O'Sullivan on the Crafar farms

Fran O'Sullivan has nailed here economic colours to the mast in this morning's Herald. And what she says will go down like a cup of cold sick with those who are trying to beat up the Crafar farms decision as some sort of attack on our birthright; she opines:

The Crafar decision is a victory for economic rationalism over blind xenophobic nationalism. Long may the former reign.

Instead of bowing to whipped-up public pressure (which it can't do anyway without breaking the law and marring New Zealand's international reputation), the Government has stuck to its guns and allowed due process to triumph.

The approval for the Chinese bid by John Key's government is a welcome sign that he intends to hit his stride in his second term and make the most of the economic opportunities that are available to New Zealand.

Not to run a mile the moment the xenophobes or the greenies start belting their predictable tambourines and unsettle the nervous nellies in his own caucus.

This is what we want to see more of from our Prime Minister. Not the poll-driven behaviour that (at times) played too big a part in his first term in office. Key has the opportunity to make some very bold calls in the next 18 months. His Cabinet minister's decision to run with the Overseas Investment Office's recommendation to approve the bid is the first.

"Make the most of the economic opportunities that are available to New Zealand"; isn't that what we elect governments to do? With such turmoil in the European markets at the moment, we are fortunate that Asia, and China in particular is literally on our doorstep; emerging markets, with whom we have already built trade relationships.

And the sale of the Crafar farms is all about opportunities and relationships, with mutual benefits; read on:

Key is clearly excited about the opportunities for New Zealand from the successful Chinese bid for the Crafar farms. So he should be. The Shanghai Pengxin bid has obviously been carefully constructed to ensure significant economic upside for New Zealand.

But when Chinese billionaire Jiang Zhaobai comes down to New Zealand this weekend as a prelude to writing the final cheque of $200 million his firm is putting up for the Crafar dairy farms, he will still be put on a ministerial-required 'good behaviour' bond.

In fact, the first condition the two ministers have put on the bid is that "the individuals with control of Milk New Zealand must continue to be of good character.

That individual is Jiang who has 99 per cent of the shares in the controlling vehicle.

I doubt that Jiang - who is listed as one of China's wealthiest men by Forbes magazine - has ever faced such an extraordinary up-front pre-condition before investing elsewhere in the world. But it is clearly a price the Shanghai Pengxin chairman is willing to pay to get a toe-hold in New Zealand as the first step towards expanding his footprint in the Kiwi dairy industry.

Make no mistake about it.

Despite claims by the Sir Michael Fay-led consortium that Jiang is paying too much for the 16 farms and will eventually exit from the investment, Shanghai Pengxin will, in all probability, emerge with a joint-venture with state-owned Landcorp to run the farms and pave the way for both parties to establish a thriving international dairy business.

Pengxin has pledged to co-operate in developing retail and distribution opportunities within China for high-value New Zealand dairy brands, something that is notoriously hard to do without deep pockets and on-the-ground capacity. It will also later form 50-50 joint-venture partnerships to produce more refined products here instead of simply shipping sacks of milk powder off to China.

Already NZ First, the Greens and Labour have decided that the Crafar farms sale is a sell-out, and the fast track to becoming tenants in our own land. We reject that entirely; for a start, the farms aren't "our land"; they were privately owned and run (unsuccessfully), and are now in the hands of receivers. But even worse, the abovementioned political parties are far more interested in political advantage than in long-term benefits to the New Zealand economy. And shouldn't that be the overriding concern?

And whilst O'Sullivan congratulates Key on his boldness, she makes little mention of the ultimate irony; Winston Peters by default supporting Sir Michael Fay. Have a read of this speech from Peters in Parliament in June 2007, and you'll see the dislike and distrust that Peters has for Fay. Now he'd rather see a man he refers to as "guilty as sin" lead the bid to buy the Crafar farms than a Chinese businessman who wants to partner with New Zealand. If anyone ever wondered why we have such a loathing for Winston Peters, they need look no further; he is a hypocrite and political charlatan of the worst order.

The sale of the Crafar farms to Shanghai Pengxin will, we believe, be good for New Zealand in the long term. The Overseas Investment Office has approved the sale, and the government has no reason to intervene. And that is the way it ought to be.