Overseas Investment Amendment Bill

Thank you, Madam Chair. We, obviously, now come to the point of the debate where we debate the title and commencement clause. In this area, there are a number of matters that I want to raise in respect of both the title and commencement. The first, obviously, is to do with the title of the legislation. The bill is named, somewhat innocuously looking on its face, the Overseas Investment Amendment Bill, which all sounds very dry and worthy, but in actual fact what we have heard through the course of this debate as it has progressed over the course of now several weeks is that, actually, this is a bill that is going to rip the guts out of the housing sector, see less houses built, and completely devastate the ability of those in the primary sector to use profit à prendre in anything except the Government’s chosen sector of forestry, where they obviously are quite happy to have overseas money pour in.

My question to this committee then is, shouldn’t the bill really be named something that is far clearer about the effect that it’s going to have on the economy? I would suggest that, in fact, a title along the lines of “Stopping Foreign Investment in the Sectors the Government Doesn’t Like (But Making it a Whole Lot Easier in the Bits that They Do Like) Amendment Bill” might be quite a good one. It would at least tell people looking through the legislation exactly what the bill does. Perhaps it could be called “A Dog’s Breakfast of a Bill Because the Work Wasn’t Done (Had to be Patched Up at Select Committee and then Again by Numerous Supplementary Order Papers from the Government) Overseas Investment Bill”, which would also tell the public a lot more about the legislation. Or in fact we could go on to say, “The Bill that Says it is Going to Make Things a Lot Harder (When in Actual Fact Making so Many Rules that Leave so Many Doors Open for Foreigners to Come Through in a Myriad of Different Ways Because the Government Didn’t Put the Time in to Getting It Right) Amendment Bill”. I think any of those might tell a much clearer story about what’s actually going on in this legislation.

Here’s the real tragedy: the bill that was promoted to New Zealand as being one that was going to help with housing affordability will do nothing about housing affordability. In fact, the submissions to the Finance and Expenditure Committee were that it was going to make the problem worse. So how about “The Bill that Actually Does the Opposite of What the Government Said It Would Do Bill”? I think that would be a pretty good title for this legislation, because when you name a bill, it should bear some semblance of relation to what the content of the bill does.

What we’ve seen through this debate is a poorly conceived, poorly designed, rushed piece of legislation that even the officials had to admit on several occasions had been done under time pressure without the ability to work through some of the stuff. On much of it, all they could say to the select committee was, “Well, we’re going to work through all of that. We’re not quite sure yet.” When the select committee asked, for example, some reasonably basic questions about the economic rationale or the policy assumptions that led to some of the conclusions, all we were told was, “Well, we’re doing it because that’s what the Government said it wants.” So perhaps the bill then should be called “Not Good Policy Process (But What the Government Said in their Manifesto so They’re Going to Do It Now Whether It Makes Sense or Not) Bill”. I think that might be quite a good title for the legislation.

The other part, of course, of what we are debating now is the commencement clause. This commencement clause sees a rushed process rushed further. I know my colleague from Clutha-Southland has real concerns about the fact that the work hasn’t been done to understand exactly what the impact of this bill will be on places like Queenstown, that he represents. I know he has a Supplementary Order Paper that he will want to debate that talks very carefully about how he could ensure the commencement is adjusted to ensure that at the very least the Government takes the time to understand the impact.

I wouldn’t have thought asking a Government to understand the impact of its legislation in the very area that it said it was concerned about, which is the housing market, would be a big deal. But no, it seems that the rush to be able to tick another box on the to-do list over-weighs the importance of actually getting the legislation right—working out whether it’s applicable, working out how it applies, more particularly, and ensuring that they understand the impact. All of those seem to go by the wayside, and what we’ve got here is a process of just get it passed so that David Parker can point to having done it—never mind that it will do nothing whatsoever to help house prices in New Zealand. It will make it worse. It will make the dealing of land in this space worse. It’s a bad bill.

Thank you, Mr Chair, a wise choice. I want to talk about the title clause of this bill. I think the Hon Amy Adams had some very good suggestions there. I think “The Overseas Carve-Out Investment Bill” would be a better name. What I can’t understand about this bill is why we’d have a carve-out for forestry around profit à prendre, when we don’t have the same thing—on up to 1,000 hectares there are no Overseas Investment Act requirements to go through, other than a tick-box exercise—offered to something like the wine industry, which actually uses profit à prendre up to now.

