Govt review risks widening FDI gap with Australia
Amy Adams - Finance
17 October 2018
The Government is creating more uncertainty for foreign investors with another review of the Overseas Investment Act, a move that may see New Zealand fall further behind Australia in attracting capital, National’s Finance spokesperson Amy Adams says.
“The Government changed the Act just two months ago, banning overseas buyers of existing homes and signalling it doesn’t want foreign capital for infrastructure like prisons, hospitals and schools. Now it already wants another crack at it to bring in further restrictions including a ministerial right of veto and a loosely defined national interest test.
“The terms of reference released by David Parker acknowledge that the current regime is deterring foreign direct investment (FDI). Unfortunately the Government is now indicating it wants to insert more uncertainty and political interference into the process.
“New Zealand already has the most restrictive screening regime in the OECD. Any further signals we are closed for business will see that capital find a home elsewhere. Foreign direct investment amounts to about $5 billion, or 1.7 per cent of GDP, which is almost half the rate of FDI in Australia.
“The shallow pool of domestic capital in New Zealand makes overseas funding an essential ingredient in New Zealand’s economic prosperity, helping bankroll everything from roading and construction to healthcare, farming and utilities.
“New Zealand’s total stock of foreign investment stood at $104 billion last year, meaning it is equivalent to more than a third of our gross domestic product. It helps drive economic growth and innovation, and creates jobs for ordinary New Zealanders.
“The Government needs to realise that New Zealand competes with every other small economy for overseas funds and every one of them puts out a welcome mat. Our screening regime already has checks and balances built in and doesn’t need further ideologically driven meddling.
“National believes in an economic framework that supports growth because that’s the best way to provide opportunities for New Zealanders to get ahead.”
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