Overseas Investment Amendment Bill

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

If you’ve got the right to live in New Zealand permanently, you’ve got the right to buy here, but otherwise it’s not a right; it’s a privilege. We believe it’s the birthright of New Zealanders to buy homes in New Zealand in a market that is shaped by New Zealand buyers, not by international price pressures.

There can be no doubt that international buyers are having an effect on the marginal price in some of our markets; perhaps less marked than it was when the property market was raging some years ago and when there were fewer controls on the outward flow of capital in some other countries. But, nonetheless, in a recent quarter, 20 percent of the homes sold in central Auckland were sold to overseas buyers and 10 percent of homes in the whole of the Queenstown Lakes District Council area were sold to overseas buyers—two of our most expensive housing markets in New Zealand, and it’s no coincidence; these matters are linked. There can be a debate as to how much the effect is on price; there can be no doubt that there is an effect.

This is a Government that keeps its promises. In 2013, the party that I’m from announced that we intended to ban foreign speculators from buying existing houses. Five years later, we stand on the cusp of achieving it. In spite of all those sitting across from us who said it couldn’t be done, we’re here today to take another step towards restoring the great New Zealand dream of homeownership.

National said it could not be done. They said we had to trade off controlling who owns our homes and having access to trade agreements. They told us that we couldn’t sign up to the Trans-Pacific Partnership, or what became the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP), and protect the ability of the current or future Governments to control who bought our houses. They were wrong. We have proven them to be wrong. They said that during the election. They denied that there was a problem prior to the election. They couldn’t even utter the words “housing crisis”, but we have shown that, actually, with clever policy and hard work, from officials as well as the Government, you can get to a sane place.

This bill is a key part of the Government’s plan to improving housing affordability, which includes KiwiBuild, tax policy to discourage property speculation—and, of course, we’ve announced ring-fencing of losses and we’ve extended the brightline test from two years to five years so that properties that are flicked on and a profit is taken within five years will be taxed on income account. We’ve got the Tax Working Group looking at further changes to discourage property speculation. All of these things together work to address the declining homeownership rates, which are the lowest that they have been in New Zealand since the 1950s and are associated with the rise of inequality in New Zealand. Everyone knows that the largest asset that’s owned by most people is their own home, and if you have got decreasing rates of homeownership, you have most certainly got a country where you have got decreasing inequality, and that’s what we’ve been experiencing in New Zealand in the last nine years.

We’re determined to fix that, and one of the ways we’re doing that is by ensuring that the prices of New Zealand homes are set on the domestic rather than international market. Under the Government’s changes, overseas speculators will no longer be able to purchase existing homes. These homes will generally only be able to be brought to be bought by New Zealand citizens and resident-class visa holders—and that includes permanent residents who spend or commit to spend the majority of their time in New Zealand; amongst other things, that makes them a tax resident. So if they’re here, they’re turning their shoulder to the wheel of the New Zealand economy, then they can buy, and if they’re not, well, they won’t be able to buy an existing home.

Now, the regime will work to channel foreign investment into the productive sectors of the economy rather than into the speculative sectors of the economy, but it will also direct the foreign direct investment that is coming into housing into new supply rather than bidding up the prices of existing homes. That’s why we’re allowing foreign developers who commit to build large apartment complexes to get approval to sell a portion of the units to overseas investors off the plans without being required to onsell the unit once construction is complete. That’s a limited exception that we’ve got to ensure the viability of these projects, but it’s also why foreign developers will be able to retain an interest in other large new residential projects, as long as the dwellings are rented out or sold through shared equity models or outright sale. This too will assist first-home buyers.

In addition to better directing foreign direct investment in the housing market, the bill will also help channel more foreign direct investment into the forestry sector. This is an important ambition for the Government. Even in the committee stage last night, it was obvious that members of the Opposition still do not get it. If we did not make these changes to include forest registration rights under the ambit of the Overseas Investment Act, they would not be able to be included in the future. Any forest that is a freehold or leasehold forest can be sold by way of a forest registration right, for multiple rotations—for more than 100 years, if you wanted to. If your screening regime does not cover forest registration rights, you have an ineffective—not you, Madam Deputy Speaker; the country has an ineffective screening regime for forests.

So we address that issue by enabling investors to purchase forestry through either freehold or leasehold or forest registration rights, but then introducing a simpler process, because we want that investment. We want it to be easier; we don’t want to be clogged up by unnecessary, lengthy processes and by the complicated counterfactual analysis that they need to complete at present, following the High Court decision in the Crafar Farms decision, which has also impacted upon forestry. We’re taking an axe to the unnecessary red tape because we want to be stimulating further foreign direct investment into forestry.

Now, if a future Government wants to come along and change that, or, in a few years’ time, the current Government wanted to change that, we can, because we’ve preserved this policy space by including forest registration rights before the CPTPP comes into effect.

Before I finish, I want to reiterate that we remain a Government committed to being an outward-looking trading nation.

💬 Hon David Bennett: What a load of rubbish.

Well, actually—they say, “a load of rubbish.” on the other side. The last Government dropped exports from 30 to 27 percent of GDP in the face of a promise to increase to them 40 percent of GDP. Abject failure: speculating house prices, rapidly increasing population, poor per capita growth, and a poor export performance.

Now, foreign direct investment is welcome to the economy where it adds—and this is not speculative asset classes like residential land or selling our pastoral farms. We don’t think that will assist—

💬 Hon David Bennett: Trees.

Actually, we do think further foreign direct investment in trees will assist; that’s why we want it, but we also need foreign direct investment in other parts of the economy, and we’re open to that.

I thank the staff of Treasury and the Overseas Investment Office. There has been a rush to do this because of CPTPP. In the final event, we were able to leave it in select committee for six months—and I thank the Finance and Expenditure Committee for their efforts during that period—and to introduce a separate Supplementary Order Paper to deal with these forestry issues in a more fulsome way. But we were only able to do that because the officials worked long hours, late at night, in order to run the policy process in parallel with the select committee process. Otherwise, this would not have been able to be achieved before the CPTPP comes into effect, and I’m grateful to the officials for their work and for the work that was done by the select committee. Can I thank all members for their contribution to this important debate.

Can I also say that I think it’s appropriate that this bill also tightens up on monitoring and enforcement. I agreed with some of the comments that the Rt Hon David Carter made yesterday in the House, that the enforcement and monitoring of overseas investment has been less than perfect in New Zealand and we need to improve upon that to maintain the integrity of the system and to maintain the support of the public. With that, I’m happy to take my chair as I commend this bill to the House.

Madam Deputy Speaker, thank you for the opportunity to speak in this debate, the third reading of the Overseas Investment Amendment Bill. The National Party opposes the bill, and we oppose the bill because we don’t believe that it actually fixes any problem. It is, in fact, nothing more than an attempt to justify some of the policies of the incoming Government and some of their decisions.

The bill, and the purpose of the bill, which amends the Overseas Investment Act 2005, is to extend the definition of what’s known as sensitive land in the Overseas Investment Act to include residential property. Of course, a lot of land is already considered sensitive, particularly large tracts of land, land around particular waterways and all sorts of other areas where it is important that there is an oversight by the Overseas Investment Office. So this bill, in many ways, is like using a hammer to try and crush a teeny-weeny little nut, because it is about saying that every residential house is now, apparently, “sensitive land”. It’s a nonsense.

Of course, it’s been brought in to be able to deal with the coalition agreement between New Zealand First and Labour. It has no more principle than the pursuit of power. It is something which a Labour-led Government a decade ago would never have done—this would never have happened under the Rt Hon Helen Clark. It would never have happened under a Government that valued foreign investment. It would never have happened under the Rt Hon David Lange. As someone who did some work with David Lange back in the 1980s and knew him, I think that this is the sort of bill that he would be absolutely appalled by, because he was never someone who would ever have taken up a stance of attacking people based on foreign-sounding names, which is exactly what this bill comes from.

