Invest New Zealand Bill

Members, we come now to Part 2. This is the debate on clauses 7 to 18, “Invest New Zealand”, and Schedule 2. The question is that Part 2 stand part.

Thank you, Madam Chair. I want to start by talking about clause 7, “Invest New Zealand established”. Now, in terms of what we’ve heard from the Minister before, I want to talk mainly about some of the financial aspects of the establishment of Invest New Zealand. Just before, on Part 1, the Minister mentioned that, for example, Callaghan Innovation is coming toward its end and “Isn’t it exciting to invest in something new?”. But one of the things I’m kind of curious about is that with the establishment of this, as we see in the regulatory impact statement (RIS), a large portion is taken from Callaghan Innovation. The other thing I’m noticing is that paragraph 4 of page 6 of the regulatory impact statement talks about the fact that one of the issues and one of the challenges that we’re facing is that New Zealand ranks 26th out of 37 OECD countries in its per capita spending on research and development. That’s not what the establishment of Invest New Zealand is, I’m assuming, referring to, because it’s not a research and development institute. Therefore, we are still possibly facing the issue of when we’re looking at redirecting the Callaghan Innovation investment into the establishment of Invest New Zealand.

Even more, I guess, curious—and I would really like some elucidation from the Minister—is that in Vote Business, Science and Innovation, page 140, it talks about the budget allocated to Invest New Zealand from 2025 to 2029 as a four-year block, which is $84.6 million in total, according to the Vote itself. However, in accordance with the regulatory impact statement—and this is now on page 14—on funding sought through Budget 2025, the amount is quite different. So I wanted to check with the Minister why there was a significant reduction in the amount allocated or the funding sought for the establishment of Invest New Zealand. What we’re looking at, if we’re looking at the four years combined, based on page 14, is a total of $155 million, which is nearly half of what it is in Vote Business, Science and Innovation. What happened between the RIS and the Budget that led to the establishment of Invest New Zealand taking, I guess, less? Or maybe there are going to be certain things that are changed.

So my main question is: why is there a significant variation in terms of the budget allocated, because, technically, we’re still talking about a bill that is being pushed through under Budget urgency—the reduction in the funding for the establishment of Invest New Zealand? Thank you.

There is quite a lot sitting in this Part 2, in particular around the functions of Invest New Zealand, which has its main function, which is set out—well, there’s a couple of things. The objective—and this is in clause 10—“is to promote increased overseas investment into New Zealand.” So that’s the pretty clear objective. Actually, to be fair, we’ve done a fair amount of discussion of that under the purpose statement.

But then it sets out in clause 11 the functions of Invest New Zealand, “to facilitate and enable increased overseas investment”, and then it has a whole set of additional functions. This is where, to be honest, I am puzzled by the policy decisions that have been made here by the Minister and by the Cabinet. So in clause 11(2)(a) it is “facilitating connections and collaboration between overseas investors, New Zealand investors, research institutions, public service agencies, organisations, and providers of opportunities for overseas investment:”. Now, I really want to focus on research institutions, because this just seems, well, a naive hope on the part of the Government. I do think it’s naive in terms of the research—

CHAIRPERSON (Maureen Pugh): Your mic.

Hon Dr DEBORAH RUSSELL: Oh, I am sorry.

CHAIRPERSON (Maureen Pugh): You’re fading.

Hon Dr DEBORAH RUSSELL: I’ll say it louder. It’s a naive hope on the part of the Government, because, unfortunately, this Government has set about trashing its reputation in terms of research.

I can speak here because I’ve spent a bit of time with our research institutions, going around to the various Crown research institutes, which are now being put into public research organisations. The mood in some of them, at least, was of despair. Scientists have been lost. A number of science jobs have been lost. People have been lost to overseas. So in many cases it feels to our scientists that they are not valued. But more to the point, that attitude is being reflected in what people think of our New Zealand science institutes. So there’s people there working incredibly hard, but they feel under siege.

Actually, some of the same sorts of things are going on within our other set of premier research institutions, and that’s our universities, where, again, I’ve talked to many of the vice-chancellors and the deputy vice-chancellors and the heads of school and so on, right through our universities. In particular, I’ve sat down with some of the pro vice-chancellors or the leads of science faculties, and they feel that science in this country is at best at a crossroad, but actually they feel it is being undervalued and, again, they feel that our reputation in science is being undermined.

So in terms of facilitating connections and collaborations with research institutions overseas and in New Zealand, as I said, I feel as though that’s a lovely, lovely idea that is sitting within this bill. Of course that’s a good thing. But the practical reality on the ground is that the Government has, through its own actions, undermined the capacity for that to happen. So I guess I want to hear from the Minister why it is that she believes that that connecting, that collaborating, will actually happen when this Government has, frankly, been quite callous with respect to what it has done with the research institutions and with research in this country.

Thank you, Madam Chair. Just starting with a few questions on Part 2, myself, and I’ll go first to clause 7 as well—the establishment clause—just because I wanted to ask a question about the choice of the way in which this entity is being established. Given the Minister’s comments about the knowledge that this entity would be created a year ago and the choice of creating a Crown entity under urgency, is the Minister aware of any other Crown entities that have been created under urgency? Of course, ordinarily, the public would have an opportunity to provide some input into this, but so would business, and so would those entities that my colleague Deborah Russell has described, in terms of what shape a bill should take, what scope its purposes should have, given what they know about industry-specific concerns and relationships. That simply hasn’t happened, because this entity is being created under urgency. So that was my first question.

My second question centres around clause 8(2) of the bill, which says “The Crown Entities Act 2004 applies to Invest New Zealand except to the extent that this Act expressly provides otherwise.” So really, I think I’m reflecting there on the purposes of the Crown Entities Act which, people will remember—the Act came into force in 1989, when we created a new form of public organisation. At the heart of that creation was the idea that sometimes, Government functions are best delivered with a degree of independent decision-making, with some commenting that operating at arm’s length from the Government would enable these entities to give more of a specialist expertise or focus on their roles.

