Overseas investment rule changes

Ministers will be given more power to address economic impact issues when assessing overseas investment applications for sensitive land, Minister of Finance, Bill English says.

Announcing the results of a review into overseas investment, Mr English said changes made last year had simplified overseas investment rules, cut red tape and sped up processing times for applications, while the latest changes would add flexibility.

"They increase ministerial flexibility to consider a wide range of issues when assessing overseas investments in sensitive land, while at the same time they provide extra clarity and certainty for potential investors and the Overseas Investment Office (OIO)."

However, Labour overseas investment spokesman David Parker said the Government's review of overseas investment was not even a half-hearted effort to protect New Zealand against increasing foreign ownership of land.

"Foreigners with access to cheaper capital find the prospect of tax-free capital gains from buying New Zealand attractive.

"But there is no benefit to New Zealand in that."

National had polled itself to a standstill on the issue, he said.

Mr English said a new ministerial directive letter to the OIO would also provide extra clarity and certainty for potential investors about the Government's general approach to foreign investment in sensitive assets.

The review was started in March last year, but the scope of it was more recently changed following a surge of publicity and concern about the possible sale of the farming network owned by the Crafar family to Hong Kong-based based company Natural Dairy.

The OIO was yet to make a decision on that.

There would now be a new "economic interests" factor allowing ministers to consider whether New Zealand's economic interests were adequately safeguarded and promoted.

"This will improve ministerial flexibility to respond to both current and future economic concerns about foreign investment, such as large-scale ownership of farmland," Mr English said.

A new "mitigating" factor would enable ministers to consider whether an overseas investment provided opportunities for New Zealand oversight or involvement, for example, by appointing New Zealand directors or establishing a head office in New Zealand.

The changes are expected to take effect from December and will not be applied retrospectively.

Mr Parker said the Government should be explicit about whether it intended to turn down applications by overseas interests to buy New Zealand farm land.

Green Party co-leader Russel Norman said the changes would not protect New Zealand farm land from overseas ownership.

"Over the last five years we've lost 150,000ha of land into overseas ownership, mostly under the Labour government, and under the rules that Bill's come out with today there's no guarantee we won't lose another 150,000ha."

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