Posted on 7-9-2004

Powerco Over Powerless

The Campaign Against Foreign Control of Aotearoa (CAFCA) declares our full
support for the Concerned Ratepayers group in its attempt to get the
Overseas Investment Commission (OIC) to block the sale of (Taranaki-based)
Powerco to Australia’s Prime Infrastucture. But we fear that they may be
pushing the old proverbial uphill. The OIC exists to facilitate foreign
investment, not to regulate it, and certainly not to restrict or stop it.
The law it operates under has no teeth and the OIC has no intention of
getting any dentures fitted. We urge that the Concerned Ratepayers and
other likeminded Taranaki people demand that the Government toughen up its
foreign investment regime.

It has recently reviewed the current law and announced its intention to,
very soon, introduce a new law to liberalise that regime even further.
Details of what is proposed can be found at:
http://canterbury.cyberplace.co.nz/community/CAFCA/OICReview3.pdf They
include:

... It will abolish the Overseas Investment Commission 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.


... The recommendations 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. The
dangers of these free trade agreements are made glaringly obvious.

... 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.

The removal of the OIC is no great tragedy in itself. 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, LINZ is
experienced with land. 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. Raising
that threshold for company takeovers will remove all but the biggest of
them from any scrutiny. And remember - until just days before the 1999
election, the threshhold for company takeovers was just $10m (an increase
of 1,000% in less than five years). We lose the right to control foreign
investment. We can expect many more Powerco situations in future. Now is
the time to tell the Government to tighten, not loosen, the foreign
investment regime.