Foreign buyers breaching overseas investment laws
Saturday, 25 July 2015
More than 100 investigations into suspected breaches of investment laws by foreign buyers were launched in the last five years.
But details of the probes will remain under wraps as regulator, the Overseas Investment Office, won't name consent holders.
Foreign investors must meet a set of strict conditions to win consent to purchase sensitive land. These include promises to create jobs or boost skills and investment.
Labour says there is no way of knowing if buyers are keeping their end of the bargain because the OIO keeps scant statistics and doesn't perform on-the-spot checks.
Land information spokesman Stuart Nash released the figures as his party develops policy to tighten up monitoring of those buying prime Kiwi land.
He says the OIO is relying on buyers to provide evidence they are keeping promises.
'[The OIO] just have to rely on the fact that these buyers are being honest. [Buyers] are noting things they think the OIO want to hear in the knowledge that the odds of them being audited are virtually nil.
'And so I wonder if this is just the tip of the iceberg. We need people out in the field undertaking spot audits making sure these promises are being delivered.'
Nash says the OIO's $2.9m budget hasn't moved since 2011, and his party would boost funding and staff.
In the decade since the Overseas Investment Act was passed, 974 consents for the acquisition of sensitive land were granted.
Developers promised to create new jobs in 716 of successful applications, and in boost investment in 608 sales.
Figures reveal the OIO discovered no breaches of consent conditions in 2010 and 2011 - but began investigations into 22 other breaches of the law, including the purchase of four of the Crafar family farms.
In 2012, it judged six buyers failed to comply with the Act. The OIO also commenced 17 inquiries into other suspected breaches.
The following year there were 22 new investigations. Of three failures to comply in 2012, two are still being monitored. Last year the number rose to nine, with six cases still live. Another 24 investigations began into other suspected breaches.
Nash says Labour would introduce yearly reporting on compliance. 'We would actually make the information available to the public…to show that foreign investment is creating jobs or is creating export earnings, bringing in new skills or business technology, as per the promises made on the applications.'
His colleague Phil Twyford spent the last fortnight defending a campaign against non-resident Chinese house buyers. Nash says his new policy is not anti-Asian and he is pro-foreign investment.
'In fact, I welcome it because we need it to grow this economy. But there is a difference between good quality and poor quality investment - at the moment we have absolutely no idea of the value that is, or isn't, being added.'
A spokesman for the OIO confirmed consent holders must provide written reports on ongoing compliance. 'The reports provided are then compared against the benefits claimed. If there is a discrepancy, or if the OIO is not satisfied with the evidence provided, the OIO will seek an explanation or further information from the applicant,' he said.