Overseas Investment Bill

I move, That the Overseas Investment Bill be now read a third time. The Overseas Investment Act has not undergone a thorough review since it passed in 1973, and I thank members of the House for their cooperation in progressing this important bill through the House. I particularly want to thank the members from ACT, the Green Party, and New Zealand First, who demonstrated how powerful the arguments in favour of this bill are.

At the commencement of this long-overdue review two objectives were identified as being of paramount importance. These were to ensure the regime focused on sensitive assets of critical interest, and to further reduce compliance costs in areas where that is feasible. The bill does that. Indeed, the second part of that has not been focused on at all during this debate.

I want to say quite clearly that it is critical for the future of this country, and for our social and cultural development, that we have a welcoming and open attitude towards inwards foreign direct investment. Indeed, I have to point out that today the Government announced new rules for the entrepreneur category, and it was attacked by the New Zealand First leader in his first press statement as being an attack upon inward-bound investment by foreigners. It is true that 45 minutes later he put out another press statement saying we were simply pinching New Zealand First’s policy, but, nevertheless, his first statement showed that party’s confusion on the issue of inward-bound investment. If this country relied on its own capital resources alone, we would not just not grow; this economy would shrink, because our investment levels would be insufficient to maintain our current level of economic activity. It is a bit like Arsenal, which had to bring in a Frenchman to be a decent coach, because it could not find anybody from its home area—I remind Peter Brown.

The second point I want to make is about this issue of reducing compliance costs. Today I have been going through, as usual, some Overseas Investment Commission recommendations on purchases. What the members opposite who voted against this bill might need to know is that the largest single category of investment that I have to approve at the moment under the law relates to, for example—today—the purchase by a supermarket chain, which is foreign-owned, of 1¼ hectares of land for a new supermarket in a small North Island town, simply because the land backs on to a drainage reserve, or something similar.

Clayton Cosgrove: Iconic drainage area!

Hon Dr MICHAEL CULLEN: Yes, an iconic drainage reserve, no doubt—in Dargaville, if one could imagine such a thing being possible. That requirement is stupid. It is stupid that we have a Government agency going through such stuff and Ministers’ time being consumed in approving things of that sort. This bill wipes out the requirement for approval in that kind of case. I have to approve, time after time, redevelopments in terms of urban subdivisions, because the initial purchaser of the land for subdivision is a Singaporean company, and, again, if it is a large subdivision, the chances are that it backs on to a recreation reserve or a drainage reserve. And those subdivisions are going to be sold off to New Zealanders at the end of the day, but we have to have Overseas Investment Commission approval for that to go through. It is a nonsensical piece of compliance cost and business cost, which we need to strip out of the system.

I make no apology for driving this measure through the policy process and driving it through Parliament. I thank those parties that have supported it for their sanity in that respect, because, bluntly, I have to read through all the pages of these reports—although, having read the first page, I have pretty much come to a conclusion—before I go any further. I am grateful that Ministers in the future will not have to do that kind of silly stuff.

Simon Power: We’re here to help.

Hon Dr MICHAEL CULLEN: Indeed, and we appreciate that help when it comes rarely from the National Party; a party, of course, that celebrates the fact that it is only 4 percent behind in the opinion polls, which is a sort of interesting commentary on the modern National Party.

Then we come to the issues of sensitive land. What Peter Brown tells us—from that vast North London farming experience he comes from; those broad acres of high-country sheep farms in Highgate, which are actually his background, or in Baskerville Hill, or wherever it was that he comes from—is that somehow or other, because foreigners have been allowed to purchase New Zealand land, the ordinary, average Kiwi bloke can no longer buy a high-country farm. As we all know, in that good, dim, distant golden age of the 1950s, good, average Kiwis down there in Sydenham could go down to the good old Post Office, get the 3 percent loan, and go off and buy themselves a decent property somewhere around Cromwell, or Queenstown, or wherever it might be, and, sadly, that is no longer true.

It is a bit like those people who write in the Listener—the true magazine for those with memories of the 1950s that are somewhat rose-coloured—that no longer can the average person own a seaside bach. Well, actually, in the 1950s it was always the middle class that owned the seaside baches; it is just that the seaside baches have become a lot bigger and more posh in the last 50 years than they used to be, and cost a lot more to buy. I grew up in Burwood, and people there did not have seaside baches. It was the people in Fendalton and Cashmere who had them. So let us not weep for a golden past that never was, which has always been the basic foodstuff of populist parties.

This bill gives us the capacity, when considering those applications, to ensure that we can address a range of important issues such as access, conservation values, historic values, and so on, and that is very, very good indeed. It can turn into a win-win situation.

Let me also make this point, because I am sick and tired of both the Green Party and articles in the Listener getting a fundamental point wrong. When foreigners purchase New Zealand land they are subject to New Zealand law in every respect, just like a New Zealander is. They do not have a separate Resource Management Act regime. They do not have a separate regime in any other sense. The people who are fighting improved land access up sensitive waterways for recreational purposes are not a bunch of foreigners; they are fifth-generation Kiwi farmers, most of whom inherited their properties. Let us be clear about where the problems are, in that particular respect. I have no time at all for this golden age rubbish and this strange xenophobia that insist that a New Zealand - born landowner is somehow kinder to New Zealanders than an American, a Canadian, or some other landowner might be. We have a damn sight more chance of tramping our way across Shania Twain’s property than we have of tramping across those owned by New Zealanders in that particular area. What is more, she can sing a damn sight better than most New Zealand landowners can, and, if I am allowed to say so in these PC days, she looks a damn sight better than most New Zealand owners. [Interruption]

I knew that would upset New Zealand First. It is not for me to mention that Craig McNair, that great New Zealand nationalist, worked for United Airlines, flying the friendly skies on behalf of Americans, and is an American citizen. It is not for me to mention these facts about our comrades opposite—Peter Brown, that well-known North Londoner, like myself; Dail Jones, who was born in Pakistan. My friend opposite is still trying to be quite sure about where he came from in the first place. We have all these sorts of things going on, from these latter-day converted Anabaptist New Zealanders over there.

The final point I want to make is that the bill transfers the administration of this very strange Overseas Investment Commission, which has a board comprising four people, and about five employees, into Land Information New Zealand, which will have the capacity to do the follow-up work. The bill improves enormously the penalties regime, so that we can actually enforce the conditions that are imposed, which we have had great trouble doing in the past. I think this is very good, balanced legislation. I thank those members who have supported it with coherent arguments. I thank those members who have opposed it with incoherent arguments.

