Overseas Investment Amendment Bill

I move, That the Overseas Investment Amendment Bill be now read a second time.

I’d like to start by thanking all who have worked on this exceptionally important piece of legislation. I stand here today proud of my fellow Ministers, select committee members, agency officials, and all of the many New Zealanders who took the time to make a submission during the Finance and Expenditure Committee’s consultation. In particular, I’d like to thank all of those who provided useful feedback on the forestry changes during the three rounds of consultation with Māori hosted by Treasury and myself. They’ve helped deliver a piece of legislation which, in turn, helps to restore New Zealanders’ birthrights, because tonight, we are enshrining in law that it is a privilege to invest in New Zealand residential land.

This is another step to making the great Kiwi Dream of homeownership more of a reality once again. We should not be tenants in our own land. The scale of the problem is clear. Statistics New Zealand, for the March 2018 quarter, showed that nearly 10 percent of all home sales in the Queenstown Lakes District were to people who were not New Zealand citizens or residence visa holders. In the same period, nearly 20 percent of the homes in central Auckland were sold to foreign buyers. The ASB survey out today says it’s even higher, and the Government doesn’t think that it’s a coincidence that these are some of the least affordable areas in New Zealand.

That’s why, under the Government’s changes, investors will no longer be able to purchase the existing homes that there are in New Zealand. That means 1.8 million existing homes will now be out of reach of foreign buyers, after we move through the following stages of this bill. Instead, they’ll normally only be able to be bought by New Zealand citizens and residence class visa holders who’ve spent, or who commit to spend, the majority of their time in New Zealand and who pay tax here.

The bill works along the Government’s extensive agenda to improve housing affordability, including KiwiBuild, the urban growth agenda, and tax policy changes to discourage property speculation. We are addressing New Zealand’s declining homeownership rates, we are addressing rapidly increasing housing costs, and we are addressing the associated rise in inequality—by ensuring that the prices of New Zealand homes, whether they’re lakeside gems, the best houses in the Bay of Islands, or family homes in our more modest suburbs in our regional towns and urban centres, these prices are going to be set by local buyers, not by the wealthy 1 percent from international markets.

A number of changes have been made to the bill to ensure the regime channels what foreign direct investment we do have in housing towards boosting housing supply. Firstly, developers of large apartment complexes are able to get approval to sell a portion of the apartments to overseas investors off the plans, but only if they’re for resale or lease to New Zealanders, not for them to occupy. This adds to housing supply, and it’s indeed what the Labour Party electioneered on. Securing off the plan sales can be important to some of these developments accessing the finance they need to bank their developments. We’re putting the right incentives in place to support this part of New Zealand’s housing market.

In addition, to support other large housing projects, the bill allows foreign developers to retain a long-term interest in new residential projects so long as they’re being leased or onsold to New Zealanders, including under rent-to-own or shared equity models. These changes too should assist first-home buyers to get a foot on the property ladder. In addition, we’ve made changes to simplify the process to acquire residential land for commercial purposes such as supermarkets and hotels, and we’ve also included an exemption for utility companies who sometimes need to acquire residential land for their utility purposes.

Consistent with our international obligations under CER with Australia and our free-trade agreement with Singapore, Australians and Singaporeans will be exempt from the new screening arrangements. Permanent residents from Australia and Singapore are treated the same way as New Zealand permanent residents.

We also are addressing forestry issues, and this bill reflects the importance the Government places on the forestry industry. The legislation both improves the coherence and simplicity of the screening regime for overseas investment in the forest sector. The current processes have not been working. They’re excessively long, they cost too much, and everyone that is involved gets very frustrated. We already have high rates of foreign direct investment in forestry and we need more to help plant the one billion trees. Under the Government’s proposed streamlined investment regime for forestry, this applies irrespective of whether they’re seeking to acquire a forest registration right or a freehold or leasehold interest in the land. These amendments reduce the regulatory burden that has been weighing on that sector’s productivity and help position it for future growth.

By bringing investments in forestry rights and certain forestry registration rights and certain other profit à prendres—which is a long-term interest in land—into the screening regime the same way as investments in leasehold and freehold are, we’ve also removed a loophole that would otherwise have allowed investors to effectively avoid the screening regime that we have in forestry.

It’s important to note that New Zealand welcomes productive foreign investment when this adds to the economy, and this Government is committed to maintaining New Zealand as an open, outward-looking trading nation. Consistent with this vision, the bill will allow persons to acquire residential land where they spend the majority of their time in New Zealand and are committed to reside and become tax resident in New Zealand; where their investment will increase housing supply; or where they’ll use the land in the ways that support the growth of our economy and the creation of new jobs and opportunities.

We are simplifying the process for acquiring an interest in our forestry land by reducing processing times. We’re going to supercharge investment in that system, with New Zealanders being the beneficiaries of a more effective and efficient sector. This bill will help ensure that a greater proportion of foreign direct investment is directed into the productive economy where the benefits of capital investment are greatest, rather than in other areas such as housing, where these flows can instead be detrimental.

National said this could not be done—wrong. They said stamp duty was an option—wrong again. They said this would break lots of prior free-trade agreements—wrong yet again. If this had not been fixed before the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) came into effect, the ability to control foreign buying of New Zealand homes would have been lost, in practice, forever, not just for buyers from the CPTPP countries, but for other countries including China under earlier free-trade agreements with the benefit of most favoured nation clauses. Through this legislation, we are preserving the sovereignty of future Parliaments. Be they Governments of Labour - New Zealand First - Green disposition or National Governments, we are preserving the future sovereignty of parliaments to tighten or loosen the rules. If we had not done this, Parliament would have, in effect, lost the right to do that. But they’ve got to come to Parliament to do it. If future Governments want to change these rules, they’re not going to be able to sneak it through by regulation, because we’ve got very tightly constrained regulation-making powers.

I note that one of my colleagues from the other side of the House, Clutha-Southland MP Hamish Walker, has argued for a carve-out for foreigners buying homes in Queenstown. It seems he’s happy that one in 10 properties in that region are sold to people who don’t live here, probably don’t pay any tax here, and don’t vote here. He wants to ensure they can continue to outbid the New Zealanders that they are outbidding, because that’s the only time they buy: when they’re outbidding in New Zealand.

But it gets worse. He doesn’t just want to carve out for foreigners; he wants to carve out only for rich foreigners. I quote from his press release: “It would make sense to give a carve-out for foreigners buying for Queenstown—for example, at a certain price point, say over $5 million for foreign purchases in Queenstown.” That is what they think on the other side of the House. That’s the difference between Labour and National: we act for the interests of all New Zealanders, not just the wealthy elite. We don’t want to prefer the interests of foreign buyers from overseas, 1 percenters who often don’t pay tax anywhere—anywhere—and yet come here because they like what we’ve got here, sometimes because their own countries are no longer safe places to live in.

We’re here for New Zealanders. We don’t think they should be outbid by foreign buyers. It’s our birthright, not theirs, and I commend this legislation to the House.

Thank you, Madam Deputy Speaker. Well, I come down to take a call on the second reading of what is an incredibly poorly designed, badly conceived, poorly implementable piece of legislation that is a response to the issue of housing affordability, yet it comes from a place of total misunderstanding and misrepresentation of the realities of the housing issue. This whole approach came from some dog-whistle politics that said it was all because of foreign buyers. That was the reason New Zealanders couldn’t buy houses! Foreign buyers were the problem and if we just stopped that, everything would be fine!

Well, here’s the problem that the Government has: the data just doesn’t bear that out. Under the National Government, we put in place data collection to understand exactly how many foreign investors were buying residential properties, and do you know what that data told us? Well, I can tell you that, for many consecutive quarters now, it’s shown us around 3 percent foreign buyers in any given quarter.

💬 Hon Members: How much?

