Submissions to New Zealand Government
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Overseas Foreign Investment Bill
Submission of Pacific Institute of Resource Management on the Overseas Investment Bill 2004
- The Pacific Institute of Resource Management (PIRM), founded in 1984, is a national
organisation with international links, dedicated to sustainable use of the earth”s resources.
We publish a journal, Pacific Ecologist to help educate on various issues on ecology and social
equity, hold public meetings and make submissions on a variety of issues of public concern. Our
readership is around 4000 and members around 400 in New Zealand and 80 overseas.
- The Institute is concerned about the effects that an already large and increasing foreign investment in land and commerce will have on the economy, society and the natural environment. We believe relevant Acts of Parliament and attendant regulations must be written with great care to ensure that the benefits of such investment accrue to New Zealanders and that there are no significant negative effects on our society or our cultural and natural heritage.
- We have significant misgivings about some of the effects of foreign investment that are already manifest. The exposure of our land to a globalised real estate market has led to a marked increase in prices. The consequences have been an increase in speculative development, often in sites that are sensitive because of their cultural, environmental or amenity value. The price has in some instances made purchase of the land unaffordable even for the Government – Ngunguru provides a current example – where it has conservation interests. Land is also becoming unaffordable for most New Zealanders, even to be enjoyed on a short-term basis as inexpensive Motor Camp sites are sold for exclusive subdivision.
- The increase in price of rural land puts farm ownership beyond the reach of many who aspire to it and forces more intensive land-use practices such as heavy use of fertiliser and irrigation. These practices are often environmentally damaging and ultimately both environmentally and economically unsustainable.
- The increased foreign investment in business does not seem to have resulted in much truly novel enterprise but has instead led to a situation in which many common activities, necessary or merely desirable, cannot be undertaken without the economic penalty of part of the money spent being lost to the local economy through remittance to foreign owners. Large-scale foreign investment in such key areas of our economy such as tourist accommodation significantly dilute the benefits that accrue to New Zealanders as a result of their efforts. Business owners who are not embedded within New Zealand society cannot be expected to consider the impacts their business decisions have on our society and environment. Some of the foreign investors have a questionable record in other parts of the world – for example, the parent company of Earnslaw 1 is reportedly involved in unsustainable logging in SE Asia. The effect of large-scale foreign investment in business has been to add to our balance of payments deficit. This deficit is now reaching worrying proportions.
- The Institute submits that the following specific points be taken into consideration:
- That the threshold for classification as foreign investment be 10% rather than 25%, a value which is in line with international practice.
- That the threshold for business investment be $10million rather than the proposed $100million.
- That the definitions of these thresholds be embedded in the legislation rather than defined by regulations so that they cannot be changed by the Executive without consultation and to protect them from being changed as a consequence of international treaties.
- That there be specified attributes that define “of good character” and that irresponsible and questionably or frankly illegal activities such as tax avoidance, asset stripping or a poor employment or environmental care record exclude investors from consideration.
- That the criteria for approval of investment in business be made more stringent than specified in (s.14(1)(b)) and should be similar to those for land with a defined corporate code of conduct (s 19).
- That the Minister not be restricted in consideration of applications for approval to matters specified in the Bill but have discretion to consider “other matters” as in the present Act s18 and s61.
- That there be limited provision for exemptions from the provisions of the Act and that these be spelt out in s61(1)(j) and(k). There should be no retrospective approval of investment without significant penalty.
- That the residence criteria of s17(e)(i) be tightened with intention to reside in NZ being inadequate and approval conditional until permanent residency is gained.
- That requirements for substantial and identifiable benefits be reinstated in the Act and that their application be extwended to all investment classes.
- That any job creation that is predicted to flow from investment be specifically jobs for New Zealanders and NZ residents.
- That any new export markets predicted to arise as a result of investment do not lead to unfair competition with existing NZ exporters.
- That there be an independent regulator appointed to oversee the approval process, similar in nature to the parliamentary Commissioner for the Environment.
- That there be opportunities for public involvement in consideration of applications and in drafting of regulations.
- That data on the nature and size of foreign investment be made widely available to the public through a Government agency.
- The Pacific Institute of Resource Management would welcome the opportunity to be heard by the Committee in support of this submission. If there are to be hearings outside of Wellington, one of these may be preferable to us given our widely distributed membership.
My address, contact phone number(s) and email address are as follows:
Dr Cliff Mason
Pacific Institute of Resource Management
P.O. Box 12125,