The Minister of Finance is certainly enjoying himself! I invite him to treasure the dying moments of his role as Minister of Finance, because our good member John Key is waiting in the wings to take over.

As a member of the Finance and Expenditure Committee let me share with the House some of the proceedings at the select committee. [Interruption] The chairman calls out; I hope Clayton Cosgrove is going to take a call, because we have not heard enough from him. He must be falling short of being a favourite member over there. I have to share with the public that overseas investment is a very sensitive topic. Many, many submissioners came before the Finance and Expenditure Committee showing signs of anguish and insecurity at the loss of control of New Zealand business, particularly farmland and scenic icons. Part of that, unfortunately, was brought about because of a few very high-profile cases; the public perceived that the enforcement agent did not do its job, did not hold the overseas investors to fulfil their purchase conditions. I think some genuine grievances have been caused by the enforcement agent, the Overseas Investment Commission, not enforcing the law.

The enforcement agent assured the Finance and Expenditure Committee that that was due to the fact that it does not have a set of effective tools to monitor the situation. I raised this issue in the Committee stage with the Minister of Finance. I am still not happy with some of the wording in the legislation: the regulator “may” require information to enable it to monitor those investments; it “may” ask for information. I am assured by the Minister of Finance that the Overseas Investment Commission, or the regulator—which from now on is to be transferred from the Reserve Bank to Land Information New Zealand—will use this legislation to enforce the conditions that the investors agreed to.

To say that some of the arguments offered by New Zealand First were entertaining is to be charitable. The New Zealand First member seemed not to understand that successful people who invest in business do not want to dismantle the business, do not want to lock up the business. They want to expand it. If they make an investment, they want a return. When overseas investors purchase a business in New Zealand they employ people, they use consultants, and they purchase supplies from New Zealand. If the business makes a loss, they have to take that loss. If it makes a profit—why not? I do not think New Zealand wants to be known as a country where every investment will return a loss. Of course we want to show New Zealand as a country where people who invest will find it profitable. They will pay their fair share of tax, because we have tax legislation; we have legislation that all businesses have to comply with.

But there is another issue that we have to think about. I am sure that Peter Brown would take another call in this third reading. What if the Government passed a law to say that Mr Brown is allowed to sell his property to a certain sector only, or is not allowed to sell his property to anybody—

Ron Mark: What does China do now?

PANSY WONG: Well, actually, I have just complimented Dail Jones. He would have been a proud member of Communist China under Chairman Mao. Chairman Mao would have been proud of Dail Jones and the New Zealand First members’ speeches.

Ron Mark: What does China do now?

PANSY WONG: I am not too sure why that member keeps asking me about Chinese legislation. I can answer that I know New Zealand law much better. The member consistently has a problem. That member of Parliament apparently is not interested in what is going on in New Zealand. I feel really happy that New Zealand First takes so much interest in China and is pro-Chinese and pro-China. What a wonderful thing to discover tonight. One can always discover something. New Zealand First is pro - Chairman Mao and pro-Chinese. I think that is a wonderful discovery.

The only complication in the passage of this bill was self-imposed by David Parker. At the select committee David Parker had this great idea about how to lose his seat of Otago to National’s Jacqui Dean. Jacqui Dean will be a great member in the next parliamentary term. David Parker introduced a provision to create marginal strips around sensitive land such as lakes and rivers. But there is a problem. Labour wanted to create a marginal strip and give no compensation. Members should just imagine that a New Zealand landowner is trying to sell a piece of land from his or her farm to an overseas investor, when suddenly a marginal strip is imposed on the property. How would that affect the selling price? David Parker seemed to think it does not matter. And I was told he is a lawyer! That is when I thought that maybe the next Parliament should welcome in more accountants and economists. Maybe they would understand the issue better.

At this stage I acknowledge that at least United Future woke up to that, even if belatedly. Its members said in the select committee that they did not like it, but they were not prepared to stand up for their principles at that point in time, and they let the bill go through the select committee. But, belatedly, they did closed-door negotiations with Labour, and Labour has backed off from the provisions to take a marginal strip without compensation.

I finish by sharing why National can see some point in marginal strips being imposed on land purchased by overseas investors. My good colleague the Hon David Carter said that overseas investors might not understand that under New Zealand culture landowners allow access by the public, particularly to iconic sites. Marginal strips can be justified on that basis, but imposing them without compensation is simply not acceptable.

We welcome the introduction of the Supplementary Order Paper amendment that removes that draconian provision of creating marginal strips without compensation, and now National will support the passage of this bill.

I rise to meet the challenge of Mr Simon Power, and to support the bill as the chair of the Finance and Expenditure Committee, which considered the bill. I draw on a couple of points. This is a good bill, because, as Dr Cullen said, it tightens the enforcement regime in respect of the purchase by foreigners of New Zealand lands and other assets and investments.

I want to touch on one thing, which is that the Overseas Investment Commission will now be absorbed into Land Information New Zealand. This is a good thing, because, as the Minister pointed out, the commission has a staff of about five. Once it goes into Land Information New Zealand, of course there will be a greater resource of personnel who will be able to enforce the provisions in the agreements that are put in place for overseas investors.

One of the biggest concerns from submitters to the Finance and Expenditure Committee was that when overseas purchasers come to do the deal, to build the lodge or whatever, to employ X number of people, and to create economic growth and wealth, those commitments are not necessarily met. I think that concern has historically been quite valid. One of the committee members, Janet Mackey, pointed out that there was an investment in her patch where those commitments, as written in the agreements, had not been met. I think even the odd member of New Zealand First—or one member—would agree with that. Historically, overseas investors have come over and invested, said they will employ people, and said they will create jobs. They have done the deal, if you will, but have not lived up to the obligations. The feedback we got from a lot of the Kiwis who came to the committee was that they do not mind overseas investment, but if overseas investors are obligated to do certain things, then they should do them. So this bill seeks to tighten up that enforcement mechanism.