There’s certainly been commentary from a director of MartinJenkins, for example, when looking at examining the role of chief executives and their monitoring body, reflecting on how important that independence is within these Ministers, essentially to ensure that decision making is kept separate from political decision-making, and, in many ways, that Ministers themselves are protected from decisions of those entities so that they can be seen to be made independently of those Ministers. The reason I’m asking this question is because I do have other questions later in this evening about the board and the specific choices that were made here in terms of the governance entity that were put into place, and I think it’s useful to know what the Minister sees this section applying to. So which specific sections of this bill does the Minister envisage are a step outside of what is provided for in the Crown Entities Act?

I do have other questions about the objectives as well, so that is clause 10, where it states that “The objective of Invest New Zealand is to promote increased overseas investment into New Zealand.” As others have said, we’ve spoken about the overseas component; my question is really just about the generality of the use of the word “increased”. I believe, in terms of the consultations, it was Treasury who made the comment that there was a need for matching—so not just an increase of capital into investments in New Zealand, but a strategic matching, if you like—of those investments. I wonder whether the Minister considered more precise language in clause 10, the “Objective” section, which would have given the entity some quite precise direction about what their role was to be; as opposed to just encouraging general investment, to do so with some strategic intent. Perhaps also, as my colleague Damien O’Connor has referenced—essentially environmental, social, and governance principles: whether there was consideration of including some direction, again, under clause 10, to enable some clear direction to the entity around the parameters of investment. That seems like it would be a fit and proper place to include such direction.

I’ll respond to those questions around the functions and objectives. I think it’s very clear to all of the members in this Chamber that this legislation is very broad and its intent is to be very enabling. Therefore, the functions set out in this bill are high level by the very nature of what we’re trying to achieve here. There are, obviously, many types of investors and investments to be gained and to be achieved and, therefore, they exist with various objectives and preferences that require different Government policy responses. We want Invest New Zealand to be agile and to be fleet of foot to be able to respond to market demand. So, therefore, the bill does specify functions and operations of Invest New Zealand, but it is keeping them deliberately very high level so that Invest New Zealand can be proactive and can be responsive and engage with investors in the global operating environment.

I just also want to turn to a couple of questions that were raised by Dr Deborah Russell in her question around the link between this stand up and the science sector reforms. It is true that the Government has announced the largest reform that we’ve seen here in about 30 years, but that is very deliberately aimed at making changes to maximise the value of the taxpayer investment—the taxpayer dollars that we must treat so preciously—and, therefore, to create a much more dynamic science and innovation and tech system that can respond to emerging priorities and emerging markets and, indeed, with technological advances. As I think I articulated in a previous response, foreign investment plays a critical role here in providing the capital necessary for the growth of those innovations and, indeed, the commercialisation of those innovations. That is what we had stopped seeing from the science sector here in New Zealand. Hence we are making the reforms we’re making and they will go hand in glove with Invest New Zealand and its functions.

Thank you very much, Madam Chair. We’re now on to Part 2, and because this bill has not had an opportunity to be properly scrutinised by the select committee, we are asking a lot of questions. Indeed, we have to move forward, so I appreciate that. I’m just going to refer to a couple of amendments that I have tabled, and they relate to clause 10, “Objective of Invest New Zealand”. Now, the Minister, the Hon Nicola Grigg, has referred broadly to it ‘being “high level”, which actually implies “vague”, because the Minister doesn’t want to explain the details and the qualifications and the safeguards that we believe are necessary for investment into New Zealand.

I’ll put a couple of facts on the table that are relevant. How much money do we have invested in our country now? It is, at last count, $546 billion. Quite a lot of money is already invested in our country. To counter that, we have about $373 billion of New Zealanders’ money invested outside of our country, so it’s very hard to say, as the Minister has, that, actually, we need this money to move us forward. The objectives of Invest New Zealand need to be specified more clearly than we see here. It says, “The objective of Invest New Zealand is to promote increased overseas investment into New Zealand.” What my amendment asks to do is to add in there “for the sustainable benefits of all New Zealanders.”, because we are right to ask the question: why do we need this money when there’s a huge amount of money in here now and we invest a huge amount of money offshore?

Is it about the money to be used in science or in real estate or in farming or whatever it might be, or is it just to provide opportunities for people to clip the ticket? In the past, we’ve accepted that direct foreign investment has enabled us to grow our economy. We’ve got $373 billion of New Zealanders’ money invested offshore now—right now. There’s no shortage of capital. The question is: where will it be invested and why will it be invested? I’d like the Minister to answer. Perhaps she might be prepared to accept my amendment, which says, “for the sustainable benefit of all New Zealanders.” That would be the objective of Invest New Zealand. It’s perfectly reasonable, I’d say. I expect that New Zealand First will support our amendment “for the purposes of New Zealanders.”—New Zealand First.

This legislation, without proper qualification, will be investors first. This is about investors first, so I call on New Zealand First to put New Zealand first and to support our amendments that will provide some qualification. I know that they’ll roll over; it’ll be part of the coalition agreement to actually push this through. Maybe they’ve had a road to Damascus experience and are now happy to sell out New Zealand. But if they are true to what their leader has been preaching for many, many years—and I’ve supported him in his statements—if it is a road to Damascus, and they think that it should be investors first, not New Zealand first, then they won’t support it. But I table that. I put, again, that the main function of Invest New Zealand is to facilitate and enable increased overseas investment in New Zealand. Full stop. I want to say, “for the sustainable benefit of all New Zealanders.”—a perfectly reasonable amendment that I’m sure New Zealand First can see its way clear to support.

Can I just go to the next serious issue that I have, and it is around clause 11, and it’s 11(2)(b)(iv)—well, it only goes (i), (ii), (iii). I’m proposing a (iv) in there. It says that “under the purposes in order to make”—it’s the functions of Invest New Zealand. I’m going backwards and forwards a bit because it is important to explain to the people who are watching, the few who may be watching on behalf of the future of New Zealand, and we haven’t had a chance to go through the select committee, because people—the public, stakeholders, and other MPs—have not had an opportunity to properly scrutinise this bill, so we must do it in the committee stage of the House.

