Overseas Investment (Urgent Measures) Amendment Bill

on behalf of the Minister for Trade and Export Growth: Talofa lau afioga I le Fofoga Fetalai—which is simply to acknowledge you, Madam Speaker. Actually, the word “Fofoga Fetalai” is gender neutral. It actually refers to the honourable orator and speaker on behalf of all those who sit in this House.

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

The Minister would like to acknowledge the members of the Finance and Expenditure Committee for the way that they dealt expeditiously with this bill. Even though it was a tight time frame, the bill is better off, thanks to their dedication and effort. I also want to acknowledge the 17 submitters who took time out of their busy lives to participate in the democratic process. Individuals, law firms, and businesses all made a significant beneficial contribution, which helped make this bill a much better bill than we originally started off with. Despite the tight time frames, it did not prohibit us from producing a bill which achieves its purpose of ensuring that we manage the risk posed by foreign investments effectively while also reducing the regulatory burdens of the current screening process so that we can continue to attract sustainable investment in our country.

The bill contains measures which the Government considers need to be put in place urgently to mitigate the economic effects of COVID-19 to help us restore, recover, and rebuild New Zealand’s economy. This is one of two bills that have been put before Parliament as a package. The other one that has been referred to select committee is the Overseas Investment Amendment Bill (No 3). This contains the remainder of the provisions from the phase two reform of the Overseas Investment Act. It is still the intention of the Minister that the amendments made through this urgent bill be subject to further parliamentary scrutiny through the process of Parliament’s consideration of the No. 3 bill.

The Minister would like this House to consider the COVID-19 pandemic context, where we have seen globally that the pandemic and related economic downturn have changed the foreign investment risk environment. Falling firm values are increasing opportunities for overseas investors to acquire ordinarily productive firms or strategically important assets at fire-sale prices without any Government scrutiny. This could result in risks to New Zealand’s national security or an offshore transfer of knowledge and jobs. That sale at a reduced value may not reflect the importance of the business to our economy, and interim controls are needed to protect our national assets. Some of those businesses that could be snapped up may be best kept in New Zealand ownership to help our recovery.

The measures increase oversight and foreign investments in New Zealand. At this time of unprecedented crisis, the Government needs the ability to rapidly respond to foreign investment risks and to be able to protect New Zealand’s essential interests. Therefore, this bill introduces a new emergency notification regime which will require overseas persons to notify the Government of certain investments with a controlling stake in an existing business or business assets that would not ordinarily require consent.

Then there’s a number of other powers that have been introduced here—new powers to effectively manage the risk of overseas investment. The Government does not currently have sufficient ability to block transactions that are contrary to our national security, the functioning of our democracy, or other essential interests. So we are introducing a national interest test that can be applied to transactions already requiring consent in the existing regime. This tool will be used rarely and only where the Minister responsible for the Act considers it necessary.

Can I then go to new exemptions following the select committee process. Again, through that select committee process, we were able to receive the benefit of their expertise and experience, and there’s a number of items that we’ve listed in the report which have enabled that bill to be a far better bill than what we started off with. And, again, the Minister acknowledges all those who have contributed. We’re also cutting red tape to support sustainable investment in our country.

Finally, this bill supports New Zealand’s interests at a critical time by increasing our oversight of foreign investment and cutting the red tape needed to ensure the Act supports rather than hinders our recovery. New Zealand continues to be open for business. Productive foreign investment has been, and will continue to be, important for our economic wellbeing, both in this time of recovery and beyond.

This bill and the No. 3 bill will achieve the balance between welcoming investment and the need for safeguards. They will set us up to make the most of the coming decades of economic change and transformation. I’d like to, once again, on behalf of the Minister, thank members of the select committee, the members of the public who contributed to this, as well as officials for their responsiveness and engagement on this time-critical issue. I commend this bill to the House.

Thank you, Mr Speaker. It’s a pleasure to rise to talk on the Overseas Investment (Urgent Measures) Amendment Bill. I think the Minister for Trade and Export Growth has given a reasonable context for the introduction of this bill. When it was first introduced, National agreed with the Government that it is important that we allow appropriate foreign investment into New Zealand, but the other aspect to it, and it’s a countervailing perspective, is that it is absolutely crucial at this particular point in time, where we’re facing an economic crisis, that we do not starve New Zealand businesses of much-needed capital, so that they can actually fund their way out of their current predicaments, from an economic perspective, and regrow and continue to underpin the New Zealand economy.

We have seen a number of companies raising capital in the current context. The most significant, perhaps, is the Auckland Airport, where it was lucky, because it was a listed entity, that it could go out and raise a significant amount of capital relatively quickly through the public offer process of being a listed company. So this bill is about how foreigners can continue to invest in New Zealand, and that is a very, very crucial aspect. Really, this is an issue around to what degree we should be allowing that to occur. The issue with this—and the Minister said it in his first speech when the bill was introduced. I think it was Friday last week, and here we are on a Thursday. When the Minister introduced the bill, he said he was dealing with the issue of making sure that New Zealand businesses were not sold at fire-sale prices because they were financially stressed. The whole concept was that we were going to have these foreigners flying into New Zealand, swooping in on vulnerable New Zealand businesses, paying a cheap amount, and, obviously, seeing them transferred into international ownership.

To the extent that that occurs, we agree with that premise entirely. However, this bill—and we noted it at the time—was a very comprehensive regime brought in under urgency, and the first point is the issue of urgency. But it allows the Minister, and it provides for one Minister, to have the right to look at every financial transaction involving a foreign party to come through his or her office—in this case, it would be a “him”—to review every transaction that occurs in New Zealand. We do not accept that premise, and that is why we will be opposing this bill, because we do not believe it strikes the right balance.

