Pattrick Smellie: Land Information New Zealand has had it tough

Land Information New Zealand data on how many foreigners are buying New Zealand houses is worse than useless.
LUKE APPLEBY/FAIRFAX NZ

Land Information New Zealand data on how many foreigners are buying New Zealand houses is worse than useless.

OPINION: It has been tough times at Land Information New Zealand.

Its property data release on Tuesday, billed earlier by Government ministers as a way to combat fears about real estate purchases by foreigners, was worse than useless: it was really confusing.

At least they admitted it was full of holes.

Land Information Minister Louise Upston looked unhappy to be there and frankly conceded there were "clear limitations" to the data and it was "not ideal".

READ MORE Only 3% of property buyers are overseas, new data shows

Land Information New Zealand (LINZ) chief executive Peter Mersi said he had decided to release the imperfect new series, the first two quarters measuring the tax residency – not nationality – of land purchasers, even though it was problematic.

To hold it back risked accusations of a "conspiracy theory" in the politically charged environment around foreign real estate purchases.

Measurements based on last year's Budget measure requiring foreign land buyers to furnish a New Zealand tax number are not providing the simple political bludgeon originally envisaged. Instead, like everything in tax it seems, there are loopholes galore so you can't really tell what you're looking at.

The Government just hopes people will hear "it's only 3 per cent" and believe it.  

Elsewhere at LINZ, announcing a 25 per cent boost to the staff at the Overseas Investment Office (OIO) might look like a win, but it's a response to chronic underperformance by this regulatory outpost.

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Foreign, particularly Chinese, investors have been frustrated not only to lose investment opportunities to unexpected ministerial refusals on "national interest" grounds, but at how long it took to be told: "No".

Admittedly, the vast majority of applicants get a "yes", but that's been taking an age too.

Raising applicants' fees between 8.7 and 166 per cent will pay for the staff increase, which should speed up approvals for 'sensitive' land applications from foreign investors.

Foreign investors should be happy, but that doesn't make a faster OIO good politics.

New Zealanders would rather be sure that the OIO is commercially astute, staffed by people with appropriate forensic legal and accounting skills, and on the case enough to pick up dirty money trying to hide here.

The recent record isn't great. The so-called "Panama Papers" helped uncover an OIO-approved purchase of sensitive land by Argentine citizens Rafael and Federico Grozovsky, who were found 'criminally responsible' for environmental pollution and discharging toxic chemicals into a river.

The case made the media in Argentina but somehow the pair passed the OIO's 'good character' test. Elsewhere, very wealthy Russians are buying coastal land. It's very hard to be very rich in Russia without being a criminal. 

The last external assessment of LINZ was a follow-up Performance Improvement Framework (PIF) Review, led by Paula Rebstock, after the 2013 review found a few problems with LINZ's core activities: mapping, property information and digitisation of that data.

In 26 pages, the OIO is mentioned only once, by its full name. Consequently, it doesn't even rate a mention in the appendix of abbreviations.

The office was "competently and efficiently" processing "high volumes of applications … including complex investigations", while coping with staff caps and a 43 percent increase in applications, Rebstock found.

With the reviewers focusing on LINZ's "core business", the OIO emerges as an appendix in its own right: a regulator trapped in a government department's body.  

Meanwhile, the long-serving senior team, none of whom are identified on the OIO's untransparent online presence, deep in the LINZ website, are gaining enhanced taxing powers to fix the slow approvals system.

Surely it would be worth asking some time whether the OIO might work better as an independent entity like the Takeovers Panel or located inside the Reserve Bank, where the expertise is global money flows rather than GPS coordinates?

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- BusinessDesk

 

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