National interest test added to overseas investment rules

The Government is delivering on its promise to protect New Zealanders’ interests by applying a new national interest test to the sales of our most sensitive and high risk assets to overseas buyers.

Associate Finance Minister David Parker said under current Overseas Investment Act rules, assets such as ports and airports, telecommunications infrastructure, electricity and other critical infrastructure are not assessed through a national interest lens.

“We are introducing a number of new powers, consistent with global best practice, to protect New Zealanders’ best interests in such important – often monopoly – assets,” David Parker said. 

Responding to concerns about overseas investment in water bottling, the Government will also require consideration of the impact on water quality and sustainability of a water bottling enterprise, when assessing an investment in sensitive land.

The changes follow last year’s reform that generally banned foreign buyers from purchasing residential homes. That policy has been a huge success. New Zealanders now have a fairer shot at buying a home.

A “call in” power will apply to the sale of our most strategically important assets, such as firms developing military technology and direct suppliers to our defence and security agencies.  This will apply to assets not currently screened under the Act.

“The power would only be used to control those investments that pose a significant risk to our national security or public order,” David Parker said.

“These tests could also be used to control investments in significant media entities where these are likely to damage our security or democracy.

“These powers will be used rarely and only where necessary for protecting New Zealand,” David Parker said.

Enforcement powers are also being improved.  The maximum fixed penalties for not complying will rise from $300,000 to $10 million for corporates.

“Provisions of an existing Ministerial directive will be written into the Act, which requires overseas investments in farmland to show substantial benefit to New Zealand, by adding something substantially new or creating additional value to our economy,” David Parker said

“The reforms will apply to all overseas investors, irrespective of where they are from.

“The Government continues to welcome high quality investments that support our plan for a productive, sustainable and inclusive economy.”

So it is cutting red tape, including setting specific timeframes to give investors greater certainty and exempting a range of low risk transactions, such as some involving companies that are majority owned and controlled by New Zealanders.

A Bill implementing the changes will be introduced in early 2020.