Shania Twain buys up big in Otago
A new ingredient in land sales: the celebrity factor
- by Murray Horton
Its always been the case that sales of rural land, especially those of coastal land and South Island high country stations, have captured the public imagination. It doesnt matter that transnational corporate takeovers are on an immensely greater scale and have much more impact on the economy (who owns banks, newspapers, supermarkets, phone companies, etc., etc., affects everybody, in contrast to who owns a particular piece of land). Land is tangible, and as the old saying goes, theyre not making any more of it. It, especially the above two categories, also exercises a powerful pull on the imagination of Kiwis everywhere. Land, after all, is what wars are fought about, and this countrys history is no exception. In recent years there have been numerous examples of such sales, from both categories, to fire up public controversy. For example, the sale of Young Nicks Head to an American and the recent proposal by another American to build a resort adjacent to Cape Kidnappers (rejected, fortunately; see the article about it elsewhere in this issue). Most infamously, the saga of Lilybank Station, when it was owned by Tommy Suharto, that exemplary scion of Indonesias genocidal and heroically corrupt ruling family.
Now we can add the celebrity factor. New Zealand has become the New Black. Everybody wants to be seen in it, and, preferably, own a bit of it. We can probably blame "Lord Of The Rings" for some of that. For instance, Cher, the singer who is making possibly the longest farewell tour in musical history, has announced that she wants to buy a little place here. But the celebrity who has actually bought herself a South Island high country station, and who has had the local media agog at the prospect for the last 18 months or so, is Canadian country and Western superstar, Shania Twain (whose real name is Eileen Lange). She, and her husband (universally known as Mutt Lange) have been given Overseas Investment Commission (OIC) approval to buy two neighbouring Otago stations Motatapu and Mt Soho, totalling 24,731 hectares for $21.5 million.
The Twain saga has been going on nearly as long as Chers two year long farewell tour. As far back as May 2003, the New Zealand Herald was reporting, as its front page lead story, that she was planning to grace us with her presence. This shows the celebrity factor at work normally the Herald wouldnt be bothering its Auckland readers with land sale details from darkest Otago. The Langes, who live in Switzerland, filed their application with the OIC in June 2003. Approval wasnt announced until September 2004, and then it was done by the Minister of Finance, Michael Cullen (who is the Minister in charge of the OIC) at a packed Ministerial press conference, and the relevant documents were immediately made public. This is not at all the usual procedure, where company takeovers and land sales are simply logged in the OICs monthly Decisions, not made public until a month or so later and then duly recorded, by Bill Rosenberg, in each Watchdog, as they have been since the year dot. In the intervening period, journalists regularly rang me up wondering if CAFCA could shed any light on the pending sale (we couldnt). When Cullen announced the sale (in September), I did a flurry of interviews with papers from Dunedin to Auckland.
So, this particular land sale has been subject to an extremely unusual amount of publicity and media scrutiny. Because of this heightened interest, and the fact that the OIC has released a large quantity of official papers about it, we have been able to see the processes at work in much more detail than usual. The Listener devoted a cover story to it (9/10/04; "Come On Over: The Shania Twain deal puts a new face on foreign ownership of our most precious landscapes", Bruce Ansley).
Originally The OIC Turned It Down
The most interesting detail to emerge was that the Langes application was originally turned down by the OIC, which is also far from the usual procedure for this most rubber of stamps. Indicative of the heightened media interest was the fact that the Press asked the OIC for all relevant papers, under the Official Information Act.
" But the papers reveal Twain and her husband almost lost their bid. The OIC told Twain it was inclined to turn down her application and only changed its mind after the couple proposed to build a public walking track through the property. The papers also reveal Twain and her husband plan to build a new $1.5m home on their land and stay there for up to four months a year. In their application the pair say that they want a safe and secure haven where they can spend up to four months away from the pressure of their public careers. But the OIC said the Twains new house was personal expenditure that did not add to their case.
"It questioned the applicants claims that investment in the sheep station would return it to a state of profitability. The OIC raised questions abut the real reason Twain wanted the sheep station, saying it doubted whether it was really a viable farming investment. It initially decided the purchase was not in the national interest, would not benefit Wanaka, and could push up the price of land for farmers seeking to set up their own property. The Commission, while seeing some merit in the applicants proposal, did not consider it a particularly compelling case given the size and nature of the property', the OICs confidential report says. The Commissions overall assessment is that there are questions about whether the applicants proposal is likely to achieve a substantial increase in productivity or efficiency on the properties.
"The OIC also challenged Twains claims that the farm would employ substantially more staff, saying the short-term increase would be from around three to six full time staff. It is not a substantial increase in employment that one might experience where a new tourist venture or factory was being established, the OIC said " (Press, 18/9/04; "Twain initially refused", Colin Espiner). This same Press report has a wonderful Freudian slip, referring to the properties "conversation" values. Judging by the media frenzy, and the fact that the decision was announced by the Minister, the properties conversation values are very high indeed. Their conservation values are another matter altogether.
