Overseas Investment Amendment Bill

Transcription

1 Overseas Investment Amendment Bill Answers to additional questions from the Finance and Expenditure Committee 27 February 2018 Prepared by the Treasury

2 Who requires consent to purchase residential land The Overseas Investment Act (OIA) requires overseas persons to obtain consent for the purchase of overseas investments within its scope. The Bill provides new definition of overseas person for the purposes of residential land investments. Summary: Who can purchase residential land? NZ Citizens Australian Citizens Permanent resident visas (PRVs) Australian PRs Pathways to purchase a house to live in Pathways to purchase residential land to develop Do not require consent to purchase residential land Do not require consent if they meet the 12 months/183 days test (i.e. have been residing in NZ for at least the past 12 months and have been present in NZ for at least 183 days in the past 12 months) Resident visas (RVs) PRVs that do not meet 12m/183d test All other persons (including temporary visa holders) Can only purchase a house to live in if they obtain consent through the commitment to reside in NZ test Under this test, holders of specified visa may be able to obtain consent to purchase one house for use as their home in New Zealand on the condition that they sell if they leave. Cannot purchase a house to live in Can purchase residential land for development (but cannot live on the land) if they obtain consent through the increased housing on residential land test* or the benefits test** * The increased housing on residential land test requires the person to build additional houses, or build/extend a long-term accommodation facility. If building houses, these must be on-sold. If building/extending accommodation facility, this can be onsold, leased, or operated directly by the overseas person. ** The benefits test is the current test under the OIA to purchase the land the overseas person must demonstrate that the purchase would benefit NZ. Residential land must be used for a non-residential purpose, used to increase housing on residential land (and then generally on-sold), or sold (e.g. surplus land not needed for the development) Individuals The Bill imposes no restrictions on New Zealand citizens or permanent residents ordinarily resident in New Zealand. For residential land, an individual will be ordinarily resident in New Zealand if they hold a permanent resident visa; and have been residing in New Zealand for at least the past 12 months; and have been present in New Zealand for at least 183 days in the past 12 months. Other residence class visa holders are not considered ordinarily resident in New Zealand for the purposes of purchasing residential land. (This differs from the existing definition in the Act of ordinarily resident in New Zealand, which would remain in place for other investments.) Body corporates and unincorporated bodies Broadly, a body corporate or unincorporated body will be an overseas person if it is incorporated outside of New Zealand, or if it is 25% or more beneficially owned or controlled

3 by overseas persons. The Act contains detailed rules on how ownership and control is measured for different types of bodies, including trusts and partnerships. These rules also apply to trusts. If overseas persons control 25% or more of the decisions of the trust or if 25% or more of the trust s beneficiaries are overseas persons, the trust will also be subject to the restrictions. 1 When assessing applications for consent, the Act requires an assessment of the ultimate beneficial ownership and control of the body corporate or unincorporated body seeking to make the investment. Associates The OIA requires consent for transactions where an associate of an overseas person acquires an interest in land, or acquires rights or interests in securities of a person that owns or controls an interest in land. The meaning of associate is set out in section 8 of the OIA. Broadly, it includes a person that is controlled by, acts on behalf of, or acts jointly with an overseas person, or participates in an overseas investment as a consequence of an arrangement with an overseas person. This means, for example, that an investment in residential land made on behalf of an overseas person by a New Zealand citizen would require consent. Treatment of Australians It is proposed that regulations to be made under the Bill would exempt Australian citizens, and all Australian permanent residents who are ordinarily resident in New Zealand from the requirement to obtain consent to purchase residential land (unless the land is currently sensitive land under the OIA, in which case screening will continue). Australian enterprises would also be exempt if they carry on substantive business operations in Australia, or Australian and New Zealand investors own and control more than 75% of the enterprise. The application of the counter-factual test The OIA currently sets out two pathways for acquiring sensitive land. Both require that the overseas person meet an investor test (relating to their business experience and acumen, financial commitment to the investment, and good character). 1 In the case of discretionary trusts, if the following applies, a discretionary trust will not, in principle, be considered an overseas person: where less than 25% of the trustees are overseas persons; where less than 25% of the persons having the power to appoint, or control the appointment of, the trustees, or amend the provisions of any instrument establishing the trust, are overseas persons; and where overseas persons and New Zealanders are discretionary beneficiaries. However, if at any stage all of the discretionary beneficiaries are overseas persons, then the OIO would consider that the trust has become an overseas person. Also, where the trustee of a trust is controlled or influenced by an overseas person, then the trustee may be an associate of that overseas person.

