PM backs MPs over Crafar decision

Photo / Christine Cornege

Prime Minister John Key today backed his government ministers whose decision to allow the Crafar farms sale has been embarrassingly overturned.

The High Court stunned the Government yesterday by sending the decision back to officials for a rethink and demanding a higher test for the economic benefits to NZ of foreign investment in farms.

But today the Prime Minister said he had "100 per cent confidence'' in his ministers who approved the same of 16 farms to a Chinese group.

He said: "Those ministers made a decision based on the recommendations of the Overseas Investment Office (OIO), applying the law as it was understood by the OIO.

"Yesterday the judge changed that interpretation of the law. You can't put the blame for that on government ministers.''

The reappraisal of the Shanghai-based Pengxin bid for the Crafar farms will be completed within days following Justice Forrie Miller's decision in the High Court at Wellington.

Ministers Maurice Williamson and Jonathan Coleman signed off an application from Pengxin subsidiary Milk NZ to buy the Crafar dairy empire last month.

In his decision, Justice Miller set aside the ministers' consent and directed them to reconsider the application.

Mr Key said the fallout from the decision could take "quite some time'' to sort out.

The OIO will now reconsider their position and make an updated recommendation to the government.

Speaking in Christchurch today after a tour of the new Christchurch Stadium which is currently under construction, the Prime Minister said any new recommendations must be "robust.''

He said: "The OIO need to come back to the government and say, 'Here is our new recommendations in applying the law as we now understand it as prescribed by Judge Miller's decision.'

"The Government has had some advice from Crown law... but we can't make any decisions until we see what the OIO decide what is the right recommendations.''

Mr Key confirmed that the Government has not explained the decision to their Chinese counterparts, saying: "At this stage we haven't felt the need to do that.

"I'm sure they will understand that this is not specifically unique to a Chinese application - this is now the ruling of a judge about the way all foreign purchases should be viewed.''

He added: "Some people will rejoice the fact that a foreigner can never buy land in New Zealand, but on the other side of the coin, that has serious implications for the way banks lend, and their comfort level and it has implications for vendors who want to sell, and implications for prices, so we need to fully understand the issue.

"My own view has been that a small amount of foreign investment is actually healthy for the market, and massive amounts may not be healthy.''

Mr Key also rejected claims that the judge's decision could be viewed as being "xenophobic''.

He said: "I don't think that is right. In the end the judge made a decision based on his interpretation of the law.''