20 July 2004

Tougher protections for sensitive sites

Overseas buyers wanting to buy sites of special heritage or environmental value will be subjected to a tougher screening and compliance regime under changes announced by Finance Minister Michael Cullen today.

The government ordered a review of the Overseas Investment Act last year with a view to providing better protection for sites of special historic, cultural or environmental significance while also encouraging foreign investment where it can make a positive contribution to the New Zealand economy.

Foreign direct investment into New Zealand rose during the 1990s to peak at over 60 per cent of GDP in 1998 but has declined since then to around 40 per cent of GDP at last measure.

“We value the benefits foreign investors bring in terms of access to markets and to new technology and ideas. But we also need to ensure that New Zealand’s unique cultural and natural heritage is protected,” Dr Cullen said.

“The decisions the government has taken, and which will be incorporated into legislation later this year, reflect that balance.”

The key changes are: Overseas applicants wishing to purchase land assets will have to include in the asset management plan attached to their application how they will manage any historic, heritage, conservation or public access factors relevant to the property as well as any economic development planned.

Plans submitted by an overseas investor in support of his/her purchase will be made conditions of consent. To keep costs to the taxpayer down, the onus of compliance will be on the overseas investor. Investors will be required to report regularly [every one or two years] on how they are complying with the terms of their consent and outline any reasons for non-compliance. Monitoring will continue until all obligations have been met.

The Crown will have a new right of first refusal over foreshore and seabed land where this would otherwise be sold into foreign ownership. The threshold for screening non-land business assets where the proposed acquisition entails a 25 per cent or more shareholding will be raised from $50 million to $100 million. It was last adjusted in 1999 when it was increased from $10 million to $50 million. [The last time a business application not involving land was turned down was by Sir Robert Muldoon in 1984.]

Purchases involving land with an unimproved value of more than $10 million will no longer require consent where the land is not screened for other reasons. [As the $10 million applies to land value alone and as any rural land sales over 5 hectares will continue to require consent, this provision is expected to affect only purchases within the main centre CBDs.] Land adjoining some non-sensitive reserves, for example drainage and hospital reserves, will be removed from the purview of the Overseas Investment Act.

Special properties include the foreshore and seabed, fishing quota and all sites over 0.4 hectares which are subject to a heritage order; registered or proposed for registration under the Historic Places Act or; classified as an historic, scenic, scientific or nature reserve and administered by the Department of Conservation under the Reserves Act.

“The Overseas Investment Commission will be disestablished and its regulatory functions performed by a dedicated unit within Land Information New Zealand. The OIC structure is curious. It is an independent organisation situated within the Reserve Bank and has a four person board but only nine staff.

“All OIC personnel will be offered the opportunity to transfer to the new unit,” Dr Cullen said.

“The government’s aim when we embarked on this exercise was to give stronger recognition to New Zealand’s natural and historic heritage while also recognising the tangible benefits which flow from foreign investment.

“I am confident that the changes we are announcing today will achieve both those objectives,” Dr Cullen said.

ENDS

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