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Speaker: The Voyage: On Interpreting and Sending Messages From the Deck

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  • Scott Chris,

    For example, the Overseas Investment Office has conceded that Shanghai Pengxin’s investment in the Crafar Farms will not increase exports or jobs here or NZ in-market skills overseas.

    Maybe so, but the Crafar Farms sale to a large international company is more to do with developing a trading relationship based on mutual trust. Sorry if that doesn’t fit with your narrative.

    Auckland • Since Feb 2012 • 167 posts Report Reply

  • Richard Aston, in reply to Scott Chris,

    developing a trading relationship based on mutual trust

    Can you expand on what that really means Scott.

    Auckland • Since Nov 2006 • 507 posts Report Reply

  • Mikaere Curtis,

    Maybe so, but the Crafar Farms sale to a large international company is more to do with developing a trading relationship based on mutual trust. Sorry if that doesn’t fit with your narrative.

    How about we develop a trading relationship based on mutual benefit instead of this one-sided arrangement ? Why should we allow foreign investments that are not beneficial to our economy ?

    Tamaki Makaurau • Since Nov 2006 • 461 posts Report Reply

  • Mr Magoo, in reply to Scott Chris,

    Sorry if that doesn’t fit with your narrative.

    Wow. Not sure what the basis of that passive aggression is.
    We already signed a free trade agreement so our relationship is just fine.

    I do find it amusing that you think "trust" is even relevant issue when discussing trade negotiations. Also that allowing sales that are detrimental to the country would increase it?

    Perhaps mutual respect and making it clear where we stand instead of being a pushover who changes their minds every 5 minutes might be more effective?

    And tell me how you fair buying great swathes of Chinese farmland next time, eh? I am sure their government will politely step out of the way...they are well known for it!

    Since Apr 2010 • 8 posts Report Reply

  • Scott Chris, in reply to Richard Aston,

    Can you expand on what that really means Scott.

    It means we had to show the Chinese we are willing to do business with them in spite of our domestic political environment. In doing so New Zealand has lived up to its commitment to free trade.

    Fact is, we need them more than they need us. If things don’t work out we’ll know better next time round. Would be nice if there wasn’t an element of risk involved, but then that wouldn’t be business would it?

    Auckland • Since Feb 2012 • 167 posts Report Reply

  • Rich of Observationz,

    The real issue is that very few land intensive businesses in NZ are actually viable.

    As I understand it, a dairy farm currently makes maybe $400/hectare in operating profits off a land price of $30,000 a hectare. That isn't enough to pay any sort of mortgage - basically they're farming for the capital gain.

    On those numbers, there are increasingly few buyers. Anyone who *is* buying in this market has obviously got something else going on. Maybe they've got a means of making a captive consumer base pay over the odds for milk powder? How sustainable that is remains to be seen.

    Back in Wellington • Since Nov 2006 • 4501 posts Report Reply

  • mic weevil, in reply to Rich of Observationz,

    On those numbers, there are increasingly few buyers. Anyone who *is* buying in this market has obviously got something else going on.

    Our dairy industry is in a precarious position as the main industry that brings money into the country. Our government should think extra-carefully about encouraging foreign investors to come in and further inflate land prices (further inflating the profits on mortgages to offshore banks) while allowing our export market to be carved up.

    How much value will the New Zealand Economy get? The products of the farms will be processed as minimally as possible to transport back to China where further processing can take place at a fraction of the labour costs.

    New Zealand taxpayers supposedly have some legal ability to avoid this situation via the OIO but are once again victim to a government intent on selling out it's people.

    Gah!

    auckland • Since Nov 2006 • 51 posts Report Reply

  • martinb,

    Scott- if we used your notion as the basis of our trading relationships we would give Pharmac to the Americans.

    We would have signed up to a treaty allowing our government to be sued by multi-national companies in the 90s, and have traded away our democracy and sovereignty for little gain.

    Auckland • Since Jul 2010 • 161 posts Report Reply

  • mic weevil,

    The worst thing is that if you're farming for capital gains, while at the same time justifying the value of the land with the amount that can be extracted from it, the apex will come when (preferably, but less likely) commodity prices drop, (more likely) rising fuel prices curb the productivity of the farm (less fert, less milk), or (worst case scenario) the land is polluted to such a degree it can no longer produce and is therefore no longer valuable.

    Like I said before: precarious.None of these things is good but they should all be thought about very hard by the whole country.

    auckland • Since Nov 2006 • 51 posts Report Reply

  • DeepRed,

    And as IPI trustee Brian Gaynor has pointed out, NZ’s sharemarket is skewed towards former state monopolies and industries wholly reliant on deregulation – which the MOM will further entrench – compared with other sharemarkets in the OECD. Many of our Sam Morgans and Rod Drurys have had to shift overseas or otherwise seek overseas capital, because Joe & Jane Kiwi still remember 1987 like it happened last week. A financial cringe with no end in sight.

