Parker David: Urgent Debates — Overseas Investment Rules—Sale of Crafar Farms 
Text is incorporated into the Bound Volume 
Parker David: Urgent Debates — Overseas Investment Rules—Sale of Crafar Farms 
[Sitting date: 14 August 2012. Volume:682;Page:4313. Text is incorporated into the Bound Volume.] 
Hon DAVID PARKER (Labour) 
: 
 I move  
That the House take note of a matter of urgent public importance 
. The finding of the Court of Appeal was that the decision was not unreasonable from a  
Wednesbury 
 unreasonableness point of view not that it was a reasonable decision. It was that it was a legal decision not the right decision. The court found that the Minister for Land Information acted within his powers to approve the sale of the Crafar farms to the Shanghai Pengxin syndicate but not that he acted reasonably because that is not its mandate. 
I want to talk about what is wrong with this decision. I also want to talk about what is wrong with the underlying problems in our economy that drive the sale of so many of New Zealand’s assets to overseas people. I also want to put on record some of the inconsistent statements that we have had from the Prime Minister and others around these issues. The Minister approved this sale the largest ever sale of dairy farmland on 20 April after his earlier decision granting similar approval had been overturned by the High Court because of misapplication of the legal test. The largest ever sale of dairy land to overseas interests is of interest to New Zealanders and I think it is appropriate that the Speaker—I could not think it inappropriate but I agree that it is a matter of importance that requires the attention of this House. 
Why do I say that and what do I say in support of that? Well I would look at our history in terms of what has happened to our forestry industry. New Zealand lost large swathes of its forestry to overseas ownership in a very short period of time— 
Hon Dr Jonathan Coleman 
: Approved by you. 
Hon DAVID PARKER 
: Some of them were approved by Labour. Some of them were approved by Labour. What has happened to the forestry industry since then has been analysed by people like Brian Gaynor. Brian Gaynor has found that the loss of control of those assets from New Zealand has led to a smaller portion of the value chain accruing to New Zealand because the forest owner who does not have an interest in New Zealand is less likely to want to process it in New Zealand and less likely to want to invest in the jobs that add value to New Zealand and will be more interested in their own profitability in terms of maximising the log price. We in this House should learn the lessons of history. If we do not learn the lessons of history we are doomed to repeat them. 
Other lessons in history go back a bit further. New Zealand lost a lot of control of the value from the farming sector in the 19th century when there were high levels— 
Hon Member 
: The early 19th century. 
Hon DAVID PARKER 
: —in the early 19th century when there were high levels of foreign ownership of New Zealand pastoral land. As a consequence Governments in New Zealand tightened up on those rules for the benefit of New Zealand farming and that is why we have now got Fonterra because we have vertically integrated enterprises that have as their foundation New Zealand ownership of our land. 
Another reason we should be concerned is that the Prime Minister told us we should be concerned. The Prime Minister in the last term of Government when there was public disquiet about the amount of farmland starting to be sold into overseas hands said he thought that the concerns that New Zealanders had were legitimate. He said that National would tighten the rules in response to that. Well what did they do? They passed this minor change to regulations and pretended it was going to tighten the rules. The reality is that the discretion of the Minister to approve or decline land sales to foreigners is already very wide. The Minister had ample discretion to decline this application if the Minister wanted to but he did not want to. He wanted to approve it and that is why he did—because it is ministerial discretion. So when I hear the Minister claim he had no choice because it was a departmental recommendation that is nonsense. Indeed if he took the decision on the basis that it was a departmental recommendation that would itself be illegal. So when he postures in that way in the media he knows he is treading a fine line because it is ministerial discretion. 
This Minister has a record of exercising that discretion in favour of applications. In fact since he has been Minister he has turned down only one application and that was where the officials found that the applicants were corrupt— 
Hon Maurice Williamson 
: No. 
Hon DAVID PARKER 
: More than one is it? How many? 
Hon Maurice Williamson 
: About seven. 
Hon DAVID PARKER 
: About seven now. But it is always on the basis that the people who are applying are corrupt individuals rather than the economics of the underlying transactions. 
The second-largest sale ever approved to foreign buyers of dairy land in New Zealand was also approved by the current Minister and that was the sale of a very large dairy farm on the Maniototo in my home province of Otago. Labour disapproved of it. Labour opposed that. We made public our disapproval of that at the time and we were not accused of racism for opposing the sale of big dairy farms in the Maniototo to American interests—in that case the Harvard University investment fund. 
Prior the largest ever in land area and value of dairy land sold to overseas interests was a Southland group of farms sold to European investors. Again the Labour Party opposed that. Again in that case the Labour Party was not accused of racism for opposing that particular sale of land to overseas buyers. But when we opposed the sale to Shanghai Pengxin the Minister accused us and accused other people of being motivated by the fact that the purchaser was Chinese rather than that the purchaser was of another nationality. 
Hon Maurice Williamson 
: Give us one quote. 
Hon DAVID PARKER 
: You were on record for that. I am sorry but the record shows that the Minister asserted that people were opposed to Shanghai Pengxin purchasing these farms rather than others on the basis of their nationality and on the basis of their ethnicity. That accusation was not made in respect of our opposition to the US purchase in the second-biggest sale or opposition to the European purchase in Southland earlier. 