Foreign-owned wine companies actually have access to New Zealand land without owning it, and what they tell me is this bill will ensure that they go through a process to buy the land now rather than going through the quite difficult process—when you’re doing that process to get a profit à prendre, you might as well own the land, and that’s what they’ll do. That is what they’ll do. So this is having quite a perverse outcome. These carve-outs don’t make any sense at all to me. I note that in the Finance and Expenditure Committee when I asked the Hon Eugenie Sage about this—you know, why we are doing this headlong rush to plant forestry? I said at that time that the people in Tolaga Bay might not think it was such a great idea. She said, “No, don’t worry. We’re not going to allow planting on steep land.” So what that means is this carve-out in the bill is going to ensure that forestry will be planted on New Zealand’s best land. And, in the words of Ian Proudfoot, as I said earlier, “The last thing we want out of this is another Central North Island forest, because it kills rural communities.” That may be New Zealand First’s end game. I don’t know what their end game is, but that is a really bad policy—extremely bad.

Forestry’s already 72 percent foreign-owned, and in the wine industry, what we found is that foreign investment has led to further vertical integration from the vineyard floor right through to the end seller in the market, which has a huge influence on the ability for New Zealand to gain more share up the value chain than would otherwise be the case. What do we see in forestry? Seventy-two percent foreign-owned, Mr Parker, 72 percent foreign-owned, and yet we see huge stacks of raw logs on all of our export ports on the wharves waiting to go overseas. They are not processed. So we are seeing a failure there. Quite clearly, that carve-out is not going to be helpful for extracting more value here in New Zealand.

Now, the stated purpose that’s been bandied about quite frequently is to try and actually lower the house prices here in New Zealand. But, if I could use a forestry analogy, you’re playing with fire doing this because, effectively, you’re trying to undertake microsurgery with a chainsaw. You’re having a very large potential impact, and if you start to get the market going down, it’s very difficult to stop it. Then we’ll end up with a whole lot of people—particularly in Auckland—with negative equity. Then we’ll have—as Mr Bayly my colleague will know—quite concerned banks and, in fact, we’d have Adrian—

💬 Andrew Bayly: And what about the homeowners?

Well, the homeowners are going to be in serious trouble, as you well know. Then we’ll see a rush to the door and it will cause a further spiral downwards in house prices. Then we’ll see the Reserve Bank Governor, Adrian Orr, wondering what to do. How useful were those stress tests that he has undertaken? I suspect not very, when things start to go down at the rate that they will when you start taking such a really blunt instrument to try and deal with a market that you shouldn’t be meddling in in the first place.

In summary, I think the name of this bill is not adequate. It doesn’t cover the consequences that will come out of this bill. I think it would be far better called the “Overseas Carve-Out Investment Amendment Bill”—it’d be far more appropriate.

Thank you, Mr Chair. It’s a pleasure to be talking on this debate. I just think it’s very, very disappointing that the Labour - New Zealand First - Greens coalition Government—call it what you may; the members over that side—have not taken the opportunity to talk to this good robust debate tonight about the Overseas Investment Amendment Bill. I just think it’s really disappointing. Those people watching from home, I think, will look at this and wonder why, as I do. All they want to do is close down this debate. I think that is wrong, because this is one of the most significant pieces of legislation that’s going to pass this House this year. Of course, it is going to have a detrimental effect, not only on those house owners and landowners, those vineyard operators that we’ve heard about, forestry owners, but on New Zealand in general. We’re already seeing the impacts of that. It is one of the reasons why we’re seeing a decline in economic growth.

Just returning back to clauses 1, 2, and 3, which I know, Mr Chair, that you’re eagerly focused on, the thing about this bill is—normally, it’s very simple about a commencement date. Normally, the wording is very simple; simply along the lines that it will come into force immediately upon being signed by Royal assent by the Governor-General, in effect. That, of course, is how legislation mostly comes into effect. But if you look at clause 2 of this bill, everything about it is complicated. Clause 2 is symptomatic of it. I just find it fascinating. Clause 2(1) states, “this Act comes into force on the date appointed by the Governor-General by Order in Council, and 1 or more orders may be made bringing different provisions into force on different dates and appointing different dates for different purposes.” Ha, Ha! I really struggle with that. Hey, but that’s only one. That’s clause 2(1). Let me move on rapidly to clause 2(2). I know Mr O’Connor there is eagerly waiting to hear.

