Friday, January 27, 2012

Selling out New Zealand

As expected, the government has agreed to sell Crafar Farms to the Chinese. Reading through the Overseas Investment Office Advice [PDF], the case for this is extraordinarily weak: the sale may create five to seven jobs; the "new investment" is small compared to the value of the asset (and reading other sections, largely deferred maintenance); the "environmental benefits" are all things they should have been doing anyway (such as excluding stock from waterways), and no account is taken of the significant environmental costs of their plans to ramp up production. Meanwhile, the supposed "benefit" of increased export earnings will be offset by the fact that the profits will be taken offshore. So what we're left with is a farm school, which is really just a way of them getting cheap, government subsidised labour for their workforce, and which doesn't require the purchase of ten farms to operate.

This is not a strong case. But the OIO is a rubberstamp, and the government wants to "send the right signals", both to China and to farmers (who would see any restriction as an attack on their property values, and hence their business model), so we end up with a strategic asset and a significant chunk of our dairy production falling into foreign hands. What this shows is that we need a significant tightening of our overseas investment regime, along with a change in mindset at OIO so we have people willing to actually enforce it, rather than just rubberstamping every decision with "approved". As for National, they've sold out New Zealand - again. And they'll do the same with our power companies too.