New law to restrict rural land sales to foreign buyers
11 March 2012 MEDIA STATEMENT
New law to restrict rural land sales to foreign buyers
(Copy of Bill below, including detailed explanatory note)
Labour Leader David Shearer has today released a new Member’s Bill to prevent foreign investors from buying rural land unless they can prove it will bring substantial benefits to New Zealand that would otherwise not occur.
“A clean, clever and job-rich future is not going to be achieved by selling off our productive assets. Kiwis are overwhelmingly opposed to the sale of prime rural land, like the Crafar farms, to overseas investors. We are listening to them and are prepared to act in their best interests.
The Overseas Investment (Owning Our Own Rural Land) Amendment Bill would substantially limit the discretion of the Minister to consent to the sale of rural land to overseas buyers.
It would require the Minister to be satisfied that the overseas investment would result in the creation of a substantial number of additional jobs in New Zealand or a substantial increase in exports from new technology or products associated with the purchase.
“The Government already has discretion to turn down farm sales to overseas buyers but it is not being properly exercised. We would be happy for them to take up this Bill as their own and progress it through Parliament as soon as possible to ensure there is no longer any doubt about the limits on the overseas purchase of rural land.
“We cannot afford to lose control of our best income-producing assets and become tenants in our own land. Selling our farmland to foreign buyers does not improve our economy. Instead the profits simply flow offshore. We also do not want to see New Zealand farms priced out of the reach of Kiwi farmers who are the best in the world at what they do.
“All of our economic decisions should be made in the best interests of New Zealanders. Cutting jobs and services and selling our assets is not the way to secure a better future,” said David Shearer.
Leader will give a speech later this week outlining his
vision for transforming New Zealand and building a strong
economy that is creative, clever and gives all Kiwis the
opportunity to succeed in life.
Overseas Investment (Owning our own Rural Land) Amendment Bill
This Bill amends the Overseas Investment Act 2005 to limit the discretion of the Minister to consent to the sale of rural land to foreign buyers.
New Zealand cannot sell its way to a brighter future.
The discretion to turn down farm sales to overseas persons is already very wide, but has not been properly exercised by the current government.
The New Zealand Labour Party believes New Zealanders’ widespread concerns about farm sales to foreign buyers are valid, and that the discretion of the Minister to approve sales should be tightened.
New Zealanders have a natural desire to control our own country for the benefit of New Zealanders.
A major part of our current account deficit is already comprised of interest and dividends paid to overseas investors. New Zealand’s poor savings record means we are reliant on imported capital to fund our current account deficit. Most of this comes via increased lending to home owners, but our deficit is used by some as a misplaced justification for the sale of our productive assets to overseas buyers.
We need to take care not to lose ownership of our farmland by allowing New Zealanders to be outbid by foreign buyers. We cannot afford to lose control of our best income producing assets and become tenants in our own land.
New Zealanders are already good farmers. Overseas owners do not usually increase farm output by any more than a New Zealand purchaser would. Our processors and exporters are also very capable. More often than not foreign purchasers use New Zealand farmers and existing New Zealand processors. International trade, including our free trade agreements, give us access to overseas markets without selling our land.
The New Zealand Labour Party does not believe selling our farm land to foreign buyers improves our economy.
economic outcomes are important, they are not the only
Social structures – including social mobility and New Zealanders’ ability to own our own assets – are fundamentally important to Labour too.
Zealand farms should not be priced out of the reach of New
Zealanders. Asset prices inflated beyond the means of New
Zealanders undermine social mobility,
and lead to concentrations of wealth amongst a smaller number. Unless we change our ways our farm will be increasingly owned by foreigners and those fortunate to be born into wealthy families – the 1% not the 99%. The prospects of a sharemilker becoming a land owner are diminishing. Labour thinks this is wrong.
Other non-economic consequences include the loss of our traditional attitudes to allowing reasonable access across rural land to our beaches, lakes and rivers.
Globalisation is averaging the price of many goods and services around the world. While prices of consumer goods and some related wages may be converging in different parts of the industrial and industrialising world, asset inequality is increasing.
Trade imbalances are high, with countries like New Zealand running long-term current account deficits while rapidly emerging economies are running very large cash surpluses.
The concentrations of
wealth, even in countries far less wealthy than New
together with state control of the savings from trade surpluses in some countries, mean that there are many overseas entities able to outbid New Zealanders for our assets.
Liquidity constraints since the global financial crisis and the higher relative cost of funds in New Zealand increasingly constrain the ability of New Zealanders to buy our own farmland if our land assets are priced on an international rather than New Zealand market.
Since the global financial crisis a pattern has emerged internationally. Those with large trade surpluses or concentrations of wealth are investing unprecedented amounts in primary resources like land, water, and minerals, and their related supply chains.
The long term solutions for New Zealand are complex and interlinked. We need to increase our exports and savings, so that we stop spending more on imports, interest to overseas lenders and profits to foreign owners than we earn. To do this we need changes to tax, savings and monetary policy.
Losing the ownership and future profits from of our farmland, by allowing New Zealanders to be outbid by foreign buyers, is no part of the solution.
Clause by clause analysis
Clause 1 is the title clause.
Clause 2 provides for the Bill to come into
force on the day after the date on which it receives the
Clause 3 states that the Overseas Investment Act 2005 is the principal Act.
Clause 4 states that the purpose of the bill is to substantially limit the discretion of the Minister to consent to the sale of rural land more than 5ha in area to overseas persons.
Clause 5 repeals section 14(1)(c)
of the principal Act.
Clause 6 amends section 16 of the principal Act to limit the discretion of the Ministers to consent to rural land sales to foreigners.
Clause 7 amends section 17 of the
principal Act to ensure only rural land sales bringing
substantial new jobs or new exports from new technology or
new products can be approved.
Overseas Investment (Owning our Own Rural Land) Amendment Bill
The Parliament of New Zealand enacts as follows:
This Act is the Overseas Investment (Owning our own Infrastructure) Amendment Act 2010.
This Act comes into force on the day after the date on which it receives the Royal Assent.
3 Principal Act
This Act amends the Overseas Investment Act 2005.
The purpose of this Act is to substantially limit the discretion of the Minister to consent to the sale of rural land to overseas persons.
5 Repeal of section 14(1)(c) of the principal Act
Section 14(1)(c) of the principal Act is repealed.
6. Amendment of section 16 of the principal Act
Section 16(1)(e)(iii) of the principal Act is amended by replacing the words:
“the relevant Ministers determine that that benefit will be, or is likely to be, substantial and identifiable”
with the following words:
relevant Ministers determine that under the principles set
out in section 17 that benefit will be:
(A) substantial and identifiable, and
(B) would not be likely to otherwise occur.”
7 Repeal and replacement of section 17 to insert new principles that bind the Minister in determining whether the substantial benefit test is met.
Section 17 of the principal Act is repealed and replaced with the following words:
(1) The Minister must be satisfied the overseas investment will result in:
(a) the creation of a substantial number of additional jobs in New Zealand through the introduction of new technology or new products; or
(b) a substantial increase in exports from new technology or new products that will be produced on the land or from the processing of that and other produce.
(2) The Minister must be satisfied that the additional jobs or increase in exports will be additional to what would be likely to occur if a New Zealander purchased the land instead.
(3) For the avoidance of doubt, a minor change to an existing technology or existing product type will not satisfy section 17(1).
(4) For the avoidance of doubt, an increase in the volume of existing exports will not satisfy section 17(1).