Overseas Investment Amendment Bill (No 3)

It is my pleasure to rise on behalf of the ACT Party in opposition to the Overseas Investment Amendment Bill (No 3). The ACT Party opposed this bill at the first reading, and we will continue to oppose the bill because none of the problems were solved in select committee. It’s this—it’s quite simple. This is about amending the Overseas Investment Act. It’s supposed to simplify the Act, but, in fact, in looking for more simplicity, the Government has somehow made it even more complicated and harder to invest in New Zealand.

That’s a real issue, because overseas investment would lead to more productivity in New Zealand, and we cannot continue to live, as a country, for ever believing that we should be isolated from the world, because that is what the Overseas Investment Act does. It stops foreign investment and capital coming into this country and lifting productivity, which would lead to our having more money for pharmaceuticals in this country and allow people to have higher wages and better jobs, jobs with more technology. This Act stops that.

If I look at a couple of the changes that they have tried to have made, they’ve made it harder to invest. They are things like “embedding a higher threshold for acquiring farm land”, making it harder for New Zealanders to sell their own property. There’s also here a change “enabling decision-makers to consider the effects on sustainability of investments that involve water bottling or bulk water extraction”. The Resource Management Act is supposed to deal with those issues, so if we’ve got a problem there, why on earth are we making a different problem, again, in the foreign investment space? It’s ridiculous.

If we look at it, and we look at the real, simple aspects of this bill, it is a tinker—that’s all it does—and what is the point? It’s been here for months, and this is all the Government can come up with.

Well, the ACT Party, yesterday, came out with our alternative Budget. We made it very, very clear that we actually want to see productivity and wage growth in the New Zealand economy, and so what have we suggested? An exemption for OECD countries, so that people can send their capital to New Zealand. We want to be a country where people want to send money. We want to be a country where people want to invest and where we can have people aspiring to come here.

I think it’s atrocious, really, that this is all that we’ve ended up with. And, in fact, we used to believe that we wanted to be one of the highest and most productive countries in the OECD, but our productivity has been slipping, and it’s been slipping for 30 years. This goes no way to alleviating that problem.

We need to be seeing more foreign, direct investment in New Zealand and more productivity. That’s what the ACT Party stands for. It is not what this Labour Government stands for. So, it’s quite simple: we’re opposing this bill. Thank you.

Thank you, Madam Speaker. I rise to speak in favour of the Overseas Investment Amendment Bill (No 3). In doing so, I’m very pleased to say that this is the third time I’ve risen and spoken, in a row, where the Opposition, National, have also been supporting the bill that I’ve been speaking on. It shows that this is the type of work we are doing in select committee. It shows that in select committee, where the work is done, we are prepared to work together to create better laws. We had 46 submissions on this bill.

New Zealand continues to be open for business. Productive foreign investment continues to be central to our economic wellbeing now and into the future. This bill, combined with all our other changes to improve New Zealand’s economic settings, achieves the balance. The balance between welcoming investment and the need to protect our most sensitive assets. They will, together, set us up to make the most of the coming decades of economic change and transformation.

This bill is about improving the efficiency of the overseas investment regime while ensuring New Zealand assets are protected, particularly farmland. Over nine years, the National Government made the overseas investment regime more and more complicated, while taking a lax approach to protecting valuable New Zealand assets, like farmland, from foreign ownership. We are now incorporating a bill that will ensure we do both. Now, this bill is an accumulation of the Government’s work to reform New Zealand’s overseas investment regime and to ensure that we continue to attract the productive, sustainable investment we need to both boost economic growth, grow jobs, and protect New Zealand’s assets.

Now I want to talk about what this bill also does to simplify the approval process for most transactions, to ensure that the limited resources are dedicated to reviewing transactions most likely to pose risk. Under the national interest test, it will be better targeted so no longer automatically applying to investments by State-linked pension funds similar in nature to the New Zealand Super Fund that operate at an arm’s length from the Government. In addition to lifting the requirements for overseas investment in farmland, the bill better ensures that New Zealanders have a regime of opportunity to purchase it by requiring that it is publicly advertised before an overseas person can enter into an agreement to buy it, unlike the status quo, where this often occurs after the deal has been signed. By doing this, it makes sure that everybody knows when this land is up for sale.

