1/06/2022·1 min to read
New Bill proposes tighter restrictions on forestry conversions by overseas investors
There has been significant industry and political dialogue in recent years about overseas investment in farm land for conversion to forestry and the ease in which foreign investors can acquire such land under the special forestry test.
In February, Treasury announced that there would be a review of the forestry provisions under the Overseas Investment Act and, yesterday, the Overseas Investment (Forestry) Amendment Bill was introduced into Parliament.
The key proposed changes are:
the special forestry test will no longer be available for forestry conversions (but will remain for overseas investments in existing forestry);
the higher benefits threshold for farm land will not apply to forestry conversions that are to be used exclusively or nearly exclusively for forestry activities and where a new crop will be established after harvest; and
removal of the modified benefits test (which is now largely redundant with the change to the counterfactual under the benefit to New Zealand test that was introduced last November).
There are some slight changes to the residential rules and further clarification that the special forestry test will not be available for permanent carbon forests. Standing consents will continue to be available, but after the Bill is implemented, only for existing forestry. Existing standing consents, or those applied for before the changes come into effect, will be governed under the existing rules which permit acquisitions for forestry conversions.
There will be the opportunity to make submissions as the Bill goes through the Select Committee process but we do not expect there will be any Parliamentary appetite for push back on forestry conversions being included in the special forestry test. Submissions on the Bill close on 20 June 2022.
If you would like to discuss these proposed changes, please get in touch with one of our team.