Overseas Investment Bill

We are up to the interesting bit now, the Committee stage debate on the Overseas Investment Bill. We know from the speeches on the second reading where the divisions in Parliament on this bill lie. I want to make particular reference to clause 4, “Overview”. Clause 4(1)(b)(i) talks about subpart 1 of Part 2. At the Finance and Expenditure Committee David Parker, on behalf of the Labour Government, inserted into this subparagraph the words—

Simon Power: I raise a point of order, Madam Chairperson. I am sorry to interrupt my colleague, but in the time since we have started this debate the Minister has not been in the chair. He has just returned to it now. I ask that we get some kind of discipline around Ministers’ seating arrangements while we are in Committee.

The CHAIRPERSON (Ann Hartley): I apologise. The Minister will stay in the chair.

JOHN KEY: Sadly, that is the position the Minister feels he will be in regarding the position of Minister of Finance as well—a chair was so close to him, but in a few months’ time the opportunity will be gone, and never will he manage to position his bottom on the Minister of Finance’s chair. What a tragedy. Let me go back—[Interruption] Well, it will be anyone—

Darren Hughes: Does he think he will get the job? Don Brash will give that away.

JOHN KEY: If he does and it is for the good of the country, I shall welcome and support the incumbent person. I shall support that decision fully, because the National Party believes in what is good for the country, not what is good for Labour. That is why Darren Hughes will be so firmly rejected when the election takes place. But let me digress no more; I will go back to the Overseas Investment Bill.

I want to talk about the addition to subpart 1 of Part 2 in clause 4(1)(b)(i) that was imposed by David Parker, on behalf of the Labour Government, during the select committee process. The additional words state that subpart 1: “imposes a statutory marginal strip condition for certain overseas investments in sensitive land:”. That clause originally included the words, following on from those I have just quoted, “for adequate and fair compensation”. The National Party would have supported that—[Interruption] Well, we would have discussed those words—“for adequate and fair compensation”. I suspect that the National Party finance spokesperson may have had some concerns about the costs of that compensation. But putting that to one side, we would have supported the inclusion of the words “for adequate and fair compensation”. Those words were not added. One is left with the feeling that that clause is nothing short of a grab of a property right—nothing short of the view of a Government that cannot quite differentiate between—

The CHAIRPERSON (Ann Hartley): Can I just clarify that we are talking about Part 1.

JOHN KEY: Absolutely—Part 1, clause 4(1). Madam Chair, were you not listening to my speech intently? I think it is one of the better ones I have delivered in Parliament so far—and Mr Cunliffe is nodding his head.

Let me go back to clause 4(1)(b)(i), which talks about imposing a statutory marginal strip condition for certain overseas investments in sensitive land. [Interruption] Yes, that is right. We know that because the words “for fair and reasonable compensation” were not added, this measure will fail. Unlike the Labour Government we understand property rights. We understand the definition as being that if something one owns in one’s own name is taken from one—“involuntarily acquired” is the term—there must be compensation.

Clearly, the Labour caucus voted for the wording that is in the bill. I understand Mr Parker’s reasons for doing so. He had some local reasons. He is under a lot of pressure in his seat of Otago. I understand that. I have been down there. I got the same reaction in Otago as I got when I was in Otaki the other day. In Otaki I asked what people thought of the local member, Darren Hughes, and they had never heard of the bloke. That is how they put it: “Never heard of the bloke.” I asked whether he was the guy cleaning out the back of the chicken farm that I was visiting, and they said: “No, I don’t think so; I think he’s in Wellington.” I got the same sort of reaction in Otago.

I understand that we are in a political environment and that Mr Parker has a lot of high-country stations in his electorate. [Interruption] Yes, he has to get it pumped up in the Otago Daily Times that up here in Wellington he is not just sipping lattes served by Deborah Coddington; he has to do something when he is up here. So sure enough, he thought that if he put this provision in the bill it would be really popular. I guess it would not be popular with those who are selling, but it would be popular with some, anyway. That is why Mr Parker did it. We saw the true colours of the Labour Government, which really does not believe in anyone’s property rights or anyone’s ability to earn anything in his or her own name, when Labour members happily followed the Pied Piper, Mr Parker, and voted for the inclusion of that provision. That was fair enough, except that when they came to Parliament they could not get even the Greens to agree with it. That is how sad it was. [Interruption] My friend Mr Donald is looking across and saying “maybe”. The Government is in an unbelievable situation.

