Tighter overseas investment regime to target more than houses
The government has begun policy work to tighten up further the sale of New Zealand assets to foreign investors, with new instructions to the Overseas Investment Office required to give effect to any new rules.
The extent of the moves are not known in detail but appear likely to go well beyond the announced creation of an effective ban on the sale of existing homes to non-resident foreign purchasers.
Rural land sales are most likely to be subject to tighter criteria, although it remains unclear whether the government will extend new restrictions to other classes of assets in the same way as countries such as Australia, which allow restrictions on the sale of essential infrastructure and applies a national interest test. Those provisions saw a proposed investment in part of the Australian national electricity grid by a Chinese investor struck down in August last year on national security grounds.
Prime Minister Jacinda Ardern indicated at her post-Cabinet press conference on Monday that the government was actively considering both legislative and regulatory options to implement its commitment in the coalition agreement between the Labour and New Zealand First parties to "strengthen the Overseas Investment Act".
A Cabinet paper on the issue is understood to have been considered at Cabinet this week. There is a need to move swiftly to ban existing house purchases by foreign buyers ahead of ratification of the newly named Comprehensive and Progressive Trans-Pacific Partnership (CP-TPP) trade and investment pact.
"We have a few options there. Of course, one is legislative means," said Ardern. "We're working on that as we speak and as you'll know we've got a timeframe we've got to work on based on the potential ramifications of TPP. In the interim, there are other tools that can be used to give an indicative direction of travel. We're taking advice on that and making decisions on that as we speak."
She appeared also to acknowledge the government is grappling with whether to make any new rules apply to applications for land and other asset purchase applications already lodged with the OIO.
"Of course, there will be applications in train and we are aware of that," she said. Asked whether the government might "pull the rug out" on applications already submitted, Ardern responded: "As I said, we are taking advice on that."
Land Information Minister Eugenie Sage said work on amendments to the OIO's mandate, including rural land sales, was occurring.
"Those are all issues that are in the mix," she said, while noting that only the housing ban was part of the government's first 100 days plan. "There is quite significant work being done in terms of our commitment to strengthen the Overseas Investment Act."
However, she scotched a report that all applications currently before the OIO were on hold in the meantime.
"That is absolutely not true," she said. "I've been informed that there are a number of applications which have been or will be coming across my desk shortly."
These were all applications that the OIO could approve without ministerial approval.
However, sensitive land applications requiring ministerial approval are unable to proceed at present because the new government has not yet delegated that task to any ministers.
The land information minister and a finance minister are routinely delegated that authority, meaning Sage and one of the government's five finance and associate ministers will get that job.