I see that the Greens are opposed, in their minority report, to the Overseas Investment Commission being absorbed within Land Information New Zealand. I have to ask why. Land Information New Zealand has more people, more resources, and more specialists to enforce agreements—to stomp the country if necessary and ensure that investors have lived up to and are meeting their obligations, such as employing people, building the lodge, creating some jobs, and creating some wealth for the country. I would have thought it was difficult to argue against those tighter enforcement measures.

Then we have New Zealand First, which is opposed to any purchase by any foreigner of any asset, investment, or land in New Zealand. As the Minister pointed out, that is totally illogical. The last one out switches the lights off if we call a halt to any international investment in land in this country. The New Zealand First members say no. Again, I think most Kiwis would not agree with them.

This bill in total seeks to lessen the bureaucracy. It seeks to lessen day-to-day ministerial intervention in minor land purchases—over whether someone can purchase a piece of land to put a supermarket on, as the Minister said. I think this is a good bill. The Finance and Expenditure Committee members on both sides worked very, very hard to try to meet some of the concerns that New Zealanders put up. I think citizens in this country do not mind foreign investment if obligations are met by the investor. One of the things the committee has been at pains to do is to ensure that there are mechanisms in the bill that will meet that.

I conclude on one other point. There was a bizarre occasion at the committee when the Green member Rod Donald put up the following proposition. Say a foreign investor bought a flour mill—I think that was the example Mr Donald used—and then the market for flour went belly up. That investor was obligated to employ people to grind and produce flour, but could not meet those obligations because the market had gone belly up. Mr Donald said that if the foreign investor wanted to close the factory down and turn it into a different business—a shoe-making factory, for example—it should not be allowed. I have a couple of colleagues here who were on the committee, and I have to say that we found that proposition rather bizarre.

This is a good bill. It meets a lot of the concerns that New Zealanders have, and I support it.

In speaking in the third reading debate of the Overseas Investment Bill, I point out to the House that apart from the Government, which has to keep its numbers up, New Zealand First is the only Opposition party that has been keeping its numbers up and it is the only Opposition party that is truly passionate about fighting against the Government on this bill. The National Party has been voting at about 19 or 20 all day long. The Greens, ACT, and United Future are voting down at about five. It is just ridiculous that they get up in this House and say how passionately they are against this bill in so many ways. The National Party, which has been saying how bad the bill is, went and voted for it. What they are doing—and my colleague Dail Jones alluded to this earlier—is positioning themselves for a coalition. The National and Labour parties are showing New Zealand that they really are together on these issues and that they really are in unison as far as foreign ownership is concerned. The chairman of the Finance and Expenditure Committee, Mr Clayton Cosgrove, has not been here all day as we have been speaking to this bill. He is in the same boat as the other parties and is just as bad as the other parties that were voting down—

Simon Power: I raise a point of order, Madam Speaker. I know that Mr Cosgrove does not need my assistance on these matters, but it is completely contrary to the Standing Orders for a member to refer at any time to the absence of any member from this Chamber. The member should be reminded of that.

Madam SPEAKER: I thank the member. He is quite right on that. Perhaps the member would like to address the bill.

CRAIG McNAIR: I appreciate your ruling, Madam Speaker, as far as that is concerned, but I felt I was addressing the bill in the sense that New Zealand First is the only party that has voted consistently with its full numbers all day long. It has been putting its money where its mouth is.

Gordon Copeland: I raise a point of order, Madam Speaker. I know that in this Chamber the convention is that we cannot question a member’s word, but it will clearly be recorded in Hansard, of course, that United Future has consistently voted 8, which is our number of members, all day.

Madam SPEAKER: That was not a point of order, but it was an interesting point of information. Maybe we could get to the substance of the bill, if the member would like to continue.

Peter Brown: Speaking to the point of order—

Madam SPEAKER: I have ruled on the point of order, but if it is a new point of order—

Peter Brown: I raise a point of order, Madam Speaker. I just draw the House’s attention to the fact that the honourable member is not in the Opposition—he actually supports the bill.

Madam SPEAKER: I am sorry; this is getting a little silly. Let us get on with the substance of the debate please.

CRAIG McNAIR: In terms of National and Labour—Tweedledumb and Tweedledumber—being the same and joining together in coalition on this issue, I have to say they are not voting together just on this bill. The Hon Dr Nick Smith from the National Party has put up a member’s bill—it is in the Local Government and Environment Committee at the moment—that basically makes the same amendment that David Parker has tried to implement into this bill. David Parker probably agrees with me on that. It is basically the same issue. That was one issue in this bill that National said it would vote against, but a member of National has put up a bill, which National has voted for, that makes basically the exact same amendment that David Parker has put up. [Interruption] I say to Mr Parker that New Zealand First voted against that. New Zealand First does not change its position for political expediency. We do not do those kinds of things. Mr Parker put forward the amendment, probably after the call-up from Michael Cullen and the spin doctors up on the ninth floor. They would have said that Labour was in trouble on this bill and that they needed to put their heads together to make it at least look as though they were trying to be tough on foreign ownership and trying to protect New Zealanders and New Zealand’s interests. They decided to have a look at Nick Smith’s bill. David Parker thought he would tweak it a little bit and tinker with it so that it could be slightly different, then Labour chucked that in this bill. It is quite ironic that National and Labour—Tweedledum and Tweedledee—are joining together and doing the same thing they did in the 1980s and 1990s. It is just like when they jointly sold $16 billion worth of State-owned assets and $10 billion per year in profits went overseas. The National and Labour members think that that was a great thing for New Zealand.

I want to say one other thing about David Parker’s amendment. Whether or not one agrees with the amendment—Richard Prebble will probably agree with me; he can tell me whether he does or whether he does not—the fact is that Labour should have decided whether it would let foreign investors into our economy or buy certain pieces of land. It should have made up its mind and decided—yes or no. But it did not. It has tried to find this halfway house—this kind of “Mugabe amendment”—and say to foreigners that they can come in and buy our land but that the Government will take a little bit of it back. It should decide—yes or no. That is what I am saying. That is what this Government has tried to do. That is what the National Party is trying to do with Nick Smith’s bill. National members are trying to say that they do not agree with this, but they do, because they have shown their true colours in Nick Smith’s bill.