The reason we cannot get support to pass this rather moderate provision relating to the compulsory creation of marginal strips as a precondition of the sale of rural land to foreign people is that New Zealand First and the Greens oppose it, because they favour a total ban on the sale of rural land to foreigners. So it is not because they disagree with our more limited position that they oppose this provision.

I say to the member who just spoke that Labour does oppose confiscation of property rights without compensation, but the point here is what the property right is. Does a property right in rural land in New Zealand include the unrestricted right to sell to an overseas person? Is it wrong in law for the Government to say that it will not allow rural land adjacent to the foreshore, a river, or a lake to be sold to an overseas person unless a marginal strip is reserved? It is not. Until 1995 the Land Settlement Promotion and Land Acquisition Act made it absolutely clear that there was an almost total prohibition on the sale of rural land to foreigners—sale of land was not merely subject to a condition about marginal strips; it was totally prohibited. Against that background it is wrong to suggest that a private property right includes the unrestricted right to sell overseas.

Mr Key is saying that the public’s right to control, through the Government, the sale of land to overseas persons and to control access to our waterways ought to be transferred from the public to the private. At the moment the position at law is quite clear, given our history, that private property rights do not include the unrestricted right to sell rural land to overseas people. The argument John Key, the National Party, and ACT put to the contrary is wrong in principle.

They are asking the wrong question. They say it is wrong to confiscate a property right. We agree. But the question is what property right is being confiscated here. If a property right in rural land has not historically in New Zealand included the right to sell to overseas people, giving people the right to sell to overseas people subject to a precondition of laying off a marginal strip is not confiscating anything. No one is forced to sell to an overseas person. If a person wants to have the privilege of doing so, it is within the jurisdiction of this Parliament to say, quite properly, that as a precondition to that permission we will reserve a marginal strip.

I make one final point. It is absolutely inconsistent to say that one can control public rights of access across the foreshore vis-à-vis Māori claims to interest in the foreshore, and then, within 1 year, come to Parliament and say: “Notwithstanding our high and mighty principles on the foreshore, we will have a different rule when it comes to New Zealanders selling to overseas people.” There is a word for that, which I am not allowed to use in this Parliament.

We cannot get those provisions through. We have other good improvements in the bill relating to controls on sales to overseas people, which will go a long way to achieving a similar outcome, but it is very important that the underlying principle here be unpicked a little. When people say that private property rights should not be confiscated, they are right, but people need to take great care in what they define as the private property right. If people do not take care, they are, in effect, changing current baselines to privatise what are existing public rights. To do that, in a world of globalisation and of concentrations of wealth in certain parts of our world, is to threaten the birthrights of New Zealanders to access waterways.

I raise a point of order, Madam Chairperson. I did not want to interrupt the member, particularly because I agreed with most of what he was saying, but I suggest that we follow a logical sequence here. Part 1 does not have any reference to the marginal strips, as far as I can see. If we can get Part 1 out of the way—because it is a relatively small part, and I intend to take only one call—then we can have a much more wide-ranging debate on Part 2, where marginal strips are very much part of the debate.

Clause 4(1)(b)(i) speaks of imposing “statutory marginal strip condition for certain overseas investments in sensitive land:”.

Simon Power: The Supplementary Order Paper refers to it, as well.

DAVID PARKER: The Supplementary Order Paper removes that provision.

The CHAIRPERSON (Ann Hartley): That is where I did get confused before.

That was a great speech from “Michel Foucault”! The member said that property rights are whatever one decides they are, and whatever anyone wants them to be. He is from the party that says: “We’ve got principles; what principles do you want to have today?”, as they dive into their bag of all sorts of different principles.