Three percent. But wait; if you take off the number of foreign sellers, the net number—the net increase in foreign ownership—is sitting at around 1 percent. One percent, and yet this is the big panacea from this bumper sticker slogan, “Don’t worry about the data. We don’t read evidence we don’t like. Why would you bother with evidence? Let’s just stick to the nonsense we’ve been pedalling for a few years despite what the data tells us.”

If this Government was serious about housing affordability, here’s what they’d do: they would grow the supply of housing and they would be relentless in ensuring that they did everything they needed to do to make it easier to build houses, to create developments, to hire workforce, and to create a market where people wanted to buy and invest in houses. And what are they doing? They are doing everything they can to turn off the landlord market through changing negative gearing, through bringing in capital gains taxes, through changing the costing on landlords so that, frankly, landlords are going out of the market in a roar. They’re turning off the tap on foreign investors. Foreign investors are saying to me just about every day—certainly every week—“Why would we invest in New Zealand? New Zealand has the ‘Closed for Business’ sign up. We’re not interested in investing in a country where the Government is going to be this unpredictable, uncertain, and punitive based on so little good information. We’re not interested in funding developers.” That is why we’re seeing—and my colleague Judith Collins knows this very well—developers struggling to get developments up.

So what’s happening now? You’ve got Phil Twyford riding in on his white—well, I would say horse but it’s probably a donkey. He’s coming in saying, “Well, all of those developments that now can’t proceed because the developers can no longer get finance, because of the actions of this Government—we’ll rebadge a few of them KiwiBuild.” and somehow that’s adding to housing supply! We’ve got news for Mr Twyford and Mr Parker: if you’re not growing housing supply, you will never fix the problem of housing affordability. This bill is quibbling around the edges of demand. If you’re mucking around with 1 percent of the residential housing market, you’re not seriously making a difference. This bill does exactly that. The answer lies in growing supply.

If you look at the work that happened under our Government, led by my colleague Dr Nick Smith and others, here’s what we did: we put in place the Auckland Unitary Plan to make sure that land could be intensified; we put in place special housing areas across the country to bring land to market quickly; we put in place the Housing Infrastructure Fund so that houses could get built; we supported the construction sector by enabling people to bring in the workforce that they needed; and we absolutely made sure that the international development market was available and wanted to come to New Zealand. That is why, when the previous Government left office, when the National Government left office, we had a forecast of 100,000 houses to be built, not in 10 years, Mr Twyford; in three. In three years, New Zealand was looking at another 100,000 houses being built by the private sector, because we supported them.

This legislation will slow down development—make absolutely no mistake about it; the signs are already there. Just today, I’ve had two more developers and a foreign investor come to me saying they are now not proceeding with major developments that they had planned, because of this legislation. This legislation will make the problem worse. We heard that at the Finance and Expenditure Committee time and time again—people coming before the committee who are in the business. On this side of the House, we listen to those who invest their money and make things happen. We don’t think we know better than Treasury, the Ministry of Business, Innovation and Employment, and everyone else who talks to the Government. The developers came in and they said, “This will slow down development.” Now, my question for the Minister is: how does a bill that slows housing supply possibly help with home affordability? It absolutely does not.

Then look at what’s in the bill itself. This is the really interesting thing, because here’s what the bill, despite all the big talk about how it is going to crack down on foreign ownership and apparently stop the insidious nature of this 1 percent or so of good people who come to New Zealand wanting to be part of and grow our economy, actually does: well, first of all, we had a last minute intervention from the Minister to include an Supplementary Order Paper that would bring forestry into the overseas investment process. “Oh,” we thought, “well, forestry’s coming in.” But look a bit deeper and no sooner does forestry come in than the Minister, effectively, carves it straight out. So here’s what players in the primary sector need to know: forestry land, which is already 72 percent foreign owned—apparently that’s not enough of foreign ownership, and this Government is doing all they can to make sure that the touch is as light as humanly possible.

Forestry land, under a forestry right with a profit-à-prendre, will only come under the Act now if it’s more than a thousand hectares being bought. But what’s the equivalent for non-forestry viticulture land, for example? Well, the threshold for viticulture land in the same circumstances is five hectares. Five hectares is the threshold. For forestry land, even if you’re over a thousand hectares, all you have to do is go through a pre-approval checklist, a self-certified checklist, to say “Don’t worry; we’ll plant some trees.” and you’re OK. You buy an investment into viticulture land over five hectares and it’s the full bells and whistles Overseas Investment Act process. As my colleague Stuart Smith has mentioned already, it will actually likely drive people into owning more viticulture land because why would you go through a profit-à-prendre where you can do that. It makes no sense, it is illogical, and it doesn’t achieve any of the principals it says it seeks to achieve. That’s just the beginning of the carve-outs.

If you look into this legislation, it’s like Swiss cheese. David Parker has achieved the almost unimaginable, in that he has a bill that is a cold handbrake on development while still having so many holes in it. Anybody that is in favour will, apparently, be able to get their developments consented. We have this new beast in the legislation now called “standing consents”. Standing consent, effectively, means you go to the Minister, you convince them that you’re someone that they would want to deal with, and you get an open ticket to go and buy up, as you will, for the period of that consent. That doesn’t sound like good process and a Government that wants to stick true to its word to me.

You’ve got a process now of exemption certificates, where certificates will be granted to developers if the Government chooses to allow some sales off the plans. For those apartments and those residential properties, they can be foreign-owned and they can be foreign-occupied. So, for all the big talk, again, if you get an exemption certificate from this Government—under what sort of process we do not know, and we have to wonder—you’re OK. There’s even more: the Government can now carve out, by regulation, anything it decides to let through. So next time there’s a tough negotiation between Winston Peters and the Labour Party or Shane Jones and one of his pet projects, you know it’s going to get an exemption certificate or a regulatory carve-out. That is not good process. That is not the sort of principles-based legislation that this Parliament should be looking at.

Then, finally, we have this very questionable process of the exemption that the Minister tried to put in place for a single development in Northland—75 percent owned by a Queenstown developer and an American developer. Isn’t it interesting that David Parker took a pot shot at Hamish Walker for standing up for his community when that very Minister told us today, in question time, that he tried to bring an exemption himself through Cabinet, against Treasury advice, for a Queenstown developer for high-end properties to be sold into the American market? There is no good reason why that would be granted—none at all. There are going to continue to be some very serious questions asked about how it is that this Minister, who stands here and tells us that he is opposed to rich Americans buying our land, tried to do exactly that against all advice: against Treasury advice, against Office of the Clerk advice, and certainly against the strong concerns of others on this side of the House. This is a matter that there is going to be a lot more said about over the coming weeks.

Thank you, Madam Deputy Speaker. Another outrageous speech from a National Party member who knows better. I’ll stand by my colleague David Parker and his integrity any time. The problem is that the National Party can’t understand that Ministers can judge with integrity, because they can’t do it over there. Nick Smith’s one of them—the courts ruled that.

The veterans who went to fight the wars from this country would be ashamed with some of the speeches coming out of that side of the House. This bill is ultimately about sovereignty and about New Zealand’s ability and New Zealanders’ ability to live in their own country as we move forward. The reality is that around the world there are billions and zillions of dollars, literally, sloshing around looking for a safe place to park. Our country, for the most part, is a country free of corruption—for the most part. It’s a country where people work hard, where the regulatory systems are sound, and people like to park their—

💬 Hon Dr Nick Smith: It was. It was.

For the most part, I was saying, Nick Smith. The fact is that they would like to park their money in this country, particularly a country that doesn’t have a capital gains tax—but that’ll be looked at, because I think it’s a perverse disincentive for many people. This bill is about setting a line in the sand and saying that New Zealand—and this Government, anyway—wants to manage New Zealand primarily for New Zealanders—firstly, to have a good job and to have a home, and to have somewhere to put their family and bring their family up. The reality is—in part because of the incompetence of the last National Government, but also in part because we’re a very small country and we are attractive for investors—that we have seen house prices and land prices escalate to the point where they are not affordable for the average New Zealander.