I’d also like to talk about the purpose of the Overseas Investment Act, which the deputy chair of the Finance and Expenditure Committee, Barbara Edmonds, spoke at length about in her speech earlier in the week. The purpose of the Overseas Investment Act recognises that we are, in fact, the land of milk and honey; where we grow, cultivate, and harvest our food, where our land is productive and our fisheries, forestry, and natural and physical resources are a rare privilege that is worthy of protection. It seeks to protect the privilege we have here in New Zealand. This bill endeavours—again, I reiterate—to balance the protection of our important assets while still being attractive to productive foreign investment. These are the reasons that I’m standing to support this bill. We must make sure, absolutely, that we continue to further cut red tape, but we must always, always do what we can to protect our land, which is what we have in our country of milk and honey. Thank you, Madam Speaker.

The next call is a split call. I call on Nicola Willis.

National is supporting this bill at second reading, and we do so because we acknowledge what we heard from submitter after submitter at the Finance and Expenditure Committee. And that was that the overseas investment regime that Labour had introduced had created significant regulatory burden, huge amounts of red tape, huge amounts of administration that wasn’t actually furthering any of the goals of the Act, which is to ensure that investment supports the needs of New Zealanders and that it can be managed effectively. So this bill takes steps that are practical to reduce that regulatory burden, and I want to acknowledge the expertise of the submitters that we had before the committee, because we did have people who understand the practical way that this legislation needs to be interpreted, and they took great efforts to inform the members of what the legal changes would mean in practice, and I think, by helping us to understand, this bill is better for it. So I want to acknowledge my fellow committee members in that effort as well.

One example of this that is important to me, and is a part of the law that I will be watching closely to see how it actually impacts, was restrictions around farmland, because the restrictions of overseas investment in farmland had the potential to actually restrict investment in potential housing. So the changes that we made at committee loosened the arrangements so that unproductive farmland that isn’t actually ever going to be used for productive agriculture, and is more likely to be repurposed for residential or commercial use, doesn’t face the huge burden that productive farmland faces.

Overall, National’s position is that we support the role that foreign investment plays in supporting New Zealand to develop and to create jobs. We see a role for bringing money into this country to support the livelihood of New Zealanders. We acknowledge the need to be very careful about that investment and for there to be controls around it, but we don’t want this to be the country that is the hardest in the world to actually put your money into. We want to be a place where people want to help us invest in innovation, new projects, new ideas, and where we can attract money to get those things going. So I just want to make sure that that is on the record.

I also want to turn now to a very important issue that is not dealt with in this bill that we could have dealt with in this bill and that submitters raised with us, and that I think it is potentially an issue that New Zealanders will become very concerned about in the coming years, and that is the way we deal with foreign investment in forestry in New Zealand.

Now, I was in the Wairarapa earlier this week and, I tell you what, people in the Wairarapa are very concerned about the changing face of their communities. Because what Labour did was they said, basically, “We’re not that interested in foreign investment but if you want to put your money into converting a farm into forest, fill your boots, go for it. You can use foreign money to buy up to 999 hectares of forestry rights within a calendar year—go for it.” And the results across New Zealand have been stark. Because, if you say to investors, “You’re not allowed to really put your money into much in New Zealand but you can go hard on forestry.”, what do they do? They’ve gone hard on forestry, and up and down this country we have seen productive farms that for decades, if not more than a hundred years, have supported the livelihoods of communities, of individuals, and of families, that have produced food and exported it to the world, are now pine trees.

The results are really real. I’ll tell you about the guy who came up to me at the pub and said, “Nicola, I know you’re an MP. I want you to know this: my town doesn’t have a rugby team anymore, because there are not people working on the farms. It’s all trees.” So this is a very real issue. We have a Government that has tilted the field towards forestry. It is having a massive economic and social effect, and it’s National’s view that this needs to be looked at, and it’s disappointing that Labour didn’t take the opportunity in this bill to remedy that imbalance.