Property rights are absolute. They are not whatever one wants them to be. When that member goes on about people who have a property right not having the right to sell it to an overseas person, that is absolute emotional claptrap, because a property right means that a person has the right to sell a property to whomever he or she wants. I remind the member to read his history. Anyone who has read history might be aware of the Australian historian Geoffrey Blainey, who wrote that in 1900 New Zealand had the highest standard of living in the world and had no restrictions on foreign investment. So David Parker is absolutely wrong when he goes on about what constitutes a property right, and about the fact that it does not include the right to sell to whomever one needs.

Foreign investors should be subject to the same rules as New Zealand investors. If those rules are wrong or they are being broken, we need to look at them and ensure that everybody obeys them, rather than tweaking them around to come up with all sorts of different definitions of what a sensitive asset is and who should be buying what. The member for New Zealand First who spoke before was going on about ACT and the National Party wanting to sell the whole of New Zealand to anybody who comes through the door. That is also a total misrepresentation of the truth. When has anybody said that?

John Key: We didn’t say that, did we? We were talking about lattes.

DEBORAH CODDINGTON: No, I am talking about New Zealand First.

There are restrictions on anybody purchasing land in New Zealand. For a start, one has to have the money to do so, or the guarantee of the money from whoever is lending it. There are all sorts of laws and restrictions relating to the sale and purchase of land. The Minister of Finance, Dr Cullen, implied that legislation like this is necessary because New Zealanders have been led to believe, through reading advertisements in an airline magazine for the sale of Poronui Station, that the purchaser would have the right to the waterways. If we passed legislation every time some real estate agent came up with an over-hyped description of a piece of land or property that was for sale, we would never get out of this place. I am still looking for a piece of Tuscany in Avondale. Are we going to pass laws saying that no New Zealanders should be led to believe that they will be able to buy a piece of land in Avondale?

I come back also to the issue of overseas investment in significant business assets. Craig McNair dealt with that before when he talked about the fact that we should restrict investment in New Zealand businesses to New Zealanders because they are the only investors of good character. I remind that member of the wine-box inquiry, which was brought into the House by his leader. Not one overseas company was involved in the wine-box inquiry, and I wonder why that was. Well, it is usually because people or companies that invest in a company, a business, or a corporation in another country are usually—I am not saying always, but in the majority of cases—good corporate citizens. The mere fact that they are putting their money where their mouths are means that they will look at obeying the laws. That is what I mean when I say that if people do not obey the laws, no matter who they are—whether they are foreigners or New Zealanders—that is when we should deal with it. We should not deal with it on the basis of the country where they live.

I come back to the principle of property rights. It is all very well for Dr Michael Cullen to sneer at principles and to say that just because I, personally, am not coming back to Parliament I can afford to be fast and loose with principles. The ACT party is the one party—apart from the National Party—that is standing on principles and is debating this bill on the basis of principles. It comes back to the basic principle, which I repeat to David Parker, of whose land it is. Whose land is being sold here? What gives that member, just because he has been elected to Parliament, the right to breach property rights?

I want to speak on Part 1 because of the issue that was raised by the Labour Government when it inserted clause 4(1)(b)—

Brian Connell: I think it is termed the “steal clause”.

CRAIG McNAIR: The member on this side of the House terms it the “steal clause”. This Government had a bill that allowed for the blatant flogging of New Zealand ownership to overseas interests. Only a few months out from an election, all of a sudden, Government members looked at themselves and said: “Oh my goodness! We have to do something that makes it look like we are being tough on foreign investors.” That is what they did; they sat around a table late at night thinking they had to do something about that in order to give people the impression that they were trying to be tough on foreign investors. That is what they did, because they knew the sentiment out in the community. They knew that an overwhelming number of people gave submissions to the select committee in opposition to the bill. They knew the public sentiment on this bill, so they thought they had to do something. They got their spin machine together, they flew Mr Parker up from Otago early on a Monday—instead of having him come in on an early flight on Tuesday—they racked their brains, and they thought of a way to spin some sort of explanation to the public to make it look like they were working in the best interests of the people.

