Parker DavidOVERSEAS INVESTMENT AMENDMENT BILL (NO 3)Third ReadingHon DAVID PARKER (Associate Minister of Finance): I present a legislative statement on the Overseas Investment Bill (No 3).DEPUTY SPEAKER: That legislative statement is published under the authority of the House and can be found on the Parliament website.Hon DAVID PARKER: Thank you Mr Speaker. I move That the Overseas Investment Amendment Bill (No 3) be now read a third time.The last year has certainly been one for the history books. While our economy has proven resilient unemployment is not nearly as bad as what was initially predictive and we've collectively weathered—Hon Michael Woodhouse: Budget day tomorrow.Hon DAVID PARKER: —COVID-19—beg your pardon?Hon Michael Woodhouse: Sounds like the Budget speech.Hon DAVID PARKER: Oh it sounds like a Budget speech"—no it's not actually; it's about the Overseas Investment Amendment Bill (No 3) but thanks for making me a bit more interesting.There is considerable long-term uncertainty about how COVID-19 will affect global and New Zealand economies. That remains. What is clear is that as with New Zealand over the last couple of hundred years productive foreign investment will continue to be important for our economy. It is also true that we need a screening regime to protect New Zealand so that whilst we get the capital we need we manage the risks that foreign investment can pose including investment by third parties and media companies and at times other sensitive land asset classes that have long been screened under the New Zealand screening regime.Recognising this the Government has over the last few years made some quite significant changes to the Overseas Investment Act. In 2018 I think those were probably the most significant changes because if those changes hadn't been made in 2018 they couldn't have been made after the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) came into effect. Those changes made sure that our screening regime could in the future under any Government screen either strictly or lightly investments in residential land and in forest registration rights under the Forest Rights Registrations Act which is an alternative way that forest investors can invest rather than buying freehold or leasehold property rights. Previously there were no screening provisions covering those classes of assets and if those changes had not been made at that time no Government would have in effect been able to make those changes in the future because it would have been in breach not just of CPTPP but in respect of earlier agreements that obtained the benefit of those provisions through the most favoured nation clause relating to investment protocols and early agreements including the China free-trade agreement. So in 2020 the next changes were made. These were in response to the most uncertain economic and health conditions facing this country in nearly a century. At that time we introduced a national interest test and a temporary emergency notification regime to ensure that investments were able to be screened. Again at the time we did that we thought things were going to be a lot worse than they've turned out—although in some sectors that have been heavily hit it has been very very hard for them including in the tourism sector. But simultaneously with that we put a longer-term bill into select committee and today with the support of the National Party and the Green Party we deliver on that bill which is the Overseas Investment Amendment Bill (No 3). I'm pleased that it has had such broad support because I think it really shows that we are delivering a stable and enduring overseas investment regime that balances the need to manage risk against cutting unnecessary red tape and that of course sets New Zealand up well for the future. I'm going to cover some of the main steps of this bill. How do we cut red tape? Well the bill ensures that up to 30 percent fewer transactions will need to be reviewed and when those that are remaining to be reviewed are reviewed the screening process will be simpler because some of the unnecessary provisions that weren't really necessary to protect New Zealand's interests are being stripped out. For example rather than requiring consent for small incremental investments in a listed company—or an unlisted company for that matter—the bill is targeted at those transactions that grant an investor greater effective control over our most sensitive or larger assets. We are also no longer to screen a range of short-term leases of land or land that is subject to the current regime only because it sits next to land that we hold additional concern for. For example under the existing law until this bill is passed and comes into effect if someone buys a commercial property that is adjacent to a reserve—and it could just be an industrial site in Auckland—the fact that it sits next to an arm of an estuary deems it to be sensitive land and it is screened as investment land even though we don't really have a worry if that particular warehouse passes—which is often the case—into the ownership of somebody else. So we are not going to screen those sorts of things in the future. Neither are we going to screen investments by what are fundamentally New Zealand companies even if they are more than 25 percent overseas-owned—we are not going to catch those in the same way as they are currently caught by the Act.For the transactions that are left we made another number of changes to prove the way—for example repeat investors that have already demonstrated that they are fit and proper people; they are not going to have to re-satisfy the fit and proper person tests every time they invest. I was pleased to hear that we are getting the near-unanimous support of the House for most of these changes recognising that overseas investment has supported New Zealanders' wellbeing for generations.We have also improved the benefit to New Zealand test which is again a mechanism for reviewing investments in land. We have simplified and clarified the test requirements whilst maintaining the test focus on the investment's benefits consistent with the outcome of a High Court case last year and recognising the important role that the broader regulatory system plays in ensuring investment is not harmful such as the Resource Management Act. I've been resistant to calls from some people who say that we should have a bigger environmental test sitting in the Overseas Investment Act when in actual fact we need decent environmental rules applying to everyone whether they are overseas investors or New Zealanders and those tests arrived under the Resource Management Act and don't need to sit in the Overseas Investment Act.The bill also delivers improvements to provisions passed in last year's Overseas Investment (Urgent Measures) Amendment Act. This filled some critical gaps in our regime to ensure that some of our most sensitive assets can be protected. There is a national interest test now that carries forward for ever strategically important assets like ports and airports. For some of the infrastructure that has monopoly characteristics that is really important to the functioning of the wider economy we think it is right that the Government be able to have a look at those investments and think whether in a time of global financial crisis or something it is better that those assets sit in the ownership of New Zealander owners aligned to the fortunes of the New Zealand economy rather than owned by overseas people who might prefer the capital investment needs of their assets and other countries' in their home country rather than New Zealand. Also there are sometimes monopoly issues that will always be present. I have a view that sometimes monopoly assets are best kept in the ownership of New Zealand investors because using monopoly theory there will always be some level of monopoly rent extracted and why would you want to export that overseas if you're not capital constrained in your own country? In any event they are now subject to rigorous review and can only proceed if the investment isn't in our national interest.I also note that investments in media companies are now included within the purview of some of the new tests that are being introduced in the Act and again I think that is necessary. I think countries should be able to control foreign ownership in media companies—they won't always want to but sometimes they will.This review was really aided by submitters and the good work that the Finance and Expenditure Committee made. I thought they made some really good contributions particularly in respect of farmland. This legislation does put into primary legislation the controls that we have on overseas investment in farmland land of more than 5 hectares. I think that's good to do.We've sorted out a very very confused set of regulations which this legislation replaces. Those regulations have competing tests which really you can't sort out rationally because they head in different directions and how successive Governments have managed the somewhat confused nature of those regulations is by way of a directive letter from the Minister of the day to the Overseas Investment Office. Those letters have changed from Government to Government which has made for regulatory uncertainty. And as well as that in respect of such an important issue it is not right that that can be changed by way of ministerial fiat and that sort of important provision should sit in primary legislation.So we've elevated into the primary legislation a better set of principles and if any other party wants to stand on a platform that says we should sell our farmland to overseas buyers they are going to have to stand on that and convince New Zealanders to vote for that as a proposition. So those provisions are now codified and made more rational.I was surprised to learn that until now the advertisement that you had to give to the public before you could sell overseas could be given after you entered the contract to sell which was nonsense.DEPUTY SPEAKER: Order! The member's time has expired. The question is that the motion be agreed to."