This is a bill without principle. It is a bill to try and cynically blame foreigners—particularly those with Chinese-sounding names—for a Government that has no other policy in which to actually improve and increase house ownership in New Zealand. When I look at some of the things that were said in the last two or three years when we were in Government—and these things were said by the then Opposition, now the Government—some of those comments that were made about people: that there were 30 percent of houses in New Zealand being bought by foreigners, when all of the statistics that we received in Government showed that the level was about 3 percent, and then to find out that this gross abuse of statistics by the then Opposition has been continued on to now, with Mr Twyford now having to concede that, yes, the level of foreign ownership and purchases of housing in New Zealand is, strangely enough, 3 percent—the same as it was under National.

What has been the result of this attack on people with foreign-sounding names—well, apparently, only some people with foreign-sounding names. What’s actually happened is that there is now a stop on apartment blocks being built in Auckland’s central business district. We all know that Auckland has a lot of people—not that many when you consider it, really, but all wanting to live in the same place. We need to have more apartment blocks built. What’s happened with this ban—before the law’s even come into place, this message against people with foreign-sounding names—is that foreign-sounding people have decided they’re not going to buy apartments in New Zealand. Strangely enough, people who do build these apartment blocks, or in the past have, have said to me and to my colleagues and to anyone who would listen—even, apparently, the Government—that they can’t get any of these buildings built because they can’t get the finance, and they can’t get the finance because they can’t get the pre-sales.

If a developer’s going to try and build an apartment block—of six stories, 10 stories, whatever—in an area in the CBD of Auckland or Wellington or any other place, they’re going to have to get around 70 percent pre-sales before they can actually get the financing to start the building. That is a huge ask. In the past, New Zealanders have been very loath to buy off the plans in an apartment block—that’s the issue. The people who have been generally willing to take a risk on buying an apartment block off the plans have been people with foreign-sounding names, often foreigners. They’re not buying the land; they’re buying an apartment.

So this bill was amended at the insistence of the Government in the Finance and Expenditure Committee. It was amended to allow for foreign people to buy apartments off the plans. That’s an admission by this Government that the policy based on loathing and scare tactics around people with foreign-sounding names was a failure. It was a failure because it stopped new apartment buildings being built. So that’s why there’s no new apartment buildings being built in Auckland’s central business district. It’s not that there are not people who would like to have an apartment there; it’s that developers have to have the pre-sales off the plans before they can get the financing. It’s not easy to sell off the plans in an apartment block, in a building that no one’s actually seen, other than on plans. It’s tough, and our developers need to have help with this.

So this new concession from the Government—is that going to fix it? They’re going to now allow foreigners to buy in pre-sales off the plans, in apartment blocks and only apartment blocks. Is it going to fix it? Well, my answer to you in this House is that no, it’s not going to fix it, because even when these foreign people are now allowed to buy off the plans, they’re apparently not allowed to live in them. They can rent them out to their foreigner mate who happens to be coming to visit or they can rent them out to a New Zealander or they can leave them vacant, but they just can’t live in them. What a ridiculous nonsense that is—what a ridiculous nonsense.

There is a whole section in part of this bill that is all around enforcement. Well, who’s going to check no one’s living in it? Who’s going to check that it’s not this particular person with a foreign-sounding name living in it, and not another person with a foreign-sounding name living in it? This bill is something I believe is—if this was a National-led Government bringing through this bill, I would resign.

💬 Hon Member: Everybody would be very sad.

I would resign because I’d be ashamed of a National Party that did this. And I see the new member sitting there going, “Oh, oh.” Well, actually, this is the best job that that women’s ever had.

💬 Hon Member: Yeah. It’s the best job she’ll ever have.

It will be the best job she’s ever had. And I congratulate her for coming in on the list from Labour, but let me tell that member this—

💬 Willow-Jean Prime: Which one?

💬 Hon Member: The whole lot of them.

The whole lot of them. They’re all “listies” from Labour. What I say to them is this. Understand this: David Lange would have been turning in his grave at this. I worked with David Lange in his Māngere electorate office, and I worked with him on the Housing New Zealand board. He’s a decent man. He had his foibles, as everyone does, but he was a man of principle, and he would have been appalled at people who attacked someone else just on the basis of their name. That is what these MPs are signing up to. They’re signing up to “You look a bit different from us, so you’re foreign and we don’t like you. Don’t buy from us. Don’t come to New Zealand. Don’t invest—oh, except when we want to kick you out.” That’s the message that the Labour - Green - New Zealand First Government is sending to New Zealanders: “If you’re not one of us, you’re the other.” That’s the damage they’ve done to New Zealand, and that’s the damage they’re doing to our economy. Well, they’re at fault.

Tēnā koe, Madam Deputy Speaker. Otirā, e ngā mema o Te Whare nei, tēnā tātou katoa. After listening to 10 minutes of that member, Judith Collins, it almost made me think, “Where has she been for the last nine years, where the average family in this country has been shut out of owning their own home?” One million dollars to get a home in Auckland—one million dollars to get a home in Auckland, and for nine long years that side did nothing about it. They shut ordinary New Zealanders out of participating in our own economy.

I’m proud to stand here and take a short call on this important bill, the Overseas Investment Amendment Bill, because, like my honourable Minister David Parker said in his opening remarks, it is a bill intended to change the Overseas Investment Act because we here on this side of the House believe in productive foreign investment that adds value to our economy. We are a Government committed to maintaining New Zealand as an open, outward-facing trading nation, and this bill will help ensure that the greater proportion of foreign direct investment is directed into productive assets where the benefits of free capital flows are the greatest. This bill talks about addressing Kiwi homeowners, and we should be proud about addressing that—that makes home affordability more available to Kiwi buyers. It talks about tourism, forestry, and, of course, the business sector.

I will touch briefly, in my time, around the forestry and this Government’s ambitious one billion trees. Where we go, around the nation, we want to encourage investment in forestry. This Government’s flagship policy of one billion trees—half a billion by the industry; the other half a billion is a challenge that we want to take up on this side of the House. Why? It’s quite simple: this is about meeting our carbon targets. It’s also about raising economic value and opportunities in regions.

This is what this bill does. The overseas investment legislation does it by two simple ways. The legislation itself will improve the coherency and the simplicity of New Zealand’s screening regime for overseas investment in the forestry sector and, like I said, encourage growth and jobs and progress. It’ll also apply two new screening pathways that have been introduced in response to sector feedback, and I want to acknowledge Minister Parker himself and the officials that travelled up and down this country to ensure that what we are bringing to this House fitted with the needs of the industry, local government, and, of course, iwi.

The screening pathways will offer simpler options for screening and will provide more certainty as we become a haven for overseas investment in the forestry sector. Also, this bill removes a loophole and impediments to level the playing field in our forestry sector. This Government is committed to working with local government, with industry, with iwi, and with all parts of society to ensure that we are planting trees in our region, and this bill will enable that to happen. I commend it to the House.

Madam Deputy Speaker, I’m sure you’ll agree with me that it’s disappointing when you get some symbolic legislation like this and a Minister of the Crown comes before this House to take the second speech by the Government and reads notes from the research unit. This is symbolic legislation. It’s very symbolic for the Hon David Parker who, from the time he entered this Parliament, has shown a distaste for foreigners—

💬 Darroch Ball: Oh, come on.

—a huge dislike of foreign investment, and an absolute dislike for any successful business person who he terms wealthy.

It is symbolic legislation for another reason. It is actually a piece of legislation that Labour, New Zealand First, and the Greens campaigned on and now they’re in this House delivering it. They campaigned from the start to outlaw foreign investment. They failed to look at the history of this country over the last 200 years as to what’s made it such a successful country as it is today. I note that Kieran McAnulty is at least listening without interjecting on this occasion, not like his fellow parliamentary colleague the lightweight Darroch Ball.

New Zealand First has opposed foreign investment from the time I first became familiar with the Rt Hon Winston Peters, with the exception, I might point out, of the current owner of Bowen House. For some reason that I don’t understand, he’s completely supportive of the foreign ownership of Bowen House, but for any other foreign investor he rails against it. I give it to the Greens: economically naive that they are, from the moment they arrived in this House they’ve opposed foreign investment. So I say to the voters, this is what you get when you vote for a Government that opposes foreign investment and you will see the ramifications over the next 2½ years for this legislation. It was well signalled; it’s now being delivered.

