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The Green Party says the government's review of the overseas investment rules, intended to make the process quicker and less complex, translates into easier sales to foreign investors.
The government confirmed on Monday it would be reviewing the Overseas Investment Act and its associated regulation.
Finance Minister Bill English said when New Zealand came through the current recession it would need simpler rules and quicker decisions to attract the foreign investment needed to kick-start the economy and create jobs.
"The current processes are cumbersome and complex. It takes a long time to make decisions because all the applications have to be measured against 27 different criteria by a pretty legalistic standard," he said.
The government wanted to retain the opportunity to protect
assets and land that it believed needed to be protected, but reduce
the cost and complexity of decision making.
New Zealand had to compete with other countries for investment and
the recent economic crisis meant a "lot of investment was going
home".
English said the government was not being overwhelmed by applications for investment and this was likely to get worse.
New Zealand's lack of savings meant it was reliant on foreign investment until that base could be built up.
It is understood that applications to invest are down 7%.
The picture is mixed because as the number of applicants seeking to invest here slow, New Zealand companies are having to seek foreign private capital because banks are less reluctant to lend.
National criticised the previous government for changing the rules and blocking the attempt by a Canadian pension board to purchase Auckland International Airport.
English said he would not comment on whether individual applications might benefit from a rule change, but the government wanted investors to be clear about what the rules were and ministers would abide by them.
"We have to re-establish the credibility of the process."
If the process was not simplified and investors were not given certainty New Zealand would miss out on investment.
The review would not mean the government would lose its ability to block investments it considered a threat to New Zealand's economy or strategic interests.
The government would still be able to look at applications that had an impact on cultural and heritage values, but this may be done through other processes that were currently duplicated by the investment regime.
The purchase of land by foreigners was a small part of the regime and he did not imagine significant changes in that area.
Law firm Chapman Tripp welcomed the review saying while it was important sensitive and culturally or historically valuable land was retained, unnecessary barriers should not be put up to foreign investments that could help the economy.
"Chapman Tripp's experience is that trivial or minor transactions which were never intended to be caught by the Overseas Investment Act are being caught due to technical drafting issues with the legislation," partner Nick Wells said in a statement.
Green MP Kennedy Graham said simplifying rules was not necessarily a good thing and he was concerned the changes would make it easier for foreign investors to buy up pristine land for uses like golf courses or mining.
"The government and ACT Party seem intent on greater foreign ownership of New Zealand for the sake of uncritical economic growth," Graham said.
Foreign investment often meant profits going offshore and New Zealand was at risk of being exploited rather than getting the productive investments it wanted, he said.
New Zealand research and education network Arena spokeswoman Jane Kelsey was concerned that changes to the rules would be locked into future free trade agreements (FTA).
Existing FTAs already contained significant provisions around services and investment that promise that New Zealand won't ever tighten up its foreign investment rules, she said.
Kelsey said FTAs stopped the last government when it tried to block the sale of Auckland Airport.
The previous Labour government "had to use the farcical situation of claiming the strategic asset was sensitive rural land so it could use a loophole in the Singapore-New Zealand FTA."
The review is to be completed and decisions made by June.
