Overseas Investment Amendment Bill (No 3)

I present a legislative statement on the Overseas Investment Bill (No 3).

💬 DEPUTY SPEAKER: That legislative statement is published under the authority of the House and can be found on the Parliament website.

Thank you, Mr Speaker. I move, That the Overseas Investment Amendment Bill (No 3) be now read a third time.

The last year has certainly been one for the history books. While our economy has proven resilient, unemployment is not nearly as bad as what was initially predictive, and we’ve collectively weathered—

💬 Hon Michael Woodhouse: Budget day tomorrow.

—COVID-19—beg your pardon?

💬 Hon Michael Woodhouse: Sounds like the Budget speech.

Oh, “it sounds like a Budget speech”—no, it’s not actually; it’s about the Overseas Investment Amendment Bill (No 3), but thanks for making me a bit more interesting.

There is considerable long-term uncertainty about how COVID-19 will affect global and New Zealand economies. That remains. What is clear is that, as with New Zealand over the last couple of hundred years, productive foreign investment will continue to be important for our economy. It is also true that we need a screening regime to protect New Zealand so that whilst we get the capital we need, we manage the risks that foreign investment can pose, including investment by third parties and media companies and, at times, other sensitive land asset classes that have long been screened under the New Zealand screening regime.

Recognising this, the Government has, over the last few years, made some quite significant changes to the Overseas Investment Act. In 2018, I think those were probably the most significant changes because if those changes hadn’t been made in 2018, they couldn’t have been made after the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) came into effect. Those changes made sure that our screening regime could, in the future, under any Government, screen, either strictly or lightly, investments in residential land and in forest registration rights under the Forest Rights Registrations Act, which is an alternative way that forest investors can invest rather than buying freehold or leasehold property rights. Previously, there were no screening provisions covering those classes of assets, and if those changes had not been made at that time, no Government would have, in effect, been able to make those changes in the future, because it would have been in breach not just of CPTPP but in respect of earlier agreements that obtained the benefit of those provisions through the most favoured nation clause relating to investment protocols and early agreements, including the China free-trade agreement.

So in 2020, the next changes were made. These were in response to the most uncertain economic and health conditions facing this country in nearly a century. At that time, we introduced a national interest test and a temporary emergency notification regime to ensure that investments were able to be screened. Again, at the time we did that, we thought things were going to be a lot worse than they’ve turned out—although in some sectors that have been heavily hit, it has been very, very hard for them, including in the tourism sector.

But simultaneously with that, we put a longer-term bill into select committee, and today, with the support of the National Party and the Green Party, we deliver on that bill, which is the Overseas Investment Amendment Bill (No 3). I’m pleased that it has had such broad support, because I think it really shows that we are delivering a stable and enduring overseas investment regime that balances the need to manage risk against cutting unnecessary red tape, and that, of course, sets New Zealand up well for the future. I’m going to cover some of the main steps of this bill.

How do we cut red tape? Well, the bill ensures that up to 30 percent fewer transactions will need to be reviewed, and when those that are remaining to be reviewed are reviewed, the screening process will be simpler, because some of the unnecessary provisions that weren’t really necessary to protect New Zealand’s interests are being stripped out. For example, rather than requiring consent for small incremental investments in a listed company—or an unlisted company, for that matter—the bill is targeted at those transactions that grant an investor greater effective control over our most sensitive or larger assets.

We are also no longer to screen a range of short-term leases of land or land that is subject to the current regime only because it sits next to land that we hold additional concern for. For example, under the existing law, until this bill is passed and comes into effect, if someone buys a commercial property that is adjacent to a reserve—and it could just be an industrial site in Auckland—the fact that it sits next to an arm of an estuary deems it to be sensitive land and it is screened as investment land, even though we don’t really have a worry if that particular warehouse passes—which is often the case—into the ownership of somebody else. So we are not going to screen those sorts of things in the future. Neither are we going to screen investments by what are fundamentally New Zealand companies, even if they are more than 25 percent overseas-owned—we are not going to catch those in the same way as they are currently caught by the Act.

For the transactions that are left, we made another number of changes to prove the way—for example, repeat investors that have already demonstrated that they are fit and proper people; they are not going to have to re-satisfy the fit and proper person tests every time they invest. I was pleased to hear that we are getting the near-unanimous support of the House for most of these changes, recognising that overseas investment has supported New Zealanders’ wellbeing for generations.

We have also improved the benefit to New Zealand test, which is, again, a mechanism for reviewing investments in land. We have simplified and clarified the test requirements whilst maintaining the test focus on the investment’s benefits consistent with the outcome of a High Court case last year and recognising the important role that the broader regulatory system plays in ensuring investment is not harmful, such as the Resource Management Act. I’ve been resistant to calls from some people who say that we should have a bigger environmental test sitting in the Overseas Investment Act, when, in actual fact, we need decent environmental rules applying to everyone, whether they are overseas investors or New Zealanders, and those tests arrived under the Resource Management Act and don’t need to sit in the Overseas Investment Act.

The bill also delivers improvements to provisions passed in last year’s Overseas Investment (Urgent Measures) Amendment Act. This filled some critical gaps in our regime to ensure that some of our most sensitive assets can be protected. There is a national interest test now that carries forward for ever strategically important assets like ports and airports.

For some of the infrastructure that has monopoly characteristics that is really important to the functioning of the wider economy, we think it is right that the Government be able to have a look at those investments and think, whether in a time of global financial crisis or something, it is better that those assets sit in the ownership of New Zealander owners aligned to the fortunes of the New Zealand economy, rather than owned by overseas people who might prefer the capital investment needs of their assets and other countries’ in their home country rather than New Zealand.

Also, there are sometimes monopoly issues that will always be present. I have a view that sometimes monopoly assets are best kept in the ownership of New Zealand investors, because, using monopoly theory, there will always be some level of monopoly rent extracted and why would you want to export that overseas if you’re not capital constrained in your own country? In any event, they are now subject to rigorous review and can only proceed if the investment isn’t in our national interest.

I also note that investments in media companies are now included within the purview of some of the new tests that are being introduced in the Act, and, again, I think that is necessary. I think countries should be able to control foreign ownership in media companies—they won’t always want to but sometimes they will.

This review was really aided by submitters and the good work that the Finance and Expenditure Committee made. I thought they made some really good contributions, particularly in respect of farmland. This legislation does put into primary legislation the controls that we have on overseas investment in farmland, land of more than 5 hectares. I think that’s good to do.

We’ve sorted out a very, very confused set of regulations, which this legislation replaces. Those regulations have competing tests, which, really, you can’t sort out rationally, because they head in different directions and how successive Governments have managed the somewhat confused nature of those regulations is by way of a directive letter from the Minister of the day to the Overseas Investment Office. Those letters have changed from Government to Government, which has made for regulatory uncertainty. And, as well as that, in respect of such an important issue, it is not right that that can be changed by way of ministerial fiat, and that sort of important provision should sit in primary legislation.

So we’ve elevated into the primary legislation a better set of principles, and if any other party wants to stand on a platform that says we should sell our farmland to overseas buyers, they are going to have to stand on that and convince New Zealanders to vote for that as a proposition. So those provisions are now codified and made more rational.

I was surprised to learn that, until now, the advertisement that you had to give to the public before you could sell overseas could be given after you entered the contract to sell, which was nonsense.

💬 DEPUTY SPEAKER: Order! The member’s time has expired. The question is that the motion be agreed to.

What an exciting speech from the Minister on this issue of overseas investment. It’s a pleasure to be talking on this. National will be supporting this bill, and we’ve made that position clear throughout, although I would say there are certain aspects of the bill that we still have concerns with, and I’ll deal with that in a few minutes.

I think it’s worthwhile just reminding ourselves that this bill is seeking to change the urgent changes that were brought about as a result of COVID, and there were a whole lot of changes that were made that basically granted the Minister, and the Minister’s just spoken, very Draconian and wide-ranging powers to basically limit any overseas investment into New Zealand on the premise that as a result of COVID we were going to have lots and lots of New Zealand companies that would fail. We’d have all these international buyers coming in, swooping up and buying them for a dollar when they had previously been worth a lot of money. At that point, when the legislation was passed under urgency by the Government, we had significant concerns with that and certainly had a view that they should be only very temporary of nature. This bill is about getting back to normality and trying to put in place some provisions and conditions that have longevity around them.

I think the issue around this piece of legislation—and the Minister has done a pretty good job of sort of going through it, but there’s sort of three key issues. The first one is around the issue of sensitive land and how that’s dealt with, and I’ll pick up on that in a moment. The second one is around a transaction involving so-called foreign entities. And the issue we’ve got, if we think about a company like Fletcher Challenge, which grew up and was owned and was established in New Zealand, is because it’s listed overseas in the Australian market, it is technically under the current rules deemed to be a foreign entity. Because it’s more than 25 percent owned by foreigners and because it’s a listed company, that’s what happens.