4 Intending to reside in New Zealand indefinitely no counter-factual The first pathway is that, in addition to the investor test, the investor is a New Zealand citizen, ordinarily resident in New Zealand, or intending to reside in New Zealand indefinitely (current section16(1)(e)(i); would become section 16A(2) under the Bill). This pathway looks only at whether the investor is intending to reside in New Zealand indefinitely and therefore the OIO will not apply the counter-factual. Benefit to New Zealand counter-factual applies The second pathway requires that, in addition to the investor test, the investor must show that their investment is likely to be of benefit to New Zealand (current section16(1)(e)(ii); would become section 16E(a) under the Bill). If the land involved is more than 5 hectares of nonurban land, then that benefit needs to be substantial and identifiable (current section16(1)(e)(iii) ; would become section 16E(b) under the Bill). The way that an investor shows that their investment is likely to be beneficial is through the 21 factors listed in the OIA and Overseas Investment Regulations. The counterfactual test requires that the OIO consider what is likely to happen with the overseas investment and without it. The language of some of the factors asks whether the investment is likely to result in additional jobs, or increased export receipts, for example. The High Court in the Tiroa E decision 2 clarified that those factors needed comparison. For example, how many jobs were likely to be created with the overseas investment, and how many without the investment. Where those jobs are likely to arise in any case, they should not be taken as part of the benefit, or substantial and identifiable benefit from the investment. However, not all of the 21 benefit factors are capable of having a counterfactual assessment applied to them, in particular a number of factors in the Regulations. For example, Regulation 28(e) asks whether the overseas person has previously made investments in New Zealand that have been or are of benefit to New Zealand. Therefore, the second pathway requires the OIO to understand who is likely to own the asset if the overseas person does not acquire it, and what they are likely to do with the asset. This can be a hypothetical New Zealand investor. This counterfactual assessment what would happen with and without the overseas investment - will then be applied to any of the relevant factors that the investor has made submissions on. A full list of the 21 benefit factors, indicating where the counter-factual applies, is set out in Annex One. Estimated time to decide sensitive land applications Currently, without the new consent pathways proposed by the Bill, applicants for consent must satisfy a number of criteria, including the core investor test criteria. In addition, consent to acquire sensitive land will only be granted if: the transaction will, or is likely to benefit New Zealand; or 2 Tiroa E & Te Hape B Trusts v Chief Executive of Land Information [2012] NZHC 147

5 the relevant overseas person intends to reside in New Zealand indefinitely. All applications for consent under the benefit to New Zealand pathway (first bullet point above) require use of the counter-factual The amount of time it takes to currently assess an application is dependent on a number of variables including: the quality of the application received: a considerable amount of time can be spent waiting for applicants to provide further information, and the complexity of the application. The average assessment times for decisions on sensitive land applications from February 2017 until January 2018 for the two pathways set out above were: Decision Average assessment times (working days) Intention to reside indefinitely 46 Sensitive Land (by OIO) 3 88 Sensitive Land (by Ministers) 111 Treatment of Hotels under the OIA and the Bill The treatment of hotels under the sensitive land provisions of the OIA and amendments proposed in the Bill depends on the status of the land they are built on. Hotels under the OIA v the Bill Under the existing OIA, an overseas person will require consent to purchase an existing hotel on sensitive land, to build a new hotel on sensitive land or to purchase a unit in a hotel that is on sensitive land. Examples of sensitive land under the OIA include non-urban land over 5 hectares, land over 0.4 hectares adjoining a lake and land over 0.2 hectares adjoining the foreshore. See Annex Two for full description. If the hotel is not on sensitive land, no consent will be required (unless it involves significant business assets as defined in the OIA 4 ). Under the residential land regime in the Bill, an overseas person will require consent to purchase a hotel on residential land, to build a new hotel on residential land or to purchase a unit in a hotel that is on residential land. (See Residential Land and the Future Urban Zone above for further explanation). 3 The OIO is delegated authority to make decisions on some less sensitive applications. 4 An overseas investment in significant business assets is the acquisition of a 25% or more ownership or control interest in a body corporate or unincorporated entity that is valued at $100 million or more, or greenfields investment of $100 million or more. Note: Australian investors have a $516 million (indexed to inflation) threshold pursuant to our CER obligations and CPTPP investors will have a $200 million threshold when CPTPP enters into force.

