In a stunning legal bombshell late this afternoon, the Government appears to have admitted that the agency tasked with approving overseas investment in New Zealand has been applying the wrong criteria to its decisions for years.
A media statement from Associate Finance Minister Jonathan Coleman and Land Information Minister Maurice Williamson says the High Court ruling today has clarified how requests for overseas investment should be assessed.
The court was critical of the OIO process, saying the office had decided that the Chinese bid for Crafar would be beneficial to New Zealand because of the economic output of the farms and the capital expenditure planned. Justice Miller’s ruling says the OIO got the criteria wrong, because the farms would have produced income in the hands of NZ owners as well. For the same reasons, NZ owners would be just as likely to have spent capital upgrading the farms, therefore – said the judge – no significant value was being added by the Chinese as required under the law.
Ministers Williamson and Coleman have welcomed the clarification:
“On the second issue, the Court ordered the decision to approve the sale be reconsidered. The Court’s ruling calls for a different test to be applied to the economic factors in section 17 of the Overseas Investment Act than the Overseas Investment Office had previously applied.
“Instead of applying a ‘before and after’ approach to the economic factors in section 17, as the Overseas Investment Office did in its recommendation to Ministers, the Court has ruled those factors should be assessed by asking what would happen ‘with and without’ the overseas investment. In this case, it is likely this will only apply directly to four of the 21 factors – section 17 (2) (a) (i), (iii), (iv) and (vi).
“This ruling changes the interpretation of how the economic factors in section 17 should be assessed,” Mr Williamson says. “In light of this ruling, the Overseas Investment Office will now apply an approach consistent with the Court’s ruling and resubmit a recommendation report to Ministers.”
SHockingly, however, the Ministers’ statement proves the OIO may have been misinterpreting the law on every decision that’s come before it.
Billions of dollars worth of New Zealand land may have been sold on a faulty analysis of the rules.