Overseas Investment Laws and Policies

Published: Fri 17 Mar 2000 05:41 PM
- Murray Horton of CAFCA
Overseas Investment Laws and Policies
Firstly, we congratulate the Greens on having articulated a progressive policy on foreign control, as outlined in your booklet “Thinking Beyond Tomorrow”.
There have been a number of Overseas Investment Amendment Acts, Regulations and Ministerial instructions given to the Overseas Investment Commission (OIC) since its creation in 1973. Their cumulative effect has been to weaken any form of effective controls and oversight. For instance, “national interest” is no longer a factor to be considered in approving foreign investment, except that involving land or fishing quota. Detailed analyses of several of these Acts are available from CAFCA (NB: these submissions date back several years, and often do not cover the final versions of these Acts).
You could call for a freeze of, and an inquiry into, the whole body of laws that directly cover foreign investment. There are a raft of secondary laws to back them up, such as various tax measures.
Just before the 1999 election, the threshold at which OIC consent is required was increased from $10m to $50m. This needs to be drastically scaled back – in 1973, it was $500,000; then $2m; David Caygill increased it to $10m.
The OIC – we believe that it needs to be shaken up, subject to the same sort of scrutiny as WINZ or TVNZ. It needs new appointments, maybe new permanent staff, and a new emphasis – ie scrutinising carefully, and regulating, foreign investors, with the facilities, staff and political will to do follow up investigations and enforcement. Even under existing laws, especially those relating to land and fishing quota, there is a lot more it could do, other than be a rubber stamp. The Ombudsman has no jurisdiction over the actual workings of the OIC (as opposed to its official information function). There is no effective oversight of the OIC itself. There is no role for public submissions or consultations.
A detail of the Greens own policy needs correcting. According to the Press (10/12/99), your policy says: “Companies which are more than 49% overseas owned should not be allowed to own land here”. Since the original 1973 Overseas Investment Act, the legal definition of overseas ownership has been anything above 24.9%. You need to get your policy into line with what has been law for nearly 30 years.
Specific things that the Greens can do:
- Act on CAFCA’s call for a Select Committee Inquiry into, and the seizure of, the NZ assets of the Suharto family and cronies. Such an inquiry would focus public attention on the “good character” or lack thereof of foreign investors approved by the OIC.
- Toughen up the “good character” requirement that the OIC currently rubberstamps. Insist that the OIC actually investigate it. Look to US states which have “bad boy” laws governing whether or not they will allow corporations to invest there. “Thinking Beyond Tomorrow’s” insistence that land ownership remain with NZ citizens or permanent residents fits squarely with this. Enforce rigorously the existing national interest criteria: require evidence of claims, change balance of proof for approval (currently “criteria applications must meet should be interpreted in a manner which facilitates rather than impedes investment” and “proposals that satisfy the investment criteria should be approved unless good reason exists to refuse them” – letters from Birch and Luxton to Chairman of OIC, 3/3/99).
- Actively support the annual Roger Award for the Worst Transnational Corporation in NZ. The 2000 Award will be announced in Wellington (in early 2001). Think about one of your MPs being a judge/guest speaker at the announcement. Get the announcement made at or in Parliament. Help publicise it.
- “Thinking Beyond Tomorrow” says: “We support the international move for a charter of responsibilities for international investors”. CAFCA offers its Corporate Code of Responsibility as a working model. This is an excellent basis for new, toughened laws regulating foreign investors in NZ. It should also apply to contracts accepted by central and local government.
There are a number of other areas which need specific legislative attention:
- the ownership provisions of the 1996 Fisheries Act need to be brought into force. - local ownership/control of Air New Zealand needs to be enforced. - restrictions on overseas ownership of NZ news media need to be restored. - the 1998 Electricity Reform Act had a devastating impact on local control of electricity supply
Underpinning all this is the need for information – the 1982 Official Information Act and its various amendments need attention. For example, it hasn’t kept pace with the corporatisation revolution – whole sectors have disappeared from its purview; it has a prohibitive scale of charges, especially for electronic media such as floppy disc; the balance of public interest for disclosure has too little weight.
You can help us. The Greens can shed light on the subject by asking Questions under privilege – once or twice, in recent years, the libel laws have prevented us and the media pursuing specific foreign investment projects.
International trade agreements – CAFCA and GATT Watchdog hold volumes of detailed information on GATT/WTO/APEC. We call for a total freeze on all NZ’ s international trade agreements, while a thoroughgoing review and public consultation is held on our nation’s involvement in “free trade”. We need an independent cost/benefit analysis of the practical effects of “free trade” on New Zealand. We absolutely don’t need yet more trade pacts with the likes of Singapore, ASEAN or the US. The slogan at the WTO’s Seattle Millennium Round protests was: “No New Round, Turn Around”.
The Greens need to emphasise the environmental disadvantages of WTO membership and “free trade” in general.
You need to formulate policies that would deal with problems such as there being no tariffs in place to protect proposed new regional development.
The previous Government made specific commitments to APEC under NZ’s Individual Action Plan – eg that ACC would be privatised and SOEs continue to be sold. The present Government needs to be pressed into revealing what are its IAP commitments to APEC.
Labour needs to be reminded of its election promises that run foul of various international commitments – the General Agreement on Trade in Services (GATS), for instance, restricts things such as the proposed Industrial Development Policy and NZ quotas in broadcasting; both WTO and CER severely constrain safe food policies.
The above are the laws and policies that directly relate to foreign investment and globalisation. There’s a whole plethora that indirectly relate, being aimed at “making the NZ economy attractive to foreign investment” – the Employment Contracts Act is but one. Think of any area of social policy and you’ll run into that mantra.
Above all, we need you to speak out and say that the WTO is bad for the world and open foreign investment solves nothing. You can be very influential in changing the climate of opinion on these matters, to break down the consensus of silence.
Regarding the SIS, which as been given a whole new brief to investigate opponents of the prevailing economic orthodoxy, we recommend that it be scrapped; that the GCSB be abolished and its Tangimoana and Waihopai spybases be closed; that NZ quit the covert UKUSA Agreement which dictates our junior membership in the Cold War Western intelligence club; and that Christchurch Airport, the site of an American military base since the 1950s, be demilitarised.
We are happy to supply considerably more detailed material on all of the areas on which we’ve briefly touched.
CAFCA Campaign Against Foreign Control of Aotearoa PO Box 2258, Christchurch email:

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