Overseas Investment (Urgent Measures) Amendment Bill

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

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

The COVID-19 global pandemic and related economic downturn have changed the foreign investment environment quite markedly. Perhaps, as has been seen by members, the most recent example is in respect of the Stuff media group, which has suffered a significant decrease in revenue post-COVID. It’s a significant media group, owning, amongst other newspapers, the Dominion Post, the Sunday Star-Times, the Press, and, of course, the Stuff website. It’s sold for $1. It was a management buy-out, but it shows the potential for the sale of strategically important assets at fire sale prices, and without this legislation, there is no ability for the Government to scrutinise those transactions to determine whether there’s something that could be adverse to the country’s either national security or long-term economic interests.

In our opinion, we’re at a time where there could be sales at vastly reduced values that don’t reflect the importance of a business to our economy, and we believe that interim controls are needed to protect our national interest. We think that New Zealand’s not alone in recognising the need to increase oversight of foreign investment in response to COVID-19. Australia, Canada, and a number of European countries have already taken steps to manage these risks. Indeed, Australia took their threshold, effectively, to zero by statutory regulation a month or so ago. Equally, and it is a point that’s been made by the Opposition—and it’s a point I agree with—productive foreign investment will play an important role in New Zealand’s economic recovery, and to get that balance right, we’re trying to strip out some of the existing screening regime which unnecessarily limits New Zealand business access to foreign investment that they need to survive and thrive.

Specifically, the bill introduces measures to increase oversight over foreign investment in response to COVID-19, as well as new powers to ensure that we can manage the risks associated with investments in our most sensitive assets. At the same time, it seeks to liberalise the screening regime by cutting some of the red tape to increase our attractiveness to the sort of foreign investment that we need for our economic recovery. It is a time of unprecedented economic change, and the Government, we believe, needs the ability to respond to that change. Therefore, we have introduced a new emergency notification regime which requires overseas persons to notify the Government of certain investments being, essentially, a controlling stake in an existing business or business assets, even though they wouldn’t normally require a consent. This regime will allow the Government to assess these transactions before they proceed and, if necessary, to consider in some detail whether they’re contrary to New Zealand’s national interest and, if so, whether they should be subject to the sale on conditions or, where there is no other option available, to be blocked from proceeding.

This power will be temporary. It will be reviewed every 90 days and, indeed, at the suggestion of various parties, we’ve agreed to the first review being after 45 days, and it will only remain in place while New Zealand is suffering from the economic impacts of COVID-19. The change to 45 days was a request that was made by the Finance and Expenditure Committee so that we can deal with whether we’re over-capturing low-risk transactions—I agree that that is wise—and, if so, to consider options to mitigate that.

In addition to the notification regime, the bill also includes two other tools to close gaps. The Government doesn’t think that we’ve got sufficient ability to block transactions that are contrary to our national interest, the functioning of our democracy, and other essential interests, and that’s notwithstanding the fact that we’ve always preserved space in our free-trade agreements for screening in those examples. We remedy this, firstly, by the introduction of a national interest test that can be applied to transactions that already require consent under the existing regime. Modelled on the Australian regime, this is a tool that’s got a wide discretion, but will be rarely used, and only where the Minister responsible for the Act considers it necessary.

This test gives the Minister responsible for the Act a broad discretion to decide whether an investment is contrary to the national interest. This has advantages over a more rigid test because it allows for New Zealand’s essential interest to be better protected by ensuring that all of the investments are assessed, and it ensures that the Act is an enduring piece of legislation that can easily respond to changes in the global risk environment and, indeed, to changes in New Zealand capital markets. What might be necessary or prudent at one stage in an economic cycle might be different to other times. If, for example, there were liquidity crises in New Zealand, you’d be more needing capital from overseas than if liquidity is flowing well within the New Zealand economy.

The second tool to be introduced once the emergency notification regime is removed is a narrower call-in power that will enable the Government to review on an enduring basis investments in some strategically important businesses, and examples include firms developing military or certain other advanced technologies that could pose significant risks to our national security or public order. The call-in power ensures that we can manage these risks permanently.

I agree with other speakers in this debate, as we’ve had it in the early stages, that it’s important that we continue to attract productive investment in New Zealand to support our recovery and sustain our future. Therefore, at the same time as introducing those increased screening rights, we’re also bringing forward some measures to cut red tape in our screening regime. We’re doing this because we want to encourage investments in the lower-risk transactions which are unnecessarily caught up in the Act at the moment, and this includes purchases by New Zealand majority - owned and controlled entities. Examples of that are—there are some companies that are listed on the stock exchange that I think most members would agree are New Zealand - owned entities, but they’re caught because of foreign shareholdings. Often, if those listed firms buy super funds and things overseas, they’re still caught by these overseas investment rules, and it’s unnecessarily complicated for them. Also, some investments in land don’t need to be screened where the land has little economic, cultural, or environmental value but is captured under the current regime because, for example, it’s next to a public park or a sports field, and there are a range of other small transactions that don’t grant meaningful control over or access to sensitive New Zealand assets, including some debt transactions that are currently caught by the regime, but won’t be in the future.