The rules change under this bill to have a couple of tests around that. One is if one person, one foreigner, has the ability to control more than 50 percent of the people that are put on the board or governance arrangements, then that person and that company is now deemed a foreigner. So it gives a bit of latitude from that perspective.

The other one is whether there’s more than 10 percent of a company’s securities who—means that they control, again, the 50 percent test, but actually means that what it does is gives flexibilities for those listed companies to actually be able to operate without being deemed foreigners. And from that perspective, I think we’ve got quite a good sort of basis in terms of determining what is foreign ownership going forward from now.

The third element relates to leases. Previously, leases were captured. What the bill sets out is if the lease is less than 10 years’ duration, it’s actually not captured now, under the bill. That’s a good thing, because if you think about the viticulture industry, leasing of land by wine companies—often they will be deemed to be foreigners. They are leasing the land, so they’re not buying it, obviously. If they have a lease for less than 10 years, it means that they can continue and it’s sort of the current way that they operate in New Zealand without being subject to undue scrutiny, and I think that’s a pretty good aspect to it.

The issue around the assessment of transactions—the bill introduces a couple of provisions. The first one is around this test around whether, in fact, the land is sensitive, and the Minister alluded to that. There’s now very clear rules set out in the table around whether, if you buy a business or even if you buy a very small plot of land, it’s deemed to be sensitive because of being a neighbouring or contiguous with another piece of land, such as a marine area or even a coastal area or a river or whatever it might be. That, under the previous rules, would have been deemed subject to overseas investment. So that sort of clarifies that quite significantly, and I think that’s a pretty good aspect to it.

The other aspect is the definition of, if you’re going to go through and assess a transaction, whether in fact—under current rules, we used to have what was called the counterfactual—if a foreigner bought it, would that foreigner do even more than a New Zealand investor? And the test, the counterfactual, was that they had to do more in terms of either growing the business or employing more people, or bringing further environmental impacts. The test now is a little bit simpler, and it’s a before and after test. Related to this is the issue around advertising, which means that this transaction will need to be subject to some form of advertising. That is the test to make sure that the New Zealand interests or New Zealand component of that test is actually properly understood and quantified.

The other aspect to it is a proportional approach. So if the land is of a really sensitive nature because of the scale of it, then the proportionate approach is, in terms of the decision making, the benefits will need to be proportionately higher if it is to pass and be approved. And I think, again, that’s a pretty good approach to dealing with the issue of certainly sensitive land.

I think some of the other areas that we talked about in the committee, and I think it’s been quite useful discussion, is the one around investment by sovereign wealth funds. At the moment, we have a lot of foreign sovereign wealth funds. These are entities that professional habitual investors—they may come in and buy shares, those types of things on the New Zealand Stock Exchange. They do not necessarily automatically need to be now subject to a national interest test. There may be occasions when they should be, if the ownership or control of those sovereign funds is unclear.

The other aspect is a call-in power, which the Minister now has. This is when the asset or transaction involves something that is strategically important to New Zealand. So this is an issue that’s pretty important in terms of how it’s exercised by the Minister. The Minister spoke before about ports and airports and other such assets. The call-in power is quite a significant issue and power and needs to be exercised judiciously, and we are hopeful that we’ve got the right balance in the legislation for that to occur.

But the big issue that we’re unhappy about in this bill is that the issue of land which is subject to forestry cutting rights or could be acquired for forestry rights—we are concerned that this is the only major issue that was not dealt with in this bill. So just to give backdrop to this, forestry land or forests in New Zealand are currently owned in excess of 70 percent by foreigners. So that means that less than 20 percent, or less than 30 percent actually, is owned by domestic owners.

That level of foreign ownership of our forests is something that we should be concerned about. Under the direction of the former Government, a very special dispensation was made, led by Winston Peters, to make sure that foreign companies could come in and buy up to 999 hectares, provided it was going to be used for forestry use or forestry cutting rights. We were very concerned about this at the time. We thought that to have a 5 hectare limit for farmland but a 999 hectare right for foreigners buying forests was disproportionate and actually an unwelcome arrangement.

This is one of the issues that we think this bill does not adequately address. We put up a Supplementary Order Paper yesterday to try and deal with this issue, because we want to make sure that we do not allow foreigners to come and buy our forestry assets without sufficient scrutiny. That’s not to say that they shouldn’t be buying them, but they should be subject to the same amount of scrutiny that other land acquisitions are under. We’re disappointed that that’s not in the bill, but it’s recognised that the bill is going to be passed.

I’d just like to finish off by thanking all of the officials for the help during the course of working through this bill.

Tēnā koe e te Mana Whakawā. It’s a pleasure to stand on this third reading of this bill, on the overseas investment regime. It’s good to see that we’ve got pretty much consensus around the House on what is an important piece of legislation seeking to protect New Zealand’s interests. The position of the National Party in respect of the forests is noted, and it was raised at committee—I want to absolutely recognise that.

But I want to step back a moment, if I may, and just look at the underlying philosophy of this, and I think when we do that we’ll see why the suggestions of the National Party weren’t adopted, because I think this is not about creating some kind of fortress New Zealand—quite the opposite in fact. This bill, in particular, is looking at fine tuning. You know, we’re on the third Act, and there’s reasons why we’ve got three of them, but fine tuning our overseas investment regime to make good investment easier and to make it harder—to make the system more sensitive, to pick up important situations which require far more scrutiny around what is sensitive and what is strategic.

If we look—as Mr Bayly rightly notes, I don’t know the numbers, he perhaps does, but large amounts of our forests are owned, cutting rights and the like are owned, by overseas investors. And that seems to be working. This isn’t a situation where we see some skewing of the market or the loss of a critical strategic asset of New Zealand, rather—whilst I do absolutely recognise recent supply chain issues with timber and the like, by and large our timber and forestry industry appears to be working well and foreign investment in it does not seem to be problematic in any way. Having said that—and we heard Mr Parker, I think it was only yesterday, say that keeping this area of the law in shape is important—it’s not out of the question that at some future date that may be revisited.

But the real point here is that this is a piece of legislation which says we want to attract high quality investment and not just the capital, because capital is only one part of the picture, but investors who bring particular expertise. We heard about the benefit to New Zealand test and essentially the abandonment of the counterfactual test, because the counterfactual—and it pops up in various areas of the law, including competition law, but it’s always a bit fraught, because it’s a “What might happen if we allow it and what might happen if we don’t.” And so your counterfactual is, by definition, hypothetical. So it is a bit of crystal ball gazing, whereas you’ve got a much more concrete test now—the before and after test—which asks the question, “What is the status quo?” and then asks the next question, “How will the status quo be improved if we allow this overseas investment?” You have to show, ultimately, a benefit to New Zealand to do that.

I guess the real point here is that when we’re doing that, when we’re asking what the triggers are for this, we want to have a proportionate approach. One of the big complaints to date, and I want to say it’s a legitimate one, is that people who are looking to invest in New Zealand had a regulatory burden that was too high. So while we’re not burning the regulations, we’re absolutely seeking to make them a lot more workable in terms of having things like standing consents. We want a proportionate framework. So in this before and after test, which is much more workable as part of it, and also a framework where you won’t have to, every time, go through the entire process of ascertaining the credentials of the investor and the nature of the investment and so on and so forth. So we see that as a really important part of it. The before and after test will now simply ask the question, “What is it now? How will it be improved later?”

I do want to touch on the other aspect of the benefit to New Zealand test, which was very much robustly discussed in committee—and I want to recognise the Greens for raising this—the question of whether you simply ask what’s the benefit, what are the pluses that we can see, and what are the direct economic costs, or whether you have a much more open enquiry and ask what are the wider detractors for New Zealand. As you’d expect from the Greens, quite rightly, they identified the bringing into account of environmental issues. Now, I guess the point to be made here is that, whenever we’re looking at any activity within New Zealand, any, for example, use of land, any activity on conservation land, any of those kinds of things: there is a thoroughgoing regime. And any person who is making an application—whether it be to run a tour through Milford Sound or mine in Waihī, they have to go through a rigorous and robust process. That’s a process which occurs after approval has been given. So there’s two quite separate questions. One is “Is there a benefit to New Zealand?”; the second inquiry—still an important inquiry, absolutely, but it’s not one you should have to do twice, you should only have to do it once—do the benefit to New Zealand enquiry for overseas investment, first, do the environmental enquiry or whatever other enquiry is important, do that one next. They’re still there, and it’s not appropriate to conflate those and, essentially, have a resource management hearing in an overseas investment context. So that was really important.

