Peters and Fay, together at last

by Fiona Rae / 11 February, 2012
When Sir Michael Fay and Winston Peters are on the same side, history must be the plaything of naughty fairies, writes Jane Clifton.

When Winston Peters and Sir Michael Fay end up on the same side of an argument about public asset sales, it’s hard to resist the theory that history is the secret plaything of naughty fairies. Fay, the poster-boy for the opportunistic private depletion of this country’s national wealth, should really try to arrange a symbolic tea ceremony with his old Winebox foe, such is the absurd circularity of his, and Winston’s, position.

Nobody – least of all the Government, which will lose votes hand-over-fist thanks to the Crafar sale to a Chinese conglomerate – welcomes asset sales to foreigners on this massive scale. We’re passionate about our land, and there is an understandable uncertainty about dealings with the mighty but still opaque entity that is modern China. It’s the most basic common sense that the more assets we own, and more profits we retain onshore from those assets, the better off we’ll be.

But if Sir Michael Fay is the answer, then the question must have been phrased with insufficient clarity. And if Peters is to be considered the most potent opponent of asset sales, then it really is time for a quick audit of recent history, before the bad fairies got bored with it. It scarcely needs saying that Fay is on a narcissistic crusade to rehabilitate his image in New Zealand – as if people will ever forget or forgive the public-asset transactions that made him a wealthy tax exile. His merchant bank bought public assets for a song and made a killing on their resale, clipping the ticket on the way through. The Labour Government’s incompetence and naivety was to blame for effectively giving vampires the consultancy over the blood bank. But it’s safe to say that the names Fay and Richwhite will never be uttered in cosy proximity with Fred Dagg, the Topp Twins or Country Calendar as icons of our rural idyll, however vigorously their chequebooks are flapped in our faces.

As for Winston, it’s hard to audit his track record on such issues and not conclude that he just has a thing about Asians. He has campaigned for years against Asian immigration, deplored Asian investment in this country, and opposed our having a free-trade deal with China – despite the fact that he was Foreign Minister at the time, and that the deal his Government had struck was worth many millions to our economy. It would seem that despite China’s emergence as a massive global economic power, Winston’s preferred response is to pretend it doesn’t – or shouldn’t – exist.

This is especially dumbfounding, as he has also campaigned for us to emulate “the Asian tigers”. So by his lights, we should do as they do – but have nothing to do with them. The rest of us don’t have that luxury. The bald facts are: we don’t have any money, and China has pots of it; China needs to expand its food supply; and we have the land and expertise to help it do so. The Chinese don’t want to own and operate New Zealand. They just want food security.

Another perspective, which confounds the histrionic sceptics, is that the land and animals will, if this deal goes ahead, be a whole lot better cared for than they were under the Crafars’s management. The Crafar empire did not enjoy the best of reputations for clean dairying or animal welfare. Nor are all of its holdings exactly premium farmland. Landcorp, the state-owned enterprise that will manage the farms employing New Zealand staff, will have to use state-of-the-art farming practices, because as a public agency it cannot afford to do anything less. Yet another irritating factoid: the Crafar farms were as good as overseas-owned anyway. The owners had to sell because they couldn’t service the debt on the farms – which was owed to dirty, filthy Johnny Foreigner. The new Johnny at least has a vital interest in keeping the farms thrivingly viable.

But here’s the daftest thing about the current panic: the Crafar farms represent a tiny proportion of land that has already, routinely and unprotestedly been sold to foreigners under administrations led by both major political parties. Under Labour, 650,000ha were sold, and since National came to office, sales of 357,000ha have received consent. We’re only focusing on this issue now, because a Reporoa farmer’s grandiose plans came a cropper, leaving a big farm empire for sale, rather than that land going to foreign buyers in quotidian dribs and drabs below the radar of headline writers. Comparably sized holdings have been sold in the past without causing a blip in Winston’s blood pressure, or fetching Fay from his private island.

None of which will get the Government off the hook for this deal. People simply hate it. And with most of the other political parties saying they would have found ways to stop this deal, it will be on a political hiding to nothing. The Government can claim the deal will open vast new markets for New Zealand dairy products, through the buyer’s relationship with Chinese supermarket chains. But the proof of this will not exactly flow through in measurable quantities overnight. The employment benefits will likewise be invisible to the average voter. People are understandably fixated on the fact that our precious land has been sold, and we’ll never be able to afford to buy it back.

At the bottom of this is the seemingly intractable problem of land prices. Foreign investment has pumped them up, and it’s impossible to dampen prices down by artificial means without causing unfairness to sellers. So although critics of the critics of the Crafar deal have cried xenophobia and racism, the outcry is mostly because the New Zealand psyche is grieving for the slow death of our founding ethos, of owning and cherishing our patch of land.

Sure, there’s a strong element of fear that doesn’t arise when, say, Germans or Americans invest here. But that’s because China is new, not only to us, but to itself. It has changed so rapidly since its Maoist transformation that it’s still evolving. It’s like no other trading partner. This is all new territory – for us and for China.

On paper, this deal snatches quite a victory from the jaws of desperation. It’s not as good as keeping the farms in New Zealand hands. But it won’t do our wider commercial and diplomatic relations with China any harm. Unless the supermarket link-up has been wildly overstated – and why would Shanghai Pengxin pay such a premium if it didn’t intend to push the resultant produce hard? – our presence on Chinese shelves should have a knock-on effect to benefit other exporters of New Zealand goods in that market. Consumerism is one area where familiarity breeds contentment rather than contempt.

In the longer term, the question is, can these export-promoting benefits be maximised, to get New Zealand into a position where such farm sales are no longer necessary? As Prime Minister John Key has so resonantly said, “Looking four, five, 10 years into the future, I’d hate to see New Zealanders as tenants in their own country, and that is a risk, I think, if we sell our entire productive base.” That risk, he said, was something the Government would “consider”. But the vicious circularity of the situation is that, until we get on top of our indebtedness by restraining spending and, most important, maximising earnings, we won’t be able to do without foreign investment in our productive base.

With a bit of luck, it’s this conundrum that Fay and Winston will solve between them when they meet for that cup of tea. If only they had joined forces sooner. A nostalgic voyage back through the wiring diagrams of Cook Islands investment that they’re both so familiar with, and they might even have been able to rustle up the extra money to match the Chinese offer.
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