Overseas Investment Bill

I move, That the Overseas Investment Bill be now read a first time. I intend that the bill should be referred to the Finance and Expenditure Committee for consideration. The bill proposes the most significant changes to the way New Zealand regulates overseas investment in more than 30 years. On 10 November last year I announced a review of the existing Overseas Investment Act. That Act, of course, is now some 30-odd years old. The review had two purposes. First, to ensure that New Zealand’s approach to the regulation of foreign investment focuses on those assets that really matter to New Zealanders. They include sensitive land, fisheries, and assets with historical or cultural significance. Second, we wanted to ensure that potential overseas investors did not face unnecessary compliance costs and that foreign investment that can make a positive contribution to the economy and to New Zealand is encouraged.

I guess those criteria, with the current way New Zealand regulates overseas investment, have some shortcomings. Some overseas business investors are subject to unnecessary compliance costs. On the other hand, some investors who want to buy land are required to pass a test that is based only on economic development and ignores other important factors, such as heritage value and access to sensitive land by New Zealand people. Further, the plans submitted by investors to support purchase consents cannot be adequately enforced. In practice, it is often impossible to ensure that they are completed to a reasonable standard or for the courts to impose adequate penalties in the event of a breach.

The bill addresses those problems through a number of provisions. In relation to land investments, a proposed purchase to the unimproved value of more than $10 million will no longer be screened where it is not screened for any other reason. This change is expected to affect only land sales in the main centres’ central business districts, and is designed to stop purchasers of small parcels of central city land that is not sensitive from incurring unnecessary compliance costs. The criteria for land purchases will be extended to include any of economic development, natural heritage, historic heritage, or walking access, and the appropriate weighting of those criteria for any given purchase will be determined by Ministers.

Purchasers will be required to submit management plans to take account of the criteria that have been specified, and compliance with those plans will be made conditions of consent. So, for example, where a purchaser is required to develop walking access for the public as part of a consent to purchase, and fails to meet that condition, the purchaser will face penalties that could ultimately include being required to dispose of the land.

Land adjoining some non-sensitive reserves will be dropped from screening. The most important of those will be drainage reserves within urban areas. This change is designed to ensure that the regulator focuses on those land purchases that are genuinely sensitive, as opposed to most of the ones that I looked at, which were around urban subdivisions adjoining drainage reserves and similar areas.

The threshold for screening non-land business assets will be increased from $50 million to $100 million. That threshold was last adjusted in 1999, when it was increased from $10 million to $50 million.

Ownership of and access to the foreshore and seabed is an important issue for most New Zealanders—as we have recently been seeing. The bill provides that the Crown will have a new right of first refusal where land includes foreshore and seabed, and where such land would otherwise be sold into foreign ownership. The requirements on landholders who would need to comply with that new provision will be set out in regulations.

The bill sets out what is regarded as sensitive land caught under the new regulatory regime. This includes land adjoining the foreshore or land that adjoins any lakes. It also includes lands over 0.2 hectares on specified islands and any land on other islands. It includes land over 0.4 of a hectare that includes or adjoins conservation land; land that is provided as reserves or public parks; land that adjoins land that makes up the Queen’s Chain; land that adjoins scientific, scenic, historic, or nature reserves over 0.4 hectares administered by the Department of Conservation; land that is subject to heritage orders or land that adjoins such land; land that is a historic place, wāhi tapu, or wāhi tapu area, or land that adjoins such land; or land that adjoins sensitive reserves. Any land over 5 hectares that is not urban land is also covered by the proposed regime.

Finally, if a proposed overseas investor is seeking to purchase farmland, that land must first have been offered for sale on the local open market, as provided for under the current Act. The rule makes no changes to the existing policy that investments in fisheries by overseas persons require consent. However, the onus for obtaining consent when an overseas person wants to buy a stake of more than 25 percent in fishing quota will now rest with the overseas investor rather than the fishing company, as the rules apply now. That brings it into line with the general rules around sensitive purchases.

I now turn to the new enforcement provisions in the bill. The bill responds to previous concerns that the ex post monitoring enforcement of consents was not robust enough and lacked the necessary disincentives. The onus for monitoring conditions of consent will be on the overseas person, who will be required to file statutory declarations to attest to ongoing compliance.

The bill provides greater flexibility for enforcing non-compliance through a series of progressively stronger penalties. Administrative penalties for late filing of statutory declarations have been introduced, as has a new category of civil penalties, which can be used to penalise people who profit from breaching conditions or cause loss to others by breaching conditions. Continued failure to comply with consent criteria could result in court orders to comply with consents, fines, or civil penalties, or ultimately to the court ordering disposal of the land.

For serious offences against the regime, individuals could be able to be imprisoned for 12 months, and maximum fines have been significantly increased to $300,000. The courts will be able to order that a mortgage be registered against any land of a consent holder to secure payment of fines and penalties.

I believe that this bill will better serve the interests of New Zealanders than the current rules. It will ensure that overseas investors who seek to acquire sensitive New Zealand assets comply with purchase conditions that advance New Zealand’s interests. Failure to comply with those conditions will result in real sanctions. At the same time the bill seeks to remove unnecessary impediments to overseas investment where the assets being acquired are not particularly sensitive. I am confident the bill balances the need to protect sensitive New Zealand assets, while recognising that overseas investment makes a positive contribution to the economy. It is with much pleasure, therefore, that I commend the bill to the House.

National will support this bill to the select committee, but will be watching the submissions carefully and reserving its position for the future. Sadly, overseas investment invokes some of the worst sentiments in some of our people and some of our political parties. Xenophobia, which is the intense dislike of foreigners and foreign investment, has no place at all in this modern world. I think that people like Winston Peters who trot out this xenophobic attitude, time and time again for the polls, does himself a huge disservice, and he does huge disservice to the recognition of foreign investment and its importance to our economy. I do not believe he genuinely believes in it, but he uses the election cycle, and every 3 years out comes the same message that is simply promoting fear and hatred, but only for the purpose of collecting votes. New Zealand needs foreign investment.