The opposition of the Labour Party is not based on where people come from. It is based on what we think is in the long-term economic interests of our country. More than ever it should be apparent to the National Party that there are huge trade imbalances in the world—enormous trade imbalances in the world. China is running the largest trade surplus we have ever seen of any country ever in the history of the world. Germany has had a trade balance that it has maintained on the back of a euro that is suppressed because of problems in the Mediterranean border States which have acted to pull down the euro and keep up the exports of Germany because they have had a trade advantage because of their exchange rate. 
We have had other countries manipulating their exchange rates. We have these massive trade imbalances in the world meaning that countries that are in trade deficits are funding those deficits through borrowing more money from overseas and through selling our assets which were New Zealand - owned to foreign buyers. Those are the only two ways you can pay for a current account deficit. Yet we have this Government ignoring those realities and saying: “Look we should just let all of our assets be available to be purchased by the highest bidder.” That is just wrong. There is no economic upside to New Zealand selling these land-based assets. We are already the most efficient farmers in the world. We are not going to increase the farm output of these farms. Indeed that was one of the reasons why the High Court upheld the appeal in the original decision which was turned over— 
Hon Maurice Williamson 
: Wrong. You’ve got it wrong. 
Hon DAVID PARKER 
: It was. One of the reasons was that the High Court was not convinced that the additional investment that was going to be made in these farms and would increase productivity would not have been made by a New Zealand purchaser. We know that New Zealand purchasers of farms increase productivity. That is how we have increased our dairy output. That is how Fonterra has thrived. We do not need foreign purchasers of those assets to increase the output of those farms. Indeed it is clear that the output of these farms would have gone up whoever purchased them and New Zealand’s output as a country will not go up as a consequence of these farm purchases. 
Even trade access into China is not vastly advantaged through this. We already have a free-trade agreement with China which gives us access to that market. So that is not a huge advantage from these transactions. 
The downside is that the future value from our farming sector if we sell it overseas goes to the foreign purchaser. That is a drain on our resources. Over time we see the hollowing out of the New Zealand economy. We see this in a rising current account deficit. A substantial part of our current account deficit is now profit flows dividends interest being paid to overseas lenders and profits being repatriated to foreign owners. We will not get out of this loop with these sorts of policies because this sort of sale makes it worse. 
There are non-economic reasons why we should not be selling these assets. I want to live in a country where successful New Zealanders who work hard and save hard can buy our assets. I do not want all of our assets priced on an international market. Some assets should be priced internationally; some should not. I do not want New Zealand to be a country where a sharemilker who works hard for decades and saves cannot afford to buy a farm. I do not want the only people who can buy farms in New Zealand to be people who either inherit large amounts of wealth or bring wealth from overseas. 
We are seeing the globalisation of trade. We are seeing the equalisation of prices for a lot of commodities and we are seeing the averaging down of a lot of labour costs for labour-intensive goods but we are not seeing asset equality. In fact we are seeing asset and wealth inequality grow around the world. If New Zealand opens itself up to those forces without protecting our asset base we do New Zealanders a disservice. Nowhere is this clearer than land. You know we have got countries overseas that for centuries have had far less egalitarian settings than New Zealand’s. They have had lower rates of tax. They have had higher rates of division. Yet the beneficiaries of those settings in those countries are hugely wealthy compared with New Zealanders. Added to that we have got the State-based control of enormous surpluses in some countries and China is the obvious example of that. Those two factors combined mean that we are unlike any moment in our history at risk of overseas people being able to outbid New Zealanders for our assets and that is not the sort of country that I want to live in. I do not think it makes much difference to the economic output of New Zealand. I do think it increases our current account deficit over time. But it is almost as important to me that I live in a country where people can afford to own our own country. 
This Government should be concentrating on what fixes that problem. It is the changes that we need to our investment signal through a capital gains tax. It is deeper savings so that there is more capital to invest in our manufacturing in our processing of our forest products in our fisheries and in the high-value manufacturing sector. We need more money in that sector through higher savings and we need the money directed there instead of into speculation. The means to direct it there is a capital gains tax to remove the tax bias that currently puts investment in the wrong place. We need a research and development tax credit. What we do not need is to sell ourselves off to overseas countries for no good reason—no good reason at all. 
China does not let us buy its land. Yet we are saying we should have to sell our land to it. This is wrong. It is not about China; my same logic applies to other countries that do let us buy their land. I personally do not think we should sell our rural land to overseas countries. Neither do I think we should sell our infrastructure with monopoly characteristics. It is really important for the functioning of the— 
Hon Dr Jonathan Coleman 
: Why have you changed your view? 
Hon DAVID PARKER 
: What is that? 
Hon Dr Jonathan Coleman 
: Why have you changed your view because you sold off all the— 
Hon DAVID PARKER 
: Actually I turned down the sale of Auckland Airport to Canadian interests so I will stand on my record. And actually I also turned down a dairy farm at the end of my tenure. The world is changing and if people cannot change as the world changes how moribund would democracy be? We may as well not have it. 
I am firmly of the view that it is not in our interests to sell our rural land nor our monopoly infrastructure. It is a symptom of a malaise in New Zealand which is that we do not export enough to cover the cost of our imports and interest. Those are the problems that should be solved. Those are the problems that if solved will raise incomes will give job opportunities and will stop those thousands of New Zealanders leaving to Australia.