In conclusion, this bill supports New Zealand’s interests at a critical time by increasing our oversight of foreign investment and, at the same time, cutting some of the unnecessary red tape so that, overall, the Act supports New Zealand’s interest. We do remain open for business. Productive investment has always been important to our economic wellbeing, and it will be in this recovery and beyond.

I once again thank the select committee and the public, as well as officials, for their responsiveness and engagement on this time-critical issue. I commend the bill to the House.

Thank you, Madam Speaker. National will be opposing this piece of legislation; it’s another piece of legislation in regard to overseas investment. Just for the benefit of listeners to Parliament or viewers of Parliament, what we’re talking about here is our overseas investment regime. New Zealand actually has one of the most restrictive regimes when it comes to allowing people from around the world to come and invest in New Zealand.

💬 Hon David Parker: Only for land.

Well, for land. So New Zealanders across the board do have a concern about our landholdings and our farms, so a regime has been put in place to clear or scrutinise and have an assessment about sensitive land in New Zealand, for some time. It is quite restrictive, and there are benefits for it and challenges around it.

It also has included large businesses, in the past, over $100 million. This Government has been, I think it’s fair to say, critical or generally sceptical about foreign investment—Winston Peters and New Zealand First particularly so; Labour a little bit less so, but they brought in extra restrictions around purchases of houses and properties. This is another piece of legislation in that vein, which is about having a notification regime for any foreign investment in businesses in New Zealand where the ownership of that business has changed substantially. People might say “Well, that’s all very well and good.”, but the challenge with it is that it makes it more difficult for New Zealand businesses to get access to the capital that they need to survive and to provide jobs for New Zealanders.

So, right now, here we are in the middle of a very substantial recession. The Reserve Bank yesterday talked about the sharpest decline in GDP growth in 160 years—now, I don’t know how they came up with that exact figure but that’s what they have suggested. We’ve had news this morning about the fact that New Zealand’s losing more than 1,000 jobs a day, 37,000 jobs in April, and many more job losses are predicted. Many small businesses and large businesses will collapse. Now, that is an inevitable consequence of the shutting of the economy for two months for COVID-19, and the continued restrictions now. So the only relevant questions are: are we making it worse than we need to be and how do we get out of it?

In terms of making it worse than we need to be, extending the lockdown is part of that, but in terms of getting out of it we’re going to rely on investment, because it’s only investment that allows businesses to hire people, rebuild, regrow, and regenerate their businesses. If we rely just on domestic savings, that’s fine but we’ll grow slower; if we want to grow more quickly, we import capital and equity from offshore, as we have for the entire history of this country since the Treaty or before. That’s how you get growth: you bring in the money and skills of people from around the world. That is going to be absolutely critical right now as New Zealand businesses seek to survive, rebuild, and grow. So this legislation is actually going to make that more difficult, and that’s why we don’t support it.

Now, there are elements of this that we do support. There is a sentiment behind a number of issues that we’re quite happy with; it’s the extent of it that we are concerned about. So there are three critical things in this piece of legislation. The first relates to bringing in a national interest test so that investments will be screened on that basis for something that might be against the national interest. Now, we support that in so far as it extends to matters relating directly to national security and for things that could have a potential military use. I think there is an interest in looking at that, but the looseness of the definition of “national interest” is such that we can’t support what is specifically proposed here.

Secondly, it brings in a ministerial power to call in applications directly in a political sense. We worry about that—we worry about that in the hands of David Parker, who has been hostile to a lot of investment, the most latest one was a powerplant on a river in the South Island, which he opposed on the grounds that it would frustrate a very small number of kayakers, for example. Then we could have had the Greens Minister Eugenie Sage doing it, and she is hostile—I don’t think I exaggerate—to just about everything when it comes to investment in business; anything involving mining or natural resources, she’s implacably opposed to. So putting any powers in the hands of Ministers such as her would be very difficult for any advancement in this country.

The third part of it is this notification regime so that any investment, no matter how small, if it changes the ownership—so, as we talked about, the pie shop owner in Taumarunui may be on their knees at the moment because Ian McKelvie is on a diet, he is not eating pies as much as he used to, and the general area is struggling. That business, if it was about to fall over—it may well be that the sister-in-law of the owner lives offshore and wants to contribute some equity to make it better. There will be thousands of similar examples all around the country right now, and now they have to apply and go through an overseas investment notification regime, then 10 days, it may be another 30 days, then they’ve got to fill out forms, get lawyers, and get accountants—it’s a difficult and uncertain process.

The net outcome of that is that it would add costs to everybody, it would add costs to the people who are doing it, it would add uncertainty, and it creates official costs because you’ve got to have an army of officials going through all these things. We don’t have any idea how many applications there might be. Nobody has any idea how many—you know, 500,000 small business might be looking at this sort of thing; we’ve got no idea how long it would take. So that adds a lot of costs, but it’s more the signal that it shows that New Zealand is a closed shop when it comes to that foreign investment.

