The Government is considering a developing a national interest test in the next phase of its shake up to New Zealand's overseas investment rules.

The Government this morning launched public consultation on the second phase of its Overseas Investment Act reforms.

Associate Finance Minister David Parker said the reforms are aimed at cutting red tape and giving decision-makers the ability to consider the broader impact on New Zealand of potential investments.

"We're looking at where we draw the line as to what constitutes a New Zealand owned or controlled company, and what information the Government should request from investors to ensure they are of good character," he said.

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"The options also look at how decision-makers could consider the broader effects of an investment, including whether to introduce a national interest test and whether there should be greater ability to consider national security, water, and Māori cultural values when assessing the impact of an investment."

The consultation launched today follows changes made in late 2018, which banned purchases of residential property by overseas persons and simplified forestry investments.

Parker said this second round of reforms is focused on reducing the Act's complexity, to better support high-quality overseas investment.

It would also ensure investments are in the national interest, Parker said.

"The Government recognises that overseas investment is an important issue and we want to encourage feedback on the options.

"To grow our economy and lift productivity we need investment – both by New Zealanders and by overseas investors. We know there is scope to simplify our overseas investment rules to ensure that New Zealand remains an attractive destination for productive investment."

The Treasury will hold a series of public meetings throughout the country, including meetings with iwi and professional groups regularly involved in overseas investment.