Labour has made a dramatic turnaround on its foreign investment policy, and now says it will turn down big land sales to overseas buyers except in exceptional circumstances.

Party leader Phil Goff said yesterday a Labour government would welcome foreign investment, but it would have strict controls on it and strings attached.

"Labour will reverse the current approach to overseas sales of land," he said at the party's annual conference in Auckland.

"Instead of the overwhelming majority of farm sales being approved, the overwhelming majority will be declined."

They would be rejected unless the overseas buyer of farm or forestry land also invested in significant further processing of primary products and brought new technology into New Zealand.

"They're not going to just cut down trees and ship them offshore," he said.

The rules - affecting tracts of land bigger than 5ha - would also apply to Australian buyers of farm and forestry land, a move which could have serious implications for the Closer Economic Relations agreement and the reciprocal rights of New Zealanders to buy in Australia.

The last Labour Government and the present National Government have approved most foreign applications to buy New Zealand land.

During its nine years in power, Labour allowed 650,000ha to be sold; in 20 months National has approved the sale of 31,000ha.

Mr Goff said a Labour Government would force would-be buyers of rural land "to invest in New Zealand and our people by bringing jobs, transferring technology, increasing exports or bringing other benefits ..."

He said he had spent many years as Foreign Minister and Trade Minister, "and no country I can think of would find the rules I am proposing unusual".

Labour would also bar overseas purchases of more than a 25 per cent share in monopoly infrastructure where the interest was worth $10 million or more.

To remove uncertainty it has listed the assets involved - including airports, ports, hospitals, schools, electricity line companies, water storage or reticulation networks, and stormwater or sewage disposal networks.

Mr Goff indicated that Labour would maintain its policy of no sales of state assets.

And it would introduce a general ministerial discretion covering all assets worth more than $100 million not covered by the new farmland or monopoly infrastructure rules.

"Access to foreign capital is important for New Zealand and Labour will encourage other forms of direct foreign investment," he said.