We could talk about some of the changes. I want to acknowledge all the submitters—and, just to give the context again, this bill was introduced via urgency on Friday afternoon. We had submitters who had to present and submit their submissions by Monday at 4 p.m.; we then heard from them on the Tuesday; we’ve been through a couple of cycles through the Finance and Expenditure Committee; and here we are trying to pass this bill through. This is the type of bill that you cannot afford to have unintended consequences with, and it does have the potential to have a material impact on our trading nations and our people or companies that operate amongst those that have free-trade agreements. That is the important consideration around this bill, and that is why we are particularly perturbed that it’s been rushed through, and without necessary scrutiny. We were very grateful for the people who turned up, but this should have been subject to a lot more scrutiny and consideration.

I know that our view was broadly supported by most of the select committee submitters. Virtually all of them highlighted the absolute, pressing time frame that had been imposed on them by the Government to respond to this, and some submitters also shared our concern around the inconsistency between the Overseas Investment (Urgent Measures) Amendment Bill—this one—and the Overseas Investment Amendment Bill (No 3) that the Minister referred to before. Again, this is where we can’t get it wrong, and the whole premise of this is: let’s rush this through. Let’s ram it through in a matter of, basically, five working days—ram it through. If we muck it up, guess what? We’ll fix it up a bit later on, in the next six months or so—probably after the election, by all accounts, I would think, given that we’re looking at a 19 September election. So, don’t worry, we can go through six months! In the meantime, the Minister has all the right to review every single transaction, and the potential reputation to New Zealand as an attractive place for foreign investment—because, after all, we do need good foreign investment in New Zealand; we’ve lived on it. That is the issue about this bill, and that is why we are opposing it.

The other thing was the issue around the national interest test—the definition around that and the call in to powers. I’m going to leave my colleagues to talk further about those things, but we just need to get this balance right between allowing New Zealand businesses who may not be financially constrained but actually want to get a foreign investor to be able to go and get that investment to enable them to grow their business, employ more New Zealanders, without now being fettered with additional regulatory oversight and ministerial approval when they want to just legitimately get on with their business. This bill now imposes a significant barrier—legislative barrier—to enabling those people to go and do that sort of stuff. The big issue is around the thresholds—and I know my colleague the Hon Paul Goldsmith will be talking about it—but this issue around there being no limits on the transactions to be reviewed means that every single transaction must be reviewed and that is wrong. That is wrong, because that is a barrier to allowing people to get on with their legitimate business.

So we will oppose this bill. We believe it’s been done in haste. We don’t like the idea of waiting six months and creating uncertainty, and we don’t like the idea of potentially damaging New Zealand’s reputation as a good place to do business, because that’s something that’s been created over many, many years of good government. I leave it to the rest of my colleagues to finish off the argument, but this bill needs to be reflected upon much more carefully than it has been.

Thank you, Mr Speaker. Look, I just want to turn away—Mr Bayly was a very useful member of the Finance and Expenditure Committee in talking about how we can streamline some of the processes. I just want to point out that not only do we have a notification process but this bill also cuts a whole lot of red tape in areas that really needed some attention. Minister Parker has done a great job in ensuring that land which isn’t sensitive, even though it’s next to a reserve, doesn’t need consents; that majority-owned New Zealand companies, including the trusts that Mr Bayly was so usefully engaged with at select committee, don’t need to get consents; and that small transactions that don’t grant meaningful control won’t need consents. So here we are making it easier to invest in New Zealand. High-quality, good investment in New Zealand—that’s what it’s all about. That’s one of the many reasons this bill is urgent. I am happy to commend it to the House.

Thank you, Mr Speaker. Somewhat surprising—somewhat surprising—that I should be promoted to this far up the speaking list, but I need to take a call on the Overseas Investment (Urgent Matters) Amendment Bill. It’s the urgent part of a two-part process, which I guess is designed to manage overseas investment in New Zealand because of, I guess, what’s seen as an emergency and the potential for New Zealand businesses to be worth much less than they may otherwise have been, and, consequently, for overseas investors to pick up a few snips in New Zealand that we’re not particularly keen on. That part of the bill I can understand, and I do think that we need to have some controls over some of these things. But we’ve got to remember, in the course of putting these controls in place, that we’re really interfering, to some extent, in a property right or a right of people to trade their businesses that they’ve grown and built as they see fit. I think that is a little challenging. I do see the reasons, as I explained a minute ago, for the bill, but I do think that the process we put this through is risky and it creates some risk, which I will go into as well, before I get on to talk about some things I want to talk about with respect to the submitters.

I think that one of the things that always worries me about scrutiny of business is the potential for, I suppose, what you might nicely term leakage. In other words, unless the system is extremely secure, there’s potential for, I suppose, leakage of intellectual property and things like that. In other words, people can obtain information about businesses that they shouldn’t necessarily be able to do. The scrutiny of this process is undertaken across a number of Government departments, and the more people you have involved in the scrutiny of these things the less secure they become. That was one of the things that worried me about the discussions we had—the very brief discussions we had—in the course of the select committee process on this bill. I think that that’s an issue that I think will be of concern to many as this process is undertaken. There’s no telling, of course, how often this process will be used, and it is a bill that’s going to be reviewed, so its term may not last for long. It may not be required to intervene that often.

The other thing that concerns me significantly about this bill is it deals with all businesses—it doesn’t matter whether they’re worth a dollar or a billion dollars. So everybody goes through this process. Now, as a previous speaker said, it does simplify some of the processes that are required to get to this point. None the less, it’s going to be costly. These things always cost money no matter how easy it’s surmised they might be.

One of the things that always intrigues me about bills is why people submit. One of the interesting things about this bill was that four legal firms submitted on it. You can only surmise that they’ve submitted on it with a great deal of interest. In fact, their submissions were very useful, but the really interesting thing about them is that they stand to get a lot of work out of this, and so I imagine they would be very interested in the process that this bill goes through to get it to the other side, as it progresses through the House.

So we didn’t have a lot of submitters, but we did, as I said, have four law firms, and we had a couple of other property companies who had specific interests in—well, not interests, they had specific reasons for submitting. Their submissions, as Andrew Bayly explained a minute ago, were constructive as well. The other thing that intrigued me about the submissions was the submission of the New Zealand Initiative. It pointed out some of the issues that I touched on a little earlier, where I mentioned the nervousness that I had about the fact that this bill has the potential to delve deeply into, effectively, private businesses. Now, clearly, there are some businesses in New Zealand that have significant national interest, and the people and organisations that have got those businesses going probably understand this situation and understand how important they are to New Zealand. So there is a need for that to be considered in the course of the bill.

