Australian investors' threshold to be lifted

BRISBANE - New Zealand will soon treat Australia as a favoured country by making overseas investment easier, says the Prime Minister.

John Key told a business audience in Brisbane yesterday that he would soon lift the threshold above which business investments must be approved under overseas investment law from the current $100 million.

The announcement could be expected after formal talks with Australian Prime Minister Kevin Rudd this month.

At present, those investing more than $100 million must pass the series of tests under the Overseas Investment Act. New Zealand is working on a new Investment Protocol with Australia that will give it a preferred status. Australia is also likely to reciprocate by lifting its $100 million threshold for investors from New Zealand.

Mr Key said the final threshold had not been decided and the two countries were still negotiating. The change is expected to at least double the current threshold. He said any new threshold would not apply to investments in land.

Mr Key also expects to announce further steps to streamline travel between New Zealand and Australia after those formal talks with Mr Rudd. The two have made the issue a priority.

Mr Key said it was unlikely the two countries would get to a point where passports were not required at all, but changes would "dramatically improve and streamline" processes of customs and biosecurity. "It will very much feel like domestic experience, but you will still carry passports."

He said the Governments had considered making flights domestic, but there were issues of travellers who were not on Australian or New Zealand passports. He said the changes being made would come at a significant cost, but a million tourists travelled in each direction across the Tasman every year.

Mr Key spoke to an audience of about 500 at the Queensland University of Technology Business Leaders Forum - a $150-a-ticket event that former Prime Minister David Lange spoke at in 2001 and Mr Rudd addressed last year.

Mr Key said Australia was "vital" for New Zealand's economic future. Australian investment accounted for about two-thirds of the total of $122 million invested. He hoped the new threshold would encourage further investment from Australia as well a further step towards the goal of a single economic market between the two countries.

Mr Key said there was "enormous potential" for Australian companies in his Government's planned $7.5 billion expenditure on infrastructure. Australia was New Zealand's "number one source of investment".

"We want to make it as easy as possible for capital - just like people, goods and services - to flow freely between the two countries."

Finance Minister Bill English is also reviewing the Overseas Investment Act to streamline its processes for investors.

Mr Key travelled to Cairns last night where the annual Pacific Islands Forum leaders meeting will be held over the next three days.

Last night, Mr Key had talks with Mr Rudd focused on a joint report expected today on the impact of the economic slowdown on Pacific islands.