I remind all members of this House of the dreadful attack by the Hon Phil Twyford on New Zealanders, some of them three- and four-generation New Zealanders, who happened to have a Chinese-sounding name—and Darroch Ball laughs. He thinks it was funny. Well, he may not know many of these New Zealanders, three- and four-generation New Zealanders, who are totally—totally—offended to be accused of being a foreigner simply because they have a Chinese-sounding name.

I remember also, Mr Twyford, and fellow members of the then Labour Opposition claiming time and time again that the reason for high residential prices, particularly in Auckland, was because 30 percent of them were being bought by foreigners. Quotable Value has released the data consistently. It was never 30 percent—never 30 percent—consistently 3 percent. Yet Kieran McAnulty thinks that 3 percent investment by foreigners into a residential market is enough to trend the market and significantly turn it up. He nods his head at that. That’s the economic genius that we have on the other side of the House. Three percent doesn’t significantly lift the price of housing.

But what I say to that Labour Government particularly is the reason the Hon David Parker said he’s introducing this legislation—and he repeated this time and time again through the committee stage of the House—is he wants to see the price of housing come down. I asked the Hon David Parker: by how much? He refused to answer. So I say to the Hon David Parker, have a look at what’s happening in Sydney and in Melbourne now: down 5 percent in the last 12 months and I believe we’ll see a similar decline in residential prices here in New Zealand. If it occurs, look out for the backlash from people who have invested recently with very high mortgage commitments.

The interesting thing about the select committee process was we heard from 64 submitters. I don’t recall any of them being in support of the legislation. They all came along to us and said, “We can understand why you’re doing it. We can understand that the Government campaigned to do it. So do it, but give us an exemption.” That was the consistent message. The rest home sector wanted to be exempted. The telco sector wanted to be exempted. The supermarket sector and the mining sector asked to be exempted. Queenstown, as an area, said, “Exempt us. It’ll have a dramatic effect on our values.” But there was one particular exemption that surprised me. It came from a Northland iwi called Te Ārai. In their case, it was a private benefit—we were led to believe to the iwi because of a Treaty settlement; subsequently, found out it was a private benefit to two wealthy people: one a New Zealander and one an American who has already invested in property in New Zealand. The advice we had to the select committee was you cannot provide a private exemption for that particular Te Ārai development. The select committee chair overrode that advice and presented the legislation back into this House to give a private benefit to one particular iwi in Northland. Who has close affiliations with Northland?

💬 Hon Mark Mitchell: Who was the chair of that?

The chair was Michael Wood. He defied the advice from the Office of the Clerk. But a better question to be asking is who has close affiliations with one particular iwi in Northland?

💬 Hon Mark Mitchell: Who is it?

I don’t know. I don’t know, but the finger points very closely to the Deputy Prime Minister again. But—but—common sense prevailed. The Speaker got out Standing Orders, and he very, very correctly said it is inappropriate to deliver a private benefit in a bill such as this.

The final point I want to make is around a sudden Supplementary Order Paper that appeared in the latter stages of the select committee process. What happened is that the Hon Shane Jones realised that if legislation went through, it would stop his billion-tree per year programme in its tracks, because the forestry industry is already 72 percent foreign investment in New Zealand. So there was an argument, I believe, in Cabinet—a big argument—the Hon Shane Jones versus the Hon David Parker. Which of the honourable members won?

💬 Hon Member: Shane.

Shane Jones. We know, on this side of the House that Labour members don’t want to admit it because they got their noses rubbed in the dirt—Shane Jones won. And in came a Supplementary Order Paper which not only allowed the status quo of 72 percent foreign investment in forestry, but made it easier. This is a bill to stop foreign investment for everything except one sector: forestry. Why did it happen? Because Shane Jones beat David Parker.

This is the sort of legislation that explains declining business confidence. This sort of legislation will stop dead the foreigners wanting to invest in housing and apartment development in Auckland. The Hon Judith Collins has said it’s already happened. We had numerous apartment developers coming to the select committee saying, “Our developments require pre-sales so we can go to the bank and get funding.” Did the Government want to listen? No it didn’t. Now, with the passing of this dreadful piece of legislation, apartment development, which the Government claims it needs in Auckland, will stall. Not only will that stall, but so will this continued problem of business confidence. Darroch Ball continues to laugh every time I mention it, but what will happen is employers will stop employing. When they stop employing, the cycle gets harder and harder to stop. The winter of discontent has only just started.

It is a pleasure—an absolute pleasure, actually—to get up and speak to this third reading of the Overseas Investment Amendment Bill. This is core New Zealand First policy, and we are proud to accept that challenge from the member that has just got down, the Rt Hon David Carter. We absolutely make no apology for that. Our first founding principle is to put the interests of New Zealanders first, and this bill does exactly that. This, at its core, is about the ability of New Zealanders to own their own home.

I will commend Minister Parker on bringing this bill forward, shepherding it through the House. Actually, before it got to the House, he did something the Opposition said we couldn’t do. When they were in Government, when Todd McClay was roaming around, he said we couldn’t do this, it was against all our trade deals, and we could not enact this policy. Well, guess what? We are, he did—he absolutely did, and it took him about two days to work out how to do it—and here we are on the third reading of this bill, about to enact this legislation.

Owning your own home is the foundation of this society. Sir Keith Holyoake, the great National Party Prime Minister used to talk about New Zealand being a property-owning democracy. It is the core founding fundamental to have a family—your home is your castle. Even if you haven’t got a family, it’s your sanctuary, it’s your place where you can be you, and where you can express yourself and just be a participating member of society without having to worry about being at the whim of a landlord. It’s an absolutely core fundamental to bring out the family and the foundation of our society.

I dwell on the teachers that I saw out there today in front of Parliament protesting in support of their wage claim, as they have been neglected over the previous Government’s term. I heard on Radio New Zealand this morning a representative from the teachers saying that a starting wage for a teacher after—what is it?—three, or maybe even four years’ training is $47,000. A senior teacher—like my sister, a primary school teacher—earns $75,000. So how does that equate to house prices in Auckland, our biggest city, where a third of our people live and where the majority of this issue occurs—a million dollars. They are, even for a senior teacher, 12 or 13 times their wage. That is extraordinary. That is the issue that we are trying to address with this piece of legislation.

It’s not the only lever. I know it’s been expressed that it’s not the silver bullet, and it’s not. But when you’re in a Government in this situation with those people, like the teachers out there, unable to get on a housing ladder, you pull every lever in your arsenal—every last one. We are doing other things. The KiwiBuild programme: 100,000 affordable houses. We’ve got reforms to the Resource Management Act coming up. The Tax Working Group is looking at various options—the extension of the brightline test, for example. We are doing other things. This is one part of a measure, but it is an important part none the less.

It is symbolic, as Mr Carter mentioned before. Why should you be able to get off a plane in Māngere and go out and buy a house or two or ten, like people were doing? Why should you be able to do that when the citizens of this country, in the extreme circumstances of this issue, were living in garages and in cars? Look, we had to do what we had to do on this issue. It is the right thing to do, and we are doing it. We are addressing supply, and we are addressing demand.

The Queenstown example that was given in some of the previous readings—yeah, OK, it might affect some people at the top of the curve, but what about those people trying to live there and take advantage of the opportunities and to live in that magnificent part of the country? Minister Twyford has just announced a measure to bring in 1,850 affordable houses with the Queenstown Lakes District Council. That’s another aspect of this programme that the Government is bringing in. So this legislation has made some changes. It’s a provision for a commitment to New Zealand. Overseas participants in the market have to be able to demonstrate that they’re increasing supply and that they are providing an overall benefit to New Zealand.