The previous speaker pointed and referred to a percentage ownership in this country. Can I say that the percentage ownership of houses in foreigners’ hands is less relevant to the fact that they’re in the market trying to buy them. Because what they do is drive up the values and drive up the market, drag up the market, and make every house in the market less affordable. The fact that 20 percent of the house sales in central Auckland in the March quarter were to foreign buyers is indicative of the ongoing and upward demand by foreigners to invest in this country.

We are concerned about affordability for New Zealanders buying homes and farmland—the National Government wasn’t. I’m quite proud of the fact that we’re intervening, passing a piece of legislation that will better protect—not absolutely, but better protect—the ability of New Zealanders to be able to afford to buy a home, because that’s why we’re in Government. We’re not in Government under some market ideology, like the National Party was, that the market will sort this all out. What sort of flat earth have you come from—right? We accept the reality that with zillions of dollars out there—happy to take 1 percent return, then they would like to invest in New Zealand with no capital gains tax and, actually, speculative returns that are quite out of this world. So they want to keep doing it unless we intervene and unless we bring into place legislation that protects the long-term opportunities for New Zealanders.

I’m proud to be part of a Government that’s doing that, and I’m proud to be led by senior colleagues like David Parker, who’s managed to walk the fine line, through his trade negotiations, respecting the rights of our foreign partners to come and invest where there’s clear additional value for our country, but, when it’s just to buy existing assets or existing homes, what’s the point? We’re here to manage for New Zealanders. We will welcome foreign capital, but we’ve got to be cautious with that, and we have to put controls on it and some guidelines, and that’s indeed what we’re doing here. We’re not saying no to foreign investment absolutely, but we’re saying that we’ll treat it cautiously.

If people want to come in and buy or build new hotels that we can utilise in our tourism industry, we’re saying that’s OK. We’ll have some caution on that, of course, but we welcome that. If you want to come in and invest in a business utilising New Zealand land, then we say welcome. Come in and add additional value to our economy, but don’t just come and speculate or park your money and inflate values to the point where some poor New Zealand business person or some poor New Zealand homeowner or farm owner can’t afford to buy the property and make a decent living. We want opportunities for all New Zealanders, all the way through the system.

In terms of forestry: yes, we do want to see some more trees planted. There is an opportunity, an advantage for New Zealand, in having a billion trees planted, because it will help us offset our carbon emissions. It will help us continue with our economy and our way of life, pretty much as it is, if we put in place proper mitigation and change our behaviours, you know, in a reasonably moderate way. It won’t require the radical change in the way that our economy operates if we were not to have the billion trees planted.

So I acknowledge the investment in this area. I acknowledge this bill as being a careful measure of a balance between welcoming investment for new opportunities but blocking investment for speculation. Kia ora.

Madam Deputy Speaker, thank you for the opportunity to speak in this debate. It’s actually a very important debate, despite the contribution from that member who’s just sat down, Damien O’Connor. I thought he could’ve done a bit better, possibly even got to somewhere close to 10 minutes, but I guess he just ran out of puff.

Tonight, we’ve heard some of the issues that this Government is trying to solve. However, a lot of those are around the housing market, and as someone who is interested in the housing market, obviously, as the National Party housing and urban development and planning (RMA reform) spokesperson, but also—

💬 Matt Doocey: Long title.

—it’s a very long title, a very long title; thank you—as someone who has been a keen observer in the market, particularly as a lawyer for more than 20 years before I came into Parliament, and also someone who has been deeply involved in commercial and tax work for many years, when I look at this bill, I see a bill of compromise. It reminded me of the Land Settlement Promotion and Land Acquisition Act 1952. Unlike some members in the House, I wasn’t actually around at that stage. However, I did have to, in practice in law in the 1980s, deal with that bill, until the then Labour Government got rid of it. It’s very much like that. In the bill, as introduced and passed in 1952, the Government had the right to take people’s land to use it for other purposes—for servicemen coming back from the war, which was, obviously, a good thing to do, to give people a chance in life—but the issue is that, over the years, that changed.

What we heard tonight is that the Government, which opposes foreign investment in property, now no longer opposes foreign investment in property as long as that property is in apartment blocks and is in hotel units. The weird thing is that somebody who wants to bring their money into New Zealand—a country which they must be wondering if they can ever take their money out of, given the behaviour coming from this Government in only nine months—will bring this money in and they’ll buy off the plans for apartments within an apartment building. It’s up to around about 60 percent of that apartment building, we now read, rather than the 30 percent that we were told last week; so who knows what it could be by then. They will do that, and they’re not allowed to live in it. They will do it so that they can then rent it to New Zealanders. So you’re going to have to turn up with your passport to prove you can rent something now? And the answer is, apparently, yes. That’s exactly what it will be. They can’t live in it themselves, but they can rent it out to others—nothing to stop them from going and renting something else, though, for that time, but just not live in their own property.

Who’s going to check all this? Was there going to be a little army of people running around checking who’s in which room, who’s doing what? Are they there? Should they be there? Where’s their passport? I think this is a mess of a bill, and it’s a mess of a bill because it seeks to deal with an issue that we have found out, from Statistics, is not actually the issue.

We heard the previous member who was speaking, Damien O’Connor, refer to the 20 percent of houses in central Auckland that have been owned by foreigners. What a load of codswallop. Actually, it is 20 percent of “dwellings”, and since central Auckland is primarily composed of apartments—if you’re looking at dwellings—I think that is actually going to be exempted; so I’m just not sure what the problem is here. And they’re talking about Queenstown. Well, Queenstown’s got a lot of apartments, too. Apparently, that’ll be all right, too. So, essentially, the reason that there is this exemption is not because they’re trying to lessen the blow of this but because even since this Government has been in power, even before this bill becomes law, the building of apartment blocks has entirely stopped. And if you sit down with Phil Twyford, as I do every Friday morning before breakfast, on The AM Show—

💬 Hon Member: Puts you off your breakfast!

—you need an empty stomach for that one. Ha! We talk about issues like apartment buildings, primarily because I raise the issue. He has admitted to us that the issue around foreign investment has actually closed down all these apartment block buildings—the building of them, I should say. What that means is this: even without the law, it stops. Investment has stopped. It’s stopped in the very apartment buildings that we’re supposed to be wanting to encourage. So it’s stopped. What is the message that’s gone out to people who might want to invest in New Zealand? “Go away.”, “Oh, we’ll want you today; tomorrow we won’t.”, “Bring your money here; we might pass a law to stop you taking it back.”?

Certainly, there was a time in New Zealand when that was true, back in the early 80s—absolutely. In those days, we actually had to get permission from the Reserve Bank to send money overseas. I can remember doing some research on an issue and I needed to send some money to a university in America to get the—they used to be photocopies in those days, or Gestetners or something, and I had to get the permission of the Reserve Bank to send over what was probably the equivalent of a couple of hundred dollars. That’s the sort of administration quagmire that this Government is wanting to bring back, whether it’s in foreign investment or whatever.

Now, we heard today from the Hon Phil Twyford, in Parliament, something that made all this side laugh a lot, and quite a few of his colleagues smirked as well, and that was that he said that the Government has always supported foreign investment. Well, who could tell? Who could tell? Well, what’s this bill doing here then? What’s this bill doing here? The bill is here to tell people wanting to invest in New Zealand, “Hey, we’re going to have the same rules”—or very similar rules—“to Australia, so you may as well just go there.” We’re going to have more people in Australia. They’ve got 25 million people; we’ve got not even 5 million. Where would you rather go if you’re going to invest? You might invest there instead of in New Zealand if you were really after making some money. Then you might say, “Well, what has been the effect of these rules brought into Australia?” Tell me about the prices of houses in Sydney. Are they higher or lower than, say, in Auckland, New Zealand?

💬 Hon Dr Nick Smith: Higher.

