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Foreign investment in Aotearoa/New Zealand
Overseas Investment Office - October 2023 Decisions
Labour's Last Hurrah
October 2023 was election month and a highly unusual one in the annals of the OIO. To quote from its monthly newsletter: "In October, Ministers worked through a large number of Decisions to help minimise any potential backlog created by the General Election. As a result, we are publishing 27 Decisions including 12 Ministerial Decisions". 27 is a very high number of Decisions in one month, nearly double the usual maximum. And Ministerial involvement in 12 of those is very unusual. This is not standard procedure for the month in which the election is held. By contrast, in October 2020, when the previous election was held, the OIO processed ten Decisions.
The OIO says: Even more unusually, four applications were declined, all by Ministers (specifically, the Minister for Land Information and the Associate Minister of Finance). In all four cases the identical reason was given for declining: "Consent was declined as Ministers were ultimately not satisfied that the likely benefit was proportionate to the sensitivity of the land and the nature of the overseas investment".
Two of the declined applications involved ERI Timber New Zealand S.á.r.l. (Germany 100%). To quote the OIO: "The Applicant is ultimately owned by a German pension fund which represents employees and firms from the German construction sector. The Applicant is a new investor into New Zealand and has a mandate to invest in New Zealand forestry". It applied to buy "a freehold interest in approximately 1,313 ha of land in the Hawke's Bay region" and "a freehold interest in approximately 500 hectares of land in Hawke's Bay". In both cases the identity of the vendors was suppressed, as were the prices offered. Both cases involved proposals to convert farmland to plantation forestry.
The third declined application was from Salm-Salm Timber Luxembourg S.à.r.l. (Germany 88%, Luxembourg 12%). "The Applicant is a forestry investor ultimately owned by German investment fund, Salm Global Timber GmBH". It wanted to buy "approximately 1100 hectares of Land in Hawke's Bay... The Applicant intended to convert the Land to production forestry by planting approximately 622 hectares of radiata pine trees". The identity of the vendor and the price offered were suppressed.
The fourth declined application was from NZ Forestry Partnership LP (United Kingdom 100%). "The Applicant is a recent new investor in New Zealand, ultimately owned by a United Kingdom family", which wanted to buy "a freehold interest in approximately 700ha of land in Otago... The Applicant intended to convert the Land to production forestry by planting approximately 524 hectares of radiata pine trees". Once again, the identity of the vendor was suppressed but this time the price offered was disclosed - $9 million.
Applications Being Declined Are Very Rare
I highlighted another declined application in August 2023. As I wrote then: "OIO statistics show that only 31 applications to purchase sensitive land have been declined since October 2018 (when the rules changed) until June 2023". So, this Ministerial decision really is a rarity. And likely to become non-existent with the change of Government. Act intends to revert to the good old days, vis a vis the foreign investment regime. It got this in its Coalition Agreement with National:
"'Amend the Overseas Investment Act 2005 to limit ministerial decision making to national security concerns and make such decision making more-timely'. Currently two Ministers or Associate Ministers sign off on decisions but this will put virtually all OIO Decisions back into the hands of the bureaucrats again. More-timely, eh. Hand me that rubber stamp".
That was written before the new Government had taken office. Since doing so, its plans to further emasculate the foreign investment oversight regime have proceeded apace. I was interviewed for an article on Newsroom (26/1/24, Andrew Bevin).
To Whom Is The OIO Accountable?
To quote from that Newsroom article: "Campaign Against Foreign Control of Aotearoa Organiser Murray Horton said ministers needed to be actively involved in decision making relating to deals that could affect employment, the environment and specific communities. 'Who is the Overseas Investment Office accountable to? Whereas ministers, theoretically, are accountable to you and me as members of the public, who elect them and pay their salaries'".
"Horton's organisation takes a strong stance against what it sees as the eroding of independence of countries by large-scale investors and believes the Overseas Investment Office is 'pretty laissez-faire' and has failed on a decision-making front on multiple occasions. 'The coalition agreement between Act and National represents a giant step backward'. Horton said the National-Act-New Zealand First definition of national security would likely be very different from his definition".
Foreign investors would have been very reassured by the fact that (to quote the OIO again): "In October, (Labour) Ministers worked through a large number of Decisions to help minimise any potential backlog created by the General Election". The Labour government knew it was doomed a long time before the October election, so it ensured a seamless handover of the foreign investment machinery to its National-Act-New Zealand First successor, which has set about dismantling it. And let's not lose sight of the fact that, of the 12 Decisions considered by those Labour Ministers in October 2023, eight were approved.
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Campaign Against Foreign Control of Aotearoa,
P.O. Box 2258
Christchurch.