So we argue that, yes, you know, there is something about this at the big end, if we’ve got a time—extreme emergency with COVID-19, and there may be some major companies of value to New Zealand that are at very low prices. There is concern, particularly about State-owned enterprises offshore with, perhaps, even opaque ownership structures swooping in and picking things up; OK, I can understand that, but I think there needs to be a practical threshold. The current threshold is $100 million before you start—it could be lower than that, but, you know, $5 million, $10 million, or something like that, which will free up, by far, the large majority of potential transactions.

The Minister stands up and says, “Oh, well, but Stuff was sold for $1, so we’re going to have to have a regime that includes everybody.” Well, it’s perfectly, I’m sure, within the wit even of that Minister to come up with some kind of threshold that talks about annual revenue or the number of staff employed or businesses of national significance, such as national media organisations or something like that. He could have come up with a threshold that would have meant that most businesses can be left alone to get the equity they need to survive and to maintain employment in this country, and to save jobs without introducing this cumbersome thing which makes it more difficult for New Zealanders to get access to the capital that they need.

We’re hearing a lot about making it easier for New Zealanders to get access to debt, and the Government’s got all these various schemes, more debt, but most businesses, as well as debt, actually prefer to have equity: equity investments, which is people putting their money in part-ownership of the businesses. Foreign investment is critical to growing this economy in terms of growing faster but also bringing skills, connections with the country with which the money has come from, and access to markets—there is long, long literature about the importance of it. I think it’s very ill timed for the small-minded, protectionist, inward-looking view of New Zealand First to dominate our economic thinking at a time when we desperately need investment to grow this economy and get back on our feet. So, on that basis, we oppose this bill. Thank you.

Thank you, Madam Speaker. Look, we’ve just come through an incredible crisis of epic proportions, and we need to make sure that our legislation is in line, that we’re making sure that we’re looking after New Zealanders’ long-term interests as we traverse this very uncertain terrain. But one thing that we do know is we want to make sure that we keep control of New Zealand, that we allow foreign investment, but actually we do it in a measured way, So that’s what this bill does. It contains measures which need to be put in place to, obviously, urgently mitigate the economic effects of COVID-19. As we restore, as we recover, as we rebuild the economy, it’s imperative that we protect those long-term interests of New Zealanders and it’s what they expect us to do.

This bill’s purpose is to ensure that the risks posed by foreign investment can be managed effectively while reducing the regulatory burden of the screening process to support the role of productive foreign investment into our recovery. In particular, we absolutely need to minimise the possibility that the cornerstone businesses in our productive economy aren’t sold in a way contrary to our national interests while the pandemic is causing the value of many of our businesses to fall. The bill supports New Zealand’s interests at a critical time by increasing our oversight of foreign investments, cutting the red tape needed to ensure that the Act supports rather than hinders our recovery.

New Zealand continues to be open for business. Productive foreign investment has and will continue to be central to our economic wellbeing, both in this time of recovery and beyond. This bill boosts our ability to attract that investment while ensuring that we have the tools that we need to navigate our way out of this uncertainty consistently with New Zealand’s national interests. And for that reason, I commend the bill to the House.

Thank you, Madam Speaker. I was going to say it’s a pleasure to take a call on the third reading of this Overseas Investment (Urgent Measures) Amendment Bill but I’m not sure whether it’s a pleasure or not—but I’m taking it anyway. I’ve taken a number of calls on this today. It’s quite interesting, when you go through stage after stage in the course of one day, you’ve got to remember what you said before and not say it again, and it’s quite difficult.

💬 Hon Member: Or say something different.

I know; you can try. I’m trying to say something different, but like so many pieces of legislation that go through this House, there are good bits and bad bits of it, and there are some bits of this legislation that we certainly support. And, in the committee stage, I got the opportunity to speak briefly about the fishing quota and the fishing sector of it, and the food sector is a very important part of what this bill is trying to achieve. But, none the less, there are some reasons that we don’t support this bill, and they were very eloquently outlined by Paul Goldsmith earlier on, and I’m sure Andrew Bayly will follow and outline them even better.

The bits that particularly concern me about this bill—and they’re a bit obscure, some of them—are things like the protection of intellectual property and the protection of, I suppose, the assets of the businesses that are being scrutinised in the course of this process that we’re going through to establish whether or not they’re critical to New Zealand’s future. I’ve seen, in my lifetime, far too many times where that information is not protected adequately and gets scurrilously used in the future by someone else. And I think that’s one of the big concerns that I have about this bill, and one of the reasons I have a concern about it is because of the time we’ve had to scrutinise the legislation and make sure that it, effectively, doesn’t leak, I suppose, for want of a better word—I don’t think that has been adequate. So that’s one of the reasons that we oppose it—that we think that the time frame has been far too short. And I do accept that, if you take this to the extreme, there is a case to be made for some urgency in inserting a piece of legislation like this, and the Minister has gone as far as to put this piece of legislation in place and then follow up with another piece of legislation which, effectively, will confirm the actions of this piece of legislation and give Parliament the time to scrutinise it properly and put those bits that I have some concerns about in place in a more appropriate manner.