Can I go back to clause 11 on functions, under (2)(b): “building knowledge about—(i) overseas investors;”—this is what Invest New Zealand, the real estate agency, will do. It’ll find out about, and build knowledge on, overseas investors—“and (ii) the investment environment in New Zealand; and (iii) investment opportunities in New Zealand.”—so it is, effectively, a real estate agent for foreign investors. These are people with trillions of dollars floating around the world who are looking for places to park it, and so this agency is going to set up a nice glossy of all the opportunities. What I would like to see added in there, as the fourth building-knowledge component, would be—if I can just find it here properly; literally, I can remember it actually; just bear with me, Mr Chair—“the impacts of additional foreign investment in New Zealand.” That is a clear obligation for this agency to monitor the progress of the effects of this investment in New Zealand. But there’s no such thing. They don’t even have to worry about, care about, or consider, what this investment might do to New Zealand.

For example, if it just heats up the real estate market in Auckland, the question would be: why? If it just heats up the market for farmland in Southland, the question is: why? Where does that leave New Zealanders and their opportunity to invest? There are many, many other questions, but I’ll ask the Minister: can you consider supporting my amendments to clause 10 and 11 regarding “for the sustainable benefit of all New Zealanders.”, and then when it comes to 11(2)(b), adding in (iv), which says to effectively monitor the impacts of this investment as they go forward? Because it will be hard to retrofit that obligation.

If I can go back three or four steps, of course, the answer that the Minister might give is: “Oh, it’s all going to be covered by the Overseas Investment Office.” Well, the question is then: why have a board? Why not have a process, as we do now, where you just go out and the Overseas Investment Office deals with the application, and they find their own opportunities and make application to pass it through the process? This is going to cost $54 million of taxpayer-subsidised money to run this organisation, and it is, effectively, a real estate agency setting up opportunities for small business, for bigger business, for the biggest business—who knows? Fonterra’s got quite a bit on the market at the moment. And then IP as well: “Come in and do joint ventures with some of our Crown research institutes or the new Crown agencies, and you can walk away with some of the best and brightest ideas from our country.”

Now, I realise that capital is required to grow those ideas into ventures. But $373 billion dollars of our own money—the superannuation fund, ACC, KiwiSaver—is invested offshore. Now, why not keep some of that money here and not, then, sell out our ideas, our land, our farms to people who have got so much money they don’t know what to do with it? This agency is going to help them bring this into the country. We need some safeguards through the amendments I’ve tabled to clause 10 and clause 11 to both have the objectives clearer “for the benefit of all New Zealanders.”, and then to make sure this doesn’t go on to create adverse outcomes—unintended, the Government might say. It may be intended—I can’t make a guess on that; it’s up to them—but they will be undesirable outcomes for the vast majority of New Zealanders. We need that clarity. There’s been no opportunity to scrutinise it through the select committee process, because of this going through under urgency. This is outrageous, and this is just another clear example of why this should have taken more time. Indeed, we don’t know whether it’s worthwhile.

Ladies and gentlemen, there we have it. A former trade Minister, Damien O’Connor, telling foreign capital it is not welcome here in New Zealand, drawing a line in the sand and pulling out the stop signs. I think the member himself used the word “disgraceful”; I think that’s a disgraceful attitude.

As I have repeated previously to this committee, any foreign investment opportunities coming through via this new organisation will be constrained by existing laws such as the Overseas Investment Office and the Overseas Investment Act. There will still be protections in place. Even the organisation itself will be further monitored by the Ministry of Business, Innovation and Employment—for example—which will act as a policy and a monitoring agency.

So I absolutely reject the protestations made by that member. I’m comfortable that the protections and safeguards will remain in place.

Thank you, Mr Chair. It’s great to be able to take a second call on this bill. I did, out of an abundance of consideration, previously foreshadow some of the questions that I would be asking later in the evening—and we have gotten closer to that point now.

In Part 2, specifically clause 9, around the size of the board of Invest New Zealand—I think it’s useful here for us to come back to the starting statement on the regulatory impact statement for Invest New Zealand, which is: “To establish a new autonomous Crown entity, Invest New Zealand, to serve as a one-stop-shop for attracting inward investment, including into critical sectors with the potential to raise productivity, expand research and development, and drive increased activity by multinational corporations in New Zealand.” It could be shortened to simply being “a one-stop shop for multinational corporations in New Zealand”.

That in and of itself is not necessarily cause for extreme concern. But when we look at Part 2, clause 9, and some of the detail around the proposed structure of the board of Invest New Zealand, we’re placing a huge amount of responsibility and a huge amount of interpretation with a very, very small, concentrated number of people. Especially given—and it’s stated also in the regulatory impact statement—that “The Prime Minister has highlighted economic growth as the core priority for the Government.” and that “Economic growth can lead to a country having increased job creation”.

“Can” is the magic word there. It’s magic in the same way that “up to” is a magic word when you’re talking about how much the average New Zealand family is going to get in tax breaks per fortnight—“up to” $250 per fortnight; we just can’t find one that has. Similarly, as my colleague to my left has pointed out, I can win Lotto. Doesn’t mean I’m going to; doesn’t mean I will—just means that there is the possibility there.

Now, clause 9—and I have written a number of amendments, which I’m sure the Minister of State for Trade and Investment has had a great opportunity to look at, especially because I foreshadowed that I would be raising these. But also it would be hard to think of any board that could operate with three members and claim to be a responsible governance entity for the level of decision making and the amounts of money that we are talking about with Invest New Zealand potentially.

Further to my concerns would be some of the language used by the Minister this evening to describe exactly how she sees that board. Those are terms like “broad and enabling”, “high level”, “attracting many types of investors and investments”, “being agile and being fleet of foot”, and “deliberately”—

Hon Damien O’Connor: Slippery.

