ECONOMICS : Selling the Family China; as the Spotlight Falls on Foreign Interests Bidding for Large Land Holdings, Bob Edlin Examines the Debate: To Sell or Not to Sell?

Article excerpt

Byline: Bob Edlin

A statistical gap was revealed by Finance Minister Bill English, as public passions ran high over sales of New Zealand land to foreigners in general and dairy farms to Chinese interests in particular.

No one knows how much New Zealand land is foreign-owned. Officials keep count when foreign purchases are approved, but they donCOt know how much land has been sold by foreigners.

News media have been reporting that an average 82 hectares of agricultural land a day has been approved for sale to offshore investors in recent years. They quoted Overseas Investment Office figures showing 235 consents for foreign investment in agricultural land were approved between July 1 2005 and July 1 2010.

The approvals were for foreign investors to buy either financial shares or physical assets on agricultural land. More than 150,000 hectares of agricultural land has been approved for sale in the past five years.

The commodity boom and a bright outlook for agricultural prices make this land increasingly attractive to overseas investors, as an Institute of Economic Research discussion paper pointed out.

The paper looked at another data set to put matters in perspective. Foreigners had $293 billion invested in our $187 billion a year economy in March 2009. Statistics New Zealand data show the stock of land-based foreign holdings was $4.8 billion in 2009 (one percent of the 2009 total). Around $27 billion (nine percent) was invested in manufacturing and $192 billion (61 percent) in finance and insurance.

Much of New ZealandCOs inward foreign direct investment comes from Australia. Investment from China is too small to be reported separately.

The institute believes there is broad support for further trade liberalisation through the World Trade Organisation or free trade agreements, because Kiwis know that when other countries remove subsidies or tariffs on the goods we export, we become more competitive and this lifts our income. We also want to be able to invest in overseas projects and travel freely for business purposes.

But some elements of globalisation discomfort some sections of the public. …