Bayly Andrew; Parker DavidANDREW BAYLY (National—Port Waikato): Thank you Mr Chair. We're in the exciting stage of being able to ask Minister Parker some questions. I think the first thing is when the original test was changed by the Rt Hon Winston Peters there was already at that stage a great deal of opposition concerning those provisions because many members—and I was one of them—expressed concern that it would lead to rapid escalation. At the time the element of New Zealand production forest owned by overseas entities was estimated at 72 percent. I do note that the—I think it's the Overseas Investment Office (OIO) recalculated the figure and slightly downgraded it. But whatever the case it was by far—even at the point that the Rt Hon Winston Peters supported of course by the Labour Government chose to increase it there was substantial foreign ownership.So here we are. Winston Peters left—I'll just pause for a moment on that—and now we've got this absolute change of heart by the Minister and the Labour Party. I'd just like the Minister to explain why we arrived to this point when already the concerns that we were expressing—that a number of people across this House were expressing at the time it was introduced—why we've had this come-to-Jesus moment if I can use that expression.Hon DAVID PARKER (Minister for the Environment): Thank you Mr Chairman. Because we couldn't rely upon the votes of the National Party to pass the legislation last term that we needed to close a gaping loophole in the overseas investment screening arrangements for forestry.The situation was that under the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) the class of investments that can be screened under overseas investment regimes closed from the date of inception of that agreement. So unless there was a screening regime for a class of assets in place by that date the Government of New Zealand could not thereafter introduce it unless they withdrew from CPTPP and other agreements that relied upon the most favoured nation clause relating to investment protocols which sucked the CPTPP restriction on new classes of screening into earlier agreements including the China free-trade agreement.So the Government decided and I was responsible for both the investment side of it and the trade side of it—we realised that we needed to move quickly after the date of signature but before the agreement came into effect to include within our screening regime classes of investment that we might want to screen in the future. Now once a class of investment is within the screening regime the rules as to how it is screened can be toughened or loosened under those agreements but you can't have a new area of screening.The area of deficiency in forestry related to the lack of screening under the Act for forest registration rights. If you want to invest in forestry you can either buy a freehold interest a leasehold interest or a forest registration right. A forest registration right can last for multiple rotations; it can last for a hundred years. It's a bit like a very long-term lease. And unless that was within the screening regime for forestry the country didn't have an effective screening regime for forestry because there was an avoidance mechanism through forest registration rights. We also had evidence that that avoidance route through forest registration rights was increasingly being used by overseas investors.Therefore to have a cogent screening regime we needed to include forest registration rights. We did that. The National Party didn't favour that legislation and we were reliant on votes from the New Zealand First Party to get that and the New Zealand First Party—and there was some good reasons for this. They didn't want to disrupt overseas investment into our forestry sector because they wanted more trees planted for climate and environmental reasons as well as for the interests of that industry. Therefore they said Well we will agree to forest registration rights being included in the Overseas Investment Act but we want what the Hon Shane Jones called the primrose path." which was a very low regulatory route applied to forestry relative to other sectors. In order to pass the legislation in order to have a cogent overseas investment regime we agreed with that request and as a consequence we got to where we got to.In the period since partly because the economics of forestry have improved there has been an increase to the risks caused to rural communities of planting out mid-quality land in forests in a way that is worrying some of those communities. And we think part of the answer lies in slightly toughening—not toughening to the extent that some people want but slightly toughening—the rules that apply to overseas investment in forestry whether it's freehold leasehold or forest registration right."