I want to highlight another issue. It takes us back to the first reading debate, when the Labour member Dover Samuels, the member for Te Tai Tokerau, talked about this great utopia, this great, amazing thing, that is going on in Northland. Foreigners are coming in and buying golf courses up in the far north. He was saying how great it is, because they are employing Māori to mow the lawns and cut the trees and hedges. He thought that that was a great thing. As I was hearing that, I could not believe it. Labour wants to make New Zealand a little Mexico. That is what this Government wants to do. This Government, along with the National Party and other parties in this House, want to subject the people of the far north—the people whom Dover Samuels represents—to being just the hired help. That is what they want to do. That is just what happens in Mexico City.

I flew into Mexico City myself quite a few times a few years ago. We saw Mexicans running around in their little Coca-Cola vans, and big, beautiful Coke signs were all around the place. Those Mexicans were earning 50c an hour—and where did the money go? It went straight back to the United States, where the wealth is. That is what this Labour Government and the National Party—Tweedledumb and Tweedledumber—want to do. That is what they are proving with this bill. They are showing it to the people of New Zealand. The Government has come up with some stupid amendment—some “Mugabe clause”. It is in the name of Michael Cullen, but we know that David Parker pushed it. It is some kind of “Mugabe clause”—

Madam SPEAKER: I am sorry; I must intervene here. I understand that offence has already been taken at a reference to Mugabe in a previous speech in the debate. I ask the member to withdraw that.

CRAIG McNAIR: I withdraw. I am trying to say, without using the exact name of that person, that Labour is basically trying to—

Hon Richard Prebble: I raise a point of order, Madam Speaker. I am sorry, but I am having great difficulty understanding that particular ruling. The member said that the amendment was a “Mugabe clause”. Are we protecting Mr Mugabe by not using that phrase because he is another member of the Commonwealth? Is that the reason for the ruling?

Madam SPEAKER: No, the reason for the ruling is that previously in this debate offence was taken by a member at a reference to Mugabe, and the member who made that other reference was asked to withdraw it. So in the interests of consistency, it seemed to me that that was appropriate.

Hon Richard Prebble: I raise a point of order, Madam Speaker. It is a new point of order. I would really like you to think about it, because it appears to me that one can describe a clause of a bill in the strongest possible terms. It seems to me that a member could describe a clause as being a “Mugabe clause”, and that it would not be out of order to say that an honourable member is supporting a “Mugabe clause”. What would be out of order is to say that an honourable member is a Mr Mugabe, or is a Nazi, or something. But to say that the clause is a “Mugabe clause” appears to me to be valid. I raise this because I think it is quite important to be able to do that. In fact, I disagree with nearly all of Mr McNair’s speech except the statement that the clause is a “Mugabe clause”, and I think the honourable member should be allowed to say that it is.

Madam SPEAKER: I thank the member for that comment. If Mr McNair had just left it at that, it would have been fine. But he linked the remark with a specific member, and that member had previously objected to that reference. If Mr McNair had just left it at that, you would be quite right, and I would not have intervened. I ask the member to continue.

CRAIG McNAIR: This is the kind of outrageous bill we are talking about. I want to finish up with what United Future and Labour voted for in the commentary on this bill, which states: “The majority does not consider it necessary that all of the overseas investors involved in a particular transaction have relevant business experience and acumen.” Further down, it states: “Such an appointment may be made to recognise local customary roles and traditions,”. This is the kind of craziness that we find in this bill. There are no rules. The Government does not care who comes in. They will find any excuse to let whomever in. That is what this Government is all about. That is what this Government and the National Party—the coalition parties, Labour and National—are doing with this bill. New Zealand First says it is outrageous.

It will take less than 30 seconds to show the illogicality of the previous speaker’s statements. He criticised amendments to the bill that would have imposed preconditions on eventually permitted sales to overseas parties as being improper, but he backs the total prohibition of the same sales. New Zealand First backs the total prohibition of sales of rural land to foreigners, yet it opposes the imposition of conditions relating to access. The two positions are irreconcilable. That took 30 seconds. I support the bill.

I am sorry that Mr Parker did not take longer. It is not often that one gets an opportunity to speak at one’s own funeral, and I think he should have taken it.

Jill Pettis: Oh!

Hon RICHARD PREBBLE: Oh, this bill most certainly is Mr Parker’s funeral. Here is a member who is so ideological he does not understand what is in the best interests of his own constituents. I do not know whether Mr Copeland would like me to quote him, so perhaps I will not, but I will say that other members have questioned whether Mr Parker is aware of the fact that property values in his electorate have gone up because people have been able to sell their land to whomever they want. The passage of this bill will damage not just one person who was unable to put through a property sale; it will damage the value of every property in Central Otago. We need to ask on whose behalf Mr Parker thought he was acting. That is his first problem.

His second difficulty is that he was prepared to support an amendment whereby the State would take away property without paying compensation. That is one of the criticisms that is made of Mr Mugabe. Indeed, I am sure Mr Parker is aware of that, and I am certain that when it comes to Zimbabwe he is strongly opposed to the actions of Mr Mugabe. That is the contradiction that has been drawn to his attention. He has managed with this bill to offend every single constituency. He has offended the liberals, the conservatives, and those who own property—he has managed to offend everyone. I understand that the National Party has a rather good candidate in his electorate. I cannot remember her name, but I am told she is pretty good.

Brian Connell: Jacqui Dean.

Hon RICHARD PREBBLE: Her name is Jacqui Dean. I am sure she would not take just 30 seconds. Then again, given Mr Parker’s position, 30 seconds was probably the longest he could speak without making a further fool of himself.

David Parker: 1.8 percent.

Hon RICHARD PREBBLE: The member thinks that the truth of a proposition is in its polling numbers. If that is so, then he will accept his defeat with grace, will he not?

Let me turn to the bill itself. Firstly, the Minister of Finance is correct in saying that some provisions in the bill bring about some liberalisation. The law at present requires Ministers to plough through proposals that everyone knows will be agreed to. Who thinks a supermarket in Dargaville is a bad thing? Only someone who does not live in Dargaville or in another area without a supermarket would think that not having one was a good thing.

Brian Connell: Woolworths did.

Hon RICHARD PREBBLE: The supermarket operator’s opponents may object, but apart from another supermarket operator, everyone would agree that such a proposal is desirable. It is desirable to have a law that does not involve that sort of nonsense. But having said that, I must say that a great deal of this bill is completely irrational. The ACT party finds itself opposing the bill not for the reasons given by New Zealand First, which are, frankly, xenophobic—

Rod Donald: I’m not.