6 If the hotel is not on residential land, no consent will be required under new pathways in the Bill. However, consent may still be required under existing OIA sensitive land pathways (or if significant business assets are involved). What this means We expect that most existing hotels will have a property valuation category of commercial use. In these cases, the Bill does not alter the status quo i.e. consent is only required if the hotel is on sensitive land as currently defined or involves significant business assets. However, hotels may be developed on residential land. The Bill expressly provides that a hotel is not a long-term accommodation facility or residential dwelling, so cannot be consented under the new increased housing on residential land test. The property valuation category of the land might change to commercial use as a result of the development process (i.e. the council s rating valuations provider decides that the highest and best use of the land is commercial rather than residential ). This would mean consent would not be needed after that change of property valuation category (assuming the land is not sensitive for other reasons). However, overseas investment earlier in the project when the land has a residential property valuation category would require consent. If the property valuation category of the land remains as residential and the building constructed on the land is unit titled, each unit will also have a residential property valuation category. The benefit to New Zealand pathway (including the counter-factual) would be the only viable pathway. The consent will be subject to a condition that the overseas person does not use the land for residential dwellings or a long-term accommodation facility (retirement village, student accommodation etc). Arguments raised by submitters Some submitters have noted that it is common for hotels to be financed through the pre-sale of units in a hotel to individual buyers. The individual buyers will lease the units back to the developer to operate as a hotel while retaining rights to occupy the unit for a period of time each year. It is common for individual buyers of these units to be overseas persons under the OIA. These units may have a property valuation category of residential meaning that they are residential land under the bill. The benefits to New Zealand pathway (including the counter-factual test) will likely be the only viable pathway for overseas persons seeking to buy hotels (or units in hotels) in those cases. We understand that the financing arrangements described by submitters and summarised above can operate pursuant to a variety of models, which differ in the nature of the use rights that the individual buyer retains. The owner can retain discretion about whether they lease their unit and for how long. Allowing an overseas person unfettered rights to retain for their own use units in a hotel development would be difficult to reconcile with the objectives of the Bill.

7 Exemption power in new section 61(1)(aaa) Why is the exemption power required? New section 61(1)(aaa) provides for regulations to prescribe classes of dwellings not to be treated as residential dwellings under the OIA. It corresponds with the definition of residential dwellings, which would be inserted into section 6(1) of the OIA (by clause 7 of the Bill): residential dwelling (a) means a building or group of buildings, or part of a building or group of buildings, that is (i) used, or intended to be used, only or mainly for residential purposes; and (ii) occupied, or intended to be occupied, exclusively as the home or residence of not more than 1 household; but (b) does not include any dwelling (i) to the extent that it is, or is part of, a long-term accommodation facility or an excluded accommodation facility; or (ii) within a class set out in regulations as a class of dwellings not to be treated as residential dwellings in this Act (emphasis added) The Bill would insert into the OIA two similar terms that serve different purposes - residential land and residential dwellings. Residential land defines the types of land that the Bill would make subject to OIA screening as an overseas investment in sensitive land. That definition could not be altered by regulations. Residential dwellings has two key uses in the Bill: First, it relates to the new consent pathway for increased housing on residential land. To obtain consent under that pathway, an overseas person must: o increase the number of residential dwellings, or undertake development works to support that (see new section 16D(4)(a)(i)); or o increase the number of dwellings in a long-term accommodation facility or undertake development works to support that. Second, it defines what can be purchased as a residence to live in under the commitment to reside in New Zealand test, under new sections 16A(3)-(4) and 16B. The definition of residential dwellings is used to define development activities that are subject to a less onerous screening pathway than the existing benefits to New Zealand pathway. The exemption power in new section 61(1)(aaa) is required to prevent misuse of the increased housing on residential land test. The intention is that each residential dwelling is something capable of being purchased and lived in separately by a household. That is, to increase housing an overseas person must create a new residential dwelling that a household can occupy as its residence. The policy intention is that, for example, sleep-outs i.e. a small building at the back of a property with no toilet or kitchen facilities are not residential dwellings so cannot contribute