The select committee process—I hear that’s being talked down a little bit over there, but we did take changes in that select committee process seriously, and there have been several adjustments, as there should be, through that process. Prime amongst them are the amendments to allow foreign investment in apartment blocks over 20 dwellings, and the threshold for that has been set at 60 percent. And that’s in regulations, so Governments coming in will be able to change those regulations as they see fit. If Mr Parker hadn’t got those concessions so that we could write them into our trade agreements, this would have been locked in in perpetuity. So he’s to be commended for looking at the flexibility of this.

Clause 5 of new schedule 3 looks at the hotel units and a similar type of provision to allow a freeing up of the amendment so that hotel units can be built with the help of some foreign capital. Clause 1 of schedule 5 recognises essential services—the likes of power companies, etc.—that may need access to some land that might have been deemed sensitive, to get some utility services provided, and there are some amendments for that. All of that came through the select committee process, so I absolutely refute that that wasn’t a robust process that was taken properly.

Of course, we come to Supplementary Order Paper 52: the forestry carve-out. It has been referenced that 72 percent of forestry is already owned by overseas interests—

💬 Andrew Bayly: That’s right, and you want to make it 100 percent.

—which is an absolute shame. That is a shame. That’s not something you should be waving around with pride over there; that is a shame that it got to this place. This is why we’ve got to start taking some of these measures on housing, to stop it escalating out of hand.

We’ve had to, probably, suck this one up a little bit, because we do need to get more trees in the ground. Why have we had to do that? It’s because Paula Bennett disappeared overseas, she turned up at the Paris accord, and she swanned around on the international stage making promises that she had no intention of being able to keep. She did not put a single measure in place to back up, to put some walk behind her talk. No, she did—actually, she did. The plan was actually to send $1.4 billion a year—$14 billion over 10 years—overseas to buy carbon credits. Many of those were subsequently found to be faulty—an absolute squandering of taxpayers’ hard-earned money. So that is why we’ve had to pull this carve-out out. This is why we have had to do it. The one billion trees strategy, this nation-building strategy that we will do—we will rally behind this strategy. We have resourced it, and we will make this happen. We will make our international commitments, and we will do so ourselves, and we will do so proudly.

This bill, at its core, is about affordability of housing for New Zealanders, for our citizens, for the teachers that were out there, for the policemen, for the nurses that also got a pay rise the other day, for the meatworkers—for everyday garden-variety hard-working Kiwis that want to get on a property ladder. We are for them, and this measure is for them. This is an egalitarian bill that doesn’t look to look after the big end of town. This will, hopefully, be a step in the pathway to returning us to that property-owning democracy that Sir Keith Holyoake used to talk about. This bill is about a fair go for New Zealanders. Thank you, Mr Assistant Speaker. I absolutely commend this bill to the House.

Thank you, Mr Assistant Speaker. If anyone needed to understand why the New Zealand economy is crashing and burning, look at what we have just heard from the New Zealand First member Mark Patterson and the other nine members of New Zealand First that are the economic geniuses behind this bill, that are delivering the economic plan for New Zealand that is working so very, very well! They are ably supported by the other economic geniuses we see in this room from the Labour Party, that have got no idea either, and the Green Party, that will never stand up for its values in this House.

There’s a reason that we have a property market, and that is a market where buyers and sellers come together. Like any other market, there needs to be a fair interaction of buyers and sellers. Once rules are put into a market that dictate what the price may be, who may buy, what time they may buy, and all those other factors that are all opportunities that the New Zealand First Party can’t resist, then that market is distorted. What is happening to ordinary New Zealanders, the very people that the Labour and New Zealand First parties talk about here? They are distorting the future of New Zealanders, because they are presenting to them an unrealistic market for property. If we can’t compete in our property markets, there is a reason, and that reason is because we are not earning enough on the international stage.

Any time any country in the history of this world has put rules in place to stop competition in one area, thinking that they can dictate that price, it fails. And when those rules go away, that country and those people are not able to compete, and they go further down the scale. That is what they are doing to New Zealanders. They are giving them false hope and taking away their future to compete. Why can’t New Zealanders compete in the property market if we expect them to compete in the overseas markets where they sell their products? Should we expect New Zealanders to be competitive in their overseas trade and yet uncompetitive in our property markets? No, we shouldn’t, and that is the strength of New Zealand agriculture: it’s because our farmers are competitive in the land market. They can actually make enough money out of their farms to buy their farms. That is the strength of New Zealand agriculture, and to take that away in fell swoops, like this bill does, leads to the economic decline that we are seeing in New Zealand now.

We need to be competitive as people, and we need to be able to do that in a way which Government doesn’t dictate. That is the fundamental belief that the Government doesn’t understand. Because they don’t understand that, they are destroying the New Zealand economy, because all the business people out there understand that and they live by that. The people in this room have no experience in the business community, and they will lead New Zealand down the track of failure.

New Zealand has a very fragile economy. We can’t afford to do too many of these decisions. We can’t afford to cut mining, cut roading, and cut foreign investment. Once the New Zealand economy gets the jitters, it gets it big time—and the New Zealand economy has already got the jitters—and there will be no way back under this Government. That Government is facing an economic decline that we thought would take a matter of years. It’s only going to take a matter of months, and that’s because of policies like this.

Let’s have a look at this policy. Even if the person that was delivering this policy actually believed in what the New Zealand First and Labour Party and Green Party have espoused during the election campaigns—and that is their belief that there should be no foreign ownership of land, or that anybody coming in here would not be able to purchase land if they’re not a New Zealand resident. That’s the premise the Minister started with. Well, look at this very piece of legislation—what is enabled to happen under this legislation? It makes an easier road to purchase farmland in New Zealand than there ever has been before.

Previously, if an investor from overseas wanted to come and buy an 800 hectare farm in the north Waikato—beautiful rolling country that could be our productive land for sheep, beef, dairy, whatever, fruit, vegetables—they would have to go through the Overseas Investment Office and prove that they are adding value to that beyond what a New Zealander would, having purchased it. Those are the current rules. Under this legislation—

💬 Mark Patterson: It had never been enforced.

—there is an exemption. They are enforced, and they have to go through them, and under this legislation there’s an exemption for forestry. Now, the Minister is very cute in his response to this, saying, “Oh, forestry rights have never been acknowledged.” Well, maybe that is true, but he also said, after that, that there will be a lower threshold for land purchase. So, essentially, that overseas buyer can come in now and say they’re going to buy that beautiful farm and put it into forestry, and they will be exempt from having to go through the full force of the Overseas Investment Office.

That is the tragedy of this bill: it actually increases foreign ownership. It makes it easier for someone to buy property in New Zealand than it would’ve in the past. What’s worse, that investor will be paid to do that, because we know that the Government is going to bring in something around forestry rights, emissions trading scheme payments to put in forestry. In fact, there are payments to put in forestry now through the Provincial Growth Fund; we just don’t know what those payments are, how much is being paid to somebody, and whether that’s consistent. But take that foreign buyer. Now, potentially, they could get paid through the foreign investment fund to buy New Zealand land and to take it out of its most productive use and put it into forestry. The people over there will say, “Oh, nobody will ever do that. Why would they want to do that?” Well, if that person is getting only a 1 percent return on their investment overseas and they don’t actually want to have to come here and work the land but they’re quite happy just to park a few million dollars here to have a safety mechanism in case their home country has some difficulty—

💬 Barbara Kuriger: And they don’t have to pay for the rural roads.

—they don’t have to pay for anything—they will actually get the advantage of this bill. So they can come over here, buy land, put it into forestry, take it out of productive use, and get paid by the Government to do so, at a higher rate of income than they would be getting for their money overseas. That is not good business. That is selling New Zealand down the road.

That’s what the New Zealand First Party has done here today. The reason they are doing that is because Shane Jones has a wild promise that he needs to actually meet. The Labour Party have no economic credentials. They do not understand what they are doing in this bill and they’re just trying to appease the New Zealand First Party, and the New Zealand economy sees that.

People in business understand what is happening, and they see right through what this bill is. They see that it is silly policy made by people that have no understanding of what they are doing, and it is creating a false economy for New Zealanders. It is meaning that New Zealanders will be told they don’t need to be productive and competitive. It means that New Zealanders will actually lose some of their best land under silly rules that you could drive a truck through.

