Prime Minister John Key is downplaying comments from Land Information Minister Maurice Williamson that opponents to land sales to foreigners were sometimes being racist, saying it was a case of humour backfiring.

In a speech to the small-business conference at Massey University yesterday Mr Williamson suggested the opposition to foreign ownership was often linked to the ethnicity of the foreigner.

But Mr Key, who has voiced concerns about foreign ownership and said he did not want New Zealanders to become tenants in their own country, said Mr Williamson was probably being flippant.

"Maurice is known for his strong sense of humour and I think it was on display yesterday," he told media in Auckland today.

"Sometimes humour can backfire a little bit and I think this is an example of that, but as a general rule everyone knows that Maurice has got a strong sense of humour and they accept it comes with the minister in question."

Mr Key said he thought Mr Williamson was making a point about the variety of reasons why people might resist foreign investment, but reaffirmed his view that New Zealanders needed to be careful around foreign investment.

"There are certain aspects where it can play an important role in delivering economic growth, but as I've said on numerous occasions recently, I don't think the wholesale selling of productive land to foreigners is in our best interest, irrelevant of whatever country they come from."

Labour leader Phil Goff said Mr Williamson's comments were "way off mark".

"This isn't about racism, it's about owning our own future. It's about keeping New Zealand in New Zealand hands.

"Kiwis give everyone a fair go, but when it comes to selling off our most productive land, we should keep it in Kiwi hands.

"That's not racist, it's about owning our future."

Green Party co-leader Russel Norman said Mr Williamson's reasoning had effectively labelled Mr Key as racist.

But Mr Key was echoing the concerns of many New Zealanders and was not being racist, Dr Norman said.

"New Zealand should not be selling off our best assets to Chinese, American or Australian investors.

"It's time ministers within the Key Government dealt with the valid economic concerns of New Zealanders on this issue without accusing those opposed to New Zealand selling its assets into overseas ownership of being racist."

Debate over foreign ownership has been heated since Chinese interest in buying Crafar Farms.

Hong Kong-based company Natural Dairy is bidding to buy 16 Crafar farms being sold by receivers.

The 13 dairy farms and three drystock grazing properties cover nearly 8000 hectares in the central and western North Island.

They have been in receivership since last October.

A review of the Overseas Investment Act is also under way.

- NZPA