Overseas Investment (Forestry) Amendment Bill

Members, we come now to Part 2. This is the debate on clauses 8 to 10, and the Schedule—“Other amendments”. The question is that Part 2 stand part.

Thank you very much, Madam Chair. Again, I must confess to a contribution that will be reasonably narrow in its nature. Again, I don’t profess to be an expert in the bigger-picture policy matters. I do understand, I think reasonably well, the different factors being played out. I look forward to the Minister explaining those further and those all around the Chamber interrogating him on those, too.

My relatively narrow question, then, is in relation to clause 10 of Part 2, which amends Schedule 4 of the Overseas Investment Act 2005. What’s happening there is that there’s a replacement of “applicant” with “persons referred to in subclause (2A)”; so broadening what it means to be an applicant and have that status. What we see in that provision is that what was previously understood to be the applicant also now includes not only the applicant themselves but also the applicant’s associates and also the individuals with control of the relevant overseas person.

I understand in general terms, of course, that we have such things as overseas persons; it’s at the heart of the overseas investment regime, whether in relation to forestry or otherwise, that we distinguish between those who are not overseas or—roughly speaking, I suppose—New Zealanders with the right, as opposed to the privilege, to purchase land and other sensitive assets within New Zealand. That much is understood; it’s obviously a key distinction between overseas or not.

And then we’ve got a relevant overseas person—of course, a person in the law can be not only a natural person, what we regard as a human being walking around, but also may be a legal entity. So to the extent that that could be a trust or a company, I do wonder—well, actually, a trust specifically. With the language there in clause (2A) and then in (c), “the individuals with control of the relevant overseas person.”—I wonder if the Minister could confirm that it might be possible for individuals or natural persons to have control of a trust, and therefore be its legal owners, but actually the beneficial ownership is the relevant test really, in terms of the overseas investment regime.

So my question to the Minister, and I think I might know the answer but I think it would nevertheless be useful for the Hansard to record his answer—his views are more persuasive than mine, as the member and indeed the Minister putting it forward, and therefore whose intentions are going to need to be understood by courts and applicants and so on. Is it intended that those individuals that have control of a relevant overseas person, if that person is a trust, if we’re talking about beneficial ownership as well as legal ownership—because, of course, what we don’t want to have is a scenario where New Zealand - based individuals; perhaps lawyers, accountants, or other such persons; I’ll choose my words carefully as a former lawyer myself. If such persons might have control of a relevant overseas person or trust on behalf of those who are, to all intents and purposes, overseas persons.

I know I’ve said “persons” a lot. I’m going to stop saying “persons”. I’m going to stop saying words altogether, actually. I’m going to resume my seat and hope that the Minister can provide some light on that subject.

This clause was added at the recommendation of the Finance and Expenditure Committee to clarify that when considering an application for a forestry standing consent, the regulator can consider the compliance record of the wider group of relevant entities and individuals associated with the applicant. I would have thought it would include, for example, the directors of a company if it was a trust that was purchasing it. I’m not sure as to whether that would be caught, but I can get that information from officials if the member desires.

I’ll take a call on this and give Minister Parker, hopefully, some time to provide a more fulsome answer for Mr Penk’s very probing question there on clause 10.

Now, I have a question in relation to the new clause 8A, around including the exemption for accommodation if the accommodation is for forestry purposes. So, obviously, the exclusion is—it can’t be residential properties on the land, but this creates the exception for that, if that accommodation is there for forestry purposes only. I think it’s that last bit, “for the purpose only of supporting forestry activities”, that I just wanted to test with the Minister, because I have some concern that there may indeed be accommodation on a forestry piece of land that is used for dual purpose—perhaps for both the forestry aspect in terms of managing that particular title of land, but also perhaps an agricultural use in terms of managing an adjacent property, a sheep and beef property or whatever it may be, and therefore having a use that is not forestry only. Or, indeed, having someone who has a property on a title working in the forestry aspect, but other tenants in that house are working on the neighbouring side of the fence, an adjacent title of land that has agricultural purposes.

Is that therefore excluded under this reasonably tight definition, being “for the purpose only of supporting forestry activities”? I would like to think that it would not exclude situations where there is a dual use. Or, indeed, it may be that it’s not necessarily the same house or dwelling but it may be in adjacent sharing quarters, for example, that just happen to be located on this block of land instead of across the fence. This sometimes may be the case in farming senses, where properties end up where they are most conveniently located, from time to time, and that may of course have preceded a particular land use that has evolved over time but, in the broader context of that area, the ongoing land use remains for agriculture purposes from some part of the property or one particular dwelling in a wider curtilage sense and not another.

So can we clarify whether or not those particular examples might still be considered acceptable in terms of the carve-out under new sections 17(5)(a) and 17(5)(b), set out in clause 8A? Thank you, Minister.

In respect of overseas companies that are trusts, yes, the grouping of people whose, for example, compliance records can be assessed overseas by the Overseas Investment Office goes wider than the legal entity to include those who are in charge of it or in control of it.

In respect of the issues most recently raised in respect of new clause 8A, this was another minor technical change that was recommended by the Finance and Expenditure Committee to, effectively, give a little bit more flexibility to the Overseas Investment Office to approve sensible arrangements in respect of buildings that are on the land.

I move, That the question be now put.

