The NZ International Business Forum has issued a challenge to the Cabinet ministers considering the Shanghai Pengxin bid for the Crafar farms to send a "clear signal" that New Zealand welcomes foreign investment.

NZIBF chairman Sir Graeme Harrison makes the point that foreign investors are prepared to respect the rules but they need predictability and certainty that when conditions are complied with the investment will be able to proceed.

"That is why the current uncertain situation with regard to the Crafar Farms is so negative for New Zealand's interests. It risks detracting from New Zealand's attractiveness as an investment destination at a time when there is strong competition for foreign investment from other countries."

Sir Graeme's determined push follows a strong statement by Auckland Regional Chamber of Commerce chief executive Michael Barnett who railed against the way the Shanghai Pengxin bid had been demonised by late-comer bidders in an appearance on Q&A at the weekend.


I'm adding Sir Graeme's name to my unofficial roll-call of those in the NZ business community who are finally stepping up and saying this country needs to protect its reputation as a fair regime for foreign investors.

But the big question is why is that only Sir Graeme, Barnett, BusinessNZ's Phil O'Reilly and George Gould have been prepared to openly speak up for what matters in this area. The paucity of open debate on the pros of foreign investment is astounding and business does need to step up here.

People quickly forget that this country periodically burns through capital.

NZ "blue chips" had to go on an international hunt for equity after the late 1980s sharemarket crash convinced many that our corporates were a big credit risk.

As indeed they were as their credit ratings slipped below investment grade.

In the early 1990s it was the US blue chips that took major stakes in prime NZ companies.

After the GFC impacted here, it was Chinese capital that injected new equity into flailing companies like PGG Wrightsons, Synlait and Fisher and Paykel Appliances.

We should not forget this. How many more jobs would have been lost if these companies had collapsed or had not been able to put themselves on to a firm international footing in conjunction with their new Chinese partners?

Sir Graeme also made the point that the Government had itself signalled it wanted to grow foreign investment from China and that it was hard to see Chinese investors coming here if they can't be sure they are welcome.

But it was his telling advocacy for foreign direct investment that also deserves a wider audience.

In essence, that without FDI, New Zealand lacks the capital to fund export-led growth.

"Foreign investment is what plugs the gap in our low domestic savings rates. Without it, ratings agencies could react by increasing New Zealand's (already high) credit risk rating and interest rates will rise."

It is a pity that the NZIBF did not come out of the blocks earlier to support Cabinet ministers at a time when they were facing flack over their initial approval for the Shanghai Pengxin bid.

But the group - which includes some of the biggest names in NZ's export business - are now saying what matters.

Engagement with Asia (particularly China) will also be a hot topic at Friday's meeting of the Australia New Zealand Leadership forum in Sydney.

The forum will address some big questions: How New Zealand and Australia can work together in the region (particularly the Pacific); seize global opportunities and also pursue further integration of the two domestic economies.

The forum will be a success if it does send a clear message that New Zealand and Australia are directly focused on making the most of these huge opportunities that are on our combined doorstep. And that both countries will engage a way that does not confuse our more recent trading partners.

There are clearly sensitivities on both sides of the Tasman. But having a common approach on how both countries treat Asian investment, deepen trading links and grow capital flows would dispel offshore investor angst and create a new Australasian norm.

There has already been some path-breaking work in science - particularly the joint bid for the SKA array project.

But there is much Australia and New Zealand could be doing to project a common agenda in our negotiations with third players such as India and South Korea. And an opportunity to be a driving force in setting the business and investment norms as the Asean nations (with which Australia and NZ have a joint FTA) move towards a single market.

Forum co-chairs Fletcher Building's Jonathan Ling and Rod McGeoch have ensured a strong programme which will engage trans-tasman powerbrokers from politics, business and officialdom. BusinessNZ now underpins the forum's work from a New Zealand perspective. The Business Council of Australia has also been brought into the frame.

This latter move has significantly raised the level of business participation from the Australian side which had declined in recent years.

The two Productivity Commissions - which were tasked by Prime Ministers John Key and Julia Gillard to look into the impacts and benefits of further economic integration between New Zealand and Australia - will also discuss their progress.

The Prime Ministers requested the commissions identify reforms that will boost productivity, increase competitiveness and drive deeper economic integration between the two countries.

Further integration has been on the transtasman agenda since former Treasurer Peter Costello and Finance Minister Michael Cullen announced plans for a single economic market (SEM) in 2004.

Progress has been piecemeal. Australia has baulked at cut-through initiatives such as mutual recognition of imputation credits which will deliver real benefits to New Zealand but at a cost to the Australian exchequer.

This is a fairness issue but at Government level Australia does not want to play ball.

New Zealand has baulked at the loss of monetary sovereignty implied by the strong economic union that has been championed by some of the Australian proponents of the SEM.

Nevertheless, forum working parties have done much useful work in hot areas like a common border framework.

The SEM agenda now includes a common framework in areas such as: a cross-border insolvency proceeding; financial reporting policies, financial reporting (financial statements), comparable disclosures to lower the cost of trantasman capital raising, competition policy, intellectual property and more.

But it is instructive that the two commissions says there has been no comprehensive assessment of the extent to which businesses have made practical use of the concessions granted under the Closer Economic Relations (CER) agenda and whether it has enhanced overall community welfare in Australia or New Zealand.

Another earlier study by the Australian Productivity Commission concluded that CER had a small positive impact on trade between Australia and New Zealand, but a negative impact on both countries' trade with the rest of the world.

As the commissions note the analysis suggested that the presence of the agreement had altered business' focus from one of "export to the world" to one of "export to the other".

Will more of the same really grow the pie?

It is hard to see this occurring under the 15-20-year reform period that the two commissions have outlined for the next stage of transtasman economic integration.

What is also needed is an action plan for the next five years. One that is focused on some daring external goals that the two nations' leaders (political, business and bureaucratic) can quickly set and progress in a way that captures the imagination while the long grind of policy reform continues.

That way there is no risk that the domestic focus blinds up to the major growth opportunities we can jointly pursue elsewhere.