Some people could call that clause the “David Parker amendment”. I was going to call it the “smokescreen amendment”. Or it could be called the “blatant electioneering clause”, as well. The Government wanted to pop in an amendment that, basically, would allow foreigners to buy whatever they wanted but, after they had done that, it would take away their riparian rights. The Government would get rid of those rights if it wanted to, in certain circumstances. Basically, this is a poll-driven Government and if it thinks that the polls are telling it that people are not so approving of what it is doing, then—nothing to do with conviction or anything—it will act purely on the polls. Its decision would be based on that alone. I think it is quite disgraceful that the Government has come out with an amendment that, as I said, is such a blatant electioneering clause.

The Government has no conviction or passion about it. Labour has turned away from its principles. It signed up to the petition that went up and down New Zealand many years ago to stop foreign ownership of land, and then it went totally against its principles, which was proved by its $10 billion worth of sales of State-owned assets from 1984 to 1990. Allowing for inflation and the amount of assets those State-owned enterprises owned at the time, they would be worth billions of dollars to the economy now. We have $10 billion a year going out of the country now, just because of foreign ownership, and this Government has allowed that to happen. The Government is obviously not concerned about it, because it is letting it happen; it is continuing that kind of regime. It just does not give a stuff! But the Government expects us and the people of New Zealand to believe that it is trying to do something about the foreign ownership issue by popping in a clause like that, by flying David Parker up from Otago on a Monday, and by getting its spin machine together to spin out a bunch of lies to the public. That is what the Government is doing.

I am reluctant to take a call, but I will take one quickly just to point out some of the inconsistencies in the submission by the previous speaker. He said that this Government lacks principle by bringing in a range of measures that provide some protection for sensitive land that is sought to be held by foreign investors. Well, that is a bit rich, because there is no lack of principle there. This Government has taken a very sensible, moderate, and balanced position, on the one hand screening negative investment in sensitive and iconic land—and the Finance and Expenditure Committee has further developed the screening factors that will allow that—and on the other hand encouraging foreign investment and lowering compliance costs in areas where that is clearly in the net national interest to do so. That is the appropriate balance.

Talk about a lack of principle—that member is from a party that when it gets out on the hustings rails against foreign investment and the country being flogged off overseas. Then its members come into this Committee and fail to support a sensible, moderate amendment by my colleague that would protect an iconic space around riverbeds and marginal strips. Well, they cannot have it both ways. Are they the defenders of the little guy, or are they what they proved themselves to be last time—God forbid it happen again—they ever got near the Treasury benches: “… full of sound and fury, Signifying nothing.”?

That was rather an abrupt end to that speech, but it was because, I think, David Cunliffe, the Minister in the chair, had run out of anything to say. It is very hard to defend this legislation, particularly because it is a con job, as I said in my second reading speech. It is a con job in a number of respects, and I would like to focus particularly on the purpose clause to emphasise my point.

Clause 3, “Purpose”, is very cuddly-feely. It talks about it being “a privilege for overseas persons to own or control sensitive New Zealand assets”. It then states that that privilege will be acknowledged by requiring overseas investments in those assets to meet criteria for consent and by imposing conditions on consent. Then we have to go to the small print to see that while the purpose talks about assets, the only real test will apply to sensitive land. There are b-all tests on anyone buying businesses, other than a good character test, so there is no expectation that a business buy-up will do anything other than tell us whether the person is supposedly of good character, and there have been numerous examples of business buy-ups where the foreign purchaser has not been of good character. So, as I said in my second reading speech, if the Government is serious about overseas persons owning or controlling our sensitive assets being a privilege, then it should give some teeth to that purpose.