Rod Donald: Why?

Hon DAVID CARTER: If Rod Donald had bothered to study the history of this country, even he would realise that it was founded totally on foreign investment. As long as New Zealanders remain relatively poor at saving for themselves, then we will continue to rely on foreign capital being invested in this country. Therefore, any rules must not be so tough as to turn overseas investors away from this country. Other countries also seek foreign capital and if their rules are grossly easier than ours, then the investor has the chance to go somewhere else, and that would not be good for our economy.

This legislation appears to be a reasonable attempt to allow small, inconsequential investment to occur without hassle, and if that is what is achieved by this legislation, then I congratulate the Government on that. At the same time, this legislation appears to recognise that some sensitive land—and by that I mean sensitive to New Zealand because of its iconic nature—will need to meet a higher threshold. Again, I agree with that.

We need also to acknowledge the abuse that has occurred in the past in the Overseas Investment Commission process. I am certainly unaware of any case at all where action has subsequently been taken against a foreign investor. I recall land being purchased by Bill Lloyd of Sovereign Yachts—

Hon Member: That went well.

Hon DAVID CARTER: Well it did not go too well, in fact. This man promised what I believe Lianne Dalziel is on the record as saying in this House, that he would create a business to give 600 jobs somewhere in Auckland.

Brian Connell: I think Jim Anderton had something to do with that.

Hon DAVID CARTER: Exactly. Brian Connell reminds me that the man then befriended Jim Anderton. Not only did Jim Anderton see that this man got tens of thousands of dollars of corporate welfare from the taxpayer, but also Jim Anderton ensured that he had the ability to buy some surplus Crown land in Auckland, at a price grossly below market value.

So this man had to seek overseas investment approval. When I look at the rules that applied at the time, the first test Mr Bill Lloyd had to pass was that he had to demonstrate, as they called it, “business acumen”. Well, as many of the political parties on this side of the House subsequently revealed, this man had had a very chequered career in North America. He certainly had not demonstrated any business acumen in those countries at all. His track record in New Zealand is equally disastrous. I am not sure, but at the last count he may have employed five or 10 people. He may have built one boat, not the hundreds that he promised. So I say that if the overseas investment legislation sets rules and thresholds, it is vital that they be met in the approval of foreign investors to New Zealand.

The next clause I want to bring to the attention of the House in this debate today is clause 18(2)(d): “there are or will be adequate mechanisms in place for walking access over the relevant land …”. The reason I raise this is that this is the first indication of any of Mr Jim Sutton’s public access legislation being advanced. It is the first indication of a move towards a freedom to wander at will over private land. We know that the legislation has been sitting on the Minister of Agriculture’s desk since March. We know that he is too nervous and scared to move that legislation. We know that this man, at least until next Monday, has been the farmers’ representative around the Cabinet table, and he has been a disaster in that role.

Only this week we revealed that Accident Compensation Corporation premiums had leapt another 30 percent for farmers. As Dover Samuels knows, that decision was passed by the Cabinet table, and Jim Sutton sat at that Cabinet table as the Minister of Agriculture and failed to represent the farmers. If this is the first step of developing public access legislation, then Mr Sutton should front up, as he promised, with the balance of the legislation before Christmas.

The last point I want to make is around the weakness of some of the rules already in existence with overseas investment legislation. One of the rules I know of, which was introduced at the insistence of Winston Peters himself, was the necessity for any farmland that was to be offered for sale to be publicly advertised so everybody knew that it was on the market. I happen to know of a farm in Conway Hills in North Canterbury that has been sold by a New Zealander to an overseas company. The deal is stitched up and done, and it was only subsequent to the deal being stitched that the owners realised that they had to advertise it publicly. We then had a tiny little advertisement appearing in the public notices. So technically the law has been satisfied, but farmers who are looking to buy land in New Zealand do not look at a small advertisement in the public notices column of the Christchurch Press. They look in the farms for sale column.

I raise that because the more rules that are set for overseas investment in this country, then the more inventive and imaginative the solicitors will be in trying to circumvent those rules.

I finish where I started. Capital is a scarce resource in this country. Capital is a scarce resource in this world. If New Zealand wants to progress and prosper, we must attract foreign investment to this country. If we establish rules that make it simply too hard for investment in New Zealand, then we will be setting rules that will be the poorer for this country.

I rise to support this legislation.

The purpose of this bill is supposedly to introduce changes to the way in which overseas investment is regulated in New Zealand. New Zealand First will not be supporting this bill being referred to a select committee.

If the bill passes its first reading, which it probably will, it will be interesting to listen to submitters and hear evidence from officials on this very important legislation. The reason I say this bill is such important legislation is that this Government should have no choice but to get it right. However, the sad fact is that the Government has got this one wrong on a huge scale. The bill’s implications will hurt this nation in a devastating way, in the same way as we saw in the mid-1980s and the 1990s with the sell-off of New Zealand assets by the Labour and National Governments of the time.

Members just need to look at the bill. They do not have to look very far to find what I am saying to be true. For example, the threshold for overseas ownership will be increased from $50 million to $100 million. Mr David Carter from the National Party said that that amount was small. He said that $100 million was a small amount. I say it is a very large amount, New Zealand First says it is a very large amount, and the average New Zealander would say it was a very large amount.

Also, for example, the explanatory note states: “Purchase of land by overseas person with an unimproved value of more than $10 million will no longer require consent where the land is not screened for other reasons.” From just reading those two examples, and there are a few more examples as well, we find that this bill takes us back to the Labour Government of 1984 to 1990, which sold New Zealand Steel, Petrocorp, Health Computing Services, the Development Finance Corporation, Postbank—remember that—the Shipping Corporation, Air New Zealand, Landcorp Financial Instruments, the Rural Bank—

Mr SPEAKER: Could the member come to the bill, please.

