Winston Peters is defending Eugenie Sage over criticism of her decision to pre-approve the sale of land to a Japanese company without going through the Overseas Investment Office.
Around 20,000 hectares of Hawke's Bay land is being sold to Japanese company Pan Pac Forest Products for forestry blocks, and National's finance spokesperson Paul Goldsmith says it shows the minister's "prejudice".
Eugenie Sage is the Minister for Land Information and a Green MP. Goldsmith is suggesting she would accept any foreign investment applications that takes land out of farming and puts it into trees.
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"Foreign investors can't buy farm land to farm, or to convert to horticulture or vineyards, but they can buy productive farm land on a massive scale to put into forestry blocks," Goldsmith said.
"This is creating massive distortions in land use decisions in rural New Zealand. The mass conversion of land away from food production into trees will remove jobs from around the country, and will destroy communities throughout rural New Zealand."
Peters, the Deputy Prime Minister and leader of New Zealand First, defended Sage in Parliament on Thursday, telling Goldsmith the National Party was "scaremongering".
Goldsmith asked Peters why the Government is allowing foreign investors to buy farmland to convert to forestry, but not allowing foreigners to buy farmland to farm or to convert to horticulture or vineyards.
"That is fake news and scaremongering," Peters replied. "There's been no such undertaking but there is some marginal land in this country that would be more appropriate in forestry."
Peters' comments were in contrast to New Zealand First MP and Forestry Minister Shane Jones, who told RNZ earlier this month he was sympathetic to rural concerns that converting farm land to forestry could spark job losses.
The Pan Pac deal is the first time a 2018 law change has been used, which allows pre-approvals to bypass the Overseas Investment Office, the agency responsible for regulating foreign direct investment into New Zealand.
Associate Finance Minister David Clark, who signed off on the consent alongside Sage, said the deal would "support hundreds of jobs including in the high-value forestry area".
Peters agreed, thanking Dr Clark who is also Health Minister, for "putting his finger on the reason why this is a wise decision".
Conservation Group '50 Shades of Green' has spoken out against the Government's One Billion Trees programme over concerns good pastoral land is being sold for forestry.
"If New Zealand First and indeed the Government really want to future proof our economy it should keep good New Zealand farmland for food production," group chair Andy Scott said last month.
Peters said in Parliament the organisation is "just scaremongering".
He said the "reality is that we need a combination of rural employment and rural enterprise and rural exports, and this is a very sound investment on behalf of forestry in this country".
Sage said the application was about "securing long-term wood supply and it is expected that the applicant will use this to purchase land which is already in forestry".
The minister admitted she hasn't retained the power to ensure that the right trees are planted in the right place.
But she said the Government has "invested substantially in the enforcement activities of the Overseas Investment Office, so I expect that the office will ensure that the conditions of the consent are abided by".
Sage said 29,000 hectares of Pan Pac's existing forest area - which its website says is about 35,000 hectares - is Crown forest licences, and a programme is underway to hand land back to iwi.