Parker DavidOVERSEAS INVESTMENT AMENDMENT BILL (NO 3)Second ReadingHon DAVID PARKER (Minister of Revenue): I firstly present a legislative statement on the Overseas Investment Amendment Bill (No 3). ASSISTANT SPEAKER (Hon Jacqui Dean): That legislative statement is published under the authority of the House. It can be found on the Parliament website. Hon DAVID PARKER: Thank you Madam Speaker. I move That the Overseas Investment Amendment Bill (No 3) be now read a second time. Can I begin by thanking the Finance and Expenditure Committee for their work on this bill and their work on the Overseas Investment (Urgent Measures) Amendment Act that was passed under urgency last year as part of our response to COVID. The deliberations of the committee covered both the urgent bill and the No. 3 investment bill that we now debated debating and I'm sure that the bill as reported back is better thanks to the work. Can I also thank the 46 submitters who took time to consider what is quite a complex set of measures. Individual law firms and businesses all made submissions to the committee and I'm sure those submissions assisted the committee in their deliberations. These obviously have been unprecedented times and although the economic out-turn from the COVID pandemic has in the case of New Zealand been far better than was initially projected our concerns at the time were that we were going to have such a severe contraction and that the recession would cause a decline in the value of a lot of businesses. We were worried that some businesses particularly in the sectors that were most affected by COVID or were predicted to be most affected by COVID would result in insolvencies. There was a risk we believed—as did Australia and various other countries—that some of those companies might be in a such a parlous position that notwithstanding credit support from central government they might have thought themselves having no choice but to sell the residual assets and the businesses in a parlous state. As a consequence we brought forward legislation which changed the threshold for Government to take action to block some of those sales to overseas parties and brought it down to a nil threshold. As it happens we've rarely exercised those discretions to use a national interest test kicking in at very low levels and the system that's been devised and applied by Government has proven to be a very efficient system which has not caused undue costs to applicants. I think most applicants have been impressed with the speed with which those call-in processes have been conducted. Now we're soon to take decisions as to whether we carry forward those interim measures but when those interim measures do end we need a background system of overseas investment rules that fit for modern times. Now I think everyone—or just about everyone—in this House agrees that productive foreign investment will continue to play an important role in our economy. It's obviously important that our businesses can access foreign investment that they need to thrive. Often the spring is not just financial capital but international connections which enable those businesses to succeed internationally. However successive Governments and indeed Governments in most countries think that there can be risks from foreign investment that need to be managed. This bill seeks to do this by being more clear as to what the rules are particularly in respect of farmland and also deregulates some areas of foreign direct investment that have been overregulated and have been unnecessarily rule-bound. In respect of changes that we've already made in the prior three years we made changes to make it harder to purchase existing homes. Overseas buyers now find it hard to buy existing New Zealand homes and that was a matter that was of considerable concern to New Zealanders. And most New Zealanders rejoice in the fact that we have made that tougher. There was a prior problem that we've largely closed down. As with some of the recent changes that we've been making to tax rules we were careful to exempt scale new builds. Foreign investment in apartment buildings for example or large subdivisions with new housing being built is enabled. So a lot of those houses are eventually going to be sold to New Zealanders or leased to New Zealanders.This bill that we're now considering largely replicates what was already the case for farmland by way of regulations under the Overseas Investment Act but it lifts those provisions from regulation to the primary legislation so that if a future Government wants to loosen up foreign direct investment in rural land that the majority of New Zealanders and the majority of farmers oppose then that future Government would have to come to this Parliament to change the law rather than change it by executive regulation without recourse to Parliament. And given the importance that New Zealanders attach to landownership and given that most of our exports come from the primary sector and the control of our large co-ops that are vertically integrated internationally is held by virtue of ownership of farms and the production which goes from the farms through the co-ops we in the Labour Party think that it is appropriate to have those rules as to foreign ownership of land set out in the primary statute.One of the changes that's been made by the select committee is to make it clear that those restrictions on foreign ownership of rural land don't apply where the land is no longer really primarily suitable for use as rural productive land but is more suited to development for housing purposes or commercial purposes perhaps at the margins of a city. And because we're not wanting to frustrate investment in housing for example or other commercial endeavours the select committee recommended and we've accepted their recommendation that that not be subject to the stricter rules relating to foreign ownership in rural land.Another change that is made is to require the advertisement for the sale of rural land to be made before the land is sold to an overseas buyer rather than after. I think most members were surprised to learn that you could comply with the laws by effectively negotiating a sale to someone overseas conditional on an advertisement not working and then advertise after the fact.In respect of some of the areas that are being loosened up we are enabling changes in shareholding of overseas companies without requiring an application to the Overseas Investment Office if it's a minor change in percentage and not an effective change in control or further change in control. We're also excluding a number of other technical investments.We're making it clear that some of the provisions that currently require overseas approval under the national interest test involving sovereign wealth funds should not be screened so long as it really is an independent sovereign wealth fund of the type described in the legislation. We're excluding short-term leases. We're saying that if you've previously proved your character to the Overseas Investment Office and you want to make another investment you don't need to once again prove your character to the Overseas Investment Office. That can be proven from your earlier application.So these mechanisms will actually reduce compliance costs. The national interest test which was introduced through the emergency legislation is maintained. It was a gap in our legislation and I expect that had the National Government been re-elected they would have moved to introduce a national interest test in respect of security issues which were raised by security agencies with the incoming Government and I think had been raised with the National Government as they left office.With that I think that we have a better foreign investment regime after this by making it clear we're open for business making it harder to buy rural land or elevating those tests into the primary legislation but also removing some of the niggly provisions that weren't necessary.ASSISTANT SPEAKER (Hon Jacqui Dean): The question is that the motion be agreed to.