💬 Angie Warren-Clark: No hyperbole there.

No, that member there wouldn’t know. That member there—I bet you she’s never been involved in a property purchase involving farmland and seeing how that works. So—

💬 Angie Warren-Clark: Wrong—wrong.

Have you? Forestry? No, she hasn’t done any forestry purchases, has she? I’d love to see her do a forestry purchase, and if she did, it’d probably still be to some foreigner.

But this is an attack on the very values that New Zealanders need to succeed. We need to be competitive, hard-working New Zealanders that have the opportunity to compete on the international market. If we constrain ourselves and we put ourselves behind barriers, there is only one thing that will happen to New Zealanders, and that will be that we will be less competitive. We will fall behind and we won’t be able to deliver what we want for our future generations, and this bill does exactly that. It constrains our people’s ability to succeed and go forward, and, at the same time—at the very same time—we are incentivising people to come and buy New Zealand property without adding value to that. In fact, we are probably taking away economic value, and that is not smart economy.

Tēnā koe, Mr Assistant Speaker. I did so enjoy listening to Mr Bennett, because he highlighted why National is there and the Greens, Labour, and New Zealand First are here. The repeated references to competition in his speech—I lost count of how many times he talked about competition in the market. It’s been National’s reliance on competition—that whole philosophy, which is heartless when it comes to people wanting affordable housing—that has ended up with the housing crisis we have today. Its reliance on the market and competition has been at the basis of its unwillingness to intervene.

Mr Bennett, 20 percent of the sales of houses in Auckland in the March quarter were to overseas persons. This Government has intervened because we don’t think New Zealand housebuyers should have to be competing with overseas people, who can often pay a much higher price. The domestic market for our houses should be determined here, in Aotearoa New Zealand, and not be influenced by competition from overseas persons who are speculating, often. So that’s why, Mr Bennett, this bill has been introduced and is close to being passed. The National Government said they couldn’t do it. Todd McClay walked around before the election saying that it would cut across trade agreements. National wanted this to be done by stamp duty, but that would have cut across trade agreements.

So I congratulate Minister Parker, and I am very grateful for the huge amount of work that officials in Treasury and the Overseas Investment Office (OIO) have done and the work that members in the Finance and Expenditure Committee have done to actually finalise and develop this bill. It is a measure to ensure that New Zealanders can get easier access to affordable homes by requiring any overseas persons to have to go through a screening process.

As the Minister responsible for the Overseas Investment Office, can I tell Mr Bennett that there are significant changes there to ensure that those processes are efficient both in the forestry sector and in the residential sector, because the processes should be clear-cut and easy to understand, and there should be adequate enforcement mechanisms as well. The previous speaker was worried about that. Can I inform him that there’s been $7 million allocated in Budget 2018 for compliance and enforcement by the OIO, and there are provisions in this bill which would enable the office to require overseas purchasers, if they’ve bought forestry land—for example—and if they are not complying with the conditions of their application, to actually be required to dispose of that land. There is more monitoring being done by the OIO, so Mr Bennett should rest assured that this Act will actually be enforced.

On the forestry front, his speech there was making a mountain out of a molehill. The reason this Act gives a clearer, more streamlined process for forestry is because of climate change. We have a lot of catching up to do because, as a previous speaker, Mr Patterson, noted, National squandered the opportunity to do something about climate change. We need afforestation to sequester that carbon to reduce the likelihood of going beyond the tipping point, so that New Zealand does its share to reduce our emissions and to put us on track to being a zero-carbon economy by 2050.

Seventy percent of our forestry in New Zealand is already overseas-owned, but it’s the investment that these companies can bring to increasing the plantings, to doing more processing, and to providing more jobs in the regions that is why we want a streamlined test. So there are good reasons, Mr Bennett, for that streamlined test. It’s not an easy run, and the OIO will be ensuring that there is good information on its website around the consents that are granted, around the standing consents in the housing property sector.

We want this Act to work. The OIO is investing the time and resources in working with the real estate sector, with the conveyancers, and with the forestry sector to make sure that the tests in the Act are understood and that the legislation is ready to go when it comes into force, because this bill is about ensuring that we get those billion trees in the ground, that we do our share to reduce our greenhouse gas emissions, and that the Government ensures that there is every opportunity for New Zealanders to purchase affordable homes without having to compete with people overseas.

So this bill will make a significant difference. It has had to be done at speed—but there’s still been a six-month select committee process—because, as Minister Parker has repeatedly explained but the Opposition still doesn’t seem to realise, it needed to be got through before the Comprehensive and Progressive Trans-Pacific Partnership agreement came into effect. So that’s why we are doing what National said couldn’t be done, particularly in that housing space, where the provisions in the legislation will ensure that while there’s not competition with overseas speculators and where there is investment by overseas companies in actually significantly increasing housing supply to deal with that housing affordability issue, that can be accommodated under the Act. So it is sensible, Mr Bennett.

What else did Mr Bennett say? He said that we face a risk with the forestry provisions of having New Zealand lose some of our best land. That is very rich coming from a National MP because, of course, it was under National that their ministerial directive to the Overseas Investment Office made sure that those purchasing farms who were living overseas or were overseas companies didn’t need to go through all the tests under the Act unless they were large farms—10 times the size of the average farm. So their ministerial directive made sure that the Act was only very narrowly applied and in very limited circumstances, and it has been this Government that has changed that ministerial directive to ensure that any sales of rural land over 5 hectares have to go through a consenting regime under the Act. So it’s making sure that where there are sales of land to overseas persons, there are substantial and identifiable benefits to New Zealand.

So this Government’s agenda is about ensuring that everyone recognises that it is a privilege to own land in New Zealand if you’re an overseas person, that it’s got to deliver substantial and identifiable benefits, and that we don’t want overseas speculation in houses, because we want to ensure that New Zealanders have access to affordable housing. The National Party, with its emphasis on the market, on competition, is all about allowing property speculation people to capture financial gains for themselves, with no concern that our rates of homeownership in New Zealand have fallen to the lowest in 60 years. This bill is about helping to reverse that, helping to make housing more affordable, helping to ensure that we get the investment in forestry, helping to address our climate crisis, and not the head in the sand attitude that we’ve seen from the National Opposition.

I commend this bill to the House. I thank all of the officials in Treasury and the OIO who have worked long and hard on it. I congratulate Michael Wood as chair of the select committee, and Minister Parker for the huge work that he has done in shepherding this bill through the House. Thank you, Mr Assistant Speaker.

Thank you, Mr Assistant Speaker. Well, this is a funny place, this Parliament. You know, some days you go home at night thinking, “Oh, we’ve had a great day, we’ve achieved a little bit.” Some days you go home at night wondering why you’re here, and some days you go home at night wondering if what’s going to happen as a result of your having been here. I’ve got to say that this is one of those days.

I listened to the Minister a little earlier on saying that in 2013 he dreamt up this bill—2013. That’s quite a long time ago. And, you know, you would think that he would have noticed that the world’s changed a little bit in those years since 2013—five whole years. The economy’s changed dramatically in that time. And to listen to the last speaker, the Hon Eugenie Sage, speaking in much the same mode, you’d wonder where they’d been for the last five years. I remember for some time sitting in numerous select committees, actually, with the Hon Eugenie Sage, the Hon David Cunliffe, and the Hon Damien O’Connor moaning and moaning and moaning about this exact piece of legislation and what they weren’t going to do when they got to the point of being able to implement it. Well, I find it very disappointing that we’ve got to this point, five years later, and the piece of legislation is still in exactly the same form that they designed it those five long years ago.

This is, without question, one of the worst pieces of legislation I’ve ever seen in my time in Parliament. It’s not the worst piece of legislation because I disagree with the philosophy; they’re absolutely entitled—anyone in this place is entitled to have a philosophy which then enables them to implement it in legislation. It would be really nice if that piece of legislation was being implemented at the time of implementation—in other words, if they were using what was going on in the economy and in the world right now, it would be very relevant. It’s not.

