COMMENT: Crafar a welcome end to a weird week
Comment by Pattrick Smellie
April 20 (BusinessDesk) – The Crafar farm decision is as much a relief as anything, at the end of a week of maddening crap talked about the economy.
After the badly run Crafar family empire, in receivership, was chased by the dodgy Chinese investors – who remembers May Wang? – the bid by Shanghai Pengxin for 7,000 hectares of dairying land has finally attracted the right decision and won’t hurt us anything like as much as it will benefit us.
Of course, we could have refused. Lands Minister Maurice Williamson is being disingenuous to suggest he was just following the letter of the law by approving the amended bid, which was based on the new economic benefit test created by High Court judge Forrest Miller’s ruling, which sent the original OK back to the Overseas Investment Office.
Governments can decide not to accept a recommendation from the OIO, even when a foreign bidder has jumped through every one of New Zealand’s unbelievably convoluted process hoops for the sale of land to foreign investors.
But as Foreign Minister Murray McCully said in a letter that Williamson sought, he foresaw “very serious implications” for the New Zealand-China relationship if that was the line New Zealand took.
To the Greens and an increasingly hysterical band of Labour MPs with economic portfolios, this will be evidence of our capitulation to the wily Orientals.
Sorry guys. The real threat is that China has plenty of other options. It’s a big world out there, and Beijing is the most powerful economic force in the world today.
As the Chinese Embassy’s urbane political counsellor, Cheng Lei, put it at a press briefing timed just before the Crafar announcement this morning, Fonterra is a big investor in China and is welcome.
The two countries could even grow two-way trade to $20 billion before the 2015 target formally set this week during the visit of fourth-ranked Communist Party official Jia Qinglin.
But only if we want to.
Meanwhile, elsewhere in the economic debate, the Labour Party turned up its nose at every kind of new job available, from cigarette-roller to croupier to call centre operator, egged on by most other political parties.
So we’re back to wanting the nanny state, now, are we? What a luxury to feel the country is able to pass up gainful employment in legal industries.
Equally foolish were finance spokesman David Parker’s burblings on changing the Reserve Bank Act to “fix” the over-valued dollar. Any reputable analysis will show it’s not the nominal exchange rate that threatens New Zealand’s export competitiveness, but real exchange rate factors like low productivity.
Greens leader Russel Norman made similar comments, but he doesn’t expect to lead a government. Labour, on the other hand, is being watched now by investors for its stance if the Key government stumbles on as at present and loses the 2014 election.
What are some of the lessons from Crafar?
Top of the list: New Zealand’s overseas investment regime sucks. It’s a political process masquerading as a legal one. As a result, New Zealand has one of the poorest scores on international measures for the efficiency of its foreign investment regime. Since most of the country probably think that sounds good, it will be difficult to move to a better place. But New Zealand needs foreign direct investment, just like it needs jobs;
* The Overseas Investment Office needs friends. Whether it’s the complexity of the law or the competence of the staff –opinions are divided on that – the OIO is an institution under siege. It needs a board, possibly to merge with a similar agency, and not to be a sub-branch of Land Information New Zealand;
* Sir Michael Fay doesn’t get redemption from this one. Rather than unite the country, Fay’s lowball offer for the Crafar farms excited plenty of cynicism from those who didn’t want the land going to the Chinese. When Fay took more of a back seat, the rest of the consortium issued florid rants. Still, their appeal on aspects of the Miller decision awaits a court date.
* Matthew Hooton’s iPredict public events gaming website made the news for the first time. Journalists were swamped late Wednesday with rumours the Crafar decision would be announced on Friday, all of which tracked back to reports from Hooton’s predictive press statement.