New Overseas Investment Act rules should not have a massive impact on farm prices, Prime Minister John Key said today.
Government announced changes to Ministerial powers under the Overseas Investment Act in September, giving them more flexability to reject foreign applications to buy up 'sensitive' farmland.
At the time, Finance Minister Bill English said farm values could fall due to the new rules, but that the government felt the farming community was ready for a drop in prices.
Key appeared before the Federated Farmers National Council meeting in Wellington this afternoon and was asked whether changes to the overseas investment rules would hit land values.
"I don't think it will enormously," Key said, adding the Minister responsible could not just say 'no' to applications if he wanted to.
"So when Phil Goff got up the other day and said 'you gotta do this and you gotta do this and you gotta do that', which is already in section 17 [of the Act], 'and all this means I'll generally say no, not yes, if I become the governmnent', well you can't just do that.
"You'd be judicially reviewed and they would eventually say you're in breach of the law.
"In our view the changes we've made will give the minister more powers, it will stop mass aggregation of farmland but I don't think it will have a massive impact on farm prices," he said.
Concerned about the Chinese buying up NZ's productive base
Meanwhile, Key also let on as to what he said was the main driver behind the rule changes to the Act - to do with the increasing possibility of large land aggregations made by states like China as food security issues loom.
"What we were worried about was a scenario, not where an individual or a company came in and bought a farm, but we can see that long term food security issues are genuine issues that countries like China and those with a very large population are considering," Key said.
"And they could easily, if they wanted to, go in and buy a very large part of the productive base in New Zealand," he said.
"Even if it wasn’t economic today, on the basis that they’ve got 1.3 billion people to feed in years to come, and all the economics tell you they do not have enough arable land to feed their people as their population not only rises, but their wealth rises and they demand higher prices.
"That could have quite a lot of implications for Fonterra, for our productive sector and for the way that we operate.
"So that’s the rationale behind the rule change – to try and reflect that there might be a changing pattern in there," he said.
(Update adds concerns on land aggregation)