Sample submission |
Submission to the Finance and Expenditure Committeeon the Overseas Investment Bill 2004I have many concerns about the level of overseas investment in New Zealand. I share the concerns of most New Zealanders at foreign ownership of land, for cultural, social and economic reasons. It pushes up the price of land, making it less affordable to New Zealanders and unviable for many farming uses. It puts property at many popular and treasured destinations out of the reach of New Zealanders. It increases the risks of speculation and absentee land ownership. It threatens traditional access to land by both Maori and Pakeha. I welcome the small improvements in the controls over land ownership in this bill, such as the increased powers of authorities to monitor and enforce conditions on investment in land. B ut there are some backward steps and more could be done. However I am just as concerned about foreign ownership of businesses. These can have hugely significant effects on our daily lives, jobs, environment and society. For examples we only need to look at the disastrous experiences we have had with TranzRail for passengers, freight clients, workers, taxpayers and minority shareholders; the continuing abuse by Telecom of its near-monopoly position; and companies like Juken Nissho with appalling safety records and ruthless tax avoidance practices. Overseas investment in New Zealand has been overwhelmingly takeover rather than new “green fields” investment, and even advocates of more foreign investment acknowledge its generally low quality. It costs New Zealand hugely every year – $4.9 billion were remitted overseas in profits from direct foreign investment alone in the year to March 2004. On aver age over the last decade, less than a quarter of those profits were reinvested in New Zealand . The advertised benefits have yet to be demonstrated. Yet the existing overseas investment rules are a mere rubber stamp where this fundamentally important type of investment is concerned. They need to be significantly tightened, and this bill completely fails to do that. I therefore make the following specific submissions. I request that I be heard by the Committee in support of this submission, and therefore request that the Committee hear submissions in ____________________________ where I live. My contact details are at the end of this submission. General1. The bill continues the 25% overseas ownership threshold throughout for an investment to be classed as an “overseas investment”. Yet control can be achieved at a much lower level. Statistics New Zealand use 10%, the common standard internationally. Even in this bill, in Schedule 2, a threshold of 20% is proposed for amendments to the Credit Contracts and Consumer Finance Act 2003. The threshold should be lowered to 10%. 2. The thresholds at which approval is required for overseas investment, including minimum land areas, minimum value of investment, and the definition of “associated land” should be embedded in the Act, not set by regulation. Otherwise changes can be made by the Executive without public consultation and as a consequence of international treaty commitments made without parliamentary approval. The thresholds are in practice crucial as to the effectiveness of the legislation. High thresholds would make it almost completely ineffective. 3. The test of “good character” is not defined in the bill. It should be defined and have means of enforcement after the investment has been made. It should also apply to companies etc, not just individuals, given New Zealand and international experience of overseas investment in recent years. A corporate code of conduct would be a useful way to define good character for companies. It would cover such matters as asset stripping, tax evasion, high levels of tax avoidance, health and safety records, compliance with labour and environmental laws and employment agreements, court convictions and losses in civil cases. 4. Ministers should retain the right to use other criteria, not just ones in the bill or in regulation. The model should be as is proposed for fishing quota investment, and is in the current legislation (s.18, s.61; compare s.73 – new s.57H(2)(b)). 5. Retrospective consents should not be allowed without penalty (s.26(1)(c)). Otherwise it becomes an invitation to ignore the law. 6. In order to have a greater assurance of independence, the regulator should have the status of a Parliamentary Commissioner (like the Parliamentary Commissioner for the Environment) rather than being the permanent head of an existing government age ncy. I am also concerned that insufficient expertise in business-related matters exists in the proposed age ncy, Land Information New Zealand 7. The regulator's responsibilities should also include: making information and statistics on decisions under the Act (including details of decisions) readily available to the public; and inviting and considering submissions from the public on its decisions, and on changes in its guidelines, regulations, and lists of sensitive reserves and parks (s.32 and s.38). 8. Independent policy advice to government on overseas investment is required – not just from Treasury. 9. For offences against the Act, fines should be higher for bodies corporate, and individuals in control of such bodies should be liable to imprisonment (as are individuals breaching the Act) (Subpart 5). 10. Affected members of the public should be able to take court action against investors breaching the Act (Subpart 5). 11. Provision for exemptions from the Act should be strictly limited and the conditions under which exemptions can be made spelt out in the Act (s.61(1)(j) and (k)). Businesses12. I oppose the raising of the value threshold for investment in businesses to $100 million as proposed by the government. In fact it should be lowered from its current $50 million to no more than $10 million, as it was until 1999. 13. Criteria for investment in business assets should be similar to those for land, but also deal with matters described in (3) above in a corporate code of conduct (s.19). Revocation of investment approvals should occur on a similar basis. 14. The criteria for whether approval is required for establishing a business (s.14(1)(b)) are easily avoided. More stringent criteria are needed. Land15. There should be requirements (not just criteria) for investors to provide access over rural land they purchase, and the opportunity should be taken to force the sale of privately owned foreshore or seabed land to the Crown (s.18(2)(d) and (e)). 16. Controls should be maintained over all urban land sales, as under the present legislation. Commercial, ind ustrial and residential land ownership can have significant effects on neighbours and urban communities. 17. For investment in land, the residence criterion should be tightened (s. 17(e)(i)). Allowing prospective investors to bypass other important criteria if they “intend” to reside in New Zealand is far too weak and invites abuse. All the criteria should be met (and if the investment is approved, conditions applied) until the investor gains permanent residence status. 18. The requirement in the current legislation for “substantial and identifiable benefits” from farm land sales should be reinstated in the new bill. It should apply to all investment, not only investment in farm land. 19. The other criteria in the current legislation for farm land sales should also be in the new bill (Overseas Investment Act 1973, s.14D(2)(a), (b), (c)). 20. The criterion for creating jobs should be for jobs for New Zealanders and New Zealand residents (s.18(2)(a)(i)) – land; and s.73 – new s.57H(2)(a)(i) – fishing quota). This is particularly important for fishing because of wide concerns that jobs on fishing vessels are going to crew from outside New Zealand , paid at much lower rates than New Zealanders. 21. The criterion for developing new export markets should specify that those markets should not be in competition with existing New Zealand exporters (s.18(2)(a)(iii); and s.73 – new s.57H(2)(a)(iii) – fishing quota). For example, New Zealand fishing companies are concerned that overseas owned competitors in New Zealand waters receive subsidies and other benefits from their home countries that mean they can easily undercut the New Zealand companies in the same export markets. Fishing quota22. The criteria for investment in fishing quota should include conservation of fish, aquatic life, seaweed, and the marine environment (s.73 – new s.57H(2)(a)). 23. The power to forfeit fishing quota from companies which are taken over by overseas investors (i.e. which become overseas companies) without consent, or which breach conditions of consent should continue as at present in the Fisheries Act 1996 (s.73 – new s.58). 24. See also 20 and 21 above. My address, contact phone number(s) and email address are as follows:
|
Campaign Against Foreign
Control of Aotearoa, |
 |