31 August 2009
Colin MacDonald
Chief Executive
Land Information New Zealand
Private Box 5501
Wellington 6145
Dear Sir
Ministerial Directive Letter
1. This Ministerial directive letter is made pursuant to section 34 of the Overseas Investment Act 2005
(“the Act”) and directs you as the regulator about:
a. the Government’s general policy approach to overseas investment in sensitive New Zealand assets;
b. the level of monitoring required in relation to the conditions of consent;
c. the powers of the regulator, with regard to compliance with specific conditions of consent and enforcement of overseas investment in sensitive New Zealand assets;
d. the criteria for including reserves, public parks, or other sensitive areas on the list kept by the regulator under section 37 of the Act;
e. the intention to reside in New Zealand indefinitely under section 16(1)(e)(i) of the Act;
f. the acquisition of special land; and
g. other matters relating to your functions, powers or duties.
Government’s General Policy Approach to Overseas Investment in Sensitive New Zealand Assets
2. While the Government acknowledges the purpose of
the Act and the consent regime it establishes, the Government wishes to minimise, as much as possible, any unnecessary delays or administrative costs in the consent process. The Government’s general policy approach is to enable those investments that meet the statutory criteria for consent to proceed, by ensuring that they are not hindered by administrative issues and
that the regulator’s resources are used efficiently.
3. The Government considers that the benefits of foreign investment can accrue over the long term and for
some investments in sensitive land, substantial and identifiable benefits may not occur for a number of years. The Government thus directs the regulator, when considering the factors set out in section 17(2) of the Act, to give equal weight to longer term benefits as to any immediate benefits.
Conditions of Consent – Monitoring and Enforcement
4. When imposing conditions of consent on an overseas investment, the regulator should ensure that the condition is necessary and achieves the intended result
in the least onerous way including, where possible, at the least cost to the investor.
5. Where a grant of consent is made subject to conditions of consent, there may be circumstances where compliance with the original condition is no longer necessary. In such circumstances the condition should be varied or revoked as appropriate in accordance with section 27 of the Act.
6. In deciding whether a condition of consent should be varied or revoked, the regulator should give consideration to any realised benefits as well as the extent to which compliance with a particular condition may be out of the consent holder’s control or is a result of the consent holder varying his or her plans.
7. The regulator should monitor compliance with conditions of consent until the benefits have been realised or the conditions have been revoked as appropriate in accordance with section 27 of the Act, whichever is the earlier. In general, monitoring
should not extend for a period of more than five years unless the benefits are expected to begin accruing after five years in which case, in general, monitoring should be appropriate to the time span during which benefits accrue.
Criteria for Including Reserves, Public Parks or Other Sensitive Areas on the List Kept by the Regulator
8. Under section 37(1) of the Act, you, as regulator, must compile and keep a list of reserves, public parks and other areas, for which the adjoining land is sensitive under Table 2, Part 1, Schedule 1 (list). The Government considers that the list may include reserves, parks and other areas of land (specifically or by class) that are not listed in Table 2.
9. The principal factor in determining whether other reserves and public parks should be included in the list should be the purpose for which the land is held; specifically, land should only be added to the list if it is held for a purpose relating to protecting or providing public access to natural and physical resources or historic heritage. In all cases, reserves, public parks and other areas of land under 0.4 hectares should not be included on the list.
10. As a guideline, and without limiting your discretion as regulator, areas of land that are likely to meet the criteria for inclusion on the list include:
? National Parks listed in the National Parks Act 1980;
? Wildlife Sanctuaries, Wildlife Refuges and Wildlife Management Reserves created under the Wildlife Act 1953;
? Government purpose reserves that are classified
as a Government purpose reserve for: wildlife management; other specified wildlife purposes; or for similar purposes as scenic, nature and historic reserves under the Reserves Act 1977; and
? Marine Reserves under the Marine Reserves Act 1971.
Intention to Reside in New Zealand Indefinitely
11. Under section 16(1)(e)(i) of the Act, overseas persons intending to reside in New Zealand indefinitely are not required to show that their investment is likely to benefit New Zealand. This is because the ownership of that land will assist new migrants to settle in New Zealand and the benefits of the proposed migration will be considered under immigration legislation.
12. An intention to reside in New Zealand indefinitely must involve a definite plan and accompanying action within a reasonable timeframe. In determining whether a person is intending to reside indefinitely, the regulator must give consideration to any active steps that have been taken by the investor to actually reside in New Zealand. In order for the section 16(1)(e)(i) criterion to apply, the applicant must:
a. have applied to Immigration New Zealand for a visa or permit under any of Immigration New Zealand’s residence policies; and
b. provide the regulator with evidence that the application for the visa or permit is likely to be successful; and
c. show other actions consistent with an intent to reside in New Zealand in the near future.
