Part 1: Introduction

How the Overseas Investment Office uses information.

To varying extents, people and organisations can make investments globally. This includes investments in New Zealand by people who are not New Zealand citizens or ordinarily resident in New Zealand, or by organisations that are owned or controlled by overseas persons. The term "overseas investments" has been used to describe these investments when they are in New Zealand businesses, land, and fishing quota.

Parliament has determined how applications for overseas investments should be managed. Under the Overseas Investment Act 2005 (the Act), consent must be granted for overseas investments in sensitive land, significant business assets, or fishing quota before the investments are made.1

This consent is granted through a process administered by the Overseas Investment Office (the OIO), which is part of Land Information New Zealand.

As part of the consultation process on our Office's 2016/17 work plan, Parliament brought a situation to our attention that raised questions about how effectively the OIO collects, handles, and uses information that could be relevant to decision-makers.2 Parliament suggested that the Auditor-General include a review of this matter in the annual work programme as part of our 2016/17 Information theme.

We have not reviewed that specific case – it was subject to an OIO internal review and an independent legal review of the OIO's approach to "good character" in that case in May and June 2016.

We decided that we would review broader aspects of the OIO's work as part of our work programme. This report sets out the results of our review.

Changes at the time of our review

At a similar time to our review, the OIO had begun developing and implementing changes to how it carries out its work. These included changes to how the OIO:

  • provides guidance to potential applicants;
  • considers applications; and
  • monitors and enforces the conditions of granted consents.

Although we have considered some of the changes as part of our review, it was too early to definitively comment on the effects of these changes.

Our focus on the use of information

What we looked at

In our terms of reference, we said that we would look at:

  • what information the OIO collects to assess applications for investments in sensitive land and significant business assets, and to assess the benefits of overseas investments for investments in sensitive land;
  • how the OIO collects that information for those purposes;
  • how the OIO determines it has sufficient and accurate information for those purposes;
  • how the OIO uses the information it collects to provide accurate, balanced, and complete advice to decision-makers (both internal and external to the OIO);
  • how the OIO uses the information it collects to monitor a successful applicant's compliance with any consent, including monitoring, and for investments in sensitive land, evaluating the actual benefits of an investment; and
  • any other matters the Auditor-General considers it desirable to report on.

Before finalising these terms of reference, we sought feedback on them from Parliament's Finance and Expenditure Committee and from the OIO.

We excluded applications for overseas investments in fishing quota because they are infrequent.

What we did

We focused on the key aspects of the application process, including what are referred to as the investor test (see Part 4) and the benefit test (see Part 5). These aspects commonly require intensive information and analysis. We did not examine every aspect of how the OIO processes applications, nor how consents are monitored and enforced.

We reviewed about 3000 documents from the OIO and interviewed some staff. We also spoke with representatives from some of the law firms that make applications for overseas investments on behalf of clients. We refer to these representatives as "agents". We also spoke with officials from the Treasury.

We reviewed 15 applications for overseas investments that were decided in 2016. In total, these applications involved potential investments of more than $1 billion in value. Although we selected the applications largely at random, we included some specific applications to ensure that our overall selection covered the range of types, value, and complexity of applications.

In addition, we reviewed four applications as background information when planning our review.

We also examined nine applications that had been through some aspect of the OIO's new "triage" process (see Part 3) and observed two of the OIO's application triage meetings.

Our review did not include consideration of any legislative changes to the overseas investment regime being proposed at the time of writing this report.

1: Section 11 of the Overseas Investment Act 2005.

2: This was in relation to the OIO's management of a 2013 Ceol & Muir application to purchase sensitive land in Taranaki. In that case, the OIO did not pass on information relevant to the assessment of two applicants' good character to the Minister making the decision about their joint application. Further information about the OIO's management of this application is available at