I just want to mention a couple of other things that have always interested me a bit about business in New Zealand. Being from the Manawatū, or Rangitīkei, we’ve had a number of historic businesses in the Rangitīkei that have disappeared out of the country, basically. One of the most notable recent ones being Allflex, which is the international animal identification company bought by a French company. It has an office still in Palmerston North, but pretty much disappeared overseas. I’m not saying that it might have been a snip when it was bought, or bought cheaply, but, none the less, that’s the type of risk this bill is trying to overcome.

The other business of significant note in Palmerston North that was taken—there’d be a number of them, actually—was a company called Glaxo, which was the very first, I guess, pharmaceutical company based on the milk industry. Of course, that company is still going all round the world under a different name now. That emphasises the reasons why this bill is being brought to the House, but it doesn’t overcome—or, just because there’s good reason for bringing it to the House, it doesn’t mean that we’ve effectively solved the problem and the risks that this bill poses, and those risks, as I’ve said, are particularly a cost. The fact that we need to encourage overseas investment in New Zealand—because, frankly, we don’t have enough capital in this country to make us go round, and we’re going to find that out very shortly with the $50 billion - odd worth of bills we’re building up for future generations right now. So we always have a need for foreign investment in New Zealand just simply because we don’t have enough cash to go round.

This bill doesn’t stop it. In fact, I think it will to some extent encourage foreign investment because it will make some processes easier, but, none the less, it makes a lot of them more difficult and also, I think, puts people off going through these processes, because we’ve seen with some of our overseas investment rules in the last couple of years, where, effectively, it has frightened foreign investment away from New Zealand. Now, that’s a political decision that, rightly or wrongly, has been made.

I won’t go on for any longer—or not much longer—but I do think that, as I said earlier, there are good reasons and others for this bill. We can’t support it as a party for the reasons that I’ve outlined and certainly the reasons that Mr Bayly outlined earlier, and I’m sure the speakers that follow me will pick up on many of the points that I’ve left out of it. So that’s my lot. Thank you.

I rise to offer the strongest possible support that New Zealand First could give to this Overseas Investment (Urgent Measures) Amendment Bill. This is core New Zealand First principle—New Zealand ownership and the importance of that. As many people know, I did have a background in the National Party. The one major philosophical difference that I do have is on this issue. The National Party would sell their grandmother for a 10c premium rather than look after the long-term interests of the New Zealand economy.

This is a long game. We need to own our value chains and our supply chains. The one example that I can give, the Silver Fern Farms example—it’s the thing that got me into politics: the exasperation of seeing the National Government stand aside, and seeing our biggest meat exporter, a $2 billion - plus-a-year company, fall into the hands of a foreign Government. It was appalling—and just the absolute lack of interest in that and the lack of a long-term strategic nous. When we rebuild this economy, and, particularly, looking to our primary sector now as never before, those are the companies that we look to, and some of those companies are now in foreign control.

In the specific example of Silver Fern Farms, what would be stopping them now directing their board to say, “We’re in a COVID-19 global pandemic. We need the food. You are sending the food to China.”, instead of the board having the discretion to market around the world? That is what happens when you lose control. It hasn’t thus far, in that company’s defence, but that is what we’re opening ourselves up for.

It’s very short-sighted to send those incredibly important supply chains into foreign ownership, and we are completely vulnerable to that now. That is why we absolutely support Minister Parker dropping the $1 threshold, in terms of what needs to be run over the ruler of the national interest test. There will be some distressed sales out of this, and it is important that the Government has some levers. That’s why the Australian coalition Government, that the Opposition would see themselves aligned for, has moved in front of us in doing this. They see the wisdom in that. They’ve seen many of their key industries go into foreign ownership. They have moved, and we are too, and not before time.

I do take into account that it has been a process that has been truncated, but because of these extraordinary circumstances. It is part of a wider reform that Minister Parker has been working on for some time and is due to come back before the House in a more comprehensive manner very shortly. So it is an interim measure, but it is an important and imperative measure at this time that we do not lose control of our key industries.

I’ll give you an example: the forestry industry, on which Minister Jones is now looking to bring legislation before the House. The reason he’s having to do that is because 80 percent of the forests are now foreign owned. They’re heading off out of that port and ports around New Zealand in raw form. We have no levers, actually, to be able to add value to that raw material within New Zealand for the benefit of the New Zealand economy, because we have lost total control of that industry. We cannot allow ourselves to go down to that path with other key industries. Imagine if Fonterra got taken over—80 percent of our whole dairy industry got taken over by foreign interests. We would be, as John Key said, peasants in our own country, having given up the control of the means to fund our own future.

So New Zealand First is absolutely behind this bill and will support it to the House. Thank you.

Thank you, Mr Speaker. Look, I always say a short speech is a good speech, and a good speech is generally a short speech, but a bill that has no real scrutiny is hardly likely to be a good bill. Having been in Government and having, actually, occasionally had to bring through legislation very quickly to deal with emergencies, they almost invariably—it turned out, as it will with this bill—turn out that things are not quite what people thought when they voted for it.

This is a bill which, having just heard the New Zealand First member Mr Patterson speak, is actually all about New Zealand First’s worry about these foreigners who are coming in to steal our businesses. Well, I don’t know. I’ve had businesses over the years, had my own homes and things—they’re not your homes. They don’t belong to people here; they belong to whoever owns them. I think one of the issues for us is that we are a country that is in desperate need of capital and capital injection into businesses because we are now looking at, according to the ANZ chief economist, around 10 percent unemployment by September, and I heard recent reports that say up to 15 percent unemployment by the end of the year. We are a country in dire need of capital, and that capital needs to not just be borrowings but actually needs to be injected into businesses, because we are a country that exists on exports.