CRAIG McNAIR: I raise a point of order, Mr Speaker. You asked me to come back to the bill. I am speaking directly to the bill, because this bill obviously concerns overseas ownership. That is what I am talking about as far as the sell-up of assets—

Mr SPEAKER: Come back to this bill, and do not dwell on the 1980s.

Dail Jones: I raise a point of order, Mr Speaker.

Mr SPEAKER: This is all coming off the member’s time.

Dail Jones: New Zealand First is saying that this bill is all about the sale of New Zealand assets, and we are giving examples of how the Labour Government has done that in the past, and the National Government has done that in the past. These are just examples, and we will come back to the bill in the ordinary way. I am disappointed that you should have interrupted that member.

Mr SPEAKER: I am sorry. Perhaps I was a little hasty.

CRAIG McNAIR: Thank you, Mr Speaker, for being open to our comments in that regard. Before I was interrupted I was telling the House about a long list of companies and State-owned enterprises that the Labour Government sold off back in the 1980s. I referred directly back to this bill, because that is what this bill does; it opens the country up to being flogged off once again into foreign ownership. That is what the bill is doing.

We saw that the Labour Government is still holding on to its past when, for example, it passed the Taxation (Annual Rates, Venture Capital and Miscellaneous Provisions) Bill this week—we just finished speaking on it today. That legislation gives certain non-residents a tax advantage on profits from the sale of shares in unlisted New Zealand companies, and that will disadvantage New Zealand - resident venture capital investors.

If we look at the National Government’s list of sell-offs, we see it is almost as bad as Labour’s. Between 1990 and 1996 the total—[Interruption] He left the National Party during that time because it broke every promise in the book. I remember 1990. I was a young fellow, 14 years of age. I remember flicking on the television and seeing Mr Bolger, the leader of the National Party at the time, say basically: “Read my lips.” He said that there were hardly any more State-owned assets to sell. The Labour Government had pretty much sold all of them. This bill brings in some more; it brings us back to those old days. That is why I have mentioned the Labour Government’s track record and the National Government’s track record. They refer directly to this bill. Jim Bolger said that, and that is what this bill will do. This Government is going back to its past. It has not changed its heart, and it shows us that by this very bill, which increases the threshold for overseas ownership from $50 million to $100 million.

Hon Dover Samuels: How much?

CRAIG McNAIR: Fifty million to $100 million, and that Māori member is voting for it. He is allowing foreign investors to come into this country, and they will take their profits back to the country they came from. That money will not go to New Zealanders. A Labour Government is supposed to stand for that; that is what I thought it was supposed to stand for, and it is not standing for it. As Rob Muldoon used to say: “I know what I stand for but I’m not going to stand for it.” That is what the Labour Government is doing. It is not standing for it. It is not standing for what the people who voted for it thought it would stand for, and that is an absolute disgrace.

The amazing thing about this bill is hearing the National Opposition speaker talk on it. He was almost reminiscing about the old days and how great the economic experiment was—selling off $6.36 billion of State-owned assets. That is what the National Government did. It sold off $6.36 billion of State-owned assets after the Labour Government had sold off $10.1 billion of State-owned assets. That is when the National Party said that there were no more State-owned assets to sell.

That is what this bill does. It takes us back to the past, back to what the National Party members—in particular, Mr Carter, who spoke just before me—and the Labour Party members, including Helen Clark, the current Prime Minister, and Dr Cullen, were a part of in what they call the good old days. That is what they call it, and that is what they want to go back to. Basically, they will sell these assets to foreign-owned companies for a song, and let them take the profits back to the overseas countries they came from. New Zealand First opposes that in its entirety. We say it is disgraceful, repugnant, and wrong, because New Zealanders own those assets and the money should come back to New Zealanders.

I thank my colleague from ACT, Richard Prebble, for letting me have a call before him. I am looking forward to his endorsing what I have to say, in the same way that I am pleased to endorse much of what Craig McNair just had to say.

It was fantastic to hear an angry young man state the obvious, which is that his predecessors in this Parliament sold off the family silver. It was not just one Government but two Governments that sold it; it was not just the Labour Government in all its new-right zeal that did that but also the National Government that followed it. I guess the only silver lining in that extraordinary sell-off of New Zealand’s State assets is that we now have MMP as a result. Due to those two old parties going against everything that the New Zealand electorate had expected of them, the public knew that it would not be good enough just to throw one lot out, because when the other lot came in it would be just as bad, if not worse. That is why the public changed the electoral system instead of the Government, and that is why we have some independent voices in this Parliament. We do not always agree with each other, but on this occasion I am pleased to say that the Green Party does empathise quite extensively with what the New Zealand First speaker just said.

And that, to respond to David Carter’s earlier speech, is not a position of xenophobia. It is not that the Greens have anything against foreign individuals moving to New Zealand and making our country their home. We are not even against foreign corporations making greenfield investments in New Zealand. It is about placing some appropriate restrictions on foreign investors, and even the Minister of Finance admits in his general policy statement that “… it is a privilege for overseas persons to own sensitive New Zealand assets,”. The problem with this bill is that Dr Cullen has narrowed what he considers to be sensitive assets, and that is our fundamental criticism with this bill.

In effect, what Dr Cullen has done is pull a massive swifty on the people of New Zealand. This bill is a complete and utter sham, and he is not going to get away with it. The public is wise to what is going on, and I can give members evidence of their wisdom in the fact that in the last few weeks I have received over 1,500 signatures to the petition I launched only this time last month opposing the expansion of foreign investment in, and foreign control of, the New Zealand economy. The reason why signatures to that petition are flooding in is that people recognise what this Labour Government is trying to do. In its very stealthy way, it is claiming to be saving the facade—in other words, so-called sensitive iconic sites—at the same time as it is making it easier to sell off the building and the businesses behind the facade. That is what this bill does. It offers some protection to so-called iconic sites of historical, cultural, or environmental interest, and we applaud that, because we want greater protection from overseas ownership of those sites, but it also so-called liberalises the foreign investment regime to make it even easier for foreign investors to gobble up the rest of the private assets that are on the block.

