John Armstrong: Stage set for veto of Crafar bid

Photo / Christine Cornege

Where to now for Natural Dairy Holdings, the Hong Kong company seeking Overseas Investment Office approval to buy the Crafar family farms?

Should the OIO approve the application, its decision will be placed in front of Land Information Minister Maurice Williamson and Conservation Minister Kate Wilkinson for the final yea or nay.

Following the tightening of rules on the sale of farm land to foreign nationals foreshadowed by Bill English yesterday, it now seems inconceivable that those ministers could do anything else but veto the Natural Dairy application.

Not to do so would make a nonsense of the rationale for giving ministers more flexibility to say "no" to sales of sensitive land - especially as the new policy was driven by Natural Dairy's bid for the Crafar farms in the first place. The Government would surely cop a huge backlash for what would be seen as a total mishandling of the matter.

True, the new criteria - which include a wide-ranging "economic interests" factor - do not come into force until December. They thus theoretically do not affect Natural Dairy's application, which was lodged back in July.

The new criteria, however, are the direct result of the deep unhappiness of many voters at the prospect of the 20 central and lower North Island farms not only falling into foreign hands, but Chinese interests in particular.

No doubt Williamson and Wilkinson will stress their decision will be made strictly in terms of the criteria currently laid down in the Overseas Investment Act.

However, it would defy political logic for the application - at least in its present form - not to be vetoed, given the new policy has been driven by the political sensitivities surrounding the "aggregation" of New Zealand farm land by foreign interests and increasing overseas control of the production, processing and distribution of dairy goods, all of which are crystallised in the Natural Dairy bid.

As it is, yesterday's announcement is a classic example of the current Government's sticking-plaster approach to dealing with political troublespots, in this case by hurriedly changing regulations rather than overhauling the Overseas Investment Act itself.

The policy is pragmatism with a capital "P". English may have been the one announcing it, but the Prime Minister's imprimatur is stamped across it.

English argues the new rules will give greater clarity to overseas investors wanting to buy sensitive land. He points to a yet-to-be-written ministerial directive to the Overseas Investment Office which will spell out the Government's stance in more detail. Without seeing the exact wording of the directive, it is difficult to be definitive about the impact of the new criteria.

For the time being, clarity has come second to giving ministers more leeway to say "no". What is clear is that policy is a major shift on National's part. When he announced a review of the overseas investment regime around 18 months ago, English stipulated the screening regime "not unnecessarily deter or prevent initial and ongoing foreign investment".

The review's terms of reference also decreed "the scope of land defined as sensitive under the act ... be refined to ensure that only land of particular significance or importance to New Zealand is screened".

Politics has since made a rude intrusion into that purist vision. National is still holding out the "welcome" sign to foreign investors. But they will surely be reading the fine print more carefully in New Zealand's case from here on.