National Liberalised Foreign Investment
Rules In Its Last Days

CAFCA Calls On Labour To Reverse Them
Alliance Tackles OIC

CAFCA has learned that one of the last acts of the defeated National government, done without fanfare, was to liberalise the rules governing foreign investment, specifically those involving the level at which foreign investors require approval from the rubber stamp Overseas Investment Commission (OIC). This was briefly covered in Watchdog 92. To quote from the Commission’s Website:

"Cabinet has recently approved amendments to the Overseas Investment Regulations 1995. These amendments were gazetted on 11 November 1999 (remember, the election was on November 27. Ed.) and are due to come into effect on 9 December 1999 (just before the new Government took office. Ed.). There are two main amendments:

  • The threshold at which non-land investments require consent under Regulation 5, has been increased from $NZ10 million to $NZ50 million; and
  • Regulation 9 has had three further types of transactions added to it.

The effect of this is that the following three types of transactions are exempt from requiring consent under Regulation 8

  1. The acquisition of some parcels of urban land which are over 5 hectares in area, do not include sensitive land and are not used for farming:
  2. The acquisition of forestry rights and forestry cutting rights; and
  3. The acquisition of easements that confer rights to transmit or convey services, such as water, electricity and gas." …And: "The Overseas Investment Commission now has responsibility for administering the overseas persons provisions of the Fisheries Act 1996. This change came into effect on 1 October 1999…"

This increase of the consent threshold, from $10m to $50m, will have the effect of allowing many more foreign takeovers without public scrutiny, and without even the minimal oversight of the OIC. What’s more, National loosened the regulations even further and gave the OIC new powers (in fishing).

This major liberalisation of foreign investment laws, done quietly just weeks before the election by a National government that knew it faced imminent defeat, is scandalous, and we called upon the new Government to reverse it as a matter of urgency. We wrote to all Alliance and Green MPs, in the very first days after the election, alerting them to this situation and urging its reversal. To date, we have received a number of sympathetic replies from Alliance MPs, saying that they are taking it up with Labour, their senior partner in the coalition. Greens co-leader, Rod Donald, raised it with the OIC via the Finance and Expenditure Select Committee.

He received an interesting reply (18/2/00): "The effect of the changes to the Regulations is as follows: The increase in the non-land threshold is predicted to result in a 19% reduction in the number of applications and a 24% reduction in the value of consents". Translated, that means, expect a substantial lessening in the amount of information made publicly available about the extent of foreign control of Aotearoa. The OIC letter also had one intriguing admission – the exemption of the parcels of non-sensitive urban land "was made to satisfy Organisation for Economic Cooperation and Development (OECD) officials about New Zealand’s compliance with international commitments" (ibid). We are waiting to hear from the OIC just what are these international commitments, and who were these OECD officials.

We also raised a different but related issue with the OIC. We pay it $150 per year to supply us with the monthly decision sheets. We wrote and asked for a reduction in the charge, in light of its reduced workload. That got a frosty reply - "The Commission has no discretion to reduce or vary the fees…Furthermore the Commission does not seek an increased charge for months where there are a large number of decision sheets. The position is that recipients continue to receive each month a copy of all of the decision sheets produced by the Commission"(OIC letter to CAFCA, 17/2/00). So there.

CAFCA’s Political Lobbying

Fundamentally, we urge the Labour/Alliance government to give priority to rolling back New Zealand’s status as a mere branch office of transnational corporations. Now there’s a thought. We have been giving a much higher priority than usual to political lobbying since the 1999 election. For example, in March 2000, Murray Horton made a flying visit to Parliament to dine with and brief the Greens caucus (specifically, co-leaders Jeanette Fitzsimons and Rod Donald, and MPs Keith Locke and Sue Bradford, plus staff). It was a very productive meeting (the briefing paper is available from CAFCA. Ed.). A briefing of the Alliance caucus was scheduled for April (Murray spoke to Christchurch MPs, candidates and activists before the election).

Things are happening within the Alliance. In March 2000, the Evening Post reported (16/3/00; "Foreign investment under fire") that Sandra Lee, Alliance deputy leader and a senior Cabinet Minister, was preparing a paper promoting changes to the OIC, to take to Jim Anderton, Alliance leader and Deputy Prime Minister. She wants a broader mix of people on the OIC; and she wants it to properly consider the national interest when approving foreign investment. "They have to consider matters of national importance but from what I’ve seen, they take a pretty scanty approach to ensuring themselves that the blocks of land actually don’t have national significance" (ibid). She has called for a review of the November 1999 decision by which National delegated decisions on land and fishing quotas to the OIC. She is particularly critical of the fast speed at which the OIC approves applications (an average of two days, in January 2000). "A clear message has been to them that ‘you just simply rubber stamp this’" (ibid).

So there are some signs of hope on the horizon. We live in interesting times.

Foreign Control Watchdog, P O Box 2258, Christchurch, New Zealand/Aotearoa. December 1999.


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