Tuesday, July 16, 2024

Farm to forestry Bill to strengthen investment rules

A law change to ensure that forestry conversions by overseas investors benefit New Zealand has passed its final reading in Parliament.

Previously, overseas investors wishing to convert land, such as farm land, into forestry only needed to meet the ‘special forestry test’ – a streamlined test, designed to encourage investment in production forestry.

Associate Finance Minister, David Parker said the Overseas Investment (Forestry) Amendment Bill requires overseas investors to show their conversions will benefit New Zealand, by meeting the stricter ‘benefit to New Zealand test’.

“The existing rules did not give decision-makers enough discretion to determine the appropriateness of investment in a forestry conversion and whether it benefits this country,” Minister Parker said.

He acknowledged rural communities’ concerns about the potential environmental, economic and social impacts of farm land conversions to forestry, while also recognising the economic importance of the forestry sector.

“I want to be very clear to the sector and to investors: production forestry is and will remain important, both to the regions and to support our climate change goals,” the Minister said.

“The sector is a major contributor to the economy, jobs and rural communities. It employs about 40,000 and is the country’s fourth largest export earner.

“This Bill is not about stopping investment in the forestry sector. It ensures that any investment is beneficial to the country. Productive and sustainable investment is and remains welcome.”

The law change applies only to conversions and does not affect overseas investments in existing forestry land, which will continue to go through the special forestry test.

The Minister said broader work was underway to investigate the impacts of forestry conversions more generally.

The Bill also includes minor and technical changes to improve the operation and effectiveness of the Overseas Investment Act’s forestry provisions.

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