None the less, the other thing that I particularly don’t like about this, and I know that the National Party don’t like about this bill, is that it really stifles the ability of some New Zealand companies to adequately get overseas funds and keep themselves going, or the capital that they so desperately need to keep themselves going, particularly at a time like this, when we’re under significant pressure. I think, just earlier in the day, I spoke about the food industry, and if you think about food security around the world and the need for countries to secure their food supplies, our food industry is probably critical to New Zealand, but it’s also an opportunity for us to grow and diversify our products. But, to do that, we need capital, and many of those countries that have food security challenges would be very interested in assisting some of our businesses to grow, change, and diversify. And, if they are precluded from doing that under this piece of legislation, that will be a great tragedy for New Zealand in the future. It will be a tragedy for those people who have the opportunity to work in them.

I think one of the ways we can get our economy moving right now is through much more investment in added-value products. If you just take the timber industry, a very simple one, there will be no expansion of the timber industry without the Government either building it themselves or a significant injection of foreign capital into that industry, because there is no appetite in New Zealand—nor the ability in New Zealand—to invest adequately in timber infrastructure or in infrastructure to make wood do better. So that’s just another example of where we desperately need investment in New Zealand. This bill won’t necessarily stop that investment, but it certainly, in my view, like a lot of these other bills we’ve put in place, will significantly impact on people’s decisions when they come to look at investing in New Zealand for one reason or another.

The other thing I have some concerns about in the course of this bill is how, in fact, the bill will be policed. Because we’ve got to remember that every transaction will be looked at from a dollar to whatever. And so every transaction that involves some segment of overseas investment beyond 25 percent is going to be perused by the Government. So there’s a massive amount of effort that needs to go into getting to that point and then deciding which businesses are relevant, which ones aren’t, and which ones the Minister—and this is the other interesting point about it—will make these decisions about. So, effectively, one person, whoever that Minister is, is going to be making these decisions. The Minister also has the ability to call up these transactions so they can take a look at it from a distance and decide, “I like the look of that. I don’t like the look of it; I might not like the look of it, but I need to look at it further.” And I think that’s a little bit—I wouldn’t say it’s dangerous, but it’s not how we do things in New Zealand, necessarily, for the better. I accept that we’re in unusual times, but I don’t think that that’s the answer to our future, either.

So the bill does some things—in an odd way—that are probably quite useful, and when I say an odd way, it’s like a strangled process, because it happened so quickly, and I’m sure there will be, as I’ve outlined already, mistakes made with intellectual property. There will even be decisions made that we will later wonder why we made, but that will all resolve itself in the future. So, from our perspective, the principle of it is probably good, but almost everything else about it goes against where we want to be as a country. I think the reason for that is that we’re in these extraordinary times where we need to be expanding our economy, or giving our economy the opportunity to expand in a constructive manner that creates jobs for New Zealanders as quickly as we can. This bill I don’t think will add to that ability; it’ll probably detract from it.

So that’s really my contribution to the third reading of this bill, and, as I said earlier, we can’t support it. We look forward to the next bill coming—it’s already in the House and it’s in front of the select committee now. That will be there for some time. We look forward to that coming in. We’ll have some vibrant debate on that, no doubt, as we go along, and I’ll leave my more intellectually disposed colleagues to deal with that at the time. So that’s my lot, and we are not supporting this bill.

Tēnā koe, Madam Speaker. Thank you for the opportunity to stand and take a call on behalf of New Zealand First on the Overseas Investment (Urgent Measures) Amendment Bill. I’d like to begin my contribution by thanking the Minister, the Hon David Parker, for bringing this bill to the House. For me, this bill is like a korowai of protection that we’re throwing across the shoulders of Aotearoa during this particularly uncertain period of time in our lives, in our history.

The Minister, in his speech just recently, mentioned the recent sale of Stuff for just $1 and the potential there for, based on that sale—fortunately, it did go to a New Zealander—the sale of important assets, like Stuff, to go at fire sale prices. So with that in mind and the fact that we have thrown this korowai of protection via this piece of legislation across the shoulders of Aotearoa, this bill actually aims to protect our national interests, the long-term interests of New Zealand. It will increase the oversight into the foreign investment in Aotearoa, because much has changed in our COVID world. Power, though, will be temporary, and it will only remain in place while we traverse the unknown terrain during this critical time. So New Zealand First will support this legislation. Kia ora.

Thank you, Madam Speaker. That’s very nice of you. First of all, I’d just like to compliment that previous speaker from New Zealand First, Jenny Marcroft, because I think that’s actually the first contribution from New Zealand First all day, which, given the perspective that New Zealand First brings to foreign investment, and certainly that of the view of their leader, the Rt Hon Winston Peters, I’m very surprised to hear that last comment, which was New Zealand First will be supporting this bill.

My comment that I wanted to start off with is I believe that this bill was introduced last Friday and, with undue haste, has been rammed through the Finance and Expenditure Committee. Submitters were provided with a copy of the bill on the Friday afternoon. They had to respond by 4 o’clock on the Monday, and then they had to present on the Tuesday. We have ended up with this bill that will be passed tonight by majority against the wishes of the largest party in this House.