8 to increasing housing. Regulations could be made to describe such buildings, and provide that they are not residential dwellings. What is the purpose for granting the exemptions to exclude classes of dwellings The policy purpose is to define buildings or parts of buildings that cannot be counted as increasing housing under the increased housing on residential land test. What are the criteria for the granting of exemptions The Bill does not provide any criteria for the making exemptions. The policy intention of the exemption power is set out above. Summary of key definitions of land in the OIA and Bill Residential land As noted above, residential land means land that has a property category of residential or lifestyle in, or for the purpose of, the relevant district valuation roll. It also includes a residential flat in a building owned by a flat owning company. Residential land is a new concept proposed by the Bill. The Bill brings residential land within the category of sensitive land in the OIA (see below). Unlike the definitions of farm land and urban land (which require some judgment on the part of the investor), residential land is a bright line test that relies on the property category of the land on the district valuation roll (i.e. the category used for rating valuation purposes). Councils must categorise land into one of 13 categories, including residential and lifestyle categories. The categorisation is done according to the Rating Valuation Rules set by the Valuer-General, and is subject to audit by the Valuer-General as part of the (usually) three yearly rating revaluation process. These are a standardised set of rules which apply throughout the country. See Annex Three for a full list of property categories under the Rating Valuation Rules. A property s category will recognise the highest and best use of land, regardless of what it is actually being used for. The categorisation will take account of zoning, among other things. The categorisation is most likely to change upon the rezoning of land, or after a resource consent or building consent is issued (especially if those consents contemplate a change of use). Sensitive land An overseas person requires consent before acquiring sensitive land. Sensitive land is land that includes certain attributes or adjoins land with certain attributes and exceeds the relevant area threshold. Different area thresholds apply for different attributes. For example, land is sensitive if it: includes more than 5 hectares of non-urban land; or includes an historic place that exceeds 0.4 hectares; or exceeds 0.2 hectares and adjoins the foreshore.

9 The assessment of whether land is sensitive or not generally requires some land law and planning expertise. There are a small number of experts who provide a research service for investors and their lawyers. Farm land Farm land means land used exclusively or principally for agricultural, horticultural, or pastoral purposes, or for the keeping of bees, poultry, or livestock. The definition of farm land serves two purposes: it defines a class of land which must be advertised on the open market before it can be sold to New Zealanders; and contributes to the definition of non-urban land (see below). In most cases, it is easy to determine whether or not land is farm land. However, the definition causes difficulty for smaller blocks, marginally economic blocks, and blocks with multiple uses. Forestry land is not farm land. Non-urban land Non-urban land means- farm land; and any land other than land that is both: o in an urban area; o used for commercial, industrial, or residential purposes. The term non-urban land is used for two purposes in the Act: 1. to capture it as sensitive land - Non-urban land larger than 5 hectares is sensitive land; and 2. to set a higher benefit test an investor in such land must demonstrate that benefits from their investment are likely to be substantial and identifiable. These purposes appear to acknowledge the importance of New Zealand s productive land. Like with farm land, in most cases it is easy to determine whether or not land is non-urban land. However, the definition causes difficulty for blocks on the urban fringe (especially in rapidly developing areas). The difficulty arises from the words urban area, which are undefined and which demand an assessment of many factors to determine a property s status. Associated land The Act defines associated land mainly for anti-avoidance purposes. The definition prevents a person from buying multiple small lots in an attempt to circumvent the area thresholds in the sensitive land definition. The Bill proposes no changes to the concept of associated land. Auckland s future urban zone