REUBEN DAVIDSON: —“high level and responsive”.

Now, my colleague to my left has suggested the word “slippery”. It’s not a word that the Minister used, but “fleet of foot” and “slippery” do have significant parallels. They could arguably mean the same thing. So the amendments specifically to clause 9 in Part 2 really address, I think, very valid concerns around the fact that three people as a board seems like a very light board. If you have three “fleet of foot”—or “slippery”—people as a board, you don’t have a governance structure that could adequately or responsibly manage $54 million of funds. I think it’s absurd to suggest that that three “slippery” board members should be in charge of that much money and of the investment future for New Zealand.

So the amendments that I have put in give the Minister a very easy opportunity to—using her own “fleet of foot”—pivot and move this legislation into a place that makes it far more responsible and far more like the kind of legislation that you would expect to see for such significant amounts of funds and for such a serious governance role as the as the board of Invest New Zealand should have. Thank you.

I just make a comment that I expect in a five-minute presentation—to at least end it with a question at the end of it to be taken seriously. Lawrence Xu-Nan.

Thank you, Mr Chair. I think it is concerning that we have the Minister in the chair who, so far, has either attacked one of the speakers or is repeating the same sound bite over and over again. What we are seeing is a lack of genuine engagement with the detail of these, which I’m sure that officials are happy to provide because this is quite significant.

Now, when we are looking at the bill, one of the things I want to ask the Minister about is clause 11. Oh, by the way, I’m still waiting for a response from the Minister regarding the funding and the cost aspect based on Vote Business, Science and Innovation; that is in clause 7 because it’s how you establish the board—how you establish Invest New Zealand. So, yes, I referred to that in my previous contribution explicitly.

So my question is about clause 11(2)(b) when we’re looking at building knowledge, and also 11(2)(c). So when we’re looking at one of the purposes and one of the functions of Invest New Zealand—I understand about building knowledge and I understand about sharing the knowledge with overseas investors—the first thing I’m seeing is a lack of reassurance: are we sharing with anyone as opposed to only the people who are interested? In which case, are we sharing information and our data—New Zealanders’ data; I know we have just had a couple of bills going through the House around consumers and data protection—with people who then can potentially use that data without investing in Aotearoa New Zealand but using our data for other purposes? That part was not explicitly stated in 11(2)(c).

So one of my amendments—maybe it’s quite a simplistic approach—is to insert the word “interested” in front of “overseas investors” as a way of at least guaranteeing that people we’re sharing our data and our insight with are people who are genuinely willing to invest as opposed to taking our data and going. That’s my first question.

My second question, building on data and around the aspect of data sovereignty, is: what advice has the Minister received from, for example, Māori data sovereignty experts that the building of knowledge, here, upholds our obligation under Te Tiriti o Waitangi? This is something that is serious. This is something that potentially will come into conflict with our obligation under the United Nations Declaration on the Rights of Indigenous Peoples. But what I’m seeing is that nothing here gives me the reassurance, under “building knowledge”, that it complies with our obligation and with our current legislation around data sovereignty and data privacy.

So in this bill, and along with the Crown Entities Act which this bill also in some ways applies to, because clause 8(1) talks about “Invest New Zealand is a Crown entity for the purpose of the Crown Entities Act 2004.”—neither in this bill nor the Crown Entities Act do we see any mention of Te Tiriti o Waitangi or the Treaty of Waitangi, as far as I could see. I could be wrong; please correct me if I am.

So one of my other amendments, if the Minister would consider, is after clause 11(2)(d), before “(e) carrying out any additional function in relation to investment”, include a new paragraph that specifically upholds Te Tiriti o Waitangi when we’re looking at a function of Invest New Zealand.

So those are my two questions. The first one is basically around how our data is going to be used and how that knowledge is going to be used.

Thank you, Mr Chair. I just will respond to those questions around Treaty of Waitangi obligations, because I’m quite certain that was the only new question I have been given this evening. But I would refer the member to the departmental disclosure statement where it very clearly says “MBIE’s Investment Policy team did not identify any inconsistencies between the policy to be given effect by Invest New Zealand Bill and the principles of the Treaty of Waitangi.” And I could go on: “MBIE took steps to determine whether the policy to be given effect by Invest New Zealand Bill is consistent with the principles of the Treaty of Waitangi. This included consulting [the Ministry of Māori Development] (Te Puni Kōkiri), who were generally supportive of the Bill and the establishment of Invest New Zealand. Te Puni Kōkiri also expressed concern about whether the Bill provides efficient protections for Iwi, Hapū and Māori to be able to benefit from this proposal. MBIE are comfortable that the operationality of Invest New Zealand will be able to work to ensure that Iwi, Hapū and Māori are able to benefit from this proposal.”

Thank you, Mr Chair. I have a question for the Minister in regards to how the “functions” clause, clause 11, sits against the “objectives” clause, clause 10.

Ordinarily, you would have a broadly framed objectives clause, and the functions would then flow and sit nicely underneath that objective. But my read of clause 11 is that the functions clause sits slightly outside the objectives clause. I’m looking in particular at clause 11(2)(c), which is the clause that others have referred to—the sharing of knowledge—but it’s a sharing of knowledge with overseas investors, New Zealand investors, and then it lists others as well, in terms of providing opportunities for overseas investment. I’m just wanting some clarity as to the function of the information sharing with New Zealand investors and how that facilitates international or overseas investment—just also noting that we have clause 11(2)(e), which says that the functions, again, are also “carrying out any additional function in relation to investment that the Minister may direct in accordance with section 112 of the Crown Entities Act”.

My thought, when I read it, was: could this not be a window for New Zealand investors to receive information pursuant to a requirement under the Act, and then for the Minister to direct facilitation, in terms of a more calculated and strategic connection of New Zealand capital to potential investments—which, in my view, and I suspect a lot of people on this side of the Chamber would think, is a good thing. So I’m delighted to see that, in terms of my read of those two clauses of the bill in there, and I was just wanting confirmation from the Minister that that was intended and that was what also can happen, potentially.

