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Posted on 12-11-2004
The Campaign Against Foreign Control of Aotearoa (CAFCA) sees considerably
more minuses than pluses in the new Overseas Investment Bill introduced
into Parliament on November 10 by Dr Cullen, the Minister of Finance. His
press release was headed "Toward a more effective overseas investment
regime" and it definitely will be - for the transnational corporations
whose ceaseless takeover of New Zealand will be made that much easier by
this most obliging of governments.
Don't get us wrong, we congratulate the Government in making it harder for
foreigners to buy land of "special heritage or environmenlal value" (note:
not actually stop them buying, just to make it harder). That arises
directly from sustained public campaigning about issues such as the sale
of Young Nick's Head, other coastal property and South Island high country
stations.
But such land is a small part of the overall picture of rural land sales
to foreigners (the vast bulk of which is forestry and farm land) and a
very, very small part of the economy. The fact is that company takeovers
by transnational corporations, in all the sectors that constitute the guts
of the New Zealand economy, total billions of dollars per year (not the
tens of millions of "special" land sales) and the Government plans to make
it even easier for those transnational corporate takeovers to proceed.
That more than wipes out any gains made in the area of tightening up
"special" land sales. Indeed, the latter is a mere sop.
It hasn't yet been announced when the Bill will have its First Reading in
Parliament, nor to which Select Committee it will be referred. The
official papers preceding the Bill stated the target for it becoming law
is July 1, 2005. There will be the opportunity for public submissions
during the Select Committee phase.
What is in the Bill?
* It will abolish the Overseas Investment Commission, whcih is the current
rubber stamp body administering the overeas investment regime and will
transfer its functions to a specialist unit within Land Information New
Zealand (LINZ).
* The threshold for official approval for transnational corporations to
buy NZ companies will be increased from the current $50 million up to
$100m. Interestingly, Treasury had recommended that the threshold be
increased to $250m and that is the figure cited all through the Cabinet
papers, Cullen's recommendations, etc. Apprehension about public outcry
caused Cabinet to back away from the higher figure. We must be grateful
for small mercies (it is worth noting that Treasury's original
recommendation was that there be absolutely no overseas investment
oversight regime but concluded that it was not politically possible, in
light of public opinion).
* To remove the current need for approval of foreign land purchases of
less than five hectares in area and/or more than $10m in value.
* The official recommendations preceding the Bill cite NZ's obligations
under the General Agreements on Trade in Services (GATS) and the free
trade agreement with Singapore as inhibiting NZ's ability to set
restrictions on foreign investment. Indeed the official papers say that
the proposed new threshold for company takeovers by transnationals will
become the benchmark for all future free trade agreements and the
officials were anticipating that threshold would be $250m.
* To add insult to injury, the Government plans - "to keep costs to the
taxpayer down" - to let the foreign investors be responsible for
post-consent compliance and monitoring. New Zealanders have had 20 years
of experience of "self-regulation" to not need to be told how just how
lousy a system that is. They will only to have a file a report "regularly"
on how they are complying witrh the terms of their consent and outline any
reasons for non-compliance. Guess how many will say "No, we're not
complying".
The removal of the Overseas Investment Commission is no great tragedy in
itself. CAFCA has always said that its job could be done by a monkey with
a rubber stamp. But its replacement agency will see a significant
weakening of any oversight. By definition, Land Information NZ is
experienced with land. But land sales are very much the smaller part of
the much bigger picture, maybe totalling in the tens or hundreds of
millions of dollars per year. Company takeovers are where the foreign
investment action is, totalling in the billions per year. There is no
proposal for any new agency with any expertise in that field to be
involved.
Cullen points out the last time a non-land transaction was refused
permission was in 1984, and therefore we might as well virtually give up
monitoring company takeovers. On the contrary - that is an indictment of
20 years of rubberstamping neglect by the OIC and Government; and a
clarion call for the transnational corporate oversight regime to be
significantly toughened up, not weakened.
Raising that threshold for company takeovers will remove all but the
biggest of them from any scrutiny. Huge chunks of the NZ economy will be
bought and sold without any official oversight at all. And remember -
until just days before the 1999 election, the threshold for company
takeovers was just $10m. We urged the incoming Labour-led government to
roll it back to that level. They have refused to do so and are now going
to raise it to $100m (an increase of 1000% in less than five years).
The removal of the need for approval for foreign land purchases of less
than five hectares in area and/or more than $10m in value removes the need
for any scrutiny of central business district projects that involve land.
What we've been saying all along about the dangers of NZ getting entangled
in free trade agreements (whether multilateral, like GATS or bilateral,
such as with Singpore) is made glaringly obvious. We lose the right to
control foreign investment.
We welcome the tightening of restrictions on the sale of "special" land.
This concession has been brought about by public opposition to the sale of
the likes of Young Nick's Head and the sale of coastal land (primarily in
the North Island) and South Island high country stations. However, this
"tightening" wouldn't have stopped any of those purchases, not Young
Nick's Head, nor the recent purchase of two Otago high country stations by
Shania Twain. The Bill increases penalties for breaches. Sounds good but
the proof of the pudding is in the prosecuting. It would be very
interesting to know how many foreign investors have been taken to court.
In the words of Scribe: "Not many, if any".
The OIC's brief has been to facilitate, not "hinder" foreign investment
and this new Bill facilitates the OIC out of existence, and delivers a
very "effective overseas investment regime" - an effective surrender of
economic sovereignty. The minor concessions on some land sales are simply
a smokescreen to conceal that central fact. The Government is saying to
transnationals: "Come on in and help yourselves. Make yourselves at home".
What You Can Do
a.. Contact your MP urgently and register your opposition to the
weakening of the current overseas investment law and regulations. Tell
him or her that you consider this an election issue, and that it will
influence your vote in 2005.
b.. Write to your local paper. Call talkback.
c.. Argue for strengthening the controls over foreign investment, the
conditions that are placed on it, and the monitoring that should follow.
d.. Advocate strongly for tighter control on overseas ownership of land
and fisheries.
e.. Become informed. Join CAFCA and gain access to a wealth of
information and analysis that you will not find in your local newspaper.
Membership is $20 per year (or $15 unwaged). Payments to CAFCA, Box
2258, Christchurch.
a.. Submissions will be called soon, and the aim is to have the Bill
into law by mid 2005, so it is critical to act now. Make a submission
opposing this Bill.
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