It’s all very well hearing parties in Parliament moan on about log exports—well, I haven’t noticed them doing anything about it in the last three years. What I’ve seen, actually, is a lot more logs seem to be moving over wharfs and moving off to various other countries where labour is cheaper and where there is a market for the product, because in New Zealand, as we all know, we are lucky if we have 5 million people, and we are a country, as I said, without that sort of population to be a major market for our own products. We export most of what we produce—whether it’s agricultural or other exports, and certainly in our manufacturing. We do have, actually, quite a good manufacturing sector, which, despite all the years of being told that they didn’t exist, actually were happily existing away and are in fact some of the people who are in need of capital now.

It’s all very well for a Government to turn around and say, “Well, we’re going to make the banks lend more money to you or we’re going to ask them to lend more money to you.” Some people and some businesses simply will not be able to borrow that, because the asset is no longer worth what it was that they would have used for security, and they simply cannot repay that money within any reasonable period of time.

This is a bill which is very much—and the member who’s resumed his seat has mentioned this—essentially, copying the Australian coalition Government’s bill. Australia, of course, is in quite a different situation from New Zealand. Although it is a major exporting country, it does actually have around 26 million people. It is an enormous exporter of resources, while New Zealand has happily, in the last three years, nobbled our resources industries and the products that we were selling, and still are to some extent, but not to where we should be.

This bill is very much a knee-jerk reaction. There has been no evidence provided to the House of these apparent foreigners coming in and stealing businesses, buying businesses, or in fire sales. What we have is an enormous new industry that is now being built up, and that is of liquidators. So hearing some of the arguments from the other side of the House on the Government side, the new industry will be liquidators of businesses that can no longer get capital, access it, and can’t pay their bills. They’ve lost their markets in many cases, they have to try and get them back, and they have to try and do it by Zoom or some other electronic means, because they certainly can’t get on a plane and go and build relationships and actually get those markets back.

People on the other side of the House who might think it terribly funny that businesses are going broke—these are businesses that employ people. So there is a reason that we have the major economists predicting that we will have double-digit unemployment only within the next few months, and that reason is because these businesses are going to be put in a situation where the owners shut up shop. If they can cut some of their losses, they can probably preserve their homes and they can probably preserve something of their own assets.

So I actually think it’s really important that we have some restraints around overseas investment, but the restraints need to be reasonable. Bringing the level of investment down to zero or $1 for any investment is simply ridiculous. This makes New Zealand not on a par with Australia, because Australia, even though it has very similar legislation, is a far more inviting market for people in which to put their capital than New Zealand, with our very small population and our tremendous love of regulation, which puts, actually, all these bulwarks against any investment.

For years, National Governments and the previous Labour Government of Helen Clark and Michael Cullen worked so hard to bring in foreign investment, and to see now a Government that is intent on demonising people whose problem is that they weren’t born here is, actually, a real shock to see. To see that happen when it comes to people who are not born here and, by the way, happen to have some money to invest—that does not make them bad people, and it doesn’t make their investment a bad thing. This is very much a sop to New Zealand First, and I’m sure New Zealand First will chalk it up as a win. The problem for them is—and Mr Patterson is confirming that’s exactly what it is and they will chalk it up as a win.

Well, this bill will no doubt pass because the Greens had quite some time ago rolled over and said, “Tickle my tummy.” to New Zealand First. They’ve given up all their core values on these issues, which is a real shame, because they have until recently been a very principled party, even though they’re often wrong. We now have a situation where we will find it harder in New Zealand to even get anybody to be in business. So when we’re looking at the ramifications for New Zealand businesses, just down in Clevedon the other day on Monday I saw in my electorate the fact that half of the shops were now shut. That is the awful, awful consequence for New Zealanders. So half the shops in an area of my electorate which is a very well-to-do area where there’s plenty of money, normally, to spend, people are not spending. They can’t spend because the businesses are shut. They’re shut because they can’t get the people in. This is an absolute tragedy. It’s a tragedy for all the people who live there. It’s a tragedy for the people who have borrowed against their homes to set up their business to buy the stock in. It is an absolute tragedy, and it is coming at us as a country like a tsunami.

A few weeks before the COVID-19 responses were announced by the Prime Minister, she suddenly said, “Oh, we’re going to do something serious now and lock down.”—a few weeks before. We had Grant Robertson standing in this Parliament saying that the Budget would not be unduly affected by the COVID-19—there’d be a few tweaks. No, it was an appalling misread of the situation. It’s all very well for the people on the other side to say, “Oh well, they’ve got jobs. They don’t care. They’re all right.” Actually, the people who pay the bills, our taxpayers who fund everything that Governments do, are the ones who won’t have the money to pay. They’re the ones who will not buy the goods. That, therefore, means there’s no GST coming in to the level that it was. These are businesses and these are people.

I look at the other side and I see so few who have ever been in their own business. They have no idea the damage that they’re doing. They sit around saying, “Oh, it’s all these foreigners who are going to come in and whip up our land and they’re going to do all these things.” Actually, we would be fortunate, if we look at the opportunities in New Zealand—what in? Tourism. Are they going to pick that one up? No international tourism for about a year at least—two years maybe. We are a country who needs capital, and we need restrictions on investments, but they need to be sensible. A dollar restriction or zero is absolute nonsense, and this Government should know better than that. Instead, what they’re doing is trying to copy another Government of a country with entirely different issues than we have.

Tēnā koe, Mr Speaker. I’m very pleased to speak in support of the Overseas Investment (Urgent Measures) Amendment Bill, and recognise the comments by the Opposition. It is disappointing that they’re not supporting the bill, particularly given the changes in the bill, which will streamline the process for overseas investors and support the role that productive overseas investment plays in our economy.

The previous speaker, the Hon Judith Collins, blamed this bill for the economic distress that is occurring. There is a major initiative in this bill, through the temporary notification regime, to ensure that we don’t have key assets which have dropped in value because of COVID being alienated overseas. At the moment, there is a $100 million threshold before any business assets and their sales have to be examined by the Overseas Investment Office if there is an overseas investor.