10 Auckland s Future Urban Zone is a planning zone used in Auckland s Unitary Plan. The zone sits within the Rural Urban Boundary, which is used to identify land potentially suitable for urban development. The zone permits rural activities (such as farming) to continue until the land is rezoned for urban purposes. Future urban zoned land is most commonly found around Pukekohe, Drury, Warkworth, Dairy Flat, Silverdale, Wainui, Whenuapai, Red Hills, Riverhead, and Kumeu. Auckland s Future Urban Land Supply Strategy provides for these areas to be released for development over the next 30 years. Planning zones, such as Auckland s future urban zone, differ from council to council. They were not therefore considered a useful basis for defining residential land in the Bill. Relationship between future urban and residential land Land with a property category of lifestyle on the district valuation roll was included in the definition of residential land in the Bill because this land is likely to be developed for residential purposes in the future. Capturing this land was intended to avoid shifting demand from land that had a residential property valuation category to land that had a lifestyle property valuation category. Land in Auckland s Future Urban Zone is unlikely to have a residential property valuation category on the district valuation roll as, by definition, it cannot be used for urban activities. We expect most land that has a residential property valuation category would sit in one of the Unitary Plan s residential zones. 5 However, it is likely that the Future Urban Zone will include land that has a lifestyle property valuation category on the district valuation roll (as well as other property categories associated with rural uses of land). 5 Residential - Large Lot Zone; Residential - Rural and Coastal Settlement Zone; Residential - Single House Zone; Residential - Mixed Housing Suburban Zone; Residential - Mixed Housing Urban Zone; and Residential - Terrace Housing and Apartment Buildings Zone;

11 Relationship between different concepts of land in the OIA and Bill This flow chart focuses on the issues regarding overseas person property developers. It does not mention the commitment to New Zealand pathway for overseas persons wishing to purchase a home to live in.

12 Examples and maps of different land types Example one: East Tamaki Land A is a 0.6 hectare factory site at East Tamaki. It has a factory, warehouse and office space on the site. There is no residence on the site. Land A is zoned Light Industry and has a district valuation roll (DVR) categorisation of Industrial. Current status: At present, land A is not sensitive land as it neither contains nor adjoins a sensitive feature. Status under the Bill: Land A will not be residential land and therefore still not be sensitive land. An overseas person can acquire land A without consent. Example two: Mt Wellington Land B is a ¼ acre (1000m2 or 0.1 hectare) residential section in Mt Wellington. It has a house on it that was built in the 1920s, and is surrounded by similar properties. Land B is zoned Mixed Housing Suburban Zone and has a DVR categorisation of residential. Current status: At present, land B is not sensitive land as it neither contains nor adjoins a sensitive feature. Status under the Bill: Land B will be residential land but not otherwise sensitive land, and will therefore be sensitive land. An overseas person will require consent to acquire this land. Example three: Pukekohe development site Land C is a 6 hectare block on the northern boundary of Pukekohe. The owner lives in the house on the land but leases most of the land to the neighbour, who grazes sheep. The land is zoned future urban, and has a DVR categorisation of lifestyle. The site is suitable for development into residential homes. Current status: At present, land C is probably sensitive land as it is probably not in an urban area, and is therefore non-urban land. An overseas person will probably need consent to acquire land B. We cannot be definitive about the current status of land C as judgement is required to determine whether or not land C is sensitive or not. Status under the Bill: Land C will be residential land and will probably be sensitive for other reasons as well (see the current status above). An overseas person will require consent to acquire this land, but will probably be unable to use the Increased housing on residential land screening option. Again, we cannot be definitive about the current status of land C as judgement is required to determine whether or not land C is sensitive or not. Example four: Ardmore lifestyle block Land D is a 20 hectare block to the East of the Ardmore aerodrome. The owner lives in the house on the land but leases most of the land to the neighbour, who grazes sheep. The land is zoned Mixed Use Rural, and has a DVR categorisation of lifestyle. The site is not suitable for development into residential homes. Current status: At present, land D is sensitive land as it is not in an urban area, and is therefore non-urban land. An overseas person will need consent to acquire land D.

