NEW ZEALAND GAZETTE, No. 123

15 NOVEMBER 2007

The Treasury

Overseas Investment Act 2005

Publication of Ministerial Directive Letter Under Section 35 of the Overseas Investment Act 2005

31 October 2007

The Chief Executive
Land Information New Zealand
Private Box 5501
Wellington

Dear Sir

1. The Overseas Investment Act 2005 (the Act) forms one part of a wide portfolio of policies that the Government uses to encourage both ongoing economic growth and economic transformation.

2. The New Zealand overseas investment regime welcomes overseas investments that are able to generate sustainable economic growth. However, the inclusion of further non-economic criteria during the review of the Act in 2005 increased the Government’s emphasis on sustainable development that provides protection for New Zealand’s cultural, social, and environmental resources. These non-economic factors include the protection of areas of great cultural sensitivity, provision of public access, and the ongoing sustainability of New Zealand’s unique landscape and biodiversity.

3. The expansion of criteria beyond just economic criteria recognised that the ongoing attractiveness of New Zealand to investors, residents, and visitors requires good custodianship of our current natural and cultural resources for future generations.

Ministerial Directive Letter

4. This Ministerial directive letter is made pursuant to section 34 of the Act and provides direction to you as the regulator about:

a. the Government’s general policy approach to overseas investment in sensitive New Zealand assets, including the acquisition of special land and the “intention to reside in New Zealand indefinitely” criterion;

b. the criteria for including reserves, public parks, or other sensitive areas on the list kept by the regulator under section 37 of the Act;

c. the level of monitoring of conditions of consent; and

d. the powers of the regulator, with regard to compliance with specific conditions of consent and enforcement of overseas investment in sensitive New Zealand assets.

5. In providing advice on the matters set out in this Ministerial directive letter, your advice must provide recommendations to relevant Ministers (Ministers) and should provide this advice in a time frame that does not discourage overseas investment or create undue compliance costs.

Part One: General Policy Approach

6. The Government’s general policy approach is to facilitate the flow of overseas investment needed to support New Zealand’s sustainable economic growth. However, the Act also recognises that it is a privilege for overseas persons to own or control sensitive New Zealand assets. The Overseas Investment Act 2005, compared with the 1973 Act, requires consideration of a wider set of factors – both economic and non-economic – to ensure consistency with wider government objectives.

7. The key public policy objectives of the Act are to:

a. facilitate overseas investment;

b. recognise that it is a privilege to own or control sensitive New Zealand assets;

c. recognise the growth benefits of foreign investment;

d. encourage overseas investment through a reduction in compliance costs;

e. assess the benefits received from overseas investment applications;

f. support sustainable development in New Zealand;

g. provide ongoing protection for New Zealand’s natural resources and cultural or heritage sites; and

h. encourage the provision of public access to sensitive New Zealand land.

8. Section 17 of the Act lists a series of economic and non-economic factors that must be taken into account in determining whether an overseas investment in land is likely to benefit New Zealanders, and includes several factors set out in Regulation 28 of the Overseas Investment Regulations 2005.

9. Under Regulation 28 overseas investors may propose that an investment is likely to create a benefit by giving effect to or advancing a significant Government policy or strategy. Investments that for example shift economic activity to New Zealand, introduce new technologies, or improve New Zealand productivity and export performance may support Government economic development strategies.

10. However, Government policy and strategy is also more widely concerned with the social and environmental factors that support long-term sustainable development. This includes for example the Government’s climate change and energy policies. Overseas investments could support these policies and strategies if, for instance, they enhanced carbon sinks, or introduced improved technologies, production processes or outputs that reduced greenhouse gas emissions or improved energy efficiency.

11. In providing advice to Ministers you, as the regulator, must consider these objectives and adopt operating procedures that are consistent with the Government’s intention to facilitate beneficial overseas investment. Accordingly, the regulator must:

a. perform its functions in a timely, consistent, and efficient manner;

b. seek sufficient information from applicants for it to be assured of the accuracy of any information, advice, recommendations, or assessments of any relevant benefits provided to Ministers;

c. verify information provided by applicants by seeking evidence or input from third parties at the Regulator’s discretion;

d. seek to recover its operating costs in relation to applications for consent from applicants through Cabinet approved fees; and

e. monitor compliance with any conditions of approval, consent, permission, or exemption granted under the legislation.

12. The regulator’s functions also include providing general information to applicants, compiling and keeping records, and making available statistics. This should include the dissemination of information on investment in New Zealand and publicly explaining the nature of our regulatory regime.

Conditions of Consent – Monitoring and Enforcement

13. Overseas investors are required to comply with any specific conditions of consent imposed on overseas