16 Feb 2012

Fresh OIO decision on farms likely soon

2:25 pm on 16 February 2012

A fresh decision on a Chinese bid for the Crafar dairy farms could be made within days.

The High Court on Wednesday ordered the Government to reconsider its approval of Shanghai Pengxin's $200 million offer for the 16 farms.

Prime Minister John Key says the court has reinterpreted the economic benefit test under overseas investment laws.

The Overseas Investment Office says it will take just a few days to prepare a new recommendation for ministers.

OIO manager Annelies McClure says there is quite a lot of evidence to help it assess what a hypothetical New Zealand purchaser might do with the farms.

Ms McClure says the OIO would then look at what extra benefits could come from an overseas purchaser.

She says it is not the first time the OIO has faced a judicial review of its decisions and it has successfully defended a number of decisions in the past, approving sales to foreign buyers.

A specialist in administrative law says the High Court ruling will set a more rigorous precedent for assessing foreign investment in New Zealand.

Grant Illingworth QC says the Overseas Investment Office and the ministers will have to apply a more stringent approach in relation to the economic benefits of foreign investment to New Zealand.

Bank of New Zealand chief economist Tony Alexander says the High Court ruling could put off foreign investment.

Mr Alexander says it won't have a positive affect on New Zealand's reputation.

Opposition views

Labour says Government ministers have always had the power to turn down the Chinese bid for the Crafar farms and should do so now.

Finance spokesperson David Parker says the minister should stop pretending he is not allowed to reject the Office's recommendation.

Green Party co-leader Russell Norman says it would be a genuine tragedy if the Government changed the law to allow the sale of the farms to Shanghai Pengxin.

Dr Norman told Morning Report the Prime Minister has an opportunity to close the floodgates on foreign ownership of land.