Norman Russel William: Estimates Debate — In Committee 
Norman Russel William: Estimates Debate — In Committee 
[Volume:665;Page:12677] 
Dr RUSSEL NORMAN (Co-Leader—Green) 
: 
 I also wish to address the approach of the Prime Minister and the Government to overseas investment. One of the major concerns around overseas investment particularly in respect of land is on the impact on land prices both rural land prices and urban land prices. Multiple factors have driven up urban and rural land prices over the last decade; there is no question about that. But one of those factors is overseas investment and that factor is likely to increase in time not decrease in time. 
Urban and rural land prices really matter. In particular rural land prices matter if we care about the family farm. I endorse the statements that have been made particularly by the Minister of Finance about the fact that the family farm is important. I totally agree with the Hon Bill English about that. The question is how family farms can continue to exist if we cannot afford to buy into them. If the next generation of family farmers simply cannot afford the land because the price of the land has been driven up by overseas investors with very deep pockets I ask how the farmer’s daughter or son can afford to become the next generation of family farmer. In fact one of the great dreams in New Zealand particularly in the dairy sector has been to go from being a sharemilker to a dairy farmer. That has become very very difficult when the price of land is driven up by overseas investment. So one of the questions for the Department of the Prime Minister and Cabinet is to ask what the Prime Minister will do and what the Government’s policy will be towards protecting rural and urban land from being driven up to being so expensive that family farmers cannot afford it. 
The other part in relation to family farms is that when the price of land is so high that an enormous mortgage has to be taken out whether the farmer is a corporate farmer or a family farmer then in order to service the giant mortgage the land and the soils need to be driven incredibly hard. The bigger the mortgage that needs to be taken the harder the land needs to be driven. So one of the issues is that if we do not regulate to protect rural land from overseas investors we force up the price of rural land which means that family farmers cannot continue in New Zealand because they cannot afford the land. This means that those who farm the land are forced to thrash it and destroy the environment because they are under such enormous financial pressures to meet their mortgage payments. This is a major concern for New Zealand. 
One further impact of course is the inflationary pressure. We know that one of the key drivers of inflation has been inflation coming through the value of land and that the Reserve Bank tries to deal with the inflationary pressures coming out of the housing market which is linked very closely to the price of land by jacking up interest rates. So any measure we can use to keep down the value of land and stop it escalating so quickly is of tremendous value and importance to the New Zealand economy to family farmers and to people trying to buy their first home in New Zealand. 
One of the tools that we have is to restrict the access of foreigners to buy up land in New Zealand. We have heard quite a lot and quite reasonably so about the issue around the level of savings in New Zealand. I totally agree that there is a real concern about the level of savings in New Zealand and we need to improve the level of savings and have policy instruments to do that. But I say two things: in the first instance we cannot solve that problem immediately but we face a real issue about foreign ownership and foreign buying-up of land right now. We have the regulations and we can impose them to prevent foreign ownership of land right now. I also say that even if we increase the level of savings quite significantly we will still have very large sovereign funds that have identified that they want to buy up New Zealand land. We have seen it from South Korea and the Chinese Communist Party Government which both have a strategy of buying up agricultural land and they have been extremely explicit about it. 
The other issue in terms of foreign ownership of land is around undermining Fonterra. If vertically integrated companies take dairy produce out of New Zealand and sell it straight into China that undermines Fonterra on price and it means that the profits travel overseas. It also threatens Brand New Zealand. Bright Dairy which is the company trying to buy Synlait was caught up in the melamine disaster and that undermines Brand New Zealand. If a single packet of New Zealand - branded milk ends up in China contaminated with melamine then it will undermine Brand New Zealand. For those reasons and many more we need a policy to restrict foreign ownership of land in New Zealand.