While public attention has been focused on the domestic fast-track consenting process for infrastructure and mining, Associate Minister of Finance David Seymour has been pushing through another fast-track process — this time for foreign investment in New Zealand.

But it has had almost no public scrutiny.

If the Overseas Investment (National Interest Test and Other Matters) Amendment Bill becomes law, it could have far-reaching consequences. Public submissions on the bill close tomorrow.

A product of the ACT-National coalition agreement, the bill commits to amend the Overseas Investment Act 2005 “to limit ministerial decision making to national security concerns and make such decision making more timely”.

There are valid concerns that piecemeal reforms to the current act have made it complex and unwieldy. But the new bill is equally convoluted and would significantly reduce effective scrutiny of foreign investments — especially in forestry.

A three-step test
Step one of a three-step process set out in the bill gives the regulator — the Overseas Investment Office which sits within Land Information NZ — 15 days to decide whether a proposed investment would be a risk to New Zealand’s “national interest”.

If they don’t perceive a risk, or that initial assessment is not completed in time, the application is automatically approved.

Transactions involving fisheries quotas and various land categories, or any other applications the regulator identifies, would require a “national interest” assessment under stage two.

These would be assessed against a “ministerial letter” that sets out the government’s general policy and preferred approach to conducting the assessment, including any conditions on approvals.

Other mandatory factors to be considered in the second stage include the act’s new “purpose” to increase economic opportunity through “timely consent” of less sensitive investments. The new test would allow scrutiny of the character and capability of the investor to be omitted altogether.

If the regulator considers the national interest test is not met, or the transaction is “contrary to the national interest”, the minister of finance then makes a decision based on their assessment of those factors.

Inadequate regulatory process
Seymour has blamed the current screening regime for low volumes of foreign investment. But Treasury’s 2024 regulatory impact statement on the proposed changes to international investment screening acknowledges many other factors that influence investor decisions.

Moreover, the Treasury statement acknowledges public views that foreign investment rules should “manage a wide range of risks” and “that there is inherent non-economic value in retaining domestic ownership of certain assets”.

Treasury officials also recognised a range of other public concerns, including profits going offshore, loss of jobs, and foreign control of iconic businesses.

The regulatory impact statement did not cover these factors because it was required to consider only the coalition commitment. The Treasury panel reported “notable limitations” on the bill’s quality assurance process.

A fuller review was “infeasible” because it could not be completed in the time required, and would be broader than necessary to meet the coalition commitment to amend the act in the prescribed way.

The requirement to implement the bill in this parliamentary term meant the options officials could consider, even within the scope of the coalition agreement, were further limited.

Time constraints meant “users and key stakeholders have not been consulted”, according to the Treasury statement. Environmental and other risks would have to be managed through other regulations.

There is no reference to te Tiriti o Waitangi or mana whenua engagement.

No ‘benefit to NZ’ test
While the bill largely retains a version of the current screening regime for residential and farm land, it removes existing forestry activities from that definition (but not new forestry on non-forest land). It also removes extraction of water for bottling, or other bulk extraction for human consumption, from special vetting.

Where sensitive land (such as islands, coastal areas, conservation and wahi tapu land) is not residential or farm land, it would be removed from special screening rules currently applied for land.

Repeal of the “special forestry test” — which in practice has seen most applications approved, albeit with conditions — means most forestry investments could be fast-tracked.

There would no longer be a need to consider investors’ track records or apply a “benefit to New Zealand” test. Regulators may or may not be empowered to impose conditions such as replanting or cleaning up slash.

The official documents don’t explain the rationale for this. But it looks like a win for Regional Development Minister Shane Jones, and was perhaps the price of NZ First’s support.

It has potentially serious implications for forestry communities affected by climate-related disasters, however. Further weakening scrutiny and investment conditions risks intensifying the already devastating impacts of international forestry companies. Taxpayers and ratepayers pick up the costs while the companies can minimise their taxes and send profits offshore.

Locked in forever?
Finally, these changes could be locked in through New Zealand’s free trade agreements. Several such agreements say New Zealand’s investment regime cannot become more restrictive than the 2005 act and its regulations.

A “ratchet clause” would lock in any further liberalisation through this bill, from which there is no going back.

However, another annex in those free trade agreements could be interpreted as allowing some flexibility to alter the screening rules and criteria in the future. None of the official documents address this crucial question.

