Māori in Northland lobbied hard for a US billionaire to be exempt from a ban on foreign speculators buying houses.
The government has come under fire this week for a clause in the Overseas Investment Amendment Bill that would have exempted the Te Arai development south of Whangarei from new restrictions on overseas buyers.
Two iwi - Te Uri o Hau and Ngāti Manuhiri - have done deals with New Zealand developer John Darby and US billionaire Ric Kayne to build golf courses and luxury homes on coastal land bought with Treaty settlements.
Opposition MPs objected to the exemption clause yesterday.
The Speaker ruled the exemption out - against Treasury advice - on the grounds that a public bill cannot be used to benefit an individual.
However, the iwi said their economic future depended on Mr Kayne.
Cabinet Minister David Parker said the exemption for the Te Arai development had been proposed for the benefit of local iwi.
Mr Parker said the iwi had told the select committee and local MPs they had suffered long delays in the planning process for the coastal development, and were concerned that a ban on foreign buyers would adversely affect it.
He said he discussed the matter with Crown/Māori Relations Minister Kelvin Davis and they decided a short term exemption was appropriate.
He rejected the suggestion that he introduced the clause because of an association with Mr Darby, saying it was "an outrageous allegation".
"As I have already made clear I'm not a friend of [John Darby], I'm not a business associate of him.
"I have known him for 20 years because he was a business associate of a man called Howard Patterson, who I used to work with, who's been dead for 15 years. The last time that I saw John Darby would be when I bumped into him somewhere, it's so long ago I can't remember where and when.
"I have never spoken to him about this. I have never had written correspondence with him about this, and I have never engaged with anyone who is lobbying on his behalf in respect of the issue."
The two northern iwi said there were good reasons for exempting the Te Arai projects from the bill and they hoped that other proposed amendments would have the same effect.
They had planned to build 700 coastal homes for their own people on Crown forest land they bought with their treaty settlements, but had to abandon that plan in the face of overwhelming objections and planning obstacles.
Instead they opted for a partnership with Mr Darby and Mr Kayne.
The developers proposed 106 luxury homes targeting wealthy overseas buyers, one private and one public golf course, and the creation of a 400ha ecological reserve to be gifted back to the public.
Te Uri o Hau Trust chair Georgina O'Connell said the iwi was sad to sell its land but had little choice.
She said the deal was a good one for the Mangawhai community as well as the iwi.
"I think we are very fortunate to have come across Ric, he has absolutely worked in favour of Te Uri o Hau in terms of kaitiakitanga," Mrs O'Connell said.
"He also runs a charity out there through his golf course where that community benefits quite significantly."
She said Mr Kayne used local contractors for the project and Te Uri o Hau had set up a nursery to supply and plant 1,000,000 native trees for it.
The exclusive golf course Tara Iti attracting wealthy overseas visitors, including Barack Obama who played there recently.
In his submission on the Overseas Investment Amendment Bill, Mr Kayne said Tara Iti now employed 50 people full time, 30 part time, and provided work for 100 contracted caddies.
Ngāti Manuhiri chair Mook Hohneck said his people had lobbied hard for amendments because the project's a good one and they need it.
The Overseas Investment Amendment Bill still has three stages to go through in Parliament before it becomes law and further amendments are possible.
Te Rarawa chief Haami Piripi said overseas investors had been a godsend for Māori trying to develop their assets and it was crucial they were not scared off by changes to the Overseas Investment Act.
Mr Piripi said the Far North iwi had always struggled to attract the backing they neededto grow their assets from within New Zealand.
He said neither the government nor New Zealand businesses had been behind them, and had always seen Māori and Māori business as a bit of a problem.
But he said overseas investors - especially the Chinese - never saw it that way.
Mr Piripi said Te Rarawa would have had to unpick forestry contracts with Chinese partners if the Bill's harsher provisions had not been changed.
He said the final Bill must not exclude the kind of investors the country needed.