Gordon Campbell | Parliament TV | Parliament Today | Video | Questions Of the Day | Search

 


Government welcomes investment agreement

Hon Bill English
Minister of Finance
16 February 2011

Govt welcomes investment agreement

A new Investment Protocol under the Closer Economic Relations (CER) trade agreement further strengthens the investment relationship between Australia and New Zealand, Finance Minister Bill English says.

Australian Prime Minister Julia Gillard and New Zealand Prime Minister John Key signed the Investment Protocol in Wellington today.

"New Zealand and Australia have one of the most open bilateral economic and trade relationships of any two countries. This relationship is underpinned by CER, which is the oldest and most comprehensive set of trade access arrangements that either country enjoys," Mr English says.

"The Investment Protocol builds on existing goods and services agreements, and aligns CER with other modern, high-quality free trade agreements.

"Australia is both the single largest source of direct foreign investment in New Zealand and is the largest overseas destination for New Zealand investment.

"The addition of investment to CER will cut red tape and compliance costs for investors on both sides of the Tasman."

Under the Investment Protocol, Australian and New Zealand investors will benefit from increases in the screening thresholds above which foreign investments in business assets require regulatory approval.

For New Zealand firms investing in Australia, the screening threshold will increase from A$231 million to A$1.005 billion. For Australian firms investing here, the threshold will increase from NZ$100 million to NZ$477 million. These thresholds will be updated annually based on changes in GDP.

The increased screening thresholds apply only to investments in significant business assets. The screening thresholds for investments in sensitive land and fishing quota are unchanged.

Further information about the Investment Protocol, including the full text, and CER is available on the website of the Ministry for Foreign Affairs and Trade at www.mfat.govt.nz.

Closer Economic Relations Investment Protocol - Q&A

What are the main advantages of the Protocol?
Once in force, the Protocol will mean that New Zealand investors seeking to invest in Australian business assets will:

• Be able to make larger investments before they hit the monetary screening threshold and are required to seek investment approval from Australia’s Foreign Investment Review Board (FIRB).
• Be treated equally as well as Australian investors and at least as well as any other foreign investors. (Any exceptions to this have been clearly specified in the Protocol);
• Have more certainty that their investments will be protected and will not be treated unfairly.

What are the new screening thresholds?
The new screening threshold for New Zealanders investing in business assets in Australia will increase to A$1.005 billion (up from A$231 billion). The new threshold for Australians investing in significant business assets in New Zealand will increase from NZ$100 million to NZ$477 million.

Are Australian investors currently subject to the same rules under the Overseas Investment Act as other foreign investors?
Yes, Australian investors are currently subject to the same rules as all other investors. That will continue to be the case. However, once the Protocol takes effect, Australian firms will enjoy a higher monetary screening threshold for investments in “significant business assets” than other foreign investors.

What are investments in 'significant business assets'?
They are non-land investments, such as shares, plant and equipment, which involve a 25 per cent or more ownership stake in business assets worth NZ$100 million or more. Once the Protocol takes effect the screening threshold will move to NZ$477 million. For example a NZ$125 million investment in a NZ$500 million company would require approval, as the investment crosses the 25 per cent ownership threshold in a company worth more than NZ$477 million.

Does the Investment Protocol affect investments in sensitive land or fishing quota?
No. Australian investors face the same rules as everyone else under those categories. In addition, if an overseas investor wishes to invest in a significant business asset that also includes sensitive land and/or fishing quota, the investment must be screened.

Will the most-favoured-nation provisions in the FTAs that New Zealand has with other countries mean that investors from those other countries will also be entitled to the benefits of the Protocol?
No. All of our FTAs include provisions that mean that we are not obliged to extend most-favoured-nation treatment with respect to obligations included in pre-existing FTAs. Because the Investment Protocol forms part of the CER arrangements, New Zealand’s very first comprehensive FTA, it is covered by this protection.

When do the Protocol and new screening thresholds come into effect?
Once Australia and New Zealand have both completed processes to establish the changes in legislation or regulation.

Does this mean that New Zealand can’t introduce any policies that might affect Australian investors in New Zealand business assets?
No. Provisions in the Protocol preserve New Zealand’s ability to take measures that could affect investors for a range of purposes. These include fulfilling obligations under the Treaty of Waitangi, to protect human, animal or plant life or health, or to manage a balance of payments crisis. In addition, we retain flexibility to adjust the criteria and factors - under existing investment categories - that must be taken into account when we look at investment applications.

