Benefit to New Zealand Factors
On this page:
- Substantial and identifiable benefit
- Approach to factors
- Delegation and fees
Recent updates relevant to this resource:
If an investment includes sensitive land and requires consent, the applicant must demonstrate how the transaction will, or is likely to, benefit New Zealand (and, in some cases, how that benefit is substantial and identifiable).
Benefit, or likely benefit, to New Zealand is considered against a large number of economic and conservation factors.
The relevant Ministers or the regulator (the OIO) determine the relative importance to be given to each factor. Depending on the nature of the investment certain factors will normally be relatively important while others will normally be less important.
For example, walking access is likely to be far more important for some blocks of land than for others. Consequently, the walking access factor may be valued more highly than other factors.
Section 16 of the Overseas Investment Act 2005 sets out the criteria for consent for overseas investments in sensitive land. Under section 16(1)(e)(ii), it must be shown in certain circumstances that the overseas investment “will or is likely to benefit New Zealand”. The factors used to assess whether there is such a benefit are set out in section 17 of the Act and regulation 28 of the Overseas Investment Regulations 2005.
If the relevant land includes non-urban land that exceeds five hectares (either alone or with associated land), the relevant Ministers or the regulator (the OIO) must determine that the benefit will or is likely to be “substantial and identifiable”.
The Act does not define the meaning of a “substantial and identifiable benefit.” The fact that section 16(1)(e)(ii) refers simply to “benefit” whereas section 16(1)(e)(iii) refers to “substantial and identifiable benefit” suggests a degree of differentiation.
In coming to a final decision, the relevant Ministers or the OIO will take all of the sensitive factors relevant to the land into account when deciding whether the benefit to New Zealand is “substantial and identifiable”.
- Relevant or not relevant
If you are applying for consent to acquire sensitive land and section 16(1)(e)(ii) or section 16(1)(e)(iii) of the Act applies, you should first identify which factors are relevant and which factors are not relevant. The factors that are not relevant should simply be identified and noted as “not relevant”.
- High importance
Secondly, from the relevant factors, the applicant should identify which factors the relevant Ministers or the OIO are likely to consider to be of high importance in the context of the investment being made. Only address the relevant factors of high importance. It is unlikely there will be more than ten such factors. There may very well be less - perhaps three or four. The OIO will write to you asking you to address another relevant factor if it believes you haven’t identified a factor of high importance.
Once you have identified the relevant factors of high importance, check the evidence required to satisfy each factor. For each relevant factor, you must attach supporting documents that provide evidence for the claims you are making in the application.
- Business plans and reports (economic benefits)
Any applicant addressing one or more factors listed in section 17(2)(a) (economic benefits) of the Act must provide the following business plan or business report, depending on which is appropriate for the nature of the investment being made.
Note that in addition to a business plan or report, the applicant must provide further evidence or reports for each factor of high importance addressed. For example, an applicant addressing the “Jobs” factor must provide the OIO with both:
- a business plan or report as described below, and
- the additional information listed in the “Jobs” factor below.
A business plan describes the:
- nature of any business to be undertaken on the land
- major proposed developments
- proposed level of capital expenditure necessary to establish that business or implement major proposed developments
- proposed timing of the establishment of the business and the implementation of the major developments and the likely capital expenditure
- requirements that must occur or be completed before the business is established and each of the major developments is commenced (for example zoning changes or resource consents)
- likelihood of those events occurring and the timeframe in which they are likely to occur
- likely business income and business expenditure in each of the first five years of the proposed overseas investment in sensitive land
- number of full time equivalent positions (being 30 or more hours per week) that will be required to operate the proposed business.
A report identifies the:
- nature of any business currently undertaken on the land
- current productivity of the business (for example number of stock units being carried, the volume of grapes being harvested)
- gross annual income, operating expenses and net surplus of the business currently undertaken on the land, and
- number of full time equivalent positions that are currently required to operate any business currently undertaken on the land.
Jobs are a factor under section 17(2)(a)(i) of the Act. This factor will support an application when new jobs are being created or jobs are retained (that might otherwise be lost but for the proposed investment by the applicant). more...
Export receipts are a factor under section 17(2)(a)(iii) of the Act. Exports are goods or services of domestic origin which are exported/sold from New Zealand to another country. Exports include the provision of domestic tourist and education services to overseas tourists/visitors to New Zealand. more...
New technology or business skills are a factor under section 17(2)(a)(ii) of the Act. This factor will apply where an investment will result in the introduction of new technology or business skills into New Zealand. more...
Added market competition, greater efficiency or productivity or enhanced domestic services in New Zealand
This factor, under section 17(2)(b) of the Act, is relevant for overseas investments that include sensitive areas of vegetation and fauna, which require mechanisms for protecting or enhancing in that region. more...
Offer back of special land is a factor under section 17(2)(f) of the Act. In some situations qualifying special land must be offered back to the Crown before consent can be granted to an overseas investment in sensitive land. more...
Consequential benefits is a factor under regulation 28(a). This applies when tangible or intangible benefits accrue as a result of the investment being made. These benefits may include additional investments in New Zealand and sponsorship of community projects.
Key person in a key industry
Key person in a key industry is factor under regulation 28(b). This factor applies where a person with high standing and influence is involved in an industry which has a material impact on the economy.
The key person’s involvement in the industry must be more than as a regular (or even prominent) player. They must be in a position to materially contribute to an improvement in the relations between New Zealand and the other country.
Image, trade or international relations, international obligations are all factors under regulation 28(c). These factors ensure New Zealand will not be adversely affected by the refusal of applications and ensure New Zealand will not breach any international obligations. more...
Ongoing viability of other investments is a factor under regulation 28(g). This recognises that some investments may not otherwise meet the threshold in their own right, but nonetheless support or enhance an earlier investment by the applicant. more...
Strategically important infrastructure on sensitive land is a factor under regulation 28(h). This asks whether the overseas investment will, or is likely to, assist New Zealand to maintain control of strategically important infrastructure on sensitive land. more...
The Minister of Finance and the Minister for Land Information have delegated to the regulator (the OIO) many of the powers to grant consent under the Act. In these delegated cases, the regulator fees apply.
The relevant Ministers generally grant consent where the substantial and identifiable benefits criterion (section 16(1)(e)(iii)) applies.
However, even if the substantial and identifiable criterion applies, decisions will be delegated where:
- the land is leasehold (other than pastoral lease land) or the interest being acquired is an interest as mortgagee or encumbrancee, or
- the only ‘sensitivity’ is that the land is non-urban and more than five hectares.
See the current Ministerial designation and delegation letter (pdf 981KB) for more information.
This website provides general information only. The OIO and LINZ do not assume any responsibility for giving legal or other professional advice and disclaim any liability arising from the use of the information. If you require legal or other expert advice you should seek assistance from a professional adviser.