An average of 82 hectares of agricultural land per day has been approved for sale to offshore investors, pushing the Government close to deciding on rules to tighten farm sales to foreigners.
Prime Minister John Key says the figures prove “significant foreign purchases” have taken place. The lion’s share of investment has come from the United States, the United Kingdom and elsewhere in Europe.
Key yesterday held talks with Finance Minister Bill English on possible changes to the Overseas Investment Act to protect farms.
“I think we’re making progress in this area,” Key said.
“My concern is about what I see potentially unfolding and that is quite large tracts of New Zealand land coming available for sale rapidly and the consolidation of those farms in foreign hands and whether that’s in New Zealand’s best interests, and my view is, it’s not.”
Foreign investment is generally beneficial to New Zealand. If you restrict foreign owners from purchasing land in NZ, there are two potential negative impacts:
- The current owner of the land is unable to sell the land for as much as they otherwise would have got. This means less wealth in NZ.
- The foreign owner of the land, as they valued it more highly, may be able to put it to better economic use (as they need higher returns to cover the higher capital) and this can contribute to a more efficient economy.