Thank you, Madam Speaker, and thank you for the opportunity to rise and stand on the Overseas Investment Amendment Bill (No 3). I would have really been interested to hear from that member on the other side of the House some of the other provisions in this bill that actually look to extend some of the protection rights and the rights of mana whenua and tangata whenua in this country. As we look towards land that has been sold off to foreign investors and the impact it’s had on cultural ambitions of tribes here in Aotearoa, on the cultural ambitions and historic values that this country hold dear to their heart, I wonder what the other side of the House makes of some of those partnerships as we look towards strengthening that particular right of tangata whenua in a bill like this. It is really important as we look towards protecting our land. It’s been made quite clear, not just by this Government but by experts in this country, that, actually, we must look to tangata whenua practices to ensure that the land is sustainable, is protected, and is cared for, for future generations, for our young people.

That also raises the point about how we get investment into this country. It’s really important that we want to encourage investment into this country, but not at the cost of losing our land and our valuable assets to foreign ownership, to foreign hands. It’s quite clear to us that in order for this country to make sure they protect their natural resources and their whenua for future generations, we must have a bill like this to ensure that. In the absence of the Māori Party, which I’m quite surprised about—not speaking on such an important matter is really actually quite concerning, given the fact that this side of the House take our relationships and our partnerships, you know, to heart and actually want to make them impactful and meaningful into the future with iwi, with iwi chairs, because, as we look towards the way iwi have invested into making sure that primary products and the primary products industry here in Aotearoa are supported, iwi have stood up to the mark and delivered.

Now, I want to address, just finally, one of the comments by the previous speaker, Nicola Willis, about the rugby team in Wairarapa. From where I come from in Te Tai Tokerau, actually, forestry’s a big part of where we are and our rugby team is booming. In fact, this weekend, Moerewa is playing Horohoro—both clubs dear to my heart—and I’m looking forward, hopefully, to seeing a good result this weekend.

💬 Hon Member: Who’s going to win?

I’m not going to put my money on a particular team but say this—say this. The support for forestry actually in a place like Moerewa has been really good and the way that we look towards growing the emissions trading scheme system here in Aotearoa means that we’ve got to be quite careful in the way we manage our resources into the future, the way we invest. Sure, farming has been one of those parts of our economy into the past, and I have no doubt it will be there into the future. Forestry, too, will play a particular part. The resources like water and whenua will always be there and it’s our job, and the serious job of this Government, to ensure they’re protected for future generations. Kia ora, Madam Speaker.

I rise in support of the Overseas Investment Amendment Bill (No 3). I want to first comment on the contribution by ACT today. It is actually something which brings home the difference in the values between parties when I hear a statement which is so resolute and in support of foreign investment, without any kind of nuance or control, and, actually, without taking note of the lessons that have had to be learnt by successive Governments in this country.

The bill that we are looking at today is one that comes from the first Act in 2005, which required a control over sensitive assets. In 2018, the Government commissioned a two-phase reform that sought to strike a balance. It isn’t a situation where this Government does not care or encourage investment by foreigners; that is something that I think both of the major parties in support of this bill have acknowledged is a good thing. No one wants to stop good investment into this country.

I was recently attending a Zoom conference of some of our greatest innovators in New Zealand. It was called Mission Economics, and it was a conference where there were people participating from all around the world, and they were talking about how, in COVID, one of the things that’s happened is that we have had a shrinking of the geographical gap. We will have so many people and so many investors interested in being part of the New Zealand economy. What we have to do as a Government, what we have to lead, is we actually have to make sure that those investments are in the right places, that they’re stimulating, that they’re making our New Zealand a better place, and that they’re actually contributing to the wealth and health of New Zealanders.

