The Government has announced that it is planning to introduce legislation to make changes to overseas investment rules in early 2020.
Associate Finance Minister David Parker says under current Overseas Investment Act 2005 rules, assets such as ports and airports, telecommunications infrastructure, electricity and other critical infrastructure are not assessed through a national interest lens.
He says the government plans to introduce a number of new powers which are consistent with global best practice "to protect New Zealanders' best interests in such important - often monopoly - assets".
Mr Parker says the Government will also require consideration of the impact on water quality and sustainability of a water bottling enterprise, when assessing an investment in sensitive land.
He says a “call in” power will apply to the sale of the most strategically important assets, such as firms developing military technology and direct suppliers to defence and security agencies. This will apply to assets not currently screened under the Act.
“The power would only be used to control those investments that pose a significant risk to our national security or public order,” David Parker says.
“These tests could also be used to control investments in significant media entities where these are likely to damage our security or democracy.
“These powers will be used rarely and only where necessary for protecting New Zealand."
Mr Parker says enforcement powers are also being improved. The maximum fixed penalties for not complying will rise from $300,000 to $10 million for corporates.
“Provisions of an existing Ministerial directive will be written into the Act, which requires overseas investments in farmland to show substantial benefit to New Zealand, by adding something substantially new or creating additional value to our economy,” Mr Parker says.
“The reforms will apply to all overseas investors, irrespective of where they are from."
Further detail from OIO
In a communication on the planned changes, the Overseas Investment Office says it will also be able to review specific investments not currently caught by the Act.
"This will only apply to our most strategically important assets, such as small high-tech firms developing military technology. The Government will be able to stop investments that pose a significant risk to our national security or public order. These powers will be used rarely and only where necessary for protecting New Zealand."
It says the Government will embed the current requirement for overseas investors to demonstrate a substantial point of difference from what a New Zealander would do when acquiring farmland.
Māori cultural values will get greater recognition, with the goal of creating greater awareness of, and access to, culturally sensitive sites.
"Decision makers will be able to consider the environmental impact of investments that involve water extraction for bottling.
In addition to simplifying parts of the regime, we will no longer review a range of low risk transactions, including those by fundamentally New Zealand companies. Statutory timeframes will also be introduced" the OIO says.
The Office says until the legislation is passed and the changes are implemented, the current legislative requirements will continue to apply.