By Bernard Hickey
Prime Minister John Key has defended the decision by two of his ministers to reject the sale of the Lochinver Station near Taupo to Shanghai Pengxin, telling an audience of New Zealand and Chinese business leaders in Auckland that the decision was not political.
Key said the decision announced on September 17 by Associate Finance Minister Paula Bennett and Land Information Minister Louise Upston was made independently of the rest of the Government and based on the merits of the bid under the current interpretation of the Overseas Investment Act, which specifies any foreign bid must deliver more net benefit for New Zealand than an equivalent ‘counter-factual’ New Zealand bid.
The Overseas Investment Office recommended on balance that the bid be accepted, but the Ministers said they were not convinced of the benefits. The decision relied on an analysis of what an alternative New Zealand bidder (the counter-factual) would deliver, including the assumption that a New Zealand bidder would also carry out the same or more dairy conversions than that proposed by Shanghai Pengxin.
“Right or wrong, that was their call and you can read their decision,” Key told the China Business Summit in Auckland. He said the ministers had not discussed the decision with other members of the cabinet.
“The problem we have is: if you want to change the Overseas Investment Act, which a lot of people will do, to have more clarity, show me where I’m going to get the numbers from because only ACT will support us. United Future certainly won’t. The Maori Party won’t. Labour definitely won’t. New Zealand First absolutely won’t and the Greens absolutely won’t,” Key said.
“So we are stuck with the Overseas Investment Act whether we like it or not in its current form, but within that there’s a lot we can do,” he said, pointing to moves to increase fees and resourcing for the office so it could process applications more quickly.
“I can give you an absolute assurance, the decision that the ministers made around Lochinver was nothing to do with the politics of it,” Key said.
“Some people might think that’s the case, but in my experience of the Government saying yes to the OIO for a whole range of things — Shanghai Maling buying into Silver Fern Farms, Bright buying into Synlait, Shanghai Pengxin buying the Crafar Farms — all of them have a degree of pushback. Not a single one of those has moved our polls,” he said.
“So personally, lots of people jump up and down and make lots of noise, but I don’t think it moves our numbers, and anyway it’s consistent with the Government’s view that we’re not going to get rich selling things to each other. We are going to get wealthy and get more jobs selling things to other people,” he said.
‘It doesn’t affect our polls anyway’
Key said the decision was based on the merits of the case and that National’s polls had not been moved by various controversies.
“Two-way investment is really important. We’re not saying no because they are Chinese or because they’re American. We’ll say yes or no on the merits of the case as we believe them to be, on the basis that every decision we take will be judicially reviewed both ways. It’s not about whether the public wouldn’t like it, because lots and lots of things the public doesn’t like and it doesn’t actually move our numbers.”
Last week Stevenson Group announced the sale last week of Lochinver to locally owned Rimanui Farms for an undisclosed sum. The sheep and beef station with dairy support and dairy conversion potential had a capital valuation of NZ$70.6 million, but Shanghai Pengxin bid NZ$88.1 million for the group.
Later in the conference, Pengxin International Director Terry Lee criticised the analysis done for the OIO on the counter-factual bidder, pointing out no other New Zealand bidder had emerged with dairy conversion plans, and the analysis had used out of date milk price figures.
Lee said Shanghai Pengxin would push ahead with a judicial review of the decision and still held out hopes it could buy the property before settlement of the current deal with Rimanui Farms.