Day: November 1, 2017

Jian Yang again/still

Michael Reddell China, NZ politics, Uncategorized

In September, a couple of weeks before the election, the Financial Times and Newsroom published a story about the National MP Jian Yang.  The story revealed that Yang, who lived in China until age 32, had been a member of the Chinese Communist Party, and a member of the Chinese military intelligence establishment, and suggested that Yang –  formerly a member of Parliament’s foreign affairs committee –  may have been investigated by the Security Intelligence Service.    Questions were raised as to how much of this background the National Party had been aware of when they first selected him in 2011.  None of it had been known to the voters at the time.

The story got a day’s coverage in various local media and then largely went cold in New Zealand, even though it was just before the election, and although it happened to coincide with the release of a major paper by Canterbury University politics professor (and China expert) Anne-Marie Brady, raising substantial and documented concerns about the influence China was seeking to exert in New Zealand, both through the (former) Chinese diaspora (people in public life like Yang and Labour MP Raymond Huo), among Chinese New Zealanders, and (for example) through the recruitment of various prominent New Zealanders to well-remunerated roles in which they might be either well-disposed to Chinese interests, or at least unable/unwilling to voice any concerns about China’s activities and policies.    Professor Brady herself summarised the issue thus

This policy paper examines China’s foreign political influence activities under Xi Jinping, using one very representative state, New Zealand, as a case study. New Zealand’s relationship with China is of interest, because the Chinese government regards New Zealand as an exemplar of how it would like its relations to be with other states. In 2013, China’s New Zealand ambassador described the two countries’ relationship as “a model to other Western countries”. And after Premier Li Keqiang visited New Zealand in 2017, a Chinese diplomat favourably compared New Zealand-China relations to the level of closeness China had with Albania in the early 1960s. The paper considers the potential impact of China’s expanded political influence activities in New Zealand and how any effects could be mitigated and countered.

Yang himself has largely avoided the media.    But papers released under the Official Information Act confirmed that he had not told New Zealand authorities about his involvement with Chinese military intelligence, instead suggesting he had worked and studied at some quite different institutions.   Asked why, he responded that the Chinese authorities had told him to do so when he had left China (years earlier), and that was the way things were done in China.   That only heightened the concerns.

I wrote various pieces about the issue, noting (for example) that we should no more regard it as acceptable to have in our Parliament a former Chinese Communist Party member, former member of China’s military intelligence, someone who continues to hob-nob with the Chinese embassy, and who has never said a public critical word about Communist China (even as Xi Jinping increases the repressiveness of the regime) than it would have been to have a former KGB/GRU party member, associating closely with the Soviet Embassy, in our Parliament in the 1970s.  No one would have countenanced the latter.  It remains staggering –  and alarming about either the blindness of our elites, or the extent to which they’ve been suborned  (eg Yang is acknowledged as a major National Party fundraiser) –  that the Yang situation still appears to be regarded as acceptable in many quarters.

My own direct involvement was pretty tangential, when at a local candidates meeting a couple of days before the election, I asked a senior National Party minister –  Attorney-General and Minister for the SIS no less – about why it was acceptable to have such a person as a National Party candidate and MP.    Disgracefully, Chris Finlayson suggested that any concerns were just racist and that Professor Brady just didn’t like any foreigners.  Almost as disgracefully, the candidates of the other parties sat mute.

The story has had continued coverage abroad, including a nice New York Times piece a few weeks ago.  Serious –  pretty liberal –  international media such as the NYT and FT have taken the story seriously.    Our own media was slow to.  No doubt that suited the politicians –  at least those of the major parties.

But this week, the story seems to have gathered a fresh head of steam.   Our new Minister of Foreign Affairs, who had  previously talked on the need for an inquiry, by last week was avoiding questions on that topic, suggesting instead that the media could give the issue some more coverage.   And so, no doubt coincidentally, they did.