In Australia, in Canada, and in other European countries, they are tightening their scrutiny, and that’s what the emergency power does here. If an overseas investor wants to increase their stake in a company in New Zealand to beyond 50 percent or wants to buy the first 25 percent, then that has to be notified to the Overseas Investment Office. What the previous speaker ignored is the process that Minister Parker outlined at the first reading. There will be a triage process that the Overseas Investment Office goes through and determines whether any investments need to be elevated to the Minister of Finance to consider. So it won’t be all investments that go through that; it will be a process of notification, triage, and determine whether there are significant issues here that the Minister of Finance can make a decision. It gives us the power to put conditions on any sale to an overseas person or, if necessary, if it’s in the national interest, to potentially block that sale.

So the National Party may not be concerned with iconic New Zealand businesses being snapped up at fire-sale prices by overseas investors, but this Government is. Yes, this bill has been developed quickly because we are responding to COVID and because we are agile. I’d like to thank the 18 individuals and organisations who made submissions to the Finance and Expenditure Committee. I would like to also thank all of the officials in Treasury, in the Overseas Investment Office, in Land Information New Zealand, and the Parliamentary Counsel Office, who have worked hard, to tight time lines, along with those submitters to improve this bill.

One of the key things that the bill also does, when the effects of the COVID pandemic are over, is it implements a national interest test, because under the current regime we don’t have in our existing Overseas Investment Act an ability for the Minister of Finance to call in transactions which affect our national security, our democracy, or key strategic infrastructure like airports, ports, and bigger irrigation companies. What this bill does is it introduces a national interest test, which enables big transactions like that rarely to be reviewed by the Minister of Finance and to have conditions imposed. So it is all about this Government ensuring that we get high quality investment in Aotearoa New Zealand and that we protect our national interests. So I am surprised that the Opposition doesn’t welcome that, but it apparently doesn’t care what sort of investment we get in New Zealand, whether it’s quality investment or not.

It’s also surprising that the Opposition is not supporting the bill, because it makes some very sensible changes to improve the process by which applications are considered. At the moment, there is this whole issue of good character. Overseas investors have to be of good character, but that often involves the Overseas Investment Office undertaking quite a long and complicated assessment of the good character of the individuals who have control of the potential investor. That can often involve internet assessments and some insubstantial pieces of material that come into play that have to be considered. What this does, with the changes here, is it enables the Overseas Investment Office and Ministers to consider the corporate character, not just the character of the individuals but of the actual corporate bodies. It will be ensuring that any serious matters that are before a court, for example, or if there have been offences where the company has been convicted—those can now all be considered because of the emphasis on the character of the corporation and not just the individual. So that is a substantive improvement.

It will also improve the timeliness of the processing of applications, but the key thing this bill does is this new temporary notification regime to protect Aotearoa New Zealand’s national interest and to implement a national interest test, which will allow the Minister of Finance to call in applications if required. As Minister Parker has said, it will be used rarely.

And final point: this bill is going through under urgency. Yes, that has meant that a lot of work has been done at speed, but the Overseas Investment (Urgent Measures) Amendment Bill (No 3) will enable any defects in this bill to be corrected. The Government has responded to some of the issues which submitters raised, to ensure that there’s no overreach in the temporary notification powers by ensuring that within 45 days of the changes commencing, the Minister of Finance must start an assessment of the classes of transactions that are subject to the emergency notification review. That will give, I think, investors the confidence that we’re not overreaching here. Then there is also a rolling 90-day review for the operation of these powers. So I think those are safeguards. That 45-day assessment has been put in in response to submissions, so I thank the Finance and Expenditure Committee for their work and thank officials for their work. I commend the bill to the House. Thank you.

Thank you, Mr Speaker—

💬 Hon Willie Jackson: Kia ora. Kia ora. Kia ora.

—and thank you, Willie Jackson. It was good to hear—we had some comments on this bill on overseas investments from the New Zealand First member Mark Patterson. He talked about core New Zealand First principles, which, of course, is an oxymoron. I’m reminded of Groucho Marx: “I’ve got my principles, but if you don’t like them, I’ve got some others.” That seems to be the approach of New Zealand First when it comes to principles.

However, having said all that, what we’re dealing with here is the Overseas Investment (Urgent Measures) Amendment Bill, which has been rushed through Parliament under urgency—a major piece of economic legislation of significant economic consequences being rushed through this House, which seems to be the hallmark of this Government at the moment. We’ve had two or three days’ select committee consideration. A few people have been able to submit on it and make a few comments, but there’s by no means, in any way, shape, or form, any detailed analysis being done. Treasury has thrown a few things together but hasn’t really dealt in any way substantially with the costs and benefits of this decision.

So what are we doing, in short? Well, there’s three basic things. One is introducing a national interest test to the screening of overseas investment. Now, in so far as that relates to things that may have a dual military or information technology component which may affect national security, we agree with that broadly—we’ve got no sort of problem with that. But how that is defined is actually quite important. Many of the submitters, and we agree, made the point that the definition of that was pretty loose. So that’s a sort of a broad intent that we accept, but the detail being rushed through Parliament is bound to lead to disaster.

Now, why is that broadly important? Because investment is the core bedrock of our economic success. Everybody understands that we’re in a time of real economic challenge and crisis for the country right now. Massive debt is growing out. We’ve just heard statistics this morning saying that we’d lost 37,000 jobs in April, more than a thousand jobs a day. So, you know, these are really worrying times for New Zealanders.

Well, how do you get back on track as an economy and as a country—and as families and communities—in terms of having strong jobs and strong opportunities for New Zealanders? How do you get back on track? Well, the biggest thing that gets you back on track is investment—private sector investment: individuals, small businesses, and large businesses deciding and having the confidence to invest their money, to grow their business, hire a new person, take a new chance, buy a new piece of plant or machinery, and expand their business in some way. That is how you get jobs back. That is the core driver of economic prosperity.