💬 Simon O’Connor: That’s right. Be still, my beating heart!

Ha, ha! It states, “To the extent that it is not earlier brought into force, this Act comes into force immediately after the expiry of the 2-month period that starts on the date of Royal assent.” Well, I’m boggling, because how do you interpose subsections (1) and (2)? I’m certain listeners at home will be wondering how that works. But that is not all. This bill gives more to the debate: clause 2(3) “In this section, provision includes any item, or any part of an item, in any of the schedules.”

💬 Simeon Brown: Are you part of an item?

My wife believes I’m part of an item.

Mr Chair, I’ve got to put to you that that is one of the most complicated commencement clauses I’ve seen in a bill for so long. I can’t understand it. In fact, I really don’t understand it. And when you overlay that with a fourth dimension, which is the issue around regulations—those wonderful things that Mr Parker and I shared an experience on in the Regulations Review Committee; those “Henry VIII” clauses; those disallowable instruments; the regulation powers for the Minister to be able to, in effect, have wide-ranging powers to make changes and bring them in on dates that he or she so determined—I think that this bill and this commencement are symptomatic, as I said before, of a very complicated bill.

I think, if I was to look at Mr Parker directly, all of those years we spent on the Regulations Review Committee talking about limiting the regulation powers of the Minister to make sure they were carefully defined and confined—I do not believe that this bill actually provides for that. In fact, it gives wide auspices to the Minister, whether he or she in the future has the opportunity to do this.

But even if you go right to the back of this very last page, what do you see? Schedule 5, clauses 2 and 3—all about regulation powers and how they’ve been amended in the Overseas Investment Regulations. I think this part of this bill is the bit that worries me the most, because I think we should have worked this out before we rapidly and hurriedly pass this bill through this House.

💬 Hamish Walker: Madam Speaker.

💬 Hon Ruth Dyson: Mr.

💬 Hamish Walker: Mr Speaker.

I call Hamish Walker.

💬 Hon Members: Mr Chair.

Mr Chair—I’ll make a note. Newbie—excuse that. I just want to discuss the name of this bill—very, very interesting. I want to acknowledge the Minister there, and I’ll get back to Minister Parker later on, but I just thought of—just making a few notes here of possible names for this bill. We could rename it from the Overseas Investment Amendment Bill to the “Twenty-Three Submitters That Came Up from Queenstown: We Do Not Care about Your Opinion Bill”—who submitted to the Finance and Expenditure Committee. We could also name it the “All Opposed, 23 Submitters from Queenstown That Came to the Select Committee Bill”. We could rename it the “Exception for Queenstown over $2.5 Million Bill”, as many submitters called for. We could also call it the “Similar to Every Other Economic Indicator Bill”, where the Government doesn’t seem to care about business confidence going out the wall—“We’re not going to listen on this or the 23 submitters from Queenstown.” We could also call it the “Queenstown Lakes District Council, We Aren’t Going to Read Your Submission Bill”. The council submitted on this, and they said “Please, just wait. Wait for the evidence, because you clearly don’t have it.”

The Mayoral Housing Affordability Taskforce was set up in early 2017, and they’ve been doing a great job in housing affordability. They actually submitted on this bill—one of the 23 submitters from Queenstown—and they said, “Please, Minister, just wait. Wait for the evidence to come through.” You could also call it the “Kill the Golden Goose in the Niche Luxury Market Bill”. We had one submitter; he has a construction company with 30-odd employees servicing the high-end market. In his submission, he said, basically, if this bill goes through, a lot of his workers will go offshore because they won’t have the opportunity to build these luxury homes or to learn from him.

Other names you could call it would be “Kill the Service to the Luxury Property Market Bill”, which has over 100 people working—

💬 Simeon Brown: Kill the bill—kill the bill.