I guess the other thing that cropped up in there was relatively straightforward, but the idea that investments go up and down. There are some situations where that’s not problematic, and we know that, by dint of company law, there are some thresholds that are important. The 25 percent threshold is important, the 50 percent threshold—where effective control exists, the 75 percent threshold, and of course total control at the other end. Within those boundaries, creeping or shifting, creeping sounds nefarious, it’s not nefarious, but shifting shareholdings or ownership interests on something like—we mentioned, the Fletcher group of companies, which is an overseas company, although has strong New Zealand roots, it’s not invidious at all. So we don’t need—simply, if there’s an additional 5 percent being purchased, for example, it doesn’t cross a threshold. We don’t need a special Overseas Investment Act inquiry into that. So I thought that was sensible and a good tidy up.

And, of course, around farmland—I think the tightening up around farmland was really good. Minister Parker just identified the bizarre situation where you could enter into a contract for the sale of farmland and then advertise later. Now, that is truly strange. I think the point there being farmland is important to New Zealanders, both economically and culturally. And if farmland is there on the market, it should absolutely and genuinely be put on the New Zealand market so that a New Zealand person can buy that. So that’s a really good idea. Of course, along with that, things like leases for less than 10 years, the committee had a really good discussion around that and, you know, to be fair, we had people coming in arguing that it should be 35 years—which is the extent of the longest consent you’ll get under the Resource Management Act—and various other articulations, depending on the particular interest held. But, at the end of the day, I think 10 years is a pretty long period of time. You can get a good economic return on your land in 10 years, but it doesn’t kind of creep to that point where it approaches a much more significant holding, almost approaching a freehold ownership.

Look, we did some other tidy ups, and one that I thought was important was fees and levies. There are fees and levies charged, as you would expect. There was a change so that the levies could look backwards and forwards up to four years, and I was concerned that that looked kind of like revenue gathering. It was a really good inquiry around the framework and whether it was appropriate to kind of have overs and unders over a long period of time—for fees and levies. Sounds technical, but nevertheless important. I was assured, and I take that assurance from officials, that this was really only a cost recovery framework, but smoothing out some of the longer-term projects that they have. So look, I guess, on closing, that shows that it was a technical bill, but a really important one. I’m very happy to commend this bill to the House.

National supports this bill. It’s one of those bills that we support with a clear understanding that it’s far from perfect, that the Act that remains could also be better, but that this is a step forward and an improvement on the status quo.

From a principled basis, the National Party supports foreign investment that creates productive, sustainable economic growth. We believe that foreign investment can lead to increased jobs and increased innovation and can help generate wealth for New Zealanders. We think it’s important that the law around foreign investment strikes a balance between screening for risk and ensuring that any investment accrues benefit to New Zealanders while also ensuring that in setting out that law and setting out those requirements, we don’t create such an intolerable compliance burden that New Zealand essentially becomes a closed shop.

Of course, the reality is we are living in a hyper-competitive world where capital has many places it can go. We are an economy that is constrained by capital, and there have been many reports written on the impact this has on our productivity levels and on the opportunities we have for innovation and growth. So it is important in that context that we remain a place where the world’s capital wants to come to invest in projects that can drive better opportunities for New Zealand and can drive innovation and job creation. We have to get the balance right.

This bill is a step forward in that it does reduce the regulatory burden around some types of foreign investment. Some of these changes are small and specific but very important to the people who interact with this regime. I want to acknowledge in this speech the select committee process and those who submitted to us about their experience of interacting with this piece of legislation and the practical effects it has. Our select committee heard from a broad range of submitters; everyone from Federated Farmers through to Woolworths, through to people involved in property investment—all sorts of people talking about what the regime has meant for them in practice. There were stories of significant delays, months of process, and huge legal fees, and so any steps that we can take that reduce that regulatory burden so that money actually goes into the right things are steps forward.

An example of that is removing the screening requirement for non-residential leases. Another example of that is streamlining the consent process for subsequent investment for overseas investors who’ve previously been screened. So they’ve already gone through the whole process of being analysed, being looked at, and they don’t need to be taken through all of that again. This bill is a step forward in that regard.

It is also a bill that, I think, benefited from the select committee process, because issues were drawn out that are reflected in this final piece of legislation. In particular, I want to draw attention to this issue around productive farmland, because what we had discussions about at the committee was the fact that sometimes land that is zoned as rural land or land that is zoned as potentially productive or farming land is actually land on the outskirts of a city or a town that is much more likely to be used for commercial or residential development. As National’s spokesperson on housing, this is an issue that is close to my heart. It is certainly my view that there is a lot more land that in the future needs to be able to be made into housing. So it is good that this bill gives the Minister the ability not to use stricter approval criteria if farmland is likely to be used for residential development. That is an important improvement, an important piece of discretion.

Members throughout the debate on this bill have pointed out that we still have an Overseas Investment Act regime that doesn’t create a level playing field, and I do want to focus on that. In a world where we allow foreign investment but we do so subject to quite strict caveats, we need to be very careful that we’re not incentivising one form of investment over another to the detriment of our communities, because that is, in fact, a situation that will lead to perverse outcomes, and, as it stands, our Overseas Investment Act does tilt the playing field. It makes it much easier for overseas investors to purchase sensitive farmland if they’re going to convert that land into forestry. So what we are seeing around the country is that while foreign investors may have difficulty buying productive farmland for the purposes of keeping that land as a productive farm, they have very little difficultly in purchasing land that has been productive farmland for generations and converting into forestry.

We in the National Party have no problem with forestry—forestry can be a good thing—but we do have a problem with a regime that favours forestry conversion over other forms of investment, because this is having a perverse impact throughout our rural communities. We are seeing that the economic and social characteristics of many parts of New Zealand are changing very quickly. There has been an immediate response to this Government’s decision to tilt the playing field toward forestry in that screeds and hectares of land are being bought up for conversion into forestry, and that has meaning for communities. There are few jobs because forestry doesn’t require as much labour and manpower and womanpower on a day-to-day basis, and in some communities it’s also having pretty significant environmental effect. These are very human stories. These are people who no longer are able to have enough kids at the local school, because what have always been productive farms are bare pine forests. People no longer have enough people for the rugby team. It’s the changing face of rural communities.

Of course, our rural communities have changed and have been resilient and have withstood a lot of change, but that is only change that is for the positive if we can see that it’s actually happening on a level playing field. Our current regime does not allow that. It incentivises foreign investors towards one form of investment, and we, the National Party, have raised our concerns about that. We have noted that while this bill is a step forward, there is every opportunity for Labour members opposite to amend the Act further to remedy this imbalance. It’s an imbalance that was born out of a coalition agreement with the New Zealand First Party, and it’s my understanding that even the Green Party oppose it now.

So we have one set of defenders of this unbalanced playing field, and that is the Labour Party. I want to take this opportunity to say to those in the rural communities across New Zealand who have spoken to me and my colleagues about this issue, that National has their back. We understand how important this is. We understand how urgent this is. We understand the changing face of your communities, and it is abundantly obvious to us that while the Labour Party has time to make pages and pages of changes to the Overseas Investment Act, it has chosen not to take this opportunity to remedy the major challenge for our rural communities right now. If those people in those communities want to know who has their back, it is National, and we will continue to advocate on that issue. Thank you, Mr Speaker.

Fa‘afetai tele lava, Mr Speaker. It’s a real pleasure to be finally at the third reading of this bill, a bill that aims to improve the efficiency of the Overseas Investment Act and regime while ensuring that New Zealand still remains open for business and to protect our assets, especially our farmland. The bill is a culmination of the Government’s work to reform New Zealand’s overseas investment regime and to ensure that we can continue to attract productive overseas investment that’s sustainable and inclusive while also protecting our taonga.

As the Minister outlined earlier, these changes have been in train since 2018. The first Ardern Government made some key changes to the Overseas Investment Act to address the concerns of Kiwis that too many of our homes were being sold to overseas investors and the protection of our forestry rights. With the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP) agreement on its way through, the Government at the time realised we had to be able to futureproof, to have the ability to screen so we could protect our assets. Previously, there were no restrictions on these assets, and if we had not made this change, there was no way we would be able to protect them once the CPTPP came through.

A big part of this work is that the Minister, in his second reading, referred to the ability to protect our assets when COVID hit our shores last year, in 2020. Although we are in a better position than we initially thought back in 2020, I can recall, very early in January last year, that the first piece of regulation as a Government official that we had to deal with was the fisheries quota—rock lobster quota. Normally, every year, our rock lobster industry has to send rock lobster over to China for the Chinese New Year, and at the time, because COVID had hit China, fisheries officials were incredibly concerned about the impact on businesses if those orders ran dry, because that’s exactly what was happening. Chinese New Year celebrations were being cancelled in China; so our rock lobster industry sought the assistance of the Government to be able to put in regulations to not have to catch the particular rock lobster or, for those that they could catch, be able to carry over that quota. They were really concerned at the insolvency that may come from the stopping of the sales.