First, there was a substantial article by Matt Nippert in the Herald. Nippert notes that his article drew on “interviews with diplomatic and intelligence sources over the past month, including several with current security clearances”  –  which is surely less impressive than it sounds, as huge numbers of people in Wellington have security clearances (I did for years) –  but those sources seem to have added only a bit more colour, rather than revealing anything substantially new.    Nippert’s article is organised around what he calls “three unanswered questions” regarding Jian Yang:

  • What is Luoyang University?  This is the institution Yang claimed he had studied and taught at, rather than disclosing from the start that for much of his time he had actually been at a People’s Liberation Army academy.
  • Did Yang have access to sensitive materials (as an MP, member of the foreign affairs committe, and as –  otherwise junior –  MP accompanying John Key and Tim Groser on official trips to China)?
  • Why the official silence?

I’m not sure these really are the biggest issues now.   We know –  because Yang told us –  that his citizenship or residency applications details were (deliberately) misleading.    That is probably quite serious at a personal level, and probably warrants more from government departments than we’ve had to date.

Both Internal Affairs and Immigration NZ have said the revelations about Yang’s background and apparent lack of disclosure were not grounds to review their handling of the matter. A spokesman Immigration NZ went as far as to say “no new information has come to light which would warrant an investigation”, despite the facts being novel enough to warrant front-page coverage last month in the London-based Financial Times.

But, frankly, it seems like a second-order issue.  A man with his background, and ongoing associations, should not be a New Zealand MP, whether or not his citizenship application was all in order.

As for the information Yang may have been exposed to, even Nippert’s sources aren’t really alarmed.

Another source said Yang’s background – and closeness to New Zealand’s PRC embassy – was well-known in senior Wellington circles and had led to self-censorship. “I’m sure everyone is aware of that, and would be careful about what they say in his presence,” the source said.

“Would Jian have seen the briefing papers that were given to John Key? Almost certainly. He sat up the front of the aircraft with the Prime Minister and his advisers – I can’t imagine for a moment he didn’t have access to it.”

The source said this briefing document – unlikely to include top-secret classed intelligence from the Five Eyes network – would have been given a classification of confidential or higher.

In other word, just not that sensitive, even on the government’s own official classifications.

If there was  particular risk to New Zealand interests around his official position it was probably much more about the possibility that he might have one day become a Minister of the Crown.

The Herald tackled the third question –  the official silence –  in an editorial on Tuesday.

International media have rightly shown a keen interest in the affair.  But locally, interest – and answers – have been strangely muted. Neither National leader Bill English nor Prime Minister Jacinda Ardern seemed willing to address the issue during the election campaign. NZ First’s Winston Peters initially demanded an inquiry, but has gone silent on the matter since his elevation to Minister of Foreign Affairs.

Ardern has inherited a role that includes oversight of New Zealand’s intelligence agencies and will undoubtedly have been briefed on the Yang situation. She needs to reassure herself and then, in appropriate fashion, the public that the matter has been – or will promptly be – properly addressed.

But again, the issue of the intelligence services seems to be rather of a red-herring.     Yang, after all, now certainly has no access to anything particularly secret –  he’s an Opposition backbencher.  On the other hand, Raymond Huo –  who appears to also be closely associated with China’s United Front Work Department efforts in New Zealand –  is part of the governing party.    As Professor Brady puts it

Huo also has close contacts with the Zhi Gong Party 致公党 (one of the eight minor parties under the control of the United Front Work Department). The Zhi Gong Party is a united front link to liaise with overseas Chinese communities, as demonstrated in a meeting between Zhi Gong Party leaders and Huo to promote the New Zealand OBOR Foundation and Think Tank.

It was Huo who made the decision to translate Labour’s 2017 election campaign slogan “Let’s do it” into a quote from Xi Jinping (撸起袖子加油干, which literally means “roll up your sleeves and work hard”). Huo told journalists at the Labour campaign launch that the Chinese translation “auspiciously equates to a New Year’s message from President Xi Jinping encouraging China to ‘roll its sleeves up’.”

How sick is that? Invoking associations with Xi Jinping.

