The PeriOIOdical November 2019

20 November 2019

You may have seen yesterday that the Associate Minister of Finance David Parker announced further changes to the Overseas Investment Act 2005.

Kia ora koutou,

You may have seen yesterday that the Associate Minister of Finance David Parker announced further changes to the Overseas Investment Act 2005.

National interest test added to overseas investment rules (Beehive website)

The changes are designed to better manage risks posed by overseas investment while cutting unnecessary red tape and encouraging productive overseas investment in New Zealand. 

Treasury is leading work on the changes with input from other agencies, including Land Information New Zealand and the Overseas Investment Office (OIO). 

Included in the changes are a number of new powers, consistent with global best practice, to protect New Zealanders. 
The OIO will also be able to review specific investments not currently caught by the Act. This will only apply to our most strategically important assets, such as small high-tech firms developing military technology. The Government will be able to stop investments that pose a significant risk to our national security or public order. 

These powers will be used rarely and only where necessary for protecting New Zealand.

The Government will embed the current requirement for overseas investors to demonstrate a substantial point of difference from what a New Zealander would do when acquiring farmland. 

Māori cultural values will get greater recognition, with the goal of creating greater awareness of, and access to, culturally sensitive sites.
The Government is also strengthening the OIO’s powers to take-action against investors who do not comply with the Act. This includes increasing fixed penalties from $300,000 to $10 million for corporates. 

Decision makers will be able to consider the environmental impact of investments that involve water extraction for bottling.  
In addition to simplifying parts of the regime, we will no longer review a range of low risk transactions, including those by fundamentally New Zealand companies.  Statutory timeframes will also be introduced.

The new changes build on those made last year, which included restricting purchases of residential property by foreign buyers. The Government intends to have new legislation passed by mid-next year.  The process will include Select Committee consideration of the proposals, including consideration of public submissions.

Until the legislation is passed, and changes have been implemented, the current legislative requirements will continue to apply.
The OIO will run an education campaign before any changes are implemented. This is to ensure applicants and their representatives know what has changed and understand their obligations.

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

Vanessa Horne
Group Manager, Overseas Investment Office
Land Information New Zealand

This issue covers: 

We are reviewing our fees and charges

The OIO relies on a standard set of fees and charges to fund our work helping New Zealand realise the benefits of overseas investment, while also protecting our sensitive land and assets. We are now reviewing how we set fees and charges for the OIO.

We need to make sure the OIO is funded sustainably, while ensuring our fees and charges are fair, efficient, and transparent. This review forms part of the overall LINZ review of third-party funding.

The approach to setting fees will follow best practice and be consistent with similar recent reviews by Government agencies, including the Civil Aviation Authority, and the Ministry for Primary Industries. 

You will have an opportunity to share your comments on the OIO’s fees and charges before any changes are made.

In the meantime, if you have any feedback about the third party funding review and how we set OIO fees and charges, please email us on feesreview@linz.govt.nz, by 5pm on Thursday 12 December 2019. This will help inform the next stage of the review.

Information about the current OIO fees and charges is on our fees and penalties webpage


Reminder to complete Residential Land Statements

Recently, the Overseas Investment Office issued a compliance letter to a law firm for its failure to complete Residential Land Statements. The failure occurred when the law firm was facilitating transfers from retired trustees to new trustees.

Residential Land Statements capture a person or companies’ eligibility to acquire an interest in residential land. It is a requirement under section 51A of the Overseas Investment Act to complete Residential Land Statements when residential land is being transferred.

Under section 51C of the Act, Residential Land Statements must be provided by the client to the conveyancer or lawyer prior to the transfer being lodged.

Because Residential Land Statements are required before a transfer takes place, they are an important safeguard against any further and potentially more serious breaches of the Act.

The conveyancer or lawyer relies on the information provided in the statement to give effect to the acquisition. The maximum civil penalty for a breach of section 51C is $20,000.

