The recommendations did not come as a surprise, because the guts of them had already been made public, courtesy of a leak a couple of months earlier.

Predictably Cullen’s July 20 press release was headed "Tougher protection for sensitive sites" and the media, by and large, unquestioningly brought that line. Don't get us wrong, we congratulate the Government in making it harder for foreigners to buy "iconic" land (note: not actually stop them buying, just to make it harder). That arises directly from sustained public campaigning about issues such as the sale of Young Nick's Head (in 2002), other coastal property and South Island high country stations.

But "iconic" land is a small part of the overall picture of rural land sales to foreigners (the vast bulk of which is forestry and farm land) and a very, very small part of the economy.

The fact is that company takeovers by transnational corporations, in all the sectors that constitute the guts of the New Zealand economy, total billions of dollars per year (not the tens of millions of "iconic" land sales) and the Government plans to make it even easier for those transnational corporate takeovers to proceed. That more than wipes out any gains made in the area of tightening up "iconic" land sales. Indeed, the latter is a mere sop. And even that alleged "tightening up" on some land sales is definitely more illusory than real (for instance, the proposals would not have stopped the highly controversial sale of Young Nick’s Head). Read the very interesting analysis of that aspect, by CAFCA committee member, Joe Hendren, that follows below.

Cullen's announcement means that we are no longer dealing with a review but with a proposed Bill. The Government has announced that it plans to introduce this Bill around September 2004, with the intention of it coming into law on July 1, 2005. There will be the opportunity for public submissions during the Select Committee phase.

• The threshold for official approval for transnational corporations to buy NZ companies will be increased from the current $50 million, to $100m. Interestingly, throughout all the voluminous Cabinet and other official papers released along with Cullen’s announcement, Treasury had recommended that the threshold be increased to $250m. Apparently, at the last minute, some of the Cabinet decided $250m was a bit high and pulled it back. We must be grateful for small mercies.

• To remove the current need for approval of foreign land purchases of less than five hectares in area and/or more than $10m in value.

• The recommendations cite NZ's obligations under the General Agreements on Trade in Services (GATS) and the free trade agreement with Singapore as inhibiting NZ's ability to set restrictions on foreign investment. Indeed the official papers say that the proposed new threshold for company takeovers by transnationals will become the benchmark for all future free trade agreements and the officials were anticipating that threshold would be $250m.

You can read the Cabinet and Treasury papers at http://www.treasury.govt.nz/release/fir/ I recommend that you do so, as it’s a fascinating exercise to see the ideological mindset in action.

OIC Scrapped; Corporate Threshold Raised 1000% Since 1999

The removal of the Overseas Investment Commission is no great tragedy in itself. CAFCA has always said that its job could be done by a monkey with a rubber stamp (and every issue of Watchdog provides graphic evidence of that). But its replacement agency will see a significant weakening of any oversight. By definition, Land Information NZ is experienced with land. But land sales are very much the smaller part of the much bigger picture, maybe totalling in the tens or hundreds of millions of dollars per year (at the very most). No disrespect to land sales, and the emotional response they generate from the NZ public, but things need to kept in perspective. They are simply a pimple on a pumpkin.

Company takeovers are where the foreign investment action is, totalling in the billions per year (recent examples being – ANZ’s takeover of the National Bank and Fairfax buying the INL media chain). There is no proposal for any new agency with any expertise in that field to be involved. Raising that threshold for company takeovers will remove all but the biggest of them from any scrutiny. Big chunks of the NZ economy will be bought and sold without any official oversight at all. Treasury estimates that the number of applications for corporate takeovers will drop from 20 per year to 12. That doesn’t sound like much, but that number belies the billions of dollars involved, which will now pass without scrutiny. And remember - until just days before the 1999 election, the threshold for company takeovers was just $10m. We urged the incoming Labour-led government to roll it back to that level. They have refused to do so and are now going to raise it to $100m (an increase of 1000% in less than five years).

The removal of the need for approval for foreign land purchases of less than five hectares in area and/or more than $10m in value removes the need for any scrutiny of central business district projects that involve land. What we've been saying all along about the dangers of NZ getting entangled in free trade agreements (whether multilateral, like GATS or bilateral, such as with Singpore) is made glaringly obvious. We lose the right to control foreign "investment" (which, in the vast majority of cases, is not investment at all but a simple takeover).