As a citizen, what worries me isn’t so much backbenchers giving away New Zealand secrets to China –  apart from anything else, they generally won’t have such access –  as the way in which such Members of Parliament seem to act as if the interests and views of the increasingly oppressive Chinese government and Communist Party are things for them to advance in New Zealand.   That is an issue both main parties look as though they need to confront, rather than being an issue primarily for the intelligence services.  Migrants should be welcome, once they become citizens, to be elected as members of Parliament, but it is probably particularly important for such members to be clear –  not just in words, but in conduct –  that their loyalties are only to the interest of New Zealand and (all) its citizens.  If Chris Liddell  –  a New Zealander on the White House staff –   spent lots of time hob-nobbing with the New Zealand Embassy, the US might reasonably wonder whose interests he was serving.  If Julie-Anne Genter does (which I’m sure she doesn’t) something similar with the US Embassy here, the same concerns would appropriately arise.  And recall that China is not just any country; it is today’s Soviet Union. A threat to all sorts of countries, including the free ones of east Asia.

Our main non-commercial media outlet, Radio New Zealand, was very late to the issue.  But this week they too have done their bit.   First, Bill English finally faced a reasonably searching interview on the subject (on Morning Report).  It was an astonishingly feeble performance, featuring repeated refusals to answer questions in any way other than “you’d have to ask Dr Yang that”, when the leader of the National Party knows that Yang has refused to make himself available for a proper interview, and for weeks has refused to answer any questions (Nippert’s experience as well).    The former Attorney-General, who claimed it was all racist, still holds a senior position in Mr English’s caucus.

And then there was John Campbell, who in his inimitable style last night illustrated the repeated refusal of Yang –  an elected member of Parliament –  to front the media.  According to Campbell, Radio NZ has been trying to get him to talk every day for weeks.  Calls simply go through to voicemail and are never returned.  Radio NZ even went to Yang’s house, but couldn’t get past the (unanswered) buzzer at the gate.

It reflects shockingly poorly on almost everyone in political life involved in this situation:

From the National Party side:

  • Jian Yang
  • Bill English,
  • Peter Goodfellow, President of the National Party,
  • Chris Finlayson, and
  • the rest of the caucus, not one of whom has been willing to break ranks (although Radio NZ did claim senior National Party sources were becoming increasingly uneasy).

And what of the new government?

  • There is the Prime Minister, who has never uttered a disapproving word, in the election campaign or since, about Dr Yang (not even about his silence),
  • The Minister of Foreign Affairs,
  • The leader of the Green Party, a party which appears not to rely on lots of diaspora fundraising, who is often strong on protecting our sovereignty, and yet who raised no concerns,
  • Raymond Huo, who surely some media should ask for a proper interview.

And then, of course, there are the obsequious members of the New Zealand China Council, and former leading figures in the National Party with a personal economic interest in keeping quiet.

Jian Yang’s political career is probably now effectively over.  Perhaps he’ll linger for a while, but it is inconceivable that he could rise any higher.  It is a disgraceful reflection on New Zealand, and on the National Party – and those other parties who could have spoken out and didn’t –  that an unrepentent Communist, unrepentant former intelligence services member of a hostile, expansionist government with a total disregard for human rights, sits in our Parliament still.  And simply refuses to face the media.  But that particular damage is probably done, it is just now a matter of tidying up the mess at some point.

The bigger questions would seem to be about the political and business culture that has been so indifferent to the specifics of Yang, and of Huo, to political fundraising from foreign sources, and to the sort of influence-seeking activities –  both among New Zealand Chinese citizens and in the wider political and economic system –  that Professor Brady has highlighted.    Professor Brady’s paper raises issues that really should be addressed in a proper inquiry, but also in some considerable soul-searching among New Zealand’s political and business elite about how New Zealanders’ interests, and reputation, as a free and independent state are best-served, and how best we –  and similar countries –  resist the inroads the Chinese Communist Party is making and, we can assume from the last Party congress, will only continue to seek to make.  As I noted in an earlier post, trade has muddied the waters: we had a clearer-eyed perspective on the Soviet Union than we seem to have about Communist China, a state on whose fortunes various elite institutions/companies and their chief executives (but not New Zealand’s overall fortunes) depend.   Perhaps our media too might ask themselves some questions, about what took them so long, made them so seemingly reluctant, to ask the hard questions about these issues.  Overseas comentators have been willing to, but the involvement of much of our own media seems quite halting and reluctant at best.

 

Making progress on housing?