I then also wanted to speak to some of my tabled amendments to clause 11—and let me just bring those up. I have proposed inserting clause 11(2)(d). I spoke earlier, in terms of the purpose of the organisation, about whether that would have been a good place to talk about ESG—environmental, social, and governance—responsibilities, in terms of framing the obligations of the entity. I have proposed specific amendments in relation to 11(2)(d), inserting a new function at the end of that list, to add “including in relation to risks relating to human rights accountabilities”. I’ve proposed a few variations of that as well, because internationally there has been a set of different language adopted in terms of whether it’s environmental, social, and governance, whether it is purely human rights standards, whether there is reference to the Ruggie rules, which are the UN business accountability rules, or whether there was another preferable option that the Minister was open to. I think that would be a useful thing to include within the specific text of the legislation.

The Minister did, I noted in her previous comments, refer to the Overseas Investment Act, so it may well be that I’m missing provisions in that Act which adequately direct investment accountability in this space and contain them, or require some form of reporting or accountability or best practice. Certainly, if those are there, I think that would be useful in terms of understanding why this hasn’t been included, and if the Minister isn’t supportive of these amendments, why that would be the case. Just recalling, in terms of why we’d include these specific amendments within a discrete piece of legislation, we do have obligations within the superannuation Act that point to these types of obligations and then give rise to an obligation to create policy. It’s not unusual, so I’m just wanting some responses from the Minister to those questions.

Thank you, Mr Chair. I really appreciate the opportunity to take a call. There are just two areas in particular that I want to address, and the first of them is around the special adviser to the board. It’s contained in clauses 13 and 14. The Minister has a power to appoint a special adviser to the board, and it turns out that it’s not just any special adviser; in fact, the special adviser contemplated by the bill is that the special adviser to the board will be the chief executive of Invest New Zealand. So, in effect, the chief executive of Invest New Zealand won’t sit on the board but will have the capacity to attend all the board meetings, and has to be given reasonable notice of the meetings and has to be given all the written material or documents that relate to the meetings.

The idea, it says, is to facilitate the exchange of information between the Minister and the board on the matters of Government policy relevant to the board in performing its functions. So I’m assuming that that is actually the chief executive as special adviser to the board. I’m sort of puzzled here about where the primary relationship is, because if the Minister wants to sort of communicate and facilitate information between the Minister and the board, well, then, surely the appropriate person is the board chair, not the chief executive.

I’m assuming that, obviously, the Minister will meet with the chief executive—that does happen—but in terms of facilitating information, I wouldn’t have thought that that meeting would happen in the absence of the board chair. So you’d want to have the chair there as well as the chief executive, but in terms of those State entities, the primary relationship that the Minister has is with the chair, not with the chief executive. So I’d just like a little bit of explanation around that. It is interesting, because it says that “The special adviser must not give directions or seek to influence decisions of the Board.” You’d sort of think, well, why on earth is the special adviser there, then?

So, first of all, that chief channel of information goes through the board chair, and that, I understand, is the standard model for the various Government entities. That’s the way that they work—the Crown entities—and that’s where the exchange of information happens. So what is the point of having the chief executive there as a special adviser? It isn’t there to provide information, because that’s not the standard way it happens. It isn’t to give directions or seek to influence decisions of the board, and I can get that having the chief executive there is probably a very good idea in terms of the chief executive understanding what the board wants. But that’s a flow of information from the board to the chief executive; it’s not the other way round, and yet these clauses imply that the information goes the other way around, from the chief executive to the board.

‘I don’t know the Crown Entities Act well enough, unfortunately—we’re discussing this bit at the moment. So I want to know if that’s a standard arrangement with the chief executives of Crown entities, and I want to particularly understand what is supposed to be the major channel of information between the Minister and the entity: whether it’s supposed to be the board, or whether it’s supposed to be the chief executive. If it is supposed to be the chief executive, that does seem at least a little unusual to me, but I’d like to have a little bit more detail and a bit of discussion around that.

I will respond to that question, because it is a pertinent question. Look, to confirm for the member, appointing a head of department responsible for the administration of a bill or an Act, and the Crown entity, as a special adviser to that Crown entity board, is indeed common. In this instance, it will be the Secretary for the Ministry of Business, Innovation and Employment (MBIE) who will be appointed as a special adviser to the board of Invest New Zealand. MBIE, as I said earlier in one of my responses, will act as a policy and monitoring agency with a range of responsibilities, including administering appropriations legislation and tendering advice to Ministers.

Thank you, Mr Chair. This is my first call on this bill, and I want to, hopefully, have a backward and forward with the Minister in the chair, Nicola Grigg, regarding, first of all, the objective of Invest New Zealand and the question around strategic risk. Then, perhaps on the same call or on a later call, I’d really like to drill down into some of the transitional arrangements to understand what happens with staffing, intellectual property, liabilities, and unfinished projects. So if I look first—

CHAIRPERSON (Greg O’Connor): I just have to remind the member that you being you doesn’t mean that the information hasn’t been covered before.

INGRID LEARY: Yes, thank you for that. I can confirm to the committee I’ve been watching avidly from my office, so I am well aware. One of the things that I would also caveat my contribution with is that I haven’t heard, when I’ve been watching avidly, a lot of discussion about the regulatory impact statement (RIS). We haven’t had a select committee, and there are quite a few caveats in that regulatory impact statement about the quality of the information about quantitative amounts and so on.

So in the interests of time, because I understand you don’t want me to waste time, I will get on with my questions. The first one, really, is just around the geopolitics. I’m wondering if the Minister has actively considered or sought advice around making this change at what is a pretty difficult time geopolitically where foreign money could be coming into big strategic assets. When I look at the RIS, page 4 says there is—and I quote—“difficulty in assessing direct and indirect impact of the relevant [foreign direct investment] to the [New Zealand] economy.” So what that tells me is that the RIS says we can’t prove this is going to work, this new entity, but what I can see is that it is full of risk and no guarantee of return.

