28 Sep 2010

Federated Farmers backs new foreign buyer rules

4:46 pm on 28 September 2010

Federated Farmers is supporting Government moves to place new hurdles in front of foreigners seeking large-scale ownership of farmland.

New regulations will allow ministers to take into account a wider range of issues when considering overseas investment.

Finance Minister Bill English says the change gives ministers more tools for rejecting applications, though he won't say what exactly would constitute a large-scale purchase.

Applications made to buy land along with processing plants, such as dairy factories, will also face extra scrutiny.

Federated Farmers president Don Nicolson says similar restrictions overseas make it easier to support such moves in New Zealand, though he says it could hit demand in the already depressed market for farms.

Little impact on rural market expected

Harcourt real-estate chief executive Hayden Duncan thinks, however, that the regulatory changes will have relatively litte impact on the rural property market, which he expects will continue to be driven by local demand.

The Green Party concedes the Government has tightened the rules on overseas investment but warns that debates about land purchases could escape public scrutiny.

Co-leader Russel Norman told Morning Report the party wants a single rule setting an upper limit for an overseas land purchase - otherwise, he says, it will be possible for a big parcel to slip through.

Lawyer Nick Wells, a partner at Chapman Tripp, is unimpressed by the new regulations, saying they'll deter, not enhance, investment.

Mr Wells describes the measures as "kick for touch", and says that, in effect, the Government is saying decisions will be made on a case-by-case basis.

"We have ended up with added criteria and ministerial discretion being added," he says, "so, if anything, the level of woolliness has gone up."

Sensitive-assets test stands

Announcing the moves on Monday, Mr English said ministers will take into account New Zealand's economic interest, in which opportunities within the country, such as setting up a head office, would be considered.

On sensitive assets such as infrastructure, Mr English says the test set up by the previous Labour-led administration during the partial takeover of Auckland International Airport will stand.

He says ministers will advise the Overseas Investment Office on which factors will be more or less important when assessing particular types of investment.