So, again, although we are in a better position, at the time Government officials moved really quickly, and the Government supported the advice that was coming through. So we had to act; hence the Overseas Investment (Urgent Measures) Amendment Bill, now the Act. The Overseas Investment (Urgent Measures) Amendment Act gave the Government the backstop tools needed to manage significant foreign investments, because the concern was that businesses, to stop themselves getting into insolvency, would sell their assets or sell their businesses to overseas investors. So we introduced a national interest test and a temporary call-in power to ensure that investments in our most sensitive assets, including our critical national infrastructure, were protected. But we needed to look ahead to the future, and we were conscious that, once we came through the worst, we needed to be able to balance making it easier for foreign investors to be attracted to come to New Zealand, to want to invest in New Zealand, but also have those protective measures to look after our special assets. So this bill builds on those changes made in 2020 urgent measures Act, and makes the most significant cuts to red tape since our rules were introduced in 2005.

This bill will reduce the number of transactions that require consents by around 30 percent. It’s a real balance for the Government to be able, again, to attract that overseas investment while protecting our taonga. Key changes include no longer screening investments in certain pieces of land simply because they sit next to each other. These were a number of issues that we dealt with during the select committee process, and again I’d like to thank the submitters who came and submitted on the bill. The changes included no longer screening very short-term leases and approved investors that are making small increases in an existing holding. So, again, it was a balance between compliance costs as well as ensuring that we have attractive investment.

The bill also simplifies the approval process for most transactions to ensure that limited resources are dedicated to reviewing transactions that are most likely to pose risks, such as critical infrastructure, as I’ve spoken to again. The Minister referred to it as that investors of proven good character would be able to access a fast-tracked approval, and the test for acquiring land will be simplified, reducing the number of considerations from 21 to seven and making the threshold for consents clearer. The national interest test will also be better targeted, no longer automatically applying to investments by State-linked pension funds, similar in nature to the New Zealand Super Fund, that operate at arms’ length from the Government. And, as I mentioned in the previous reading, part of the call-in powers was to make sure that there were particular exemptions that were available through the bill, and again the select committee made those changes in order for us to get to a better balance.

The bill complements the further changes to the urgent measures Act because it makes sure that the changes do not serve as a barrier needed for development such as housing on less productive land, giving the Minister the flexibility to not apply the higher threshold in such circumstances.

If I can go back to embedding a higher threshold for farmland, which the Minister touched on briefly. While the Minister said it’s critical that we do everything we can to attract valuable investment, this cannot come at the expense, again, of protecting our taonga and our values. This is why the bill maximises New Zealand’s chances to be able to protect farmland in two ways, as the Minister touched on. First, it codifies that foreign investors cannot acquire farmland unless they bring substantial benefits, such as new technologies or jobs to New Zealand, again, balancing the need for attracting productive investment as well as protecting our taonga. Secondly, the bill ensures that New Zealanders have a genuine opportunity to purchase farmland by requiring it to be publicly advertised before an overseas person can buy it. I remember during the select committee we had a really good discussion around advertising, and it was something that we didn’t want to be just a tick-box exercise; we wanted it to be genuine advertising, on various platforms. I remember having that conversation with officials, saying, “Well, is an ad in the paper sufficient for advertising?” And we came to agreement that, no, it wasn’t; there had to be some genuine advertising, a genuine trying to attract Kiwis to be able to invest into this land. And if it didn’t, then we were OK; we would go through the process with the Overseas Investment Office.

I think the Minister ran out of time to be able to thank officials in his speech. I want to pick that up, having been a Government official who worked in the last term, going through the changes that we did for COVID. The Minister and the select committee would like to thank the staff of Treasury, would like to thank the staff on the overseas investment bill, who not only worked really long hours last year to get that urgent measures Act through but also, as soon as that Act was through, had to start working on this particular bill. This bill was only made possible because of their work and their long hours. Again, to the Finance and Expenditure Committee, we were absolutely well served by those officials, and we cannot take that for granted, particularly in this time when, having gone through a whole year of policy development, that they continued on.

So, again, I go back to the main point of this bill. This bill is about improving the efficiency of the overseas investment regime while ensuring New Zealand assets are protected, that our taonga are protected. This is a culmination of our Government’s work to reform New Zealand’s overseas investment regime and to ensure, again, that we can attract productive, sustainable, and inclusive investment that we need to boost economic growth and protect our taonga at the same time. I’m proud to commend this bill to the House.

Tēnā koe, Mr Speaker. Thank you. I’m pleased to take a call on behalf of the Green Party on the Overseas Investment Amendment Bill (No 3). Can I start by taking issue with some of the comments by Nicola Grigg—

💬 David Seymour: Willis.

—Willis, sorry; thank you, Mr Seymour: Nicola Willis—in terms of the fact that the National Party supposedly is very supportive and has the back of the rural community. One of the first things that the Government did in the last term was amend the ministerial directive to the Overseas Investment Office in relation to rural land. Under the former National Government, the provisions in the overseas investment legislation around a requirement for screening and consent for rural land above 5 hectares had so many loopholes that you could drive a truck through them. One of the key loopholes was that the ministerial directive by the former National Government was that the substantial and identifiable benefit test only applied to large farms, which could be several times larger than a standard dairy farm. The previous Government sent a directive to the office for the overseas investment changing that. What this bill does is embeds those provisions around rural land in the legislation so it’s not just relying on a ministerial letter, and it means that any future Government will need to come back to this House, rather than the Minister of Finance simply changing a letter.

As other speakers have noted, one of the other key changes in the legislation is around the counterfactual test. That counterfactual test arose from the courts in the Crafar cases. It was built, really, on the analytical framework that the Commerce Commission use when assessing anti-competitive behaviour. A counterfactual test is quite hypothetical, because the decision makers under the Overseas Investment Act had to consider what would be the benefits to New Zealand of the status quo and what would occur with the investment and without the investment. It got to be quite hypothetical and somewhat divorced from reality. This bill, in simplifying the test to what it will be before the potential overseas investment and what it would be after the proposed overseas investment is actually a clearer framework and a clearer criteria for Ministers and the Overseas Investment Office to make decisions on applications.

So that is a significant improvement, as is, rather than having over 20 factors to determine whether there is a benefit to New Zealand, shrinking those down and making them much clearer. We can have overseas investment in Aotearoa New Zealand if it provides a substantial benefit to New Zealand; if it creates new, productive assets; if there aren’t significant impacts; if there is significant participation by New Zealanders; and if there is a significant increase in added-value processing. So it’s those sorts of issues that then are front of mind, and that’s one of the reasons that the Green Party is supporting the bill.

It’s also supporting the bill because there have been changes around where an overseas investor is applying to take water for water bottling or extract significant quantities of water, where, in that instance, because of the public concern about this issue, there has to be an assessment of sustainability. Other speakers might say that those issues are normally dealt with under the Resource Management Act, but, in terms of water, it is a common asset; there is significant public concern about overseas water-bottlers taking our water and exporting it; and there is no resource rental, so there’s no commercial return to New Zealanders.

There’s also additional consideration of Māori cultural values and what impact the investment would have on those.

One of the areas that we’re disappointed in is that Government did not see fit to support the Supplementary Order Paper (SOP) that I put forward on behalf of the Green Party around forestry to make sure that forestry was on a level playing field with other applications to purchase land by overseas companies. We’ve seen significant investment by overseas companies—over some decades now—in the New Zealand forestry sector. In fact, about 70 percent of the forestry industry is overseas owned.

We are not objecting to forestry per se—the National Party says the same, but it does seem to be objecting to forestry as a land use. What we wanted was that those forestry companies, when they are buying farmland, have to establish that there was a significant benefit, and that might be that there was significant added-value processing requirements around supplying timber to processing companies in Aotearoa New Zealand rather than so many of our logs sitting on our wharves and being exported in raw form.

I hope that the Minister does ask officials in Treasury to look more closely at that so that we are not seeing the overall alienation of farmland for significant forestry investments.

One of the other changes that is of benefit is the fact that the good character test has a lot more clarity around it. It goes to factors around things like criminal offences. There’s also an ability to take into account an applicant’s tax payment record and, if there has been unpaid tax, to take that into account. So there’s quite a lot of enhancement around tax disclosures.

The other changes that Dr Duncan Webb noted were around the issue of where there are changes in the level of ownership—shareholder creep, I think it’s been called—so that where the shareholding just increases slightly, that is no longer a factor which triggers an application under the Act. Instead, it is where that ownership by overseas persons passes defined thresholds, which match those in the Companies Act in terms of the ability of the shareholder to block resolutions and the like—25 percent, 50 percent, and 70 percent. That provides greater clarity and will mean that the office is not burdened with considering applications that it doesn’t really need to.

One of the other key measures is around the urgent measures test, which Barbara Edmonds talked to. It was really helpful that this legislation was going through as a backstop to the measures which Government had to put in place around urgent measures in relation to COVID because of that concern that we would get vulnerable New Zealand companies—because of the impacts of COVID: loss of business—being bought up by overseas interests, putting in place a strong regime around national interest and greater ministerial assessment. This bill, in following along behind, has allowed that regime to be adjusted, still giving the Government the power to screen some of those transactions where they breach our national interest thresholds. So while we are disappointed by the lack of the forestry SOP, there are a number of other changes which have significantly improved the legislation, and the Green Party will be supporting it.

