SpeechDr JAMES McDOWALL (ACT): Thank you Mr Assistant Speaker Bennett. First I congratulate you on your promotion. It's good to see a fellow Hamiltonian in the Chair.This bill addresses an almost intentional policy failure made by the previous Government which is somewhat overdue given the issues especially the unintended consequences—as my learned colleague Tim van de Molen stated in his previous call—which have been raised for some years now. The main objective of this bill is to better manage investments from overseas that have to this point resulted in the conversion of land to forestry to ensure there is from now on a genuine benefit to New Zealand. It is a somewhat subjective concept but given what has unravelled over time it is clear that the outcomes of the existing law need to be improved. In many ways this illustrates that Government intervention by its nature regardless of the intent is almost always prone to unintended consequences.We are told that the more stringent benefit to New Zealand test requires in-depth consideration of the benefits that the investment may bring relative to the current use of the land and provides a greater discretion to decision-makers; further that applying this test will ensure that overseas investments in forestry genuinely benefit New Zealand and that any risks brought about by that investment can be mitigated and managed. As the economics of forestry have become more attractive we have seen an increase in these conversions. The increasing price of carbon credits plays a role here as well as the various other reforms and incentives.When it comes to intervention I think it's always good to start with the mind-set that a market should be as free as possible and without regulation and then if necessary dial it back from there to ensure that any market failures can be addressed. In this case there has arguably been a market failure albeit within the confines of regulation that has had perverse outcomes for farmland. It should be noted that this bill of course as it's in the title only applies to investment from overseas and I think one should be wary of how this may impact what happens with domestic investment once the playing field has been tipped in the other direction.It's worth emphasising I think as others have done the importance of forestry to New Zealand: 1.6 percent of our total GDP. It is the third-largest product export earner behind dairy and red meat and I think we can all agree it has a high-growth potential. The sector is heavily dependent on overseas investment with up to 70 percent of forestry plantations being foreign-owned. So any regulation will have an impact on productivity and the economy at large. So there are risks including that a stricter overseas investment regime may cause a decrease in investment among other things.The regulatory impact statement yielded an interesting point: There is minimal data available to fully demonstrate the link between external factors such as the ETS and raising log prices with the levels of overseas investment in forestry as well as the potential impact of this proposal on afforestation and land use." So to reiterate regulation is seldom without unintended consequences and these need to be carefully monitored and addressed.One thing I want to note that I reflected on is in the first reading Minister Kelvin Davis said that "These changes build on our earlier action to ban overseas purchase of existing homes so that New Zealanders are not outbid by wealthy overseas investors". I think it's a shame that the Minister went there and said that because I think it's unrelated and appears to be some sort of attempt to cover up the fact that this bill is a product of their own policy failure of picking winners and losers in their previous coalition—no pun intended.In closing this bill does mitigate a loophole in the existing legislation and it should we hope meet its objectives. However as I stated earlier I caution this given the impact that this could have on domestic investment. The Minister even said it himself specifically: "increasing conversion of land into forestry some of which is coming from overseas investors." So there will no doubt be more policy work on the horizon in this sector and with that I commend it to the House."