Not In The National Interest
Why did the reliably supine OIC baulk? Its Chief Executive Officer and Secretary, Stephen Dawe, explained, in a letter to the Listener (30/10/04; "Foreign Owners"): " In 1995 the legislation was reviewed and a national interest test introduced. In 1998 further changes were made that introduced a substantial and identifiable benefits test for farmland and required farmland to be advertised for sale to New Zealanders before it could be sold. The latter came into force on February 1, 2002, and the Lange application is only the second involving pastoral lease land to be dealt with under those rules ". Dawe denied that Cullen or any other Ministers had any input into the OICs proceedings, and his letter concluded: "Moreover, the fact that the applicants had a high public profile did not influence the way that we processed the application". Yeah, right.
Bruce Ansleys Listener cover story ((9/10/04; "Come On Over: The Shania Twain deal puts a new face on foreign ownership of our most precious landscapes"), to which Dawes letter was responding, added further details about the OICs initial refusal. " By proposing to remove cattle from the stations, concentrate on merinos (top quality sheep. Ed.), and go some way to reducing the over-stocking that has been endemic in the high country, the Langes were, in fact, making their task harder. As the proposal was batted back and forth and the Langes added a promise to fence off half their farm and covenant it for conservation, their position in farming terms became even worse: the smaller the area available to farm, the more difficult it was to meet the OICs economic targets. The Langes planned to pour money into their farm: $1.6m over three years, far more money than New Zealand farmers could afford. And because they are rich, they told the OIC they needed no immediate return on their capital.
"But still their figures were not stacking up into the kind of economic equation the OIC liked. The farming side of it wasnt good enough to make it fly, says Dawe. In terms of farming profitability, it wasnt going anywhere. They had to do other things to tip it over the edge And documents released under the Official Information Act reveal an interesting OIC philosophy. Some people, it noted, had complained that the Langes were paying too much for their property (compare the $21.5m, for example, with the $10m the Government paid for a similar sized high country property, the 24,000 ha Birchwood Station in the not far-distant Ahuriri Valley last January, a price some of its neighbours regarded as scandalously high). The OIC reports that it knew of New Zealand owners paying prices as high, and quotes the Treasury as finding no strong evidence the overseas buyers were paying more than New Zealanders for land.
"But then it turns its new, concerned face to the arithmetic. It balances the extra capital being introduced to the economy by way of the Langes purchase price, against public concerns that foreigners buying trophy properties out of the reach of New Zealanders and especially farmers trying to set up their own farms. Remarkably, it comes down on the side of the locals: it could not conclude, it says, that the Langes purchase price or capital investment on their own were in either the national or local interest. According to Dawe, the proposal was then juggled back and for the between them and the Langes three times in fact ".
So What Saved The Deal?
Ansleys Listener cover story continues: "Enter the Te Araroa Trust. Te Araroa is a national pathway being established from Cape Reinga to Bluff. It had tried to negotiate access through Motatapu Station with its owners, Don and Sally McKay, unsuccessfully. When the Trust heard that the McKays planned to sell to the Langes, its head, Geoff Chapple, wrote to the OIC: if they were serious about the national interest, what about making a track through the two stations a condition of sale? Obviously the Langes were getting nowhere otherwise "
The Langes seized on this opportunity as a means of meeting the national interest criteria. But the deal still nearly stalled. The obvious place for a walking track is along the valley floor but this had been refused by the McKays, and the Langes didnt want it either. The Department of Conservation (DOC) suggested an alternative that the public walking track should run through the hill country, climbing to 1,500 metres. " For, under the agreement, the Langes created a public walking track in perpetuity. They will build a new trampers hut and upgrade a musterers hut for trampers, build stiles and bridges, cut tracks, put up signs and donate everything to DOC, along with $10,000 a year for five years, for maintenance. The whole lot will set them back $220,000. They will allow public access to 4,000 ha of the covenanted land above the snowline (i.e. above 1,100 metres) The combination of Te Araroas track and the conservation land persuaded the OIC that the deal was, after all, in the national interest" (ibid).
This level of media scrutiny whetted our appetite, so CAFCA joined the queue and asked the OIC for all its papers on the subject. An impressively large pile duly arrived. The guts of it had already been disseminated in the media and there is an awful lot of repetition but there is still some interesting reading to be had. For example, Hugh Logan, Director-General of DOC, wrote to the OIC (18/3/04), under the subheading "Sustainability": " Retiring land above 1,100m will benefit that land but it does not address the (conservation) values below that altitude. In fact, intensifying the management of the lower altitude lands could put additional pressure on some of the values that are inferred ". And what comes through very clearly indeed is how the OIC and the Langes seized on the Te Araroa track proposal as a means of achieving the OICs permanent objective that of facilitating foreign investment. Not surprisingly, Te Araroa was ecstatic at the outcome, describing it as a win win situation, and a much better deal than could have been secured with any New Zealand owners.
