Invest New Zealand Bill

Members, we now turn to the Invest New Zealand Bill. We begin with the debate on Part 1. Part 1 is the debate on clauses 3 to 6—“Preliminary provisions”—and Schedule 1.

Thank you, Madam Chair. I want to start with clause 3, “Purpose”. I think that’s a very good place to start. I think the big question is: why?

Let’s get down to the more specific questions around this because, while we are having this committee stage after the first and second reading, it must be noted that, like other bills under urgency, we did not go through a select committee stage and we are essentially creating an entirely new Crown entity without public input. I know that lots of people would like to ask a lot of questions around the purpose part, but I want some clarifications from the Minister for Trade and Investment to start with on why do we think that this particular investment is needed.

Now, I refer to the regulatory impact statement that does talk about the various options that have been considered or are on the cards as part of the process. But what we are not seeing is specifically why we need to have an entirely new entity, and why we are creating something and calling it a one-stop shop when we have a number of one-stop shops already—New Zealand Trade and Enterprise (NZTE) being a really good example.

In terms of some of the comments that have been suggested in the regulatory impact statement, I’m going to limit it for the time being to look at some of the agencies that have been consulted. I think as part of the wider question in terms of how this came about, my next question is around the fact that what we saw is that the Ministry of Foreign Affairs and Trade (MFAT) was requested to consult, but they have not provided that data, as we see in the drafting of the regulatory impact statement. So my next question is: what advice has the Minister received, then, from MFAT around this new Crown entity?

My final question for the Minister is on further looking at a list of the four agencies consulted, understanding that some of them, a lot of these, were consulted, one that I think has a direct link to this idea of foreign investment etc.—which I thought would be on that list, unless the Minister could elucidate that they are under another ministry—is Immigration New Zealand. Immigration New Zealand was not on the list of consulted agencies, and neither is Education New Zealand. This is interesting because Education New Zealand is the premier and principal agency that we use to promote Aotearoa New Zealand globally, from the perspective of international education. It essentially functions like NZTE but for international education. That was also an agency that was not consulted in this new Crown entity that is supposed to be a one-stop shop for attracting investment.

A number of questions: the first one is how did this come about? Why have we decided to create an entirely new agency? What is the difference between this one-stop shop and the mini one-stop shop we already have in terms of agencies? What is the advice the Minister has received from MFAT? It is missing from the regulatory impact statement. Finally, why were Immigration New Zealand and Education New Zealand not consulted, in the full list of consulted agencies?

Thank you, Madam Chair. I’m looking forward to having quite a good conversation about the overall policy here, and, as my colleague Dr Xu-Nan has said, it is appropriately located, when we discussed it in clause 3. We do actually need to have quite a good discussion about the general policy here, sitting in under the “Purpose” statement, because this bill was introduced under urgency in the Budget, went immediately through its first and second readings, and this is, in fact, the only opportunity we have to look at the overall policy—and it’s a pretty significant one. This is, as Dr Xu-Nan has said, setting up an entirely new investment agency. Their money has been, according to the regulatory impact statement, reprioritised from within other budgets, so there are some questions there about whether that’s an appropriate reprioritisation of money. I think there is some extra coming from New Zealand Trade and Enterprise (NZTE) itself, some is coming from Callaghan. There’s some pretty strong impacts on those entities.

Dr Xu-Nan has asked a number of “Why?” questions, but I think there’s another very important one to ask, and that is, given that this policy has been tried once before and failed, why has it been revived? Why has it been tried again?

Now, it’s interesting because I don’t see any discussion in the regulatory impact statement or in the legislative statement or in the departmental disclosure statement. Now, it might well be that it’s there, but we haven’t really had the chance to look at it. What I haven’t seen is any consideration of the history here, of what has gone on previously in this space of creating Crown entities that were there in order to promote foreign investment into New Zealand—what I’m referring to is, of course, the old entity that was called Investment New Zealand. It existed, it was quite a long time ago, and was sort of within the NZTE family, but it was a separate entity called Investment New Zealand. But it was a long time ago, and I was quite occupied with small children at the time, so I don’t think I particularly noticed, but at that time, in 2003, I’m told that Investment New Zealand was folded into NZTE, and its functions were folded into New Zealand Trade and Enterprise.

The interesting thing is, in considering the establishment of a new Crown entity, I can find nowhere in the regulatory impact statement, or elsewhere, an analysis of what happened with Investment New Zealand: of what it did, of the reasons why it was thought to be unsuccessful and was then folded into NZTE, and what this new entity is doing that guards against the problems that were found with Investment New Zealand way back at the start of the century.

Now I know it’s a long time ago, but there will be institutional memory within New Zealand Trade and Enterprise that will remember Investment New Zealand. In fact, my own knowledge of it—given that I was occupied with small children in 2003—was from someone I know who happened to work at New Zealand Trade and Enterprise at the time and let me know about it. This person no longer works there and has not for quite some time now, but there must be some institutional memory of Investment New Zealand.

I want to know from the Minister for Trade and Investment why his officials haven’t given us at least some background on Investment New Zealand, haven’t given us some understanding of what that entity did, haven’t given us at least some understanding of how what that entity did or didn’t do led to it being folded into NZTE, and as to why the current Minister is so confident that this new entity Invest New Zealand will have a different fate from the old Investment New Zealand. What is it doing that is different?