Members, it’s come time for me to leave the Chair for the dinner break. The House will resume at 7 p.m.

Sitting suspended from 6.02 p.m. to 7 p.m.

The House is resumed. When the House rose for the dinner break, we had just completed the sixth speaker on the Overseas Investment Amendment Bill (No 3). Would some member like to seek the call.

Thank you very much, Madam Speaker. I don’t like to trifle, but I don’t think it’s fair to say we’d “completed the sixth speaker”; I think the sixth speech had been completed. I’d hate to see the House “complete a speaker”. That would be—well, I’d hate to think what that would look like.

ASSISTANT SPEAKER (Hon Jacqui Dean): So helpful.

But having dealt with that minor matter, I arise on behalf of ACT in opposition to the Overseas Investment Amendment Bill (No 3). Let me just say a few things, first, about the importance of foreign investment to New Zealand.

It’s possible to tell the history of New Zealand as a history of foreign investment. Kupe showed up with a waka hourua and a couple of kunekune pigs, and we’ve been importing foreign capital to New Zealand ever since. We’ve never looked back, and it is absolutely critical that we don’t rely purely on the savings of New Zealanders to capitalise the businesses, the farms, and the firms that make New Zealand prosperous. A little while later, after Kupe’s arrival, Sir Joseph Ward, the then finance Minister, later Prime Minister, had to go to London and beg for favourable terms for credit so that New Zealand could actually expand and capitalise its infrastructure.

These are the stories of our history, all the way from the arrival of the first person we’ve been importing foreign capital, and long may we continue to do so. I know there’s some people who don’t like it much. There are some people who don’t like foreigners very much. I personally like foreigners. There’s a lot of good people in the world. Many of them live in other countries. Good jokers and good joker-ettes live in New Zealand and elsewhere, and I think we should actually embrace them. But even people who don’t like foreigners should be in favour of foreign investment. Let me explain why that is.

Immigration is when foreigners come and live here, potentially next door to you. Foreign investment is when they stay home and just send you money. What a great thing is foreign investment, essential to New Zealand’s economic future, and, unfortunately, New Zealand has a history in recent times of being one of the most fortified against foreign investment, and people want to send money to New Zealand. Recent example: Microsoft, a well-known software company from the United States, wanted to send money and know-how and capital to New Zealand to establish a data centre in Auckland. What a wonderful thing—our friends around the world wanting to invest in New Zealand, providing the capital, the know-how, the infrastructure for New Zealanders to do their work—and yet, oh no, no, we have the Overseas Investment Act to make it harder and delay and slow them down in getting their capital here. In fact, we’ve been ranked fourth-worst in the OECD for openness to investment. So there’s an awful lot of work that could be done by a Government that wanted to improve our legislation.

What does this overseas investment bill do? Is it worth supporting? Will it help reinforce New Zealand’s tradition of foreign investment? Will it tear down some of the barriers to foreign investment that we’ve recently erected that impoverish us by making it hard to get foreign capital? Well, it says it’s “embedding a higher threshold for acquiring farm land, and ensuring that farm land is advertised in a way that best ensures New Zealanders have a chance to acquire it”. I heard the Minister responsible say, “We don’t want to sell our farms.” Well, let’s just think about what that means for a moment. I mean, first of all, “our farms”—what is he talking about? Has New Zealand secretly become a sort of North Korea of the South Pacific with one big collective farm that’s for sale? No, actually, New Zealand individuals own farms, and it’s up to them to decide who they sell them to, not up to someone else to decide. But it turns out that, actually, if you want to sell your farm to one of those terrible foreign people, then you have to advertise that you’re doing it in the paper.

“Enabling decision-makers to consider the effects on sustainability of investments that involve water bottling or bulk water extraction”—now, isn’t this interesting? The Minister got up and said, “I don’t know if there should be environmental considerations in the Overseas Investment Act because, actually, we have the Resource Management Act, we have environmental regulations in New Zealand.” Now, if we need environmental regulations for foreign investors, are we saying that we don’t mind if local investors damage the environment? Well, of course we’re not. We have a robust environmental regulatory regime for people who are using land, such as bottling water, all up and down New Zealand. Why would it matter who the person was? It’s pure politics.

Then there’s “requiring investors to disclose information relating to their proposed investment structure and tax treatment to Inland Revenue”. Well, there you go, yet another hurdle, another burden where people find themselves having to justify themselves to bureaucrats whose greatest power is the ability to say no, to stand athwart progress, yelling “Stop!”

Then it says, “better recognising Māori cultural values. For example, the bill would require decision-makers empowered by the regime to take into account an applicant’s plans to protect or enhance wāhi tūpuna, wāhi tapu areas, and Māori reservations.” Well, really? I mean, why is that actually different from the regulatory regime we have for land use in the rest of New Zealand? It’s only if you’re a foreign investor? We could argue about the level of commitment we have to preserving and upholding Māori culture, but why would we have a different regime for people to do that if they don’t happen to be born in New Zealand? Surely, we would want to have a regulatory regime to protect Māori culture—if, indeed, it needs protection by regulations—that applies to everybody.

Then it goes on to say, “the Government intends to reduce the burden that the overseas investment regime imposes on investors and the regulator. The bill would achieve this by: no longer screening non-residential leases of less than 10 years”—I’m sure there will be some benefits in that. “Allowing investors that have previously been screened and approved to use a streamlined consent process for future investments”—well, that sounds like something that should have been done years ago, so that’s not such a bad thing. “No longer requiring a large range of low-risk transactions to get consent. For example, the bill would no longer require consent decisions on investments in less sensitive land that is only screened because it adjoins sensitive land”—well, these are sensible but minuscule, minor changes.

So the question is whether to support this bill. Well, there’s two problems here. Number one is that to justify a change in legislation, you have to justify all the imposition of the uncertainty and disruption that you put on people used to doing business. That’s a threshold that there has to be some substantial improvement, and, unfortunately, overall, when you look at the overall amount of restriction on investment of the people trying to send money to New Zealand—a process we’re so hostile to for some reason—you’d have to say this is a mild step backwards. That doesn’t justify a change, so the ACT Party can’t support the legislation.

What the Government could have done, and should have done, is gone back to first principles and asked: what is the purpose of the Overseas Investment Act? Well, surely it is to stop people who would do harm to New Zealanders—people who might, for instance, want to have a military installation, people who might want to acquire land for strategic purposes, or people who might want to somehow use their ownership to leverage New Zealand politics. Those might be good reasons to actually prevent people investing in New Zealand because they wanted to do harm to New Zealanders. That’s what a good regime would look like—so you can invest so long as you’re not doing harm.

But instead, we have this regime where we have to prove that an investment has net benefits to New Zealand. Well, just a minute—how can anybody truly know? Which New Zealanders? What’s a benefit?

Surely, the fact that you have a willing buyer and a willing seller already tells you something. The person who owns the property values the money offered more than the property they own. If that test doesn’t make it net beneficial to New Zealand, what will? We end up with a situation where in order to sell your property and get investment, you have to contort yourself for a process of pure politics, deciding what a valid benefit for New Zealand is. That, unfortunately, is pure banana republic stuff, and until the Government is prepared to go back to first principles and ask what the role of Government and regulating foreign investment is and actually genuinely makes it easier for people to bring capital to this country and choose how to sell their own land and who to sell it to, the ACT Party will not support legislation such as this. Thank you, Madam Speaker.

It’s a pleasure to rise to talk about a bill in its third reading, particularly after that speech from ACT. It’s always actually something that really reminds me of my job, because the view of that party is so different from my own, and I stand with a party I’m really proud of, because it has come a long way since those ideologies dominated this House. We’re actually in a situation where everyone else is in consensus—other than ACT—on this to a large extent, and that’s because we can all see the value in leadership in the parties in this House actually doing their jobs, which is to make sure that the interests—

ASSISTANT SPEAKER (Hon Jacqui Dean): Order! Order! The member will come back to the bill.

Sorry. It is absolutely about this bill, because this bill is about the parties in this House doing their job and making sure that, actually, our—

ASSISTANT SPEAKER (Hon Jacqui Dean): Order! Order!

Sorry.

ASSISTANT SPEAKER (Hon Jacqui Dean): I’ve invited the member to return to the bill. This is a third reading speech, and I’d ask the member to confine her comments to what is contained in the bill.

Thank you, ma’am. Actually, today I got a letter that was about this bill. It was a letter that came in after the last speech in this House, asking a specific question, and it made me realise just how important something like this is to very, very ordinary New Zealand citizens. We tend to think about a bill like this as actually being about big business, but it’s not. It’s actually about ordinary citizens and making sure that they get what they need out of a society.