We’ve heard some interesting phrases. The Hon Andrew Little talked about “We need a robust capital base.” We heard the Minister who introduced the bill, the Hon David Parker, talk about “triage”, because everything coming in from overseas foreign investment needs to be triaged because there is a view that maybe it’s going to be an issue—everything’s going to be an issue—although he later this morning retracted that phrase.

I did quote this morning—here we are: we’ve been ramming though this bill, but, at the very same time, in my electorate, right now, we have got a really big trade issue that will affect many small businesses that this is trying to deal with, and that is the issue of a 2.6 million tonne stockpile of potatoes in Europe that is looking to come to New Zealand and devastate the New Zealand market for potatoes. We are trying to get the Minister to look at that to try to stop that from occurring because we don’t want to see our good growers, and particularly those in Pukekohe and Matamata and down south in the Canterbury region, affected. Yet we cannot—and the Minister is slow-tracking that; whereas we’ve got a bill like this and we’re ramming it through at breakneck speed.

I think it shows a paternalistic approach of the Government with how they view businesses and the right for businesses to raise capital, and the view that the Government should have an overview of all transactions involving foreigners, even though the Governments have nothing to do with the businesses in question. It’s the business owners who have taken the risk. They are the ones who’ve mortgaged up their houses, borrowed from their mums and dads—whatever the case may be. They’ve held all that business risk over all the time, and yet, at this very moment when they may be wanting to get capital—which all New Zealand businesses have relied on for the last 140 years to continue to survive—this is a bill that puts a huge handbrake on it.

So there’s actually seven issues that we’ve traversed in the discussions of today that the National Party has some issue with in this bill. The first one is the issue of lack of threshold. We believe that there should be a minimum threshold. There was actually some advice provided that there should be a minimum threshold, but, at the moment, there is absolutely no threshold. So that means every transaction is required to go through an application process and then to go through Overseas Investment Office (OIO) official review, no doubt, and then, ultimately, go through to a Minister—and there’s only one Minister, of course—for approval or decline. That is a godlike power. That is a divine power.

The second thing is the application process. It’s clear, from the questioning we just had before in the committee of the whole House, that the form, which the Minister referred to as being a two- to three-page form, has not yet been prepared. He said it would be completed by the time this bill’s operational, in two weeks’ time, but it would have been good to be able to share that with the select committee. I think also, as part of the hearing process from submitters, it would have been very, very helpful if they could have seen the nature of the information that is required and how it was to be delivered. That sets the information threshold, but also it would have enabled the committee that if the Minister is to have a proper intent in achieving the objectives of this bill, whether, in fact, enough information was actually going to be provided. So that lack of clarity around the application process is a second concern.

The third one relates to confidentiality, because what we’re talking about are commercial transactions between willing buyers and willing sellers. Those transactions, where either you’re selling the whole business or you may be raising new capital, as the Auckland Airport did recently—that is a transaction where fresh equity is coming into that business—those are very commercial and very sensitive. We’ve had the Minister today in question time talking about refusing to answer questions around the City Rail Link on the grounds of commerciality. Under these arrangements, every foreign transaction or applicant will have to put down commercially sensitive information. And the first thing that’s commercially sensitive is the mere fact that they have entered into an arrangement with a particular company. That in itself is incredibly sensitive information, because a competitor looking at buying that business or acquiring or doing something with that business, if that information is made public, can use that to their advantage. The elements around it—the committee made some changes around it, and certainly the disclosure arrangements between agencies and the requirement to involve the Privacy Commissioner. But it is an issue of great concern to us.

The other thing we haven’t heard about, and we couldn’t get during the select committee process, are the resourcing requirements for the OIO to be able to actually handle this avalanche of transactions or applications that are normally occurring at any point in time. That resourcing requires highly skilled officials who the Minister, no doubt, will be relying on. We haven’t seen anything of that, and, actually, there is no real ability to ascertain whether, in fact, the OIO is well prepared to actually meet its obligation of processing all these applications within a 10-day period.

The next issue is the issue that there’s only one Minister. There is only one Minister, and, under the current arrangement, that would be the Hon David Parker, who must, on his own, review and assess all these transactions and make a determination. We don’t think that that’s an appropriate process. There certainly could have been a screening process and then another process certainly with much more substantial transactions where those normally go to two Ministers to make sure that there is a balance to the thinking. But, under these arrangements, if Mr David Parker is having a bad day and chooses to make a decision, then that is the decision. I’m not suggesting he will have a bad day, but that is the issue with that: there are no checks and balances.

The other one is the extensive use of regulations. This means, for those listening, that the Minister, once this bill has passed, will ask his officials to fill in all the missing detail, which wasn’t available to the committee and which was not subject to parliamentary oversight. That is all the most important detail as to how this bill will really operate in practice and, particularly, even the form that people will have to use when they’re making an application. We choose that regulation, and the strong desire is that you use regulation-making powers at the absolute minimum. I have quoted five examples of that in this bill in my early discussions in the committee of the whole House. The use of regulation-making power is because this bill has been rushed through Parliament, and they haven’t had the time to actually sit back and reflect on it.

