Foreign-investment change in limbo

Bill English. Photo / Marty Melville

Public concern around the sale of farmland to overseas interests means the review of foreign investment rules is now unlikely to deliver much of the gains originally hoped for, Finance Minister Bill English has acknowledged.

In launching the review last year, Mr English said the intention was to encourage more foreign investment by giving overseas interests more certainty as to what assets they would be allowed to acquire under the act.

The review had been widely expected to result in a more liberal foreign investment regime and was seen as a reaction to the former Labour Government's last-minute blocking of a Canadian investment fund's partial bid for Auckland International Airport.

However, Mr English has indicated that the review would not create as much certainty as he expected, but foreign investors had told him that was not a big problem.

"They know that overseas investment always has a political tinge to it, that at different times Governments and the general public are going to take views about it if they think there is too much of it or it's in the wrong sort of assets or it represents some kind of threat. So I think they're fairly pragmatic and I don't think we need to be driven by the need for absolute certainty for the applicant."

The review of the Overseas Investment Act, originally scheduled to take six months, has now ground on for 15 months.

Prime Minister John Key recently indicated its recommendations would be released within days.

But Mr English last week refused to say when the review's findings would be made public and acknowledged it had been delayed by rising concerns about large-scale foreign interest in New Zealand farmland, sparked by Hong Kong company Natural Dairy NZ's bid for the Crafar farms.

Green Party co-leader Russel Norman said that while the intent of the review had clearly been to loosen foreign investment controls, Mr English's comments indicated that would now not happen.

"He certainly seems to have stepped well away from weakening them ... but the pressure on him is to strengthen them."