This legislation is a balancing act. It is something that, in 2018, was set out in its objectives. The objectives of the Act were not to discourage investment but to channel it into the right places. So it was about encouraging investment, but it was also about constraining it when that might actually pose a risk to New Zealand. My letter, from a person in Auckland, was simply about her worry that a property that she was involved in in a rest home might actually go to an overseas investor without comment. Of course, it won’t do that, because if, in fact, overseas people or companies were to take over ownership, this legislation would actually make sure that there is sufficient constraint on that.

Just let me go through what this bill does. In 2018, we had a strategy that was to build up our constraint on overseas investment, and that was with the dual purpose of encouraging investment and controlling investment where there was risk. It’s going to control the investment over sensitive assets like fishing quota and sensitive land, and, actually, just assets that matter a lot. In 2020, that became extremely important because we had a crisis in this country, and it was very real as a possibility that there would be a dramatic drop in the share price of a lot of our companies and those companies would be subject to takeover by overseas investors. If that had happened, we would have lost a lot of our taonga, a lot of the things that matter to us. You’ve heard my colleague Barbara Edmonds talking about that specifically affecting something like crayfish.

In that time, some of the rules were put in place, but they were put in place in a way that really needed review. So part of the job of the Finance and Expenditure Committee was to review those changes as well as look at the new ones. The submitters gave us a lot of good feedback, and we have struck a good balance here.

So what we have now is we have an investment regime which, for example, curbs the call-in powers. So the call-ins will be in places where the Minister can block or impose conditions on acquisitions where there is significant vulnerability, and it will be constrained to that. It is going to mean that things like ports or electricity or investments that would actually do some damage if they went overseas into foreign ownership could actually be protected and stay within New Zealand. We heard the Minister talk about his rather deep thought about how monopolies happen in this area and how important it is that those monopolies really sometimes happen within the constraints of our country and we don’t lose control of those.

We have made changes with regard to farmland. It does sound like a little thing, but it was kind of absurd to hear in the select committee that people were advertising farmland after having sold it, and the objection of some submitters was that what we would do if we changed this would be to stop that process and that this would be just, somehow, red tape. We concluded it wasn’t red tape; it was exactly what the purpose of the bill was: to give New Zealanders an opportunity to actually buy that land, to actually allow the people selling it to realise its true value, but within New Zealand hands if possible.

We had a change with regard to leases. Now, that one was one where we really struck a really good balance, I think. We’ve gone for controlling leases that are over 10 years, and that includes the right of renewal being within that time. It would be possible to lease land without really engaging if it’s on those sort of short-term bases, but it will stop the kind of perpetual leases and long-term leases that really alienate that land from New Zealanders.

With regard to foreign ownership and foreign control, I thought that was another situation which really was a good example of striking the balance, making sure that the investment was going into the right places. We now have a rule that says that foreign control, if it’s over 25 percent, will need to be screened, but we really distinguished between control and passive investment. The real valuable money for us is in things like, as my colleague Mr Bayly talked about, sovereign wealth funds, the super funds, the buy-backs of CEOs. Those things will all be able to be done without red tape, and my colleague Barbara Edmonds made the point that this is intended to mean that there’s a 30 percent reduction in the applications needed under this Act. That’s a huge streamlining that’s going on.

With regard to adjoining land to sensitive land, again, there’s been an easing there. Because it’s not really a worry, that adjoining land, there isn’t the need for people to go through the process. There’s also a streamlining over fit and proper persons, so that once you’ve actually got that approval and you’ve been through that rigorous process, it doesn’t have to happen in the same way again.

With regard to non-productive land, I thought this was a very interesting one in terms of the values of the Labour Party. Non-productive land on the edges of cities which could be used for housing is one area where we heard from submitters on rent-to-buy schemes, and they talked about how that land was land that they really saw as potential in terms of them building houses. We also heard from a lot of the rest homes with regard to that land. That is a priority for this Government, just making sure that there are houses for people and affordable houses for people. So there’s been an easing up with regard to that too.

Finally, I wanted to just go back and thank the people we heard from, because it was an extraordinary range of people. I am new to this House, and what I was extremely impressed by was the skill of those people, the fact that they were willing to share at a level which was not just about protecting someone’s interests; mainly it was actually about sharing a vast deal of knowledge. They very much came often from a point of view—particularly the law firms—of actually trying to make this country a better place and trying to make sure that we were actually getting that balance right, we were actually encouraging investment where it should be, and we weren’t stopping people at the door if they wanted to pour money into this country, but we were making sure also that we weren’t alienating things that are taonga from New Zealand. I really appreciate the insights I got from them, and it made a big difference in that process, so thank you.

A five-minute call—Simon Watts.

Thank you very much, Madam Speaker. Look, I rise on behalf of the National Party and as the MP for North Shore to take a short call on the Overseas Investment Amendment Bill (No 3), third reading. National supports this bill. There should be a level playing field for all types of overseas investment in New Zealand, regardless of whether this investment is on a farm, commercial enterprise, technology start-up, or in forestry. This bill works to reduce the burden that the Overseas Investment Act imposes on investors and the regulator, and this is a sensible approach. We are pleased that the Government has finally started to recognise the importance of reducing the arduous administrative red tape that is around investment, red tape that is costing our businesses growth and productivity—red tape that reduces New Zealand’s attractiveness to investment necessary to support a productive and sustainable economy.

Having spent over 20 years of my career working in financial services and global banking and markets, it is clear to me that making New Zealand a more attractive place to do business and a destination for overseas investment needs to be and should be a significant priority, particularly around reducing the burden of regulation. The National Party supports the amendments that have been made to this bill through the select committee process, and I thank those members on the Finance and Expenditure Committee for their contribution. One of those particular amendments was around loosening the requirements around unproductive farmland, which, likewise, otherwise could be repurposed for commercial use, industrial, or residential developments, and I guess this makes sense. So we’re pleased to see that.

What doesn’t make sense is the fact that this Labour Government has not used its powers to remedy the carve-out for forestry, and that is disappointing. But we’ve still got time. I’m only the ninth call this evening, so we might see a change in decision on that before we finish.

In my electorate of the North Shore, we have many bright and hard-working people with real ambition to be best in class, and telling our story and promoting the attractiveness in the North Shore as a destination for foreign investment is important. It’s important for our technology incubator businesses that are operating within healthcare and also looking at climate solutions, so anything that this House can do to reduce the burden of regulation on our business, reduce red tape, and reduce cost should be a priority and should be something that we continue to do at pace. I commend this bill to the House.

Tēnā koe, Madam Speaker. I’m delighted to take a call in this third reading of the Overseas Investment Amendment Bill (No 3). I note that a certain party of two in this House have chosen not to participate in this debate, so I’m more than delighted to take this opportunity to support this bill and support the good work of this Government in progressing and improving our overseas investment regime. That’s what this bill is about: the leadership of the Hon David Parker, with our Government, ensuring that we have a COVID recovery that is boosting our economy and ensuring that, particularly, our productive sectors maintain their competitive edge internationally and can be a productive, sustainable, and an inclusive economy.

Just today, just as an example, I was driving through my vast electorate of Te Tai Tonga, an area which—

💬 Hon Gerry Brownlee: Which bit?

—the Hon Gerry Brownlee would know well. The beautiful Canterbury Plains, Kā Pākihi Whakatekateka o Waitaha. As I was driving all the way from Christchurch down to Timaru—mighty Timaru—just the vast landscapes that we have there. Productive, world-leading, arable farming landscapes, farming systems, world-leading systems, whether it be in dairy—some wonderful dairy processing facilities dotted throughout the landscape as we go. I could go on and on through the great island of Te Waipounamu, to the West Coast, to Southland, to Otago. We know how important our taonga lands are to us as a country to maintaining our competitive advantage and earning a living in this very dynamic and challenging world that we live in, in this COVID environment, so overseas investment is critical to our economy.

This bill makes a number of very welcome changes to ensure that we are protecting our taonga especially, and I know this is very dear to Māori up and down the country. Mind you, Māori, in general, are very welcoming of overseas investment. We have been so since the Treaty. Since before the Treaty, we were very welcoming. It was just unfortunate that once we did sign the Treaty, things did sort of go awry somewhat.

But overseas investment has always been necessary for our economy. It has always been necessary to improve the productivity, right across our productive sectors especially, and we have overseas investment happening every day and in every sphere of our economy. Whether it’s in the tech space or our businesses being purchased and interest in businesses being bought and sold, there are investments happening across the board, but we want to ensure, through this bill, that we do protect our taonga—productive land. Therefore, ensuring that the directive which the Minister gave to the Overseas Investment Office, we are codifying that into legislation to ensure that there has to be a demonstrable boost and productive improvement to those land assets to ensure that the investment is justified. So it’s a very high bar now that applicants have to meet and that is very welcome, because we want to ensure—and I certainly do, as I continue to drive around the great big island—that we maintain our sovereignty as Kiwis but we also welcome that investment that will help to enhance and grow the wealth of our provinces and our region and our nation as a whole.