The New Zealand First speaker suggested there would be more State assets available for sale. I have to give Labour credit that it has no intention of selling any more, and the profitable ones, I tell Mr McNair, have already gone to overseas owners. This bill is all about making it easier to asset-strip the private sector in this country, and that is why we oppose this bill and why we will be putting up significant amendments to it. We see foreign investors as guests, and we believe that guests need to follow the rules of their hosts. In our case, those rules should mean no more land sales to foreign corporations and non-resident foreigners—absolutely, no ifs, no buts, no maybes. Land has got to be off the table. Already, too much of New Zealand’s land has fallen into foreign control.

It is difficult to know how much, because the Government simply does not collect statistics on it. We can hazard a guess that approximately 7 percent of our commercially productive land, or more than 1 million hectares, is now in foreign ownership. We know from the Government figures that are available that in just the last few years 2,720 hectares of offshore islands, 57 kilometres of coastline, and 150,000 hectares of high-country leasehold land have been sold to overseas buyers. But that is just the tip of the foreign ownership iceberg, because most residential and commercial land sales under $10 million are not scrutinised or recorded now. With that threshold increasing to $100 million, not only will the sell-off intensify but it will be more difficult to identify which parcels of land have fallen into foreign control.

This bill is a complete contradiction of the recommendations made by the Finance and Expenditure Committee only a couple of years ago. That committee, in a review of the Reserve Bank for the 1999-2000 year, made a number of significant recommendations. Those recommendations were joint recommendations, as in being Labour Government and Greens recommendations. They included appointing an additional commissioner to represent the wider community on the Overseas Investment Commission, extending the application of the national interest criteria to all proposals, not just to land sales, and re-examining the investment thresholds. Our preference was to reduce them from the $50 million that Mr Bolger had brought in, back down to the pre-election level of $10 million, and therefore we are certainly opposed to increasing them to $100 million. We also wanted the commission to consider the impact on social well-being, environmental sustainability, and economic sovereignty, when assessing whether an investment will benefit New Zealand, and we wanted a code of corporate responsibility for investors, because they need to measure up to that—otherwise, there is no point in having a compliance regime.

Quite frankly, there is no point in having the compliance regime in this bill, because it is a self-regulating one, and who will say no when asked whether he or she has complied? There needs to be some independent compliance monitoring, and, yes, it should not be at the cost of the taxpayer, but, no, it should not be undertaken by the applicant. It should be paid for by the applicant, but it needs to be done independently. That is one of the many flaws in this legislation.

Another flaw is getting rid of the Overseas Investment Commission. Stephen Dawe, who heads that commission, will tell members that the Greens have many criticisms of how it operates, and one particular example recently was the Shania Twain sale, but that is not a reason for getting rid of it. The problem is that that was a pre-determined outcome. There was no first-principles review of the Overseas Investment Commission. The Government knew all along what its intention was, and that was to make it even easier for foreign investors to gobble up more of our assets. It was not interested in addressing issues around the lack of compliance. It was not interested in addressing issues around the fact that there have been a lot of retrospective approvals. It is not interested in facing up to the big issues, which are that at the end of June foreign investment in New Zealand totalled $190 billion—up more than $8 billion on the previous year—and that that investment is costing us enormously. For the year ended June, there was $9.488 billion in interest payments and profits on those loans and shareholdings. That is what foreign investment is costing New Zealand. It is costing us an increasing balance of payments deficit. It is causing the price of land to increase so that it is becoming nearly impossible for young Kiwi families to buy a farm or ever have the opportunity of buying a bach at the beach. It is making it more difficult for first-home buyers to buy their first home, because residential property is being bought up by overseas investors who can get it at a very cheap price and make a very good return on their capital.

So we ask the public to please make a submission on this bill and tell this Government that it has got it wrong. The fact that National supports the bill is a very good reason why everyone in this country should be concerned.

I rise on behalf of the ACT party to say that we will also oppose the Overseas Investment Bill, but for completely opposite reasons to the Green Party.

Rod Donald: I thought so. Predictable.

Hon RICHARD PREBBLE: It is a shame that it is predictable, because Mr Donald, though he tries to hide it, has a better intellect than was showed by the speech he gave to the House. He was talking emotional claptrap. The idea that foreigners are buying up homes in Ōtara, pushing up the price of homes—

Stephen Franks: Wainuiōmata.

Hon RICHARD PREBBLE:—or in Wainuiōmata—and making it impossible for young New Zealanders to go there, is absurd. If he listened to his own rhetoric about the amount of overseas investment in New Zealand, he would know that it is still tiny.

If he had bothered to study history when he was at school, he would realise that this nation was built on overseas investment. If one goes back far enough, one can see that nearly every economic activity in New Zealand was done by foreigners. If we look at New Zealand’s economic growth at the time when there were no rules at all against overseas investment, we see that we have never matched that growth since—never, never matched it. Indeed, according to research done by Geoffrey Blainey, who is, as I am sure the New Zealand First member knows, probably Australia’s most prominent historian, it is his belief that in 1900 New Zealand had the highest standard of living in the world—and that was at a point when we had no overseas investment rules.

These rules are nonsense. Let me give one other, small example. The explanatory note includes “investments” that are “sensitive”, and “sensitive assets”. When one reads through it, one finds out that those refer to land, but the proposal actually increases the “threshold for screening non-land business assets” whereby overseas people can buy from a company to $100 million. I hate to be the first to break it to the Government, but that means people can go and buy a company on the New Zealand Stock Exchange for $99 million—

Stephen Franks: Lots of them!

