Green Minister criticised for ‘rubber stamping’ foreign purchases of land

Green MP and Minister of Land Information Eugenie Sage is under fire again, this time for approving 21 applications to sell land to ‘foreigners’.

I think this illustrates the contrast between the ideals when in opposition and the reality of Government responsibilities – “I’m bound by the law, and as a minister, I implement the law.”

RNZ:  Green MP Eugenie Sage accused of ‘rubber-stamping’ land sales to foreigners

Eugenie Sage is being accused of continuing National’s practice of “rubber-stamping” the sale of sensitive land to foreigners.

New figures reveal the land information minister and Green MP has approved nearly every application to cross her desk over nine months, rejecting just 30 hectares out of almost 60,000 hectares.

Between 1 November and 26 July, Ms Sage approved 21 applications covering about 55,957 hectares. She turned down two requests relating to 30 hectares.

But Ms Sage said most of approved land – roughly 40,000 hectares – related to the sale of Mount White Station, a sheep and beef farm in Canterbury.

In that case, the Czech buyer already had permanent residency and his wife and children were New Zealand citizens.

“There was very limited opportunity for discretion because … it had only been triggered as an application under the Overseas Investment Act because he was out of the country for a period.

“I’m bound by the law, and as a minister, I implement the law.”

Many of the other applications related to forestry which was a government priority area, she said.

“We need more investment in forestry to meet the billion trees’ commitment to ensure that we are sequestering enough carbon to meet our climate change objectives.”

There appears to be a clash of policy priorities here – something common in Government, especially when several parties want different things done.

But I think that Labour and NZ First had both campaigned against foreign purchases of land, so all three parties seem to have taken different positions on this once in power.

Former Green MP Sue Bradford is warning the news will stir up more disquiet among the party’s supporters after an earlier backlash over Ms Sage’s decision to allow a Chinese water bottling giant to expand.

“Her role is meaningless. The party’s role is meaningless,” Ms Bradford told RNZ.

She was shocked Ms Sage approved the sale of so much land to overseas people.

“It’s virtually just rubber-stamping.

“You’d think that either [the Greens would] move their person out of the role or they’d negotiate a damn sight harder with their coalition partners about changing policy on it.”

Bradford has never experienced being in Government.

Campaign Against Foreign Control of Aotearoa spokesperson Murray Horton said the approval rate made a “mockery” of the government’s promises to curb foreign investment.

“The Greens need to be a bit bolder, frankly. They’re in government for the first time ever.

“They have a mandate from their members and the people who vote for them to actually establish a point of difference.”

A mandate from 6% of voters is hardly a mandate to make bold changes.

It could also be argued that there is no mandate for Labour+NZ First+Greens to slash foreign purchases because that was never put to the voters as a joint policy.

However some changes have been made, and it is subject to one of the many reviews initiated by the current Government:

The government extended the Overseas Investment Office’s oversight in November and banned house sales to most foreigners in August.

Ministers also directed officials to review the Overseas Investment Act with changes expected by 2020.

Perhaps they can jointly seek a mandate in the next election for stopping foreign purchases.


More pressure on Sage: Minister challenged over Mackenzie greening (Newshub)

Crown decisions are allowing greater agricultural intensification in the Mackenzie Basin, new research has found.

The academic research, published last week in the Journal of NZ Grasslands, and funded by the business ministry, reveals two-thirds of intensive development in the Mackenzie since 2003 has been on Crown-owned land or land freeholded through tenure review. (Tenure review is a voluntary process which allows farmers to buy a portion of a Crown-owned pastoral lease, with the balance added to the conservation estate.) That reversed the trend before 2003, when almost two-thirds of intensification was on land that was already privately owned.

A big factor in the increase in farm developments was discretionary consents issued by the Commissioner of Crown Lands on pastoral leases.

Given Eugenie Sage is minister of both Land Information and Conservation, the article says it’s clear who has the power to make enduring and effective changes, to protect vulnerable land. “It is the Crown itself that can change its patterns of decisions to alter the trends in intensification. The choice and the power reside with the Minister of Land Information.”

Being a Minister can be a tough job.

Cunliffe on GST on foreign purchases

How low would David Cunliffe propose dropping the current $400 no-GST threshold for foreign purchases? The implication is very low, book price low, although it’s not clear whether it would go as low as David Farrar is suggesting – ebook and iTune low, which would be a dollar or two low.

I have obtained a recording of what David Cunliffe said about the GST threshold on foreign purchases – his explanation of his comments and David Farrar’s interpretation have been different.

Tom Pullar-Strecker reported in Retailers in GST counter-attack (Dominion Post) about comments made at a seminar at Victoria University last Wednesday:

Labour revenue spokesman David Cunliffe said a low threshold for charging GST on overseas purchases would stop the Government “subsidising foreign commerce” and was a “no-brainer”.

David Farrar picked up on this at Kiwiblog in a post Retailers need to stop trying to tax us online

Oh wonderful. Make sure everyone knows this. Labour Party policy is to tax your online purchases more. Buy a book from Amazon, and Labour will hold it up at the border until you pay the Government an extra 15% of the price.

Will Labour also block itunes? We can’t have people downloading music and not paying GST on it. So to implement their policy they’ll have to block itunes in NZ, and only allow people to purchase from a NZ located online retailer.

Labour grandstanded on the carpark tax (yet never had a clear policy on it), but have now trumped that with their e-tax. I look forward to detailed Labour policy on what they would reduce the threshold to so we know how many of our online purchases they plan to stop at the border.

