Foreigners face ban from buying infrastructure assets

The Government is proposing to block the sale of big infrastructure assets to foreigners.

Associate Finance Minister David Parker yesterday announced the next phase of overseas investment rule reviews, following the house sale ban which takes effect from next week.

“It is likely that a broad, but rarely used, discretion to decline approval for significant foreign investment, such as infrastructure assets with monopoly characteristics, will be introduced,” Parker said.

Treasury would lead the review and the terms of reference have also been released.

Stephen Selwood, Infrastructure New Zealand chief executive, expressed concern about the proposal, while PwC economics director Geoff Cooper welcomed it and Property Council advocacy head Matt Paterson hoped it might ease commercial asset sale pathways.

Selwood said such a move might not be our ultimate national interest.

“New Zealand should always keep all its options open with the potential to sell infrastructure to foreigners if there is a benefit to New Zealanders in doing so,” he said.

He cited potential sales of water, port, airport and electricity businesses as falling into the monopolistic infrastructure asset field.

Asset sales which have been talked about included Auckland Council’s Watercare, the Ports of Auckland and Auckland International Airport, Selwood said.

“But with the ports, the operations could be sold but the council would keep the land,” Selwood said.

Cooper, who for the last four years has lived in the United States where he was an associate in international financial institutions for the US Federal Reserve Bank, was more open to Parker’s review which he said was potentially in this country’s interests when it came to monopolistic infrastructure assets.

“I lived in the US for four years and saw many people not doing so well from globalisation. New Zealand should be judicious about asset sales in areas that are of strategic importance and particularly where there are monopolies,” Cooper said.

Paterson said the Property Council hoped the Overseas Investment Act review would “provide a more efficient system for foreigners to buy non-sensitive commercial, industrial or retail property so it’s quicker”.

The Overseas Investment Office was slow compared with systems in other countries, Peterson said, leading to frustration.

“The system is now quite an impediment to the sale of these assets because it takes so long to get approval,” he said.