Complex regime tough for OIO: lawyer

The bid for Auckland International Airport was blocked despite the OIO indicating it offered substantial and identifiable benefits. Photo / Supplied

The Overseas Investment Office does a good job in dealing with a regime that is unduly complicated, says David Boswell, partner corporate and commercial in Auckland at law firm Bell Gully.

"I think it's too time consuming, especially if the application has to go to the minister for approval and it's also very expensive," Boswell says.

The Government has improved the situation by delegating more authority to the Overseas Investment Office to make some decisions, helping speed up the process and by issuing a new directive letter setting down their policy, he says.

Striking the balance between encouraging investment and protecting sensitive assets is a political judgment, Boswell says.

"I think in relation to something like farm land, something that really goes to the heart of the New Zealand economy and culture, people have to understand that with the current regime ... it is open to overseas people who satisfy the relevant criteria to buy farm land."

In Australia overseas investors cannot buy residential houses, he says.

"In New Zealand if somebody wanted to say we don't want overseas people owning our farms you could argue, well the Aussies do it for housing, they see that's of fundamental importance why wouldn't we have that for farming. I'm not saying that should be the case but I can see an argument being put forward like that."

In April 2008 senior Labour Cabinet ministers vetoed a Canada Pension Plan Investment Board bid for 40 per cent of Auckland International Airport because they were not satisfied it would benefit New Zealand, despite a recommendation from Overseas Investment Office officials indicating it offered substantial and identifiable benefits.

"When you look at the decision that was made on the Auckland International Airport ... something like that for all I know could put someone off who's looking at making a very big investment here in a potentially sensitive area at that level," he says.

"But for less sensitive applications ... I would have thought they would try to proceed with the investment and show that they meet the criteria."

OVERSEAS INVESTMENT ACT 2005

WHAT IS IT?
* Protects land of particular significance or importance.
* Encourages foreign investment that contributes to the economy.

WHO MUST APPLY?
* Overseas investors or associates wanting to buy significant non-land business assets for more than $100 million, sensitive land or fishing quota.
* Non-urban land of 5ha or more is deemed sensitive.
* New Zealand incorporated companies if 25 per cent or more is owned or controlled from abroad.

HOW DO YOU PASS?
* Applicants must satisfy criteria, including relevant business experience, financial commitment to the investment and good character.
* Consent to buy sensitive land will only be granted if the transaction is likely to benefit New Zealand.
* Some land has additional criteria - farm land must be advertised for at least 20 working days.

WHO DECIDES?
* Under the act the Ministers of Finance and Land Information must decide all sensitive land applications.
* Ministers can delegate decision-making, with the Overseas Investment Office deciding about 75 per cent of applications.
* For sensitive land ministers take 19 factors into account, including environmental and economic, when deciding if it is likely to benefit New Zealand.

HOW LONG DOES IT TAKE?
* The Overseas Investment Office aims to make decisions on high quality, straightforward applications within 50 working days of registration.

WHAT ARE THE PENALTIES?
* Ranging from $100,000 for not providing information to $300,000 for not obtaining required consent or trying to evade the act.