We then listened to the member for New Zealand First, who I think originates out of Southland, the place where—almost half the land in Southland has not only changed in ownership but changed in land use in the last 10 or 15 years. It’s quite possible, I guess, that under this piece of legislation half of Southland could go into pine trees. He’d look pretty odd then, wouldn’t he? That’s exactly what this piece of legislation could achieve, because it enables people to buy land—and I’m talking about foreign owners buying land—in any part of New Zealand. It doesn’t matter whether it’s class one land or class 10 land; they can buy any sort of land and plant it with trees, because that’s the blindness with which this piece of legislation is being approached, and the history drives it to be in that form, I think.

So I think it creates a couple of real problems, this piece of legislation, and both in critical areas for this Government and, I think, critical areas for New Zealand. One’s around housing investment, because instead of encouraging investment in housing—and whether we like it or not, in New Zealand we need foreign capital; we need injections of capital into this country—this piece of legislation is going to stop that piece of foreign capital being injected into the housing market in New Zealand. It’s going to stop the apartment market stone-dead. I can explain why: because no one in a falling housing market or even a stable housing market is ever going to invest in an apartment that they can’t live in. The reason for that is because the moment they don’t live in it and they let it out, it depreciates in value, so no one, no absentee owner, is going to invest in that type of opportunity. In a rising market, they probably would and probably did.

I think the same thing exactly happens in the forestry market, and we’re going to see some challenging times in that market, too. Other than the climate change thing—which our Minister Sage talked about—there’s no capacity in New Zealand, and there won’t be capacity in New Zealand, for further forestry manufacturing and production other than sending those logs out through the ports. So that raises a couple more issues, because the ports in New Zealand—whilst the roads of national significance and some of the work that is still ongoing in that area have made those ports more accessible, it hasn’t made the ports any more efficient, or any bigger, or able to deal with the quantity of timber going out of the country now. Imagine what’s going to happen as we increase the planting of forestry in New Zealand.

The reason for that is that the RMA—and I’ll get back to that in a minute. The Resource Management Act precludes any form of further production lines being built in this country, and there will be no investment in that either in the next—until such time as that Act changes. That RMA is also inhibiting and has inhibited significantly the development of housing, particularly in Auckland. The Auckland plan concluded that, of course, and some efforts were made under the previous Government to alter that regime. It hasn’t been entirely successful and it will need a lot more work. So it doesn’t matter what we do with legislation like this, this type of legislation is not going to manage the problem that we’ve got, because there are some significant problems in behind it.

The next thing that I want to get on to is the exemptions, and there were a number of exemptions talked about in the committee stage of this bill. There were also some exemptions brought to the select committee by the Government, or by the Minister, and there were also over, I think, something in excess of 60 submitters who all would have liked to have had exemptions for their particular industry. It doesn’t matter what it was; whether it was aged care, health—all those sorts of things were looking for exemptions. Now, the very fact that almost all submitters were looking for an exemption really meant they’re all struggling for capital and are all struggling for investment opportunity in New Zealand. That, again, precludes those industries from expanding at the rate we would like them to.

The next thing I want to touch on is the potential for depopulation in provincial New Zealand caused by unplanned planting of pine trees, or of trees. We’ve already seen in provincial New Zealand significant depopulation—the Bay of Plenty, some parts of the East Coast, and certainly in the central North Island, where depopulation becomes an issue because the trees are planted with no thought to the future. I’ve got no problem with planting trees; I think it’s a great scheme to plant trees, but the problem is we plant them randomly and we plant them everywhere, and that’s a real challenge for us. We need to plan this whole planting of trees much better. The potential for foreign investment in this land will preclude us from being able to, in my view, plan the planting of those trees in a proper manner.

I also listened to the Minister give what I thought was a pretty unconvincing speech when he introduced the bill for its third reading today. Not only was he unconvincing but I also had a great deal of sympathy for the officials that went through the process of trying to put this bill in place, because you could see in their faces that they were struggling to make it relevant, and I think it has struggled to find relevance. I think there are such a lot of shortcomings in this bill that to apply compliance to it’s going to be almost impossible. The costs of that compliance—there’s been no work done on the cost of that compliance. That will be significant, and when you think about it from an investor’s perspective, if they have a significant cost of compliance in the lead-up to their investment decisions, they’re not going to make those investment decisions—they’re not going to make that opportunity available to New Zealand. So, again, even though the opportunity’s there for investment in both forestry land and in apartments and, in fact, in residential land, it’s very unlikely to happen because they’ve been precluded from doing it.

One last point on that, of course, is perception. When you tell them they’re not welcome in New Zealand, whether you like it or not, you can’t legislate to make them come back. The moment you tell someone they’re not welcome, they have that feeling they don’t ever want to come back. And I don’t blame foreign money for leaving the country and not entering at the rate we require it at, because they’ve been told and have the impression that they’re not wanted back.

Governments have the ability to distort markets, and you never know, when a piece of legislation is put in place, what the reaction of the market to that piece of legislation is going to be. And, I guess, whilst I understand the Government’s—well, I don’t understand it, but I recognise that the Government has a will to drop house prices, and there was some discussion in the House about that today. If you take 10 percent off a house price and the deposit’s been 10 percent, then that poor person’s got no equity left.

I think there’s a very real possibility that this legislation will have a distorting effect on not only land prices but land use, and I don’t think that Governments can ever interfere, or should ever interfere, in land-use trends. I think they should make sure the planning’s done around land use and what might happen in the future. And, again, I think if you look at some of the changes we’ve seen in land use in New Zealand in the last few years, it hasn’t all been positive, but it hasn’t been positive because the planning hasn’t been done before the land use took place. That’s something we very much need to consider.

In my view, this is a sad piece of legislation. It’s an old piece of legislation that, in my view, has run its course, has been introduced far too late, and has been introduced from an idealistic perspective that I think is tragic for New Zealand and for the housing market in New Zealand particularly. Thank you, Mr Assistant Speaker.

I call Willow-Jean Prime.

Tēnā koe e Te Māngai o Te Whare.

ASSISTANT SPEAKER (Adrian Rurawhe): Aroha mai, rima meneti te roa o tēnei karanga.

[Apologies, this speech has a duration of five minutes.]

Āe, tēnā koe—kia ora. E tino harikoa ana ahau ki te tū mō te wā poto ki te kōrero e pā ana ki tēnei pire. E tautoko ana ahau i tēnei pire. He aha ai? Nā te mea he whenua rangatira tēnei whenua. E mōhio ana ahau tētahi raruraru nui, ko te raruraru ko te noho kore whare. Te maha o ngā tāngata e rēti hoki ana i ngā whare. E mōhio ana ahau he raruraru tēnei i roto i tōku ake takiwā i roto i Te Tai Tokerau. E mōhio ana ahau he raruraru tēnei mō te iwi Māori, te tokoiti o ngā tāngata Māori, ngā whānau Māori e hoko ana i ngā whare, nō rātou te whare. He raruraru anō hoki mō ngā tāngata Pasifika.

Ko tēnei tētahi kaupapa hei whakamāmā ake i tērā tū āhuatanga, i tērā o ngā raruraru. Ko tēnei ko te aukati i ngā tāngata, ngā kaihoko, ngā tāwāhi te hoko i ngā whare o Aotearoa nei. He raruraru tēnei nā te mea 20 paihēneti o ngā whare i roto i te pito o Tāmaki-makau-rau, nā ngā tāngata nō tāwāhi i hoko wērā whare i roto i te wāhanga tuatahi o tēnei tau. He mea nui te whakaruruhau ō tātou ake tangata i te tuatahi.

Nō reira, e kaha tautoko ana ahau i tēnei pire, pau te kaha nō te mea he whenua rangatira tēnei, ko tēnei tētahi mea hei whakamāmā ake i te tū āhuatanga o te nui o te utu ki te hoko i ngā whare, me te nui o ngā tāngata e noho kore whare ana i roto i Aotearoa nei. Nō reira, e tautoko ana ahau i tēnei pire, kia whakairi ki tēnei Whare. Tēnā koe.