Now, if we rely entirely on our domestic savings, that’s fine. We can do that, but we’ll grow slowly because there’s a limited pile of domestic savings. If we want to grow faster, if we want to get those jobs back faster, well, then we need to import some capital as well, like we have for the entire history of this country. Anybody that doesn’t understand that doesn’t have any idea of how this economy has been built, how this country has been built. It has been built on both domestic savings and drawing in capital from around the world to create jobs and opportunities for New Zealanders. Now, if you don’t understand that, you don’t have a clue of how the economy works.

This bill, in its extremity, brings in a filtering regime, a notification regime, for every single dollar, potentially, that comes in to help New Zealand businesses grow, and that is our point of contention with this bill. We can understand the introduction of a national interest test in so far as it applies to military and national security—yes—and we can also understand the broad concern that has been expressed in many countries around the details of the COVID crisis, where, particularly publicly listed companies, the value of those companies has dropped substantially and can be cheaply purchased on open markets. There is a legitimate concern around entities from overseas countries, particularly State-owned entities with opaque ownership structures, coming in, swooping in, and buying those companies cheaply. I can understand that concern, and the National Party would support measures to respond to that.

But, surely, any sensible person would say, “We would have a concern about major entities—a $50 million enterprise or a $100 million enterprise.” Yes, you could have a regime that looked at that and ran a filter through those sorts of transactions for this emergency period, but what we’ve got here is everything, right down to so and so having a small restaurant in Hastings or Eketāhuna, who’s really struggling, has run out of working capital, and is in a desperate situation. He’s got a sister-in-law living overseas, an overseas person, who’s happy to tip some money in and help get that business through this crisis. Well, under this legislation, if it was only $10,000 to take a 25 percent ownership in that little tiny small business in order to get it through this situation and survive and keep employing people, well, it has to go through this notification process. The Minister says, “Oh, it’s only 10 days, or maybe 40 days if we have some issues.” You’ve got to put in all these forms. Any forms like that and you’ve probably got to talk to a lawyer or an accountant—it’s dollars; it’s thousands of dollars. It’s delay. It’s uncertainty. It’s sand in the gears of investment that will drive this country back to progress and prosperity. We don’t support it. We do not support it. It is an overreach and a ridiculously cumbersome imposition of regulation and cost and difficulty that will block the foreign investment that we need to grow this country, and so that is why it is muddled and confused and is not a piece of legislation we support.

The third element of it is giving the Minister all sorts of wide-ranging powers that we don’t necessarily agree with either. So the point is that there are elements and ideas and concerns recognised by this legislation that we understand and are sympathetic to. What we cannot support is this piece of legislation, with no exemptions, impacting every single potential piece of investment coming into every single small business in this country and creating difficulties and blocking the flow of investment that is critical to turning around the economic prosperity of this country. On that basis, we do not support it, because it will cost jobs, and, right here, right now at this time of New Zealand’s history, there is nothing more important than saving jobs and creating an environment where they can be recreated. This piece of legislation, notwithstanding all the talk from the Minister of Finance about how he cares about jobs—and we hear the Prime Minister talking about jobs day in, day out—will mean that we will lose more jobs and we will take longer to build—

💬 Hon Member: Scaremongering!

It’s true—it’s true. We will take longer for the private sector to have access to the capital that they need to grow new jobs. There’s no magic about where you get jobs from. It comes from investment. You can talk, you can have all the programmes in the world, which take a billion dollars of taxpayers’ money to create jobs killing possums, and things like that. That’s fine, but they are not sustainable jobs that are created and sustained by the realities of the global economy in which we live. We either, as a country, are based on an economy that is about creating goods and services that the rest of the world wants to buy or we aren’t. So this legislation, which makes it more difficult for businesses to get access to the capital that they need to grow and hire new people and support jobs and opportunities for New Zealanders, is going to make it more difficult, and, on that basis, we do not support it. Thank you, Mr Speaker.

This is a split call. I call Priyanca Radhakrishnan—five minutes.

Thank you, Mr Speaker. Now, this is a bill that allows the Government to effectively manage the risks of foreign investment while reducing the regulatory burden of the screening process to support the role of productive foreign investment to aid our recovery here in New Zealand. So it’s really sad, it’s really disappointing, to see the scaremongering from the Opposition. It’s actually about supporting high-quality investment and not blocking investments, per se, as they have suggested. It’s a bill that will be helpful to us in New Zealand, and I commend it to the House.

It’s my pleasure to take a relatively short call on this, because I think our side of the debate has been well articulated by previous speakers, including the Hon Paul Goldsmith. It’s very easy to sit in this House and pass laws about things that New Zealanders will be concerned about, but it’s also very easy to have massive overreach. Our reason for opposing this bill, largely, is because of the overreach. I don’t believe anybody in this House or any New Zealanders would actually want large strategic assets to be sold at discounted prices to foreign owners post-COVID.

💬 Mark Patterson: Silver Fern Farms—waved it through; didn’t care.

Since COVID, I’m talking about, Mr Patterson. So we accept that—we accept that.

However, this law allows any investment to be screened—any investment. So, as Mr Goldsmith just said, a small business in Hastings—and I’ve seen lots of them in the last couple of weeks really struggling, some of them shut. If they had a distant relative somewhere in another part of the world who wanted to put $5,000 into a $20,000 company, they’re not allowed to—well, they’re allowed to, but they’ve got to go through a process. This is all about scale. If we’re talking about $10 billion, $1 million, or $50 million, I can understand the rationale, but we have taken this to the extreme.

As part of that, we are going to expose all those small businesses that may need a little bit of help to a whole lot of compliance costs—regulations, getting lawyers involved, accountants, going through a process. Yes, some of the red tape has been taken out, but it is actually a disincentive for investment. I want members of this House to consider the environment of that small business. They have very few customers, their family’s working in it, and they can’t get any more working capital. Their lifeline might be this. If you shut off this lifeline, what, effectively, happens? The business goes broke. The assets are sold in a distressed way—to a New Zealander, probably, because no foreigners can do it. The value to that whole family diminishes, and they are paralysed by that—an awful situation.

