THE PRESS WEDNESDAY, JANUARY 25, 1989. Who should buy N.Z. land?

Press, 25 January 1989, Page 16

THE PRESS WEDNESDAY, JANUARY 25, 1989. Who should buy N.Z. land?

The increased recent interest by overseas buyers in New Zealand land raises a number of complex issues. Should rural land be sold to foreign buyers? Should Australians, who require no special permission to settle in New Zealand, be regarded in the same light as foreign buyers? Should the number of potential buyers for land be limited when many rural people are in desperate financial straits and would like to sell to anyone who would give them a better price? New Zealanders do not have a single view on these issues and there may be distinct differences in the views of some rural and some urban residents. The Government has so far shown no inclination to extend its various forms of deregulation of the economy to the foreign ownership of land, no doubt partly influenced by the sensitivity of the issue within the country.

The sensitivity is not surprising. Land has been central in the matters raised by the Maori people. Land was the issue in the wars fought last century between Maoris and Europeans. The European settlers who came to New Zealand sought land. The ownership of the land, as opposed to various enterprises conducted within a country, seems close, in the minds of many people, to having a country of one’s own. If the land is owned by people not identified as New Zealanders, then a sense of alienation and being dispossessed may result. The Overseas Investment Commission, to which applications for foreign investment in New Zealand are referred, makes no distinction between applications to invest in land and applications to invest in business. Approval for any application to invest in New Zealand depends on the extent to which the proposals meet certain criteria. Consideration is given to whether the proposal will benefit New Zealand, whether the investor will bring certain expertise, whether the investment will enable New Zealand to gain access to export markets more easily, and whether the proposal will introduce useful technology to New Zealand. In assessing all of this, no distinction is made by the Overseas Investment Commission between investment in land and other forms of investment.

However, the Department of Lands is required to enforce the 1952 Land Settlement Promotion and Land Acquisition Act. This lays down certain criteria about who may own rural land exceeding two hectares. The aims of the act are to prevent undesirable speculation in New Zealand land by overseas interests, to restrict absentee ownership except in certain circumstances, and to ensure that land required for a reserve does not pass out of New Zealand ownership. Some of those who have expressed an interest in acquiring New Zealand land have wanted to restrict the traditional access New Zealanders have had to certain areas, such as the seashore and riverbeds, used for recreation or sport. The act was amended in 1969 to apply particularly to land on islands off New Zealand.

The Department of Lands satisfies itself on whether a prospective foreign purchaser is resident in New Zealand or intends to be resident in New Zealand. It then makes a recommendation to whichever of the 19 Land Valuation Tribunals throughout the country is examining the case. Corporations as well as individuals can buy land, but the criteria are different. The department has to be satisfied that the corporation will conduct experimental or research work of benefit to the agricultural industry in New Zealand and in the interests of the community generally, or that it plans to use the land for nonagricultural purposes with a greater advantage to the community. Individuals

must reside permanently in New Zealand and farm the land for the individual’s own use and benefit.

Some applications have to gain the approval of both the Overseas Investment Commission and the Department of Lands. Occasionally, exemptions to the act or to the rules are granted by the Ministers of Lands and Finance. Thirty-four such applications were made in the 1987-1-988 year, of which five were declined. In the 1986-1987 year there were 27 applications; four were declined. Often the case for the exemptions was based on a technical ground.

In the past it has been feared that the prices foreign buyers were prepared to pay for New Zealand land would inflate the prices within the country. Even at a price inflated by New Zealand standards, land in New Zealand was cheaper than in a foreigner’s own country. Because of the rural crisis in New Zealand, the loss of equity by some farmers in their properties and the heavy debt and interest burdens some farmers carried, the idea of selling farms to foreigners has gained appeal among some farmers, although the official policy of Federated Farmers is to oppose the sale of rural land to foreign interests.

A number of Australians have shown an interest in buying New Zealand farms. Because Australians are automatically entitled to settle in New Zealand (as New Zealanders are automatically entitled to settle in Australia), the question of residency does not arise. All that happens is that the Lands Department satisfies itself that the Australian is serious about becoming a permanent resident of New Zealand. A similar situation applies to New Zealanders going to Australia. In 1987, Australia changed its existing rules about the purchase of property. Before 1987, permission had to be sought by non-Australians for the purchase of any property worth more than sAust4oo,ooo. Since 1987, permission has to be sought for the purchase of any developed property by a non-Australian. The change was an effort to curb what was seen as extensive buying of residential properties by Japanese, Hong Kong, and Korean interests. As soon as the Foreign Investment Review Board is satisfied that a New Zealander intends to live on the property and is not buying it as a business to let, permission is automatically given. Neither New Zealand nor Australia wants residents of the other country becoming absentee landlords.

As New Zealand and Australia become closer in almost all business matters, it would be sensible for the two countries to remove any restrictions on citizens of the other country buying properties. It is only with each other that the two countries have that special travel and settlement arrangement, and New Zealanders and Australians do not treat one another as foreigners. The logic of the special relationship should be extended to not treating residents of the other country as foreigners over the purchase of homes or farms. About 4000 New Zealanders are leaving the country a month at the moment intending to be long-staying residents in Australia.

New Zealand is not the only country in which sensitivity over the purchase of farm land is keen. The laws at present governing the purchase of land by foreigners are a blend of ensuring the customary rights of New Zealanders but not cutting New Zealand off from access to markets, expertise and technology. That seems a reasonable position. There is certainly no reason to change the rules to encourage extensive land sales to foreign interests.