[Yes, thank you—thanks. I am very happy to stand for a short time and speak about this bill. I support this bill. Why? Because this is a fine country. I recognise there is a big problem: the issue of homelessness. So many people are also renting houses. I know this is a problem in my own electorate in Northland. I know this is a problem for Māori people, as very few Māori people or families buy houses, own houses. It is also a problem for Pasifika people.

This initiative is designed to mollify that situation, that issue. This will prevent people, purchasers, foreigners, buying houses in New Zealand. This is an issue because 20 percent of the houses in central Auckland, people from overseas bought those houses in the first part of this year. It is important to protect our own people first and foremost.

Therefore, I strongly support this bill with all my strength because this is a fine country. This is one thing that will ease the situation of the large price to buy houses, and the large number of people who are homeless in New Zealand. Therefore, I support this bill. May it come into effect in this House. Thank you.]

I call Andrew Bayly—five minutes.

Thank you, Mr Assistant Speaker. I’ve got to say this was an embarrassing process to be involved in for the members on the Finance and Expenditure Committee, which heard the avalanche of submissions from such a wide range of submitters, and to hear the continuous chorus of statements saying how this would be bad for New Zealand—would be bad for New Zealanders—was actually somewhat daunting and also sobering. And, naturally, we do oppose this bill, and we oppose it on many counts.

The first question is: why on earth would you be implementing a bill such as this just when we need new houses to be built in New Zealand? The second issue is that I think there’s a general lack of understanding among the New Zealand First, Labour, and Greens members of Parliament about the need for businesses, whether they’re one-, two-, three-people businesses right through to your big corporations, to be able to access foreign capital. And a bill like this doesn’t provide for that. And also what it has done, a bill like this, in the way it’s been presented, is sent such a poor message to the international community that, effectively, says New Zealand is off limits for foreign investment, and that is at a time when we need to be continuing to ramp up the investment in infrastructure in New Zealand. And that is probably the most damning thing about this bill: the international message that it sent to our friends around the world.

Now, I just want, really, to turn to the issue around residential building and apartments. And, again, I just note—and I use this word advisedly—the naivety of Ministers and Government members about the need if you are building and developing new houses and apartment blocks in New Zealand. One of the key requirements is the need to be able to access bank funding. And all banks impose—and it doesn’t matter whether they’re international banks or New Zealand banks; whatever the case may be—a requirement around pre-funding, which requires the element of pre-sale. One follows the other as night follows day, unless you’re incredibly well resourced and you can fund an entire development off your own financial resources. And very few developers are in that situation.

So what we ended up with was an absurd situation where we had last-minute changes to recognise this fact, which was blindingly obvious to everyone—namely, that if you’re building more than 20 homes or apartments, a foreign person doing that could get a dispensation to allow up to 60 percent of those homes or apartments to be sold to foreigners. And so here we have the logic which is: the foreigner can build the house but we don’t want them to live in it. We don’t want them to own it even though the foreigner has built that house in New Zealand. But we are also very happy that that foreigner land banks and makes all the money out of the development. So we think that’s fine, and, in fact, the last-minute change allowed for that, specifically catered for that. And so we think it’s fine for foreigners to be land bankers and developers and make the money but not to own the house once they’ve built it. And I think that logic train is somewhat missing in this whole bill. And, anyway, there’s a way of getting around the issue. All you have to do, if you’re a foreigner, is build the house and then rent it to your daughter or son on a commercial lease for at least three years and get around the commercial arrangements that way.

And then there was the issue of the existing foreigners who have built very expensive homes in places around Queenstown, who are now facing substantial loss because they will not be able to sell their new homes to other people. And I think just this whole bill—Mr McKelvie said it was sad; in my view the process was bad and the bill itself is not only sad but it’s bad. It’s bad for New Zealand.

This is a split call—five minutes. I call Dr Deborah Russell.

Tēnā koe e Te Māngai o Te Whare. Mr Assistant Speaker, this bill is what New Zealanders want. This bill is about New Zealanders retaining control over their own land. This bill is about New Zealanders having access to their birthright of a secure home in their own land. And I am proud of the work that the Minister David Parker has done to bring this bill to the House and get it through the House. I am proud of the work that the Finance and Expenditure Committee chair, Mr Michael Wood, has done getting the bill through the select committee, and I am proud to have been part of that committee, working to ensure that New Zealanders retain their birthright of having a say in who gets to own property in this country.

I say to you that this is a welcoming bill. It is a bill that welcomes people who want to come and live in New Zealand, who want to make a commitment to New Zealand. It welcomes them to buy property here. If someone makes a commitment to living in this country, then of course they can buy a home here—if they make that commitment. All this bill does is ensure that non-residents, non-citizens, cannot buy homes here. Why? Because we want to ensure that New Zealanders and people who are committed to New Zealand can buy homes here, and that’s why this is the bill that New Zealanders want.

This is what New Zealanders want, and there are good reasons for wanting it. Part of it is just that retaining control, but the other reason is that we have had a housing market that has failed. Oh, it hasn’t failed in terms of rising prices—which is fine for those who own property already and fine for those who can bring funding from overseas as non-resident, non-citizens, and owners, but it is not fine for the young people who have been locked out of housing and it is not fine for Māori or for Pasifika—people living in and committed to this country who cannot afford housing here. Now, this bill by itself will not rein in our housing market, which has failed, but this bill, together with the action that this Government is taking right across the housing portfolio, will help.

That is exactly why I am proud to support this bill. I am proud to support what New Zealanders want, and I commend this bill to the House.

I enjoyed that last contribution immensely. It was as though the member who just resumed her seat, Deborah Russell, had been on cut-price acting lessons. All I can say is I think she should keep winding up the drama. We’re actually here to make legislation—high-quality legislation—for the future of New Zealand, and I have to say that in almost four years in this House, I have not seen a more ham-fisted attempt at legislating.

Let’s just pause and ask ourselves what this bill intends to do. Well, the member did get one thing right: it intends to stop foreign entities from purchasing residential land. And that leads to a couple of questions: what’s a “foreign entity”, and what’s “residential land”? Well, under the Overseas Investment Act, a foreign entity is anything with more than 25 percent foreign ownership—an overseas person, they call it—and residential land is usually defined by councils. It’s pretty laborious, but there are a whole lot of definitions and it, basically, comes back to what most New Zealanders would think of as a residential area—a suburb or an area where, mostly, people live.

Well, the interesting thing is that in order to achieve the objectives of the bill to make housing more affordable for New Zealanders, one of the things that has to happen is we need people to build more homes. Home building, it turns out—as we found in the select committee before the Government went into reverse gear, at great speed, putting all sorts of exemptions and carve-outs into the bill—tends to involve a lot of foreign entities purchasing residential land. You see, when you have a home in a modern country like New Zealand, you need things like electricity and you need things like telecommunications; sometimes older people in the community need things like retirement villages. The thing about big telcos and electricity companies and retirement villages is that many of them are listed globally on sharemarkets called the Australian Stock Exchange—if anyone from New Zealand First has heard of that, come and see me later—and that means that many of them are more than 25 percent foreign-owned. So it suddenly means that we would go from about 150 Overseas Investment Office applications per year to an estimated 2,700, as all of these organisations that are involved in building homes—whether it’s Ryman Healthcare or whether it’s Spark or whether it’s an electricity reticulator—would, all of a sudden, have to go through the Overseas Investment Office.

Of course, what the Government did once it realised that it had, basically, made it impossible for the New Zealand construction sector to build homes—I mean, you can’t make up how stupid this bill is—is they then started putting in exemptions for just about everything, to the point where the bill has become meaningless. It’s a case study in bad law-making, but it’s also a case study in this particular Government of how poor their understanding of the country’s history and economy is. You see, the history of this country is actually a history of foreign investment. Right back to the time that Kupe sailed up on the beach with a waka hourua and a couple of kunekune pigs, we have been bringing foreign capital to this country, and we’ve never looked back, and so it remains in the construction of housing today.