It has not; therefore the Green Party will endeavour to do what the Government has failed to do, and will propose some amendments to the purpose clause. We will leave what is there as it stands, because it goes part-way, but we believe that it needs to be strengthened by making clear that any ownership or control must be in the national interest for the long-term benefits of New Zealanders. I ask the Government whether that is too much to expect of foreign investment legislation. If the Government does not support our amendment, then in effect it is saying that it is happy for foreign investment not to be in our long-term interest and not to be for the benefit of New Zealanders. That is an indictment on a Labour Government. It is what one would expect of National if that party were in Government. Of course, when National was in Government, it did make it very easy for foreign investors to gobble up a lot of our strategic assets, particularly State-owned assets. But for Labour to make that even easier, under the smokescreen of saying that it is a privilege for overseas persons to own or control our sensitive assets, is an indictment.

The Government, of course, is doing this because it has an agenda, and the agenda is very clear. The Government would dearly love a free-trade agreement with the United States of America, and we know full well that it is high on the US shopping list that any restrictions on overseas investments be reduced or eliminated. The Government has locked itself into the General Agreement on Trade in Services (GATS), and I have to ask it whether it is just a coincidence that one of the major demands from our trading partners during the current GATS round is for New Zealand to scrap the Overseas Investment Commission. Clearly, the Labour Government has done the bidding of our neighbours overseas—to the disadvantage of our own citizens—because the Government is scrapping the Overseas Investment Commission and transferring it to Land Information New Zealand. It will be even easier for foreign firms and individuals to buy up our land, our buildings, and our businesses, and Labour is therefore doing exactly what those Governments representing multinational corporations that already own a fair chunk of New Zealand want it to do.

So our other amendments to this part will tighten up the scrutiny on foreign investors by reducing the threshold from 25 percent ownership to 10 percent ownership. That actually brings us into line with the IMF, the OECD, and the United Nations Conference on Trade and Development in using 10 percent as a criterion for the standard international definition of foreign ownership.

I move, That the question be now put.

When I took a call in the debate on the first reading of this bill, I said that the National Party has no problem with the concept of foreigners pouring their hard-earned cash into New Zealand, subject to certain rules of engagement. I went on to say that everyone wins: overseas investors get to live in Godzone, and we get money for education and infrastructure. That is how citizens of New Zealand get to grow their wealth, and that is the contribution that foreign capital makes to our economy.

I was very much of that opinion when I came down to the House to talk on the second reading of this bill until I struck the “Mugabe clause”—the “Parker Pimpernel clause”. That is the clause that says—and this is from a rural member, the member for Otago—it is OK to take people’s private property rights, and it is OK to take the best part of their land and annex it without even offering compensation. The man’s true socialist agenda came pouring out and he is wearing it on his sleeve. He wonders why he will not be coming back to the House after the next election. Bye-bye, Mr Parker.

We should not be surprised that this is the type of thing the Government is doing. The same Government that is promoting this legislation is suggesting that the public can roam at will across private property. When Michael Cullen was on his feet, he slapped a sneaky little left jab into my colleague Nick Smith—below the belt, as is Michael Cullen’s way—by suggesting that this is the type of nonsense that the National Party would support. What he conveniently overlooked is that this is a Government bill sponsored by Michael Cullen, and this sneaky, nasty little clause is in the name of David Parker, the soon to be former member of Parliament for Otago. But we should not be surprised because this is—

Pansy Wong: Jacqui Dean is coming here.

BRIAN CONNELL: Jacqui Dean is coming. I know her. She is working hard and knocking on a lot of doors in Otago, and she will be here very soon.

But we should not be surprised that this Government would embark on this type of rhetoric. I was at a public meeting in Timaru where the Minister of Agriculture—a Minister of the Crown—got up and, in a public forum, said that the annexing of private property can be justified in the public good. That is the sort of thing one would expect to hear from the leaders of some Central African countries. But to hear it from someone in the New Zealand Government who represents the Crown is simply unsatisfactory and not acceptable.

It is all right for people like Mr Parker to say: “This land is everyone’s. We’ll put a value to it. No one’s going to miss it.”, but that is the worst type of interference in the property market that I can think of. The member from the ACT party, I thought, made this point particularly well. Why is it that we have been seduced by minority groups into thinking that foreign ownership of our land means that New Zealanders will not be able to enjoy it? The facts do not stack up. Of the land that has been sold in the high country around mid-Canterbury, six of the 11 stations sold in the last 2 years went to New Zealand interests. So much for the argument that they have been priced out of the hands of Kiwis. Fifty percent of those that were resold over the last 10 years went to New Zealand interests.

