The offer by a Chinese company to buy Lochinver station was turned down by the Government largely because the potential buyer was not proposing to invest much more money on the station.

Government sources have told POLITIK that the buyer, Shanghai Pengxin subsidiary, Pure 100 Farm, was proposing to spend only another $3 million extra on the station.

“What’s that – two and half Auckland houses?” said the source.

They were also proposing to create only one temporary part time job along with a number of contracted positions.

Given the size of Lochinver, 13, 843 hectares (more than 30 times the average New Zealand sheep and beef farm) the proposed investment and job creation was paltry.

The Ministers are thought to have compared it unfavourably with the investment in the Crafar farms by the same Chinese company.

The 10 Crafar farms were only a third of the area of Lochinver but Shanghai Pengxin committed to the investment of an additional $14 million in them.

The investment in Lochinver was to convert 600 hectares of scrub land covered in wilding pines into dairy farms.

Given the low per hectare purchase price (just over $600) the scope to convert even more of the station to dairy was obviously there.

Federated Farmers’ views may have also influenced the Government.

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In August last year they questioned the sale.

They noted that amendments to the Overseas Investment Office Act and also recent court decisions meant that any sale of farmland was required to demonstrate a real and identifiable benefit.

”This was to ensure any investment, such as the one being proposed, has benefit over and above just making a farm work better,” said Federated Farmers president, William Rolleston.

”Since Lochinver Station is highly regarded in farming circles, there must be something very special and we are keen to know what it is.”

And that appears to be where Shanghai Pengxin failed. Their small investment and low number of jobs being created didn’t meet the criteria the Ministers were required to consider.

The turn down of the sale, was the first big overseas purchase declined by a New Zealand Government since March 2008 when the Labour Government had to amend legislation to allow them to block a Canadian pension fund from purchasing Auckland International Airport.

And the decision has drawn criticism.

The right-wing New Zealand Initiative said the decision went completely against NZ’s international reputation as a place to do business, but was unfortunately consistent with New Zealand’s poor OECD ranking for openness to foreign investment.
 
“Ministers vetoing the deal cited a lack of economic benefits to New Zealand but ignored the benefits all property owners enjoy when they are free to sell to the highest bidder: the higher price then received.,”  an Initiative spokesman, Bryce Wilkinson said.

New Zealand First asked if Lochinver could be turned down why the Government had approved the sale “of over a million hectares of land to foreigner buyers.

“None of those sales add substantial benefit for New Zealand,” says Deputy Leader Ron Mark. 

“Is this nervous third term government only acting now because their polling shows they are on the slippery slope?”

Even though Associate Finance Minister Paula Bennett maintained the decision to turn the sale down was not political it did over turn a decision of the Overseas Investment Office.

Though they admitted the matter was “finely balanced” they argued that the sale to Shanghai Pengxin should be approved because it would provide benefits under 14 different categories to the country.

Those categories included the creation of jobs, increased export receipts, greater productivity and additional investment for development purposes — all of which the Ministers believed failed the test.

This then raises interesting questions about the Overseas Investment Office and whether it approves farmland purchases applications too easily.