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Prime Minister John Key says the Government did not have any valid reasons to refuse approval for the Chinese bid from Shanghai Pengxin to buy the 16 Crafar farms - and blocking it may have broken the law.
The ministers responsible for overseeing Overseas Investment Office decisions, Maurice Williamson and Jonathan Coleman, announced this morning their approval of the the Pengxin bid.
But strict conditions apply, including that the owners continue to be of good character, invest $14 million in the properties, and cannot become majority owners of milk processing facilities in New Zealand.
They must also agree for Landcorp to manage the farms, and they must sell the farms if an agreement cannot be reached.
Mr Key said Pengxin "well and truly exceeded'' all the conditions they had to meet under the law.
"Ministers could have overturned that decision, but there were no reasons to do so. The OIO correctly interpreted the legislation, and had they turned it down simply on the basis of being Chinese, it would not only be unlawful but unacceptable and would have been overturned in the courts.''
He said the Government could change the law if he felt an unacceptable amount of farmland was being sold to foreign buyers, but he did not feel that was the case.
Less than one per cent of New Zealand was foreign-owned, he said, and in the last 18 months 72 farms had been sold, mainly to German, UK and Australian buyers.
"There are always going to people who have concerns about investment that comes from countries like China. I acknowledge their concerns, but we have pretty tight conditions around sales in New Zealand.
"As a country, we need foreign investment to grow.''
Mr Key said it was up to the receiver to decide who to sell to, and then the Overseas Investment Office had to apply the law.
"It's not for the Government to say that a liquidator should accept a lower price by selling to a New Zealander.''
But Mr Key fired a shot at Mr Shearer, asking if it was Labour's policy to refuse all land sales to foreigners.
"If he's going to tell us that he intends to change Labour's policy to no sale of farms to foreigners, he should tell us now. Or if he's going to be a Prime Minister that's going to break the law, that would be an interesting proposition.
"Mark my words, when I go to the very many Chinese functions that I go to as Prime Minister, more often than not accompanied by the Labour leader, I bet you he won't be getting up in those meetings and telling them they're not welcome in New Zealand.''