Whose land is it anyway?

By GEOFF CUMMING

In 1999, a New York billionaire was allowed to buy a historic pastoral farm on the Hawkes Bay coast after promising to use it to lure tycoons to invest in New Zealand.

The businessman's application to the Overseas Investment Commission said the coastal property halfway between Napier and Wairoa would be developed for hunting, fishing, kayaking, hiking and mountain-biking "as an ambassador property for high-level business persons".

With its 3km ocean beachfront and sweeping views to Cape Kidnappers, the 640ha farm was reluctantly sold by the Tait family, who had farmed it successfully for generations. But William Tait weighed up his options and took "a good offer at the time" for the isolated block.

Four years on, there's no sign of the lodge planned to house the Long Island resident's rich business acquaintances or the job opportunities "for the Hawkes Bay area". Nor of the promised plantings of zinfandel, a new grape variety which would increase export opportunities.

The businessman, who has restaurant and forestry interests in the United States, has leased the farm to a young New Zealand couple. Another example of foreigners exploiting our "open door" overseas investment regime to grab a slice of paradise? Definitely not, says the man's New Zealand lawyer.

"The intention to build the lodge and plant zinfandel is still there," says the lawyer. "The value that's been added in this case is that he has leased the property to a young Kiwi couple who have the chance to farm it."

The owner, whose grandfather was from Wellington and whose father was a New Zealand citizen, has also undertaken significant native tree planting and done up a cottage.

"He's thrown quite a lot of money at the farm and lots of consultants and contractors in the Hawkes Bay region have enjoyed the fruits."

The trouble is, we can only take the lawyer's word for that because, for some years, the Overseas Investment Commission has not checked to see whether the pledges which led to approval are being carried out.

The commission's limitations in monitoring what happens after purchases were highlighted this week when the Government announced a review of the overseas investment regulations.

Finance Minister Michael Cullen said publicity about Waitai Station, on D'Urville Island in the Marlborough Sounds, which was sold in 1999 to American couple Marc and Ivy Powell, raised concerns about the commission's monitoring capability and the powers it has when purchase conditions are not met.

The Powells' case was reviewed after publicity about disputes with local contractors and their failure to move here. The inquiry deemed the sale still in the national interest because the farming operation, and local economy, had benefited from the millions the Powells have spent on the property.

Cullen linked the review to the public outcry about sales of significant coastal and high country land to foreigners. The sale last year of Young Nick's Head had raised the question of whether specific rules were needed to cover cultural, historical and heritage issues, he told a press conference.

"We value the benefits foreign investors bring in terms of access to markets, technology and ideas. But we also need to ensure that our unique cultural and natural heritage is protected."

Asked whether the Government would classify all coastal land as iconic, Cullen said: "Goodness me, I would doubt that sincerely."

The apparently conflicting aims of the review have been seized on by the Green Party, which wants foreigners barred from buying farms and coastal property.

Co-leader Rod Donald accused Cullen of a giant con job, saying the review was being used as a smokescreen to mask the real agenda of lifting restrictions on overseas investors.

Indeed, the review is more a total overhaul of the overseas investment framework than a tweaking of the regulations to deal with sensitive land purchases.

Among other things, it will consider whether the commission should continue to approve company takeovers - where a foreigner buys more than 25 per cent of a company. It will examine ways to reduce compliance costs and whether the commission should remain part of the Reserve Bank.

"Not a single purchase in relation to companies has been turned down for a number of years," says Cullen, who believes the purchase process can also be simplified for many land transactions.

The review will look at the commission's structure and whether it is adequately equipped to monitor approvals. The commission, which oversees nearly $10 billion a year in investment, has a budget of $800,000 and 6.5 staff.

It is regarded as a rubber stamp for a Government which welcomes foreign money. In the six months to June 30, it approved 101 of 103 applications, 94 involving land.

Under the present regime, land buyers need to convince the commission that the deal is in the national interest and will add value to the property and the economy. Farmland must first be offered for sale on the open market.

In practice, say critics, it's easy for experienced lawyers to tailor applications to fit the broad approval criteria, which include the creation of new jobs, retention of existing jobs, development of new export markets, demonstrated financial commitment or an intention to live here permanently.

Bill Rosenberg of the Campaign Against Foreign Control of Aotearoa, which analyses commission decisions, says applicants routinely promise to build tourist lodges or "plant yet another grape variety which only they are able to sell because of their contacts back home".

"Some of it's true, but you wonder how much of it gets checked up on - whether the lodge actually gets built or if anyone stays in it."