Hon RICHARD PREBBLE:—one could buy quite a lot on the New Zealand Stock Exchange for $99 million—and the next day deregister it and put it on to the Singapore Stock Exchange—which has happened to a few public companies. That is possible. But the “sensitive” investment is land, and no one has worked out how that can be picked up and put into Singapore. No foreigner has ever managed to acquire a piece of New Zealand land or foreshore—perhaps a little bit of sand, but not a proper section—and take it overseas. It cannot be done. That is a load of rubbish, and when we hear the stuff about some singer who has bought some land—

Craig McNair: Shania Twain.

Hon RICHARD PREBBLE: Apparently she is a pop singer or something, so I am told—[Interruption] Well, jolly good.

Hon Member: She’s very good-looking.

Hon RICHARD PREBBLE: I have various strengths but that is not one of them—but I can guarantee that that land is still there, and I suspect she is probably a better landowner than many Kiwis.

I listened to Mr Rod Donald and to the New Zealand First member talking about overseas investors, and heard that they have a dreadful impression of some sort of robber barons. It is interesting that they did not name one of those corporations. If they have to look at robber barons in New Zealand, I would have thought the New Zealand First member would know about the Wine-box. Not one overseas company was involved in that—not one.

I can tell the member why that is so. It is because overseas companies tend to be very careful about obeying the law. I have been a director of New Zealand companies overseas, and we are extremely careful to be very good citizens. There are quite good reasons for that. We certainly would not be interested in playing the sorts of games that New Zealand companies have played—regrettably—on occasions.

This also raises questions for New Zealand First and the Green Party. I will give one example. If we are to follow the advice given by New Zealand First and the Green Party, do we say to New Zealand’s biggest multinational, Fonterra, that it should not own overseas companies, and that it should withdraw its bid for—what is it?—

Gerrard Eckhoff: National Foods.

Hon RICHARD PREBBLE:—National Foods in Australia? In fact, the Green member said that no foreigner ought to be able to own any land in New Zealand. That is interesting. I hate to break it to him, but I am a New Zealand citizen and I own land overseas. So if that theory is applied, that land should be taken away from me. I assure the member that I am a very good owner, and my wife would be even more upset than I would be if that were to happen. It is nonsense.

I say to the House that it is a shame when members get up and scream, because that is really what the New Zealand First member did. I guess he can plead his youth, as he did. I do not know what Rod Donald’s excuse is for getting up and talking emotional claptrap, but it does not help the House. I do not doubt for a minute that there are many New Zealanders who instinctively fall for that sort of appeal, but it is still claptrap.

Let me give the member another example, which is probably one of the more famous. We all know that the United States became the wealthiest nation on earth. One of the actions that achieved that was the building of the railroads right across the United States, which in that century was the big economic development. The people who paid for that were the British; the British put in the investment. Under the theory advanced by the Greens and New Zealand First, the United States should have come out of that experience as a very poor nation. Did they? No, not at all—of course they did not.

If we had had the sense to get the British to build the New Zealand rail, I would not have had to go and save it; it would have been a problem for the British. But of course we put our money in, unlike—

Craig McNair: The difference is that the British actually lived in the US.

Hon RICHARD PREBBLE: Oh, they lived in the US? That will come as a great shock to them. I guess they did in the sense that some of them thought the “united states” were still the colonies, but most of the investors did know about the Declaration of Independence. Most of them knew that the United States was a separate country, but there could have been a few New Zealand First supporters who got confused about that sort of development. I assure the member that no railway was built when the United States was still a colony of Britain, and the point I make to the member is that that is just one example—a very easy one for anyone except New Zealand First members to see—where the people of the United States were the real beneficiaries of that investment. No doubt British investors got some money, as well.

But coming from the ACT party, which believes in sound economics, I say to the House that this whole bill is emotional claptrap. Of course overseas investors should have to obey the law, but they ought to obey the general law of New Zealand that applies to all investors. They should not have to fill out those sorts of forms and, as Green Party and New Zealand First members have accurately pointed out, many of the forms they will be asked to fill out have been put up just for political smokescreen reasons by the Government.

Hon David Carter: That’s right.

Hon RICHARD PREBBLE: The National Party member says that is right. That is because neither of the two original parties in this Parliament are prepared to get up and say that what we ought to do is have no such bill of this sort. We should be saying that anyone who wants to come and invest in New Zealand can do so but they must obey the general laws of New Zealand, and that if there is anything wrong with those general laws then we should fix them. I think there is—there are too many of them.

This addition to investment law is of no assistance, so the ACT party will vote against it. Yes, there will be people who claim that assets are being sold. I tell the House that I have never sold a State asset. I have sold many State liabilities, but I have never sold a State asset. Some overseas people bought those liabilities and nearly all of them did a better job than previous Ministers. I say to the House that this bill is emotional nonsense, and that it is a great shame for the country that we are even attempting to pass laws of this nature. The ACT party will vote against it.

It is a bit of a mixed blessing to follow a speech like the one we have just heard from Richard Prebble of the ACT party. On the one hand, I agreed with a fair bit of what he said earlier on in the speech but, on the other hand, right towards the end when he made the claim that he had never sold a Crown asset to overseas investors but that he had sold only Crown liabilities to them, I thought to myself that we should congratulate him on his genius. Not many Kiwis can talk overseas investors into buying New Zealand - based liabilities, and I think that that really is an incredible feat. I extend my congratulations to him for doing that. However, I think that maybe he is a bit of a stranger to the truth on some aspects of it.

The other irony relates to the position of New Zealand First. We had—let us put it mildly—a very impassioned speech from Craig McNair, who raved on about the sale of Crown assets. The irony of that to me is that just earlier this year the Government went to New Zealand First to get its support on the foreshore and seabed legislation, because it could not get the bill through without New Zealand First. The Government wanted to put the foreshore and seabed into Crown ownership, which Craig McNair spent his whole speech saying was a very dangerous thing to do, because the foreshore and seabed would be flogged off to overseas people.