There are also a number of very helpful improvements through this bill. I want to acknowledge the Finance and Expenditure Committee for all their helpful contributions that they made in their consideration of this bill. Some very helpful improvements have been made to ensure that those applications which do meet the tests and which are going to add and enhance our businesses and their profitability and their productivity—those applications will have an easier time to ensure that they can get processed quicker, and there’s a whole host, a suite, of sensible improvements in that regard.

So, on the whole, this is an excellent piece of legislation. I thank the members and the parties for their support of this bill. This is, once again, ensuring that we can continue our COVID recovery and boost our economy. Kia ora tātou.

In speaking to the Overseas Investment Amendment Bill (No 3), I’d just like to go to the heart of the bill, just for anyone who’s maybe watching at home or listening and who’s just not quite sure. I think if one goes to section 17 in clause 9, we’re really talking about the beneficial test factors, and this is where the heart of it is. [Interruption] It’s probably a little bit too detailed and complicated for some of the members opposite, but I have much more faith in the comprehension skills of those sitting watching at home and those sitting on this side of the House.

It goes to the economic benefits, and I’m sure we can all agree that that’s why we’re here. We want to do things that economically benefit this country and also things that benefit the natural environment. These are things that are in the bill, and they continue or enhance access by the public within or over sensitive land.

Now, I’d like to speak to that one. I was lucky enough to grow up on a farm in a farming community, and access to land was never an issue. If I wanted to go somewhere, go and shoot a deer or goat, I just rang up the next-door farmer, and it was always a matter of making sure you had permission, but it wasn’t an issue. I grew up with full access to the whole area of the Buller, really, and it was only when I moved to the North Island and went to a town in the middle of a lot of farmland, I suddenly realised what it was to grow up without access to any farmland, where actually you had to, basically, do a 15-minute car drive before you could get access to any land, with that being a forest. That sort of sowed a seed in me. It is pretty necessary that people in a country do have access to that land.

Now, you could go to the extent that the Swedes go. The Swedes have a thing called every man’s right. I’m not sure if they’ve made that every person’s right now, in light of the changes in our society, but that means that, essentially, as long as you don’t go within 10 metres of a dwelling, you can actually wander anywhere around Sweden. Well, no one’s advocating that, and I’m certainly not advocating that, but it’s just the extreme of understanding of how important it is that New Zealanders do actually have access to this great land of ours.

So continuing down section 17(1)(e), there is also “give effect to or advance a significant Government policy:”. Again, it’s inserting that whatever the Government of the day is, it’s important that this legislation does protect and give any Government the ability to ensure that they can enhance and that they are not prevented from introducing policy because they haven’t got control of significant access to significant land—again, an important part of that.

Again, when I’ve spoken on this before, there are those—and I’ve heard speakers opposite, particularly from the ACT Party—saying that nothing is strategic about land, nothing strategic about ownership. When I’ve spoken on this bill before, just those of us here who are—well, we’ve all come from somewhere, whether it be in 1200 or latterly. Certainly, my ancestors came from Ireland. Now, if anyone wants to know how strategic ownership of land is important—this goes right back to section 17, and I’m very careful. I know, Madam Speaker, that you like to ensure that we are narrowly on the sections. Let’s go to section 17, coming back to ensuring the strategic asset.

So at that time, there were about 8 million people living in Ireland, and they lost control of their land—it was taken over by the English. Then a famine visited that land, and the population reduced to less than 2 million in a very short time. The problem was that the locals had lost control of their land strategically, and at that time, while the population was starving, those that owned the land were actually still exporting food. So if one looks for an example of losing that strategic asset, or losing strategic ownership of your land, that is a very good example, and there’s not very many people here who have come to this land, wherever their ancestors come from, where there won’t have been a similar case of loss of control, usually to another country. The extreme of that, of course, is by invasion, by warfare. It’s something that we’d all prevent, because the first thing any invader does is take full control of the assets.

Now, we balance that—again, I agree with one of the previous speakers saying that overseas investment is absolutely necessary. We only need to look for North Korea and some of those regimes to see where they turned off the overseas tap altogether and the effect that had on the population of those countries. So coming back to section 17, which I know you’re very keen for me to do, Madam Speaker—I keep going back to it. But these are very good examples of why this bill has become so important.

Of course, it is the second part of a piece of legislation. The original legislation was the urgent measures, which was brought in around the COVID recovery, and that was, again, being referred to by other speakers, when we talked about where there was a danger that our economy may have collapsed. It wasn’t that long ago that farms in New Zealand, in the late 1980s—it was probably with a little bit of regret that I didn’t whip in and buy a farm at the time myself, because they were very hard to give away at the end of the 1980s because of other decisions made. So it would have been a real shame that we end up losing control or ownership.

Now, again, there’ll be those who say it doesn’t matter whether we lose control, because the money comes in. The problem with that, though, is once a piece of land in New Zealand has actually gone to overseas ownership, it remains in overseas ownership. So if we get a Hong Kong corporation that owns a large chunk of Mr Brownlee’s favourite area of Canterbury, well, that’s fine. That money, when it’s originally sold, will remain in New Zealand. It’ll be reinvested in other things. However, that corporation in Hong Kong that then onsells that to a corporation in New York—tell me, there is actually no benefit of that, because that money is, essentially, a transaction that takes place offshore, and the benefit will accrue all offshore. So other than perhaps the transaction costs that will accrue to New Zealanders, there will be no benefit. So, again, it’s very, very important that we look at what is strategically the intent of this bill.

Going through the bill, one of the things also I was going to look at was water—actually, water extraction. Now, that’s one of the things that often New Zealanders become passionate about: why we’ve lost control of our water—well, our water rights. It’s not the water. That’s what the commodity is, and, of course, much of that has gone. The Waiwera water, I think, is owned by a Russian conglomerate over there at the moment. So that is the one thing, often, when New Zealanders generally are concerned and lamenting a loss overseas of a local asset.

Water is actually specifically mentioned in the bill. Ministers can consider whether the transaction will or is likely to result in a positive or negative impact on water quality and sustainability—again, very sensitive. It won’t actually, currently, affect the rights of those that are extracting water. It won’t be turning the tap off, so to speak—if you excuse the analogy—but what it does do is that where the use of that water by foreign companies does look like it’s going to have an impact on New Zealand, either by way of its quality or sustainability, then there is the ability for Government to act.

Again, one of the other important parts—and I am sort of starting to run a little bit out of time; hopefully, one of the following speakers will talk about this—is the ability of overseas companies to own. Again, I’ll look at probably the best example—that is, managed funds or the managed investment schemes. There are two categories here. If they are unlisted and the manager or trustee is an overseas person and more than 25 percent of the value of the scheme’s investments are invested on behalf of overseas persons, then they will come within the parameters of this bill. Also, if they are a listed company and overseas persons own 50 percent or more of the value of the scheme’s investments, again, they will come within the purview of this bill.

This will not stop transactions—this is not going to turn us into North Korea. This will ensure that there is still the ability to attract overseas investment, which we need, and I think every speaker here has agreed we need to do. It’s just ensuring that we understand that, strategically, in New Zealand, the Government of the day is able and has the ability to ensure the decision making it has around strategy, around safety, around water quality, and that it actually is able to do these things and that we don’t become a country where it’s too late, essentially, to turn around and try and make long-term, strategic decisions for the benefit of those that come after us because the horse has bolted. So I have no hesitation in commending this bill to the House.

Having listened to the last four Labour speakers, I was momentarily wondering to myself why I was supporting the bill. Then I realised that we were supporting the bill on this side of the House because we know what it does; they on that side of the House clearly don’t.

We had the extraordinary comment made by the first of those speakers, telling us that this bill was all about the Government’s priority to get New Zealanders into houses. Well, all I would say to that is, if the Government’s priority is to get New Zealanders into houses, don’t have too many priorities, because it is not going very well at the moment, and there is nothing in this bill that will make that current situation any better.

Then, we had the wonderful traverse across the Canterbury Plains from Rino Tirikatene. Now, I’ve got to say that I thought he is the first Labour speaker I’ve heard in this House say anything positive about the rural community, the first Labour speaker in this House that I’ve heard actually supporting the work of farmers in this country, and the first Labour speaker to recognise that it is the investment in horticulture and in agriculture in this country that is so important to our export mates. And guess what! A big chunk of that export income that holds up all of the social services provided in this country, that eventually will manage some of the extraordinary debt that we’re going to see in front of us tomorrow, will come from that sort of investment, and this is a small step—a very small step—towards recognising that New Zealand has always been a country that has had significant foreign investment, whether it was, once upon a time, our main streets of our post-Treaty towns owned by banks and insurance companies that were domiciled in the British Isles or in some other part of Europe, or today, where we have a range of different nationalities owning some parts of our CBD, some of our farmland, some of our forest land, and some of our industrial and other productive sector, as well. It is no different.

