Parker DavidOVERSEAS INVESTMENT (URGENT MEASURES) AMENDMENT BILLFirst ReadingHon DAVID PARKER (Associate Minister of Finance): I move That the Overseas Investment (Urgent Measures) Amendment Bill be now read a first time. I nominate the Finance and Expenditure Committee to consider the bill. At the appropriate time I intend to move that the bill be reported to the House by 25 May 2020 and that the committee have the authority to meet at any time while the House is sitting (except during oral questions) during every evening on a day where there is a sitting day of the House and on a Friday in a week in which there has been a sitting in the House and outside the Wellington area despite Standing Orders 191 193 and 194(1)(b) and (c). This bill contains measures which the Government considers are needed to be put in place urgently to mitigate the economic effects of COVID-19. As we restore recover and rebuild the economy from the effects of COVID-19 it's imperative that we protect New Zealand's long-term interests. The bill's purpose is to ensure that the risks posed by foreign investment can be managed effectively while reducing the regulatory burden of the screening process and so to support the role of productive foreign investment in our recovery. In particular we need to minimise the possibility that some cornerstone businesses in our productive economy are sold in a way contrary to our national interest while the pandemic is causing the value of many enterprises to fall. This is one of two bills I'm introducing as a package. The other which follows is the Overseas Investment Amendment Bill (No 3) and it contains the remainder of the provisions that have been included in the previously introduced Overseas Investment Amendment Bill (No 2). It's my intention that the provisions of this urgent bill that are permanent which include the national interest test will be subject to full select committee scrutiny through the normal process of Parliament's consideration of the No. 3 bill. The COVID-19 global pandemic and related economic downturn has changed the foreign investment risk environment. Falling enterprise values are increasing opportunities for overseas investors to acquire ordinarily productive firms or strategically important assets at fire sale values without Government scrutiny. That reduced value may not reflect the importance of the business to our economy and interim controls are needed to protect our national interest. Some of those businesses may be best kept in New Zealand ownership to help our recovery. Such a sale can on occasions also result in risks to New Zealand's national security or an offshore transfer of knowledge and jobs. New Zealand is not alone in recognising the need to increase oversight of foreign investment in response to COVID-19. Australia Canada and a number of European countries have already taken steps to manage these risks. Equally productive foreign investment will play an important role in New Zealand's economic recovery. Other parts of the current screening regime unnecessarily limit New Zealand businesses' access to the productive foreign investment they need to survive the crisis and thrive in the recovery. The bill I introduce today seeks to introduce these issues by introducing specific issues to increase oversight of foreign investment in response to COVID-19 as well as broader tools to ensure that we can manage risks associated with investment in our most sensitive assets. We're cutting red tape to increase our attractiveness to the sort of foreign investment we need for our economic recovery and we're strengthening our ability to enforce the Act to ensure these new tools to increase oversight operate effectively. The Government needs the ability to rapidly respond to foreign investment risks and protect essential interests at this time of unprecedented crisis. This bill introduces a new emergency notification regime which will require overseas persons to notify the Overseas Investment Office of proposed investments of generally 25 percent or more in an existing business. Instead of the normal threshold of at least $100 million the temporary threshold will be zero; it's what Australia's done too. This screening power will allow the Government to assess these transactions and if necessary consider whether they're contrary to New Zealand's national interest or whether they should be approved perhaps on conditions. I expect the large majority of transactions will be triaged and approved to proceed 10 working days after notification. A much smaller number of transactions are expected to require a more thorough assessment against our national interest test. The lower threshold for the exercise of the national interest test is temporary. That power will be reviewed every 19 days and will only remain in place while New Zealand is suffering from the economic effects of COVID-19. The emergency notification power is in addition to two other tools that were originally part of the Overseas Investment Amendment Bill (No 2) and this bill carries forward those two tools to close gaps in our screening regime. Currently the Government doesn't have sufficient ability to block transactions that are contrary to our national security the functioning of our democracy and other core national interests. This bill introduces a national interest test that can be applied to transactions already requiring consent under the existing regime. This power will be used rarely and carefully and only if the Minister responsible for the Act considers that it's necessary. This will ordinarily be the Minister of Finance—not the Minister to whom most Overseas Investment Act decisions are routinely delegated. This national interest test is modelled on the Australian equivalent which also has a wide discretion rarely exercised. The second new power is a narrow call-in power that will enable Government to review on an enduring basis investments in some strategically important businesses such as firms developing military and certain other advanced technologies that may pose significant risk to our national security or public order. That call-in power ensures that we can manage these risks permanently. Foreign direct investment remains important to support our recovery and this bill also brings forward some measures to cut red tape. Cutting red tape means encouraging investment by reducing the number of low-risk transactions that are unnecessarily caught by the Act. It does this by addressing screening of purchases by majority New Zealand - owned and controlled entities; investments in land that are caught up currently but have little economic cultural or environmental value perhaps because they sit next to or an example is reserves like a sports field—sorry I should say that again. An example is land that sits next to a reserve like a sports field that's currently caught and there are also a range of small transactions that don't grant meaningful control over or access to sensitive New Zealand assets that are also currently caught which we're removing from the ambit. Cutting red tape also means clarifying and simplifying the consent process including focusing the requirements for assessing an investor's character on the factors that matter most such as proven serious offences and requiring applications to be processed to a deadline giving investors the confidence they need to come here to invest. We're also bringing forward a number of new enforcement measures that were originally tabled as part of the No. 2 bill to ensure that our reforms operate effectively. I won't list them now. Recognising that the use of some of the tools could be challenged in court the bill includes provisions to ensure that natural justice rights and classified security information can both be adequately protected during any court proceedings. More broadly there's an ongoing piece of work responding to the work by the Law Commission in relation to the use of national security information in courts and Parliament should expect to see the outcomes of that work at a later date. Finally recognising that the response to COVID-19 is challenging and changing this bill introduces temporary regulation-making powers that can be used to address transitional issues that might arise. These powers include for example the ability to allow modifications or exemptions from the consent requirements while the emergency notification power is in place. In conclusion the bill supports New Zealand's interests at a critical time by increasing oversight of foreign investment while also cutting unnecessary red tape. New Zealand continues to be open for business. Productive foreign investment has been and will continue to be welcome and I commend this bill to the House.