Commission chief executive Stephen Dawe pointedly says the amount of monitoring it does is determined by the Government. It does its best to follow up the hundreds of approvals it grants each year - placing the onus on applicants to report back on progress. If they don't, the commission chases them up.

"People who think the Government won't send anyone to investigate are taking a pretty large risk."

The commission once launched court action against the buyer of a clifftop Takapuna property who failed to develop promised tourist chalets. An out-of-court settlement was reached when the owner handed over some of the property.

It is at present investigating 13 cases, several involving "technical" breaches of a requirement to take up residency within 12 months, which is sometimes a condition of approval.

In one case, the commission wants to know why a tourism venture proposed eight years ago by the German buyer of Pepin Island, north of Nelson, has not happened. Steel magnate Viola Hallman has until the end of the month to respond to 57 questions concerning the purchase, approved on the basis she would build three tourist bungalows for a farmstay resort. The $2 million sale of the 521ha island has angered locals unable to access its beaches without permission.

Sales of Crown leases and freehold blocks in the South Island high country have raised similar complaints from trampers and hunters. The new owner of Glenhope Station, near Hanmer, developing a hunting and safari business, fenced off access to the Magdalene Valley to preserve it for his clients. He now charges for use of the farm road into the valley despite there being a legal road line, says Forest and Bird.

Whether foreigners are more inclined than local buyers to bar access to recreation spots is a moot point. Of more concern to environmentalists is the impact of overseas interest on high-country land values.

Forest and Bird South Island field officer Eugenie Sage says soaring prices make it impossible for Crown agencies such as the Conservation Department to buy land which could be added to the conservation estate. To gain a return on their inflated investments, buyers are increasingly converting the high country to more intensive uses, such as vineyards, forest planting, adventure tourism and lifestyle blocks.

Clearance of tussock and shrublands threatens the open space nature and ecological value of the high country, says Sage.

"The Overseas Investment Commission has had an open-door policy. It's not looking after the conservation interests or the ecological values."

Americans are the biggest foreign buyers of our land and suspicion of their motives has not been eased by comments in the Los Angeles Times.

"The coastline basically feeds animals," Nelson vineyard developer Glenn Schaeffer said. "Well, those animals don't need to look at the ocean as they eat grass. If they could put houses on those cliffs, there are fortunes to be made."

But the issue is far from clearcut - many foreign buyers add value economically and ecologically.

US billionaire Julian Robertson, developer of the Kauri Cliffs golf course in the Far North, faces objections from Maori and conservationists over plans to build a lodge and 24 chalets at the former Summerlee Station at Cape Kidnappers, where he is building another luxury golf course. He has also bought vineyards and Brooksdale Station, at Porters Pass.

At Cape Kidnappers, he aims to create one of the world's top 10 courses, bringing jobs to the area. There's pressure to extend Hawkes Bay Airport to cope with golfing jetsetters.

A letter to Hawkes Bay Today said: "Why ... destroy the very thing that brings people from all over the world, namely the natural, unspoilt countryside?"

Yet Robertson proposes to fence off the bulk of the rest of the property to create the largest privately owned conservation area in the country. The proposal, welcomed by DoC, would see about 10km of coastline fenced off to keep out cats, rats, stoats and possums. Public access to the cape's world-famous gannet colonies would be retained.

Near Whangamata on the Coromandel Peninsula, American purchaser Fred Kingery has added value to an endangered bird and bush enhancement project similarly praised by DoC.

Kingery has planted thousands of pohutukawa on a former farm subdivision and funded bait stations which have decimated the possum population. Locals say he thwarted one landowner's plan to subdivide.

It's a difficult balancing act for a Government conscious of the public backlash, but wary of any move which may be seen as anti-foreign investment.

Even this week's review announcement was misreported in some foreign newspapers as "NZ wants to halt land sales to foreigners." At home, Federated Farmers said the review would scare away investment and force sellers to take a lower price.

According to the commission, just 1.2 per cent of New Zealand's land area, including forests and farmland, was sold to foreigners in the five years to December 31, 2000. Dawe says coastal land sales requiring the commission's approval in the six years ended last year amount to just 0.18 per cent of the coastline. There's a lot of confusion he says, with foreshore sales of less than 0.2ha (half an acre) not subject to commission approval.

In this confused environment, it's questionable how far the review will go to ease public concern about "the foreign land grab".

But Cullen clearly sees scope for change, describing the 1973 act as a blunderbuss which "deals equally with the sale of a major South Island high country property with an Auckland subdivision".

New Zealanders feel strongly about losing ownership of areas like the South Island high country.

"If a small increase in the number of people employed is sufficient reason for the sale of such land, then I think we have to ask questions about whether the act is sufficiently robust in that respect."