Key John: Overseas Investment Bill — Second Reading Instruction to Committee In Committee Third Reading 
Key John: Overseas Investment Bill — Second Reading Instruction to Committee In Committee Third Reading 
[Volume:626;Page:21531] 
JOHN KEY (National—Helensville) 
: 
 I arise on behalf of the National Party in relation to the Overseas Investment Bill. It is the intention of the National Party to support the bill provided the matter referred to by the Minister in her address in respect of no compensation for marginal strips is removed from the process. 
I want to take a step back and define the issues as I saw them as someone who sat on the Finance and Expenditure Committee. There were a great many submissions. I have to say there were from memory no submissions in favour of the bill and I do understand the reasons for that. I want to run though the dilemma as I see it from the National Party’s perspective. 
On a relative basis there have been very few examples when the Overseas Investment Commission has in fact declined purchases of New Zealand land or foreign purchases of New Zealand companies. It has been a relatively lightly used provision—most applications have been accepted. Secondly there is a genuine concern—and I think a warranted concern from New Zealanders—that we do not want to become tenants in our own country. I think the long-term future of New Zealand is not that of a bunch of people running around serving lattes to foreigners who own our country. We do have a brighter and better future for ourselves than just that. 
There is a relatively good argument to say that most countries have some provisions around who can and cannot purchase their land. Of course the risk in this situation is that New Zealand needs to think about its relative economic position compared with other countries. That is to say the average American income is of quite some magnitude above the average New Zealand income. By definition that means New Zealand can become quite a cheap entity. We face within that a risk around times when the exchange rate is particularly low that New Zealand becomes quite attractive solely from a currency-play perspective. 
That is the dilemma New Zealand faces. We have a global world now where the Internet is playing an interesting role. A large number of people are surfing the Internet looking to buy prime pieces of land around the world and New Zealand is one of those places that is very attractive because—as we know—it is a beautiful nation. Therefore New Zealand is highly attractive because of its price because of the global nature of the world and our free capital markets that allow people to come in and buy land. By definition of course if one thinks about New Zealand in one sense most New Zealanders would recognise that the land that is actually attractive to foreigners—and primarily we are talking about high-country stations and beachfront and lakefront sites—is the land that is likely to be purchased by foreigners when they come to New Zealand. The truth is that they will not come to New Zealand to buy some piece of dirt that is out in the middle of nowhere. Generally speaking they are coming for the choice bits of a great little country. 
So I think we have to consider that element and then contrast it with the reasons why on one level the National Party supports this bill—that is there are issues around property rights and owners wanting to maximise the property’s value when they sell the fact that we do live in a global world and broadly speaking a sort of acceptance that we are part of a world where we do not want to close ourselves off completely on a number of fronts. 
So I will take the first of those matters concerning company investments where the threshold for reference to the Overseas Investment Commission has gone—from memory—from something like $25 million to $100 million. That reflects the fact that it makes sense to do that for companies financed for less than that amount whether it is foreign or domestic capital financing those businesses—in one sense I see that as being largely irrelevant under that sort of measure. 
Above that threshold I am still relatively supportive if foreign capital wants to come to New Zealand but clearly there are national interest reasons why we would want to refer that. But under that level I think it is just a reflection of the growing size of businesses and of what is relevant to the international situation. 
Around the issues of sensitive lands the first important thing to note is that the bill is attempting to tighten up the current situation but it is worth remembering that there have been very few examples where things have been declined. So we have to put it in that context and say that this bill is an example of where we are actually making it more difficult. Young Nicks Head was a great example of a sensitive piece of land. It is a very small acreage but regardless of its cost it is now referred to the Overseas Investment Commission for its review. In that regard I think that should be seen as a very positive step. 
I want to talk for a moment about the marginal strips issue. If we recall the reason for marginal strips it is really an issue that relates to the Queen’s Chain which currently applies to about three-quarters of New Zealand. Most New Zealanders do not understand that situation terribly well. They think the Queen’s Chain is either something that has gone or something that applies all around the country. The truth is that it applies to about three-quarters of the country. But my point is—and I think it was introduced by Mr Parker—that in the event of a sale overseas if the land did not have a marginal strip to which the Queen’s Chain applied then the Queen’s Chain would be drawn up in the agreement in that instance. 
Again on one level I have some sympathy for that and Nick Smith from the National Party proposed having a similar kind of process in his member’s bill. That came from the situation on D’Urville Island where property was sold to foreigners and as I understand the case there was no Queen’s Chain. An offshore owner of an island gave instructions to those looking after the asset indicating—rightly or wrongly—that the owner would not allow anybody else on the island at all. So New Zealanders were effectively stopped from pulling up their dinghy on the beach depending on where the high tide mark was. 
I think on one level that locking New Zealanders out of that access to be able to land their boat alight and walk up a lake edge or whatever seems wrong so in that sense National would be very supportive of protecting that access. 
The issue becomes one where if we are not prepared to require that compensation be paid for allowing for access rights to the Queen’s Chain in private property sales then we are really taking a significant property right from those who are selling because the purchaser will almost certainly pay a bit less. That leaves us with the vexed question of whether the Crown wants to pay for the costs required to acquire the Queen’s Chain. In that respect I take it that the current Minister of Finance potentially shares my view—as a possible Minister of Finance—that it is a cost that we do not necessarily want to pay if I understand that correctly. But National does not think it is fair to demand that the Queen’s Chain be applied on a non-compensation basis. So on the assumption that that provision comes out of the bill we will be supporting it. 
I will digress very slightly to go back to the reason this issue is hugely sensitive which is that there is a feeling that too much is being sold offshore. Again I think pastoral leases are a good example of this. It is essentially correct to say that prior to 1995 pastoral leases could not be sold offshore but now they can be and quite a number of high-profile pastoral leases have moved offshore. So I think that New Zealanders are right to question that trend. On one level I think they are right to say that it is their country and they do not want to become tenants in their own country—but on another level it is also important to weigh the property rights of the owner against that view and to reflect a little on the fact that we now live in a somewhat more global world. 
The definition of what a foreigner is becomes extremely difficult also. As some people know I have spent a considerable amount of time living overseas and under the technical definition I may well have been deemed to be a foreigner when I came back and bought land back in New Zealand. So that situation creates some interesting issues. There is also the argument around someone who lives offshore but who wants to come to New Zealand and does not want to remain a taxpaying resident. That person may well have good grounds to buy here. So National will be supporting the bill assuming the provision relating to marginal strips comes out but we recognise that this is quite a finely balanced debate.