Tizard Judith: Overseas Investment Bill — Second Reading Instruction to Committee In Committee Third Reading 
Tizard Judith: Overseas Investment Bill — Second Reading Instruction to Committee In Committee Third Reading 
[Volume:626;Page:21529] 
Hon JUDITH TIZARD (Minister of Consumer Affairs) 
 on behalf of the 
 Minister of Finance 
: I move  
That the Overseas Investment Bill be now read a second time 
. The Overseas Investment Bill balances the need for ensuring sufficient protection for New Zealand - sensitive assets with encouraging foreign investment in New Zealand. This bill does that by ensuring that the screening of foreign investment is focused on sensitive assets encouraging foreign investment that contributes to the New Zealand economy and reducing compliance costs. New Zealand has a welcome and open attitude towards inward foreign direct investment and it has been the Government’s intent to maintain that attitude. 
Submitters on the bill focused on a range of issues that relate to ensuring that foreign investment in New Zealand is of benefit to New Zealand and to ensuring that the potential gains foreign investments can bring to a small country like New Zealand are realised. The Government agrees that those are indeed the critical questions New Zealand faces when determining its foreign investment regime. Some submitters were in favour of New Zealand adopting a more liberal foreign investment regime and others favoured a more restrictive one. Other themes that emerged related to a wish for better information on foreign investment in New Zealand and a wish to ensure that provisions in the bill and conditions placed on an investor’s consent are monitored and effectively enforced. 
The Finance and Expenditure Committee did not suggest any changes to the bill that significantly affected the balance between the restrictiveness and the liberalness of the regime. The Government concurs with that assessment. As a result of the deliberations of the select committee changes to the criteria for the assessment of potential purchases of sensitive land by overseas persons have been suggested. The vast majority of transactions covered by the overseas investment regime are land-related so it was appropriate that the select committee examined that area of the bill in particular detail. The bill specifies a number of factors that may be relevant to the assessment of purchases of sensitive land by overseas persons. As per the first reading of the bill those factors can be summarised as economic development natural and historic heritage walking access and the offer to the Crown of any foreshore and seabed contained within the sensitive land. The select committee has recommended that the relevant Ministers explicitly consider all the factors— 
Madam SPEAKER 
: I am sorry to interrupt the member but the time has come for me to leave the Chair. 
Sitting suspended from 1 p.m. to 2 p.m. 
Hon JUDITH TIZARD 
: The Overseas Investment Bill seeks to ensure sufficient protection for New Zealand’s sensitive assets while encouraging overseas investment in New Zealand. The Finance and Expenditure Committee has recommended that the relevant Ministers explicitly consider all the factors that are specified in the bill. The factors in the assessment of purchases of sensitive land by overseas persons may be summarised as economic development natural and historic heritage walking access and the offer to the Crown of any foreshore and seabed contained within the sensitive land. The Minister must explicitly consider all the specified factors and determine which factors are relevant and how important each is to the overseas investment in question. Having considered the relevant factors the Minister must then determine whether the overseas investment will or is likely to benefit New Zealand. 
The select committee has suggested also changes to the specific factors to be taken into account when assessing potential purchases of sensitive land. It has recommended to the House that the Crown have the right of first refusal to purchase any lake bed of more than 8 hectares any riverbed with an average width of 3 metres or more and any lake included within sensitive land. This welcome addition to the bill ensures that New Zealand has the ability to control whether riverbed and lake bed pass into overseas ownership when they are contained within sensitive land with provisions similar to those already in the bill around foreshore and seabed. 
Furthermore the select committee has recommended that a new factor be added to the bill—a factor relating to the enhancement of the habitats of recreational fisheries and wildlife and walking access to the relevant areas. This addition to the bill is a result of submissions made to the select committee. Other changes relating to land investments are relatively minor. These include allowing potential enhancements—not solely maintenance of existing assets—to areas of historic heritage and improvements to walking access to be taken into account when assessments of sensitive land are made. These are relatively small but important improvements to the bill. 
An investor test is applied to all purchases of sensitive New Zealand assets. This will be standardised across business land and fishing investments and will consist of a good character test a financial commitment test and a business acumen test. The good character test which the select committee recommended be given some definition in the bill applies to all individual overseas persons while the financial commitment and business acumen tests apply to the collective of a company. 
The bill as reported back to the House from the select committee included provision for marginal strips to be set up when sensitive land that adjoins a significant waterway is sold to an overseas person. This provision would have ensured the creation of marginal strips to guarantee that access and conservation objectives around significant waterways were met when sensitive land was being sold to overseas persons. The select committee recommended that no compensation be payable unless the marginal strip is greater than 20 metres in width. A Supplementary Order Paper will be introduced into the House to remove the compulsory acquisition of marginal strips. This will ensure a parliamentary majority for the legislation. 
The bill makes provision for factors such as conservation values and walking access to be taken into account when decisions are made regarding investment in sensitive land. Access and conservation objectives will be dealt with on a case by case basis as part of the consent process rather than as a statutory and automatic provision. The Supplementary Order Paper I mentioned previously contains also a number of technical amendments to the bill. These cover a number of relatively minor technical issues the most important of which is amending the bill so that consent for a transaction will be required only when a property is acquired or a business is established. So it will no longer be necessary to specifically enable contracts to be entered into or given effect to conditional on consent being obtained. 
The bill revises the regulator’s information and guideline functions in clauses 32 and 37 to cover overseas investment rules generally. The select committee has recommended to the House a variety of other changes. The most major of these are as follows. It is recommended that the regulator have a new function: to produce regular statistics. That will assist in ensuring that submitters’ concerns around the information on foreign investment are met. It is recommended that an interest in farmland with a term of 3 years or more must be advertised. It is currently obligatory for all sensitive farmland subject to overseas investment to have been offered and advertised on the open market to New Zealand residents. An exemption currently exists if the interest in the land has a maximum term of less than 21 years. 
It is recommended that when considering a consent application the Minister should have the power to consult as he or she thinks appropriate. It is recommended that the regulator be able to charge an administrative penalty when an overseas person seeks a retrospective consent—that is when that person did not gain a consent when he or she should have. It is recommended that the value threshold of $100 million and the area threshold—0.4 hectares for some sensitive land—be placed in legislation in the future as opposed to being in regulation. This would mean that future changes to the coverage of the regime will have to be endorsed by Parliament. 
No major changes are recommended by the select committee around the definition of “overseas persons” the coverage of the regime or the monitoring and enforcement of the regime. The Government proposes that the House accept the recommendations I have outlined and other more minor recommendations I have not listed from the select committee. The passage of the Overseas Investment Bill is essential in ensuring that New Zealand’s overseas investment regime strikes the correct balance. I thank the select committee for its consideration of the bill and I commend the committee’s report to the House.