Will the Protocol make it easier for Australian investors to buy New Zealand State Owned Enterprises, if the Government adopts a mixed-ownership model for certain SOEs?
In line with the tests set out by the Prime Minister in his first speech of the year, the Protocol includes a specific provision which preserves the right of the Government to give preference to New Zealanders with respect to any share sales in SOEs [Reservation II-NZ-4].

When was the Protocol negotiated?
Negotiations were announced in February 2005 (by then Finance Minister Michael Cullen and then Australian Treasurer Peter Costello) and were concluded in June 2010.

Where can I find the text of the Protocol and additional information about the Protocol?
The full text of the Protocol will be available on the website of the Ministry of Foreign Affairs and Trade, www.mfat.govt.nz. Copies of a brochure providing an overview of the Protocol, and the National Interest Analysis of the Protocol are also available on the MFAT website.

ENDS

© Scoop Media

 
 
 
 
 
Parliament Headlines | Politics Headlines | Regional Headlines

Gordon Campbell:
On The Team Behind Trump's Throne

Forget the Putin factor. Daily, the team of charlatans, bigots and stunningly ignorant crackpots that Trump is appointing to head key federal agencies is just as alarming. These are positions with vast power and budgetary discretion over policies that stand to affect tens of millions of vulnerable Americans. Sad! More>>

 

Gordon Campbell: On Bill English, Abroad

If David Cameron was the closest thing John Key had to a political mentor, their successors also share a whole lot in common. Theresa May and Bill English were both propelled into the top jobs as the result of unexpected resignations, and without much in the way of credible competition from their colleagues... More>>

ALSO:

Pike River: Labour Bill To Override Safety Act For Mine Entry

“Bill English has been hiding behind the legal excuse that any attempt to re-enter the mine to recover the bodies might place the mine’s owner, Solid Energy Limited, and its directors in breach of the Health and Safety at Work Act 2015." More>>

ALSO:

Gordon Campbell: On Populism And Labour 2017

For many people on the centre-left, populism is a dirty word, and a shorthand for the politics of bigotry. In this country, it has tended to be equated with the angry legions of New Zealand First. Who knew they were not just a reactionary spasm, but the wave of the future? More>>

Oxfam: 30% Of NZ Owns Less Wealth Than Our Two Richest Men

The research also reveals that the richest one per cent have 20 per cent of the wealth in New Zealand, while 90 per cent of the population owns less than half of the nation’s wealth. The research forms part of a global report released to coincide with this week’s annual meeting of political and business leaders at the World Economic Forum in Davos, Switzerland. More>>

ALSO:

Hospitals: Resident Doctors Set To Strike Again

Despite discussions between the DHBs and NZRDA over safer hours for resident doctors progressing during the last week, the strike planned for next week appears set to proceed. More>>

ALSO:

Not So Super Fund: More Burning Ethical Questions For Steven Joyce

Greens: Radio New Zealand reported this morning that the New Zealand Superfund has $77 million invested in 47 coal companies that the Norwegian Government’s Pension Fund – the largest sovereign fund in the world – has blacklisted. More>>

Activism: Greenpeace Intercepts World’s Biggest Seismic Oil Ship

Greenpeace crew have made contact with the world’s biggest seismic oil ship after travelling 50 nautical miles on two rigid-hulled inflatables off the coast of Wairarapa... Greenpeace radioed the master of the Amazon Warrior to deliver an open letter of protest signed by over 60,000 New Zealanders. More>>

ALSO:

Gordon Campbell: Why Tax Cuts In 2017 Would Be A (Proven) Bad Idea

Ever since the world fell prey to the mullahs of the free market in the 1980s, no amount of real world evidence has managed dispel one key tenet of their economic faith. Namely, the idea that if you cut income taxes and taxes on small business, a wave of individual enterprise and entrepreneurial energy will thus be unleashed, profits will rise and – hey bingo! – the tax cuts will soon be paying for themselves ... More>>

Get More From Scoop

 

LATEST HEADLINES

 
 
 
 
 
 
 
 
Parliament
Search Scoop  
 
 
Powered by Vodafone
NZ independent news