Oh, they’re higher? Fancy that! They’ve got a lot of apartment blocks, too, haven’t they, and still they’re higher. Fancy that! So it would possibly be about demand and supply.

The best way for a Government to make housing more available to people is to increase supply. If we have more supply—more people investing into building apartments or more people investing into development of property—that supply will start to overtake demand, and then we will end up with prices going down. That sounds a great thing if one is out in the market looking for a property. It is not such a great thing if someone’s already got their property and they’ve got a big, fat mortgage on it. That’s not such a great thing. And, in fact, what we’re likely to see under this Government is that it won’t be too long before they’re putting the begging letter out to foreign investment to come back to New Zealand, please, and buy something, because, suddenly, a whole lot of people will leave.

We’re already starting to see people moving back to Australia after we’d stopped that flow, brought people back home, and they’re already starting to go back. Tradespeople are going to start to go back, too. And I think what we’re seeing in New Zealand now around the construction industry is something that might actually be worthy of the pre-crisis mode. Construction of housing in New Zealand is 10 percent down on what it was when we left office—10 percent down—and that’s after all of the rhetoric, all of the money, the $2 billion KiwiBuild budget, and everything else. It’s down 10 percent. You start dropping 10 percent a year like that Government is and we’re going to end up with a crisis all right. That will be their crisis. We’ve already got the State housing waiting list up by 2,000—the highest it’s ever been—under this Government. This bill won’t help any of that.

Well, thank you Madam Deputy Speaker. The usual scaremongering from over there, but let’s start at the beginning. Let’s ask a pretty fundamental question: who should be able to own a home in New Zealand? It’s a pretty simple question.

💬 Hon Ruth Dyson: I think New Zealanders.

Oh, New Zealanders, the member for Port Hills says—brilliant, brilliant. And that’s exactly right. We don’t want 10 percent or 20 percent of our market to be held by people who don’t live there who have simply invested from overseas, never laid a foot in New Zealand. They don’t even have to lay a foot in New Zealand under what we’ve got at the moment; they can simply buy that on the knowledge that the market’s going silly because of the panic buying that’s created.

Now, this shibboleth of supply and demand was coming from the member over there before. Well, I’ll tell you what, there is some fictitious demand happening, and that’s what this bill puts a stop to. There are 1.8 million dwellings in New Zealand, and you know what? For all of the talk, for all of the sniping from the other side, those dwellings are now going to be for New Zealanders.

And being a New Zealander doesn’t mean that you have to have been here for five generations. We’re not going to ask the impossible. All it means is you have to hold a residence class visa, you know, and what’s more is there’s a whole lot of other frameworks in there which look after the need to generate houses. The apartment framework which says, “Yes, you can buy and develop an apartment complex and own up to 60 percent of those apartments on a continuing basis.” And you know what? If that doesn’t work, the Minister can tweak those settings as well. So if we need apartments—as the member Judith Collins was going on and on about—well, we can allow that.

This legislation doesn’t need to stand still, but the core fact of this legislation is that Minister Parker has done something that the National Government did nothing about. He has said, “I’m putting a stop to overseas owners speculating in the New Zealand housing market.” And that is going to create a whole lot more homes for New Zealanders. It’s a comprehensive bill. It’s well thought through, and it’s something that should have been done a long time ago. I commend this bill to the House.

I’m actually saddened to be speaking in the second reading of this bill. I’m saddened, firstly, because the origin of this bill was the cynical Chinese-sounding name debacle led by Phil Twyford in 2015. And I hate seeing racism rewarded. I’m also saddened because I came to this Parliament to be involved in evidence-based policy-making. And all the advice shows that this bill, quite the opposite from improving housing supply and affordability, will actually do the opposite.

And I’m also saddened by the politics of this bill. You see, when this Government was elected, international media aligned the Ardern-Peters Government to those of the politics that occurred with Trump and Brexit. And members opposite screamed foul and said they’re different. No, this bill is New Zealand’s Trump or Brexit moment, because it plays off the fear—it plays off the fear—of foreigners for a bill that is all poorly thought-out.

Now, I was astonished to hear Dr Duncan Webb begin his speech by saying he was concerned about scaremongering. Well, let me talk about scaremongering by winding back to 2015, when Mr Phil Twyford launched his campaign against foreigners. Mr Twyford claimed in this House that 39 percent of homes were being bought by people with Chinese-sounding names—39 percent from Chinese-sounding names. He actually only used data from one real estate company. It was only for one area. Whether your name was Lee or Ki, or anything that sounded slightly Asian, then he said that they must be foreigners. His message was simple, and that is the core of our housing problem is a whole lot of money-hungry Asian people, and it was one of most disgraceful moments that I have heard in this House.

Mr Twyford’s not the first person that’s gone down that road. I think members opposite would know the history of Enoch Powell in the United Kingdom in the 1960s blaming jobs on foreigners. I recall the time in the 1990s when Winston Peters blamed Asians for crime in New Zealand, when, actually, most of us would know from the statistics that the levels of crime amongst people of Asian ethnicity in New Zealand is actually substantially less than other groups. But here’s the difference: Mr Powell was demoted by the Leader of the Opposition at the time. Instead, what we have from the Labour Party is those racist connotations now being transferred into this bill.

Let’s test Mr Twyford’s bill against the facts. Remember, he said 39 percent of homes were being built by foreigners. Well, every single property transaction for more than three years now has been collected as to the residential status of those buyers, and it has consistently shown that, of the 200,000 properties that are bought and sold each year, 3 percent of those are bought—

💬 Hamish Walker: How much?

—3 percent—by people that are from overseas. But here’s the interesting part: the report also shows that 3 percent of the sellers are overseas residents. Actually, over the entire last three years—over the entire last three years—the net change in the number of homes that are owned by people overseas is 1,300, out of 1.7 million homes in New Zealand.

We’re building 30,000 homes a year—double the number that we were just five years ago. Does any member in this House seriously believe that a change of 1,300 homes over that number is at the core of the housing issue? In this Parliament, for three years, we heard Labour members saying that those statistics produced by Land Information New Zealand were rubbish and indefensible. Well, it’s interesting that since they have become the Government, those figures have magically—they’re exactly the same, but now they’re reliable. Doesn’t that just show the dishonesty and the fraud behind this bill.

Then I want to talk about the carve-outs, because here’s the really interesting part: if we look at those same statistics, guess who’s the biggest group of buyers and sellers of overseas people owning New Zealand property? It’s those damned Australians! Those bloody Aussies! So I want to ask Dr Webb this: why is it OK for an Australian or a Singaporean to evilly speculate in New Zealand property? That’s OK, he says. That’s what this bill says is OK. But if he’s from China, he’s to be feared. If he’s American, well, we’ve got to ban him. Can some member opposite explain the logic of that differentiation?

Then let’s come to the next part of the bill. What this bill now says is that if it’s an apartment, it’s OK to have foreign speculators, but, if it’s other sorts of houses, it’s not. Well, I’ve just listened to years of debate on housing, and I thought: whether people want to live in apartments, in town houses, or in your stand-alone home, why would Parliament want to have different rules for different types of houses? It is a nonsense.

And then I have to come to the glorious, biggest hypocrisy that I have ever seen in this House, and that is the specific exclusion for a Millbrook-type development in Northland. How often we heard from members opposite, “We’re not having foreigners building McMansions in New Zealand.” They forgot to add a few words on to the end, and those were “We’re opposed to expensive McMansions, except if they’re our mates.”—except if they’re our mates. That is, the Government proposed a specific amendment, and a carve-out from all of these issues, for the development that is in Northland. And, guess what: in that development, what’s the average section price? Oh, $4.5 million. So my question to Dr Webb and co. opposite: why are you so opposed with this bill but want to exempt $4.5 million sections of David Parker’s mates in Northland. Now, I say, that’s wrong, that’s immoral, that exposes the nonsense of this bill.