So what this bill does is it says that in real time we’re going to let New Zealand businesses crumble and fail, New Zealand businesses and families lose equity, because a relative in another part of the world can’t tip a bit of money in in a compassionate way to help them through this crisis. We think, on this side of the House, that the goal at the upper level and the significance is important, but, at the scale that this is being done, it’s not helpful at all.

Equally, I come back to what Mr McKelvie says: there is leakage in these processes. I don’t care how good they are. You are sharing information with a whole lot of people—private information about small businesses and companies—through a Government department, through a whole series of people. The risk of intellectual property leakage and things like that is significant. On balance, our side of the House doesn’t believe that risk is worth it, nor the benefits are worth it, and it’s a major intrusion on the ability of small businesses to get a little bit of working capital.

This is a split call. I call David Seymour—five minutes.

Well, thank you, Mr Speaker. I rise on behalf of ACT in opposition to this Overseas Investment (Urgent Measures) Amendment Bill. I just begin, as I have on previous readings of this and other similar bills, with a simple statement of philosophy that the history of this country is a history of foreign investment. The facts are there. Kupe showed up with a waka hourua and a couple of kunekune pigs, and we’ve never looked back; we’ve been importing foreign capital ever since. The reasons for that are very simple. Again, productivity—that means better and more interesting jobs and better futures for our people—depend on capital, number one. Number two, there’s a lot more capital in the other 99.8 percent of the global economy than there is in the 0.2 percent that’s here in New Zealand. Any sane person seeing those basic facts and that history would say the future of New Zealand, just as its past, depends on free flows of capital and investment from overseas.

I say to the xenophobes and those that want to put up walls and close us off: if you don’t like other people, foreign investment is for you, because, see, immigration is when people from other countries come and live in New Zealand. Now, if you’re a xenophobe and you don’t like that, then foreign investment is where all those people you don’t like stay home and just send money. It’s a good deal. But I’m not a xenophobe; I want New Zealand to stand proudly in the world and trade value for value, getting stronger together with like-minded capitalists around the globe.

When it comes to the current circumstances, we, more than ever, need foreign direct investment. We need capital so that New Zealanders have the capital to create jobs and be prosperous and able to provide for themselves and their families by producing goods and services that consumers actually want to buy with real money, and that requires investment, now more than ever.

And what’s this Government doing? Well, instead of upholding the rule of law and free flows of investment into our country, it’s introducing a bill that gives absolute ministerial discretion on practically all investments. They’ve made it a little bit better in the select committee. Some businesses will be able to go through a slightly quicker process. But the signal to people around the world is that New Zealand really has a wish to replace Fiji as the largest group of Pacific Islands—that, actually, we’re going to put in place more arbitrary rules for people who want to send us capital, and it’s absolutely the wrong direction to go in.

Now, I happen to be on the Finance and Expenditure Committee, and I asked the officials—I pleaded with Deborah Russell, the chair of the committee—if there is a real threat, if it’s true that President Xi is sitting up there in Beijing and he’s been waiting to take over certain assets. You know, they talk about strategic assets, by the way. I’ve never heard a person who talks about strategic assets tell us what the strategy is. Too many people use that word because they think it makes them sound smart, but, eventually, they get found out. But maybe President Xi is sitting up there in Beijing, saying, “Jeez, I’ve always wanted to take over some strategic assets in New Zealand as part of my quest for world domination. I’ve just been waiting for the market to fall a bit so it’s cheaper because I’m a bit short.”

And when we asked, well, maybe we could get the experts in—if they really have identified, if they’ve really got intelligence, then they can come to the select committee and tell us in secret, confidentially, just to the MPs; under the rules of Parliament we’ll never reveal it. But we, as MPs, want to know what exactly the Government is really worried about that made them bring in this legislation. You know what? They wouldn’t tell us, even in secret. They couldn’t tell us because the truth is, they don’t know. The truth is that this legislation doesn’t have a public policy purpose other than fumbling, legislating one step at a time with no strategy and no forethought that makes our country more bureaucratic and more hostile to foreign investment and makes New Zealand workers, who want to create jobs with good capital to provide for themselves and their families and their communities, poorer. We can’t afford, as a small, open country, to have such myopic, stumbling lawmaking, because we actually need a strategy and clarity, and we’re not getting it from this Government.

I oppose this bill. Thank you, Madam Speaker.

At a time when the economy is in serious trouble, it is shameful that this legislation is being rushed through this House in urgency. While I’ve been waiting for a chance to have a speaking slot on this legislation, I’ve picked up a press release from Stats NZ that’s just come out. In April, job losses amounted to 37,500 people—37,500 jobs were lost last month alone. That is the largest fall for a month that we’ve seen in this country in over 20 years. So what is the Government’s response to that statistic? To put in some legislation that’s going to make it harder and harder for struggling businesses to survive.

We have all been back in our electorates, up and down the main streets—Hastings, as Lawrence Yule mentioned, Westport, Greymouth, Wānaka, and Queenstown. We know that businesses are struggling, and some of their only hope is to sell or perhaps to go into a partnership, and that partner may be an overseas investor. But this Government is xenophobic. It hates foreign direct investment. I’d expect it from the Greens; they’ve argued against foreign direct investment for ever. I’d expect it from New Zealand First; Winston Peters campaigned only two or three years ago to stop a failing meat company from surviving. Silver Fern Farms was in trouble. Mark Patterson went up and down the country saying, “Don’t let foreigners invest in that company.” He was unsuccessful. Silver Fern Farms did get foreign investment, and now we have two very strong South Island - based meat companies where we would have had only one.

So I don’t expect New Zealand First to ever change its xenophobic nature. But the Labour Party used to be a respected political party, and, on issues of free trade and foreign direct investment, that party had principles. But, as we approach the election, that party—the Labour Party—has sold its principles down the drain to support New Zealand First. And what we’re seeing is this legislation being rushed through in urgency simply as a means of stopping distressed businesses from having a chance of surviving. That’s the effect of this legislation, and the process around foreign direct investment, from the very day this Government was formed, has been nothing but shambolic.

