Wednesday, February 15, 2012

Overseas investment must benefit New Zealand

The High Court has ruled in the Crafar Farms case, found that the Ministers of Finance and Land Information erred in their decision to let foreign buyers buy the farms, and told them to go back and do it again. This won't necessarily stop the sale - the Ministers new decision may be the same as the old one, with better reasoning - but it delays it somewhat. More importantly, it has nailed down the interpretation of the Overseas Investment Act, requiring Ministers to assess the benefits of proposed investment against what would happen were it not made, not the status quo. In this case, where most of the "benefits" would happen regardless of who bought the farms, it significantly undermines the case for overseas purchase.

The message is clear: overseas investment must actually benefit New Zealand. Where an overseas buyer simply wants to act as a foreign absentee landlord, sucking profits out of our economy while contributing nothing, they can and should be told to take a hike.

The full judgement is here [PDF].