The new transtasman investment protocol is expected to further strengthen the investment relationship between New Zealand and Australia.
Finance Minister Bill English welcomed the protocol, signed by New Zealand Prime Minister John Key and Australian Prime Minister Julia Gillard this week under the Closer Economic Relations trade agreement.
"New Zealand and Australiahave one of the most open bilateral economic and trade relationships of any two countries.
"This relationship is underpinned by CER, the oldest and most comprehensive set of trade access arrangements that either country enjoys."
He said the protocol would build on existing goods and services agreements with Australia, which is the single largest source of direct foreign investment in New Zealand and the largest destination for New Zealand investment.
"The addition of investment to CER will cut red tape and compliance costs for investors on both sides of the Tasman."
Investors would benefit from increases in the screening thresholds for foreign investments in business assets requiring regulatory approval.
For New Zealand firms investing in Australia, the threshold will increase from A$231 million to A$1.005 billion.
For Australian firms investing here, the threshold increases from $100 million to $477 million.
Thresholds will be updated annually based on changes in gross domestic product.
Its main benefits for New Zealand investors looking to put money into Australian business assets will be:
Lower screening thresholds
Being treated equally to Australian investors
More certainty that investments will be protected
The protocol comes into effect once both nations have completed the necessary legislative and regulatory changes.
English said the protocol protected the right of the Government to give preference to New Zealanders for any share sales in state-owned enterprises.
Bilateral talks between Key and Gillard saw both Prime Ministers commit to accelerate efforts towards greater transtasman economic integration, including working towards a joint patents examination system, more competitive mobile roaming charges and accelerating cooperation on joint trade and investment initiatives.
Each committed to making travel across the Tasman a domestic-like experience, including the roll-out of SmartGate and joint studies looking at further improvements to transtasman travel.
