An overseas investment law overhaul could boost forestry businesses and add about $4 billion to annual export earnings, says Forestry Minister Shane Jones.

The Overseas Investment Amendment Bill, which a select committee reported back on yesterday, would ease the way for foreign businesses to invest and expand, almost doubling annual returns, he predicted.

"We already plant about 60 million trees a year and we've got to get to 100 million a year so potentially international capital, in partnership with landowners, could boost about a $6.4b foreign exchange earner to $10b per annum over time," he said.

"Forestry is a long-term play but as the sector expands with partnership capital, the foreign exchange earnings will grow. This won't happen overnight but an increase in Japanese forestry investment would be so welcome in places like Kaitaia and the Tai Rawhiti," he said.

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Although the law aims to restrict foreigners' access to New Zealand housing, Jones said it freed up rules for global forestry businesses arriving or doing business here.

"Forestry is going to enjoy a lighter touch. The applications to the Overseas Investment Office will no longer have to go through such a constipated administrative tract. It will be quicker and why? Because forestry has a key role to play in climate change.

"It will be simpler for international firms to go through the OIO when they want to sell to other international firms. It will be simpler for international firms wanting to establish commercial forests here," he said.

National's finance spokesperson Amy Adams criticised the bill yesterday, saying although forestry was let off the hook, problems would be caused elsewhere.

"Forestry investments have been given a free pass, while the same investments into viticulture have been effectively blocked without any clear justification for the distinction between the two," she said.

The new law was "a dog of a bill, a textbook example of bad law-making, and the changes made at select committee will do nothing to alter the fact it's a dog", Adams said.

The select committee report said forestry land or land intended to be turned into forestry land will not need any consent until the total holding exceeds 1000ha.

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Jones said the law change recognised the importance of forestry to New Zealanders and that he's "confident it's struck the right balance that will boost forestry investment while ensuring the regime cannot be bypassed".

Jones says forestry has key roles in climate change and the economy. Photo/Duncan Brown
Jones says forestry has key roles in climate change and the economy. Photo/Duncan Brown

Foreign investment in forestry would be an important part of achieving the Government's One Billion Trees planting programme and will also promote economic development opportunities in our regions, Jones said.

"This Government wants to see a strong and flourishing forestry sector that will create and protect jobs across the country and contribute to our climate change targets."

But Jones this month also acknowledged issues in the industry, particularly logs in waterways.

"The Queen's Birthday floods at Tolaga Bay are an awful outcome. The images are all wrong. I was disappointed by the sluggishness of the forestry sector. I challenged them directly. They're already moving with more speed. The sector needs to change its harvesting practices," he said, adding that "log-mongers" needed to be expelled from the sector and that was next on the political agenda.

Jones also hopes the NZ Superannuation Fund will invest more heavily in forestry, because the fund's single largest investment is a $1.49b stake in the Kaingaroa plantation and Jones hopes for an expansion.

Doug Ducker, managing director of Pan Pac Forest Products, made a submission on the bill, telling the select committee on April 10 that the business wanted riders applied.

"We accept that forestry rights should be brought within the [Overseas Investment Act] regime but only if there is both a set of forestry rights and land are considered and a pre-qualification regime is applied to certain established operators under which they have a standing consent to purchase land or acquire forestry rights subject to appropriate limitations and reporting criteria," Ducker wrote.