The reality is that in a world that is flush with capital at the moment, it can go anywhere. If we are to be a country that remains competitive internationally, that does have the opportunity to keep its interest rates low, and, over time, to massively increase the incomes of New Zealanders—something that has not happened in the last four years and is now, actually, by a decree from the Government, for a big chunk of New Zealanders not going to happen in the next three years. But if it is to happen, then we will need to have ongoing investment in various activities around New Zealand, and some of that will come from foreign sources.

The interesting thing about this is the fear that clearly comes through in this bill from the Government. It is timid—very, very timid. Look at some of the main provisions that are in this bill. Firstly, it says the bill will grant the Government powers to effectively manage the risk posed by foreign investors. Well, how is it that you’ve got a bill that enables foreign investments that then focuses on the risk of those investments? Why isn’t there simply the opportunity for those investments to be made? Immediately, anyone looking at it gets a degree of “Not welcome here.”

Then, we look at introducing the higher threshold for acquiring farmland. It ensures farmland is advertised in a way that ensures New Zealanders have a chance to acquire it before overseas investment is involved. Remember all the furore over the Crafar Farms? Massive furore—people up and down the country upset that they were being sold to Shanghai Pengxin, a Chinese company. People ignored the fact that the animal husbandry on those farms was appalling and ignored the fact that the investment in those farms as productive units was non-existent, and now people will be able to go and look at those farms and see what happens when you get good quality investment in farming activities in New Zealand. It brings everybody else up with it.

It should also be recognised that it is the quality of that investment that also determines the price that ultimately gets paid for the product produced. So I can’t understand why people can celebrate the fact that it is still going to have to have a ministerial flick over it when, in fact, there is no chance that that farmland can be wrapped up, packed up, put in a container, and taken away. It remains here.

💬 Anna Lorck: But the profits can.

It is a question simply of the activity—no. Hang on, I’m not talking about the vineyards. I’m not talking about the vineyards and the product from them—best the member doesn’t get into any of that discussion. I just think that allowing decision makers to factor in sustainability and water quality in investments involving water bottling and bulk water extraction is also a very interesting thing.

Look at the situation that exists down in Canterbury, where a former wool scour had an enormous right to take water to wash out the various contaminants in the wool—and we all know what they are—and then to send that contaminated water down the local river, no worries whatsoever. Now, of course, the plant has ceased operations because some of the people, like those on the other side of the House, thought that it was far better to wash dirty wool and send the by-product down the river than it was to put that pristine, clean water into a bottle and recover funding for this country from its sale, and a fraction—just a fraction—each year of what would normally be flushed down that river would be sold at a benefit for the entire New Zealand economy.

It’s the attitude that we’re seeing over there. They’re all getting excited over there at the moment. You’d swear they wanted to go out and bottle that filthy water after it’s been through a wool scour. I can’t understand their attitude.

Yes, there can be standards. That’s why you have a Resource Management Act that puts those standards on it—

ASSISTANT SPEAKER (Hon Jacqui Dean): Order! The member will come back.

—and that is why this particular provision—

ASSISTANT SPEAKER (Hon Jacqui Dean): Thank you.

—in this bill is of absolute concern to this side of the House.

Then, there is the idea—and I think that David Seymour covered this extremely well—that you have to put into the bill some protection for better recognition of Māori cultural values, including taking into account plans “to protect and enhance wāhi tūpuna, wāhi tapu areas,” and then it says, “Māori reservations”. Well, why wouldn’t that just be a natural condition for any investor in this country? No, it’s got to be specified here as some kind of overlay because a whole lot of your cultural pirates are likely to land in New Zealand and want to buy up some of our land.

Let me just take you to a part of the bill that the previous speaker, Mr Greg O’Connor, didn’t manage to; that is, section 17 in clause 9 of the bill. It talks about the aspects that would be focused on where there is consideration of the sale of land to foreign entities. Why is it that anybody coming into New Zealand can buy perfectly good farmland, productive farmland, promise to put it into a forest, and not have to go through a process? Why is it that we have a foreign investment amendment bill that still means that if anyone wants to come and buy that land for productive purposes—annual productive purposes, job-creating productive purposes—they can’t, without a massive number of hoops to go through. But if they turn up and they say “We’re going to plant it, the whole 1,000, 2,000, 3,000 hectares, formerly beef and sheep and whatever else might be produced on that land, and we’re going to plant it in trees.” and the answer is “Go for your life.”, that’s the sort of convoluted logic that, unfortunately, the Government presents all too often.

So, while we are supporting this bill, it is with the caveat that it is a bill that is only taking baby steps to the sort of investment this country is going to need if we are to get through the extraordinarily difficult times likely to be ahead of us, given the heavy load of debt that we will all see exposed in the Budget tomorrow.

Thank you, Madam Speaker. I rise to speak as the last person to speak on the Overseas Investment Amendment Bill (No 3) and in doing so, I’m thrilled to say this is the fourth time in a row that I have spoken on a bill where the National Opposition have been supporting the work that we do. In doing this, I think this just shows me that the hard work that we do in select committee is working.

There are so many parts of this bill that demonstrate that New Zealand is open for business. This bill works to reform New Zealand’s overseas investment regime to ensure that we can continue to attract the productive, sustainable, and inclusive investment we need to boost economic growth, and yes, grow jobs. But in doing so, it’s also protecting our assets and, particularly, our farmland. By improving New Zealand’s business access to the investment we need to thrive, this bill supports our recovery and sets us up for continued economic success.

Now, I just want to talk a little bit about the farmland and where National sits on this, because over nine years, while the National Government was in, they 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. So the ministerial directive letter was sent by the Government to the Overseas Investment Office in 2017 and put a high bar on the foreign purchase of land of greater than five hectares. Now, in this bill, we’re incorporating that letter so that if a future ACT and National Government was ever to come into power and wanted to sell off New Zealand’s farmland, then we would make sure that we have got the protections to stop them from doing what they did in those 10 years.

Now, I want to put on the record now that we’ve heard from the other side of the House how they backed farmers tonight. And I can say that there were hundreds of hectares of rolling, productive farmland sold to foreign investment over those 10 years.

ASSISTANT SPEAKER (Hon Jacqui Dean): Order! Order! This is a third reading speech. It is to be a summary, if you like, of the bill at hand. Occasionally, it can stray into other related matters, but commentary on what another party may have done is not within the scope of this debate.

Thank you, Madam Speaker. So this bill will embed a higher threshold for foreign investment in farmland. Farmland has significant economic and cultural value, and New Zealanders are world leaders in the primary sector. Reflecting on these factors, this bill embeds a higher threshold for the acquisition of farmland. In general terms, this means that farmland cannot be acquired by overseas persons unless they offer substantial benefits to New Zealand, such as the creation of jobs or the introduction of technology. Farmland must also be publicly advertised before entering into an agreement to sell, to maximise the chance of a New Zealander being able to acquire it.

Now, I want to talk about this particular part, coming back to Hawke’s Bay, where it’s been very important in making sure that in this bill we make sure that we have the advertising prior to the land being sold. Some of the submitters, when they raised questions about applying this to having zoning around farmland, we also talked about the reasons for making sure that this wasn’t so stringent in the bill. For example, there is very high productive farmland around urban fringes in my area of Hawke’s Bay. Submitters talked about wanting there to be the opportunity not to have to advertise on areas of 40 hectares or less, but in places like Hawke’s Bay, where there is land around those fringes, that’s been important. So in this bill, we decided it was more important to keep the advertising over and above that for all productive farmland.

I want to talk a bit about forestry. Now, there’s been a lot of talk tonight about forestry and it asks—in here, we need to highlight this as part of the bill. In 2018, we brought forestry rights into the Act for the first time. Prior to this, overseas investors could invest in forestry rights without scrutiny, although they did need a consent to acquire the freehold and leasehold land. Now, I want to say that there’s been a lot of talk tonight in this third reading of the bill about forestry. I want to say, “Farmers, foresters, and conservationists all share the objective to plant more trees in the right places, whether to diversify farm incomes, stabilise erosion-prone hills, increase wood supply for processing, or create more permanent indigenous forests for biosecurity or recreational use.” I use that quote from the Minister of Forestry, Stuart Nash. Now, “Forestry is the third largest primary exporter by value, so it’s important we keep innovating to support regional development, drive economic growth and meet our climate and environmental [standards]. … Forestry [is] a key part of our climate change response.” Now, that’s why it’s important.

There’s another question I would like to leave in the House tonight. If the National Party—who have raised this time and time again tonight—continues to say what they do, I’m asking the question: is the National Party going to tell farmers who they can sell their land to? Is that what this National Party is asking? Do they want to legislate?

💬 Hon Gerry Brownlee: That’s what the bill does! That’s what the bill does!

No, no. Do they want to legislate, and is that what the National Party is doing? If that’s what the National Party is doing, then I would like to know that. I commend this bill to the House.