Debating the Impact of B.C.’s Foreign Investors
Features / September 25, 2017
Experts argue whether banning foreign ownership will improve the provincial market
Alyssa Laube, Coordinating Editor
Whether the subject is British Columbia’s overpriced housing market or its agricultural industry, foreign investors are often blamed for unsustainable property ownership in the province.
As few British Columbians have the money or opportunity to store millions of dollars in the purchase of homes or farmland, rich investors from other countries can easily reap the benefits of setting up operations on comparably affordable Canadian soil. Some local experts argue that foreign investment only helps to stimulate the province’s economy, while others push for legislation against foreign investment to be implemented as soon as possible in order to create a fair environment for B.C. citizens to flourish in.
The leader of the B.C. Green Party, Andrew Weaver, is one of those experts promoting anti-foreign investment legislation. Last year he introduced a private member’s bill that encouraged a ban on the purchase of any B.C. agricultural land larger than five acres by foreign investors.
Part of Weaver’s motivation for proposing the bill was the implementation of last year’s foreign buyers tax on housing. He both explicitly disagrees with the way that the B.C. Liberals carried out the tax and believes that it caused foreign investment in the area’s agricultural land to surge.
“The best way to avoid paying a foreign buyer’s tax is you buy land and build a house afterwards,” says Weaver. He adds that foreign investment in farmland—if used for non-agricultural purposes such as this—prevents local farmers from producing sustainably and providing for themselves and other Canadians.
“The single biggest barrier right now for young farmers who want to get on land is access to land because of price,” he says. “Our land is seen as a good, stable investment. But the problem is that when you start to view this as a means of essentially parking foreign money as an investment to protect it from, say, unstable economies or fluctuating commodity markets, it drives up prices for those who actually live in the region.”
He points out that Alberta, Saskatchewan, Manitoba, and Prince Edward Island have already taken steps to limit the ability of agricultural land to be purchased by non-Canadian non-taxpaying entities, with little to no negative impact reported thus far.
In the KPU community, Kent Mullinix, the director of university’s Institute for Sustainable Food Systems, is working on an ISFS-run study designed to analyze ownership and use trends of agricultural land in B.C. It is expected to be completed in time for spring this year.
“No one knows the extent to which farmland is owned by non-farming entities. No one knows the extent to which foreign investors and investment groups own farmland. It’s a real deficiency in the Lower Mainland,” he says. “We’re conducting a study to determine that, and to determine what owners want to do with the farmland they own.”
Like Weaver, Mullinix expects that there are fewer farmers and young people pursuing farming than there have been in the past because it has become too expensive for British Columbians to compete with the wealthy foreign investors in the market. He adds that relying on rich foreign buyers or farmers in developing countries to manage agriculture in B.C. is too environmentally destructive, technologically intensive, and economically inefficient to be sustainable.
Instead, Mullinex believes the province should “spread the wealth of agriculture and food around our communities, not concentrate it in the hands of a few.”
“The land should not be bought and sold for speculation. It is a precious commodity that needs to be dedicated to food production for us and economic livelihood. It should be owned by agriculturists and farmed and that should be regulated by the government,” he says. “The province could say, ‘No foreign ownership. No ownership of agricultural land except to anyone who has an agriculture business, or to own agricultural land, you have to be a trained agriculturist.’ Otherwise, it’s devaluing agricultural land.”
Not everyone agrees that foreign investment is the root of the problem, however. Matt Hern, an SFU lecturer, activist, and author with a background in urban studies, believes that “the fixation on foreigners is entirely wrong-headed at best and potentially dangerous.”
“We’re living in a particular historical moment of Trump, Brexit, all kinds of nationalistic fears and potential xenophobic movements. This is one more element of it popping its head up in a particularly stealthy way,” says Hern.
“[I would say] to Mr. Weaver, just like I would say to any other proponents of foreign buyers taxes on condos, ‘What is the problem you’re trying to address?’ If your problem is that you think there are … too many Chinese people that are taking up too much of the economic pie—if that’s your argument, then don’t couch it in the foreign buyers tax.”
Although Hern thinks that “it’s depressing that this [anti-foreign investor] argument is being brought up again because it feels like it’s been thoroughly debunked in Vancouver” due to last year’s foreign buyer’s tax on housing, he also sympathizes with Weaver’s efforts to end speculation and profiteering in B.C.
“Let’s say that he’s concerned about the conversion of agricultural land for other uses. That’s an important issue. Protecting agricultural land is an important issue. Protecting agricultural land from profiteering—that’s an interesting project too. All of those are interesting, and none of those would a foreign tax get to,” he says.
Hern expects that the ban would do little more to resolve the issue, as foreign investors will likely find another way to keep their money in the province, and the Canadian investors wealthy enough to do so will continue to buy up land that the more plentiful, smaller-scale farmers can’t afford. He suggests that the government consider other methods of supporting B.C. agriculturalists.
Weaver considers Hern’s assertion that measures against foreign buyers are symptomatic of bias to be “offensive,” and asserts that the label of “foreign” to describe investors is only meant to account for the way individuals pay their taxes, and who they pay their taxes to.
“If you’re a landed immigrant here in Canada and you’re paying taxes and working in Canada, you’ve paid your dues. That would be definite. What’s not exempt is someone sitting from afar and buying land in Canada with the purpose of it being an investment. We have to realize there’s a lot of capital out there in the world and this is a small part of Canada,” he says.
Joseph Chen is a KPU Economics instructor who specializes in law and industrial organization, but he is also an immigrant to Canada and a homeowner with a Chinese background. He suggests that the provincial government do more publicly accessible research into how much of an influence foreign buyers are having on farmland before they move forward with any bans or taxes pertaining to their role in the industry.
“I think that, so far, we have no idea whether foreign investors are really the factor pushing the price up. At the base of our economic model, everything is based on demand and supply… [and] there are so many factors that could change demand or supply,” he says. “Based on what I have read before, I think foreign investors shouldn’t be a huge factor. They say that, at most, they are one per cent. I don’t know if one per cent can really push the price so high.”
Chen believes that if the government does decide to put the agricultural ban on foreign investors, it should also be expected to provide more funding to local farmers to avoid freezing the market and harming the economy further. He also anticipates that the ban “will cause more trouble to local business because we’ll push the funding away to different provinces.”
“You don’t want foreigners to buy farmland here, so we’ll just have locals to pay here, but [other provinces] will get more funding from foreigners investing in their places,” says Chen. “If they have farmland and agricultural business, they can set up plant production. They can have real jobs being set up in that specific area. That could stimulate or get those local businesses into better shape than B.C.”
He continues, “Let’s say you want to own some B.C. farmland. If you don’t have enough money or the government doesn’t provide you with enough funding, if you want to sell it to an investor group from overseas, they can purchase your place and commercialize the area and have bigger production lines. They can stimulate the economy.”
Mullinix disagrees with Chen’s sentiments about encouraging foreign investment, calling his standpoint symptomatic of a “trickle-down economic philosophy where you let anybody who’s got the money have it and the economic benefit will eventually trickle down to you and me.” He believes that, in practice, the philosophy never works that way.
Mullinix recommends that KPU students read the ISFS’ report issues last year, “Home on the Range”, to learn more about the state of B.C.’s agricultural land.