Jacinda Ardern shoots down COVID-19 economic stimulus idea of easing foreign buyer ban

The Prime Minister has shot down a businessman's idea of stimulating the economy during the COVID-19 crisis by easing the foreign buyer ban and requiring investors to spend $5-10 million on construction in New Zealand. 

Rod Drury, the founder and former CEO of online accounting software company Xero, told the Epidemic Response Committee that in places like Queenstown, where tourism has dried up, it could make sense to allow some foreign property investment. 

"It would make sense that we should revisit the question of allowing people from overseas who would love to buy down here to buy some property," he said. "That could happen quite quickly and it doesn't need to be all over New Zealand."

He said the Government could offer up a thousand sections and ask foreign investors to spend $5-10 million on construction, which would give engineers and architects immediate work and prompt "some real construction in the next 12 months". 

But the idea was shot down by Prime Minister Jacinda Ardern. 

"That philosophy has existed in New Zealand for a number of years and it's never been one that I've subscribed to or believe actually achieves what people claim it does," she told reporters. 

The Government made changes to the Overseas Investment Act in October 2018 to put restrict overseas people buying residential property in New Zealand.

Most overseas people are not able to buy homes in New Zealand, but certain overseas people can apply to the Overseas Investment Office for consent to buy one New Zealand home and live in it.  

Housing Minister Megan Woods' office told Newshub easing the foreign buyer ban is not something the Government is considering.

Drury said he finds objections to the idea "really interesting". 

"The whole story around not allowing people to buy from overseas kind of got whipped up five or six years ago. But certainly the experience I've had is those people come in, they're very low key, and they really want to engage with people here."

Rod Drury, the founder and former CEO of online accounting software company Xero.
Rod Drury, the founder and former CEO of online accounting software company Xero. Photo credit: Parliament TV

It comes as interest in underground bunkers in New Zealand has surged, according to a Bloomberg report, as America's wealthy elite are eager to escape COVID-19 which has claimed the lives of more than 47,000 people in the US.  

Finance Minister Grant Robertson highlighted how visas already exist for foreign investors, one requiring a minimum investment of NZ$10 million for at least three years and another requiring NZ$3 million for at least four years. 

"It exists, and it's a scheme that's been there for many years, but right now there's not going to be a lot of people moving around the world, so it's not an immediate problem or an immediate issue," Robertson told Magic Talk. 

He said while the New Zealand economy does need foreign direct investment, he has concerns about land "disappearing into offshore hands". 

Drury said allowing foreigners to invest in New Zealand and finance construction would complement the Government's plan to fund large "shovel-ready" infrastructure projects to boost the economy after the COVID-19 lockdown.

He said investing in 5G technology and expanding fibre internet across the country would also help to boost economic development as the nation will become more reliant on digital communication with international travel at a standstill. 

"With the infrastructure projects being talked about, communication infrastructure makes a whole lot of sense, so I'd be asking the question: what is stopping us from extending fibre out?" 

As of November 2019, the Ultra-Fast Broadband fibre scheme had been rolled out in 126 cities and towns around New Zealand, and was available to 79 percent of the population, with an uptake of 54.9 percent.

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