    And because there was little or no regulatory oversight of what was privatised by Prebble and later Richardson, David Cunliffe was left with no choice but to haul out the anti-trust chainsaws in the case of Telecom. And Sir Dr Michael bought back Air NZ after it screwed up, and what was left of TranzRail after banksters chewed it up and spat it back out. The way things are going, the same mistake is in danger of being repeated with the power stations.

    We can catch up with Oz, or we can be its ‘Mexico’, but to be both can only be done via economic division by zero. Unless of course, there’s a third option. Like decartellising the broadband market and subsequently encouraging the likes of Google opening big data centres here.

    PS. @Scott Chris: what’s your take on the TPPA? A foot in the door to sell beef and milk to the Americans? Or a handy excuse to impose the will of the RIAA & MPAA on us?

    The southernmost capital … • Since Nov 2006 • 4431 posts Report Reply

  • Angus Robertson,

    Yet, we continue to encourage such destructive behaviour. For example, the Overseas Investment Office has conceded that Shanghai Pengxin’s investment in the Crafar Farms will not increase exports or jobs here or NZ in-market skills overseas. Yet, the government approved the deal.

    Sir Michael Fay approved this message?

    Auckland • Since May 2007 • 984 posts Report Reply

  • Scott Chris, in reply to martinb,

    if we used your notion as the basis of our trading relationships we would give Pharmac to the Americans.

    I disagree. Rather than enter into any multilateral trade agreements I’d rather see New Zealand do what the Swiss do, which is to negotiate a series of bilateral trade agreements tailored to suit the nature each unique relationship. Pharmac is an example of an effective government institution that delivers tangible benefit to Kiwi consumers so it would seem foolish to agree to its disestablishment.

    Auckland • Since Feb 2012 • 167 posts Report Reply

  • DeepRed, in reply to Scott Chris,

    Rather than enter into any multilateral trade agreements I’d rather see New Zealand do what the Swiss do, which is to negotiate a series of bilateral trade agreements tailored to suit the nature each unique relationship. Pharmac is an example of an effective government institution that delivers tangible benefit to Kiwi consumers so it would seem foolish to agree to its disestablishment.

    If the Aussie experience with the USA bilateral is anything to go by"I prefer an 18 year old single malt with my steak, not a Scotch with my 18 year old steak." And we still haven't got to the DMCA yet.

    The southernmost capital … • Since Nov 2006 • 4431 posts Report Reply

  • Angus Robertson,

    Thus, Treasury’s forecasts in the recent budget show our net international liabilities will rise from 67.5% of GDP in 2011 to 80.8%% in 2016. One of the main reasons for this is the low-growth rut in which exports are stuck.

    Bloody optimists.

    We can have a property crash, I think that is a given. This will be triggered by a fall in commodity prices and/or a bursting of the Chinese real estate bubble. Our economy will contract corrospondingly and drive up our debt to GDP ratio, making NZ a much riskier looking place to lend money to. Interest rates at which the state can borrow will increase and (unlike in Ireland which is sheilded by the EU) these will be reflected in borrowing rates NZers pay.

    What happens after that is critical.

    If the government resists the temptation to print money these rate rises will mean large number of defaults on our private sector debt as households and farms go deep underwater. These defaults will be painful, but they will reduce our indebtedness to the rest of the world and increase the rate at which we save and invest.

    But probably the government will cave to the demands of the NZ middle class (who have borrowed way too much) and print a shit load of money to cover the debts. This will result inevitably result in massive inflation destroying any impetus to save and invest, whilst at the same time impoverising those on a fixed income.

    Auckland • Since May 2007 • 984 posts Report Reply

  • Rich of Observationz,

    Sir Dr Michael

    As a total aside, I think it should be Dr (Sir) Michael. The title of Dr, which is conferred by an open and objective process is to me far more prestigious than an imperial honour conferred through a political quota.

    Back in Wellington • Since Nov 2006 • 4501 posts Report Reply

  • Brian Murphy, in reply to Scott Chris,

    Rather than enter into any multilateral trade agreements I’d rather see New Zealand do what the Swiss do, which is to negotiate a series of bilateral trade agreements tailored to suit the nature each unique relationship.

    Some Swiss people that I know see this as enriching lawyers in Switzerland and Europe, while achieving the same results more slowly than the broader agreements.

    It sure does seem that there is a lot of downside exposure in the "Free Trade" type agreements though. So somehow we need to be sure in whose interests the negotiators are negotiating.

    Auckland • Since Nov 2006 • 44 posts Report Reply

  • Stephen Judd,

    A while ago I raised the point of profits going overseas and Eric Crampton responded that the profits are denominated in NZ dollars, and therefore must be spent here, and are in no way lost to the NZ economy. I feel that who controls the spending is still important, but nonetheless it's an interesting counter which I hope Rod will address.

    Wellington • Since Nov 2006 • 2977 posts Report Reply

  • Kiwi Nomad, in reply to Angus Robertson,

    Well it's obvious that Angus buys the neo-liberal economic ideology, but in reality governments don't print money, they spend money by crediting bank accounts, and as the fiat currency issuer are not financially constrained in spending... inflation only becomes an issue if the government spending is so great that it buys up all the un-utilised resources in the economy. Very unlikely in this recessionary environment, which is why stimulus spending in various economies hasn't had any inflationary effect.

