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New directive for the Overseas Investment Office announced

Hon David Parker

Associate Minister of Finance

Hon Eugenie Sage

Minister for Land Information

29 November 2017 MEDIA STATEMENT
New directive for the Overseas Investment Office announced

Associate Finance Minister David Parker and Minister for Land Information Eugenie Sage, have announced today the strengthening of New Zealand’s overseas investment regime, by issuing a new Directive Letter to the Overseas Investment Office.

The Directive Letter sets out the Government’s policy approach to overseas investment in rural land. The directive does not change the rules regarding acquisitions of significant business assets.

“The existing directive is too loose,” says Mr Parker. “It only applied to very large farms more than 10 times the average farm size.

“In practice this meant restrictions in sales generally applied to sheep and beef farms over 7,146 ha or a dairy farm more than 1,987ha.

“This new directive tightens how we assess overseas investment in New Zealand to ensure authorised purchases provide genuine benefits.

“Too often we see investors buy a New Zealand farm, and then use existing systems, technology and management practices which don’t substantially add anything new, or create additional value to our economy.

“We want to make it clear that it is a privilege to own or control New Zealand’s sensitive assets, and this privilege must be earned. We campaigned on these changes and they won’t come as a surprise to potential investors,” says Mr Parker

“Today’s announcement raises the bar for overseas investments in sensitive land by replacing the existing large farm directive, with a new and much broader, rural land directive which applies to all rural land larger than 5 hectares other than forestry,” says Ms Sage. “The large farm directive previously only applied to very large farms.”

“This directive acknowledges the importance of jobs, new technology and business skills, increased exports, processing of primary products and oversight and participation of New Zealanders,” says Ms Sage.

The new Directive Letter will come into force on 15 December 2017. All applications which are being assessed by the OIO at, and from, this date will be subject to the new directive letter.

Applications which have not been determined by 15 December, will be given a fair opportunity to make additional submissions under the new approach. The Overseas Investment Office continues to accept and process applications, and both Ministers and the OIO are making decisions on applications.

“This Directive Letter is the first step to strengthening the overseas investment regime,” says Mr Parker.

“We will be introducing legislation to ban foreign buyers of New Zealand’s existing houses before Christmas and other work to strengthen the Overseas Investment Act is underway.”

“The Government wants to see an increase in value added processing in the forestry sector and Minister Shane Jones will be making a separate announcement on this,” he says.

Questions and Answers

1) What does the new Directive Letter do?

The new directive letter:

• Sets out this Government’s policy towards overseas investment;

• Introduces a new rural land directive which raises the bar for overseas investments in rural land;

• Introduces a new forest land directive that encourages domestic processing;

• Reduces the importance of donations;

• Sets the expectation that overseas investors claiming that they intend to move to New Zealand will be subject to conditions that they do so within 12 months (rather than the current 5 years).

The directive letter does not change the criteria for consent. That can only be done by amending the Act.

2) Why are you changing the directive letter? What was wrong with the old one?

The new letter is needed to outline the types of benefits that this Government expects from overseas investment in New Zealand’s sensitive rural land and forest land.

3) Will the letter impact overseas acquisitions of New Zealand business assets?

The letter will not generally change how acquisitions of significant business assets are considered by the Overseas Investment Office, unless the acquisition involves sensitive rural or forest land.

4) Why haven’t the environmental factors been given high relative importance?

As noted in the letter, the Government welcomes high quality overseas investment that is environmentally sustainable, minimises adverse impacts on the natural environment, and is likely to create positive and long lasting environmental benefits. I expect the Overseas Investment Office will elevate environmental benefit factors for appropriate investments.

5) Why will forest land applications be treated differently to rural land applications?

Overseas investment has an important and significant role in the forestry sector, which is reflected in the direction to the Overseas Investment Office about applications to invest in forest land. The letter emphasises that overseas persons investing in New Zealand’s forest land should support New Zealand wood processing and manufacturing, which will also support regional communities.

6) How will the letter apply to existing applications being considered by the Overseas Investment Office?

The new Directive Letter will come into force on 15 December 2017 and apply to all applications being assessed by the OIO at that date, and any new applications received after 15 December. The mid-December date is intended to enable an orderly transition to be made. The Overseas Investment Office will contact affected applicants so they have a fair opportunity to make additional submissions under the new approach. I expect the Overseas Investment Office to give guidance to minimise any cost to existing applicants.


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