Damien Grant: Asset sales benefit all

Damien Grant. Photo / Janna Dixon

The proposed sale of state assets has caused some hand-wringing by economic illiterates fretting over the risk of foreign ownership.

Someone needs to tell them we sold much of godzone decades ago.

New Zealand has an exceptionally high level of household and commercial debt secured against property, leaving only a sliver of equity in the hands of the nominal landowners. The old joke about the bank owning the house is funny because it is true and our banks are owned by the Australians.

The angst over the sale of the Crafar farms to foreigners misses the point that receivers were appointed by Westpac and Rabobank. These properties are already owned by overseas interests.

If the proposed investors were fronted by Shania Twain and not May Wang I am sure there would be less fuss.

Foreign money brings foreign expertise. Today's youth suffer anxiety attacks if they exceed their monthly text allowance. I suspect their synapses would melt if they had to endure a six-week wait for a landline phone connection, the norm from state-owned Telecom in the 1980s, before Prebble sold it to the Americans.

American capital and know-how transformed Telecom from a moribund behemoth into a dynamic enterprise driving the explosion of telecommunications infrastructure that propelled New Zealand into the internet age. The new American owners took their dividends but these were dwarfed by the benefits returned to the wider economy by a transformed Telecom.

Try building Trade Me on a telecommunications network made from number 8 wire.

A farmer borrowing money to develop his farm may lose equity in the land but if he ends up selling more milk to China the overseas lender, the Kiwi farmer, and the Chinese consumer all benefit.

When we as New Zealanders swap some of our assets for cash our net wealth remains unaffected. If the new owner invests and develops that asset New Zealand makes an economic gain.

We buy coffee at Starbucks but, at the same time, Josef Roberts is building Burger Fuel stores in Dubai, John Key owns property in Maui and Peter Jackson bought a private jet with the money made from foreigners watching his hobbits.

New Zealand is facing capacity constraints in our electricity infrastructure, in generation capacity and in the transmission and distribution networks. There is a need for ongoing investment in infrastructure and technology.

It makes sense that an industry so critical to our economic wellbeing benefits from international capital and the expertise that comes with that.

The debate over the benefits of foreign investment has long been settled.

damien@waterstone.co.nz