Standing consents not a 'free pass

There has been much talk in the media recently about standing consents issued under the Overseas Investment Act.
In September, the OIO granted a standing consent to Japanese company Pan Pac that allows it to acquire up to 20,000 hectares of land for forestry.

Read our first forestry standing consent grantednews item.

Let’s be clear - the consent is not a ‘free pass’ for the company to bypass the overseas investment system, it’s quite the opposite.
Standing consents for forestry investment and housing developments were introduced in October 2018 to allow a more streamlined process for trusted overseas investors with a strong track record to invest here.

They are a form of pre-approval, however, the OIO still carefully scrutinises every transaction a company undertakes.
The bar is set very high for overseas investors to be granted a standing consent. They must have a proven track record, detailed business plans, and strong processes to ensure they comply with the conditions of the standing consent.

The Pan Pac standing consent is the first forestry standing consent to be granted. We don’t expect many forestry standing consents will be granted because of the high bar companies must meet.

To date, four standing consents have been granted under the increased residential housing pathway.

Under a standing consent, after each transaction is settled consent holders must notify the OIO. The OIO will assess the transaction to ensure it complies with the standing consent conditions. The OIO has the power to put more conditions on in relation to each transaction.

It’s also important to note a standing consent cannot be used for any transactions that have already been entered into.
If consent holders don’t comply with the conditions of their consents, the OIO has the power to force them to sell-up. The OIO has stepped-up its enforcement efforts in recent times and we regularly force overseas investors that haven’t complied with the rules to dispose of their New Zealand assets.

Changes in our enforcement team

Our wonderful enforcement manager, Kirsty Millard, has moved into a new role as Director of Legal and Ministerial Services at the Ministry for the Environment. She was on a secondment and has now agreed to take-up the role permanently.

Kirsty did an excellent job leading our enforcement function as the team grew and compliance action increased during the last few years. We wish Kirsty all the best in her new role!

I’m pleased that Jeremy Ford, who has been acting in the role, has agreed to stay in the post until April 2020.

In the New Year we will be on the hunt for a new enforcement manager, so if you know somebody with the right experience and expertise then please get in touch by emailing vhorne@linz.govt.nz

Importance of being transparent

In recent years the OIO has made an effort to be more open and transparent about its work.

As a government agency we’re accountable to the public, which rightfully has an expectation that information with a high degree of public interest will be made available.

Making information more freely available allows the public to better engage in the regulatory process and hold Government to account for its decisions.

We also have obligations under the Official Information Act (OIA).

New Zealanders can request information under the OIA and expect it to be made available unless there is a good reason to withhold it.

The OIO notifies applicants or their representatives if information relating to their application is going to be made public.

They have an opportunity to tell us if they have concerns about releasing certain information and we will consider if there are grounds to withhold the information under the OIA. We also consider whether withholding information is outweighed by the public interest.

Realistic timeframes

Now and again we receive applications from investors who want an outcome as soon as possible. While we do our best to process applications as quickly as possible, there are things outside of our control that can mean applications take longer to process than we would like.

When submitting applications it is the applicant’s responsibility to ensure that any relevant commercial agreements allow enough time for the OIO to assess the application, and the application is lodged in a timely manner.

We do not give priority to individual applications except in exceptional circumstances, for example, to accommodate other statutory timeframes. Our ability to work to an urgency request is also dependant on the availability of staff and decision makers.

The most effective way for you to get your application assessed as quickly as possible is to use our application templates, to give us all the information we ask for, in the order we ask for it, and to answer our questions promptly.

The OIO often gets a rush of applications at this time of year. If you plan to submit an application before the end of the year please factor in that we may have a higher than usual number of applications. If your application needs to be approved by the Ministers, you may want to factor in the Parliamentary calendar.

More information about assessment timeframes.

Latest decisions straight to your inbox

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

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Media enquiries

Email: media@linz.govt.nzor phone: 027 566 5251

 

Media enquiries

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