This Government is out of touch with that reality. They came into Government with things like the despicable Chinese-sounding names publicity stunt, on a wave of xenophobia and the premise that we must do something. Their minor premise: “This is something.”; their conclusion: “Let’s introduce the Overseas Investment Amendment Bill.”, even though it will not achieve anything like what it intended to achieve. In actual fact, if it has any effect, it will prevent much-needed foreign investment from boosting the construction sector and adding to the number of homes in New Zealand.

That’s what happens when you have an accidental Government with no real policy agenda, with no real policy understanding, wasting this House’s time by putting in place legislation that will not achieve its stated objective. Just ask Vancouver. Just ask Auckland—after we required IRD numbers and bank accounts—whether restrictions on foreign capital inflows actually affect house prices. It won’t achieve its objective but it will put all sorts of roadblocks in the way of building more homes, and for that reason it’s easily the stupidest bill I’ve seen in four years. I proudly stand for the ACT Party in opposition to this bill. Thank you, Mr Assistant Speaker.

The last speaker for Labour, Deborah Russell, said this was to do with New Zealand’s birthright. In my view, this has got nothing whatsoever to do with birthright, and if members of the Government sat in the Finance and Expenditure Committee, they would have heard a chorus of submissions and multitudes of carve-out provisions as this ill-thought-out, ideologically driven piece of legislation made its way through this Parliament.

I completely agree with the last speaker, Mr David Seymour. There was hysteria created in this country in the lead-up to the election. The campaign about “Chinese-sounding names” was despicable, and the Government itself had done very little research to understand what was behind it, how big the issue was, how serious it was. But it captivated some people’s hearts and minds as it related to housing. I found it offensive, actually, to our significant ethnic communities that are living in New Zealand that that was used to somehow bring this piece of legislation to this House.

This is a terrible piece of legislation—a terrible piece of legislation—and I actually want to put it on the record that I’m proud of foreign investment in New Zealand and I’m proud of the things that New Zealanders have achieved using that foreign investment. As the first piece of significant legislation I came across after entering Parliament, I was amazed that the Government had no understanding whatsoever of the reliance that the New Zealand economy has on foreign investment. It soon became abundantly apparent as carve-out clause after carve-out clause was brought in through the select committee process following the submissions to try and maintain a sense of proportionality for that foreign investment.

This bill set out as a ban on foreign sales of residential houses and land. But it actually was more encompassing than that, and that had to be reined in by the select committee process. It’s easy to forget what the last National Government did in getting to this point. The last National Government required all foreign buyers to be registered for IRD and to indicate that they were foreign buyers when purchasing a house. They introduced regular monitoring of foreign buyers through Land Information New Zealand, which showed that there was a small percentage of the market, around 3 percent, that was going in foreign sales, and they introduced the first brightline test, which was subsequently amended—with no notice—from three years to five years.

I also want to talk about a carve-out provision which has been the subject of the time of this House. That was a Northland example where a carve-out was sought by the Government based on Treaty settlement claims for wealthy investors. At that time, I, as a junior member of the select committee, asked the select committee for further advice: were there any other potential Treaty claim carve-outs, and would this have any implications? We actually—our side of the select committee—couldn’t even get advice. We couldn’t even get it through, and we were told by the chairman that that’s our decision to make. We now subsequently know that the Speaker made a ruling to say that specific carve-out provision for an individual wasn’t allowed.

When I talk about foreign investment I want this House to understand why I support it. In my own part of Hawke’s Bay we have been transformed by the use of foreign investment. Craggy Range is an Australian-owned company, where the Peabody family have come from Australia and are significant investors. Elephant Hill—the Weiss family have come from Germany. Cape Kidnappers—Sir Julian Robertson has come from the USA. All of those people have entered my community in Hawke’s Bay, have been wonderful contributors—them, their staff, and their families—and they have transformed the tourism base of the Hawke’s Bay economy. Yet this bill says that when they first arrive on our shores to do their property development they are not allowed to buy a house—not them, their family, or their staff. That’s where I think this ideologically driven bill is so misplaced.

I want to comment on what Mark Patterson said in his contribution. He said he’s proud today. I want Mr Patterson to remember that in these things there are balances. Most of the nursing homes and rest homes in New Zealand have significant foreign investment in them. A significant investment in Silver Fern Farms was made by a Chinese entity.

💬 Mark Patterson: Shame!

I know, Mr Patterson. I know you don’t like it. But you go and tell the workers, Mr Patterson. When Silver Fern Farms was in some difficulty, if they hadn’t had the foreign investment and they didn’t have their jobs, you know what they’d say? “We want the foreign investment.”—as most people do. But you stand up here, Mr Patterson—you stand up here in this House and you say somehow it’s bad. If I was you, I wouldn’t say this is a proud day, because I think actually you’re missing the point. Foreign investment is a great enabler for the economy, for the people that live in rural parts of New Zealand. Subcontractors, contractors, meatworkers, nurses—many of them get their income from a foreign investment that’s made.

In this legislation we have also got some carve-outs where we pick and choose. So it’s OK for Australians or people from Singapore to buy a house in New Zealand, but it’s not OK for somebody from the UK, Scotland, or America. Tell me how that’s fair. When we go and negotiate free-trade agreements, particularly post-Brexit, with the EU or Great Britain, I guarantee this issue will be brought up as part of the negotiations from their side. All we’ve said is “Oh, we haven’t quite thought that far through. We’re just going to treat Australians like this and Singaporeans—we got a little bit of the deal a few years ago.” Our mother country—they have expectations, and I’m a proud supporter of the Commonwealth, but I think this will make a big issue for us in the United Kingdom.

In the area of housing, I don’t think this will make one iota of difference. I now know in Auckland—and I talked to a property developer the other day, who had sold all but six of his apartments and was in the profit phase. All the apartment funding up to that point had largely been done by foreign investors. Since this legislation came in, now he cannot sell to the last six investors, because people have been scared off. He actually can’t even get banking finance now for the last six properties, and he’s in a little bit of financial stress.

So for all the reasons that this was done, I think it’s not going to achieve its outcome. As the last speaker on this side of the House, I think we’re going to look back at this legislation in five years and see a number of things. (1), it’s made no difference whatsoever to the price of houses in New Zealand. (2), there will be unintended investment decisions made by foreign purchasers around forestry in particular, where it will now all of a sudden be very appealing for them to go and buy properties—good farmland in my view—and plant it in pine trees, because that’s the only way they can make a foreign investment in New Zealand without going through the Overseas Investment Office.

I also think something that hasn’t been thought-out is that there is lots of land in New Zealand that’s under 5 hectares that is still incredibly productive. Members opposite might know that the average size of a kiwifruit orchard is about 3.6 hectares—well under. So what we’re saying is “You’re welcome to New Zealand. Buy our kiwifruit orchards. Buy our farmland and put in forestry—no overseas investment approval.”

So what I am really surprised about and what I’m saddened about, as a strong supporter of foreign investment, is that we are saying to the world, “We are closed for business. By the way, we want your money. Please give us your money. We don’t have enough of our own to fund these things. We’ll have your money, but you can’t buy a house here.” I think that is having and will continue to have a chilling effect on the New Zealand economy, and that’s why I think this bill is a travesty for the investment decisions in New Zealand. Thank you very much.

Tēnā koe e Te Mana Whakawā. What a privilege it is to speak on this third and final reading of the Overseas Investment Amendment Bill. This is the day that this Government fulfils yet another one of its promises, and I have only two things to say. First of all, we welcome all people who live in New Zealand to buy a house here. Any New Zealand resident can buy a house here. No matter where they come from, we welcome them all with open arms.

There’s just one other thing to say: we welcome any overseas investment which benefits New Zealand. Look at the bill—the benefit to New Zealand test is there in black and white. Anyone who comes to New Zealand with their money can buy our land if there’s a benefit to New Zealand. New Zealand is here for New Zealanders. This bill is for New Zealanders—another promise fulfilled by this Government. We’re going to keep doing it. I commend this bill to the House.