Treasury papers released yesterday reveal the extent of the government's change of heart during its review of overseas investment rules.In July last year, two months after the review began, Finance Minister Bill English made a number of proposals to his C
Treasury papers released yesterday reveal the extent of the government’s change of heart during its review of overseas investment rules.
In July last year, two months after the review began, Finance Minister Bill English made a number of proposals to his Cabinet colleagues, in alignment with advice from Treasury.
The most significant proposal, with regard to sensitive land, was to remove the requirement that foreign investors prove a substantial and identifiable benefit to the NZ economy.
Instead, prospective investors would simply have been required to sign a certificate stating that they were aware of sensitive (cultural and heritage) features on the relevant land, and commit to providing adequate public walking access.
Mr English was satisfied that “commercial incentives, such as the incentive to generate profits,” were sufficient to align an investor’s interest with the national interest.
He acknowledged that ministers would have less discretion to turn down applications, but said that this reduced flexibility was outweighed by gains in simplicity and predictability for investors.
The Department of Conservation and Ministry of Agriculture and Forestry (MAF) were strongly opposed to the proposed changes to the sensitive land test.
MAF expressed concern that the change would result in a loss of ‘negotiating coin’ during future free trade and economic integration agreements.
Mr English later submitted Cabinet papers recommending greater protections for sensitive land, with the government finally settling on two new tests providing for greater ministerial flexibility when considering applications.
Treasury has advised that the new tests - 'economic interests' and a mitigating factor to ensure New Zealand involvement in the investment - have not increased certainty for foreign investors and could be open to legal challenge.