Thank you very much, Madam Chair. Goodness me! The other aspect I thought was interesting of Part 2 is clause 8A, which amends Schedule 2 of the Overseas Investment Act, and that is talking about a certain subclause within that, and it’s all about what could be regarded as land that’s supporting forestry activities. And, of course, forestry activities is an important definition. It’s an important concept to the bill. That’s what we’re interested in, of course, here we’re talking about the importance of forestry, and, you know, from a “New Zealand Inc.” perspective. Of course, one weighs up the various competing considerations, whether that’s property rights of those who own land and should, you know, on the face of it, be able to sell those to whoever they should please, versus, of course, you know, the more strategic aims that we might have in terms of the land being put to its most productive use overall.

So, of course that’s really significant, what we regard as such land. In this particular provision we see that where “… accommodation is being provided for the purpose only of supporting forestry activities … being carried out on the farm land … or the relevant land …”—and—“all the buildings being used for that accommodation are located on [the] land on which some or all of those forestry activities are being carried out …”, etc. So I think what’s happening there—but again, as always, grateful for the confirmation of the Minister—is that we’re saying that well, there might be land that’s ostensibly or mostly being used for forestry activities, some bits of it may not be, but they may not be in a way that makes sense, in the sense that they are enabling forestry activity. So there might be accommodation but we’re not talking about a hotel or other commercial accommodation. It’s that specifically which is used for supporting forestry activity. So it seems to me that that’s consistent with the purpose of the bill, the intent of the regime as a whole, and I think that’s probably a sensible interpretation that anyone looking to invest under this Act should have regard to.

I think that would be the way that it would be interpreted if there’s a line call that the courts might be asked to make or, indeed, the office itself might be asked to make, where there might be accommodation that’s perhaps ambiguous as to where it starts and ends, and there might be activities that are ancillary. Maybe it’s accommodation to support forestry with workers but the workers might stay on longer in New Zealand if they’re temporary for the purposes of a holiday or whatever. So any comments the Minister can make in relation to that to help clarify the intent of the regime, and, indeed, this particular provision, I think would be really helpful and interesting.

I think that’s the same issue that Mr van de Molen just raised, and so I refer him to that answer, respectfully.

Respectfully, there was a slight difference there, Minister, between Mr Penk’s contribution and my own, his initially being around the definition of forestry activities and then the use of that land. Mine was more around whether there could be accommodation either in the same dwelling where one person in there is working on the forestry land; another person, tenant, or worker in the same accommodation is working on adjacent land or, indeed, there are adjacent sharing quarters, for example, that are on the forestry land but have no use for that, but are used on an adjacent land and are perhaps rented to that farmer, or, indeed, in the sense where we have forestry workers coming into the accommodation for a period of time to carry out pruning, for example, and then leaving again, and the accommodation—is it then able to potentially be used for other purposes outside of the time when it is being used for forestry purposes?

So, obviously, there are seasonal elements or specific times when forestry work will be required to be carried out, and plenty of times when it will not be, and the accommodation may not be used at all. So during those times, can it be used, for example, as shearers’ quarters for a neighbouring farm when they are having their peak shearing season or for accommodation for school camp groups, for example? Are these sorts of activities enabled? Because it seems to be a very tight definition around purpose only of supporting forestry activities. My understanding, not being on the Finance and Expenditure Committee, but my understanding was, and to your point earlier, the intent was to allow some more flexibility, so can I get confirmation from the Minister that the examples that I have given would be allowed under his understanding of the intent of this? Because certainly it would be for me an appropriate consideration, especially if it’s not at the cost of forestry work. You know, if that work can be carried out and then, when it’s not being used, it can be utilised for some other cause, as long as it’s not impacting on that forestry use, then surely that should be enabled as well.

Thank you, Madam Chair. I can confirm that, but that’s not in the schedules; that’s in the first part of the bill, which does contain provisions to allow that flexibility. But we’ve already considered that part of the bill.

Thank you, Madam Chair. Minister, I wonder if you could just give the committee a little bit of clarity around the purpose behind amending Schedule 3, which is in clause 9.

So I note there’s a focus here on unconsented forestry rights. I’d be grateful if you could just clarify, for the record, why it was necessary to change this to focus on unconsented forestry rights, and noting that in clause 9, new clause 7, it says, “In this clause, unconsented forestry right means a forestry right that is acquired otherwise than in reliance on a consent”—that’s been changed to say—“any of the following: (a) a consent: [or] (b) an exemption in, or an exemption granted under, this Act or the regulations (other than an exemption under this clause).”

So the secondary part of this is why an unconsented forestry right could be otherwise then—the exemption; what is meant by an exemption granted under this Act? If you could provide some more information, for the record, on what that means, as well, please.

This is another minor and technical change which was made to clarify that when determining whether the 1,000 hectare exemption applies only unconsented forestry rights are considered in that calculation, i.e., if they’ve already been approved elsewhere, they don’t need to be counted again.

I move, That the question be now put.

Motion agreed to.

Members, the Hon Eugenie Sage’s amendments to Part 2 set out on Supplementary Order Paper 219 are out of order as being inconsistent with the previous decision of the committee. The question is that Part 2 stand part.

Part 2 agreed to.

The question is that the Schedule stand part.

Schedule agreed to.

Clauses 1 to 3