13 Status under the Bill: Land D will be residential land and will be sensitive for other reasons as well (see the current status above). An overseas person will require consent to acquire land D, but will be unable to use the new build screening option. Summary of examples Example Current status Status under the Bill Example one (East Tamaki) Not sensitive Not sensitive Example two (Mt Wellington) Example three (Pukekohe) Example four (Ardmore) Not sensitive Probably sensitive Sensitive Sensitive as Residential (but not otherwise sensitive) land Sensitive as Residential land and probably sensitive for other reasons Sensitive as Residential land and sensitive for other reasons Maps Map 1A: Map 1B: Map 1C: Map 2A: Map 2A: Map 2B: Map 3A: Map 3B: Map 3C: Flat Bush Aerial photograph Flat Bush Zoning Flat Bush DVR categorisation Pukekohe Aerial photograph Pukekohe Zoning Pukekohe DVR categorisation Ardmore Aerial photograph Ardmore Zoning Ardmore DVR categorisation Legend Zoning maps Residential zones Future Urban Zone Rural zones Open space zones Business zones DVR maps Residential Lifestyle Industrial and commercial Rural categories

14 Map 1A: Flat Bush Aerial photograph

15 Map 1B: Flat Bush Zoning

16 Map 1C: Flat Bush DVR categorisation

17 Map 2A: Pukekohe Aerial photograph

18 Map 2B: Pukekohe Zoning

19 Map 2C: Pukekohe DVR categorisation

20 Map 3A: Ardmore Aerial photograph

21 Map 3B: Ardmore Zoning

22 Map 3C: Ardmore DVR categorisation

23 ANNEX ONE: FACTORS FOR ASSESSING THE BENEFIT TO NEW ZEALAND TEST Section 17 of the OIA (with amendments made by the Bill shown in tracking) provides: Factors Counter-factual? 17 Factors for assessing benefit of overseas investments in sensitive land (1) If section 16(1)(e)(ii) applies For the purposes of section 16E(a) and (b), the relevant Ministers (a) (b) (c) must consider all the factors in subsection (2) to determine which factor or factors (or parts of them) are relevant to the overseas investment; and must determine whether the criteria in section 16(1)(e)(ii) and (iii) section 16E(a) and (b) are met after having regard to those relevant factors; and may, in doing so, determine the relative importance to be given to each relevant factor (or part). (2) The factors are the following: (a) whether the overseas investment will, or is likely to, result in (i) (ii) the creation of new job opportunities in New Zealand or the retention of existing jobs in New Zealand that would or might otherwise be lost; or the introduction into New Zealand of new technology or business skills; or (iii) increased export receipts for New Zealand exporters; or (iv) (v) (vi) added market competition, greater efficiency or productivity, or enhanced domestic services, in New Zealand; or the introduction into New Zealand of additional investment for development purposes; or increased processing in New Zealand of New Zealand s primary products: (b) whether there are or will be adequate mechanisms in place for protecting or enhancing existing areas of significant indigenous vegetation and significant habitats of indigenous fauna, for example, any 1 or more of the following: (i) conditions as to pest control, fencing, fire control, erosion control, or riparian planting:

