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Te Hiku Iwi says adding forestry rights to overseas investment regime stifles global partnerships

Wednesday 4th April 2018

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Te Hiku Iwi opposes bringing forestry rights into the Overseas Investment screening regime, arguing they will have a material impact on the value of their land and compromise their ability to attract overseas partners.


Te Hiku Iwi includes Te Manawa o Ngāti Kuri Trust, Te Runanga Nui o Te Aupouri Trust, Te Runanga o Ngāi Takoto Trust, and the Te Waka Pupuri Trust and one of its major assets is 22,000 hectares of forest land in Northland. Their forestry rights are currently owned by Summit Forests New Zealand, a subsidiary of Japanese company Sumitomo Corporation and Te Hiku iwi is looking to extend that agreement but said in a submission to Parliament's finance and expenditure committee the proposed changes could jeopardise the negotiations. 


"Te Hiku need investment partners to maintain Te Hiku forest. Te Hiku’s ability to attract overseas partners, including Summit, will be compromised by the cost and uncertainty of the OIO process and the unknown nature of conditions that the Crown may impose on an investor (and by association Te Hiku)," according to the submission presented by Paul White. 


The government wants to include forestry rights in the Overseas Investment Act screening regime and the matter is being considered by the select committee. Currently forestry rights - which do not involve the sale or lease of the land but the right to grow and harvest the crop - are exempt. If the law is passed, overseas investors will only be able to purchase up to 1,000 hectares of forestry rights per annum, or any forestry right of less than three years duration, without approval from the Overseas Investment Office. 


Together with a decision to ban the sale of existing residential homes to foreign buyers, the government has also sought to increase its scrutiny on foreign buyers of rural and forestry land.


In November it issued a new directive letter to the Overseas Investment Office that emphasised the forestry sector has the potential to add "significant value" to the overall economy and environment. In particular, it aims to encourage an increase in the value-added processing of raw products and the advancement of its forestry-related strategies.


However, "we feel this legislation is coming in over the top of us in a very paternalistic way but also in a way that reduces the value of our land,"  White told the select committee. 


"We are in negotiations with Summit. We believe they have some shared values that we also have. We are working on an agreement and it's complicated enough dealing with a party who is owned offshore without having to then say we can't make a decision here, we have to go back to the government to make a decision," he added.


"We as iwi want to invest more in forestry and owning the actual resource and controlling what happens to that resource on our land, but we are mindful that we can't put all our eggs into the forestry basket. We need partners. We don't really think it's up to the government to decide which partners we should have in terms of that longer-term investment," he said.


White also charged there is no analysis on the use of forestry rights and how they have impacted the industry over the past 30 years. He said the system was designed to avoid long-term leases as "we had long-term leases with the Crown - 99-year leases - and they didn't end well." 


Forest rights are used by Maori landowners to provide secure access to land for forestry purposes without alienating the underlying ownership of the land, according to the submission. "It is Te Hiku’s intention that any long-term arrangement that it might reach with Summit, or any other forest investor, will be secured by forestry rights specifically to avoid the alienation of the Te Hiku land," it said. 


However, bringing forestry right under the overseas investment region is an "unnecessary restriction" on the freedom to use land returned to Te Hiku Iwi under a settlement in 2015, something White said was "ironic." 



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