Review aims to smooth way for foreign investors

Bill English. Photo / Brett Phibbs

New Zealand must become an easier place for foreign investors to do business in order to attract the cash needed to fund our recovery from recession, says Finance Minister Bill English.

But Labour says New Zealand already has a high level of foreign ownership and the changes could put sensitive land at risk.

English yesterday announced the National Government's review of the Overseas Investment Act.

The review, he said, was intended to make it easier for "constructive" foreign investment that could "play an important role in economic recovery and job creation".

"We're an economy that, because we've consumed rather than saved, is pretty dependent on overseas borrowing and overseas investment. Looking out over the next three to five years, we're not going to be able to get the overseas borrowings in the same way so we are going to need investment of our own and overseas in order to create jobs."

The review would make foreign investment more simple and attractive while at the same time protecting sensitive land, assets and resources.

English said he did not know whether the review would result in a regime that would have approved the Canadian pension fund's bid for Auckland Airport last year, but the intention was that decisions would be made faster to provide prospective investors with more certainty.

It had taken too long to process some investment proposals due to the complexity of the current legislation, which had also added to the costs incurred by investors "and may have turned some of them away".

He was, however, unable to give concrete examples of this and said there were currently no major applications being considered.

However, he said there had been "quite a lot of concern" from existing foreign investors who wanted to invest more here.

English said one investor wondered why they had to go through the approval process when selling to another.

"That wouldn't matter if we didn't need investment to help us create jobs as we come out of this recession."

But Labour leader Phil Goff said the New Zealand overseas investment regime was already one of the most liberal in the Western World.

That, with New Zealand's poor savings record, had contributed to what was "one of the highest levels of foreign ownership anywhere in the world".

"Clearly it hasn't been a problem to invest in New Zealand, so you then become suspicious if this has become an issue of priority for National because what they'll be focused on is the one area where we have protections against international investments and that's sensitive land."

Goff accepted that the current application process was a little slow at times and had issues that could be tidied up, "but that doesn't require a major Government review, it just requires a bit of common sense".

Auckland University law professor Jane Kelsey said she had concerns about the review in that any liberalisation of foreign investment criteria which resulted would effectively be nonreversible in the future due to "ratchet" provisions in recent free trade agreements.

The review, to be led by Land Information Minister Richard Worth, is expected to be completed by mid-year.

Yesterday's move was part of a wider review of "bureaucratic red tape" led by English and Regulatory Review Minister Rodney Hide.

SELLING NZ

Three major parts of the Overseas Investment Review:
* Ensure more applications are decided by the Overseas Investment Office rather than ministers, enabling them to be dealt with faster.
* Possible changes to overseas investment regulations which would require Cabinet approval.
* Possible changes to the scope of overseas investment screening regime, for example which land should be considered "sensitive".