U-turn ahead? Or just a foreign buyer snarl up?

Apparently New Zealand didn't need a register of foreign land owners ... until it did. So is National preparing to change tack or is it just getting itself into even more of a tangle?

As Winston Peters might put it, it seems like an 'I told you so' moment. Having spent many months ridiculing the idea of a foreign buyers register, reports yesterday suggested government officials have been quietly working away at one after all.

National has spent a long time defending the lack of data on just how many foreigners - or non-residents - are buying New Zealand houses and farms. The gaps have been plugged with Inland Revenue data, real estate agents' anecdotes and the odd bank survey, but we've always been arguing in the dark because no-one knows who's buying what in this country.

National has long said we don't need the data because foreign buyers just aren't a problem. Yet last week Finance Minister said he was "open" to the idea and yesterday he told reporters:

"I gather there's some going on. This issue's been around for a couple of years, there's nothing new about it."

Land Information Minister Louise Upston said:

"They're just doing some preliminary investigation about what it might look like, what data they might need, those sorts of things. There's been a number of questions I've asked over the last couple of months so they've just been doing some preliminary work to see where it goes."

While John Key said:

"According to the advice I've had this afternoon Land Information might be looking at the broader issue but as far as I'm aware they're not working on a register and I've always said and maintained, we could always introduce a register but the real issue here is building new houses."

Later the tone of the comments seemed to change, with English saying it hadn't been looked at "in any detail" and Upston adding she "hadn't put a lot of thought into it".

So clear as a muddy puddle. Is a register being prepared on the quiet so that National can announce a u-turn? Or is it all a big misunderstanding?

And while I'm asking questions, here's one for Question Time. Does the Prime Minister stand by all his statements? Because if it's true that he's "always said" that "we could always introduce a register" and he's "not hostile" to the idea, he's hung his Finance Minister and most especially his Housing Minister out to dry.

Because both are on the record saying there's just no need for a register; indeed National's opposition has been vociferous.

Back in May, Nick Smith told Marcus Lush on RadioLive that a register would be "a distraction" that would cost "mega millions" without doing a thing to tackle house price inflation. He even suggested the argument in favour was playing the race card. Smith argued:

“This is just about politics... It would be a waste of public money when all we’d be trying to work out is whether it’s say 1.2% or 1.4%."

That same day the NZ Herald quoted him saying:

"This is a blind alley that we could beat our chest and have our officials do a whole lot of work [but] it's not an area that will make housing more affordable for Kiwis."

And that afternoon he told the House:

I do stand by my statement that a register would be a waste of money. My advice from officials is that it would cost many millions of dollars. I cannot justify the spending on trying to work out whether it is 1.2 percent or 1.3 percent. My focus is on the real issues that will increase the affordability of homeownership of Kiwi families, rather than on chasing these red herrings.

"...It is a non-issue. It has not changed in the 5 years that we have been in Government. Let us focus on the things that matter."

So why would National waste public money and officials' time even looking at a register? Why be distracted by a non-issue at all?

What's more, the deputy Prime Minister back in May told Paddy Gower on The Nation he wasn't interested either:

Gower: Is that something your Government could look at?

English: We’ll we’re not looking at it because we don’t intend to ban foreign buyers and we don’t intend to ban foreign buyers because we don’t think they’re a significant influence on the market although you can always hear an anecdote about how –

But no register to settle this once and for all?

Yes, no, well you know, it will show that there are two or three houses in every hundred being bought by Chinese residents, so what do you do about that? And our answer would be ‘that’s not a big problem’.

To quote Smith, "this is just about politics". Any movement by National will not be because it has fundamentally shifted its position on foreign investment but because it now fears voter backlash over its position more than the humiliation of a u-turn.

Last week an Australian parliamentary report recommended a register there, on top of existing restrictions on foreign buyers. National likes to keep our economy as aligned with Australia's as possible and we don't want frustrated Chinese buyers in Australia turning our way in greater numbers. So it adds to the pressure for the government here to act.

Over the weekend, Lisa Owen on The Nation interviewed Simon Henry, the co-CEO of Juwai, China's most influential international property buying website. New Zealand is the 7th most popular place to buy out of 58 countries on its site. The killer quote from Henry:

“We think we’re at the very beginning of the Chinese outbound property cycle....the Chinese have only just started to look at the world as an emerging opportunity”

Henry predicted a 15-20 percent growth in Chinese offshore property buying over the next year or two.

Winston Peters called it an "I told you so moment", saying that this had been what New Zealand First had been warning of for years.

In political terms, National has painted itself into a corner over this. It's hard to argue against making an informed decision and the information may well be it it's benefit. Even Henry, who's making money helping Chinese folk buy offshore, says it'd be "useful" and may take some of the emotion out of the debate. If the data shows few foreign buyers, National can have its own 'I told you so' moment.

But getting there could get incredibly messy. If National does now look at a register, its own words can be thrown back in its face. If it goes ahead and introduces one, it then needs to explain how that doesn't send negative messages to foreign investors, as Auckland mayor Len Brown has long argued it would.

Given that National fundamentally believes New Zealand is a country dependent on foreign capital which thrives only if its markets are open and the 'for sale' sign is out for everyone to see, the implications of a register would be a tough rat to swallow. It not only shows up its housing policy as failing, it undermines some of its core economic arguments. 

This reminds me of the folic acid conundrum, when in 2008 National tried to says its planned introduction of folic acid to all bread was due to a treaty with Australia and agreements signed by the previous Labour government. But it was so at odds with its own principles of choice that it couldn't in good faith argue there was no alternative. So it did an embarrassing (and as it turns out, possibly unwise) u-turn.

But u-turns are much trickier in a third term. So National has to decide whether it wants to stick to its principles or use a register as a way of taking some heat out of this emotionally-charged issue by 2017 and pay the price in the short-term.