    Auckland • Since Dec 2011 • 7 posts Report Reply

  • Chris Waugh, in reply to Mr Magoo,

    And tell me how you fair buying great swathes of Chinese farmland next time, eh?

    Chinese people can't buy Chinese land. All land is either state-owned or collectively-owned. Foreigner investors in China can buy the same land use rights that Chinese people can buy, albeit with certain restrictions around national security or the national interest.

    So, nice little red herring you've got there.

    Beijing • Since Jan 2007 • 2190 posts Report Reply

  • Islander, in reply to Chris Waugh,

    So, nice little red herring you’ve got there.

    HOWEVER
    back here in ANZ
    buying a property(landed means something ENTIRELY DIFFERENT here)
    is a vastly different matter from buying a property in China - and comes with a whole set of prohibitions of use and committments towards community than a possible Chinese owner (Corporation or set of individuals) might know about- mahi loana n/nKeri

    Big O, Mahitahi, Te Wahi … • Since Feb 2007 • 5643 posts Report Reply

  • Scott Chris, in reply to Brian Murphy,

    So somehow we need to be sure in whose interests the negotiators are negotiating.

    Yes I agree. I quite like Harvard Law Professor Lawrence Lessig’s voucher system for funding of political parties whereby institutional funding is prohibited and each voter is granted a voucher of, say $50 which s/he donates to the party of her/his choice. The idea being that with no corporate or union funding of political parties a government’s policy will be less tainted by undue political influence.

    Auckland • Since Feb 2012 • 167 posts Report Reply

  • Mr Magoo, in reply to Chris Waugh,

    Chinese people can't buy Chinese land. All land is either state-owned or collectively-owned. Foreigner investors in China can buy the same land use rights that Chinese people can buy, albeit with certain restrictions around national security or the national interest.

    Not a red herring Chris you have missed my point so badly you have actually ended up adding weight to it.
    You just stated what I was implying: NZers cannot buy land in China and so why are some so confident that we should just let China buy ours and not land use rights only?
    The argument that this should be so (for any reason not just "better" trade relations) is therefore farcical.

    Sheesh...

    Since Apr 2010 • 8 posts Report Reply

  • Ian Dalziel, in reply to Mr Magoo,

    Give me land, lots of land...

    NZers cannot buy land in China and so why are some so confident that we should just let China buy ours and not land use rights only?

    To be fair the Government seems to have set up some sort of co-management covenant on this land:

    The Chinese-backed buyer, Milk NZ, was set up by Shanghai Pengxin to operate the farms under the management of state-owned Landcorp.
    ...
    NZ Milk, funded by its parent company, will acquire the farms and fund their management and development. A joint venture company owned 50/50 by NZ Milk and Landcorp will develop and manage the properties.
    Landcorp will also manage the disposal and acquisition of properties for the portfolio, and undertake capital expenditure on behalf of NZ Milk.

    from NBR

    Meanwhile another big golf course resort down here has gone to full Japanese ownership... But we get some riverbed back as part of the deal apparently.

    Christchurch • Since Dec 2006 • 5169 posts Report Reply

  • Joe Wylie, in reply to Mr Magoo,

    The arguments around the Crafar deal - we need them more than they need us, overriding the "xenophobia" of "misinformed" popular opinion - are reminiscent of the bizarre pie-in-the-swamp Multifunction Polis that was proposed for the Gold Coast, and eventually South Australia, in the late 80s.

    The concept was still being half-heartedly flogged long after the Japanese economic bubble that was supposed to fund the high-tech "colony" had well and truly burst. Anyone who dared to raise the question of why Australia wouldn't be building a reciprocal colony on Japanese soil was treated like the kid who'd pointed out that he could see the Emperor's arsehole.

    flat earth • Since Jan 2007 • 3628 posts Report Reply

  • Angus Robertson, in reply to Kiwi Nomad,

    Kiwi Nomad is obviously believes in "socailist" economics. As such there will be continual disagreement between us on the merits of crediting banks with $billions to cover bad debts. "Socialist" Keynesian economics endorses the need to indebt the nation and/or create swathes of new currency to ensure that the mega rich bankers who made bad loans remain profitable.

    I as a "neo-liberal" think that banks that make bad loans should be allowed to fail and people who buy property at over inflated prices should suffer when the market falls.

    ...inflation only becomes an issue if the government spending is so great that it buys up all the un-utilised resources in the economy. Very unlikely in this recessionary environment, which is why stimulus spending in various economies hasn't had any inflationary effect.

    I unsurprisingly disagree, the stimulus programs carried out so far have had direct inflationary effects on the price of land, of shares, of gold and of safehaven bonds. All the things the rich buy when they get given lots of money have gone up in price, because all of the money has been given to the rich. And it has had no benefit to the rest of us.

    Auckland • Since May 2007 • 984 posts Report Reply

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