Bernard Hickey has written an excellent opinion piece on interest.co.nz – everyone should read it. His basic premise is that as a country we borrow too much foreign money, and then sell off our assets when we can no longer afford to do so any more.
For decades we have spent more than we earned as a nation and funded the difference by borrowing foreign money through our banks, or directly in the form of companies borrowing offshore or the government borrowing from foreign funds and banks. If we couldn’t borrow the money, we would sell assets, be it companies, land or state assets.
We’ve been kidding ourselves for decades that, like the L’Oreal ad, we were worth it. We have run chronically high current account deficits for most of the last 30 years. We believed, and have been encouraged by our leaders, bankers, and asset buyers, that New Zealand could afford it and we deserved it.
But in our bones we knew we couldn’t, and it’s great to see Justice Miller at the High Court now tell us in this decision it has to stop, even if the government can’t or won’t do it. His ruling that any foreign buyer has to prove a bigger benefit to the nation than a local buyer sets a very high threshold.
It effectively says that any buyer has to invest an awful lot more, create a lot more jobs and pledge to reinvest dividends here, otherwise there is an inevitable drain on the nation.
I highly recommend you read the full article.