By Patrick Crewdson
The Press
13 November 2006

Foreigners have bought up nearly $16 billion worth of New Zealand assets – including four valuable South Island rural properties – since overseas ownership rules were rejigged last year.

Since its creation in August last year, the Overseas Investment Office has approved the sale of $15.8b worth of businesses, assets and property to overseas companies or individuals.

Critics say the office is acting as a doorman serving foreign companies, when the country actually needs a bouncer to protect its assets. However, the office says it is simply following Government policy by encouraging much-needed foreign investment. In just over 13 months, the office approved 194 applications and refused only four. The successful applications included about 170,000ha (1680sq km) of freehold land, as well as some of the country's biggest companies.

The majority of foreign investors were from Australia, the United States or Britain.

In four cases, all details were kept secret. For another 31 cases, including four purchases by the partially US-owned TrustPower, the price tags were confidential.

The Overseas Investment Act 2005 replaced the 32-year-old Overseas Investment Commission with a specialist office within Land Information NZ. The act's intention was to encourage and attract foreign investment while preserving "sensitive" New Zealand assets. It tightened the rules around the sales of some land - such as foreshore and seabed, or heritage land - but removed the requirement for other large land purchases to be approved and set a threshold of $100 million before corporate transactions would need consent.

While the number of applications processed by the office has held steady, their gross value has increased - even though many transactions that would previously have been included in the statistics no longer require official oversight.

In 2004, its last full year of operation, the commission approved $6.9b in foreign sales, down from $13b the previous year, and declined 10 applications.

Murray Horton, of the lobby group Campaign Against Foreign Control of Aotearoa, said the legislation was promoted as a tighter control on foreign ownership, but actually served to make it considerably easier.

"We see the role of the Overseas Investment Office as essentially that of a doorman and ... what this country needs is rather more of a bouncer," he said. He said that while some foreign investment enriched New Zealand, much of it only served to suck profits, jobs and resources out of the country.

Overseas Investment Office manager Annelies McClure said Government policy set the office "a delicate balancing act" between protecting national assets and encouraging foreign investment that brought economic gains. She said many thought the system was too restrictive. "Commercial lawyers tell me the overseas companies for which they act can't understand why it is they have to go through all these hoops."

Horton said land sales, such as that of Young Nick's Head to American millionaire John Griffin in 2002, had "emotional resonance", but they were dwarfed in significance by corporate transactions.

Recent industrial disputes at Progressive Enterprises supermarkets - bought by Australia's Woolworths in October 2005 for $2.8b - showed what could happen when foreign shareholders were valued over New Zealand's best interests, he said.

McClure said the new regime was more restrictive and had "much more teeth" than the system before 2005, partly because the office had extra enforcement powers.