The Crafar Farms sale has become a flashpoint for public concern over foreign ownership. As politicians figure out how to repsond, how can we keep the land without closing the door to business and trade?
The Overseas Investment Office's recommendation on the Crafar Farms sale is sitting on the desks of Maurice Williamson and Jonathan Coleman, ticking away like that cliched old time bomb.
What should the government do? Should it approve Shanghai Pengxin's $200 million offer for the 16 farms? Of course it should; and it will. As the law stands, it's right and proper. Sure, Justice Forrie Miller's ruling may have raised the bar, forcing foreign investors to offer more benefits to New Zealand than previously. But nothing he said should be sufficient to scupper the deal.
So now the government has to announce that decision in the knowledge it will be met with hostility by voters, just at the time that voters are already meeting plans for partial state asset sales - even a bit of land in Devonport - with hostility. It also has to balance the diplomatic delicacy of a visit by China's fourth-ranked leader Jia Qinglin in a couple of weeks.
It's going to be awkward, to say the least.
But this is a done deal. Shanghai Pengxin have acted in good faith; you could even argue their offer is generous. Certainly Michael Fay's low-ball offer and attempt to play the race card for his own personal gain makes it look more-than-decent by comparison.
To change the rules on the hop would damage our reputation in Asia, a point Kiwi investment fund manager David Mahon made on Q+A:
New Zealand is under some scrutiny... not just in China, but throughout Asia with our major trading partners and these sizeable economies – India, Indonesia – would look upon this as being New Zealand as a narrow country after all, that New Zealand actually is racist in terms of its view of who it would like to be its business partners, which I think would be a sad misreading of New Zealand..."
So the question then becomes, what next? The Crafar Farms represent just .006% of our farmland, but two percent has been sold offshore in the past decade and interest is only growing.
The public mood is strong on this, and I don't think it's for the budging. Whether it's xenophobia, a proud love of the land or some latent business instinct, the vast bulk of New Zealanders think selling the land that underpins our prosperity is just daft.
So it's time to think about the creative solutions. The Greens have a simple answer - no sales to non-New Zealanders. That's one place to draw the line; presumably the land already in foreign hands would be exempt and slowly sold back into New Zealand hands if and when.
But are there other options? Different countries take a different approach to not only farmland, but residential property as well.
Australia is quite tight on residential land, but when it comes to farmland has a pretty open door - only farm sales over $244 million trigger a mere investigation by the Foreign Investment Review Board. But other countries have stricter lines. In Alberta, Canada, non-residents are limited to two plots of agricultural or recreational land not exceeding a total of 20 acres. Elsewhere in Canada, Manitoba prevents non-residents from owning more than 40 acres of farmland and requires that they move to the province within two years of purchasing the land.
Last year Argentina passed a new law restricting overseas buyers to 1,000 hectares in key areas of the country. It also sets a limit of 15% of total land being owned by foreigners. And that's a country with a heck of a lot more land than us.
Perhaps that offers a model for New Zealand to follow - a limit in either percentage terms in the total number of hectares that can be sold.
Undoubtedly, if other countries continue down the same track as Argentina, the pressure will grow on politicians here to act. Why? Because investors and governments in China and the Middle East, so eager to secure their food and resource supplies, won't stop their land grab.
So, if other countries tighten their ownership rules, demand for land here is likely to increase and drive the price upwards. Great for selling farmers in the short-term, but of little benefit for the country long-term and with a distinct downside.
Mahon also had an idea, which he raised on Q+A. What about leasehold?
There are solutions. Perhaps there could be a trust that acquires agricultural land from anybody. So farmers can sell, in a real sense, get value for their land, and then foreign buyers coming in acquire land through that trust. And that trust could base sales on the fact that all land purchased in New Zealand was leasehold.
Obviously private farmers can keep doing their thing, but if and when they want to sell, the government could bid and, should it win, build up a land bank to be leased to offshore investors. We all own the land, but we still attract foreign capital.
Might be too state-controlled for some, but the public feedback to Mahon's proposal was instant and favourable. People were writing and texting in saying leasehold was a great idea.
So perhaps there's a middle-ground between the rubber-stamping the Overseas Investment Office currently engages in and the complete ban the Greens and New Zealand First support. What do you think?