The benefit of afforestation to New Zealand

Authors: Edwin Jansen
Publication: New Zealand Journal of Forestry, Volume N.Z.J.For. 2024, Issue N.Z.J.For. 68(4) 2024, pp Pages 29 - 37, Feb 2024
Publisher: New Zealand Institute of Forestry

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Abstract: In late 2022, the Overseas Investment Act 2005 (the Act) was amended to replace the ‘special forestry test’ with the ‘benefit to New Zealand test’ when considering the acquisition of farmland for afforestation. The amendments were in response to political pressure to halt the conversion of productive farmland to forestry, and which also saw changes to the National Environmental Standards for Plantation Forestry (NES-PF) (renamed Commercial Forestry) to limit the permitted activity status of afforestation and incorporate permanent forests. This paper examines the first four applications under the Act to purchase farmland for afforestation purposes under the benefit to New Zealand test, and the assessment of those applications by Land Information New Zealand (LINZ). Discussion centres around the Overseas Investment Act 2005, the Ministerial Directive to LINZ, the Applicants, the applications, the attributes of the farmland properties, the investment strategies of the Applicants, the benefits claimed, the Assessment Reports prepared by LINZ and the decisions made by Ministers. The paper aims to examine why the Ministers declined three and approved one application. This paper concludes that the Regulator (LINZ) failed to comply with the Ministerial Directive of the Minister of Finance by omitting to provide Ministers with a recommendation on the applications, and gave imbalanced assessments of largely analogous benefit claims. Presented with no recommendation, positively and negatively framed assessments of the same benefit claims, and limited quantification of the economic benefit to New Zealand, the responsible Ministers were left to decide the benefit to New Zealand through their own political lenses. Ministers did not identify the conflict of interest that these omissions created, particularly when making decisions just before the October 2023 election. The Government often highlights the phrase ‘the Right Tree, in the Right Place’. However, the national benefit of the forestry and wood processing sector depends on ‘the Right Forest, in the Right Place, for the Right Purpose, by the Right Investor’. It is clear that both the Overseas Investment Act and the Ministerial Directive to LINZ require amendment to emphasise the factors critical to achieving a benefit to New Zealand, to require the quantification of the economic benefit in Gross Domestic Product (GDP) terms, to clarify what ‘sensitive land’ is, and to limit Ministerial discretion in assessing whether the benefit to New Zealand is proportionate to the sensitivity of the land.

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