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The argument that foreign ownership is "bad" for New Zealand, or there is a free-for-all occurring, lacks robust evidence, an ANZ report on the controversial issue says.
The latest Agri Focus report said a huge proportion of New Zealand’s comparative advantage resided in its land and the income generated from it.
As such, there was strong interest in maintaining local ownership and a firm but fair regulatory framework was key.
But New Zealand also needed to recognise the many benefits that foreign ownership could bring.
Foreign ownership in the rural sphere had been very influential in the forestry, viticulture and pipfruit sectors and those sectors would not be where they were today without it.
Despite common perceptions, foreign ownership had been less influential in sectors such as dairy and meat and fibre.
With the political breeze clearly favouring a more restrictive stance, it would be interesting to see "how far the pendulum swings", the report said.
"If it swings too far, there could be immediate implications for asset valuations in sectors where foreign investment had been the greatest, namely forestry, pipfruit, viticulture and large-scale operations."
But perhaps more importantly, there might be negative long-term implications for high-growth sectors.
There could be negative impacts on productivity, innovation, market access, infrastructure and wages across some of New Zealand’s key business sectors.
Current angst over foreign ownership deflected attention from the heart of the issue — New Zealand’s poor savings record, the resulting reliance on foreign savings and poor relative investment returns. Foreign investment in New Zealand was nothing new and it should be remembered that it was not just equity — the majority was actually debt, the report said.
Analysis of land transactions approved by the Overseas Investment Office showed that since 2001, there had been about 2480 in total (nearly 2000 for freehold land, the rest leased).
Those approvals involved a gross land area of 2.186million ha, of which a net 0.958million ha (44%) was proposed to go into direct foreign ownership (two-thirds freehold, one-third lease by area).
That highlighted many of the foreign ownership approvals were joint ventures with New Zealand companies.
Outside forestry, viticulture and pipfruit, the area of land sold to foreign investors in the past 12 years seemed to have been relatively small. Since the further tightening in foreign investment rules in 2011, the average number of transactions approved each year had dropped by 24% and the gross area by 33%.