💬 Hon Ruth Dyson: Ha! This member lecturing us on morality! That’s a joke.

I say this to Ruth Dyson, who’s interjecting: one of the proudest things I have of the nine years of the Key-English Government is that Transparency International concluded in 2017 that, of 196 countries in the world, the least corrupt country in the world was yours truly, New Zealand. And that is something for every member of this House to take pride in, and I honestly say the provisions of this bill will take us backwards, because, in the standard exemptions that are proposed here, we’re opposed to foreign investment, except Ministers are able to pick out their mates and say, “Oh, but they’re exempt from those controls.” Now, the truth is that in many parts of the world it is those sorts of provisions that are wide open to corruption. We should have laws in this Parliament that say, “You can do A or you can do B.” But a law that says “You can do B, providing you’ve got a ministerial exemption.” is bad law. And members opposite have form in that regard, and that’s why I say that this bill is a bad bill for housing. But, most importantly, it’s a sad day for this Parliament.

Tēnā koe e Te Māngai o Te Whare. Shouty Dr Smith encapsulates the negativity of the National Party in relation to anything about housing. He’s so negative and he’s so shouty because National said this couldn’t be done and this Government has gone and done it, because we are committed to improving the affordability of housing in New Zealand, through KiwiBuild, through this initiative, to ensure that we’re not pushing up house prices through allowing foreign speculators to buy homes in New Zealand. I commend the work of Ministers Twyford and Parker, and I strongly oppose the National Party’s efforts to try and smear—personally attack—politicians and put aspersions on their integrity. It is the lowest form of debate, Dr Smith.

The select committee’s work on this bill—the 213 submissions on the bill and their careful consideration by the Finance and Expenditure Committee, ably chaired by Michael Wood—has improved the bill. There have been some significant and well-considered changes, which focus on quite specific aspects of the bill, making it simpler, for example, to acquire residential land for commercial purposes such as supermarkets and hotels.

I also take issue with Dr Smith’s comments about the way this bill will be implemented. As Minister for Land Information, I have responsibility for the Overseas Investment Office (OIO). There is a major investment of time, energy, and resource going into ensuring that the office is well equipped to implement the bill once it becomes law. Budget 2018 saw an extra $7 million available to the office for monitoring and enforcement. There is money available for education, for ensuring that the professionals who will be dealing with this bill—the real-estate professionals, the lawyers, the accountants, and others—understand the bill and can ensure that their clients can easily comply with it. There is a lot of work being done about simplifying and ensuring that there are plain-English processes. So Dr Smith’s claims about lack of transparency and leading to corruption are utter nonsense.

💬 Hamish Walker: You watch!

💬 Hon Dr Nick Smith: Tell us about the water-bottling plant.

We will watch, Dr Smith. And it will be a major improvement on the regime that we had under your Government, because your Government did absolutely nothing to control overseas speculation.

The first steps towards this bill happened last year, when the Government issued a new ministerial directive which ensured that the sales of rural land had to provide a substantial and identifiable benefit to New Zealand. That same ethos informs this bill. Under National, you had only the Overseas Investment Office having oversight of the sale of large farms; that has now changed. Similarly, with this bill, it is aiming to ensure that New Zealanders can afford to buy a home, and that we get rid of those property speculators, who were a factor in pushing up prices and pushing Kiwi buyers out of the market.

We know that capital is coming into New Zealand from many different countries. We are seen as a safe, a stable, and a secure country—a good place to invest. But while we encourage investment that brings substantial and identifiable benefits to our country and our economy, purchases that are speculative help push up prices. They contribute to making housing unaffordable to New Zealanders, and that’s one of the key reasons that this bill has been introduced.

We want to encourage investment by some of the bigger developers where they can make a substantial difference in providing a large number of homes. That’s what the bill will help to do. It will also help ensure that we get the forestry investment that we need to meet the billion trees target by making the screening regime much more coherent, much simpler than exists under the current law. We’re also closing the loophole around profits à prendre—those long-term usage rights that, effectively, created a loophole in the overseas investment regime. This is a bill which is about ensuring that we recognise that it is a privilege for overseas investors to buy land and property in New Zealand, and that they must deliver a benefit to our country for that. So the rest of the world has placed a high value on owning a home in New Zealand; we’re saying with this bill that that privilege belongs to New Zealanders and those who live here permanently and who bring benefit to our economy.

Mr Walker, as the MP for Clutha-Southland, was suggesting that there be exemptions for regions like Queenstown and for things like luxury homes. I’m pleased that the select committee has rejected that, because what that would’ve seen is investment drifting to those parts of New Zealand. It would have seen additional pressure on already high house prices in areas like Queenstown, which are shutting locals out of the market because houses are unaffordable. It would’ve seen additional competition for resources in the construction sector. So the bill, as it’s being reported back from select committee, is a coherent regime. There is a lot of effort being put into ensuring that the OIO is ready to implement it, and in terms of the streamlined test for forestry, that will help us meet our billion trees target.

The National Government said this couldn’t be done; once again, this Government is showing that it can be, to protect New Zealanders and make housing more affordable for Kiwis. Thank you, Madam Deputy Speaker.

💬 Ian McKelvie: Madam Deputy Speaker—Ian McKelvie, Rangitīkei.

I’d actually written your name down. I call Ian McKelvie.

Thank you, Madam Deputy Speaker. I was quite intrigued by the speech from the “Minister for Water Bottling” a minute ago. I thought that—

💬 DEPUTY SPEAKER: Order! Order! [Interruption] Order! We will use proper names.

Oh, apologies, Madam Deputy Speaker. I was—yes, OK. I wanted to correct a couple of items that she mentioned. We didn’t at any stage say it couldn’t be done; what we said was it shouldn’t be done, and we still would have exactly the same stance now. I think that we were always of the view that this piece of legislation would be fraught, and it most certainly is.

I just wanted to correct a couple of other issues, because we took significant action not to control or to get rid of foreign buyers—well, certainly to control them, I think, and I just wanted to mention a couple of them, because I think they’re pretty relevant. We required all foreign buyers to be registered with the IRD and indicate that they are a foreign buyer; we introduced regular monitoring of foreign buyers; we introduced the brightline test, which applied to foreign buyers and New Zealanders who do not live in the homes; and we introduced a number of other items which had an impact on the market—and, of course, that’s proved since to be true.

Today, we’ve seen what I consider to be two of the worst pieces of legislation debated in this House in my time in Parliament, and this is the second leg of the dreaded quinella. There can be no winners here, and it’s another example of the penchant this Government has for gambling with our economy and the lives of everyday New Zealanders in order to blatantly push their distorted view of overseas investment in New Zealand. We’ve already heard Minister Twyford today, completely confused, with his statement that he’s happy to have offshore investment in new builds, when we know this bill not only disincentivises foreign investment in many new builds, because of the residential clause, but also stops new builds in many other types of businesses, such as vineyards, farms, and other places in New Zealand.

Everyone wants a fair go in New Zealand, and I support that in every way, but to cut our noses off to spite our faces is plain stupid. The tragedy of this legislation is it will stifle development in the very area the Government is trying to grow the pie—and I’ll say more on that later. I want to deal with three particular examples of why it’s so bad—and despite overwhelming opposition from a majority of submitters, the Government members on the Finance and Expenditure Committee pushed on blindly with this piece of legislation. First, I want to talk about the exemption that was put in place for the Te Ārai development. We also heard the last speaker, Eugenie Sage, talk about high-value property in Queenstown, and this exemption was put in place for what I’d consider very high - value property in Northland—I can’t see the difference.

