Forestry cutting rights to be added to overseas investment regime ahead of CPTPP signing
By Rebecca Howard
March 7 (BusinessDesk) - The government is adding forestry rights to the Overseas Investment Act screening regime ahead of this week's signing of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership in Chile, preserving its right to legislate on the issue using the same carve-out as residential property.
Ministers are finalising the details and it will then be referred to a select committee with a short period for public consideration, Associate Finance Minister David Parker said in a statement. Adding a new asset class to the regime can only be done through legislation, and Parliament's finance and expenditure committee is currently assessing an amendment to include residential property.
Parker heads to Chile this week to sign the CPTPP - a trade and investment pact involving 11 countries across the Pacific - and "making this change now will preserve policy options for future governments in relation to forests,” he said.
“Not making this change would mean future governments could not screen overseas purchases of our forests because there is little difference in effect between a long-term lease and a long-term forestry registration right. Both confer effective control of the forest and land.”
Parker said overseas investors will only be able to purchase up to 1,000 hectares of forestry rights per annum, or any forestry right of less than three years duration, without approval. Forestry rights do not involve the sale of the land but the right to grow and harvest the crop.
Together with a decision to ban the sale of existing residential homes to foreign buyers, the government has also sought to increase its scrutiny on foreign buyers of rural and forestry land.
In November it issued a new Directive Letter to the Overseas Investment Office that emphasised the forestry sector has the potential to add "significant value" to the overall economy and environment. In particular, it aims to encourage an increase in the value-added processing of raw products and the advancement of its forestry-related strategies.
Parker said changes approved by Cabinet mean a new streamlined approval path will be opened for overseas investors buying forestry rights that will make it easier to gain approval.
A standing consent system will also be developed, so quality forestry investors can make purchases of forestry land and rights without needing to seek prior approval of each individual transaction. This new streamlined approval path will also be available for investments in leasehold and freehold forestry land, which are already screened.
"It is important to note that Māori hold a large percentage of forestry interests in New Zealand. It is not anticipated that this change will prejudice interests that iwi have secured through the settlement process or fundamentally change the rights and interests of Māori in relation to their lands," Parker said.