Then, on page 6, the RIS says that we may not be able to innovate due to “poor levels of research and development.” I know that there has been extensive discussion about Callaghan funding, but I’m wondering if the Minister has actively turned her mind to what it would mean to replace Kiwi expertise by bringing in foreign money that would then have a claim on the intellectual property. That’s really relevant around some of the development of new technologies that could be used in sinister ways, I guess, or dual-purpose ways that may not be in the best interest of New Zealand. So I’m really interested to hear the response to the question from Vanushi Walters about whether the Overseas Investment Act has some kind of bearing on this that would provide us with some surety.

I also note that on page 8 of the RIS the Ministry of Foreign Affairs and Trade was asked for consultation, but the Minister had not received it. They are a key stakeholder, and they’re missing from the advice, so I’d like to know if the Minister, if she can, when she does her series of answers, could just let us know whether she has actually received that advice.

Treasury, on page 8 of the RIS, wanted clarification on funding, clarity on investment priorities, and clarity on how it would work in a wider New Zealand context. I’m not sure that we have heard clear answers on that, but I would like to hear the Minister answering those three specific questions that Treasury itself wanted, and that is one of the caveats in the RIS.

DPMC on page 8 of the RIS—that’s the Department of the Prime Minister and Cabinet—did itself raise national security issues, and so I’d like to know whether the Minister responded to those security issues. Did she reassure them? Was a paper written? Could that be produced? What is the plan, and which sectors will or won’t be included in this new entity? For example, can she be very specific about things like ports or roads or hospitals or airports—those other strategic assets that we know from our experience in the Pacific Islands are important to maintain control over.

I’m thinking, also—I mean, I will have questions around the fees that can be gathered, too, because when fees can be gathered from foreign investors, then in some ways that does have a bearing on incentivising the direction of business. So I will come to those questions later.

Also, pages 9 and 10 and the table on page 11 of the RIS, there were three options—I know there’s been a question on that, so I won’t hold up time on that. Questions on page 11 of the RIS: when it says it will liaise—[Bell rung] Mr Chair? Mr Chair? I’ve still got some more questions, Mr Chair. Thank you. Page 11, the RIS talks about liaising closely with other ministries. Is there actually a plan for that, and can the Minister please tell us which specific agencies, and how will it be independent? How will it be accountable for the risks?

I know that she’s talked about the Ministry of Business, Innovation and Employment (MBIE), which comes to a later question of mine, which is around monitoring and evaluation. On page 16, the RIS says that the “monitoring, evaluation, and governance … [is] yet to be finalised.”, and that’s really unusual from a governance perspective. Usually, monitoring and evaluation (M & E) and governance should be designed first and sorted out before designing an entity. It’s a bit like building a plane and flying it. So it would be good just to have some reassurance and some extrapolation of the comment that she made to Vanushi Walters about MBIE being accountable. It was a very flippant, one-line response the Minister gave that doesn’t give us any assurance that there is actually a true M & E and governance plan.

On the RIS, on page 14, when it comes to monetised benefits, it says that there is no ability to assess that and that the evidence certainly is low. Again, I know this has been traversed in the first part, but given that that is in the RIS, it would be really good to understand why the Minister is so confident about the benefits this will bring to New Zealand.

Finally, the RIS says that recruiting is taking place in February and March. There has been no parliamentary mandate for that, and I suspect that is against the employment rules. I know there is a section in the bill that talks about superseding the Employment Relations Act, but I’m wondering: under what authority has the new entity been doing that employment, given that this bill hasn’t passed?

I have some more separate questions that are not around foreign risk, and I would like to come to those in a later contribution, but I’d love to hear the Minister’s answers to those many questions.

Thank you, Mr Chair. I thank the Minister of State for Trade and Investment for responding to my previous question, but I wanted to check a couple of things with the Minister. Again, I just want to check that the Minister hasn’t responded to my question around the budgetary implications in the establishment. And also based on what the previous speaker, Ingrid Leary, has mentioned as well, the Minister hasn’t yet elucidated the committee on what the Ministry of Foreign Affairs and Trade’s advice was.

But going on to two things that I want to ask the Minister around, one of them is clause 13, “Power of Minister to appoint special adviser to [the] Board”—as in, i.e., to appoint the chief executive. I genuinely don’t know this—I know the Minister mentioned previously that it was within the mandate of, let’s say, the Ministry of Business, Innovation and Employment to appoint the chief executive, etc. But is it normal for an independent Crown agency, the Minister, to have the ability to appoint the chief executive on to the board? Is that a normal process? On top of that, is that a normal process for the chief executive to play the intermediary between the Minister and the board in clause 13(2)? If it has been answered, that’s all good. If it has been answered, I don’t know because I was looking at some of the things as well.

One of the things that the previous speaker, Vanushi Walters, spoke on that reminded me that one of the things the Government is currently doing—because there’s a number of bills in the Justice Committee as well—is around anti - money-laundering and also countering foreign terrorism, etc. But in terms of that—because New Zealand Trade and Enterprise presumably would not be doing that—what mechanisms would Invest New Zealand have to ensure that potential investors would be vetted as a part of that?

It is an operational question, but again the Minister previously has mentioned a few things. But we are still trying to understand exactly how this is going to provide that level of vetting. Yes, I understand the Minister mentioned that they will be compliant with domestic legislation—that’s fine, we understood that—but how? How are they going to be able to vet things in a way that we know that there is going to be an accountability mechanism by Invest New Zealand to ensure that domestic legislation is indeed followed? That is my main question to the Minister around anti - money-laundering and countering financing of terrorism.

I move, That debate on this question now close.

