National interest test added to OIO rules

A national interest test will be added to Overseas Investments rules in ports, airports, telecommunications infrastructure, electricity and other assets.

The new rules will put water bottling and media companies under the spotlight.

Associate Finance Minister David Parker said the test would be applied to the sale of sensitive and high-risk assets to overseas buyers.

The current rules only allowed the Government to take into account the financial capability of the investor, he said.

If they were not corrupt and had the financial capability to manage the investment, there was no way that the Government could turn down an investment.

Responding to concerns about overseas investment in water bottling, the Government would also require consideration of the impact on water quality and sustainability of a water bottling enterprise, when assessing an investment in sensitive land, he said.

The OIO would now be able to take this into account and in the advice it provides to ministers, as to whether it should be approved or not.

The test would apply to large investments at a minimum of $100 million.

However, in some cases, depending on the terms of free trade agreements, such as CPTPP and TPP countries, $200m. And in the case of Australia, $500m.

‘‘If those things were ever to be sold, we think the Government should have the right to say they should have to be sold to a New Zealand entity rather than to a foreign entity.’’

The screening powers had always been reserved under our free trade agreement but had never been activated, he said.

When the Government took office, Crown agencies recommended that loophole should be closed, he said.

The new powers were consistent with global best practice in important monopoly assets, he said.

They could extend to private sector media, where there was concern it could fall to overseas ownership, he said.

The tests could also be used to control investments in significant media entities where they were likely to damage our security or democracy, he said.

‘‘These powers will be used rarely and only where necessary for protecting New Zealand.’’

A final set of changes addressed ‘‘overly picky’’ rules, he said.

‘‘For example, if you have a commercial lease in New Zealand and you’re an overseas corporate at the moment, you have to seek approval for it for a fiveyear lease. We’re doubling that to a 10-year lease.’’

It would mean companies such as Air New Zealand would not be ‘‘put through the hoop’’ as an overseas investor, he said.

The airline was currently caught up as an overseas investor because it was more than 25 per cent overseas owned and would now be taken outside the regime.

The deregulation of the ‘‘niggling and over-regulated’’ rules was needed because it caused too much work for applicants and the Overseas Investment Office, he said.

Enforcement powers were also being improved and the maximum fixed penalties for not complying would rise from $300,000 to $10m for corporates.

‘‘These powers will be used rarely and only where necessary for protecting New Zealand.’’

David Parker

Associate Finance Minister