Who benefits most from investment?

The Overseas Investment Act starts with the premise that it is ‘‘a privilege’’ for people or companies from overseas to own or control sensitive New Zealand assets, whether it is a business or land. Before this privilege is granted, the law says, some criteria must be met.

Will the investment create new jobs or retain existing jobs that would otherwise be lost? This is one of the factors the Overseas Investment Office (OIO) must consider. Other benefits include increased exports, skills and technology and additional investment.

Not every condition has to be met. When Government ministers Louise Upston and Paula Bennett took OIO advice and approved Shanghai Maling’s application to buy half of Silver Fern Farms in 2016, they cited just two of the benefits. The additional investment, they said, would generate export receipts.

Upston and Bennett said New Zealand shareholders who own the remaining half of Silver Fern Farms would ‘‘benefit from the injection of funds from the new investor’’. The deal would help pay off debt and create new beef and lamb products for the Chinese market.

Shanghai Maling paid $261 million for 50 per cent of the company. Nearly a year later, Silver Fern Farms confirmed a poorly kept secret. It proposes to close a processing plant at Fairton near Ashburton. More than 370 jobs could disappear, although some work may become available at other sites.

It was a familiar story. Workers who had given the company decades seemed shocked and others were resigned to their fate. They had seen sheep numbers decline and heard the rumours.

But workers were overlooked in earlier discussions about the pros and cons of the investment. At a time of growing concern about overseas ownership and globalisation, it might be a good idea for the OIO and Government ministers to be clearer about the nebulous ideas embodied in notions of a ‘‘benefit’’ to New Zealand.

There have been concerns that the OIO is not assertive enough in challenging potential investments. Some call it a soft touch or a rubber stamp. It recommended the controversial bid by Shanghai Pengxin to buy Lochinver Station that was subsequently rejected by Upston and Bennett in 2015. The OIO had argued that foreign ownership of Lochinver Station would bring ‘‘substantial and identifiable’’ benefits.

Since the proposal was announced to cut jobs at Fairton, the OIO says it is watching Silver Fern Farms to ensure the investment will benefit New Zealand as promised. And if it does not? The OIO has a range of enforcement tools available, from formal warnings and compliance letters to prosecution and a fine of $300,000 or 12 months in jail.

These tools could be used if the OIO decides that ‘‘a benefit that was an important factor in the decision to allow the investment has not been delivered’’. But would redundancies at Fairton trigger that response when the benefits that were promised, which Upston and Bennett happily endorsed, were earnings and investments rather than the creation or preservation of New Zealand jobs?