Not Everyone Was So Delighted
Others were considerably less enthusiastic. There is no mechanism for a formal submissions process to the OIC, but that doesnt stop people writing to it about sales such as these two. The OIC papers include a handwritten fax, dated 26/8/04, with the signature and name indecipherable. It reads, in its entirety: "We need a public bike/horse trail thru (sic) the Motatapu before you allow the sale. A public hi (sic) altitude walking track suits only some of the public. You are too lenient with foreign ownership. I think your policy allows
1/ Restriction of NZ public tax paying peoples access to recreation.
2/ Inflates farming values way over there (sic) value and makes it harder for farmers to buy in.
3/ I think foreign ownership of NZ Hi (sic) Country, foreshore properties, and iconic lands should be prohibited.
Come on Helen (Clark), Get Real" (underlining in the original).
Other correspondence came from concerned neighbours, local Otago organisations, an expatriate Kiwi, and one of Shania Twains countrywomen. The latter, from Andrea M Stelmach, is worth quoting. "It was with much dismay that I read a recent article in the Ottawa Citizen (Canadas Capital newspaper) about Shania Twains desire to purchase property in the South Island, near Wanaka, and her expressed intention to retain her privacy by refusing public access across said lands. My husband, three children and myself spent the year 2000 in Greymouth on a teaching exchange and were very impressed with New Zealands unique land use system, in particular, its extensive tramping tracks. I would urge you (i.e. Michael Cullen) to do everything in your power to retain the integrity of this system and to refuse the sale to Ms Twain if she is unable to comply with local land use regulations. I can advise you that, if it is privacy that she seeks, there is more than ample land available in Canadas north where she can purchase property and no one will see her! Please do not allow New Zealands uniqueness be compromised by celebrity whims" (22/8/04). Exactly.
Nor were the Greens bedazzled by this celebrity buy up. The partys Co-Leader, Rod Donald, told the Listener (ibid.): "More and more iconic land is falling out of New Zealand ownership. Foreign owners buying stations and coastal land are making the Kiwi dream inaccessible. This sale sends a loud message that New Zealand is ripe for the taking, a rich persons paradise and playground. It also shifts the whole nature of land use it makes it harder for someone just to farm, because the earning potential is never going to be enough to give a proper return on capital. So much of the back country is only viable as a lodge for rich foreign tourists. We shouldnt be selling any land to non-resident foreigners or foreign corporations".
Theres not likely to be any let up in sight. The $21.5m purchase price paid by the Langes is dwarfed by the $62m being asked for by the American owner of the luxury Poronui fishing resort in the central North Island. More recently, the OICs head, Stephen Dawe, was in Queenstown, attending the annual meeting of the Japan-New Zealand Business Council, in his familiar role of drumming up foreign investment, and concluding " NZ benefits a lot from foreign investment" (Mountain Scene, 21-27/10/04, "Growth Driven From Overseas", Yvonne Kerr).
Lest We Forget: Lilybank & Tommy Suharto
But Stephen Dawe doesnt like to be reminded of the OICs embarrassments from the past. Take our old mate, Tommy Suharto and the Mackenzie Countrys Lilybank Station, a saga that kept Watchdog (and a fair chunk of the countrys media, especially Bruce Ansley and the Listener), in copy throughout the 1990s. As Bruce wrote in his Shania Twain cover story (ibid.): " A new look for the land grab is overdue: the last one was dismal from the outset. It was tainted by Hutomo Tommy Suharto, son of the Indonesian dictator. He bought Lilybank, a prime station at the head of Lake Tekapo. Even the limp strictures of the time required foreign purchasers to be of good character. Suharto was already a thug and a crook. He is now serving a 15-year sentence for a series of offences, including paying a hitman to murder a judge. Under Suharto management, huts were burnt, public access denied. Even in a regime that urges the OIC not to be so tough as to unbalance a welcoming approach to investment, few would defend the Lilybank decision now. The (National) government was so keen to accommodate him, says the High Country Accords chair, John Aubrey. It was a disgrace".
The OICs head Daweman was having none of that. He promptly wrote to the Listener (30/10/04; "Foreign Owners"): " This is wrong in two respects. First, there was not a required good character test when Tommy Suharto bought Lilybank in 1992. The good character requirement was introduced in March 1994. Second, the convictions of Suharto that may have questioned his good character, did not occur until significantly after these dates. The OIC has explained this often to many in the media, including the Listener, in an unpublished letter submitted after an earlier article. The OIC has also explained it publicly to the Finance and Expenditure Committee and its explanation forms part of the public record of those meetings ". Touchy, touchy. Note that Dawe said that Tommys convictions, including arranging a contract murder of a judge, only "may have questioned his good character". Based on that, wed hate to meet someone that the OIC thought might actually be of bad character.
to Watchdog 107 Index