10 May 2018
Chief Reporter
TIME FOR ACTION FROM GOVT ON FOREIGN TAKEOVER OF BUSINESSES
Tell Them The Garage Sale is Over
The Campaign Against Foreign Control of Aotearoa (CAFCA) has already congratulated the Government on toughening up the approval regime for foreigners wanting to buy New Zealand rural land.
But we’ve seen no action from the Government, nor any indication that there will be any action, in the much more important area of transnational corporations (TNCs) buying up New Zealand businesses.
Here is one example. Under the Overseas Investment Act the threshold for business takeovers not requiring Overseas Investment Office (OIO) approval is anything under $100 million.
But – National’s Trans-Pacific Partnership Agreement Amendment Act 2016 amended the Overseas Investment Act to allow them to change the threshold to $200 million by Order in Council.
Labour has already done a complete back flip on the TPPA and signed it.
CAFCA asks: does Labour intend to increase that threshold to $200 million and, if so, when?
A $200m threshold will exempt a lot of foreign takeovers from appearing in the OIO’s records (and that has been the case throughout the history of the OIO and its predecessor, the Overseas Investment Commission).
The threshold started at $500,000 in the 1970s; then was increased to, firstly, $2m and then to $10m, where it stayed for a long time.
Immediately before Labour was elected in 1999, National increased it to $50m.
CAFCA lobbied the incoming Labour government to roll it back to the previous level. We were ignored.
Michael Cullen’s 2005 Overseas Investment Act – the current one – increased it to the present $100m.
And that was presented as a “compromise”: Cullen wanted it at $250m – Treasury lobbied for the abolition of any threshold.
Each time it has gone up that has meant more and more foreign takeovers flying under the OIO radar.
And that’s not to mention Australian investment which gets special treatment under Closer Economic Relations (CER).
Australian investment – the single biggest source of foreign investors into NZ – under $477m does not require OIO approval.
Others (e.g. China) can already access the $200m threshold under Most Favoured Nation treatment that is granted under existing free trade agreements.
A lot of foreign takeovers already take place under the existing $100m threshold without requiring any OIO approval or scrutiny.
Obviously, this trend will only increase if that threshold is doubled to $200m.
One result of all this is the quite misleading impression that the buy up of NZ by transnational corporations is “slowing down”.
Whereas, all that is happening is that less and less foreign “investment” (meaning takeovers) is being officially recorded.
CAFCA calls on Labour to not increase that threshold to $200m.
And to not simply freeze it at the present $100m but to roll it back to a much lower figure.
This is exactly what Labour has already done in relation to land sales to foreigners i.e making a whole lot more of them subject to OIO approval.
All that we ask for is consistency. And a commitment to tighten up NZ’s laughably “come on and in and help yourselves” foreign investment regime.
This would be a first step and send a positive signal to the TNCs – the garage sale is over.
Murray Horton
Secretary/Organiser
Campaign Against Foreign Control of Aotearoa,
P.O. Box 2258
Christchurch.