4. R DOUG WOOLERTON (NZ First) Link to this
to the Minister of Finance
Was any forecasting done on the impact of the Overseas Investment Act 2005 prior to its passage; if so, how does the value of businesses, assets and property bought by overseas companies or individuals in the past year compare with that which was forecast?
Hon Dr MICHAEL CULLEN (Minister of Finance) Link to this
There was a forecast in relation to the likely change in the number of approvals because that, obviously, was the issue in relation to resources required. As the initial proposal was to lift the business threshold to $250 million, but in eventuality this was lifted only to $100 million, clearly more approvals required to be considered than was originally forecast.
If we were to include transactions to overseas buyers in the past year, which were worth between $50 million and $100 million and are now no longer subject to official oversight, does the Minister think that the total value of such transactions has been in line with the intent of the legislation and the will of the New Zealand public; if so, why?
Hon Dr MICHAEL CULLEN Link to this
Yes. When one looks particularly at the total number of approvals, and the amount of land involved in the land approvals, in fact there is very little change. In a number of areas there has actually been a reduction, particularly in terms of land.
H V Ross Robertson: How is the Government using the Overseas Investment Act 2005 to protect waterways and New Zealand’s access to them?
Hon Dr MICHAEL CULLEN Link to this
Under the new legislation, foreshore, seabed, riverbed, or lake bed proposed as a sale to an overseas person must first be offered to the Crown. The Government has already accepted a number of such offers, at no cost to the Crown except for surveying and the like. We also required additional public access to be provided along some waterways by way of the equivalent of marginal strips, the most notable being the recent approval for the sale of the Carter Holt Harvey forest estate.
Sue BradfordIs the Minister considering any means of restraining the ongoing influx of foreign investment into the housing market, given its upward pressure on house prices?
Hon Dr MICHAEL CULLEN Link to this
Generally speaking, except for subdivisions, that does not normally come within the purview of the Overseas Investment Act because the land areas are too small, or for other reasons. Often subdivisions do, because they back on to drainage reserves or similar. Usually, of course, at the end of the day they are onsold to New Zealanders. So the issue that the member raised is quite a different one from the Overseas Investment Act procedures.
Was it the intention of the Government to increase hugely the total value of sales to foreigners as a result of the Overseas Investment Act; if not, is the Minister satisfied with a 60 percent increase in the value of transactions compared with the average of the previous 2 years?
Hon Dr MICHAEL CULLEN Link to this
In terms of the sales that have been approved, the gross value of consideration for the year to date 2006 is within a ballpark—or a stadium, at least—figure of the period for 2005, but the net investment is slightly up. Net investment is very, very much lower than the gross investment figure because many of these sales are from overseas owners to other overseas owners, but each registers as a sale to an overseas owner.
Does the Minister agree that there is a crucial difference between investment that grows wealth for this country and simple asset sales that produce wealth for the purchaser, with no increase in employment, technological innovation, or public good; and does the Minister plan to take any measures at all to make sure we get more of the former, productive kind of investment and less of the latter?
Hon Dr MICHAEL CULLEN Link to this
In general I think it is true, and one of the issues under consideration around taxation changes is exactly how the tax system may lead to various changes in one direction or another. In this area, of course, business taxation fundamentally is simply a good business test, rather than a national interest test such as that which applies to land. We would be in serious difficulties in terms of our international agreements if we moved back to other considerations than a good business test in that particular area of business sales. I ask members to remember that not a single business sale has actually been declined since 1984, even though many have been through the approvals process.