I recall the first Overseas Investment Amendment Bill—the one whereby they were going to stop apartments being bought in Auckland. Suddenly, at the very last minute, after the select committee process, there was an amendment moved and we were going to allow free sales to the Chinese. Most of these apartments were being built by Conrad Properties, and then, subsequently, we found that Conrad Properties had given thousands of dollars to New Zealand First. I’m not going to draw any link, but I leave it for other members to think about. Then, in that same piece of legislation, suddenly the New Zealand First members realised they were making it harder to reach the target of a billion pine trees being planted. So what they did was, without any logic at all, they changed that legislation and said, “If a sheep and beef farm is up for sale and an overseas buyer wants to buy it to keep it in sheep and beef production, we’ll stop it. But if a sheep and beef farm is up for sale and the overseas investor wants to put it into trees, we’re going to make it easier. They can buy a thousand hectares without going through Overseas Investment Office approval.” There isn’t much logic.

Then the Government introduces a second bill, the No. 2 bill, which they’ve done no work on at all. And they bring this bill in, the Overseas Investment (Urgent Measures) Amendment Bill, take it to the select committee, and, as the select committee does work on it, the officials say to us, “We know we haven’t got it all right, but we’re going to have a third piece of legislation—the Overseas Investment Amendment Bill (No 3)—and we’ll fix up mistakes in this one in the third bill. Don’t worry.” That’s how much logic has gone in to satisfy the xenophobia of the New Zealand First Party.

I want to give the example of that struggling motelier in Greymouth—maybe 20 units, really up against the wall. The bank says, “I’m not lending you any more money.” If the bank was to lend any more money, it’s actually foreign direct investment, because the bank is likely to be an Australian-owned bank. But that doesn’t figure on Mark Patterson’s radar. He hasn’t quite got through to that yet. The chance for that motelier to survive is perhaps a partnership with an overseas investor. That now is a relatively small investment. It’s not a strategic asset. Maybe the motel of 20 units in the main street of Greymouth, according to Mark Patterson, is a strategic asset. Let him take a call and tell us whether it is. I don’t think it is. I’d rather see that guy recapitalise one way or the other with a partner. If the partner lives in another country, let him come in. But, no, this bill means even that investment has to go before the Overseas Investment Office, and, if they want to have any concerns about it, it gets advanced upstairs to probably the 6th or 7th floor of the Beehive to one Hon David Parker. The sole decision-maker as to whether that investment can take place is a Minister called David Parker. It’s just wrong, Mr Patterson, and you know it.

Now, I’m not arguing there should be no foreign direct investment regime at all, but there’s a good one that exists in the legislation now, and it’s worked for a long, long time in this country, whereby we have a national benefit test. So, if there’s to be an investment and it reaches a threshold of $100 million, it goes before the Overseas Investment Office and they consider whether that investment brings national benefit to New Zealand. If it doesn’t, don’t let it take place, Mr Patterson, but that’s the law that exists before you put this rubbish into Parliament under urgency. So there’s plenty of protection for that.

Now, the reason the Government members say we’re doing it is because the world’s been hit with a health pandemic, COVID-19, and, therefore, there could be a prying nation out there, travelling the world, looking for strategic assets that they can snap up at bargain prices. Mr Patterson, the motelier in Greymouth is not a strategic asset, and I doubt whether some Chinese statesperson has rushed over here—if he can get into the country—and is running down the main street of Greymouth, looking at that investment as a strategic asset. It is just not logical. If you’d left the threshold where it was, at $100 million—I’ll ask the member a question: tell me what strategic asset in New Zealand we should worry about that you’re likely to buy for less than $100 million.

💬 Mark Patterson: What about Tīwai Point, David?

He says—which one?

💬 Mark Patterson: They’re sitting on a $250 million liability.

The member says Tīwai. If the purchaser can buy it for less than $100 million, put in some legislation and drop the threshold to $20 million if you want to. But don’t get it to the stage where the motelier in Greymouth has to come over the Hon David Parker’s desk. That’s where it’s wrong.

This legislation, driven by the Labour Party, is a sop to New Zealand First, who for 25 years have stood proudly against foreign direct investment in this country. They failed to understand the basic economics that, if you get businesses, you get jobs, and it’s little wonder to me that, on the day they’re rushing this legislation through Parliament, we have record unemployment—we have 37,500 New Zealanders who have lost their jobs in April.

Isn’t it so telling that on the day on which the National Party voted against decent income support for people who have lost their jobs as a result of COVID-19, we find out about the group of people whose interests they really care about: international speculators. That’s the class of people that they are defending through their opposition to this bill. There have been so many straw men put up in this debate by the Opposition that as the Hon David Carter rose from his seat, I had an image of Worzel Gummidge.

This bill does not stop overseas investment in New Zealand; this bill does exactly what countries like Australia and many others have done at this time—and, in fact, in normal times as well—which is to apply a national interest test so that significant and strategic foreign investment in New Zealand is simply assessed as to whether it is in the interests of this country. This side of the House makes absolutely no apologies for that.

It’s a clear divide, because Mr Carter and his colleagues sat on this side of the House, in fact, during the 1990s and saw significant private and public strategic assets flogged off on a dime that has been of significant negative economic consequence to this country. This side of the House is proud of the way that we have responded to COVID19. We’ve supported Kiwis, we’ve supported Kiwi jobs, and we’re putting in place legislation which is not so naive as to assume that there aren’t international speculators out there who will take advantage of the current conditions to swoop up on assets, to strip them out, and to sell them off at a profit later on. How naive can those members be, and how forgetful can those members be, perhaps wilfully neglectful, to forget about the pillage of assets—for example, the rail assets of this country—during the 1990s after similar difficult economic circumstances?

This side of the House stands in favour of this legislation because we stand in favour of the interests of New Zealand, of looking after the interests of New Zealanders, and of not protecting international speculators, as that side of the House so clearly does. I commend the bill to the House.

Amendments recommended by the Finance and Expenditure Committee by majority agreed to.