24 (ii) covenants over the land: (c) (d) (e) (f) (g) whether there are or will be adequate mechanisms in place for (i) (ii) protecting or enhancing existing areas of significant habitats of trout, salmon, wildlife protected under section 3 of the Wildlife Act 1953, and game as defined in sections 2(1) of that Act (for example, any 1 or more of the mechanisms referred to in paragraph (b)(i) and (ii)); and providing, protecting, or improving walking access to those habitats by the public or any section of the public: whether there are or will be adequate mechanisms in place for protecting or enhancing historic heritage within the relevant land, for example, any 1 or more of the following: (i) (ii) (iii) (iv) conditions for conservation (including maintenance and restoration) and access: agreement to support the entry on the New Zealand Heritage List/Rārangi Kōrero of any historic place, historic area, wahi tapu, or wahi tapu area under the Heritage New Zealand Pouhere Taonga Act 2014: agreement to execute a heritage covenant: compliance with existing covenants: whether there are or will be adequate mechanisms in place for providing, protecting, or improving walking access over the relevant land or a relevant part of that land by the public or any section of the public: if the relevant land is or includes foreshore, seabed, or a bed of a river or lake, whether that foreshore, seabed, riverbed, or lakebed has been offered to the Crown in accordance with regulations: any other factors set out in regulations. No. Regulation 28 of the Overseas Investment Regulations 2005 also provides: 28 Other factors for assessing benefit of overseas investment in sensitive land The other factors that are referred to in section 17(2)(g) of the Act for assessing whether an overseas investment in sensitive land will, or is likely to, benefit New Zealand are as follows: (a) whether the overseas investment will, or is likely to, result in other consequential benefits to New Zealand (whether

25 (b) (c) (d) (e) (f) (g) (h) (i) tangible or intangible benefits (such as, for example, additional investments in New Zealand or sponsorship of community projects)): whether the relevant overseas person is a key person in a key industry of a country with which New Zealand will, or is likely to, benefit from having improved relations: whether refusing the application for consent will, or is likely to, (i) (ii) adversely affect New Zealand s image overseas or its trade or international relations: result in New Zealand breaching any of its international obligations: whether granting the application for consent will, or is likely to, result in the owner of the relevant land undertaking other significant investment in New Zealand: whether the relevant overseas person has previously undertaken investments that have been, or are, of benefit to New Zealand: whether the overseas investment will, or is likely to, give effect to or advance a significant Government policy or strategy: whether the overseas investment will, or is likely to, enhance the ongoing viability of other overseas investments undertaken by the relevant overseas person: whether the overseas investment will, or is likely to, assist New Zealand to maintain New Zealand control of strategically important infrastructure on sensitive land: whether New Zealand s economic interests will be adequately promoted by the overseas investment, including, for example, matters such as all or any of the following: (i) (ii) (iii) (iv) whether New Zealand will become a more reliable supplier of primary products in the future: whether New Zealand s ability to supply the global economy with a product that forms an important part of New Zealand s export earnings will be less likely to be controlled by a single overseas person or its associates: whether New Zealand s strategic and security interests are or will be enhanced: whether New Zealand s key economic capacity is or will be improved: No. No. No.

26 (j) the extent to which persons who are not overseas persons (New Zealanders) will be, or are likely to be, able to oversee, or participate in, the overseas investment and any relevant overseas person, including, for example, matters such as all or any of the following: (i) (ii) (iii) (iv) (v) (vi) whether there is or will be any requirement that 1 or more New Zealanders must be part of a relevant overseas person s governing body: whether a relevant overseas person is or will be incorporated in New Zealand: whether a relevant overseas person has or will have its head office or principal place of business in New Zealand: whether a relevant overseas person is or will be a party to a listing agreement with NZX Limited or any other registered exchange that operates a securities market in New Zealand: the extent to which New Zealanders have or will have any partial ownership or controlling stake in the overseas investment or in a relevant overseas person: the extent to which ownership or control of the overseas investment or of a relevant overseas person is or will be dispersed amongst a number of non-associated overseas persons. No.