Despite warnings from the Rt Hon David Carter, the select committee chair belligerently and arrogantly ignored written advice from the Clerk’s Office that it was not a fit and proper way to introduce legislation, giving a private enterprise an exemption. Fortunately, the integrity of the select committee has been saved by the very unusual action of the Speaker, where he ordered the exemption be removed. In doing so, he mooted that the Labour-led and dominated select committee had been motivated by a desire to assist and to be fair to the landowner. Well, I wonder about that, and I wonder why the many other affected landowners have not been considered. There would be many landowners throughout New Zealand affected by exactly the same issue as this, and I don’t think it matters who they are or where they reside. I’m not going to prosecute the reasons for this extraordinary decision; I’ll leave that to others more knowledgable than I. They are—these challenges—not, of course, specific to iwi-owned land. This will affect many such developments throughout New Zealand and, in many cases, affect the financial viability of them. So I don’t see any difference between that development and any other that might have been applicable under this bill.

I would note that I, too, have sympathy for those parcels of land that have had their value affected by this unfortunate piece of legislation, as many businesses and private homeowners will possibly be affected financially by this, and that will depend on the market reaction to it—one which, I imagine, we’ll see pretty soon after it has been implemented.

There was a lot of discussion in the select committee around the apartment building projects and the potential for them to be stifled by actions taken by this piece of legislation. I think one of the real flaws in this is that work that has been undertaken allowing foreigners to own but not live in their properties. This is a great lurk in an escalating market, but it’s certainly not an attractive place to be in a market that’s either static or dropping. The reason for this, of course, is that there’s no potential for gain. No foreigner is going to put money into an investment in New Zealand for New Zealand’s benefit that they get no benefit financially from; they need to have the potential to have a financial benefit from it. In fact, in this environment you’d almost think they’re probably going to lose, especially given the statements of the Acting Prime Minister today, who clearly wants to drive the price of houses down. If you’re going to drive the price of houses down, you’re certainly not going to get investment in those properties to get them going.

💬 Stuart Smith: Did he turn up?

Perhaps not. These investors are not stupid; they’ll run a mile from this great opportunity, and anyone who has experience in this type of market knows the danger of holding property awaiting capital gains. Then there’s the mouth-watering incentive of being slapped by the capital gains tax—if, in fact, there is any gain to be had.

💬 Kieran McAnulty: Stop reading your speech.

The difficulty for—it’s beautifully written. The difficulty for property developers accessing capital is clearly the issue at stake here, and that’s been a long-time issue for property developers, particularly where they’re developing apartments. If they can’t sell off the plan, they can’t get the bank to back them and they can’t get funding to get going, so, consequently, those property developments don’t take place. This is the big challenge for this piece of legislation, and it’s the big challenge for the Government.

The next thing I want to talk about is the forestry issue, and I think this is quite a serious one, and I think it’s serious for some different reasons than have been raised earlier in the night. I think the real challenge here is that we’re giving foreigners the right to buy forestry land to grow their own trees, export them to their own mills in their own countries. So, effectively, we’re giving away a section of New Zealand property—and not only a section of New Zealand property, we’re also giving away the jobs and the product from it, and I think that’s an extraordinary thing for a Government that pretends to be here for New Zealanders to be doing.

It’s highly likely, also, that these properties will be sold lock, stock, and barrel to foreign owners, and they will then plant the property in its entirety. The issue with that is that if you do plant the property in its entirety, you’re planting a large proportion of class I, II, III, and IV land, and there’s no way that that class of land should ever be taken out of food production. From a world perspective, I think that’s hugely serious.

So it’s extremely dangerous for Governments to interfere in a market. It always causes distortions, and we’ve seen many instances of this throughout our history. I go back to the supplementary minimum prices in the farming sector in the days of Muldoon. I go back to the Dairy Industry Restructuring Act, to the regional fuel tax, and on it goes. So everything we do has the potential, once we start interfering in markets, to distort markets. That is a great tragedy, I think.

We’ve also seen—

💬 Hon Tracey Martin: The market will deliver—trickle-down, trickle-down.

It’s like a parrot. We’ve also seen countries be exempted from this process—

💬 Hon Members: Ha, ha!

I can’t imagine where it is. Up there? We’ve also seen countries exempted from this process, which has now been extended to include Singapore. Who next, we may well ask, and we now see the Minister has the right to chop and change the legislation at will, to suit what’s going on at the time. Well, I think that’s fine, but, in fact, if you’d left it to the market, the market would have done that for the Minister, so that’s not really, in my view, of great value to us.

The last topic I want to speak to as this second reading speech comes to an end for me and we dispatch this legislation to committee of the whole House, and no doubt there’ll be some wholesome debate in that area too—I want to talk about the cost of compliance that this piece of legislation is liable to bring about. It’s going to be huge. Treasury predicted the applications in workload will increase from some 150 per year to 4,700. Imagine the cost to investors and the bureaucracy in this. Every time we add a cost to the business of houses, we add to the cost of the house.

This is a poorly conceived piece of legislation. It will be poorly implemented, and we’ll be paying the price for it, in my view, for quite some time. I’m extremely pleased with the fact that this Opposition has put a minority report into this bill, and I’m sure that minority report, unfortunately, will come to haunt us into the future. Thank you, Madam Assistant Speaker.

I understand this is a split call—Anahila Kanongata’a-Suisuiki.

Kia orana, e Te Mana Whakawā. It is always a privilege to contribute in the House and, in particular, to this important bill, the Overseas Investment Amendment Bill, the second reading.

But before I do that, since we are talking about overseas, I want to take this opportunity to congratulate Jason Taumalolo and the Mate Ma’a Tonga rugby league team for their leadership in utilising expat Tongans to sing the Tongan national anthem. Maybe our national Kiwi team might learn a lesson from that. So I just want to acknowledge the Mate Ma’a Tonga team for utilising Club Fofo’anga to sing the national anthem.

Let me get back to the Overseas Investment Amendment Bill, and I refer to the Finance and Expenditure Committee report to the House. I want to take this opportunity to acknowledge the chairmanship of Michael Wood. I’ve always found, as a regular sub into the committee, I find him very respectful and with due diligence, and, of course, the rest of the members of the select committee, thank you very much for your hard work.

As with the previous speakers on this side, I want to echo our acknowledgments of all the submitters. When I think about this bill, the whakataukī, “Whatungarongaro he tangata, toitū he whenua”—man disappears, but the land remains—comes to mind, because, in reality, we are talking about the land and our role as lawmakers to ensure the landowners of this land are ordinary residents of Aotearoa New Zealand. As we all disappear, whether we’re in ashes or whether we go in a box in the ground, we all at the end, whether we are a billion trees or whatever you call it, become compost, to belong to the land—just a reminder.

Then reading the select committee’s report, I just want to finish because I know that many of this side have actually said a lot that needs to be said. I just want to alert members to three points—three points. This bill, actually—the words that stood out to me are that it ensures the investment in New Zealand by overseas persons will benefit New Zealand. It also ensures that the overseas people who are not ordinary New Zealand residents would generally be not able to purchase existing houses on land classed as residential under this bill. Lastly, the member from across the road was worried about enforcement. I want to refer that member, the member from Papakura, to Part 3. It actually talks about enhanced information-gathering and enforcement powers of the Overseas Investment Office—more than just monitoring.

All that has been said has been said. I want to commend this bill to the House. Malo.

Since I’ve been on the Finance and Expenditure Committee, it has been the biggest learning experience for me about how a Government should not do a bill, because, actually, this is a dog of a bill. I listened to the Hon David Parker saying “We don’t want to be tenants in our own land.” In fact, last week, I listened to the Hon Damien O’Connor saying that he doesn’t want any farmland to be sold to any overseas owner in the future under his watch. He’s proud of that, but I say there is a balance in New Zealand.

We have produced—and there have been sales of—200,000 homes over the last three years in New Zealand. Three percent of them have been sold to foreign buyers, 3 percent have been bought by foreign buyers, and we have actually lost from the housing stock about 1,300 homes to foreign buyers in those three years. That is not what is behind the cost of housing going up. The cost of housing is going up in New Zealand as a supply and demand equation as the market works. And, while those on the other side don’t like the market, if you go and ask people in Auckland or in my town who have actually had their property values go up from $500,000 to $700,000, or $700,000 to $1 million, they are actually quite happy with the increased equity in their property.

