No Reason For Rushing ‘urgent’ OIA Changes Through Parliament
Changes to the Overseas Investment Act deserve more time for scrutiny, particularly when thousands of Kiwi business teeter on the edge of bankruptcy, according to the New Zealand Initiative.
The Government tabled the Overseas Investment (Urgent Measures) Amendment Bill last Thursday and put it in front of the House for its first reading on the same day.
The Bill is being rushed through Parliament by asking for all public submissions to be delivered by 4 pm today (18 May) – giving the public only two full working days.
A policy report by New Zealand Initiative senior fellow Bryce Wilkinson, called FDI: The fallacy of urgent measures, said this is simply not enough time anyone to thoroughly understand the proposed amendments to the OIA.
He said the new Bill has many concerning alterations, but given the restricted timeline of the Bill, Wilkinson’s report highlights a handful of the most egregious.
These include: new powers for the Minster to prohibit any overseas investments which may be “contrary to the national interest”; dropping the OIA threshold from $100 million to zero dollars; and compelling the Government to review any change in equity ownership greater than 25%.
“The Government has made no public interest case for adopting these measures which will cause unnecessary business failures and job losses. This is contrary to the its professed objectives outlined in Budget 2020,” Wilkinson said.
The Government’s reasons for urgently pushing through the amendment to avoid overseas interests buying up large swathes of Kiwi businesses at “bargain prices” as a result of the Covid-19 lockdown.
However, Wilkinson said this logic is flawed because it creates two values for New Zealand assets: the market value and “the Government’s value.”
Instead, he said the principle of mutual benefit between a willing buyer and willing seller is the only meaningful yardstick for finding the true value of an asset.
“When prices are low, business owners require no protection – and no law is needed to stop people selling shares, houses, cars or any other asset – competing buyers can do that job.
“Moreover, politicians have neither the incentive nor the knowledge to assess whether an asset’s market price is too high or too low,” Wilkinson said.
Blocking foreign direct investment (FDI) may be justified in cases where New Zealand’s national security or public health is in jeopardy. But Wilkinson said these situations are rare.
“In those cases, the burden can be borne by the taxpayer. To impose that cost on the thwarted seller is manifestly unfair and opens the way to majoritarian exploitation.
“The reality is, New Zealand needs the technology, expertise and access to overseas markets this FDI can bring. It would be harmful to everyone to put up more barriers here,” he said.
Wilkinson said the public needs more than two full working days to unpack the OIA changes to see if they truly reflect what the country needs right now.
Submission on Overseas Investment (urgent measures) Amendment Bill
See attached for Policy Point: FDI Unjustified Urgency