;
XVIII. Publish league tables to provide parents with information that enables them to measure the performance of schools in measures of literacy and numeracy;
XIX.  Recapitate primary schools as the first step in a two-stage process of eliminating intermediate schools and reintegrating Year 7 and Year 8 students into a full primary education model;
XX.         Expand the number of fee-free Trades Academies to allow more secondary schools to partnership with tertiary providers to enable 16 and 17 year olds to move to vocational training courses as an alternative to learning courses designed for university entrance; and

XXI. Introduce interest rates on student loans to price the cost of the loan finance raised to pay for tuition fees and related course costs.

Local Government

Local government has emerged as a major cost driver for the business community.  Ratepayers deserve value for money from local government.  The local government sector is a creature of statute, which means reform of the local government sector requires decisive action by Parliament.  The New Zealand Government should:

XXII.  Amend the Local Government Act 2002 to repeal the power of general competence, and introduce merit-based appeals for development contributions
XXIII. Amend the Local Government Act 2002 to prohibit territorial authorities from appointing elected members to the boards of council controlled organisations and council controlled trading organisations;
XXIV. Amend the Local Government (Rating) Act 2002 to prohibit territorial authorities from setting general rates differentially on the basis that businesses can claim GST and a tax deductible expense; and
XXV. Appoint a commissioner to review the composition of the local government sector with a view to making recommendations on local government amalgamation throughout New Zealand (excluding Auckland).