What we are dealing with is a shortage of residential land and houses in New Zealand. This is actually having a chilling effect way greater than that side even understands. It’s no different to the oil and gas decision made without any consultation, any Ministry of Business, Innovation and Employment analysis, and now we know—and now we know—may be worse off for climate change than what we were doing before. There’s a lot of advice, even in this space, that says that what this will do to the New Zealand housing market will be detrimental. It’s being ignored by those on the other side. We’ve just heard the Hon Judith Collins tell us that housing development and apartment development in Auckland has stopped dead. The law isn’t even in place yet, but it’s stopped dead because we’ve scared off the very people we need to help build and fund these developments.

We actually can’t have it both ways in New Zealand. I’m reminded by the pastoral sector that when the dairy industry’s in trouble, and when the payout drops to under $5, and a number highly geared properties are in difficulty, you know what happens, you know the people that are out there—sorry, Madam Assistant Speaker, the other side should know what happens. What happens is that often large corporates, some of them foreign-owned, come in and actually underpin the market. What we’re saying is we actually don’t want them in good times, but when things get a bit rough we actually still need them. Well, I’m arguing you can’t have it both ways.

The carve-out provision in Northland worried me at the time. I sought questions and asked whether, in fact, we had received any advice about whether it was allowable; whether, in fact, there were any other examples; or did it, in fact, set a precedent. The chair, Michael Wood, said that was for us to decide. We ignored the Clerk’s advice and then the Speaker had to make a rare move and rule it out. I found that a really difficult process. We asked genuine questions, as the Opposition should, and were largely fobbed off and, in the end, the Speaker made an unprecedented ruling.

I also want to comment on some comments that were made about my friend Hamish Walker by the Hon David Parker. You see, in my area, foreign investment has been transformational. We have Craggy Range, Elephant Hill, Cape Kidnappers—all wonderful examples of foreign investment; wonderful corporate citizens who have made a big difference. In Clutha-Southland, in Queenstown at Glenorchy a couple have transformed the Glenorchy camping ground, spent $40 million, and donated it back to the community. That’s what they’ve done, and we say to those people, “Oh, you’re not welcome. We don’t want you to buy a house in New Zealand.”? I just think it’s rubbish.

Today we heard from the Hon Phil Twyford that he welcomed foreign investment. I also heard today that he welcomed flat-pack houses from China or some other country to help us with the housing crisis. You cannot have it both ways. You cannot tell people who you want investment from that they can’t live here but then ask them for all the cash as well. That’s why I think this bill is fundamentally flawed and we oppose it.

It’s with some determination, actually, I get up and speak on the Overseas Investment Amendment Bill. As many of you know, I was a member of the National Party, and I was active in the National Party, and I do have sympathy with some of their philosophies. But the one thing—the one thing—I could never get my head around was this obsession with putting foreign interests in front of our own citizens’, and that is why I stand here. This is absolutely core New Zealand First policy, and it is something that we are united about on this side of the House. I would commend Minister Parker and the work that he’s done. It was said that we could not do it—we couldn’t do this and comply with our international obligations. Well, guess what? We’re doing it. We are.

So what happened was that the way it was structured up until now was our homes have, essentially, been a commodity on the international market to buy and sell like pork bellies or coal or iron ore—exactly the same.

💬 Kieran McAnulty: Embarrassment.

It is an embarrassment. There are no restrictions. So while we can play around with the figures and we could say there are only 3 percent, well that’s 3 percent too many. In our biggest city, Auckland, our houses are at $1 million just for an average house—how could you let that happen, over that side? How could you let that happen?

ASSISTANT SPEAKER (Poto Williams): Order!

Sorry, Madam Assistant Speaker, not you. How could the National Party have allowed that to happen under their watch?

I tell you what, I know—I can pinpoint to the day—the day that sentiment changed against that former Government. There was an item on The Nation. Mike Wesley-Smith went round—the Hon Jenny Salesa, I believe, was involved in that. I was sitting in my comfortable lounge in Lawrence watching that with my jaw open—to see my fellow New Zealanders living in garages, at best, paying exorbitant rates.

💬 Kieran McAnulty: They don’t care.

They did not care. What on earth? Where are the morals? Where are the morals in that position? When your citizens, when our citizens are in that situation, we pull every lever—every lever—and one of those levers is to take demand out, and those foreign speculators that are coming in here had to go and they are going.

There are record low levels of homeownership. We heard from the Rt Hon Winston Peters today when he quoted the great National Party Prime Minister Sir Keith Holyoake, who used to brag that New Zealand was a property-owning democracy—an absolute founding principle and quality and value that we want the most. That has been taken away, slowly eroded over time, particularly for Māori, who have incredibly low rates of homeownership in their own country. That is a shame.

I would also pick up on Minister Sage’s comments about the Land Information New Zealand and the Overseas Investment Office and farm ownership, and how we’re tightening up on the letters of intent there. [Interruption] There was a day when young New Zealanders, Mr Yule, could aim at picking up a handpiece, putting on a set of cuffs, and working their way to farm ownership. I’ve just heard him, over that side of the House, saying that we need foreign investors in here to prop up the markets, keep the prices up. What about letting young New Zealanders, those that are out there working hard—giving them the incentive, like past generations have had, to get out and own their own piece of dirt. That has been taken away.

I do have the privilege of owning a farm, but I don’t care if it drops by 20 percent. I’m not in there for the capital gain; I want to pass it on to my family, as, I’m sure, most farmers round New Zealand do. We’re now seeing that the current rules are going to actually put substantial and identifiable benefit where it belongs, and actually up in lights, so that our young farmers can have that hope and that dream.

Of course, we have been pragmatic about this bill. The Finance and Expenditure Committee—we’ve taken on the views, particularly, as has been mentioned, around the cutting rights for trees as we build towards our billion-tree strategy, that nation-building strategy as we seek to accept our responsibility to meet our Paris commitments. That is a thoroughly sensible amendment, and credit to the select committee and those that have worked through that process.

We’re not banning foreigners from owning property here or building property; there are provisions where people are coming in to add to the existing housing stock. That investment is welcome. It is helping, it is beneficial to us as an economy—we accept that. But the rules are ours. We’re making the rules for our benefit. We’re not enabling speculators to come in and disadvantage our own citizens. So on this side of the House we make absolutely no apology—none whatsoever—for putting the interests of our citizens, New Zealanders, first.

💬 Andrew Bayly: Madam Assistant Speaker.

I call—

💬 Kieran McAnulty: Here we go, “Old Shouty”.

💬 Andrew Bayly: Madam Assistant Speaker, it’s a pleasure—

ASSISTANT SPEAKER (Poto Williams): Just a second. I apologise to the member; I hadn’t quite called you. Could I ask the Government whip, when I’m calling members, to actually restrain himself. Thank you. I call Andrew Bayly.

Thank you, Madam Assistant Speaker. It’s a pleasure to be talking on the Overseas Investment Amendment Bill. What a divisive issue this has been. I, like a number of us in the House, have sat on the Finance and Expenditure Committee, which received 213 submissions, and heard 63 of them in both Auckland and Wellington. I’ve got to say that it was almost an embarrassment, actually, being a member of the Finance and Expenditure Committee during the period that we heard submissions on this bill. I think it’s best characterised as one of those feel-good bills that parties like New Zealand First like to promote because it sort of appeals to the general public—yes, we’re going to stop foreigners coming in and buying our assets. Then, on the other side, having little regard to what that actually means and what the implications are. In life, it’s always a balance, and I think, unfortunately, we’ve ended up with a very poor balance.

