Crafar decision imposes 'de facto tax’ on overseas buyers
There is still a higher hurdle for foreigners buying New Zealand land after today’s decision, says Wellington lawyer Mark Ford.
The decision by ministers to approve the deal for Chinese company Shanghai Pengxin to buy the 7892 hectare, 16 Crafar Farms properties is accompanied by a series of conditions.
The decision was released Friday afternoon by Land Information Minister Maurice Williamson and Associate Finance Minister Jonathan Coleman.
Mr Williamson has remained largely out of media contact in New Zealand and Mr Coleman is in Kabul.
The decision approving the purchase is based on the principles laid down in the High Court judgment on a challenge to the deal by a rival bidder led by expatriate Rich Lister Michael Fay.
That decision ruled the earlier approval from ministers needed to be revisited, and stated the ministers had to find “identifiable and substantial” benefits to the New Zealand economy, above and beyond what a local buyer would bring, before a purchase by an overseas buyer could be approved.
The latest decision – which the Fay-led consortium has indicated it may appeal – went to considerable length outlining the extra benefits the purchase would bring, quantifying them as around $12.5 million above what a local purchaser would provide.
“There is still potentially a higher hurdle or barrier to entry for overseas purchasers of New Zealand land,” Mr Ford says.
“The references to things Shanghai Pengxin have said they would do – the on-farm training school, the investment in heritage sites, the potential to sell river beds to the Crown, the rejuvenation of indigenous vegetation … none of these are things a local buyer would have to spend.
“So there’s a de facto tax on foreign land purchases.”
However, previous land deals have also included commitments form overseas purchasers which local buyers would not have had to make – he points to the purchase of high country land by signer Shania Twain, and the sale of land on Cape Kidnappers to American investor Julian Robertson.
Both these deals involved commitments to improve the properties, which would not have been imposed on local buyers, and the only question about the Crafar decision is whether it effectively lifts the level and cost of such commitments.