Hon RICHARD PREBBLE: The Green member interjects—and I am not objecting to that—to say that he is not xenophobic. I hate to break it to him but, in fact, the Green Party has expressed exactly those sorts of sentiments. I join with Mr Trotter in saying that it is a great disappointment to see that a party that was elected to this Parliament as a green party on environmental issues has decided that it wants to keep itself here by making ridiculous xenophobic statements against foreigners and suggesting that foreigners, and foreigners alone, are somehow an attack on the New Zealand environment.

I say to Mr Donald that overseas investors actually have a better record than New Zealanders on a whole range of things. Let me give just one example, which New Zealand First may identify with. We had a case known as the wine-box case in which a number of companies entered into a number of interesting arrangements to get out of paying taxes. Not one of those companies was an overseas company. All of them were New Zealand companies.

Gordon Copeland: Including State-owned enterprises.

Hon RICHARD PREBBLE: Of course—State-owned enterprises are well known for trying to avoid tax. When I was the Minister for State-owned Enterprises I discovered that a number of State-owned enterprises had gone into the sorts of tax arrangements that made the wine box look like nothing at all.

The point I am making is that overseas investors tend to be much more careful about obeying the law. There are some quite logical reasons why they should be. Just because a large number of submitters came before the Finance and Expenditure Committee and said that overseas investors do not obey the law does not make it true. Repeating a lie does not make it true. The evidence shows that overseas investors follow our laws. The evidence shows also that New Zealand is a much wealthier country today as a result of overseas investment. Dr Cullen is absolutely right—New Zealanders do not save enough. If we were to follow the logic of New Zealand First and the Green Party, this country would be much, much poorer today. I tell Mr Donald that there is no doubt about that at all.

Rod Donald: I agree.

Hon RICHARD PREBBLE: Mr Donald now says we should save more. He thinks that by preventing overseas investment coming here, somehow we will be able to pull ourselves up by our own bootstraps. That is nonsense.

Firstly, the ACT party is opposed to restrictions on private property. If one owns a property, one ought to be able to sell it to whomever one chooses, not just to those to whom Mr Donald and Mr Peters think it should be sold.

The second thing is this. We already have in this country a Securities Commission, monopolies laws, and a Companies Act. We have no shortage of regulations and controls that exist on investment. No case has been put up by any member, including those from the Government or the National Party, as to why there should be extra restrictions on people just because of their passport. No such argument has been raised, and that is why the ACT party is totally opposed to the bill.

We can see absolutely no reason for it, and it is a matter of regret that the bill can go through only because the two old parties support it—for electoral reasons, I think, not because they believe it. Dr Cullen does not believe in the bill and John Key certainly does not believe in it. The bill will go through because the two old parties looked at the polls and saw how well Mr Peters does in his anti-foreigner rants—helped by the Green Party, which is disgraceful in the case of that party, because at least it is a party that claims to represent principle; Mr Peters never hides the fact that he is a straight-out populist. The two old parties are pandering to the fact that there are many people in the country who have an irrational fear of foreigners. Shame on both those parties.

That is the reason why the ACT party is voting against the measure. We do not actually need it.

The Green Party is opposed to the plans of Labour and National to make it even easier for foreign investors to buy up our land, our buildings, and our businesses. We are not alone. Most New Zealanders remain opposed to the sell-off of businesses like Telecom New Zealand and Contact Energy to foreign investors. Most New Zealanders can see what a mess our rail network ended up in after foreign investors milked it dry. Most New Zealanders are not happy that more and more iconic land such as Young Nicks Head is being bought up by foreign investors who treat our country as a plaything. Young farmers are upset that the dream of owning their own farm is receding, because increasing overseas investment means farmland is being priced out of reach and beyond its agricultural earning capacity. Holidaymakers are finding that their favourite camping spots at the beach are no longer there because foreign investors have bought them up and built their mansions where Kiwis used to play. First home buyers are being deprived of their dream of owning their own home, because foreign investors are outbidding Kiwis at the bottom end of the property market as well as at the top.

So much for Labour’s ownership society. Any assistance the Government provides first home buyers fades into insignificance when one considers that property purchasing power, which is measured in terms of average house price versus average wage, is half what it was 25 years ago. That is because foreign capital has artificially inflated house prices, and that foreign capital has also driven up New Zealand’s current account deficit, which has made mortgage interest rates 1 to 2 percent higher than they otherwise would be. This double whammy is a direct result of the liberal foreign investment regime of National and Labour.

It is extraordinary that this Labour Government is proud that New Zealand has such a liberal regime. Dr Cullen said so in New York last November. That position is in stark contrast with the statement of Labour leader, Helen Clark, on 4 June 1995. Then, she said: “Labour would be strongly opposing the National Government’s efforts to liberalise restrictions on the foreign purchases of New Zealand land.” She also said that the Government of the time—a National Government—was completely out of touch with the strong views of the overwhelming majority of New Zealanders, who considered that encouraging more foreign purchases was unacceptable. As far as the Green Party is aware—and that is backed up by the 7,000 people who signed our petition calling for tighter rules on foreign investment—New Zealanders are just as opposed to increasing land sales to foreign buyers as they were 10 years ago. Now it is the Labour Government—not a National Government—that is out of touch and is pushing an unacceptable agenda on to the public.

We can only speculate—and I will in a minute—as to what has induced Miss Clark to change her mind so radically on this matter. In the Green Party’s view, she was right then and she is wrong now. Indeed, there is even more reason to be opposed to increasing foreign ownership, as the last 10 years’ bitter experience can attest. Only yesterday, Dr Cullen admitted to the Finance and Expenditure Committee that it would cost the taxpayer much more than the $200 million already allocated to fix the rail network, which was left in a decrepit state by its former foreign owners, who ran down the network, milked all the profits they could, and took the money and ran. Surely, that costly experience should be enough for Labour to understand that New Zealand’s foreign investment rules are not tight enough.