The last thing is the potential risk of reputation of New Zealand as a place to invest. We’ve traditionally been an excellent location. People want to come here, and they want to come here for the right reasons, but this bill is potentially going to damage that reputation.

Thank you, Madam Speaker. It’s my pleasure to rise and take a short call on the third reading of the Overseas Investment (Urgent Measures) Amendment Bill. I guess a lot of the detail’s been quite well traversed by this point. I think the key thing for me in this is that it’s creating temporary emergency power for the Government to screen transactions which are not normally screened, and transactions of companies worth less than $100 million and not involving sensitive land or fishing quota, which would normally be excluded from oversight but will now have proper scrutiny and oversight. The reason for that, and why this is being driven at the moment, is that as we are in difficult times there is a possibility or likelihood that economic hardship will lead to the sale of some pretty precious resources. While they may not meet that threshold, we want to—and I think it’s appropriate for the Government to ensure that there is proper oversight to make sure that there aren’t basically fire sale prices and that we don’t lose precious resources to going overseas without getting the return, and that others don’t take advantage of these difficult times economically.

It also implements some measures that were originally proposed for the earlier Overseas Investment Amendment Bill, 2020, in phase two, to complement the economic recovery post-COVID. This includes exempting some low-risk transactions and bank loans from the requirements of the Overseas Investment Office. So that’s increasing scrutiny, where we’re making sure that there’s not that fire yard sale and us losing resources, but also enabling slightly easier input of capital to help businesses here when they may need it. And it reduces new regulation-making powers to manage any risks associated with rapid development, drafting, and implementation of emergency proposals. So I think, further than that, the detail’s been well canvassed in earlier speeches, so I will wind that up, and, again, I am commending it to the House.

Thank you, Madam Speaker. I haven’t sat on the Finance and Expenditure Committee to hear submissions on the Overseas Investment (Urgent Measures) Amendment Bill. It is a critically important bill. To be honest with you, it’s concerning, because at no time in our past and going into our future has good foreign investment been more important than ever in terms of rebuilding our economy. The worst thing that we could do as a country is put more barriers, red tape, and regulation in front of possible investment and good capital flow back into the country. We already have a very good regime in place, and that’s the Overseas Investment Office (OIO).

I just want to pick up on a quick point that the last speaker, Jan Logie, raised, which I find completely counterintuitive. I was a Minister myself for Land Information New Zealand, and I’m not going to go into the details of the case, but just very broadly, there was a farm that had been faithfully farmed by a family for three generations in the South Island, and the couple that were on it wanted to retire. They’d actually passed retirement age, they’d had the property on the market for five years, and no one was interested in it in terms of a local buyer, and finally someone from overseas took an interest in the property. They were able to meet the price expectations, and it went through the OIO and it was very good.

The previous speaker was talking about: “We want to avoid fire sales on our properties or our businesses.” Well, the only way to avoid fire sales is to be able to have good capital investment and foreign investment interested in our country. The local market cannot stand up. If you’re relying on the local market, then that’s exactly what you’ll get—you’ll get a fire sale. They won’t be able to meet the price. They won’t be able to meet the price expectation around the sale of their business or their property due to the economic impact and harm that we’ve suffered under COVID-19. So I would just caution the Government, and I’d say, “Please listen to industry. Please listen to people in business.” It is them that are going to take the risks. It is them that need to have the confidence. It is them that need to have the energy to be able to start to rebuild our economy, protect jobs, and create new jobs.

The one issue on the bill that I really wanted to just talk to very quickly was simply this: that they received a large amount of submissions that were very concerned; there’s no detail around the national interest test. So you’re passing legislation through the House that’s going to cede enormous power to one Minister who ultimately will make these decisions, and we don’t agree with that. Checks and balances are important, and they’re proven to actually make sure that there are good decisions made. So we’re going to pass this legislation without any clarity, without any definition, without any detail around what the national interest test is that this Minister, who’s going to have all these decision-making decisions ceded to him, is going to apply. So to me it’s a complete travesty that this bill is even being debated and actually passed through this House under urgency and a shortened, truncated process, when one of the most fundamental issues that should be debated is the national interest test. So that’s one of the reasons why, on this side of the House, we cannot stand in support of this bill. Thank you.

The next call’s a split call. I call Dr Duncan Webb.

Tēnā koe, Madam Speaker. I just wanted to dismiss one myth that seems to be around this bill, just around this notification requirement. There seems to be some sense that it’s a full-blown application process. It’s not. It’s simply a process where if an overseas person in the current circumstances is acquiring a New Zealand asset, they need to let the Overseas Investment Office know. Now, if in 10 days that is seen as being something substantial, there may be further procedures. But it’s very low threshold, very low compliance, a very sensible step that the Minister for Trade and Export Growth has taken in these circumstances. So that clarification is the only contribution that I wanted to make. Thank you, Madam Speaker.