Thank you, Mr Chair. I just wanted to pick up on a follow-up question I had for the Minister, just on the basis of a response that she gave. It was in regard to the comment that the chief executive of the Ministry of Business, Innovation and Employment would be appointed as the special adviser to the board. It looks to me like in the interpretation section, which I know we’ve already discussed, the chief executive is defined as meaning the chief executive of the department. I just thought that was an unusual way for that term to be defined in a statute when, of course, we have a number of chief executives in a number of different departments. And if you compare the equivalent in the New Zealand Trade and Enterprise (NZTE) legislation, in that legislation it’s quite specific, it says: “(a) the Secretary of Foreign Affairs and Trade; and (b) the Chief Executive of the Ministry of Economic Development.” I guess the question is whether that’s an error, and there was an intent to insert a specific chief executive there. That’s the first question.

The second question is that a very calculated choice has been made here, in terms of who that chief executive is, clearly. Whether it’s explicitly in the bill or not, my question is why the other chief executives who were considered relevant for the functions of NZTE were not considered as potentially relevant, particularly the Secretary of Foreign Affairs and Trade, and whether they were consulted on the views about whether being in a special adviser capacity would have been a useful function for them to serve, given the purpose of the new entity. I’m not sure where in the documents it is, but there was commentary that Ministry of Foreign Affairs and Trade hadn’t provided some of the feedback requested. So I am just ensuring that that dialogue did in fact take place.

The other question I have, in terms of the special adviser function, is whether there was any thought given to whether there were useful governance functions that a special adviser shouldn’t be party to. As often happens with governance boards, you may have the board who are meeting in a stand-alone conclave session for parts of the function. The way in which the bill currently reads looks like it goes the opposite. It looks like it creates the ability for that special adviser to have access to all the papers, access to all the committee meetings, so I wonder whether there was any advice on whether there was some utility in carving out a conclave session specifically for that board.

In terms of clause 15, my colleague from the Green Party has touched on the issue of ensuring that there isn’t corruption in terms of money coming into New Zealand. Clause 15 allows “Invest New Zealand [may] charge any fees and recover any costs in respect of the provision of services, information, or advice requested from Invest New Zealand in relation to its functions under this Act.” This is quite a unique function, in many ways. It’s not purely a function that’s about selling a loan; it sounds very much to me like it’s a function about brokering. So my question is really: what are the safeguards in place within the legislation that the Minister sees to direct the entity to ensure that it has policies in place that actively prevent, rather than waiting for those situations to eventuate before taking action?

I would also just go back to a point I made, but make a slightly different point on environmental, social, and governance provisions. I made the point that I think we have obligations that we ought to be inserting within the statute. There are obviously investors who will be subject to international rules, and the EU is actually a great example of where a body of work is being done on responsible investment. My view is that any entity in this space ought to be aware of those external obligations coming in, and I would again reiterate my view that it is worth holding that information and those learnings within the purpose of this entity.

Thank you very much, Mr Chairman. And I’m sure that the Minister will be prepared to answer the questions of my colleague Vanushi Walters, and I welcome that. I go to a couple of points.

The one around investment, I’ve referred to it briefly earlier on in principle, but in clause 15 “Invest New Zealand may charge fees and recover costs”. This is a $54 million commitment by taxpayers to an agency that’s going to be selling New Zealand, and the question is: why not, like every other real estate agency, doesn’t it fully recover—in fact, they’re making good, healthy profits—from any of the actions and the functions of it? That should be written in, because there will be enough suspicion about what this agency’s going to do. We’ve heard before of the vague qualifications and safeguards in this legislation. There’ll be many people out there saying, “Is this just a coalition deal to sell New Zealand to the highest bidder?”. Because there are, as I’ve said before, trillions of dollars floating around the world, looking for a place to park. If you wanted to bring it somewhere, to a country of hard-working, honest people for the most part, with systems that have integrity, that are reliable, and no capital gains tax, then actually we’re a very, very prime location for some of that money.

The fact that we are committing to spend $54 million—well, not “we”, but the Government is committing to spend $54 million—to a board of unknown numbers, with very few safeguards is something that we want to see a bit more certainty around. So can the Minister accept that Invest New Zealand—or can she give a reassurance that we’ll have 10 percent cost recovery, 50 percent cost recovery, maybe 75 percent, or maybe 100 percent, which would be the fair proposition for something that is not necessary—not necessary at all? There’s enough money in New Zealand.

The question I have alongside that—and it goes back to the purposes, but it’s kind of through this bill—Minister, is: does ownership matter? It’s a serious question for each and every one of us across our economy, across our private lives, for the future of New Zealand. Because this bill is going to open up the opportunities for anyone to say, “I’ve got a good idea. Can you go out and find me the money?”, without any safeguards over who owns the entity, the enterprise, or the infrastructure. Does ownership matter? It goes to the heart of what we do as a nation and as politicians. We are here for all New Zealanders, now and into the future.

Steve Abel: And Australians!

Hon DAMIEN O’CONNOR: Does ownership matter—does ownership matter? I welcome the Minister getting up and explaining that, because that might give us some sense as to the purpose for this investment, the likely avenues and areas of investment. I missed that, sorry, because I’m a bit deaf, so I’m sorry if I missed a really good joke. But it is a very fair question to ask in a piece of legislation like this, which may give us some indication of the philosophical, ideological, or indeed practical reasons why the coalition Government is bringing in an agency to sell New Zealand. Does ownership matter?

Speaking to questions from the member Vanushi Walters that are specific to this bill, she asked about Invest New Zealand and whether or not it may be able to charge fees and recover costs. I think the keyword there is “may”. Invest New Zealand “may” charge any fees, recover any costs. It is simply being put in here to futureproof the legislation. It will be an option in the future. It is not unusual. I think of Immigration New Zealand, indeed the Overseas Investment Office. There are multiple cost recovery and fee charging agencies within the public sector.

I move, That debate on this question now close.

The question is that Dr Lawrence Xu-Nan’s tabled amendments to clause 9, replacing “3” with “4” and “9” with “8”, be agreed to.

