New Zealand has always had a love-hate relationship with foreigners and their money.
We need them. We resent them. We sell them assets and then regret it. We ban them from buying things and then we desperately want them back.
In the current phase of this tempestuous relationship, Prime Minister Christopher Luxon is swiping right on foreign investors as he desperately tries to inject some life into the unloved New Zealand economy.
Immigration rules will be relaxed to allow rich investors a fast track to residency in New Zealand in the hope their cash will align with Luxon’s new catch cry of “going for growth”.
His urgency is understandable. New Zealand’s economy has been mired in recession.
National’s poll ratings are awful, with two major polls showing the opposition has more support than the government. Luxon’s own lack of popularity means his leadership through the Parliamentary term – let alone a second term – is not a given.
Luxon is betting the ranch on economic growth, setting himself up for a do-or-die scenario, but the foreign investment field is strewn with mines.
The most obvious problem is the nature of the three-way coalition. National is wedged between Act, a neoliberal party which aims to complete the unfinished business of Rogernomics, and an economic sovereignty party which is, as it says on the tin, about putting New Zealand First.
Winston Peters had already swiped left on one contentious aspect of foreign investment before the three-way marriage was even announced. National had campaigned on a 15% foreign buyer tax on houses worth over $2 million, claiming that would gather $740 million a year in revenue but Peters put the kibosh on that during the coalition negotiations, with the ban on foreign buyers retained.
But talk is bubbling up now of easing the ban which will add to the confusion about whether New Zealand wants foreigners to invest in the country or not.
As will the move to scrap the English language requirement for wealthy investors. Peters has spent a good chunk of his career demanding that migrants coming to New Zealand should speak English.
“Migrants should speak English,” was the headline of a May 2003 press release – one of many fusillades on the topic – where he “demanded that the government stop importing tens of thousands of immigrants who don’t speak English”.
“This country is groaning under the weight of indiscriminate immigration, particularly in Auckland and the latest move shows that immigrants are not required to fit in here but are given free access to all the benefits on offer,” Peters said. “Our schools are overloaded with foreign students, hospitals cannot cope and the ugly face of imported crime is showing itself in major centres with murders, kidnapping and extortion.”
Now we want them back - no English required, as long as you have the cash. Wealthy investors would have only to spend 21 days in New Zealand over three years to gain residency, under the so-called Golden Visa programme.
One week a year isn’t a great commitment to New Zealand, although billionaire Peter Thiel spent just 12 days here before being granted citizenship, when the standard rules said you had to spend at least 70% of your time in New Zealand over five years (around 1300 days).
Thiel has said he had invested $50 million in local tech companies so some will see that as a good deal, while others will feel New Zealand shouldn’t sell out to wealthy foreigners quite so easily.
Attracting the right sort of foreign investment is essential for New Zealand but get it wrong and the regret is long lasting. Having our four major banks in Australian hands is a constant source of frustration and angst for consumers and governments alike.
The problem with international investment in key assets is that it can be fickle. The media sector found that out last year when Warner Brothers suddenly decided that, actually, it didn’t really want to own Newshub at all.
The government is hastily arranging the red carpet for foreign investors but there are already deep pools of foreign money here. Foreign investment in New Zealand reached $572 billion last year, according to Statistics New Zealand.
And no, China doesn’t feature strongly at all. Australia ($175 billion) is the largest investor by a big margin, followed by the US ($76 billion), the United Kingdom ($60 billion) and Singapore ($17 billion).
The government offering special visas for people investing $5 million or $10 million might be a welcome shot in the arm for the economy but unless it really gathers momentum, it’s hard to see it moving the dial.
Still, you can’t say Luxon isn’t trying. In March, he will open a New Zealand investment summit in Auckland, welcoming about 100 high-profile investors to the gathering.
Luxon will do all he can to get them to open their wallets and make them feel the love. He needs to convince them that this time we really mean it.