Thank you, Madam Speaker. It’s a great opportunity to discuss the Overseas Investment (Urgent Measures) Amendment Bill, that we are debating this afternoon in urgency. This bill has some grave concerns for this side of the House. Certainly, in terms of process, it’s been shonky. This bill was introduced last Friday and submitters were given until Monday to get their submissions in and be heard. It has certainly been a very rushed and shonky process, and we don’t support that. We realise that COVID-19 is upon us, and it is impacting the New Zealand economy right now. As a result, the Government is, sort of, creating this fear that foreigners are going to rush to New Zealand and gobble up all of our land and all of our businesses. The reality is that we have one of the toughest regimes in the whole of the world in terms of foreigners purchasing land in this country.

So the Government wants to really throw sand in the cogs and the gears of foreign investors coming to New Zealand at a time when our economy is dropping through the floor and unemployment rising—going to be well above, I think, 10 percent or 9.8 percent that Treasury’s forecasting it to be. A thousand people a day are queuing up for the dole, and this Government is saying we want to padlock away any foreign investment in this country that is going to mean more jobs will be created.

We have taken this opportunity through the House and through the select committee process to try and panel beat this bill into some sense of practicality. But our debate, our points that we have raised, has fallen on deaf ears.

This bill requires foreign investors to notify the Government if they are going to invest in any businesses or land in New Zealand. Let’s look at a business. If a business is floundering and going broke, and it has the opportunity to encourage a foreign investor to come in and prop this business up, well, what is wrong with that when this business could be employing hundreds of people? Otherwise, it’s going to fold and those people are going to end up in the dole queue, more than likely, and the Government is going to have to prop them up.

This bill means that these foreign investors will have to pass through a New Zealand interest test. In the select committee, we said, “Well, let’s try and define this. What exactly is a New Zealand interest test?” It might be specific to one Minister and another Minister might have another view. Officials amongst themselves—it’s very hard to determine what is a clear and concise definition of the New Zealand interest test.

We get the fact that this piece of legislation will be reviewed every 90 days to wait and see what happens with COVID, because it’s only meant to run for the period of the COVID pandemic. But there’s another part to this that is not well understood. This 90-day period may indeed run until we’ve weathered the storm of New Zealand’s economic impact as a result of COVID. Now, what we know from the Budget 2020, when Treasury has forecast, we’re not going to come through this period of uncertainty. The New Zealand economy is not going to suddenly respond, in 90 days or 180 days. It’s going to take months, if not years, and it’s going to take at least a generation to pay down this sizeable amount of debt that the Government is proposing to spend.

So this is an anti-growth bill. This is padlocking away foreign investors being able to come and invest strategically in New Zealand at a time when New Zealand surely needs it. So that is why we don’t support this bill.

Thank you, Madam Speaker. It’s my pleasure to take a call on this. I was expecting something from the other side but they’ve got very little to say, clearly, ramming this through under urgency.

We’re opposed to this bill for many of the reasons that the Hon Nathan Guy has just laid out for us, and I’d have to say, sitting in the House this afternoon and listening to comments from the Minister, I can sort of understand, really, what he’s trying to do, but what he fails to understand and what this Government fails to understand is the absolutely chilling effect a policy like this and a piece of legislation like this will have on the post-COVID regime.

In my previous commentary and speeches, I’ve talked about what I see on the ground in my own electorate right now—right now. On Monday, I spent the day talking to retailers and small businesses and they’re stressed. It was my observation the staff are less stressed because they’re in work at the moment, they’re being funded by the wage subsidy—and good on the Government for doing that, and there is an ability for that to be extended. But the only way that can be extended is you’ve got to show you’ve lost 50 percent of your turnover for the last month prior to application. If you’ve lost 50 percent of your turnover, most businesses will be in severe trouble and about to lay off their staff. And what I saw from fish and chip shops to hairdressers to small retailers, small boutique shops, was a very, very high level of stress amongst the owners.

💬 Hon Nathan Guy: Plus you’ve got the drought too.

Yeah, we’ve got the drought as well. We have the drought as well, so we have a double whammy—triple whammy, I’d call it: we’ve got the Government, the drought, and COVID. That’s a triple whammy. But anyway, moving right along—it’s a triple whammy, but we’re tough in Hawke’s Bay; we’ll carry on through. But my point is this: they don’t know what to do next and they don’t have a lot of time. Some of them have applied for the small-business loans—some of them. But many of them are in such a predicament that the only thing they’ll be able to do is lean on friends and family to get them through this really difficult time. Friends and family for many of them will include overseas interests.

So what we’ve heard today is that this Government has set up a regime. It’s an online regime. Apparently, it’s going to take 10 days for normal people to get through and it’s really simple: a tick box of five things. According to the Minister—they actually haven’t done the online thing yet—it’ll ask the asset value, income and expenditure, and number of staff. That was pretty much what he said. You fill that out and then if the people in the Overseas Investment Office thinks that it’s low risk, then it’s approved, but if there are any questions that need to be asked, another 30 days get added on to that.