Reuben Davidson’s tabled amendment to clause 9 replacing “3” with “4” is ruled out of order as being inconsistent with a previous decision of the committee.

The question is that Reuben Davidson’s tabled amendment to clause 9 replacing “3” with “5” be agreed to.

The question is that Reuben Davidson’s tabled amendment to clause 9 replacing “3” with “6” be agreed to.

The question is that Reuben Davidson’s tabled amendment to clause 9 replacing “3” with “7” be agreed to.

The question is that Reuben Davidson’s tabled amendment to clause 9 replacing “9” with “10” be agreed to.

The question is that Reuben Davidson’s tabled amendment to clause 9 replacing “9” with “11” be agreed to.

The question is that Reuben Davidson’s tabled amendment to clause 9 replacing “9” with “12” be agreed to.

The question is that Reuben Davidson’s tabled amendment to clause 10, inserting the word “ethical”, be agreed to.

The question is that Dr Lawrence Xu-Nan’s tabled amendment to clause 10 inserting the words “and additional” be agreed to.

The question is that Vanushi Walters’ tabled amendment to clause 10, deleting the word “overseas”, be agreed to.

The question is that the Hon Damien O’Connor’s tabled amendment to clause 10, inserting the words “for the sustainable benefits of all New Zealanders”, be agreed to.

The question is that Dr Lawrence Xu-Nan’s tabled amendment to clause 11(1) inserting the word “advise” be agreed to.

The question is that Dr Lawrence Xu-Nan’s tabled amendment to clause 11(1) inserting the words “sustainable and environmentally conscious” be agreed to.

The question is that Vanushi Walters’ tabled amendment to clause 11(1) deleting the word “overseas” be agreed to.

The question is that the Hon Damien O’Connor’s tabled amendment to clause 11(1) inserting the words “for the sustainable benefits of all New Zealanders” be agreed to.

The question is that the Hon Damien O’Connor’s tabled amendment to clause 11(2)(b) inserting new paragraph (iv) “the impacts of additional foreign investment in New Zealand” be agreed to.

The question is that the Hon Damien O’Connor’s tabled amendment to Vanushi Walters’ amendment to clause 11(2)(b), proposed subparagraph (iv), inserting the word “environmental” be agreed to.

The question is that the Hon Damien O’Connor’s tabled amendment to Vanushi Walters’ amendment to clause 11(2)(b), proposed subparagraph (iv), replacing the word “standards” with “mechanisms” be agreed to.

The question is that Vanushi Walters’ tabled amendment to clause 11(2)(b) inserting new paragraph (iv) be agreed to.

The question is that Dr Lawrence Xu-Nan’s tabled amendment to clause 11(2)(c) inserting the word “interested” be agreed to.

Dr Lawrence Xu-Nan’s tabled amendment to clause 11(2)(c), replacing the words “providers of opportunities for overseas investment” with “providers of overseas investment opportunities”, is ruled out of order as not offering a serious alternative form of words.

The question is that Dr Lawrence Xu-Nan’s tabled amendment to clause 11(2)(d) replacing “information” with “insight” be agreed to.

The question is that Vanushi Walters’ tabled amendment to clause 11(2)(d) inserting the words “including in relation to risk relating to human rights accountabilities” be agreed to.

The question is that Vanushi Walters’ tabled amendment to clause 11(2)(d) inserting the words “environmentally and socially responsible” be agreed to.

The question is that the Hon Damien O’Connor’s tabled amendment to clause 11(2)(d) inserting the words “and increase the value for New Zealand from this investment” be agreed to.

The question is that

Point of order. I seek leave to pause the vote and resume it when the committee resumes at 9 a.m. tomorrow morning, given that it is five minutes to 10 p.m.

Leave is sought for that purpose. Is there any objection? There is.

The question is that Dr Lawrence Xu-Nan’s tabled amendment to clause 12(a), inserting the words “in writing”, be agreed to.

The question is that Dr Lawrence Xu-Nan’s tabled amendment to clause 12, replacing reference to “having regard” with references to “implementing”, be agreed to.

The question is that Vanushi Walters’ tabled amendments to clause 13, to amend subclause (1) and delete subclause (2), be agreed to.

The question is that Dr Lawrence Xu-Nan’s tabled amendment to clause 13(1) inserting the words “or a delegate of the chief executive” be agreed to.

Motion not agreed to.

The question is that Dr Lawrence Xu-Nan’s tabled amendment to clause 13(1) inserting the words “on an ad hoc basis” be agreed to.

The question is that Dr Lawrence Xu-Nan’s tabled amendment to clause 13(2), inserting the words “and to advise”, be agreed to.

The question is that Vanushi Walters’ tabled amendment to clause 14(1), to insert “however is not permitted to attend board alone or executive committee only discussions”, be agreed to.

The question is that Dr Lawrence Xu-Nan’s tabled amendment to clause 14(2), inserting the words “as requested by such committee”, be agreed to.

The question is that Vanushi Walters’ tabled amendment to clause 14(2), inserting the words “and is not permitted to attend board meetings alone or executive committee, only discussions that are part of committee meetings”, be agreed to.

The question is that Vanushi Walters’ tabled amendment to clause 14(3)(b), to delete “any” and insert “that is not prepared for consideration by the Board alone”, be agreed to.

The question is that Dr Lawrence Xu-Nan’s tabled amendment to clause 15, replacing “any” with “reasonable”, be agreed to.

Vanushi Walters’ tabled amendment to clause 15, to insert a reference to the UN Convention on the Elimination of Discrimination against Women, is ruled out of order as being outside the scope of the bill.

Vanushi Walters’ tabled amendment to clause 15, to insert a reference to the UN Principles on Business and Human Rights, is ruled out of order as being outside the scope of the bill.

The question is that Dr Lawrence Xu-Nan’s tabled amendment to clause 17(2) replacing “through trade promotion” with “through promotion of sustainable trade opportunities” be agreed to.