Picture this: a wealthy American couple buy a 3ha piece of land in a beautiful, sleepy town in rural New Zealand.

Their plans for the land are ambitious; a redeveloped campground, information centre and community classroom. A café, organic garden, meeting room and artist studio. Plus, a revamped general store that will offer the locals an array of goods they had not been able to purchase before: fresh produce, Italian gelato, eco-cosmetics and Vogel’s bread.

Doesn’t this all sound positively awful! As if the temptation of Vogel’s bread could possibly be sufficient to forgive those bolshie foreigners for “marching into town and buying everything up.”

Clearly, our foreign direct investment rules are far too loose if they’re allowing this sort of nonsense! But wait, it gets worse.

The wealthy couple also happen to be dedicated environmentalists. Their Seattle-based philanthropic foundation has an explicit mandate to “safeguard the [Pacific Northwest] region’s environment and build broad citizen support for environmental protection.”

The couple’s wider vision for their latest endeavour is to design facilities that meet NetZero energy certification, the highest global standards for environmental sustainability. Once completed, the facility will be able to accommodate up to 120 people while using half the energy and water of more orthodox structures.

What good is the Resource Management Act if it’s permitting these sorts of developments? It gets worse still.

Shockingly, the multimillionaire couple aren’t in it for the money. Despite bankrolling the entire project, the couple will channel the profits into a non-profit community trust. This will see funding put toward the local public pool, education, healthcare and the arts. What an outrage!

The Southland Times last week reported the purchase of a Glenorchy general store and campground by wealthy American philanthropists Paul and Debbie Brainerd is causing a huge rift within the town. The couple have been exposed to a barrage of opposition from locals. One fear is that the project will negatively affect other retail and accommodation services within the town.

Another fear is that the store will provide exotic merchandise that the locals certainly don’t need. And, of course, there is the fear that this development will drastically change the culture of tranquil Glenorchy.

It is easy to sympathise with disgruntled Glenorchy locals. Many have moved to the quiet rural town to escape the madness and mayhem of the bigger cities.

Naturally, this vocal minority know what is best for the good people of Glenorchy. They fear that the development will disrupt their modest way of life. Just think of how great Auckland would be today if it only had the population of Glenorchy.

But can we really afford to be so precious about preserving the modest culture of small towns, when so many of New Zealand’s most isolated towns and regions are suffering real economic decline?

Are we mistaking the tranquillity for lethargy?

Of course, Auckland today could have been the size of Glenorchy if only the early settlers had decided that no one had the right to develop or enhance their own properties or businesses, and to prevent newcomers from competing with the local retailers.

But those pesky Victorians had other ideas about property rights and free markets, and New Zealanders’ high average level of prosperity is just one of many unfortunate outcomes.

Fear not! The RMA has done much to stop all that property rights nonsense. Its fundamental premise appears to be that none of us has the right to develop our properties.

Instead, we must obtain resource consents for anything of significance and almost anyone can object to any change, without being confronted with the costs they wish to impose on the community. All snark and satire now aside, this is the opposite of the “those who benefit should pay principle.” Instead, it is a “the property owners should pay for my benefit” principle.

Glenorchy community association chairman Pete Reid supports the development, emphasising the employment opportunities that will result.

“A lot of small towns would love to have someone coming in and building a nice asset … it will attract good types of people who will come and stay,” he says.

In this Glenorchy example, the Brainerds are fully prepared to pay for the cost of creating the enhanced facilities for the good people of Glenorchy and visitors.

This development will, undoubtedly, raise the value of local properties. And yet, there appears to be no report that those objecting to the project are offering to compensate anyone for the cost of depriving the Glenorchy community of these facilities and associated benefits.

The Overseas Investment Act is as contentious as the RMA. The central idea of this piece of legislation seems to be that none of us has the right to sell our private property to whomever we want.

Instead, property owners and potential investors, particularly when it comes to sensitive land, are subjected to an onerous and costly application process requiring them to prove the asset sale will result in net benefits for the whole country.

The public furore over the Glenorchy case exemplifies the degree to which emotional arguments in public debate can drown out sober and factual consideration of the benefits of allowing greater foreign direct investment.

Both the RMA and OIA regimes could, and should, be substantially liberalised. Is there really any substantive national interest in scrutinising Americans’ purchases of rural campgrounds, just because they are American?

The real issues are bigger than just this campground. NZ Initiative’s reports on housing, and its recent and forthcoming reports on mining, examine how regulatory shortcomings make housing too expensive in the cities and starve rural areas of development opportunities.

The third of our reports on foreign direct investment, Open for Business, focused on why and how we must improve investment legislation so it is better attuned to the country’s needs. The OIA is not fit for purpose as it stands; New Zealand needs to be much more open to business. Especially this kind of business. If New Zealand’s legislative barriers are raising costly hurdles for even the Brainerds, what hope is there for anyone else?