The Government is to put the approval of overseas purchases of farmland on hold as it gets advice from officials on how to carry out its coalition agreement with NZ First to strengthen the Overseas Investment Act.
The hold is likely to affect tens of millions of dollars of property sales and possibly hundreds of millions of dollars worth of business transactions.
POLITIK understands that the sale of one large South Island property and the potential sale of an iconic Wanaka station along with two large North Island dairy properties are likely to be caught up in the move.
It was not clear from the comments from Prime Minister Jacinda Ardern yesterday whether the hold will also apply to overseas business investments – but if that is the case, there are proposed takeovers in both the oil and gas and private hospital sectors that could be affected.
Ardern said the review of the Act to accommodate the ban on the sale of existing urban houses to foreigners was proceeding urgently because of the need to have it in place before the Comprehensive Progressive Trans Pacific Partnership Agreement (CPTPP) comes into force.
That is expected to be early next year.
Asked at her weekly post-Cabinet Press Conference if it was her intention to suspend existing applications, Ardern said the Government had a few options.
“One is legislative means, and we are working on that as we speak and as you will know we’ve got a time frame we need to work on based on the potential ratification of the (CP)TPP,” she said.
“In the interim, there are other tools that can be used to give an indicative direction of travel.
“We are taking advice and making decisions on that as we speak.”
She said the Government was aware of applications that were in train.
Asked if the Government would “pull the rug out” from those she said: “As I have said, we are taking advice on that.”
Under the coalition agreement with NZ First, the Government is committed to strengthen the Overseas Investment Act and undertake a comprehensive register of foreign-owned land and housing.
NZ First have been particularly critical of overseas farm sales.
Their Southland list MP, Mark Patterson spoke on the subject in his maiden speech last Tuesday.
“I salute this Government’s commitment to eliminating foreign speculators from our housing market, and I look forward to this being extended to the sale of farmland,” he said.
“Historically, New Zealand is the only predominantly agrarian economy to have achieved and maintained First World status.
“The foundation stone on which this sits is the family farm.
“We must strive to keep the pathway open for young New Zealanders to pick up a handpiece and put on a set of cups and still be able to work their way into the pinnacle that is farm ownership.
“ I see no value in inflating the value of farmland beyond its productive value by way of having it for sale on the international market.”
Patterson has been particularly opposed to the sale of the 1400 Te Anau Jericho station to a Chinese buyer for $8.7 million when a local Southlander had bid $8.5 million.
He told POLITIK last night there was now an expectation in NZ First that the sale to the Chinese buyer would not go ahead.
During the election campaign, NZ First Leader, Winston Peters said New Zealanders were alarmed at the huge amount of valuable farm land being “flogged off” to foreign buyers under National.
He was particularly critical that the sale of Jericho was being made by its owner, the state-owned enterprise, Landcorp.
“Post-election, New Zealand First will commission an inquiry into all state-owned asset sales,” he said.
Ironically, or perhaps intentionally, he is now Minister of State Owned Enterprises.
But Labour has also long . been critical of foreign farm sales and Environment Minister, David Parker, has been one of the most critical.
He was particularly critical of the decision earlier this year to allow an American TV star to buy the Hunter Valley Station at Lake Hawea with the Overseas Investment Office ignoring the requests of the local Council and organisations like The Deerstalkers and Fish and Game Council to allow access across the station to access a conservation area popular with hunters at the head of the lake.
A hint of the direction that the new Government might go could be in a 2012 Private Members’ Bill promoted by then-Labour Leader, David Shearer.
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 the discretion to turn down farm sales to overseas buyers, but it is not properly exercised.,” said Shearer at the time
“ 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.”
There are other issues in this debate such as the scrutiny of approved sales after the sale has gone through to see whether the overseas buyer honours the commitments they have made.
In a statement to the Federated Mountian Clubs before the election, Labour said: “for any overseas purchase, Labour will insist that public access commitments are honoured.”
Meanwhile, there are other big sales currently underway.
Lake McKay Sation, a 6637 hectare Wanaka property described as a “spectacular high country property boasting scale, stunning views and a prime location” is currently being promoted for sale internationally with tenders closing at the end of the month.
Any bids for this from overseas would presumably be caught up in the current freeze — and given the publicity, any purchaser is likely to get, the chance of this property being sold off shore would now seem slim.