Green Rush - Land Information Minister and Green MP Eugenie Sage has given a foreign-owned forestry company a free pass to buy thousands of hectares of New Zealand land without applying to the Overseas Investment Office (OIO).

Photo: RNZ / Richard Tindiller

Japanese-owned Pan Pac Forest Products was given the special approval to bypass the OIO to purchase land for forestry for the next three years as the government sought foreign forestry money to help meet its tree planting targets.

The pre-approval was given to Pan Pac despite the Green Party having strongly protested land sales to foreigners and Forestry Minister Shane Jones saying he was sympathetic to rural concerns that converting productive farm land to forestry could cost jobs.

Associate Finance Minister David Clark signed off on Pan Pac's pass, known as a 'standing consent', alongside Ms Sage.

The free pass allows Pan Pac to make 25 transactions involving 20,000ha of land and is valid until 2022.

Ministers signed off on the decision on 19 September but kept it under wraps until now.

Ms Sage defended the decision, saying Pan Pac had been in New Zealand since the 1970s, was a large exporter of quality timber and needed to secure its wood supply.

"They've got a long standing reputation in New Zealand. They've increased their investment here, they've got a strong workforce. We want to add value to our forestry exports not just have log exports and Pan Pac is a company that can do that."

OIO group manager Vanessa Horne confirmed to RNZ that the deal allowed Pan Pac to buy farm land to convert to forestry.

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The move has stoked fears in rural communities that their towns will be hollowed out by the 'green rush' to forestry.

Andy Scott, spokesman for lobby group Fifty Shades of Green, formed to voice rural concerns about job loses from converting productive farm land to forestry, was horrified by the deal.

"How can they give a free pass to a Japanese company to come and buy productive farms to turn into pine trees? They will be lost to New Zealand forever. Gone."

He said ceding control to a foreign-owned company was "ludicrous" and he believed the decision would add fuel to the fire ahead of a protest march on Parliament the group was planning for 14 November.

"How can they give them authority to purchase land without any OIO consent? It's unbelievable," Mr Scott said.

National's finance spokesman Paul Goldsmith said the government's forestry strategy threatened to gut rural towns. "If you're taking land out of food production, with generally quite a lot of employment, and into planting trees, there will be far fewer jobs and rural communities will be devastated."

The option to give pre-approval to bypass the OIO was made available under 2018 law changes designed to attract foreign forestry money, but the Pan Pac deal is the first time it has been used.

Under the scheme Pan Pac, which is 100 percent owned by Japan's Oji Green Resources, would only have to notify the OIO once a transaction to buy New Zealand land for forestry was settled.

Pan Pac managing director Doug Ducker said the company was likely to use the special consent to buy land around its wood processing mills at Whirinaki, north of Napier, and at Milburn, south of Dunedin.

He said the pre-approval would make it much easier to compete for land purchases, as the company would not have to wait up to a year for OIO approval.

More than 70 percent of the forestry sector is foreign-owned, and a recent analysis of land ownership by RNZ revealed the four largest private landowners in New Zealand are all foreign-owned forestry companies.

Photo: RNZ / Rebekah Parsons-King

National's Paul Goldsmith said the government's message on foreign investment was arbitrary and confusing, in that it rejected it in many areas but gave the green light to forestry.

"It's going to create massive distortions about land use. So a foreign investor generally can't buy farm land to hold as farm land or to turn it into horticulture or a vineyard but they can buy farm land to put it into trees."

He said Ms Sage appeared to be letting ideology govern her decisions and called for her to be removed from the role.

But Ms Sage said New Zealand needed foreign investment in forestry to meet its billion trees programme and climate change targets.

"It's not about blanketing the landscape in trees. But if we are going to sequester the carbon that we need to, to meet our Paris Agreement commitments, we need more trees."

Despite Labour, the Greens and New Zealand First opposing land sales to foreigners in the past, the OIO has approved more than $2.3 billion of forestry-related sales since the government was formed.

*This story is part of Green Rush, a series on land ownership and forestry by Kate Newton and Guyon Espiner.