I tweeted David Cunliffe asking “what sort of lower GST threshold do you suggest for overseas purchases?” – he responded:

@DavidCunliffeMP

TP-S writes up a question as a statement and DPF goes ape… Calm down folks there is more work to be done on that question.

In another post at Kiwiblog, Labour’s iTax, David Farrar further implied that Labour would apply GST to small foreign purchases like ebooks and itunes. That would have to cover purchases of just a dollar or two, implying an extremely low or no threshold.

I was interested to find out how much Farrar could be exaggerating, or Cunliffe could be fudging his intent.

I have obtained a recording of Cunliffe’s comments, it’s a poor quality recording but key phrases can be heard clearly enough:

Just following up on John’s question, given that we’re talking about a a smaller picture here, which is the GST collection…

…is this not a no brainer, why don’t we have a single point low threshold, and as John said, stop subsidising foreign commerce…

…surely it’s a no brainer, why hasn’t it been done before?

Cunliffe is correct, he does ask a question – but in twice also saying “a no brainer” there is a clear implication that Cunliffe favours a lower threshold.

How low? He has avoided answering that. But the research being presented at the seminar was sponsored by Booksellers NZ. This implies a much lower threshold than the current $400.

‘The Rise in Foreign Retailing and New Zealand’s GST Exemption: Time for a Change?

Speaker: Summer Scholarship Research Assistant William Steel, with an introduction by Lincoln Gould, CEO of Booksellers NZ (sponsors of this research project).

Abstract:

This presentation will report on results from a recent project evaluating the economic and revenue costs of this distortion. It will argue that, by diverting domestic spending offshore, the government not only misses out on GST revenue, but also loses out on some company and PAYE tax revenue and is distorting consumer choices. But there are significant collection cost issues when trying to levy GST on low value purchases from foreign retailers. We discuss of a number of options to collect such GST revenue if New Zealand’s foreign GST-free threshold was reduced, and outline how a cost-benefit analysis could be made.

In the past two decades the New Zealand retail market has undergone a rapid transformation. What was traditionally bought in stores is now increasingly being bought online. As a result many goods purchased from foreign websites, valued at up to $400 each, legitimately avoid paying 15% GST. Such an exemption creates a distortion that favours overseas retailers over their New Zealand based competitors

Obviously there is no Labour policy on this at this stage, Farrar is over-egging that aspect.

But Cunliffe seems to clearly favour a much lower “single point low threshold“. As opposition spokesperson on Revenue it is his job to investigate and consider changes like this.

It’s difficult to know whether Cunliffe was poli-pandering to an audience or if he would seriously consider a change to a very low (or no) GST threshold.

Cunliffe recently criticised the proposed car-park tax, in part because of the compliance cost, some claims where that it would exceed the tax take. There are major issues of compliance costs for small online purchases being delivered by opost, or delivered over the Internet.

It will be interesting to see the specifics of Labour policy on this – should they decide on a clear policy.

Reference article and links to research:

Booksellers NZ – International e-commerce: the downsides for NZ retail and tax revenue

A Proposed Pathway towards future reform of New Zealands de minimis threshold (opens to PDF)

E-Commerce and its effect upon the Retail Industry and Government Revenue

Labour on GST on overseas purchases

Retailers are lobbying the Government to address competiton between local sales and buying from overseas by changing the GST rules on overseas purchases, as reported on Stuff in Retailers in GST counter-attack

Retailers are stepping up efforts to close a “loophole” that allows GST-free purchases of overseas goods costing less than $400.

The Booksellers Association yesterday released research commissioned from a Victoria University “think-tank” which suggested slashing or abolishing the threshold altogether, and that overseas retailers could be given the choice of collecting the tax on behalf of Customs.

Association chief executive Lincoln Gould said the failure to impose GST on personal imports represented “a serious and growing hurdle” for local booksellers and other retailers.

David Farrar at Kiwiblog argued against this in Retailers need to stop trying to tax us online. He also picked up on a comment about Labour:

Labour revenue spokesman David Cunliffe said a low threshold for charging GST on overseas purchases would stop the Government “subsidising foreign commerce” and was a “no-brainer”.

Farrar commented:

Oh wonderful. Make sure everyone knows this. Labour Party policy is to tax your online purchases more. Buy a book from Amazon, and Labour will hold it up at the border until you pay the Government an extra 15% of the price.

Will Labour also block itunes? We can’t have people downloading music and not paying GST on it. So to implement their policy they’ll have to block itunes in NZ, and only allow people to purchase from a NZ located online retailer.

Labour grandstanded on the carpark tax (yet never had a clear policy on it), but have now trumped that with their e-tax. I look forward to detailed Labour policy on what they would reduce the threshold to so we know how many of our online purchases they plan to stop at the border.

This appears to be based on an inaccurate report. Cunliffe on Twitter:

‏@DavidCunliffeMP

TP-S writes up a question as a statement and DPF goes ape… Calm down folks there is more work to be done on that question.

(TP-S is Tom Pullar-Strecker, the journalist who wrote the article.)

That was in response to a direct question “what sort of lower GST threshold do you suggest for overseas purchases?”

It certainly doesn’t sound like a Labour party position any more than “presented the research to ministers, including Finance Minister Bill English and Revenue Minister Peter Dunne, and had been promised they would seek advice from officials” is a Government position on changing the threshold.

Cunliffe only took on the Revenue spokesperson role for Labour since the recent reshuffle.

He is well aware of how compliance costs can kill tax tweaks, he was vocal in the recent carpark Fringe Benefit Tax debate. New spokespeople seem to have a free rein to oppose Government consultations but could be forgiven for taking a bit longer to propose alternatives.