2. Dr RUSSEL NORMAN (Co-Leader—Green) Link to this
to the Minister of Finance
What constraints, if any, does the New Zealand - China free-trade agreement place on the ability of the New Zealand Government to tighten the rules governing the sale of New Zealand land to overseas buyers?
Hon BILL ENGLISH (Minister of Finance) Link to this
In a number of free-trade agreements, as well as in respect of the World Trade Organization, New Zealand has committed to not changing the classes of investments that are subject to screening under the Overseas Investment Act. This means we will be able to continue to screen investments in those existing classes set out in the legislation—significant business assets, and sensitive land, including farmland. Chinese investors are subject to the same rules as everyone else. In all our free-trade agreements, New Zealand has preserved the ability to alter some of the criteria and factors against which proposed investments are assessed, if that is deemed desirable by the Government.
Is it the case that rules governing the sale of land to overseas buyers from China in force at the time of the signing of the New Zealand - China free-trade agreement cannot be tightened without breaching the terms of the agreement?
No, I do not think I would agree with the member. He has raised a quite legitimate issue—that is, if the Government were to alter the Overseas Investment Act, it would need to take account of the undertakings it had made in free-trade agreements. But I do not believe that those undertakings prevent a tightening of the rules.
In terms of the current review of overseas investment that the Minister referred to previously, and dealing with overseas investment in land in particular, has he considered the issues in relationship to free-trade agreements and whether those free-trade agreements place constraints on how we can change the Overseas Investment Regulations?
If the Government were to make any change to the Overseas Investment Act, then, yes, it would certainly be checking that change against the free-trade agreements. My impression is that those agreements do not prevent the Government from altering, to some extent, the way that it screens incoming investment.
If the Government were to decide that all sensitive land—defined within the Overseas Investment Regulations as farmland of greater than 5 hectares, for example—must remain within New Zealand ownership and could not be sold into overseas ownership, would that stay within the terms of the New Zealand - China free-trade agreement?
Certainly, from the Government’s point of view that is a hypothetical question, because we would not be considering the option of banning any overseas ownership of sensitive land. Sensitive land is a very broad category of land. It includes farmland, but it also includes quite small areas of land next to waterways, for instance, such as sections with commercial buildings on them.
How will his Government constrain the ability of overseas investors from China to buy land in New Zealand without tightening the overseas investment rules, hence potentially breaching the New Zealand - China free-trade agreement?
It is unlikely—in fact, it is out of the question—that the Government would tighten criteria related to investors from one particular country. I do not think our free-trade agreements or our commitment to the World Trade Organization would allow that; in fact, it would not be sensible economically, either. We need to keep in mind that any investor coming in to buy, say, farmland in New Zealand has to pass the existing tests in the Overseas Investment Act. Those tests were laid down by the previous Government when it rewrote the Act. Any application that is in the pipeline now will be dealt with by the tests laid out in 2005, I think it was. If there was to be any change to those tests, the Government would signal that ahead of time.
Hon David ParkerWhat signal is his Government sending to the world when he is on record as saying that we need to relax the rules on foreign investment, while John Key has been saying just the opposite, or is this merely another example of the Government belatedly agreeing with the Labour Party position, as it also seems to be doing on savings?
No, it is another example of the member’s shallow analysis and political manipulation of statements. The Government’s review of the Overseas Investment Act was always aimed at reducing the time, cost, and uncertainty of the decision-making process, and that continues to be an objective of the Government. In fact, we have achieved quite a bit of reduction in the bureaucracy associated with that process over the last 18 months.
When will the Minister release the long-awaited review of foreign investment, which was announced 17 months ago, or is this just another example of a Government that has polled itself to a standstill because it has no coherent plan?