Michael Cullen himself stood in the Chamber a few minutes ago and said: “You can’t take the land with you.” That is right. One cannot. It is always going to stay here. Yet that same Minister is sponsoring a bill that says it is OK to steal other people’s property. That is simply unacceptable. The great shame of all this is that rather than attract capital to New Zealand, we are now getting ourselves into a situation where potential investors are starting to become gun-shy. Instead of welcoming those people and instead of using their capital, we are losing that opportunity. I can think of an example in mid-Canterbury where a five-star beef block—

I move, That the question be now put.

I appreciate having a few more minutes to speak, as I had not even got on to supporting my good colleague David Parker on his excellent initiative. But before I go there, I want to finish talking about the amendments to the purpose clause that I have proposed on behalf of the Green Party, and I am pleased to see that the Minister of Finance is with us to hear those. One of our fundamental concerns with the legislation as it stands is the extent of influence that the Minister has through his letter of direction to the Overseas Investment Commission. Although I have made considerable criticisms of the secretary of the commission in terms of how he has acted, I recognise that the ministerial directive has pretty much determined how the commission operates. That has basically been—without quoting the letter in full—to facilitate overseas investment. The scrutiny function has very much taken a second-class position; the thrust has been to making it even easier for foreign investors to buy up our land, our businesses, and our buildings, and we need some balance to that.

Hence the amendment we are putting up to the purpose clause that public participation in decisions around overseas investment will be encouraged. I believe it is vital that the people of New Zealand have a say in whether overseas investments are appropriate, rather than the regulatory authority simply carrying out the wishes of the Minister of the time—although given that the Minister is usually Labour or National, there is very little difference between them in terms of their determination to make it even easier for foreign buy-ups.

I say this not only as a citizen but also with the benefit of information from Mark Dunlop, who made a submission to the Finance and Expenditure Committee. I think he was very brave to do so, as a former member of the Overseas Investment Commission staff. He said in his submission that the bill is fundamentally flawed and that it does not provide the framework, including supporting structures and safeguards, necessary to facilitate or ensure only positive and high-quality overseas investment that is beneficial to New Zealanders. He goes on to talk about the role of the regulator, and said that it is simply unacceptable that the same body can act as both a compliance and enforcement agency and an advisory and facilitative one. On the one hand, the commission is trying to encourage overseas investment, as per the directive letter; on the other hand, it is meant to be trying to ensure that compliance is maintained. Hence our amendment, and hence our criticism of the commission’s job now being handed over to Land Information New Zealand.

I finish my call by saying that I thought it was an excellent move on the part of David Parker to use this legislation to enable statutory marginal strips to be created when a foreign investor buys up land that adjoins our foreshore, our significant lakes, and our significant rivers. It is a great step forward for public access in New Zealand. It recognises that the lakes, the rivers, and the foreshore are public, should be open space, and, therefore, should be accessible. I am extremely disappointed that some parties in this House that I thought supported public access and the ability for people who enjoy the great outdoors to get access to that public space are now voting against this provision simply because there is no provision for compensation.

There is no provision for compensation when a subdivision takes place, either. Will United Future now be demanding that landowners be compensated when they proceed with a subdivision? I hope not. I hope that they will see sense. I hope that the outdoor recreation lobby and its party actually get some benefit from having its name attached to United Future, and I hope that United Future will change its position on these amendments—that it will not force the Government to move its Supplementary Order Paper and backtrack on what would have been a great step forward for New Zealand and for New Zealanders, especially those who enjoy the great outdoors. I am very sorry to see Dr Cullen have to back down on these provisions. They were successfully negotiated by the Labour member for Otago in the best interests of not only his constituents but also people throughout New Zealand.

I move, That the question be now put.