The so-called good-character test is a sham. Foreign buyers of businesses should have to meet at least the same national interest test that foreign land buyers need to pass. If companies like Juken Nissho had to sit even the weak national interest test we have now, they would fail. Juken Nissho operates wood-processing plants in Kaitāia, Masterton, and Gisborne. It has a horrifying health and safety record. It had 269 serious harm notifications from 1995 to 2003, and 11 convictions under the Health and Safety Act, with fines ranging from $6,000 to $10,000. In 1997 Juken Nissho was prosecuted for exceeding permitted emissions at its Kaitāia plant. There are numerous complaints from neighbours about the effect on their health. An analysis of Juken Nissho’s New Zealand accounts from 1999 to 2003 shows that it reported losses and paid no tax. It was totally debt-financed, and under normal circumstances it would be insolvent. Many of the company’s transactions appear to occur through related parties, and may provide a way to shift profits offshore and to avoid tax.

So why does Labour want more investment from companies that behave so badly? Why does Labour refuse to introduce a code of corporate responsibility that would hold the Juken Nisshos of this world to account? A responsibility code for foreign investors is neither a radical idea nor a new one. New Zealand is already a signatory to the OECD guidelines for multinational enterprises. Indeed, our Government has undertaken to promote the guidelines, although there has been little noticeable activity. This is unfortunate, because the June 2000 revisions contain, in the words of Australian Treasurer Peter Costello, who was chairman of the ministerial committee, “far-reaching changes that reinforce the economic, social, and environmental elements of the sustainable development agenda.” Given that the Government endorsed those OECD guidelines at the time, the Greens believe that the Government should incorporate them into even more explicit legislation that must also include penalties—and not the light-handed ones in this bill—for corporations that do not meet their responsibilities. Those penalties should be serious, so that corporations that do not meet their responsibilities are held to account.

Labour will not do what most of its own supporters want because it wants to keep onside with the big boys’ club, rather than with the citizens of New Zealand. That is clear, because we know from the General Agreement on Trade in Services negotiations that a major demand of our trading partners is for us to scrap the Overseas Investment Commission. That is exactly what the bill does, and it will allow foreign firms and individuals almost unrestricted access to New Zealand property and businesses. So the big boys’ club will be happy, as will the United States, which made it clear in its free-trade negotiations with Australia that it wanted to reduce or eliminate restrictions on overseas investment. If the United States wanted it for there, it will want it for here as well, which means that Labour is in a better position to do a deal with George Bush and to cuddle up to the Americans for a free-trade deal.

In the meantime, we should not forget that foreign investors already control half of the New Zealand sharemarket, that 41 of the top 100 companies operating in New Zealand are 100 percent foreign-owned, that over 1 million hectares of land is already foreign-owned, including at least 157,000 hectares of high-country leasehold, 2,720 hectares of offshore islands, and 57 kilometres of coastline. Those figures do not disclose ownership below the threshold, or undeclared purchases. As a former Overseas Investment Commission staff member, Mark Dunlop, said in his submission, his experience has left him “with the distinct impression that there is widespread evasion of our overseas investment rules relating to land.” That revelation highlights the need for a proper monitoring regime, so that the true extent of foreign ownership is disclosed. We know from Statistics New Zealand that foreign investment in New Zealand now exceeds $208 billion, and that the cost of that investment in the form of interest and dividends reached $8.9 billion for the 2004 calendar year. It is no wonder that New Zealand’s current account deficit was $9.3 billion for the same period. That is unsustainable.

I do agree with Dr Cullen on one thing—we Kiwis need to increase our savings rate if we are ever going to reverse that appalling situation, and get our economy out of the red and back in the black.

In closing, I have to say that for all New Zealand First members’ bluff and bluster, they acted like lambs when it came to this bill. They did not put up any of their own amendments, and they did not support the majority of my amendments. The Green Party proposed improving the scrutiny on foreign investment by changing the rule from 25 percent ownership to 10 percent; New Zealand First opposed that. We wanted to extend the coverage to aquaculture; New Zealand First opposed that. We wanted to reduce the threshold from $100 million to $10 million; New Zealand First opposed that. We wanted to bring in Crown pastoral leases; New Zealand First opposed that. We wanted to extend the national interest test to significant business assets; New Zealand First opposed that. We wanted to bring in import substitution as a criterion; New Zealand First opposed that. All in all, New Zealand First is all bluff and bluster.

I would like to use my third reading speech on the Overseas Investment Bill just to tie up a few loose ends from my point of view.

The first I would like to mention is that during the Finance and Expenditure Committee’s consideration of this bill, I spent quite some time wrestling with the good character test set out in the bill—namely, that one of the criteria that has to be satisfied is that foreign people who are buying business assets of more than $100 million in this country are of good character. I wanted to explore the possibility of putting something in the bill that would actually stop a repeat of the disastrous New Zealand Rail sale. In other words, I wanted to think of a way whereby we could maybe safeguard ourselves, to ensure that we would not sell our large companies again to investors who were merely asset-strippers.

The officials working on the bill were very patient in that regard. They went away and got a lot of information. They came back and they told us about our World Trade Organization obligations, our various free-trade obligations, and so on and so forth. But the clincher for me in the end, of course, was just to realise, as the Hon Richard Prebble pointed out, that the problem with the New Zealand Rail sale was not that it was made to overseas buyers or foreign investors but that it was made to a consortium that included Fay Richwhite—New Zealanders. It was Fay Richwhite—and I say this under the privilege of this House—that then led the charge, disgracefully, to strip out every single dollar that New Zealand Rail had, and to leave our rail system in disarray to the great detriment of New Zealand and its citizens. It was a disgraceful action, but it was actually perpetrated on New Zealanders by other New Zealanders who had given in to unbridled greed, and who were quite prepared to make money at the expense of their fellow citizens. I believe that that was a disgraceful episode in New Zealand’s history. It was the unacceptable face of capitalism, yet it was not done by foreigners but by New Zealanders.

Rod Donald mentioned that 41 of our top 100 corporations in this country are foreign-owned—

Rod Donald: 100 percent foreign-owned.

GORDON COPELAND:—100 percent foreign-owned, and I would like to ask him whether there is any problem with that. Are any of those companies asset-stripping? I think most of them are doing a very, very good job. They are good corporate citizens and they are making a huge contribution to this country. We do not need in any way to restrict their operations.

I want the New Zealand First members to think this through for a moment. Why do they conclude that people born in this nation somehow have superior characters and business ethics to people from overseas? Really, when I analyse it, I tell those members that the bottom line is that it is xenophobia—it is xenophobia pure and simple, and they cannot escape that conclusion.