Obviously, what we’ve heard is that this bill is about seeking to place limitations on overseas persons from acquiring, basically, residential land, and characterising it as “sensitive land”. There are three ways that they can obtain consent—I’m talking about overseas investors. Those are: if they are in the business of buying the land and adding to New Zealand’s housing supply, i.e., they buy the land, sit on it, develop it, and then flog it; if they want to use the land for non-residential purposes or residential purposes relating to core business, i.e., it’s a business you acquire which happens to have some residential land, and a case in point was telecommunications companies, which were initially precluded, or residential retirement village - type companies; or, the third one, if they hold an appropriate visa and could show they had committed to reside in New Zealand. And the big issue was in allowing overseas persons to acquire residential land for the purpose of supply of housing.

We’ve heard, from a number of people, that the way the bill has been written, it has had a chilling impact on new developments already, even though the bill is still not even enacted. And it raised the question, in the committee, about what sort of land an overseas buyer might buy. So is it a residential piece of land; is it land deemed rural-residential, which is on the outskirts of—for instance, in Auckland—my electorate; or is it rural land that could be bought and then subsequently re-consented and actually used to build property? The question is: if you’re an overseas person, over what time period can you buy this land and over what time period can you hold it? Can you be a land banker for a long, long period of time—which is actually the issue around property development? If you wanted people to develop property, and if they’re overseas people—if you really wanted them to develop property—you would have put time pressure on those foreigners—

ASSISTANT SPEAKER (Poto Williams): Order! Order! I’ve let the member go on a bit, but, please, don’t bring me into the debate.

But this bill had nothing of that. The bill was silent on that and still allows for overseas persons to actually land bank, and that’s one of the core reasons for why we’ve got a lack of supply in housing.

One of their changes was an exemption if the overseas person is buying it—if you are buying and building a multi-storey apartment. So the rule that was subsequently announced during the course of the hearings and the committee’s work was that if you’re an overseas person, if you’re building a multi-storeyed apartment with more than 20 units, you could offer some of those—

ASSISTANT SPEAKER (Poto Williams): Again, I just remind the member the use of the word “you” brings the Speaker into the discussion. So if you could just not do that, that would be great.

Thank you, Madam Assistant Speaker. So the developer, the overseas person, could sell those off the plan, to overseas people, and up to 60 percent—and we didn’t get clarity around that, whether that was 60 percent, but we believe it could be—of the units could be sold to overseas people. There were some exemptions around that: rented, share equity schemes—whatever. But, effectively, what that allows is apartments to still be built and sold to overseas people.

What this raised was the issue around who might actually rent those properties or enter into long-term arrangements. The rules around it are that they must be subject to a market rent on a proper basis. And, of course, one of the things—and I think this is where the biggest hole is in this bill, when it becomes an Act—is that a foreign person could develop apartments, then sell them to a family member under a market rent situation and, therefore, still have control of that and still achieve the same outcome. That issue was never actually resolved within the committee. I think it’s the one that cuts through and actually undermines the case of this bill. If you were to actually be clear about it, you would have actually put a dent in that if you were trying to stop foreigners coming in and buying apartments.

There were similar exemptions for hotel units. One of the things we’ve asked—you know, with all these sorts of complex arrangements where foreigners are allowed to do these developments and then have to sell them within a certain time period, and foreigners are allowed to buy these units—is how on earth do you monitor that? We spent a lot of time with the Overseas Investment Office (OIO) asking that very question. As my colleague Ian McKelvie noted before, at the moment the OIO do only a very, very small number of consents—about 150, but now they’re probably estimating they’re going to have to process about 4,000 a year. That is a phenomenal increase, and the whole issue about the resourcing of the OIO is, incredibly, one that we could not get a view on. We were told that they were going to have some additional people, but it is a big issue, and it’s a complex issue. It’s not only at the time that these original arrangements come into place, but because they have transitional arrangements later on, how on earth is the OIO going to continue to monitor these types of arrangements and property and rental arrangements to make sure they comply with this bill?

There was a step change during the bill. I’ve spoken about it. Previously, the bill envisaged that power and gas companies and telcos, who often have a requirement to buy residential properties for their own operations, were all going to be excluded. Only through the process did the Minister put in place a new change to give a dispensation to those groups but ruled out a dispensation for retirement homes, because, in many cases, our largest retirement homes are owned more than 25 percent by overseas parties merely because they’re listed on the stock exchange. There was no real reason why they were actually precluded.

The one that really worked us up as a committee was around forestry rights. As my colleague the Hon Amy Adams noted before, 72 percent of the forestry rights in New Zealand are already owned by foreigners; yet we have a Government who says that’s not enough and actually sets about dismantling and making it easier and setting in place three easier steps for foreign forestry people to come in here and buy more of our forests. There is no justification for why we should allow more foreigners to own more than 72 percent of our forests. I heard the argument about trying to achieve our billion-dollar budget of new trees, but, of course, New Zealanders should be doing that. That’s New Zealand stuff. Why on earth would New Zealand First support foreigners increasing their share of forests in New Zealand? I absolutely cannot understand it. On the other side, we’ve got a viable vineyard winery business in New Zealand—highly successful. Do you think there are any such dispensations for that? Not one jolt—not one jolt.

Some of the other issues were around the conveyancing of it. The conveyancing rules were actually very significant for people who had to do that, and through the work of the committee we reduced some of the liability so that now there’s an obligation on the purchaser to provide a statement which the conveyancer merely has to note and pass on. But the liability for making any false claims now sits with the foreign overseas party. Now, that’s another issue with the Overseas Investment Office. How is it going to monitor that? How is it going to check it, given the significant scale of 4,000 consents a year? I do not support this—

Order! I apologise to the member. Your time has expired.

Kia ora, Madam Assistant Speaker. It’s a wonderful opportunity to stand here in support of this bill. I’m absolutely delighted, because this bill will mean a lot for New Zealanders—New Zealanders that I have worked with every day—

💬 Kieran McAnulty: The people we serve.

—the people that we work with. That’s right, Mr McAnulty—the people that we are here to serve: our New Zealanders. Tonight, we have heard the Opposition, when we said that they said this bill couldn’t be done, say, “No, no, no, we never said that. We said it shouldn’t.” But the reality is they wouldn’t—couldn’t, shouldn’t, wouldn’t—do this.

That is the reality, because that Opposition is on the side of the foreign buyers. They believe that they are there to support them. Well, we, as a Government, are here to support New Zealanders into homeownership. We believe in New Zealanders buying their homes. The reality is that the Opposition said this bill will mean that there can be no winners. Well, I challenge the Opposition to look in the faces of those people who have been hurt by those overseas buyers over the last few years, and tell them that there can be no winners out of this bill. There are winners out of this.

The reality is that you can—sorry Madam Assistant Speaker; the Opposition can—quote statistics and twist statistics as much as they like. But the reality is the faces of those people who have been put out of homeownership because of foreign buyers coming in. I have worked closely with those people over many years. You ask any teacher now, starting out, the reality of owning a home right now. They don’t believe in that dream any more. They don’t have that dream, because it is not reality for them.

One story that I would actually like to finish with is the story of families that I have worked very closely with in the past few years, who were quite excited, actually—just bear with me, please, Government members, but they were quite excited to start with—when they heard that an overseas buyer was buying a number of the houses that they were renting, because they felt that that meant they would be able to stay in their rentals and stay in the community that they’d called their community for many years. Two weeks after those sales went through for houses—two weeks after that sale went through—they all got eviction notices. Eighteen months after that sale had gone through, those houses are still lying empty, and one of those families, at least, is still living in a van in a car park every single night.

That is what the reality of foreign buyers coming in and buying up our homes means, and that is what the Opposition is completely failing to acknowledge, yet they’re on the side of those people who will leave those houses empty and leave our families living in vans. Shame—I think it’s a big shame. I believe this is a great bill, and I commend it to the House.

The question was put that the amendments recommended by the Finance and Expenditure Committee by majority be agreed to.