The very point of distinction that United Future had on that bill was to say that we should put the foreshore and seabed into the public domain, to make it clear that it is not for sale to overseas people. I do not think we will ever get around to selling it, but I note that little irony in the diatribe we heard from the New Zealand First member about how terrible it was to sell anything from this country to anyone from overseas.

Richard Prebble really hit the nail on the head in many ways. The fact is that the history of this country has from its very beginning been very, very influenced by overseas investment in our nation. When, for example, the ANZ bank tells us that it has been here since 1840, we remember that it was Australians who invested in this country and who continue to do so to this day. Overseas investment really has been a part and parcel of our history.

The other thing that I think a lot of Kiwis overlook when they talk about the sale of land to foreigners is that it kind of depends on where people stand in the spectrum, does it not? They may just have the point of view that they do not want overseas people to own New Zealand land. If asked why, they will answer that it is because the buyers are foreigners. When asked why that is relevant, they will answer that it is because the buyers are foreigners. In other words, we get back to a sort of xenophobia on that point.

On the other hand, if one talks to New Zealand landowners—such as owners of big pieces of land, of whom I know several—who actually want to sell their property and get the very best price from the market they can for the labour they have expended on that property, sometimes over many generations, and if the best price they can get happens to be from someone based overseas, the world looks very different, indeed. I do not think we should be in the business of stopping New Zealanders from freely exercising their right to sell their own property.

With respect, the New Zealand First member’s speech was limiting in that it referred to only the Crown selling things. But there is a whole other class of business activity in this country, if members have not noticed—that is, private business and private property ownership. One thing that goes with that reality is that those owners should have the right to transact business in the marketplace with more or less as little restraint as we can reasonably impose on them. Having said that, I tell members that United Future will support this Overseas Investment Bill, because I think that in a funny kind of way it probably comes down on about the right side of the ledger.

The political reality is that there are New Zealanders who are opposed to the sale of our land to overseas owners. Therefore, I think it is sensible to put some conditions in place, particularly when sites are sensitive. Young Nicks Head is a case in point, Cape Kidnappers is another, and there are several other very sensitive pieces of land for which we should put in place some requirements, because they are places that all of us value. I think it is fair and reasonable to have the requirements in this bill—which is a plan for economic development—to maintain the natural heritage and historic features of a site, and to have walking access.

Walking access is a very important issue. We in this country have a culture—and I remember the Prime Minister talking about this to Paul Holmes this morning, I think, on the radio—whereby we have broken away completely from British and, to some extent, American models. Citizens of those countries cannot walk on the beach in many places and cannot access lakes and rivers, because they are privately owned. I know of places in the United States where beaches are fenced off. As one is coming along the beach, one cannot get over the fence to the next bit of the beach because there is a physical barrier restraining one from doing that.

New Zealand was founded on the basis that there should be free access that is reasonable to those parts of the country that in a very real sense are our endowment and are what we see as being universal destinations—in other words, destinations that belong to all people, which also includes people coming here from overseas as tourists. So I think that the walking access requirement that has been made a part of the sale of large tracts of land to overseas investors is a very good way of signalling that that is Kiwi culture. Otherwise, the danger is that those people, with the best will in the world, will put a great big fence around a whole property and say that people cannot go there because it is theirs.

Gerrard Eckhoff: Name me one property where that’s happened.

GORDON COPELAND: One situation that has caused this bill to come into being is the D’Urville Island situation. Some very real problems have arisen there, not only because of the access rights but also because of the fact that there are—

Stephen Franks: That land was off-limits before the foreigners bought it. I know; I tried to go there.

GORDON COPELAND: OK. Well, two wrongs do not make a right. The point I am making is that I sincerely believe that it was part of my heritage to be able to walk up and down quite freely on the piece of beachfront I grew up on, and that is what I want my kids and my grandchildren to be able to do. I unashamedly think that that is part of Kiwi culture. This bill recognises that, which is very good, indeed.

I also think, with regard to the D’Urville Island situation, that the new rights brought into the bill about not fulfilling the conditions of the consent are extremely important. There must, logically, be a way to ensure that if one puts in place conditions attaching to a sale, the conditions are enforced. Otherwise, they are not conditions; they are just suggestions. So I think it is exactly right to state in the bill that if one strays outside or fails to comply with the conditions on which one purchases a property, then one will be subject to penalties. In extreme cases, the court can order the disposal of a property to new owners, who will then be subject to and have to fulfil those conditions. That would probably result in a very real loss to the foreign purchaser.

As far as business is concerned, I think I have already made United Future’s position quite clear. We welcome, and should welcome, business investment in New Zealand. One can think of so many examples recently of New Zealand companies successfully investing offshore. I was just reading in today’s or yesterday’s paper—I am not sure which; we are still in Tuesday after all, and it has been a pretty long Tuesday—that Glassons, for example, is now succeeding quite well in the Australian market. That is the latest example of successful investment by a New Zealand company overseas.

There has to be a reciprocity, of course. As Richard Prebble said, if we want to invest in other people’s countries, then we have to reciprocate by allowing them to come and invest here. I think that everyone benefits from that.

The last point I make is one that Richard Prebble also made. I agree with him that I have not yet seen anybody remove any land from this country. If an overseas-based person buys land here and puts money in here, it creates jobs and wealth. That is the way in which our economy will grow, expand, and succeed in the future.

I rise to support the Overseas Investment Bill. I bring a practical example of why I support this bill. I have listened to a number of claptrap contributions that referred to this idea that if we sell land, then all of a sudden somebody will pick it up and take it away. Right next to my bay in the far north there was a marginal farm called Tepene Tablelands.

