Is the Lochinver Station sale John Key's 'Corngate'? Voters may surprise us

Elections always produce their surprises. Many of them have no impact on voters' intentions. But some do, since they either go to the credibility of political parties, or they relate to a policy issue that actually matters to voters. So, for instance, the GE 'Corngate' issue hurt Helen Clark in 2002, and the Exclusive Brethren fiasco hurt National in 2005.

So is the revelation that Lochinver Station is to be sold to Shanghai Pengxin in this category? At first blush it would seem so, since the ownership of farmland is said to matter to voters. Perhaps the opinion polls over the next couple of weeks will tell us whether this is so.

One thing is pretty sure. Colin Craig will not be the beneficiary of any electoral fallout. Breaking a story is not the same as owning it. The last few days has shown the ability of those with a long-term track record to wrest back the issue. The news now only reports the views of Winston Peters and of Labour, with National’s response.

National is clearly aware of the risk. John Key, ever sensitive to the mood of voters, has signaled that National would act if there were a run of overseas owners buying up farmland. Unusually, Steven Joyce started off key, emphasising that Lochinver station was only a “ridiculously small amount of the North Island.” I suspect that many New Zealanders will not view the sale of one of the nation's largest farms from such a perspective.

With Labour polling in the twenties, it was inevitable they would scratch this itch, without too much regard to the potential risk of judicial review or trade agreement obligations. From Labour’s point of view, these are issues to be sorted once in government. The overriding imperative is to first get into government.

So how is the issue going to develop over the next few weeks?

New Zealanders will want to know how much farmland is actually owned by foreigners; it seems surprising that we don’t know this. The high-end estimate of nearly 10% seems grossly excessive, but 1% seems a bit low. For instance there are 11,000 dairy farms in New Zealand. Is it likely that foreigners own only 100? Shanghai Pengxin owns 26 dairy farms alone. At the very least, National is going to have to concede this point. Even Federated Farmers wants this.

The second thing that New Zealanders will want to be absolutely demonstrated is that overseas owners will do more to improve the land than New Zealand owners would. And they will be skeptical that they will.

In fact, Shanghai Pengxin has dramatically improved the Crafar farms. There is substantial evidence they will spend many tens of millions converting much of Lochinver into dairy farms. Since so much of it is flat, at around 500 metres elevation (I grew up not so far from the Lochinver), it is very suitable for dairy conversion.

Perhaps a key concern for New Zealanders is the nature of the relationships that the overseas owners, particularly large-scale owners, have with New Zealand. Do they build enduring relationships with local businesses? Should this be made a condition of any purchases?

This was not explicitly required by the OIC from Shanghai Pengxin, but in practice they have done so. The partnership that Shanghai Pengxin has developed with Maori owned milk processor Miraka is instructive of the possibilities. Would it be reasonable to go from this being a desirable outcome, to being a required outcome for any such investment to be approved?

A debate conducted in the heat of an election is not always going to be most informed or dispassionate, but it has the advantage of putting focus on the issue. And each of the major political parties has to respond in a way that meets voters concerns, without abandoning the philosophical values of the party.

Comments (7)

by Stephen on August 07, 2014

Two thoughts, what about a 999 year lease? And a 51/49% partnership so at least 51% of profit stays in NZ?

by william blake on August 07, 2014
william blake

Lease holding would seem like a better option if foreign owners want to participate in the New Zealand economy.

by Alan Johnstone on August 07, 2014
Alan Johnstone

This is dangerous for Key, for the first time in years he's clearly on the wrong side of the public mood and has locked himself into a position he can't easily change.

The initial line of calling people that don't agree with it racists (xenophobes is just a slightly more polite word)  went down very badly.

Labour should run hard with this, espically in rural NZ

by Kat on August 07, 2014

This parody cleverly sums up Key and National and why Labour is most likely going to form the next govt.

by Andrew Osborn on August 07, 2014
Andrew Osborn

I think you're wrong about NZers wanting to know the facts. This is the politics of emotion rather than anything factual.

Even a half decent analysis of the facts will show there really is no issue here but that doesn't mean the opposition can't run with this ball for all it's worth, aided and abetted by an incompetent media.

I'm not a Labour supporter but in the past I have respected them for being above using the race card. Today even that little shred of respect has gone. Cunliffe has stooped to Winston's level to grab a few xenophobic votes.



by Wayne Mapp on August 08, 2014
Wayne Mapp

The issue of leasing always comes up (I see that the Greens have it as policy), but what is the difference between a 999 year lease and freehold. In reality overseas byers both buy and sell.

Rather than having a special clss of tenure, it would better to first know how much land is owned by oversaeas owners and the typical length of ownership. We might have a maximum percentage of land that could be in overseas ownership.

I think a lot more could be required, especially if large scale holdings are involved, of purchasers to demonstrate the nature of the commercial relationships they will develop. 

by Arch Rival on August 10, 2014
Arch Rival

Mr Mapp, I'd like to ask you a question please.  Were the needs of our soldiers in Afghanistan ever compromised by budget cuts forced on the Ministry of Defence? I understand the Defence Chief was asked to find savings of $400 million a year. Did that affect operations in Afghanistan? If not, why did NZ SAS troops buy their own gear using a US internet address? I'd really like to know.  

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