Fran O'Sullivan: Land sales row flares again

John Key is now in an unwanted debate. Photo / Sarah Ivey

Political parties line up to attack Government over proposed buy-up of Lochinver Station farmland by Shanghai Pengxin, the same Chinese interests that created a furore over the purchase of Crafar Farms

Political leaders across the spectrum have pounced on the opportunity to peddle their policies for the impending election - a sound bite or snippet more than sufficient to stir up controversy - particularly on a matter as divisive as land sales to foreigners.

The proposed sale of Lochinver Station to Chinese company Shanghai Pengxin has once again stirred up nationalistic sentiment reminiscent of the Crafar Farms debacle in 2011.

Already it is a political football after Conservative Party leader Colin Craig brought it to the public's attention last Friday -- a matter not helped by Economic Development Minister Steven Joyce's attempt to dismiss the sale as a "ridiculously small piece of land". Note Mr Joyce: It is a major sale worth $70 million to its Stevenson Group owners.

The upshot is that Prime Minister John Key has found himself drawn into a debate he'd rather avoid. Key says any "serious run on New Zealand land" would be met with Government intervention to "try and slow that down". It's a line he has used before, but in the absence of the comprehensive register of foreign-owned farmland that Federated Farmers has proposed.

Labour concedes Federated Farmers has a point, but while in principle a register is a good idea, Labour's finance spokesman David Parker says, "I don't need a register to know that for me it's wrong to sell New Zealand land to foreigners".

There is an extraordinary amount of hypocrisy coming from Labour's camp given it did not halt land sales while last in Government.

But Labour is now saying it will clamp down on the sale of all land to foreign buyers -- with rural property to be the subject of more restrictive covenants.

Their view is New Zealand needs to take care not to lose ownership of its farmland through allowing New Zealanders to be outbid by foreign buyers. "We cannot afford to lose control of our best income producing assets and become tenants in our own land."

If Labour's policy left any doubts as to their intentions, finance spokesman David Parker says "in all but the rarest of cases, sales of rural land to overseas buyers will be banned".

Labour would take the present criteria used by the Overseas Investment Office and make it more arduous to gain consent. In order to be approved, the foreign investor would need to demonstrate that they would deliver benefits that would be "over and above" that a New Zealand investor would be able to produce in addition to achieving substantial improvement in job creation and exports. That's already implicit in the current framework and Labour needs to spell out exactly what lies behind the rhetoric.

Drawing a line in the sand over all sales, however, would be unreasonable. Farms are investments like any other and forcing potential sellers to take discounts instead of full market value for their property is a game-changer for the agricultural sectors.

One of the biggest failings of the Key Government has been their inability to get their ducks in a row over exactly what and how much is in foreign hands. Some hard data would at the very least put an end to speculation as to whether the two Shanghai Pengxin deals were "one-off" sales as Key referred to them, or whether they were symptomatic of a more serious trend in the ownership of a key New Zealand resource - land.

The Key Government has been welcoming to foreign investors - particularly from China - and their track record of decision-making leaves them little in the way of wriggle room to find a compromise in this situation. It's time for a more fully-fledged debate that also takes account of the fact that China links trade to investment.

If the Government stops farm sales to Chinese interests, would Fonterra's farm hub programme in China face roadblocks?

Fran O'Sullivan is a business columnist for the NZ Herald and Alexander Speirs (right) is a business journalist for Herald Business Reports