The area was about 4,000 acres. The majority of the land was covered in gorse and tea tree, and 50 percent of it was non-productive. It was owned by two Kiwi farmers, and they employed 2½ people. Some years ago an American investor came along and made an offer for the property, and despite the ramping and raging of some of the local politicians and of some other politicians, the investor actually secured and bought the property. Now, 7 years later, that property is one of the top international golf courses in the world. It employs some 60 people on a permanent basis, and two-thirds of those people are actually related to me and to the leader of New Zealand First. Two-thirds of the people employed are local tangata whenua, and they are people who have been trained to do the job. I say that that investment has uplifted the economic destiny of our community. Two-thirds of the employed are local people, and a number of them are in managerial positions. Now we have a piece of land that is productive and making a contribution, not only to the local economy but to the New Zealand economy.

That is the reason why I want to stand up and give an example of a practical application of what this bill allows, and I want to stick that up the noses of those people who are saying: “blah, blah, blah, blah. We are not going to sell any more land in case somebody comes along and offers X’s of millions of dollars, invests in our country, and creates jobs for our people.

That was an outstanding contribution from the last speaker. I was hoping he would take more time and give another example, but we are very grateful for having had the benefit of his contribution.

The National Party is prepared to support this legislation through to its next stage and, as my colleague the Hon David Carter has already foreshadowed, we will watch carefully what happens at the select committee stage and reserve our position. I have to say that at a first read it appears to me that this bill is a pragmatic and common-sense solution to what is an emotional and often very ill-informed debate, flamed by some politicians in pursuit of what I roughly phrase as cheap votes. National has no problem with the concept of foreigners pouring their hard-earned cash into this country, subject to some clear rules of engagement. For goodness’ sake—everybody wins! Overseas investors get to live, work, and own property in Godzone, and we get money for education, employment, infrastructure—members can name it. That is the type of contribution that foreign capital makes to our economy.

But I have to say, also, that this bill appears to me to be an absolute no-brainer. Arguing against it is a bit like arguing against motherhood. But then, on reflection I realise that some members of the House did argue against that last week so I probably should not use that example. No one is knocking tourism in New Zealand, no one minds planeloads of foreigners coming here and spending their cash—

Hon David Carter: The Green member does.

BRIAN CONNELL: Will the Green member knock tourism? Well, that is probably enough said. No one should mind foreigners coming here and deciding they want to buy a company or a farm—

Hon Dr Michael Cullen: I bet he doesn’t ride a NZ-made bicycle.

BRIAN CONNELL: I bet he does not. Foreigners are really saying to people in New Zealand that they think this is a great country and they want a stake in it. I say to members in this House, and particularly to Green Party and New Zealand First members, that this is just another form of immigration. Unless we forget, I remind everyone that we are a nation formed from immigration, beginning with Kupe. Overseas investment is a vote of confidence in the New Zealand economy. Years of market reform in the 1980s and the 1990s have made this a very good-performing economy, but some Luddites in the House want to wind back that clock.

I have heard all sorts of talk about our heritage being sold off, etc., but I want to quote some examples that put those myths to bed, I hope forever. In the last 3 years, 11 Canterbury high-country stations were sold. Six of those went to New Zealand interests, three were sold to New Zealand and foreign interests in joint ventures, and only two were sold to foreigners—so much for the argument that Kiwis are being priced out of the marketplace! Over the last 11 years, 40 percent of foreign-owned properties were sold back to New Zealand interests. I have also to say that with the benefit of that overseas capital, those farms are now performing at a much higher level than they ever were before. They are making significant contributions to the local economy, in terms of both their produce and their employment opportunities. Let us remember that nothing is sold in this country—or not yet, unless Mr Sutton has his way—unless there is a willing seller and a willing buyer.

I challenge a member of the Green Party or the New Zealand First Party to stand up—whoever will—and say that he or she is prepared to take $50,000 or $100,000 less for his or her property, simply because it is an overseas buyer who is making that offer. The Government has no right to involve itself in the New Zealand property market, and has no role in that market. I therefore congratulate the Minister on resisting the pressure that must have been brought to bear from some quarters for him to do just that.

I want to take time to quote another example. Five Star Beef Ltd’s feedlot in Ashburton houses nearly 18,000 cattle, all destined for the top tables in Japanese restaurants. It is a joint-venture operation between Japanese and New Zealand interests, and Japanese capital contributes something like $30 million to that venture. Not only does that feedlot employ significant numbers of people in the area but it underpins the local barley price, two meatworks, three or four transport companies, and dozens of grazing and silage contracts, and the flow-on effects into the Ashburton retail trade are extremely significant. That is what foreign capital does for this country.

I offer yet another example from mid-Canterbury. The Mt Hutt ski-field is now regarded as one of New Zealand’s premier tourist attractions. The prosperity of the township of Methven is underpinned by the performance and success of that ski-field—and guess what? The capital that underpins that ski-field is Japanese capital, as well. [Interruption] Is the member contradicting me?

Hon David Carter: I’ll tell you when I’ve made it.

BRIAN CONNELL: Ha, ha! Well, a lot of it is foreign capital; does the member agree with that? In fact, there is actually some misunderstanding around the Mt Hutt ski-field. About 4 or 5 years ago there was an exchange of ownership. The original owners of Mt Hutt ski-field were having difficulty trading so they sought significant capital. My understanding is that that capital came from Japan.

I have another example: the Terrace Downs golf resort in mid-Canterbury is now regarded as one of the premier golf courses in this country. About 10 years ago a Japanese investor—risk taker is a better way of describing him—came to the area and bought a farm that nobody else wanted. The local community said: “You are absolutely mad.” Today, the capital employed in that resort is in excess of $80 million. The resort employs 180 people at the height of the season, and has been doing so for many years. An astounding number of people in the local community—in particular, Christchurch—have built properties on this resort. One needs only to go there to see how outstanding that development is. That was all due to foreign capital.

