What is the Overseas Investment Office and why is it controversial?
Thursday, 16 August 2018
The Overseas Investment Office deals with matters dear to the hearts of Kiwis - ownership of land by foreign companies or individuals.
The OIO recently lifted staff numbers to about 30 to process the average 150 applications from overseas investors each year.
Of those 30 staff, about 25 are focused on processing applications, operational policy, and monitoring conditions and enforcement.
In response to the new regime under the Labour-led Government, the OIO is in the process of appointing more people.
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They will include three new managerial roles, focused on consents for housing, forestry, and monitoring and intelligence.
'We will also seek to appoint about four more solicitors, and about half a dozen more applications case officers,' Land Information New Zealand deputy chief executive policy and overseas Investment Lisa Barrett said.
What is the Overseas Investment Office?
The Overseas Investment Office is a specialist unit within Land Information New Zealand that assesses applications from overseas investors to ensure they meet the criteria set down in legislation. Until now, most decisions have been in accordance with the Overseas Investment Act 2005, but there have been several amendments changing the rules since the 1970s.
What investments does the OIO Act apply to?
Overseas people and organisations that are more than 25 per cent foreign-owned wanting to invest in New Zealand's sensitive land, significant business assets and fishing quota, must get consent. It usually involves rural land of more than 5 hectares, and land of more than 0.4ha adjoining conservation areas or the foreshore.
Why do the OIO consents reports keep the name of an overseas investor secret, and/or the value of a deal?
The lawyers acting for overseas investors often argue that a deal is commercially sensitive - a competitor might benefit by knowing, or a Stock Exchange-listed company is required by rules that it must give information to all investors at the same time.
There are provisions allowing suppression of names. For example the ownership of Lilydale Station could only be traced back to a lawyer's name in the Companies Office, and the ultimate foreign owner was never revealed except by Stuff.
Sometimes an entire deal is secret with nothing on the decisions sheet except the name of the applicant's lawyer. The OIO may reveal the facts on its web site at a later date.
What kind of investments from overseas people don't require consent?
Generally smaller properties such as an apartment or home within the OIO size thresholds. This was why it was difficult for previous governments to collect data on the number of foreigners or their agents buying Auckland apartments and homes.
What does the OIO look at?
To obtain consent, investments from overseas investors must deliver benefits 'over and above those that a likely New Zealand investor would deliver'. The benefits can be economic, such as additional jobs or improved market access, and can also include providing walking access, undertaking pest control, protecting and enhancing indigenous fauna and vegetation.
The investor must also pass a good character test.
Who has the final say on consents?
Consent decisions are made by ministers of the Government of the day, based on advice. But the OIO can make decisions itself under delegation from ministers.
Why have decisions been controversial?
In the past, the OIO has been accused of making liberal decisions and accepting information provided by applicants' lawyers. OIO officials have stepped up monitoring, and members of the public or stakeholders have sometimes provided information.
What happens if an applicant fails to obtain consent or deliver on promises of benefits to New Zealand?
In a few rare cases the OIO has applied to the High Court to cancel deals or force a sale. The OIO has come under fire when media or members of the public have highlighted failures.