Ron Mark: I raise a point of order, Madam Speaker. Given that the member has just specifically addressed his question to New Zealand First, could I ask, through you, that he yield the floor and allow me to answer that question?

Madam SPEAKER: There will be an opportunity for New Zealand First to respond. That is not a point of order; it is a debating matter.

GORDON COPELAND: As we all know in life, sometimes the truth hurts. The other thing I really want to recognise, though, as a New Zealander, is that one of the great things about growing up in this country and being a New Zealand citizen is the freedom we have. We have the freedom to leave this country at any time. I have the freedom to leave here if I want to, to go overseas and live there, and, hopefully, to buy a home there, and so on and so forth. That is something we value when it comes to us, but we do not seem prepared to extend the same freedom to other people.

When we think about it, we realise that a restriction on freedom like that in any part of the world is a danger to world freedom, world democracy, and basic fundamental human rights. We saw that kind of thing existing in the world under communism, where those countries built walls to keep their people in. It exists in Cuba today. Cubans cannot go overseas, and until quite recent times most Chinese could not go overseas. That is actually what we are talking about here—the basic, fundamental human right for people to be able to travel freely, invest freely, and interconnect as equal human beings with equal dignity, and I resist very, very strongly any attempt in this House or in New Zealand outside this House to categorise people on the basis of nationality, origin, race, colour, or language. Such categorisation is seriously wrong and needs to stop. I hope one day that more of our fellow citizens will come to that simple conclusion, and will start to treat all people in the world with the dignity and respect that is their inherent, God-given right.

I want to make another point, too, which I think was unconsciously made by Rod Donald. He said this bill is such a terrible animal that the day could come when people from overseas could buy up all the assets New Zealand has. It just showed me how much he misunderstands the process of buying and selling assets. Because of course, if that were to happen, the net result would be that we New Zealanders would be the wealthiest people on the face of the earth. We would have sold our assets at top dollar to other people, and would have greater wealth and huge assets. I make that point because people seem to misunderstand that if we try to stop foreign investment, at the same time we deny New Zealanders the right to get a decent price for their properties. There are two sides to the equation, and it is time, I think, that the Greens in particular, and New Zealand First, woke up to the fact that when one buys and sells there are two parties to the process. It is mutually beneficial, which is why people buy and sell by agreement, and the funds that swap hands are going from out of the pockets of foreigners into the pockets of New Zealanders. How that can be bad for this country is beyond me to understand. It simply leaves me to say that the analysis and understanding that go into that opposition are shallow in the extreme.

One other loose end I would like to mention is to do with the Hon Nick Smith’s Overseas Investment (Queen’s Chain Extension) Amendment Bill, which arose out of the unsatisfactory situation on D’Urville Island. As Clayton Cosgrove has pointed out, this bill ensures that that unsatisfactory situation will not be repeated in the future. It brings in a very, very strong enforcement regime, with powers given to the court, powers to set aside contracts, etc., to ensure that non-resident New Zealanders who buy sensitive land in this country will be forced to carry through with the conditions that apply to that privilege. I think that is a very, very good move, and I think that the situation that arose in D’Urville Island was totally satisfactory. We did not have legislation previously with enough teeth to ensure that people who undertook obligations were forced to actually carry them through. There were no consequences of departing from the terms of the approval given, and that has now been fixed in this bill. If we really think it through, we know that it makes Nick Smith’s member’s bill redundant, so we should bring it back to the House and discharge it. The problem he identified—quite correctly, by the way—has now been fixed.

Here we are on “14 June” at 9 o’clock, and I thank the Government for taking us into urgency because it enables the National Party to build the collegial spirit that is so important when a party is about to go into Government. National members are very appreciative of that opportunity. We support this bill for the reasons I am about to outline. I cannot understand the attack that was made upon me by Gordon Brown.

Hon Maurice Williamson: He’s the Deputy Prime Minister of Britain.

BRIAN CONNELL: Mr Brown, I apologise—Peter Brown. Members can see how badly he has wounded me; I cannot even remember the member’s name. However, I said I could not understand that attack, and I still struggle with that.

Peter Brown said I had built an argument that anyone can come to New Zealand regardless of any criteria, invest in this country, and then take those resources out of this country and suck the country dry. I refer the member to my Hansard record, which will specifically state that I welcome foreign investment into this country, subject to it meeting strict criteria, and those criteria were set down in this bill. That is why National agrees with the thrust of this bill. It was not lost on me that Peter Brown was building an argument that there should be no foreigners or foreign capital coming into New Zealand. There he was, espousing that in his strong English accent. The irony of that might have been lost on the members of New Zealand First, but it certainly was not lost on me. I notice that Dail Jones has not jumped up to make an argument either, given that he was born in Pakistan, as I recall. Of course, members of the National Party are not as difficult to deal with as some members of New Zealand First. We welcome the New Zealand First members to New Zealand and to Parliament, because their diversity adds to our rich tapestry.

Some of the arguments I have heard from members who are opposed to this bill remind me of Luddites who would like to turn the clock back. People who want to come to New Zealand to invest—

Peter Brown: I raise a point of order, Madam Speaker. The honourable member opened his speech by attacking Gordon Brown, I think it was, the Chancellor of the Exchequer in Britain, but he then went on to say that in very short order he would explain why National supports this bill. He is running out of time, and we are sitting here keenly waiting to hear that.

Madam SPEAKER: No, that is not a point of order. I do not need any assistance with this. [Interruption] That is not a point of order, either, but I am sure the member is about to get to the bill.

BRIAN CONNELL: I will now turn my attention to the bill. The bill will guarantee that New Zealand’s assets will be protected, not just for the benefit of the current generation but also for future generations, because it will continue to build on New Zealand’s reputation for encouraging foreign investment in this country. Those members who would build the argument that foreign investment is not important, or that it has not made a contribution to New Zealand, really do not have a very good understanding of economics.

Arguments were built that New Zealanders were missing out on the ability to buy high-country stations. As Dr Cullen pointed out—and I do not find myself agreeing with him very often, but he was right on this occasion—how many ordinary blokes can run down to the South Island and buy a high-country station? Very few ordinary blokes can. A few people get together, form syndicates, and buy high-country stations, but very few ordinary people can do that. There are some clear exceptions, and they were detailed in my earlier calls when I spoke on this bill.

Ron Mark: The Hon Lockwood Smith could buy one!