13. The regulator may impose a time limit within which
the applicant must become permanently resident in
New Zealand. As a general rule, the Government would expect that this would require that the overseas person must be resident in New Zealand within five years of the date of application.
Acquisition of Special Land
14. Section 17(2)(f) of the Act requires that Ministers must consider whether any special land has been offered to
the Crown in accordance with the Overseas Investment Regulations 2005 (“the Regulations”). Special land is defined under Regulation 12 as “the foreshore, seabed, riverbed, or lakebed”.
15. Special land includes land that forms part of the owner’s registered title to the relevant land or that is held under common law (in relation to a riverbed or lakebed) by the owner under the ad medium filum aquae rule.
General Policy Approach to Acquisition of Special Land
16. The Government’s general policy approach to the acquisition of special land is that the special land should only be acquired if it is in the public interest for the Crown to own the special land.
17. Relevant matters for determining whether it is in the public interest for the Crown to acquire special land are:
a. whether there is a recognised attitude of
New Zealanders (or a group of New Zealanders)
to the special land. This attitude could relate to a specific piece of special land or may relate to a more general class of special land eg foreshore or seabed. The regulator is not expected to provide advice beyond recognising that an attitude may exist in
New Zealand to that land;
b. whether the overall benefit of Crown ownership exceeds the likely costs of acquisition and the ongoing liabilities likely to be incurred in maintaining and managing the special land;
c. the interrelationship with the surrounding area
(for example, whether the special land adjoins riverbed, lakebed, foreshore or seabed that is already in Crown ownership);
d. whether the new owner intends to reduce public access to the special land, relative to the access provided (if any) by the current owner;
e. whether Crown ownership of the land in question will, or is likely to, adversely affect the overseas person’s ability to carry out the overseas investment, for example by adversely affecting the business operations on the land; and
f. whether there is a more cost effective alternative to Crown ownership.
18. The following matters are already taken into account and are thus not relevant when deciding whether to acquire special land:
a. Values to do with the water covering the special land, such as fishing or swimming (it is the value of the special land that is at issue, not associated uses);
b. matters that relate to protections already offered under the Conservation Act 1987;
c. matters that relate to protections already offered under the Foreshore and Seabed Act 2004; and
d. the factors specified in section 17 of the Act and Regulation 28 of the Regulations (in order to determine whether an overseas investment in sensitive land will or is likely to benefit New Zealand, any part of it, or any group of New Zealanders).
19. There is nothing in the Act or Regulations which suggests that the relevant Ministers approach the question whether to purchase special land with any presumption as to the outcome – either for or against.
In particular, there is no presumption that the relevant Ministers will accept an offer to purchase the special land if it is offered to the Crown for nil consideration.
20. The decision whether to purchase special land will be dependent on the individual facts in each case. Any decision will be based purely on consideration of the merits of only the special land in question. In particular, the decision to acquire special land, or to waive the Crown’s right to acquire special land, does not imply that the Crown already owns (or does not own) the special land in question or, in the case of riverbed, whether a river is or is not navigable.
21. The regulator may consult with the Department of Conservation when preparing this advice to Ministers.
Other Matters Relating to Regulators Functions, Powers, or Duties of the Regulator
22. In providing advice to Ministers you, as the regulator, must:
a. perform your functions in a timely, consistent, and efficient manner;
b. seek sufficient information from applicants for you to be assured of the accuracy of any information, advice, recommendations, or assessments of any relevant benefits provided to Ministers;
c. verify information provided by applicants by seeking evidence or input from third parties at the regulator’s discretion;
d. seek to recover your operating costs in relation to applications for consent from applicants through fees set by regulation; and
e. monitor compliance with any conditions of approval, consent, permission, or exemption granted under the legislation.
23. The regulator’s functions also include providing
general information to applicants, compiling and keeping records, and making available statistics. This should include the dissemination of information on investment in New Zealand and publicly explaining the nature of our regulatory regime.
Revocation of Previous Letter
24. The Ministerial directive letter dated the 31st day of October 2007* is revoked on and from the date this Ministerial directive letter takes effect.
Date Letter Takes Effect
25. This Ministerial directive letter shall come into effect on and from 4 September 2009.
Yours sincerely
HON BILL ENGLISH, Minister of Finance.
*New Zealand Gazette, 15 September 2007, No. 123, page 3244