If ever there was a dangerously inappropriate political football, it is the potential sale of Crafar farms to the Chinese company, Shanghai Pengxin and the hysterical xenophobia it has induced. While the furor has managed successfully to paint National into a very uncomfortable corner, it has also made all future overseas purchases significantly more difficult. Like the sale of airport shares to Canada during the Labour administration, the entire debacle has been driven by the typical isolationist xenophobia of Kiwis in general (the consequence of living on an island miles from anywhere). Unlike the airport saga, though, the Crafar sale has the added complication of an about-turn instituted by a legal judgement.
Let me be clear that I have no issue, on the surface, with the Justice Miller’s legal finding that the OIO have overestimated the additional benefits to New Zealand of an overseas sale. The problem here is with the word “additional” which the Judge correctly points out can be interpreted to mean “additional to the reasonable improvements expect to incur from a New Zealand sale”. While this is a reasonable lay interpretation of the words, it is clear that the OIO and, I suspect, many economists would disagree with it.
The problem lies in the fact that the idea of reasonable improvements is extremely nebulous. Take the Crafar farms, for instance, (and John Key is probably thinking “please do”). Fay and his consortium could simply sell the farms, without improvements, individually, to make a reasonable profit. Or, more likely, they can spend the bare minimum to make them a going concern again and make a killing. Absurdly, if they sold them individually, I think all the farms are small enough to escape the level of scrutiny being given to the current deal. It is therefore quite possible for Fay to sell the farms individually to Pengxin over a period of a few years (I am just guessing here, but it is possible, owing to the way the current law is structured, that a deal like this could be made)
The thing is that Fay, and any other New Zealand bidder can offer as many improvements and jobs as their imagination can provide. Unlike the Chinese and other foreign bidders, the OIO has no power to compel them to provide these improvements. Fran O’Sullivan points out in her column today that Fay has an extra $30 million dollars to play with and so can make his offer of improvements seem very plausible. It would be hard to establish that his offer, bogus or not, was “unreasonable”.
Effectively, this makes it virtually impossible for an overseas investor to beat a homegrown offer, even if that offer is much lower (in fact, especially if it is lower). As O’Sullivan points out, this essentially reduces the sale price of all farms in New Zealand.
Ridiculously, the Left are crowing about National’s discomfiture without any apparent appreciation for the damage they are doing to New Zealand investment. This is made doubly absurd by the fact that Labour accepted many, many farm sales during their last administration based on exactly the same OIO analysis as the Crafar one, now rejected by Justice Miller.
There are no good options left for National. Appealing Justice Miller’s ruling would merely prolong the issue and there is no guarantee that it would be overturned. Approving the sale based on a new OIO recommendation will see Fay taking it to court again. The damage to National would be very large if he was successful. Key might even have to demote his ministers.
Rejecting the sale is also a poor option, sending all the wrong signals to overseas investors, but at least it can be done in the context of reviewing the OIO criteria and making the selection process clearer and more defined. The MacDoctors advice, FWIW, would be to scotch the sale and purchase the farms via Landcorp (at a bid somewhere between Fay’s and Pengxin’s). Get them up and running again and sell them individually ( if Fay can make money out of this I see no reason for the government not to be able to). At least Fay will not profit from his machinations (and that would send a clear signal to the Chinese that the New Zealand government is less than impressed with the situation and will act to remedy it). Then the OIO criteria can be revised and made unambiguous at leisure.
Of course Pengxin will be put out, but even that would be a valuable lesson for them. Next time you want a piece of New Zealand, get a New Zealand company to front the bid and loan them the money. We have to do the same when buying into China.
After all, xenophobia is the bed-pan of socialism. You just have to hide it under the bed.
Related posts:
- Rabies warning I hope everyone over at the Standard has had their...
- Judge Dredd I used to enjoy the Judge Dredd comic strip. It...
- Wrong Answers The sad story of the death of diabetic Mrs. Maureen...
- Sell-Down Bernard Hickey lays into National‘s plan for a partial sale...
- Why the Bong is Wrong Predictably, the Misuse of Drugs (Medicinal Cannabis) Amendment Bill was...
Feb 18 12 7:34 pm
…xenophobia is the bed-pan of socialism.
WTF? Been at the drugs cabinet again have we? If you ask your ideological soul-mates, such as scrubone or the psychos at Crusader Rabid, they will inform you that socialists are the polar opposite of xenophobes, as they are deliberately allowing foreigners to destroy western civilisation through what they see as open immigration. So which is it?
This issue is more about Fay wanting to asset strip the farms for a few extra million Swiss francs, and appealing (oddly) to nationalism is so doing. Plus he has the cash to abuse the legal system to get his way. However, it makes the Nats look like they don’t know what planet they’re on, so has some comic value.
Feb 18 12 9:05 pm
Sorry, my pithy quote is far too subtle for you…
No argument from me about Fay’s motives, but I don’t see how anyone can consider the Nat Ministers at fault when they are just processing exactly the same analysis from the OIO as Labour did in the last government.
Feb 18 12 9:53 pm
Not so much subtle, or pithy as laughable, but however. It’s not a quote either, as you appear to have come up with it all on your own.
Nat Ministers maybe aren’t at fault, but they sure are flailing about horribly. Most entertaining.
Feb 20 12 10:25 pm
Next time you want a piece of New Zealand, get a New Zealand company to front the bid and loan them the money.
Actually, that’s what they tried first.
Feb 21 12 8:48 am
Not quite. My understanding is they created a front company using a New Zealand citizen with Chinese connections. What they needed to do was use an already established company.
Feb 20 12 10:30 pm
that socialists are the polar opposite of xenophobes
The observable facts say otherwise. My own observation that xenophoba (just like stupidity) knows no political boundary.
I do note the connection between big government and an attitude that “our” money must be spent on “our” people though.
as they are deliberately allowing foreigners to destroy western civilisation through what they see as open immigration.
Mac, hear that? You’re destroying western civilisation!
Feb 21 12 9:04 am
Everyone is Xenophobic to some degree. The far left use immigration as a tool to disrupt cultural norms, but are not at all averse to using xenophobia to get their way, as in the Crafar farms. But when it gets right down to it, Socialism itself, the collectivisation of humanity, is intensely xenophobic in its structure. It is structured on group identity, rather than individual acheivement. The net result is that the group automatically sees another group not as individuals with hopes, dreams and skills and achievements but as “them”.
Hence xenophobia is the bedpan of socialism – it is where all the nasty stuff goes.
Feb 23 12 7:19 am
You don’t understand the left at all do you?
Socialism itself, the collectivisation of humanity, is intensely xenophobic in its structure.
Way to contradict yourself in a single sentence. The current case is just Fay appealing to nationalism in order to fleece some more cash out of the country. Not really a left/right thing. However, it’s the right who say things like:
The far left use immigration as a tool to disrupt cultural norms
Which is itself an appeal to xenophobia (the home and hearth of right wing nutjobs if you will).
Scrubone can’t read btw.
Mar 9 12 12:26 am
Socialism and Nationalism go hand in glove. Scratch one and you find the other.
Feb 18 12 11:57 pm
There are no good options left for National.
Well, then they should do the right thing. Change the law to abolish the entire OIO system, and sell the Crafar farms and all other SOEs to the highest overseas bidders – payments only in remimbi or USD.
Yep, KiwiRail too – but obviously only for scrap, not as a going concern.
Feb 19 12 12:13 pm
I just hope that Fay doesn’t get to purchase these farms as he has made millions, if not billions out of ripping off our countries assets over the years, especially in the days of the Labour Govt and Rogernomics in the 80′s. I can see him doing this again .