Federated Farmers Submission on the Overseas Investment (Forestry) Amendment Bill

Central government policies artificially encouraging forestry have been of growing concern to our farming members over recent years. 

Federated Farmers supports the Government’s strategic objective of the “right tree in the right place”. However, we are concerned that policies have distorted land use outcomes to the detriment of rural economies and environments. Forestry has an important place in the New Zealand landscape but when afforestation is driven by interventionist government policies that distort land use then the long term economic, social, and environmental impacts for regional communities and for New Zealand as a whole are potentially large and largely irreversible. 

The Bill as drafted will not restore a level playing field to land use policies in New Zealand and will not halt the negative social, economic, and environmental impacts being felt in rural New Zealand communities. 

The playing field will continue to not be ‘level’. This is because Cabinet has decided that farmland-to-forestry conversions will go through the general benefit to New Zealand Test. Yet farmland-to-farmland sales will continue to have to go through the more stringent test for farmland where the benefits have to be ‘substantial’ and more than what a New Zealand owner could do. Our understanding is that the Government would not consider scrapping the farmland test. 

We are concerned that the general benefit to New Zealand test will not provide materially difficult hurdles for applicants for farmland-to-forestry conversions. So, while the Bill is a step in the right direction it does not result in a level playing field Federated Farmers advocates for. 

While it is correct that international forestry investors cannot directly transfer NZUs overseas, they can however sell the NZUs in New Zealand and transfer the revenue overseas. From an overseas investment perspective, by not easily enabling a thorough assessment of the costs of the foreign investment (discussed in Section 6 of this submission), overseas investors are able to enrich themselves at the cost of those New Zealanders in vulnerable rural communities. 

It is Federated Farmers’ strong submission that farmland-to-forestry conversions should be subject to the farmland test. 

Federated Farmers recommends that clause 4 of the Bill be amended to simply refer all farmland-to-forestry applications for consideration under the farmland test. 
Our full submission can be reviewed on the right