Michael Reddell Housing, Uncategorized

I’ve been quite sceptical that either side of politics –  whichever group of parties won the election – would address the fundamental distortions that have rendered urban land and houses so expensive.  After all, successive National and Labour-led governments had enabled us to get, and overseen us actually getting, into this mess.  And for anyone looking to the minor parties, New Zealand First had previously been part of, or supported, governments of both stripes, and the Greens –  with a taste for rapid population growth and restrictive planning laws –  didn’t seem any more hopeful.   Neither the Prime Minister nor the Leader of Opposition, before or after the election, seemed interested in seeing lower house prices.

An optimistic supporter of the Labour Party yesterday put it to me –  it was Reformation Day , and the 500th anniversary of Luther nailing his theses to the door of the church in Wittenberg –  that not even the Pope could stop an idea whose time had come.   As I noted in response, the general point was no doubt true, but plenty of aspirant reformers misjudged when “the time had come”, when the mood and opportunity for change had become irresistible.   Often they paid a dreadful price.   In modern democracies, of course, that usually only means losing the next election, or quailing at the prospect and just not doing anything much of substance at all.

As I’ve noted various times previously –  including in this post a year ago – while there are plenty of examples of successful places (notably now in significant parts of the United States) without tight land-use restrictions limiting housing development, I’m not aware of any country (or even region/major city) that, having once adopted the morass of planning laws and associated restrictions, has ever successfully unwound those controls.  And thus we have house prices as they are in New Zealand, or Australia, or much of the UK, or California (and many other parts of the United States).

Housing was a significant issue in the election campaign, but perhaps less significant than it might have been if Auckland prices had still been rising strongly this year.  Four of the items on Labour’s pre-election 100 day plan were housing-related:

  • Pass the Healthy Homes Guarantee Bill, requiring all rentals to be warm and dry
  • Ban overseas speculators from buying existing houses
  • Issue an instruction to Housing New Zealand to stop the state house sell-off
  • Begin work to establish the Affordable Housing Authority and begin the KiwiBuild programme

 

Whatever the merits of some of them, nothing on that list was seriously likely to address the fundamental regulatory distortions that have stopped the housing and urban land markets working effectively.

Today the headlines are dominated by the announcement that the government appears to have found a way to ban non-resident non-citizens from buying existing homes, by amending the Overseas Investment Act to classify all the land under such dwellings as “sensitive land” (for which we reserved rights to “adopt or maintain any measure that requires the following investment activities to receive prior approval by the New Zealand Government under its overseas investment regime” –  page II-59 of this Annex to the Korea-New Zealand agreement).      Given that the Act requires a “national benefit” for any overseas investment in “sensitive land”, and it is difficult to conceive how a potential non-resident purchaser of a house could demonstrate such a benefit given the criteria set out in the Act, it looks to this lay reader like a clever wheeze that should, largely, be effective.

But to what end, other than political signalling?   At the margin, presumably transactions costs for all purchasers of houses, anywhere in New Zealand, will increase a bit forever (will we all have to verify that we are residents or citizens?).    More importantly, is there any evidence at all that a law change like this will increase housing supply?    And is housing supply, as distinct from land supply, the real issue at all?   The argument is supposed to run that if non-resident foreigners want to buy in New Zealand they will have to build, or buy a newly-built house, instead (as is, indeed, the law in Australia).    If the law discourages foreign purchases in total it will, to some extent, ease overall demand pressures –  although experiences with provisions like the British Columbia stamp duty suggest the effect might be quite shortlived –  but if it simply leads foreigners to bid for new houses rather than existing houses, presumably residents and citizens will –  at the margin –  buy more existing houses rather than new ones.     The law is likely to change, at the margin, who buys which type of dwelling, but why will it increase overall supply?     The land market is rigged, by regulation, to be as unaffordable as ever.  That won’t change as a result of this policy.  Any issues around development finance, council consenting, or infrastructure won’t change either.   In many cases, non-resident non-citizen purchasers –  however many there truly are –  probably already prefer new apartments (if, for example, what concerns them is an easily-maintained and secured store of value).    Perhaps there is evidence from some other places that such a restriction has increased effective supply?  If so, it would be good to have it drawn to our attention.   As it is, as I noted the other day, if the goal is real impact on housing affordability for New Zealand there is probably a stronger case for banning all house purchases by non-resident non-citizens than simply banning purchases of existing dwellings.

