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Consultation on overseas investment rules

Press Release – New Zealand Government

To grow our economy and lift productivity we need investment, both by New Zealanders and overseas investors. Overseas investment is welcomed where it supports New Zealanders wellbeing.Hon David Parker Associate Minister of Finance
Tuesday April 16, 2017 PĀNUI PĀPĀHO MEDIA STATEMENT
Less red tape, new national interest test focus of consultation on overseas investment rules
To grow our economy and lift productivity we need investment, both by New Zealanders and overseas investors. Overseas investment is welcomed where it supports New Zealanders’ wellbeing.

The Government has today launched public consultation on the second phase of its Overseas Investment Act reforms, which is aimed at cutting red tape and giving decision-makers the ability to consider the broader impact on New Zealand of potential investments. The consultation follows changes made in late 2018, which banned purchases of residential property by overseas persons and simplified forestry investments.

This second round of reforms is focused on reducing the Act’s complexity, to better support high-quality overseas investment, and ensuring investments are in the national interest, Associate Finance Minister David Parker said.

“To grow our economy and lift productivity we need investment – both by New Zealanders and by overseas investors. We know there is scope to simplify our overseas investment rules to ensure that New Zealand remains an attractive destination for productive investment.

“We’re looking at where we draw the line as to what constitutes a New Zealand owned or controlled company, and what information the government should request from investors to ensure they are of good character.

“The options also look at how decision makers could consider the broader effects of an investment, including whether to introduce a national interest test and whether there should be greater ability to consider national security, water, and Māori cultural values when assessing the impact of an investment.”

The Treasury has produced a consultation document outlining options for reform. The options aim to achieve a balance between supporting high-quality investment and ensuring governments have flexibility to manage any issues arising from overseas investment.

“The Government recognises that overseas investment is an important issue and we want to encourage feedback on the options,” said Minister Parker.

The Treasury will hold a series of public meetings throughout the country, including meetings with iwi and professional groups regularly involved in overseas investment.

The consultation document, related material and further information about the public meetings, as well as how to provide feedback, can be found here:https://treasury.govt.nz/overseas-investment-consultation

Background Q and As What is the Overseas Investment Act (OIA)?

The Overseas Investment Act sets out the rules for overseas investment in ‘sensitive assets’ in New Zealand. If an overseas investor wants to buy or invest in sensitive assets in New Zealand, they may need to apply for consent. The Overseas Investment Office (part of Land Information New Zealand) is responsible for assessing (screening) applications and, in some cases, Ministers make the final decision on whether consent is given.

What are sensitive assets?

Sensitive assets include some land (including residential property and non-urban land over five hectares), significant business assets (generally those worth more than $100 million) and fishing quota.

Why does New Zealand need foreign investment?

Overseas investment can help grow New Zealand businesses and increase productivity, and thereby increase our living standards. Overseas investment can directly benefit individual businesses, companies and communities through things such as job creation, access to new technology and international export markets.

Why does New Zealand need an Overseas Investment Act?

Overseas investment can raise community concerns, impose direct costs and have potential risks. For example, it could conflict with some people’s view that land with high environmental, productive or cultural value should be owned and controlled by New Zealanders. It may also raise economic risks if it involves infrastructure with monopoly characteristics. The Overseas Investment Act recognises that it is a privilege for overseas investor to own or control sensitive New Zealand, and therefore requires investments in these assets to meet certain criteria before they can proceed.

Why does the Act need changing?

Some of the Overseas Investment Act’s rules for screening investment applications may be overly complex and time consuming, and may be discouraging investment New Zealand needs. At the same time, some of the rules do not allow the government enough discretion to decline applications that may not be in New Zealand’s national interest.

What are the reforms focused on?

The reforms are focused on achieving a balance between supporting high-quality overseas investment by improving the process for investors and cutting unnecessary red tape with ensuring investments are in New Zealand’s national interest. To do this, the Treasury have compiled a range of options for submitters to consider. The options explore issues related to: what is screened, who is screened and how screening occurs and how a balance can be achieved between productive investment and flexibility for governments to manage any risks arising from overseas investment.
Some of the issues explored include: • Where to draw the line as to what constitutes a New Zealand owned or controlled company and when it should be considered an overseas company that requires consent to invest in sensitive assets • What information the government should request from investors to ensure they are of good character • How decision makers could consider the effects of an investment in a more holistic way, including whether to introduce a national interest test and whether there should be greater ability to consider national security, water, and Māori cultural values.

The Summary Document provides information on each option detailed in the Consultation Document, and is available at the following link: https://treasury.govt.nz/overseas-investment-consultation.

How can I be involved?

You can provide feedback by: • attending a public meeting or hui, and/or • completing a written submission and either emailing it to overseasinvestment@treasury.govt.nz or posting it to: o Overseas Investment Act Reform o The Treasury o PO Box 3724 o Wellington 6140 What’s the deadline for submissions?

Submissions close at 5 pm, 24 May 2019.

What’s the timeframe for the review?

Legislation to implement the review’s recommendations is planned for passage by mid-2020.

Who is being consulted?

The Treasury will hold a series of public meetings throughout the country, including meetings with iwi and professional groups regularly involved in overseas investment.

Where can I find more information about the Overseas Investment Act?

The Overseas Investment rules can be found in: • Overseas Investment Act 2005 • Overseas Investment Regulations 2005 • Sections 56 to 57J of the Fisheries Act 1996

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