27 ANNEX TWO: SENSITIVE LAND UNDER THE EXISTING OIA What land is sensitive Land is sensitive under this Act if (a) (b) the land is or includes land of a type listed in table 1 and the area of that type of land exceeds the corresponding area threshold (either alone or together with any associated land of that type), if any; or the land (land A) adjoins land of a type listed in table 2 and the area of land A exceeds the corresponding area threshold (either alone or together with any associated land), if any. Table 1 Land is sensitive if it is or includes this type of land non-urban land land on islands specified in Part 2 of this schedule land on other islands (other than North or South Island, but including the islands adjacent to the North or South Island) and that type exceeds this area threshold (if any) 5 hectares 0.4 hectares foreshore or seabed bed of a lake land held for conservation purposes under the Conservation Act 1987 land that a district plan or proposed district plan under the Resource Management Act 1991 provides is to be used as a reserve, as a public park, for recreation purposes, or as open space land subject to a heritage order, or a requirement for a heritage order, under the Resource Management Act 1991 or by Heritage New Zealand Pouhere Taonga under the Heritage New Zealand Pouhere Taonga Act 2014 a historic place, historic area, wahi tapu, or wahi tapu area that is entered on the New Zealand Heritage List/Rārangi Kōrero or for which there is an application that is notified under section 67(4) or 68(4) of the Heritage New Zealand Pouhere Taonga Act hectares 0.4 hectares 0.4 hectares 0.4 hectares 0.4 hectares Table 2 Land A is sensitive if it adjoins land of this type foreshore or seabed bed of a lake and land A exceeds this area threshold (if any) 0.2 hectares 0.4 hectares

28 land held for conservation purposes under the Conservation Act 1987 (if that conservation land exceeds 0.4 hectares in area) any scientific, scenic, historic, or nature reserve under the Reserves Act 1977 that is administered by the Department of Conservation and that exceeds 0.4 hectares in area any regional park created under the Local Government Act 1974 land that is listed, or in a class listed, as a reserve, a public park, or other sensitive area by the regulator under section 37 land that adjoins the sea or a lake and exceeds 0.4 hectares and is 1 of the following types of land: an esplanade reserve or esplanade strip (within the meaning of section 2(1) of the Resource Management Act 1991); or a recreation reserve under the Reserves Act 1977; or a road (as defined in section 315(1) of the Local Government Act 1974); or a Maori reservation to which section 340 of Te Ture Whenua Maori Act 1993 applies land over 0.4 hectares that is subject to a heritage order, or a requirement for a heritage order, under the Resource Management Act 1991 or by Heritage New Zealand Pouhere Taonga under the Heritage New Zealand Pouhere Taonga Act 2014 land over 0.4 hectares that includes a historic place, historic area, wahi tapu, or wahi tapu area that is entered on the New Zealand Heritage List/Rārangi Kōrero or for which there is an application that is notified under section 67(4) or 68(4) of the Heritage New Zealand Pouhere Taonga Act hectares 0.4 hectares 0.4 hectares 0.4 hectares 0.4 hectares 0.4 hectares 0.4 hectares

29 ANNEX THREE: PROPERTY CATEGORIES UNDER THE RATING VALUATION RULES The following is an extract from the Rating Valuations Rules 2008 (LINZS30300, Version date: 1 October 2010): F.2 Structure of category code F.2.1 First character definitions Each rating unit must be categorised individually based on its highest and best use, within a broad property group, using the codes set out in Table 18. Table 18 First character A C D F H I L M O P R S U First character category codes Definition Arable cash cropping land, generally farmed with some stock. This code does not include market gardening. Commercial uses Dairy land suitable for all types of supply and stud Forestry land that may be either in production or currently available for planting, and includes protected forest areas. This code does not include forest nurseries. Horticultural land suitable for uses such as orchards, market gardening, or glasshouses Industrial uses, including associated retailing Lifestyle land, generally in a rural area, where the predominant use is for a residence and, if vacant, there is a right to build a dwelling. The land can be of variable size but must be larger than an ordinary residential allotment. The principal use of the land is non-economic in the traditional farming sense, and the value exceeds the value of comparable farmland. Mining and other mineral extraction sites of all descriptions Other uses not covered by any alternative category in this table, generally non-economic uses of a government, civic, or recreational nature Pastoral farming land where the main farming use is a use such as grazing or fattening of livestock Residential land of a domestic type, including investment flats Specialist livestock of a non-dairy or pastoral land use type Utility assets