The Hon Nathan Guy knows this, as most other provincial MPs will know: we have for years had lots and lots of criticism about how long it takes to get anything done through the Overseas Investment Office, under both Governments—under both Governments—and it’s because it’s a bureaucracy. It takes weeks, costs tens of thousands of dollars. We have no assurance that this regime that’s being set up knows how many applications there’s going to be, knows how many people are going to be required at the Overseas Investment Office to process these, and the net result of that is, I believe, a lot of small businesses in New Zealand who are looking for equity, who may have overseas connections, are going to be majorly disadvantaged. That’s what I believe.

💬 Michael Wood: What a load of arrant nonsense.

No, I believe—well, you can say that. You go and walk down the streets, Mr Wood, which I’ve done and I see what they’re doing. I see what they’re doing and they’re stressed. So we oppose this on the basis that the threshold used to be $100 million, but now there is no threshold. So if an international person wanted to invest $10—$10 in a company—

💬 Hon Member: That’s too much.

Well, $5 then—it would still trigger this regime.

We also know that as we go through this, all this does is further show international companies and people that we’re not really open for business. Personally, I don’t mind some regime that stops international corporate raiders coming into New Zealand and taking small assets that are distressed. I have no issue with that. But what this does is go—and the Stuff regime is used as the reason why we’ve had it limitless. Well, there’s other ways of putting a disincentive, if you want to use that term, in the way of this and that could be about the number of employees; it could be about a whole lot of reasons.

So I have come from a district and I’ve largely supported foreign investment and I’ve seen some of the benefits of it. It’s been hugely successful in my own region. I really worry that on a time-limited piece of legislation at a critical time in these businesses, we are putting up an unnecessary roadblock at the very low end of the scale, because what’s going to happen is, as we get into June and July and the current wage subsidy runs out and the new one is worked on—but understand how hard it is to get—a lot of these businesses are going to fail. Many of them are going to be looking at all sorts of ways of raising capital. Many of them, I suspect, will not be able to raise capital from normal commercial banking and other sectors. They’re going to rely on families and friends. That’s what I principally oppose in this piece of legislation. It’s not the regime itself; it’s the thresholds that have been set.

I also know that this is only going to go for 90 days and then, apparently, it’s going to be reviewed. Well, it’s actually going to be reviewed at 45 days. Let’s be clear. This is going to stay for quite some time. The economic carnage that is being unleashed on New Zealand is going to be here for some time. So we are, effectively, sending a signal to the market, I believe, for at least six months that if you want to bring foreign capital into New Zealand at any level—and I repeat that: at any level—then you’re going to have to go through this regime. Even before, as the Hon Nathan Guy said, New Zealand’s got one of the toughest regimes in the world. Greg O’Connor chipped in and said, “Well, talk about China.” I understand that. He said “one of the toughest”. I don’t want us to be like China, but we have great investments in New Zealand and we need to be really careful that we don’t send long-term signals to the market that dissuade people to come and invest here.

There are a lot of people that have made good investments in New Zealand. They can’t take the land. They’ve done a whole lot of things to vertically integrate into markets overseas. And while this has been sold as a temporary measure, so it doesn’t damage free-trade agreements, etc., let’s wait and see how long this lasts. Let’s wait and see how many applications there are, how many people get turned down. Ultimately, under this regime, the Minister—in this case, the Hon David Parker—has the final say, the total final say on what is good for New Zealand and what isn’t; what is in the public interest and what isn’t. There are no big, broad criteria around it. Fundamentally, after it’s been through the final analysis, the Minister will decide on everything—not $100 million, the Hon Nathan Guy, not a big number, but anything, anything. I think Ian McKelvie talked about a motel in Bulls or somewhere—

💬 Hon Member: Greymouth.

—and there’s another one in Greymouth. What are those motels meant to do? They’ve got no business. They’ve got no customers. The bank won’t lend it to them, so are they literally just going to be allowed to go broke, lose all their New Zealand equity, on the basis that somehow we don’t want a foreign investment to prop them up for a while? Is that what we’re saying?

In my view, the balance here is wrong. The balance here is wrong. In my view, if somebody wanted to buy a motel in Greymouth and take an equity share of 25 percent, what’s wrong with that? What’s wrong—

💬 Hon Member: Have you read the bill?

I have read the bill.

💬 Hon Member: Is it strategic?

Oh, strategic—every single item, any type of investment on any level that goes to 25 percent has to go through this process. I would argue that it’s a bureaucracy gone mad. At a time when people want to make calls and investments—they’re working out whether they’re going to lose their whole livelihood—suddenly they’ve got to fill out another form, another form. And by the way, if it’s really easy it might go through in 10 days, otherwise it’ll take 30. You try telling a family somewhere in another part of the world who actually wants to give $10,000 or $20,000, take a bit of a share in the short term, that they’ve got to go through some process that’s going to take a month. They’ll just laugh at you.

So that’s why we’re against this bill. It’s not the high-level stuff we’re against; it’s the effect on small businesses and the chilling effect on those same businesses.

Thank you, Madam Speaker. Look, we’re in unprecedented times. We have a very much changed foreign investment risk environment. It’s a privilege to own or control our sensitive New Zealand assets. Let’s protect our family silver. I commend this bill.