Just “Kill the Queenstown Economy Bill”. Another name was actually raised with me on Monday and last Friday: the “David Parker Gone Loose Bill”, as David used to be the local member for Queenstown back in the day—and I appreciate your comments earlier on, Minister, in Dunedin Airport. Very valid, but, I mean, what would someone like Howard Paterson, who you did a lot of work for, think of this bill, Minister? Some other names could be the “No Donations to Queenstown Bill”. Take, for example, one buyer who bought five farms between Queenstown and Wānaka—$60 million. He then spent $50 million to get the farms to a state where they used to be, and then he donated 90 percent of those farms back to the Crown through the Queen Elizabeth the Second National Trust; therefore, all New Zealanders get to have access to these. He also spends between $3 million and $5 million per year servicing this.

We could also call this bill the “No Americans Allowed Bill”. Take the American couple at Camp Glenorchy. They’ve spent $40 million developing the first carbon-zero accommodation camp in the world, and it just so happens that they’ve donated all the profits—all the profits—back to the community. We could call it the “No Affordable Housing Specialist Bill”. As many submitters from Queenstown said, this won’t make housing affordability any better; it’s actually going to make it worse, because do you meet many first-home buyers who spend $5 million to $10 million on their first home? Well, I don’t. Or one gentleman who was the chair of the Queenstown housing affordability trust for nine years. He’s currently on a New Zealand-wide housing trust. He also mentioned that this is not going to make housing affordability any better.

We could also call it the “We Don’t Respect the Select Committee Process Bill”, as every single submitter to the select committee from Queenstown opposed this bill—every single one—which is a shame, because on select committees you often get some really good work through diversity of thought from the different parties. You could call it the “Purchaser in China Sets Up a Company in Singapore to Buy Property in New Zealand Bill”, or you could call it the “Loophole Bill”.

This bill, quite clearly, judging by the submissions from Queenstown, is a dog, and I encourage the Minister to look at some of the amendments.

I move, That the question be now put.

I wish to take a brief call on the title and the commencement. First of all, a number of titles have been suggested, but, actually, in the Minister’s own words, the reason for this bill is to ban foreign housebuyers, so it should actually be called the “Ban Foreign Housebuyer Bill”, in my view. I think that more aptly describes what this bill seeks to do. Having sat on the select committee from the beginning, it soon became apparent that there were all sorts of other things caught up in this complicated bill which have since been amended—many of them have—and we’ve even seen amendments submitted this evening on the regulating side of the bill.

I think what I really want to talk to, though, is the more substantive part, about the commencement date. When we started this decision-making process and this bill was introduced to the House, it was done with some urgency by this Government, because this Government had found a way, it said, to deal with the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) negotiations, and it had found a way of carving out its concern about foreign housebuyers and bringing it through this House. That was done with some urgency, including a very limited time for submissions and including a rather rushed process, which was then amended a number of times.

So I come to the point, which is around the commencement date. As my learned friend Mr Bayly has just said, the commencement date provisions are quite complicated, and I’m actually asking the Minister to explain to the committee why those commencement date scenarios are listed in the way they are. If this Government is so keen on bringing this bill through, despite widespread opposition from submitters—as Mr Walker has just said—and despite opposition from this side of the committee, why does the Minister not simply have a simple clause that said “10 days after Royal assent” or something to that effect? I genuinely don’t understand, Minister, the reason for that and why that might benefit New Zealand; the reason as to why you have brought in a series of provisions that can be brought in over different times, as opposed to what is normally a very simple clause.

So I think the name needs to better represent both exactly what this bill seeks to do and what politically motivated this coalition Government to bring in a piece of legislation like this. Then, more simply, at the end, if you are so keen about doing it and it was part of your election manifesto, why don’t you bring it in as quickly as you possibly can through this parliamentary process? Now, if there are things about the CPTPP that we don’t understand, that require these provisions to be put in, I encourage the Minister to take a call and tell this Parliament why that is the case. It’s not obvious to me and it wasn’t obvious to my colleague Mr Bayly, who questioned it.

I actually think this House deserves to know what the complexity is that means that parts of this bill will come in at certain times to be determined by Order in Council at some future time, when actually when we started this process it was a mad rush, it needed to be done as soon as possible, and it was one of the top 100-day priorities of this Government. It then became more complicated, and more submissions brought in a whole lot of other issues that the Finance and Expenditure Committee worked hard on over a significantly compressed time frame.

So I actually ask the Minister, as we come to the end of this debating round, could he explain to the committee and the members here why the commencement date is as it is, and why it needs to be like that when it could actually simply say what is traditionally the case, which is that it comes in 10 days after gaining Royal assent? Thank you, Mr Chair.