If we adopted some of the arguments put forward in this House we would build a wall around this country to keep out the rest of the world, but that would be shooting ourselves in the foot. We need foreign capital, we need foreign investment, and we need the type of person I have just spoken about to come here and invest. We need to embrace those people. But the anti-foreign sentiment I have heard tonight makes my skin crawl. It is sad but a lot of the protest is racially based. I have to say that some members are objecting because a lot of people who are coming here and investing in New Zealand are Asian. I say to them: “Wake up and smell the roses.” We are a multicultural country now, and we are part of Asia.

I say to those members: “Don’t be surprised, because you will be slashing your wrists, if we see people from Pakistan, South Korea, and Mainland China coming here to invest, more and more, into the future.” Capital is a scarce resource and we should embrace it.

I compliment the previous speaker on his well-presented, well-researched, and knowledgable contribution, which started from Kupe.

It singularly impressed me. I support this bill on the basis of the arguments that have been presented.

The National Party gives cautious support to the Overseas Investment Bill. We support its referral to the select committee, and will watch very closely as submitters come forward and put pressure on the Government. We will be interested to see where and when the Government folds on some aspects of this bill.

We know that there are far too many roadblocks to investment in this country, not only to overseas investment but also to internal investment. Members have heard many, many claims made in debates in the House that the Resource Management Act has caused a slowing down in investment in this country both from overseas and from internal investors, large and small. The taxation regime, and all the associated levies and taxes, slow down investment in this country. The immigration regime holds back expansion in business, because people cannot employ the right skills from overseas. This is either because of xenophobia, as demonstrated by the New Zealand First member who spoke earlier, or because we are allowing into this country those who do not contribute and never will, and those who have no skills and never will.

I turn to clause 18(2)(d), which deals with land access. It states, with regard to land owned by an overseas investor, that there will be adequate mechanisms in place for walking access over the relevant land or a relevant part of that land by the public or any section of the public. It is interesting to see that provision introduced in this bill. I hope it is not the thin end of the wedge for later Government legislation to see a “right to roam” for the general public across agricultural, rural, and other remote land.

I know that David Carter has travelled the length and breadth of this country, both in the media and physically, preaching the National Party’s stance on that issue. We say the general public should have the courtesy to talk to farmers before crossing their land, just as they always have, because they will see farmers allowing them free and safe access across the land, just as farmers always have. That is what David Carter has been saying, the length and breadth of this country. Some hundreds of metres behind him, of course, has come Gerrard Eckhoff echoing those sentiments and redistributing David Carter’s speech. We thank him for pushing National Party policy. These land access issues, as demonstrated in clause 18(2)(d), relating to land owned by overseas investors, had better not be a stalking horse for free-range access over our rural properties, because that involves safety issues, private property rights, and, not least of all, matters of courtesy that have served this country well for many years.

I also take great interest in clause 73, which deals with the amendments to the Fisheries Act 1996, because that deals with the overseas ownership of fishing quota. It might be of interest to the House that overseas interests are prohibited from owning New Zealand fishing quota. In fact, they are prohibited from owning not just quota but provisional catch history and annual catch entitlement, without obtaining exemptions under that Fisheries Act. “Overseas ownership” is defined as any company or building society in which 25 percent or more of any of its shares are held by that overseas person or entity. But it is not just the ownership of share rights; it is also the control, or the voting rights, held at any meeting that that person or entity may hold. That influence cannot exceed 25 percent, either. If that figure is exceeded, either by the ownership share numbers or by the voting power on any meeting relating to that entity, then that is deemed an overseas owned company or person. They are prohibited from owning fisheries quota.

Interestingly, the rules that will be brought in by this Government are about amending the Fisheries Act 1996 so that it falls in line with this other legislation. I am intrigued to see section 57G, “Criteria for overseas investments in fishing quota”, inserted by clause 73. That section states that all relevant individual overseas persons must be of good character. I will be intrigued to see how this Government, with its policy, judges that. I trust that it will not have anything to do with being part of the Labour Party. There is also criteria for overseas investments in fishing quota, relating to the Immigration Act of 1987. That Act lists certain people who fall into a category that we do not want to see owning New Zealand fishing quota. I think Ahmed Zaoui would qualify under this section as the Government has clearly welcomed him with open arms by not deporting him the moment he arrived in this country but giving him 2 years’ stay.

Stephen Franks: Free board.

PHIL HEATLEY: And free board, as the ACT member chips in. It is not just free board but a weekly $180 cheque for the next little while, which will contribute to the friars’ fund I should think.

Section 57H, inserted by clause 73, also deals with determining whether overseas investment in fishing quota is in the national interest. The criteria there deal with the creation of job opportunities in New Zealand; the introduction into New Zealand of new technology that may be useful to us; the development of new export markets, which may not have happened if this overseas investment in quota did not take place; added competition to make the fishery more efficient in the use of our fishing product; the introduction into New Zealand of additional investment for purposes of development, which of course is quite important; and improvement in the efficiency of processing of New Zealand fish or aquatic life.

What concerns me is section 57H(2)(b)—and I will be interested in the select committee examining this—which states: “any other criteria prescribed under the Overseas Investment Act 2004,”. That, of course, is subject to Government policy of the day and may be far too wide ranging. It is not just giving the Government free and unchecked scope to allow investment into the fishing industry, but scope to close off investment in the New Zealand fishing industry. So those are the issues that I would particularly like to highlight this evening. We will be supporting the bill to the select committee, and watching with interest.

I want to take just a brief call. This particular bill has certainly provoked some interest in my own electorate of Christchurch East and I know that there are constituents who want to have meetings about it, in order to discuss the ramifications of it. I think my constituents will find that the aim of creating a balance between the need to protect New Zealand’s assets, while also promoting overseas investments in order to achieve growth and innovation, will have been met. I look forward to the debate and the report back from the select committee in due course.