NZ business assets and land are increasingly being acquired by i) very large listed global corporations and ii) by private equity funds. The ultimate beneficiaries are anonymous shareholders, probably changing constantly.  Their interest (and the responsibility of those managing the corporation or fund) is the creating of “shareholder value” from financial transactions. We cannot expect these ultimate beneficiaries to be knowledgeable or to share the same concerns as NZ citizens and residents about any impacts on our economy, environment, social values and Treaty responsibilities. 

For this reason, we need the Overseas Investment Act to include criteria that allow Ministers and officials to make decisions for us that will reflect those concerns. I suggest the following: “That consent should not be inconsistent with or detract from the achievement of goals and purposes of environmental, conservation or climate change legislation, or the protection of nga taonga katoa under the Treaty of Waitangi”.

Several consents in the past two years have put land or substantial business assets into the ownership of companies created just the week before. Other consents have been required because an extra “holding” layer is being added to a corporate group structure. These holding companies seem to be about location for tax advantage and insulation from accountability.  

Buyers’ Identities Often Hidden

From the Decision summaries, all we know about these shareholders or private equity investors is their “nationality” - in places like the Cayman Islands, Virgin Islands, etc. - or that the registered address is an Amsterdam Airport building with 760 other companies.  We need to think about overseas investment in New Zealand in conjunction with Treasury and IRD’s current work towards global tax reform.

The “counterfactual” approach now being applied to overseas purchases of land should also be applied to substantial business interests: will the overseas applicant bring more to the table than a local purchaser would? Relatively few of the OIO Decision summaries suggest that there will be any substantial investment in development over and above the cost of purchase. And in two years of consents, I have seen just one clearly “greenfield” business development.

This may be because of the extremely cryptic nature of the OIO Decision summaries. The OIO currently seems more open and communicative, making price information available when it is no longer commercially sensitive, and responding to OIA requests. But the short formulaic summaries make it difficult for the public to understand the pros and cons of different consents. 

Often the full information provided to or obtained by the OIO includes data on local resources and local environments that is public (or publicly funded) and could be made available in the summaries. The OIO is now required to monitor compliance.  This role will be much more cost-effective if local people, business journalists and organisations like ours are given fuller information in consent summaries.