I’d like to see an analysis from the Minister as to the differences with Investment New Zealand and, I suppose, some of the thinking behind why the Minister thinks that this new entity will be successful when the old entity wasn’t.

Thank you very much, Madam Chair. This, as my colleagues have said, is a piece of legislation brought in under urgency, and the Government has failed to push it through as quickly as they would have liked. There are many questions around, firstly, the reason for rushing this through. Then, of course, now that we have a little bit more time, we can ask the why of what this bill achieves.

We’re talking about Part 1 and “The purpose of the Bill is to establish Invest New Zealand to promote increased overseas investment into New Zealand”. There are some amendments that we’ll talk about as we go through this. I think the question of whether, firstly, all investment is beneficial to New Zealand, I think that’s a—and maybe the Minister for Trade and Investment can get up and explain it. If you go to the RIS—the regulatory impact statement—it makes some assertions around that. But it also qualifies that the benefits could, in fact, not be realised because there are not sufficient safeguards to the investment or qualifications around infrastructure, around capability within the economy—things that are needed to supplement the investment.

The purpose of the Act, it says here: “to provide for Invest New Zealand’s objective, functions, and operation.” Indeed, it just seems to bring investment into the country, which is a very, very simplistic approach to what we are told is a growth agenda. I want to know who will be the people who may benefit from that growth and if the Minister has had advice in that area. Because, you know, there will be the people who obtain the money; they’ll be clipping the ticket somewhere—the people who bring it into the country might be clipping the tickets. And then it will come into some company or some entity or, indeed, some land. I suspect that if this is to bring investment into land, that will just further drive up land values. So what’s the benefit of that in itself?

As a farmer—and I know and I expect that the Chair we have at the moment understands this full well, that, actually, higher-value land doesn’t create anything; it just adds a debt burden to someone who has to run the business on the land. And if the purpose of this bill is to bring investment in to drive growth, as the RIS says is possible—we accept that could be possible. Then if the only thing it does in one sector—say, agriculture or housing—is to simply drive up the value of the land and add cost to the business on the land, then the net benefit of that may be very, very little.

So the Minister can, perhaps, take a call and explain how the purpose of this new entity—that is that it’s different from what is currently undertaken and by New Zealand Trade and Enterprise—will give us any net benefit to our country and to the New Zealanders who live here. This could just bring money. Money in itself doesn’t create any additional productivity; it doesn’t even guarantee any additional profit. It does enable opportunity for those who trade the money or those who might have a job to go and find the money or to spend the money, but ultimately that can just add cost and add a burden to what we, I think, all accept is an objective for us, to try and improve the economy, to ensure the benefits of that better economy are shared across New Zealand.

So the Minister can maybe answer—there are just a few questions in there. It looks as though she’s keen to get up and answer them, and I look forward to those, because there are many, many—even in Part 1 here—questions that we have of the Government as to why it’s going to spend a considerable—I think up to $54 million a year, when it’s up and running, to basically have a real-estate agency, I say, to go out and sell New Zealand for the benefit of going and finding the money. So who’s going to do the selling? Who’s going to do the buying? What’s the net benefit of that? That relates to the purpose—which is clause 3, right at the start—before we’ve got into any of the other provisions in this bill. This is a very, very important bill that goes to the sovereignty of our country, and I hope the Minister takes a call to answer some of those.

Thank you, Madam Chair. I’ll wrap a few of those questions all together to answer them. It seems that the thrust of the questions coming from the Opposition are around “Why the need for a new stand-alone agency?” Well, look, the Government believes that by creating this new stand-alone agency that is mandated, that is charged with a singular focus of attracting inward investment that’s able to promote New Zealand as what we view as an ideal and very attractive investment destination—that the single mandate of this agency is to support foreign investors who are interested in coming here and investing in our country and in our businesses.

Of course, it will differ from the existing New Zealand Trade and Enterprise (NZTE), of which I, very proudly, am a former employee. NZTE, as members will know, has a dual mandate, and that means that it is playing multiple roles, and indeed I saw it myself in my years there. But its main thrust is to support the exporters and to get businesses up and running—“bigger, better, faster” was the tag line when I worked there. The dual mandate of it is to attract some inward investment, but that part of the agency is by no means its primary focus. We believe that having Invest New Zealand as a singular autonomous Crown entity will provide that long-term stability and, indeed, send a very strong signal to the international market.

Hence, to answer the questions around urgency and why this entity is being stood up so quickly, it is that we do already have investors interested in New Zealand and in our businesses, and they need to know where these investible opportunities are, and, indeed, how to navigate the regulatory environment that we have here. There were questions around agencies that have been consulted on and agencies that have helped shape this, like Immigration New Zealand, like the Overseas Investment Office, like Education New Zealand. We believe it’s very important that we are working with urgency, because we have to move quickly to stand up this agency and give it that mandate to attract inward investment and provide support to prospective investors. We believe it’s actually a really simple, straightforward piece of legislation. It’s non-controversial. We are passing this legislation under urgency—and, I would say, unapologetically.

This Government was elected with the mandate of rebuilding this economy. As former Prime Minister John Key has always said, “We’re not going to get rich selling to ourselves.” I think everyone in this Chamber has to be a bit realistic about that. The economy is contracted to the extent where we do need foreign capital, and we invite foreign capital. Therefore, we are going to pass this under urgency. I very much look forward to continuing to talk to the virtues of this bill.

Members, the time has come for me to report progress.

Progress to be reported.

House resumed.