And so the first objective of that review in 2018 was to make sure that those investments were encouraged, and this bill will do that, but it will do it in an appropriate way, because it’s balanced by the second objective, which is the controlling of investment where it might cause a risk, where it might undermine the New Zealand way of life. We need to make sure that we’re controlling foreign entities in the sensitive assets in this country, and that is things like our farmland, that is our fishing quotas, that is assets that are important to our cultural wellbeing, and that includes our taonga.

I want to talk about what happened next, because we had a very difficult year last year where we were faced with a pandemic. This Government noticed the vulnerability that was present, and it acted proactively when it brought in urgent measures that sought to make sure that overseas investment didn’t happen in the wrong way—and that would have been if we had had a terrible downturn; luckily, we were able to avoid the worst of that. But, basically, they made sure that the law was fit for purpose at a time of crisis so that there wasn’t a fire sale and so we didn’t lose our assets to overseas companies, when, actually, we needed to make sure that we kept them safe and that we had a long-term view. If there had been people who were at the brink of bankruptcy in their investments here, and they had sought the highest bidder, it probably would have been overseas. So it was a very important, urgent measure that took place.

But then the Government has had the sense to go back and look at the reforms it made at that time, and actually make sure that people during the select committee process were able to look at what had happened, review it, and take a more measured and nuanced response. We did that. At the Finance and Expenditure Committee, we had submissions where we learnt lessons. So this bill is very much a product of that learning curve, because some of those measures were probably a little blunt, and we’ve been able to just actually rein things in and make them as long term and fit for purpose as we possibly could.

So I think it’s probably worth going through some of those changes. The first is that we have narrowed the national interest test. So we had something that was a little bit broad, and we’ve made sure that it’s narrowed. We’ve also brought in call-in powers—so we’ve kept those, and, again, we have looked at being able to block and impose conditions on the acquisition of assets which actually put New Zealanders at significant vulnerability if they are sold overseas.

So, for example, the ports: if somebody wanted to buy the ports, that might be something that we would look at and think, “Actually, owning the ports overseas would actually cause difficulties for New Zealanders.” The same is true for things like the EFTPOS system, I suspect, and electricity—those things that we really rely on as New Zealanders. We need constraints, and we’ve kept the capacity to act very urgently and to keep those constraints. We have actually kept and tightened constraints on farmland, and that is something that I think we have learnt the lessons of over a long period of time. I was very distressed to see the sale of farmland, without very much thought to the fact that this is an incredibly important industry in the country, but it’s also important to what New Zealanders are—it’s part of our culture. This is a farming country; this is our main asset.

So to do that is a really important thing. Then we also learnt that there were parts of that land that were, perhaps, unproductive, that were moving, and we didn’t, basically, cut off our nose to spite our face. We did things like made sure that land which was not as important for farmland any more—maybe unproductive—was something that we might be able to encourage investment in, where appropriate. So, for example, we had a submitter come and talk about rent-to-buys, and they are a big international entity that wants to pour money into building houses for New Zealanders, because they do this all around the world. They will be able to source land that was maybe once farmland but is not productive any more, and they would be encouraged to invest in those things by this legislation.

The other part of this is, actually, that we looked at the whole idea of foreign control versus passive investment. So there’s really a much more sensitive approach to that. Where there is actual foreign control implicated in an investment—perhaps from a foreign Government or, you know, serious amounts of control—then that is looked at quite differently from passive investment; so, investments that might be a super fund, which might be somewhere else. Those are the investments that we still want and need.

So this is actually a bill which is the sum total of three. It’s a very good piece of legislation; it’s come in in a steady and controlled way. It is a very different ideology from that that ACT supported. It’s actually something that is very much part of a consensus between the parties that have governed this country for some time, because it is something that I think we all agree on, it is something that will support a value system that’s become common to New Zealanders, and I commend this bill to the House.