BRIAN CONNELL: I would not say he is an ordinary bloke. He is a strong contributing member of the National Party, which does not make him ordinary—it makes him outstanding. The point I want to make is that despite who was buying high-country stations in New Zealand, before foreign capital took over some of them, the stations were underperforming. They were hardly economic units. In short, they were undercapitalised. I say to Mr Mark that he and I know very well that a farm cannot be turned into a productive unit unless there is sufficient capital. As a result of foreign capital being introduced to some of the high-country stations, they are now strong contributors to the local community. They are employing not just one or two people but significant numbers of people, and are contributing to not only the farming economy but also the tourism economy of the area, because they have been able to diversify. That is what foreign capital does for the high-country farming areas around Canterbury, for example.

I ask this question of members: where has the hysteria come from that says it does us harm when people come from overseas and buy our land? If one looks at most examples—

Craig McNair: $10 billion a year going out of New Zealand.

BRIAN CONNELL: We have listened to the member make a fool of himself, so he should just be quiet for a while. If one looks at most of the examples of land purchases, one sees the very converse of that takes place. Foreign investors come into New Zealand, risk their capital, and as a consequence jobs are created, infrastructure is developed, and no harm is done. The arguments presented by some members tonight are xenophobic. I am afraid that knowing some of those members as well as I do, I find it difficult to say that about them, but in this case I think it is very, very true.

Let us also talk about the idea that people are coming to this country and closing up high-country properties. The very converse of that is happening, in fact. The people who close the gates in high-country stations are members of the Department of Conservation, not foreign investors. Another example that Michael Cullen furnished was that of the singer Shania Twain. What has she done for access to the environment for people around Cromwell? She has created walkways and opened up that environment, so people have more access to that countryside than they ever had before.

I just want to finish by drawing the House’s attention to the “Mugabe clause”. I termed it that, and I will not back off that one iota. That clause ran to 10 pages in this bill, and it suggested that the Government would annex private property from New Zealanders. I am not joking; that is what was being suggested. That in itself was bad, but even worse was that no compensation would have been offered at all. I ask members of this House to run the rule of fairness over that. Which Kiwi voters would have said that was fair? Very few. I do not hear barracking from the New Zealand First members now, because they know they could not get on to the hustings and say that they were defending that. It is simply not fair. Michael Cullen had to come to the rescue and introduce Supplementary Order Paper 376 in his name, which took right out of the legislation the “Mugabe clause” that his colleagues in the Finance and Expenditure Committee were trying to foist on to the people of New Zealand. That is why the New Zealand National Party was strongly opposed to the bill in the first instance. Only when that clause was removed did National say it would lend support to what was otherwise a very sensible and well-argued bill.

Madam SPEAKER: Before I call the next speaker, I would ask members to keep the level of chatter down a bit, please.

I have to say that I do not know where that honourable member has been during this debate, because New Zealand First opposed that clause as strongly and as strenuously as the National Party did.

Hon David Carter: And you opposed everything else.

PETER BROWN: We did, but we certainly were not having that bill put through with that clause in it.

A few speeches ago, Clayton Cosgrove said that the average New Zealander does not mind foreign investment, as long as there are obligations.

Clayton Cosgrove: And they’re enforced.

PETER BROWN: Actually, he did not say that, but he is adding to it—and they are enforced. That is exactly New Zealand First’s position. We do not mind people coming here with suitcases of money, as long as they make a permanent commitment to this country to participate both economically and socially.

Hon Maurice Williamson: Did the member have suitcases of money when he came in?

PETER BROWN: No, I probably did not—I had a trunkful. We live in a world where investment does advance the country, but there are many organisations in this country. Let me name a few that have taken their money offshore—thanks, in large part, to the difficulties this Government imposes on them. Electricity lines companies cannot invest in electricity in this country, except in a modest way. So what are they looking at doing? They are investing in Australia—as are some of our power companies. Māori corporations—and my colleague Ron Mark will tell people more about this matter in some detail at some other time—are looking at investing offshore because of the difficulties in investing here. Private fishing companies are looking at investing offshore. These are New Zealand entities that are keen to invest in this country, yet this Government—helped by its old buddy, the National Party—wants to open the door and let in anybody with any amount of money, and they can then move out. They can leave the money and move out. The ACT member Deborah Coddington said this afternoon that she did not mind being a waitress in a cafe, and that it would do us all good.

New Zealand First stands for controls and restrictions on foreign investment. We oppose making it easier for foreigners to come into this country, leave their money, buy the businesses, buy our homes, and buy our land.

Hon Maurice Williamson: Tell them to leave the suitcases and go.

PETER BROWN: The member might make light of it, but this is a serious issue, and it will be an issue that the average New Zealander will show his or her support for come the next election. In the next few weeks, average New Zealanders will show just where their thoughts are.

Dr Cullen was so hard up in his attempt to substantiate his facts that he had to refer to the French manager of the Arsenal Football Club, as a poor example. He had to refer to Arsene Wenger, the manager of Arsenal, as a poor example. Arsene Wenger has made an absolutely fabulous commitment to Britain. He lives there, he has put his life on the line, and he is doing a fantastic job for a major football club. I thought that that was actually a poor example to give, when one is trying to illustrate where things are going wrong, because, in fact, they have not gone wrong in that instance. [Interruption] The members muttering away behind me have confused foreigners coming here with their money, with people coming here who want to stay and invest in the country. New Zealand First has no problem at all with anybody coming here—

Hon Ruth Dyson: What did you bring with you to New Zealand?

PETER BROWN: The member has asked a question that would take me too long to answer. [Interruption]

Madam SPEAKER: Let the member continue.

Hon Member: The member should answer the Minister for Disability Issues.

Hon Member: Did the member ship the money out of the country?

PETER BROWN: I will answer the member with a disability. Never have I shipped money out of the country for any ulterior motive. This is a serious issue, and New Zealand First is very strong on having restrictions on just anybody coming here to take over our businesses and our homes. It raises the cost of business in this country, the cost of homes, and the cost of land, and puts them beyond the reach of the average New Zealander. I think that much has been said in the debate on this bill, but after this bill goes through it will make it harder for New Zealanders to buy land, homes, and farms—and it is hard enough now. [Interruption] The member disagrees, but I can tell him that he has got it wrong. New Zealand First opposes this bill.