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

Greens: Russel Norman To Stand Down As Co-Leader

Green Party Co-leader Dr Russel Norman has announced today that he will stand down as leader at the party’s Annual General Meeting in May. Dr Norman will remain as Co-leader and retain his finance and climate change portfolios until the AGM.

“After nearly a decade as Co-leader, now is a good time to find a new challenge for myself, and to spend more time with my family” said Dr Norman.

“This is my ninth year as Co-leader and I think it’s time for a change. Now is a good time for new leadership for the Party. My replacement will start from a strengthened base and will have a full parliamentary term to establish himself in the role and take the Greens into government in 2017." More>>

 

Gordon Campbell: On The Eleanor Catton Rumpus

If anyone was in doubt about the accuracy of the comments made in India by Eleanor Catton, the reaction from some quarters here at home has gone a long way to proving her point… More>>

ALSO:

More Rent Assistance, Less State-Owned Housing: John Key Speech - Next Steps In Social Housing

"We are going to ensure that more people get into social housing over the next three years, whether that is run by Housing New Zealand or a community provider. The social housing budget provides for around 62,000 income-related rent subsidies a year. We are committed to increasing that to around 65,000 subsidies by 2017/18, which will cost an extra $40 million a year." More>>

ALSO:

The Future Of Work: Andrew Little - State Of The Nation 2015

In 2005 when I led the EPMU we worked together with Air New Zealand to find a way to keep engineering jobs that were heading overseas. A lot of these workers were people I’d known for years and they were facing not just losing their jobs but not being able to find the kind of work they do without going overseas. A lot of people were facing personal and financial upheaval.... More>>

ALSO:

Gordon Campbell: On The Sabin Case, The Pressures On Greece And (Songs About) Coyotes

Mike Sabin is a National MP, and the current chairman of Parliament’s law and order committee. Yet reportedly, he is being investigated by the Police over an assault complaint... However, the PM will not comment on any aspect of the story. More>>

ALSO:

Houses, ISIS, King (& Catton): PM Post-Cabinet Press Conference

The Prime Minister met with reporters to discuss: • Social housing, the Auckland housing market • The prospect of joining international forces to combat ISIS • David Bain’s compensation • The lowering of the flag for the King of Saudi Arabia's death ... More>>

ALSO:

Gordon Campbell: On Tomorrow’s Speeches By John Key And Andrew Little

The Key government has already kicked off the political year on a stridently ideological note, with Environment Minister Nick Smith choosing to lay all manner of sins at the door of the RMA. Tomorrow, the government will wheeling out its best salesman – Prime Minister John Key – to sell its plans for state housing… . More>>

ALSO:

Get More From Scoop

 

LATEST HEADLINES

 
 
 
 
 
 
 
 
Parliament
Search Scoop  
 
 
Powered by Vodafone
NZ independent news