Thank you, Mr Speaker. I think this is a debate that clearly illustrates that there are two parties in this Parliament that don’t fear foreign investment and there are three parties in this Parliament that do. Certainly, the National Party is one party that welcomes foreign investment in a sensible, managed, and ultimately productive way for New Zealand that improves our lot economically, socially, and culturally and doesn’t harm it. The difference between my party and the ACT Party, who also support foreign investment—and disappointingly, in my view, in the context of this bill—is that, if I interpret what Brooke van Velden said in her third reading speech was, because this bill is only incrementally making improvements to the Overseas Investment Act and doesn’t completely liberalise overseas investment, then they shouldn’t support it. We take a different view. We think that because this is an improvement, albeit not as far as we would go, we should still improve it, and improve it we did through the select committee process.

But I think we should be really measured in the degree to which we think this is going to make material improvements, and on that I do agree with Miss van Velden. The definition of “overseas persons”, the improvements in the 25 percent control, the unproductive farmland, and one or two other amendments, I think—the removing of the requirement for certain existing overseas owners, and particularly when they’re selling one overseas owner to another overseas owner, not materially affecting the degree of foreign ownership in this country. All good stuff, but I’ve got to say, I did choke on my water a bit when I heard the Labour member Anna Lorck talking about how this is going to be protecting farmland from foreign ownership. Well, if the Labour Party really wanted to protect farmland from foreign ownership, they shouldn’t have agreed to the sop to New Zealand First to have the carve-out for very highly productive farmland to be converted into forestry, an industry that itself is already owned—70 percent, I think—by overseas owners.

Now, thankfully, they can cut it down and take it away, but they can’t take the land away, and for that reason, I’m completely ambivalent about that, except to the degree that the change that was made in the previous Parliament that enables foreign buyers not to jump through high hoops when they’re buying farmland so that they can convert it to farmland is incredibly concerning to me and to the National Party, and despite our efforts we couldn’t fix that. That remains a significant irritant in our overseas investment framework, and for Peeni Henare to talk about the rights of tangata whenua and looking to tangata whenua to care for the land for our young—“We have a bill that does just that.”, he said. Well, actually, it doesn’t—doesn’t do that at all, doesn’t improve things from the significant backtrack that we took in terms of what he described as protecting the land for our young. His rugby team might be booming in Moeroa, I think he said it was—

💬 Hon Aupito William Sio: Moerewa.

—thank you—but it isn’t because of forestry. Anybody who goes into a forest, particularly when it’s harvested, might be lucky to see five people, because of the mechanisation technologies that removed a huge amount of labour need from that industry. Yes, there is planting; yes, there is pruning over a 30-year life cycle of a forest, but let’s not pretend that that’s propping up the premier rugby clubs around the Bay of Plenty and Northland, because it’s not. Actually—[Interruption] I’m not sure what she said, but I don’t think it was probably going to improve the dialogue any. I sometimes am grateful for the fact that I’m profoundly deaf in one ear.

We will continue to support this bill, but, I stress, let’s not get too ahead of ourselves in terms of what this is going to mean. I think there is still much more we can do to show the world that New Zealand is open for business and it’s open for investment, for the benefit of New Zealand. We believe in free trade. We believe in the free movement of capital. We believe in a reasonably free movement of people—although we’re probably backsliding in that regard, given the Minister of Immigration’s approach over the last few months. So we shouldn’t be too terribly worried about the free movement of investment in this country, because they’re not stealing anything. Every time an overseas company invests in this country, that frees capital up for New Zealanders to invest in other things. That’s how the economy works, and to be scared of that is to put the shutters up and close for business.

💬 Hon Member: Fortress New Zealand.

Exactly. There is no fortress. There might be a very large moat around the islands, but it is hardly “Fortress New Zealand”, and long may that be the case.

So with those caveats, and with the very material disappointment that I have that we are not fixing a major irritant in the overseas investment framework, we support the bill.

Just before I go into the actual bill, I would just like to take issue with something that the previous speaker, the Hon Michael Woodhouse, said. Yes, we do need overseas investment in New Zealand. But he was saying that it actually frees up capital in New Zealand if an overseas investor buys off a New Zealander. However, I wonder what happens when an overseas investor buys off an overseas investor; an investor in Hong Kong buys off an investor in London. I just wonder where the benefit to New Zealand arises, because that is subsequent to what happens.

