The PeriOIOdical October 2019

1 October 2019

Now and again it’s important to step back, look at the big picture and see how things are tracking.

Kia ora koutou,

Now and again it’s important to step back, look at the big picture and see how things are tracking.

The Overseas Investment Office (OIO) recently took a look back at the 2018/19 financial year. It was a good opportunity to reflect on the applications that went through the office, have a look at any developing trends and to think about our role as a regulator.

It was particularly interesting to see the number of applications we received for homes to live in following the restrictions the Government put in place in October 2018.

Between October and the end of June, we processed 186 applications for consent to buy homes and 89 percent of these applications were approved. The top three regions for overseas people buying homes were Auckland, Canterbury and Wellington.

The new special forestry test was also introduced in October and out of the 11 decisions we made through till June, four were farm to forestry applications and seven were existing forestry.

During the 2018/19 financial year, 41 decisions were made that related to significant business assets with a net investment of $16 billion. The top three industries were manufacturing, financial and insurance services, and information, media and telecoms.

Meanwhile, 86 decisions included sensitive land with a net investment of $933 million. Four of these were declined and a further 22 were withdrawn or lapsed.

You may be aware the OIO has stepped up its efforts at enforcing compliance with New Zealand’s overseas investment laws in recent years. During the 2018/19 financial year the OIO took action against 36 investors for non-compliance. 

Actions we took ranged from reaching settlement agreements and issuing compliance letters to, in the most serious cases, forcing investors to dispose of their assets.

You can find more information below about the types of applications we dealt with during the last financial year.

As always, if you have any feedback or questions please don’t hesitate to get in touch with me by email.
 
Ngā mihi nui,

Vanessa Horne

Group Manager, Overseas Investment Office
Land Information New Zealand

This issue covers: 

Looking back - the year in review

Find out about the types of applications the OIO dealt with during the 2018/19 financial year.

Boosting the number of site visits

During the last few years the OIO has made a major effort to increase the number of site visits to overseas investments throughout the country.

So far this financial year we have made eight site visits. This has included visits to oil and gas production stations, a sheep and beef farm, an abattoir and a luxury lodge.

In the 2016-17 financial year we did just three inspections and last year we did nine.
Site inspections are useful for a few reasons.

They help us monitor compliance with conditions of consent – written reports have limitations. Viewing a property and speaking to the people who work there gives far more information about the genuine benefits of an investment and the impediments to delivering any benefits.

They are also a useful education opportunity for the OIO and for investors. Investors can understand the reasons for our consent conditions and we can better understand site conditions and the operational context for investors.

We will continue doing more site visits in future and over the next few months the team plans to inspect a further nine sites.
We notify consent holders in advance before we do a site visit. We also take measures to ensure our visit doesn’t interrupt the day-to-day running of the business.

Tick tock – assessment timeframes

It can be frustrating for applicants and their advisors when decisions take a long time to be processed, or when they take longer than first expected.

The OIO recently looked at applications we’ve received during the last five years to see on average where the days are spent. 

Included below is a graph showing the portion of time, on average, applications spend at each stage of the process for each pathway.

Applications spent most of their time being processed by the OIO or back with applicants or their advisors to provide further information. The amount of time applications were with Ministers or were waiting for information from third parties was relatively small.

Earlier in the year Treasury consulted the public on possible changes to the Overseas Investment Act. Included in the consultation document was a proposal to introduce statutory timeframes.

This proposal was driven by calls from investors and their advisors for greater certainty and a quicker turnaround on decisions. 

One proposal from Treasury was to introduce statutory timeframes for decisions under each of the Act’s consent pathways, with the ability to extend the timeframe once if needed.

Another option was to introduce a blanket timeframe on all applications.

Treasury has taken on board the feedback it received during the public consultation and will provide advice to the Government. The Government will then decide what changes it wants to make to the Overseas Investment Act.

The OIO is also looking at improving the information available to investors and their advisors. Hopefully this will improve the quality of applications and then reduce the time they take to be processed. 

Currently, we advise applicants early in the process how long we expect an application to take as timeframes are different for different applications. More information about timeframes, is on our website.

Changes to the decline process

We’re making changes to how we deal with applications that, after our initial assessment, do not appear to meet the criteria for consent.

This includes sending the applicant an ‘Intention to decline’ letter, which includes information about our initial assessment.
We will also give the applicants 15 days in which they can respond with further information before we proceed with our assessment.

The OIO expects applicants to put their best foot forward when they apply.

When we tell an applicant we intend to recommend that we decline an application, applicants will have an opportunity to correct or enrich our understanding of their application before we proceed with our assessment. This is an opportunity to provide additional evidence or clarification and not an opportunity to negotiate with the regulator.

The information provided must not generate substantially new claims. If an applicant would like to make changes to their investment plan (as opposed to clarifications), this will require a new application.

We are happy to talk to applicants, by phone or in person, to receive more information about the application after we have sent an intention to decline letter.

More information about the decline process is available on the Decline process page.

Publishing withdrawn and lapsed applications

The OIO is doing its part for open and transparent government. 

We are on a mission to provide greater transparency to the public, applicants and vendors, including giving a fuller picture of the applications we receive and consider.

We already publish decision summaries for applications that have been granted or declined. These give details about the applications and the reasons consent was granted or declined.

The OIO is considering publishing summaries for applications that have lapsed or been withdrawn. Applicants and vendors would have a chance to comment before summaries were published, in the same way they do now for applications we have granted or declined.

We’re considering publishing these from the end of November. It would apply to all applications that have been withdrawn or lapsed since 1 July 2019.

Before we make this change we’re keen to hear your views. Send your thoughts to oiofeedback@linz.govt.nz.

Issues receiving emails with large attachments

The OIO has had issues receiving emails with large attachments recently.

This problem was compounded because a ‘bounce-back’ email wasn’t being sent to the sender, and the intended recipient wasn’t being informed of the failed delivery.

We’ve worked with our IT team and external service provider to fix the problem. 

We’ve made several changes, including increasing the file size we can receive and introducing a bounce-back email for the sender.

In addition, we’ve asked our assessors to promptly confirm receipt of information so that the sender knows it has reached us.
This last change is a precaution. If you do not receive confirmation that we have received your email, please call your assessor to check. 

Thank you for your patience as we worked through this.

Latest decisions straight to your inbox

At the end of each month the OIO publishes decision summaries for applications decided in the preceding month.

Join our mailing listto receive monthly updates about new decision summaries and historic decision summaries that have been revised to include information previously withheld under the Official Information Act.

Media enquiries

Email: media@linz.govt.nz or phone: 027 566 5251

Media enquiries

Email: media@linz.govt.nz or phone: 027 566 5251