Rethink on overseas landowner rules

Fears that foreign investors could muscle in on the farming sector have prompted a last-minute rethink on land sales under a review of overseas investment rules.

Prime Minister John Key said he had deep concerns about increasing overseas interest in farms, and warned that the huge resources available to foreign buyers could mean that they became dominant players.

"The concern, I guess, is that there is so much wealth out there that they could literally buy New Zealand's productive base. It's not impossible. That's the question – what do we want to be? Do we want to be tenants in our own country or do we want to own our own destiny?"

Finance Minister Bill English later said that a review of the Overseas Investment Act, expected to be reported in the next few weeks, would now reconsider farm and other land sale rules.

Mr English said last July that the review was likely to see a loosening of the rules to ensure "only genuinely sensitive" sales were restricted. But a bid by Chinese company Natural Dairy for 16 Crafar farms, which cover more than 8000 hectares, has raised concerns about the potential for significant parcels of highly productive land being sold to overseas buyers.

Natural Dairy has reportedly bid as much as $230 million for the farms, which came up for sale after the four Crafar companies went into receivership owing more than $200m.

A bid by state-owned company Landcorp and a private venture was ruled out by the receivers this month, leaving Natural Dairy as the front-runner.

Any foreign sale would need approval from the Overseas Investment Office, but the Chinese bid has raised concerns about the ability of foreigners to buy large tracts of farmland.

Mr English said the review was trying to strike a balance between protecting important assets while allowing sufficient foreign investment. New concerns about farm sales were an added complication.

"We want to make sure we understand what is going on here."

Greens co-leader Russel Norman, who has a member's bill that would restrict overseas sales of farmland bigger than five hectares, welcomed the decision to take another look at the rules.

"It's certainly a start, but what we really need to do is clamp down on overseas buyers buying up some of our best farmland. We can't really prevent the sale of large amounts of New Zealand farmland without regulations."

Labour associate finance spokesman David Parker said the rethink showed that the Government position was confused.

"John Key continues to run hot and cold on farm sales. Today he is saying that a review of the overseas investment regime is likely to stop the sell-off of large tracts of land to foreign buyers, and yet the review ... had the express aim of ensuring applications to the Overseas Investment Office could be approved more easily."

The sale of farmland should be priced to New Zealand market rates, rather than left to international bidding wars in which Kiwis were unable to compete. "The bank's interest is not necessarily the New Zealand interest."