I’ve heard, during the debate, people talking about how ownership of land is not strategic—well, have a look at my surname. My surname is O’Connor. My ancestors were Irish. They left the Ireland in the 1840s, as did the ancestors of many people in this House, and they left because they lost control of their land. At the time, there was a potato famine and they were starving, there was very productive land down the middle of Ireland, Ireland was a net exporter of food while its people were starving—but they had strategically lost control; they didn’t own the land any more. So those who suddenly think that ownership of land means nothing in an economic world, I would just ask them to have a little look at their history to ensure that doesn’t happen.

Saying that, I agree with the previous speaker, it is absolutely necessary that we actually do have foreign investment, foreign capital, coming into this country, because failure to do so—we only have to look at a country like North Korea, where they stopped any foreign capital coming in, and we saw the subsequent effect. So what we are really seeking to do all the time is to get that balance.

Now, this bill, when you look through it, it’s not major. It addresses things and it is given context by things that have happened before it. But, actually, what it is is secondary to a piece of legislation that we passed last year: the Overseas Investment (Urgent Measures) Amendment Act. You might remember, during COVID, when it looked like there may be some seriously distressed assets in New Zealand—and, again, all parties, and, I believe, from memory, even the ACT Party, agreed with this—it was necessary to have a piece of legislation to ensure that at that time we didn’t lose strategic assets because they were so distressed. That was actually dealt with. I think everyone agreed that the last thing we wanted to do at that particular time, when this big mix of hedge funds or particularly funds where foreign Governments had a major part of the investment—that we didn’t actually lose that.

So it is very important to keep context to this discussion that we as New Zealanders, wherever we come from, understand getting that balance right, that, yes, we are part of a world where the flow of capital is an important part. We saw what happened in 2008, in the global financial crisis, when the flow of capital throughout the globe was threatened—that threatened us all. So getting that balance right, New Zealand, it is important that we are part of that.

So the bill has come out of the Finance and Expenditure Committee—I was lucky enough to be on the select committee. Again, it was one of these things that comes through the select committee, where one comes out of it much more aware of issues that are important to our land than perhaps one did when we went in there. So making sure that issues like overseas investors coming in who already were existing investors who owned large parcels, whether they should have to go through the same process again, when they could show that the land that they were buying, they didn’t need the same level of scrutiny; they’d already been through that should we require them to do that again. So, I think, a very sensible solution—I wouldn’t even say a compromise—reached here that where that land can be shown that it is, again, not of separate strategic importance, a piece of land that is additional that may be even runoff land or land, that winter overstock, that, yes, you can purchase that land and don’t have to go through the same system again. And that, through this bill, has made things very sensible.

So, again, this bill has gone through select committee. I, once again, congratulate my fellow select committee. I think we had some very good submitters there that, again, drew our attention to things that perhaps, on the surface, we may not have been aware of. And if you look at the recommendations, I have been through the recommendations: they will go, there will be some amendments when we get to the committee of the whole House, but they will be ones that, I think, on the recommendation of the select committee, will make this bill better and will ensure that New Zealanders can be secure, that we can welcome overseas investment, that that investment comes in, is the right investment, and that it’s not one that, ultimately, is going to threaten our strategic importance at some stage and say, “Who let them in? Why was that mob, why was that company, why was that foreign Government allowed to own this strategic part of our business?”

Interestingly enough, I see a member opposite, who often stands in this House, talking about his background with Fonterra. I’m sure he would be the first person to stand up in this House and say that it would not be a good strategy for New Zealand to lose control of Fonterra and its suppliers. I’m sure that were anyone to suggest any regime that might result in that happening, he would be the first that would stand up and say, “Boy, we had better not make that happen.”

So this bill continues its way through the House, thoroughly improved, I believe, from its select committee process. I recommend it to the House.

The question is, That the amendments recommended by the Finance and Expenditure Committee by majority be agreed to.