New Zealand’s screening regime for foreign investment in sensitive land conjures images of a madman waving a big stick in a public place. He is as likely to hit his own head as anyone else’s, but it is bad either way.
It piles absurdity on absurdity.
First on my list of self-inflicted harms is the economic madness of the Overseas Investment Act’s refusal (section 17(2)) to recognise that the primary benefit to New Zealand from selling land to a foreigner is the enhanced price paid. Why sell it to them otherwise?
Imagine a government banning anyone from selling their labour unless they could prove to a regulator that the non-wage benefits exceeded the costs of forgone leisure time. Yet that is the OIA’s evaluative framework.
Second is the ridiculously broad definition of what constitutes sensitive land. The government’s recent and opportunistic decree that all residential land is sensitive takes it to an extreme. Sensitive to whom? Someone with extreme xenophobia?
Third is the broad definition of an overseas person. Any company with 25% or more overseas ownership is an overseas person. Government and iwi-controlled organisations can be overseas persons. Mercury, Meridian and Genesis Energy too. Our major banks have been around for more than 100 years, but they can’t be trusted with buying ‘sensitive’ land freely. Neither can Fletcher Building, Ryman Healthcare or Metlifecare.
Making long-standing New Zealand-based companies apply for approval to purchase land now deemed sensitive but is a standard aspect of their business is wasting everyone’s time and money. Whose interests are served by this?
The absurdity of the law’s scope has forced the government to create limited exceptions for investments in forestry and hotel units. On-sell prohibitions have had to be modified to attract capital for retirement villages. But these and other expedient but necessary carve-outs and provisions create a legal minefield that must exacerbate investment uncertainty.
The importance of attracting overseas investment was acknowledged in the Prime Minister’s recent first meeting with her business advisory group. Yet, the government disdainfully tells overseas investors that investing in New Zealand is a privilege. It is New Zealanders who miss out if, say, Swedish furniture retailer IKEA decides not to compete in New Zealand. Why treat it as suspect?
New Zealand already had the most restrictive screening regime in the OECD before the latest measures kicked in. Our screening criteria are commercially and economically ridiculous. The UK has no such screening requirements … why should New Zealand?
This article was originally published in NZ Initiative.