Hell Freezes Over
Treasury Consults CAFCA On Government's Review Of Overseas Investment Act
- Murray Horton
Something unprecedented happened in October 2018. Treasury - which has never contacted CAFCA about anything in our 40+ years of existence - contacted us and asked if we'd like to be consulted as part of the "engagement process" of the Government's second stage review of the Overseas Investment Act (Stage 1 became law that same month).
I refer you to our press release “New Overseas Investment Amendment Act. CAFCA Says Don’t Expect Much And You Won’t Be Disappointed”, 16/8/18, http://canterbury.cyberplace.co.nz/community/CAFCA/press-statements/new-overseas-investment-amendment-act.html). The initiative came from Treasury (and the Government, I’d imagine), not from CAFCA. It came to us.
Before we get too excited here, it's stating the obvious to say that Treasury and the Campaign Against Foreign Control of Aotearoa have radically different views on foreign investment. Nor is the Government proposing anything too drastic, certainly nothing to make the chronically nervous business sector in need of a lie down. The tone of the material announcing the review is that the aim is to make the Overseas Investment Act easier to use - CAFCA considers that it's too easy already and needs significant tightening up. And I have no illusions about “consultation”. I was a railway worker during Rogernomics and was one of the many thousands “consulted” out of a job.
Nonetheless, CAFCA was happy to be consulted, (for the sheer novelty value, if nothing else) and I spent 30 minutes on the phone with several Treasury people. We were all on our best behaviour and not once did any of them succumb to exclaiming: "You want to make the country like North Korea, don't you?" (they'll happily leave that to Mike Hosking and his ilk).
Key Points
I drew heavily on CAFCA's submission (written by Bill Rosenberg) on what became the 2005 Overseas Investment Act, specifically the recommendations. It is still extremely relevant and informative. It is online at http://canterbury.cyberplace.co.nz/community/CAFCA/OIReview/2005/CAFCA%20Submission%20compact.pdf. The recommendations span from page 35 to page 44. At the end Treasury asked me what three or four main points would I want to stress. I told them:
- A national interest test (which is mentioned in the material from the relevant Minister, David Parker).
- No increase in the $100m threshold (only transnational corporate takeovers above that sum require the involvement of the Overseas Investment Office - OIO); indeed, it should be reduced to $10m (which is what the threshold was 20 years ago),
- The oversight of the whole foreign investment regime should be taken off the OIO (which is part of Land Information NZ) and undertaken by a dedicated Regulator, one with the same independent status and statutory powers as the Parliamentary Commissioner for the Environment.
- The whole "good character" part of the Act needs to be tightened up and defined. It is currently only applicable to individuals, including those owning and/or controlling companies. It is not applicable to the companies themselves.
I also gave Treasury the views of the three CAFCA members – Linda Hill, James Ayers and Bill Rosenberg - who, separately, have been responsible for analysing and writing up all the monthly Decisions of the Overseas Investment Office and its predecessor, the Overseas Investment Commission, for the past 30 years. Linda is CAFCA’s current OIO expert. Here is what she wrote (the title is mine).
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