Investment rules full of holes: critics

Green Party co-leaders Russel Norman and Metiria Turei. Photo / APN

The Government's plan for rule changes on the sale of large tracts of farmland to foreign investors is too vague, too weak, and prone to political pressure, say economic nationalists Save The Farms and The Green Party.

Finance Minister Bill English yesterday unveiled the results of a long-awaited review of overseas investment rules originally intended to simplify the regime for investors, but which was delayed for months due to growing public unease around Hong Kong company Natural Dairy's bid for the Crafar dairy empire and other big farm sales to foreigners.

Mr English said the Government had decided against changing the Overseas Investment Act but had instead introduced "extra flexibility" to consider a wider range of issues including large-scale farm sales.

Under the revised regulatory framework announced yesterday, ministers with the final say will have the ability to veto proposed transactions if they don't safeguard New Zealand's economic interests. However, Mr English said proposals are likely to be regarded more favourably if they provide opportunities for local participation such as the appointment of New Zealand directors.

The detail on how ministers will consider applications will be set out in a letter to the Overseas Investment Office in November. The letter would draw attention to the Government's concerns about "the undue aggregation of farmland" and large scale vertical integration - or control of production from pasture to supermarket shelf - by foreign investors.

But Gary Boulag, spokesman for Save the Farms - which kicks off an advertising campaign to further fuel public debate on the farm sales issue - said his group's concerns were not addressed by the announcement.

'I don't see that it's such a radical change. The minister talks mostly about the problems surrounding large tracts of farmland, we're concerned about all sensitive farmland being sold."

Mr Boulag said there was not enough clarity around the rules which appeared to allow the Government to deal with applications "with some political expediency by way of veto".

Greens co-leader Russel Norman also criticised the new framework as being overly political.

"On each parcel of farmland that goes up to be sold, if we mount a political campaign to draw enough attention to it then it might get turned down. But if it slips through under the radar like the 150,000 hectares over the last five years, then it will just go through."

The Greens favoured a "simple clear" regime that disallowed overseas ownership of more than 5ha of farmland.

Labour leader Phil Goff, who admitted he was "uncomfortable" with the extent of farm sales under the previous Labour Government, labelled the new regime "a half-hearted effort" that would do nothing to discourage the increasing foreign ownership of New Zealand farms. Labour would unveil its "clearer and stronger" policy on the issue "in the quite near future".

A TV3 poll last month suggested three-quarters of New Zealanders wanted tighter controls on foreign ownership of farmland, but Mr English said the Government had realised that simplifying the Overseas Investment Act would reduce protections.

Given the public fears, the Government decided "to take the opportunity to make a number of changes to regulation".

However, the new rules will not take effect until December and will affect Natural Dairy's bid for the Crafar farms which was intended to be the first step in a $1.5 billion vertically integrated dairy business.

Mr English said the Government had also been swayed by potential foreign purchase of large land holdings likely to come on to the market in the next few years "not least of which could have been the South Canterbury Finance related holdings".