Of course, this further liberalisation of NZ’s already dangerously laissez faire foreign investment regime is not taking place in a vacuum. For example, running parallel to it is a Government review of the Resource Management Act (RMA), which just happens to be one of the laws that the transnational corporations (TNCs) and local Big Business have targeted for many years. In July 2004, 13 environmental groups wrote to the Prime Minister expressing their alarm at proposals such as ones to introduce a national interest clause to the Act (ironically, at the same time as the national interest has been progressively removed from the foreign investment laws) and to fast track major developments (all very reminiscent of Piggy Mulddon’s Think Big mega-projects of the 1970s and 80s). John Wilson, President of the Federated Mountain Clubs, said: "In simple terms, the Act ain’t broke and doesn’t need fixing. What it needs is forthright implementation and sharper accountability of those responsible at all levels" (Press, 15/7/04; "RMA review attacked", Sean Scanlon). That sounds very much like CAFCA’s critique of the foreign investment review. We urged the officials and Government to use the opportunity to toughen up the foreign investment regime, not weaken it further.

There are other players quietly assembling in the wings. July 2004 saw the launch (with Michael Cullen, no less, as the keynote speaker) of the New Zealand Council for Infrastructure Development (NZCID). And what does it want? Public-private partnerships (PPPs), to build and own roads and other infrastructure. This was a key part of the ideology of those in power throughout the 1990s, a project which got delayed by the defeat of National in 1999. But its rich and influential proponents haven’t gone away. They’re peddling PPPs as the answer to Auckland’s roading bottlenecks, for example. Naturally, they want the Government to change some laws. Which ones? Well, the RMA and what is described as the Green-influenced Land Transport Management Act.

Nobody should have any illusions that politicians will win this battle for us. As far as Labour is concerned, they are satisfied with the "concession" that the threshold for company takeovers was set at "only" $100m, as opposed to the $250m that Treasury and Cullen wanted. That’s a very old ploy, that one. State something truly outrageous as being your goal, then scale it back to something merely outrageous and hope that the public feels grateful. A couple of the Opposition parties have taken a stand on the matter. The Greens announced a petition to ban all land sales to foreign investors, and Co-Leader Rod Donald has also drafted a Private Member’s Bill to that effect. They want the corporate threshold returned to $10m and a national interest test to be applied. New Zealand First Leader, Winston Peters, who has been silent on this issue for many years, said: "All they’re doing is removing any rational impediment to foreign takeover of New Zealand companies. Why go out and follow the bogus arguments of foreign investment when, in fact, it doesn’t comply with foreign investment, it’s just takeover of New Zealand" (Dominon Post, 20/7/04; "Foreign investment rules to ease", Vernon Small). Peters also called for every takeover worth more than $10m to be scrutinised to see if it is in the national interest.

No, this battle will have to be fought out, at the grassroots, as usual. Over the past few months CAFCA has been pleased with the variety of groups that have expressed alarm at this liberalisation of the foreign investment regime, groups ranging from the Deerstalkers Federation to the Catholic Justice and Peace Office. Most media coverage has fallen for the Government line that it is tightening up controls on land sales; only a few have gone beyond that to look at the proposals to remove yet more TNC takeovers from any scrutiny. But at times like this, CAFCA is rediscovered by the media, because we’re the only group that specialises in this field. So we’ve done a flurry of media interviews, ranging from iwi radio stations to Morning Report, from network TV to business papers such as the Independent (which gave our views the greatest prominence of any paper). One journalist asked me to comment on an apparent assertion by Cullen that "CAFCA is a one-man band bordering on xenophobia". After I stopped laughing, I replied that at least he could have called us a two-man band.

Cullen, and the media, say that it’s a waste of time having any scrutiny of TNC takeovers, as none have been refused since the Muldoon government in the early 1980s. This is not an excuse for removing scrutiny. Firstly, it’s an indictment of the previous and current regime. Secondly, it’s an excellent opportunity for tightening up that regime. Look at some of the corporate criminals that have been allowed to set up business and wreak devastation in this country. If you want a handy summary, read the various Judges’ Reports for the annual Roger Award for the Worst Transnational Corporation Operating in Aotearoa/New Zealand (www.cafca.org.nz , follow the Roger Award links). In its first six years, it was won three times by Tranz Rail, for very sound reasons; read the latest, 2003, Judges’ Report, on Japanese forestry-processing TNC, Juken Nissho.