The Government’s involvement in the controversial decision to approve the sale of Westland Milk Products to Hong Kong Jingang, a company wholly owned by Chinese conglomerate Inner Mongolian Yili, will be under the spotlight in the Court of Appeal this week.

The hearing is of Social Credit’s appeal against the High Court decision on its judicial review application, and is set to start on Wednesday.

The judicial review challenged the basis on which the Overseas Investment Office made its decision in 2019 to approve the sale.

Social Credit’s position is that the Overseas Investment Office applied the wrong legal test.

“We contended that, in the context of a dairy farming operation, “agricultural purposes” under the Act extends to both the milking of the cows and the necessary processing of their milk. This would mean the privilege of overseas persons acquiring sensitive New Zealand dairy assets should have been tested in appropriately wide circumstances. “

“Therefore the link between the production of milk and its immediate processing into saleable forms requires all land used for both aspects of that process to be treated as being used for agricultural purposes, and therefore sensitive under the Act. “

“As Westland Milk was already an efficient processor with good export markets and wide ownership of New Zealand farmers through its cooperative structure, we don’t think the benefits of the sale were ‘genuinely substantial and identifiable’. That is the legal test the OIO should have applied.”

“Our view was that the OIO failed to properly take all necessary matters into consideration necessary to determine whether the benefits of the sale were ‘genuinely substantial and identifiable’when it consented to the Westland Milk takeover, hence our original application for the judicial review which the High Court turned down.”

“Given the role of OIO as the ‘gatekeeper’ to the acquisition of New Zealand assets by overseas entities, our aim was to ensure that it applies the proper legal test, that it has sufficient information to determine which test should be applied to an application for consent, and that all necessary matters are taken into consideration when it assesses applications.”

The sale of one of New Zealand’s dairy cooperatives to a foreign buyer was a controversial one.

While at the time NZ First and Labour MPs bemoaned the sale prospect, and questioned the big bonus payouts to the company's executives, they did nothing to avert either the short term or long-term consequences.

Then Regional Economic Development Minister and Associate Finance Minister, Shane Jones, claimed, in a report in the Herald on July 18th 2019 that “as steward of the Provincial Growth Fund, I was never approached [by Westland directors] as to whether or not we could look at restructuring and help shore up that company.”

But Radio New Zealand had reported on July 8th that it “understands ministers might be breathing a sigh of relief that farmer-shareholders gave Yili the thumbs up. That is because rejection of the Yili deal might have left the taxpayer being forced to pick up the tab.

“The taxpayer never needed to pick up the tab”.

“What has been clearly demonstrated is the capacity of the Reserve Bank, which has created around $60 billion since March last year.”

“The government could have used that capacity to rescue the company and keep it in New Zealand hands, as an aide memoire presented to it by the Treasury and Reserve Bank in April last year outlined”.

“It could have put in place an arrangement similar to the 1% overdraft that the Dairy Board had access to from 1936 to the mid 80's, and made it available to Westland Milk – the solution Social Credit proposed at the time”.

“That would have enabled the co-operative to swap its expensive commercial bank created debt for much cheaper Reserve Bank created debt and allowed the company to use its income for the benefit of West Coast farmers rather than interest payments to Australian owned banks”.

“Such an arrangement would not have resulted in an increase in the country's money supply, nor would it generate any inflation, because repaying the commercial bank debt would have simply wiped it out of existence”.

“Such a scheme would have been a win-win for all the New Zealand parties involved, and the country, and would have ensured that a substantial slice of New Zealand's dairy processing was retained in New Zealand hands”.

Social Credit has a longstanding policy of opposing foreign takeover of land and businesses by overseas buyers and would seek to reinstate New Zealand ownership of strategic assets.

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