New Zealand Parliament is considering a bill that would forbid foreign corporations from making rural land purchases in the country unless that purchase proved more economically lucrative than any domestic bid. The move comes in the wake of a Chinese purchase proposal for 16 dairy farms in North Island that was approved, but subsequently turned down by the High Court. Economic value would be determined by considering how many domestic jobs the purchase would create and foreign buyers would have to meet a significantly higher standard than interested New Zealand buyers. For more on this continue reading the following article from Property Wire.
A new bill has been introduced in Parliament in New Zealand that would prevent foreign companies from buying land in the country.
It comes as controversy rages over a bid from a Chinese company to buy 16 dairy farms in Crafar, North Island.
The Government had approved a bid from China company Shanghai Pengxin, but this was overturned in the High Court, which found that potential benefits had to be measured against an alternative buyer.
Now Labour leader David Shearer wants a law change so governments have to throw out any foreign bid to buy New Zealand farms, unless the offer would result in more jobs and more exports than any New Zealand bid could.
The proposal would result in most applications from foreigners to buy sensitive land in New Zealand being turned down. The door would be open only to new technologies and new products.
Shearer said there are currently 41 new applications by foreigners to buy rural New Zealand land with the Overseas Investment Office affecting 16,000 hectares.
‘The government already has discretion to turn down farm sales to overseas buyers but it is not being properly exercised. Selling farm land to foreign buyers does not improve the country’s economy, with the profits flowing offshore,’ he said.
‘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. We don’t want foreign corporates buying our land and seeing the value flow out of New Zealand,’ he added.
At present two Government ministers have to approve any decision by the Overseas Investment Office. They consider several factors and can decide which factors are relevant and to what degree.
Shearer’s bill would replace this with a stricter test. If the applicant cannot demonstrate benefits through ‘the creation of a substantial number of additional jobs in New Zealand’ or ‘a substantial increase in exports from new technology or new products’, then ministers would have to turn it down.
The bill also says any benefits would have to be additional to what would be likely with a New Zealand buyer. This effectively means the Shanghai Pengxin bid would have failed, because of the comparable bid by a Sir Michael Fay backed NZ consortium.
The bill has to be drawn in the members’ bill ballot before it can be considered. But the Green, New Zealand First and Maori parties have expressed support.
A spokesman for Finance Minister Bill English said the proposal amounted to being able to turn down applications on pure political grounds.
This article was republished with permission from Property Wire.