For the moment though, it is telling that the sound and fury –  perhaps even lifting the government’s poll ratings –  is around a measure that might dampen demand very slightly, and should do almost nothing to increase supply.    No doubt there is a place for signalling in politics.  But if you want to believe that real structural reform is coming, wouldn’t it have been reassuring to have seen something tangible around land supply in the 100 day plan, or emerging –  together with the non-resident ban –  from yesterday’s first substantive Cabinet meeting?  The Minister of Housing is quoted in the media talking about potentially using the Public Works Act to confiscate private land (and the Public Works Act provisions, while necessary for some limited purposes, never adequately compensate owners).  But not about allowing private land owners to use their own land more freely.     Labour went into the election promising

Labour will remove the Auckland urban growth boundary

Couldn’t that have been made part of the 100 day plan?   Or what about a piece of legislation allowing any geologically-stable private land to be used for housing, up to two storey height, without further resource consent (preferably for the whole country, but at least say in a circle with a radius 100 kms from downtown Auckland)?     Yes, there are still transport and infrastructure issues to be resolved –  so perhaps make the commencement date of the new legislation 12-18 months hence – but changes in this area –  land-use rules –  get much closer to the heart of the problem.    If there is a problem with “land-bankers”, it is a problem created by regulation and legislation, which removes the element of free competition from the market for developable land.  And, perhaps to balance the potential to increase the physical footprint of cities, how about a Working Group to report back within six months on options for allowing groups of residents/existing owners to contract out of existing planning restrictions when collectively those owners judge doing so to be mutually beneficial?

But this all highlights the question as to whether the government is really willing, let alone wanting, to see house and urban land prices fall.    On that score, the evidence is mixed at best.    Both the current Prime Minister, and her predecessor as leader of the Labour Party, have fallen over themselves to deny such an interest, and both have proved very reluctant to talk prominently about land-use reform (although I’m told that in small meetings  –  including during the Mt Albert campaign – the PM can talk fluently on the topic), favouring instead a public focus on (a) tax changes, (b) non-resident bans, and (c) state-driven building activity (much of which is likely to displace other building, since there is little evidence of unmet excess demand at current house+land prices).

On the other hand, Labour’s official housing policy has sounded promising, and both Phil Twyford (Minister of Housing) and David Parker (Minister for the Environment) have a promising track record.  In the previous Parliament, Parker moved an amendment –  which came very close to passing –  that would have removed the urban growth boundary around Auckland.  But Opposition –  when you don’t live with the consequences (gains and costs) – is different from government, and tactical embarrassment of an incumbent government, is different from managing a tri-party government and implementing serious structural reform.   Greens/Labour/New Zealand First agreement was presumably easy around the non-resident ban, but will probably be lot harder around fixing the land market (especially now that the government has recommitted to the “big New Zealand” approach to immigration and population).

I’m not ready to be very critical of the new government yet. But my scepticism about the prospects of serious reform remains.  It isn’t really about individuals or personalities –  as I’ve noted, past governments for 25 years have also done little or nothing –  but about incentives, risks, and precedents.  In that post I wrote a year ago I concluded

Individual political leaders can make a real difference.  It would be great if one would stake a lot on urban land use reform, but anyone considering it needs to recognize the lack of precedents, the potential losers, and the worries and beliefs that underpin the durability of the current model here and abroad. And they probably need to find not only the right language to help frame repeal choices and options, but find a package of measures which helps allay – even if only in part, and for a time –  the sorts of concerns some have.

(If anyone was serious about reform, and lowering house prices, I suggested a possible limited compensation scheme here.)

In a three year electoral term, if serious reform is going to happen it needs to be got under way quite quickly.  Whatever the possible merits of KiwiBuild (and I don’t have strong views) at present it looks as if there is risk that it –  with lots of activity –  will crowd out addressing the real issues around land use law that have, unnecessarily, given us among the highest house price to income ratios anywhere in the advanced world.