Overseas investors wanting to buy up large tracts of farmland will find it tougher under changes announced today.Finance Minister Bill English has issued a directive to the Overseas Investment Office setting out changes the Government had previously annou
Overseas investors wanting to buy up large tracts of farmland will find it tougher under changes announced today.
Finance Minister Bill English has issued a directive to the Overseas Investment Office setting out changes the Government had previously announced.
However two new factors have been added which will have to be considered when investors want to buy areas of farm land that are 10 times or more larger than an average farm.
Debate over foreign ownership has been heated since Chinese interest in buying Crafar Farms. Hong Kong-based company Natural Dairy wants to buy 16 Crafar farms being sold by receivers.
That debate fed into a review Mr English was doing into overseas investment.
He said the changes he made struck a balance.
"They increase ministerial flexibility to consider a wider range of issues when assessing overseas investments in sensitive land, while providing extra clarity and certainty for potential investors and the Overseas Investment Office (OIO)," he said.
The OIO uses a test to evaluate the benefit to New Zealand of sales. The new considerations announced today include an "economic interests" factor. That would allow 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."
The second was a "mitigating" factor enabling 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 this country.
"The letter, sent this week, directs the OIO to give these factors high relative importance in any decision of whether overseas investment in large areas of farm land is likely to benefit New Zealand."
Mr English said the definition of large areas of farm land was 10 times the average size of any given type of farm. For example, based on Statistics NZ data, the average dairy farm is 172 hectares, so the threshold will be 1720ha. The average sheep farm is 443ha so the threshold will be 4430ha.
The new factors were in addition to a range of existing factors and a good character test.
Regulatory changes will kick in early next year.
Federated Farmers president Don Nicolson said it supported investment but accepted the public was worried about large sales to overseas corporates.
"We're worried that this may be used as the basis for vertically integrated production, processing and marketing business models that send economic benefits overseas.
"All we ask is that appropriate scrutiny is delivered by the authorities, so pre-emptive calls by politicians to make it much harder for foreigners to buy farmland are lessened."
Mr Nicolson said farmers wanted to be able to sell land to the highest bidder.
"Any new rules on overseas investment must preserve certainty to landowners, as well as allowing beneficial investment to continue."
He said the trigger point of large farms reduced the risk of unfair decisions but he said he wanted to know about the new mitigating factor.
