Donald Rod: Overseas Investment Bill — Second Reading Instruction to Committee In Committee Third Reading 
Donald Rod: Overseas Investment Bill — Second Reading Instruction to Committee In Committee Third Reading 
[Volume:626;Page:21601] 
ROD DONALD (Co-Leader—Green) 
: 
 The Green Party is opposed to the plans of Labour and National to make it even easier for foreign investors to buy up our land our buildings and our businesses. We are not alone. Most New Zealanders remain opposed to the sell-off of businesses like Telecom New Zealand and Contact Energy to foreign investors. Most New Zealanders can see what a mess our rail network ended up in after foreign investors milked it dry. Most New Zealanders are not happy that more and more iconic land such as Young Nicks Head is being bought up by foreign investors who treat our country as a plaything. Young farmers are upset that the dream of owning their own farm is receding because increasing overseas investment means farmland is being priced out of reach and beyond its agricultural earning capacity. Holidaymakers are finding that their favourite camping spots at the beach are no longer there because foreign investors have bought them up and built their mansions where Kiwis used to play. First home buyers are being deprived of their dream of owning their own home because foreign investors are outbidding Kiwis at the bottom end of the property market as well as at the top. 
So much for Labour’s ownership society. Any assistance the Government provides first home buyers fades into insignificance when one considers that property purchasing power which is measured in terms of average house price versus average wage is half what it was 25 years ago. That is because foreign capital has artificially inflated house prices and that foreign capital has also driven up New Zealand’s current account deficit which has made mortgage interest rates 1 to 2 percent higher than they otherwise would be. This double whammy is a direct result of the liberal foreign investment regime of National and Labour. 
It is extraordinary that this Labour Government is proud that New Zealand has such a liberal regime. Dr Cullen said so in New York last November. That position is in stark contrast with the statement of Labour leader Helen Clark on 4 June 1995. Then she said: “Labour would be strongly opposing the National Government’s efforts to liberalise restrictions on the foreign purchases of New Zealand land.” She also said that the Government of the time—a National Government—was completely out of touch with the strong views of the overwhelming majority of New Zealanders who considered that encouraging more foreign purchases was unacceptable. As far as the Green Party is aware—and that is backed up by the 7000 people who signed our petition calling for tighter rules on foreign investment—New Zealanders are just as opposed to increasing land sales to foreign buyers as they were 10 years ago. Now it is the Labour Government—not a National Government—that is out of touch and is pushing an unacceptable agenda on to the public. 
We can only speculate—and I will in a minute—as to what has induced Miss Clark to change her mind so radically on this matter. In the Green Party’s view she was right then and she is wrong now. Indeed there is even more reason to be opposed to increasing foreign ownership as the last 10 years’ bitter experience can attest. Only yesterday Dr Cullen admitted to the Finance and Expenditure Committee that it would cost the taxpayer much more than the $200 million already allocated to fix the rail network which was left in a decrepit state by its former foreign owners who ran down the network milked all the profits they could and took the money and ran. Surely that costly experience should be enough for Labour to understand that New Zealand’s foreign investment rules are not tight enough. 
The so-called good-character test is a sham. Foreign buyers of businesses should have to meet at least the same national interest test that foreign land buyers need to pass. If companies like Juken Nissho had to sit even the weak national interest test we have now they would fail. Juken Nissho operates wood-processing plants in Kaitaia Masterton and Gisborne. It has a horrifying health and safety record. It had 269 serious harm notifications from 1995 to 2003 and 11 convictions under the Health and Safety Act with fines ranging from $6000 to $10000. In 1997 Juken Nissho was prosecuted for exceeding permitted emissions at its Kaitaia plant. There are numerous complaints from neighbours about the effect on their health. An analysis of Juken Nissho’s New Zealand accounts from 1999 to 2003 shows that it reported losses and paid no tax. It was totally debt-financed and under normal circumstances it would be insolvent. Many of the company’s transactions appear to occur through related parties and may provide a way to shift profits offshore and to avoid tax. 
So why does Labour want more investment from companies that behave so badly? Why does Labour refuse to introduce a code of corporate responsibility that would hold the Juken Nisshos of this world to account? A responsibility code for foreign investors is neither a radical idea nor a new one. New Zealand is already a signatory to the OECD guidelines for multinational enterprises. Indeed our Government has undertaken to promote the guidelines although there has been little noticeable activity. This is unfortunate because the June 2000 revisions contain in the words of Australian Treasurer Peter Costello who was chairman of the ministerial committee “far-reaching changes that reinforce the economic social and environmental elements of the sustainable development agenda.” Given that the Government endorsed those OECD guidelines at the time the Greens believe that the Government should incorporate them into even more explicit legislation that must also include penalties—and not the light-handed ones in this bill—for corporations that do not meet their responsibilities. Those penalties should be serious so that corporations that do not meet their responsibilities are held to account. 
Labour will not do what most of its own supporters want because it wants to keep onside with the big boys’ club rather than with the citizens of New Zealand. That is clear because we know from the General Agreement on Trade in Services negotiations that a major demand of our trading partners is for us to scrap the Overseas Investment Commission. That is exactly what the bill does and it will allow foreign firms and individuals almost unrestricted access to New Zealand property and businesses. So the big boys’ club will be happy as will the United States which made it clear in its free-trade negotiations with Australia that it wanted to reduce or eliminate restrictions on overseas investment. If the United States wanted it for there it will want it for here as well which means that Labour is in a better position to do a deal with George Bush and to cuddle up to the Americans for a free-trade deal. 
In the meantime we should not forget that foreign investors already control half of the New Zealand sharemarket that 41 of the top 100 companies operating in New Zealand are 100 percent foreign-owned that over 1 million hectares of land is already foreign-owned including at least 157000 hectares of high-country leasehold 2720 hectares of offshore islands and 57 kilometres of coastline. Those figures do not disclose ownership below the threshold or undeclared purchases. As a former Overseas Investment Commission staff member Mark Dunlop said in his submission his experience has left him “with the distinct impression that there is widespread evasion of our overseas investment rules relating to land.” That revelation highlights the need for a proper monitoring regime so that the true extent of foreign ownership is disclosed. We know from Statistics New Zealand that foreign investment in New Zealand now exceeds $208 billion and that the cost of that investment in the form of interest and dividends reached $8.9 billion for the 2004 calendar year. It is no wonder that New Zealand’s current account deficit was $9.3 billion for the same period. That is unsustainable. 
I do agree with Dr Cullen on one thing—we Kiwis need to increase our savings rate if we are ever going to reverse that appalling situation and get our economy out of the red and back in the black. 
In closing I have to say that for all New Zealand First members’ bluff and bluster they acted like lambs when it came to this bill. They did not put up any of their own amendments and they did not support the majority of my amendments. The Green Party proposed improving the scrutiny on foreign investment by changing the rule from 25 percent ownership to 10 percent; New Zealand First opposed that. We wanted to extend the coverage to aquaculture; New Zealand First opposed that. We wanted to reduce the threshold from $100 million to $10 million; New Zealand First opposed that. We wanted to bring in Crown pastoral leases; New Zealand First opposed that. We wanted to extend the national interest test to significant business assets; New Zealand First opposed that. We wanted to bring in import substitution as a criterion; New Zealand First opposed that. All in all New Zealand First is all bluff and bluster.