As an academic expert in this area I am uncertain about the risk.

But the lack of clarity underlines the problems exemplified in this bill. It is another example of coalition agreements bypassing democratic scrutiny and informed decision making. More public debate and broad analysis is needed on the bill and its implications.

Dr Jane Kelsey is emeritus professor of law, University of Auckland, Waipapa Taumata Rau. This article is republished from The Conversation under a Creative Commons licence. Read the original article.

Article by AsiaPacificReport.nz

An initial hearing of a class action against mining giant Rio Tinto over the toxic legacy of the Panguna copper mine on the autonomous island of Bougainville has been held in Papua New Guinea.

The lawsuit against Rio Tinto and its subsidiary Bougainville Copper Limited (BCL) is seeking compensation, expected to be in the billions of dollars, for what plaintiffs allege is historic mismanagement of the massive open copper-and-gold mine between 1972 and 1989.

More than 5000 claimants backed by anonymous investors are seeking damages for the destruction that sparked a 10-year-long civil war.

The Panguna mine closed in 1989 after anger about pollution and the unequal distribution of profits sparked a landowner rebellion. As many as 20,000 people — or 10 percent of Bougainville’s population — are estimated to have died in the violence that followed between pro-inependence rebels and PNG.

Although a peace process was brokered in 2001 with New Zealand support, deep political divisions remain and there has never been remediation for Panguna’s environmental and psychological scars.

The initial hearing for the lawsuit took place on Wednesday, a day ahead of schedule, at the National Court in Port Moresby, said Matthew Mennilli, a partner at Sydney-based Morris Mennilli.

Mennilli, who is from one of two law firms acting on behalf of the plaintiffs, said he was unable to provide further details as court orders had not yet been formally entered.

A defence submitted
Rio Tinto did not respond to specific questions regarding this week’s hearing, but said in a statement on September 23 it had submitted a defence and would strongly defend its position in the case.

The lawsuit is made up by the majority of villagers in the affected area of Bougainville, an autonomous province within PNG, situated some 800km east of the capital Port Moresby.

At least 71 local clan leaders support the claim, with the lead claimant named as former senior Bougainville political leader and chief of the Basking Taingku clan Martin Miriori.

The lawsuit is being bankrolled by Panguna Mine Action, a limited liability company that stands to reap between 20-40 percent of any payout depending on how long the case takes, according to litigation funding documents cited by the Organised Crime and Corruption Reporting Project.

While the lawsuit has support from a large number of local villagers, some observers fear it could upset social cohesion on Bougainville and potentially derail another long-standing remediation effort.

The class action is running in parallel with an independent assessment of the mine’s legacy, supported by human rights groups and the Autonomous Bougainville Government (ABG), and funded by Rio Tinto.

Rio Tinto agreed in 2021 to take part in the Panguna Mine Legacy Impact Assessment after the Melbourne-based Human Rights Law Centre filed a complaint with the Australian government, on behalf of Bougainville residents.

Legacy of destruction
The group said the Anglo-Australian mining giant has failed to address Panguna’s legacy of destruction, including the alleged dumping of more than a billion tonnes of mine waste into rivers that continues to affect health, the environment and livelihoods.

The assessment, which is being done by environmental consulting firm Tetra Tech Coffey, includes extensive consultation with local communities and the first phase of the evaluation is expected to be delivered next month.

ABG President Ishmael Toroama has called the Rio Tinto class action the highest form of treason and an obstacle to the government’s economic independence agenda.

“This class action is an attack on Bougainville’s hard-fought unity to date,” he said in May.

In February, the autonomous government granted Australian-listed Bougainville Copper a five-year exploration licence to revive the Panguna mine site.

The Bougainville government is hoping its reopening will fund independence. In a non-binding 2019 referendum — which was part of the 2001 peace agreement — 97.7 percent of the island’s inhabitants voted for independence.

PNG leaders resist independence
But PNG leaders have resisted the result, fearful that by granting independence it could encourage breakaway movements in other regions of the volatile Pacific island country.

Former New Zealand Governor-General Sir Jerry Mateparae was appointed last month as an independent moderator to help the two parties agree on terms of a parliamentary vote needed to ratify the referendum.

In response to the class action, Rio Tinto said last month its focus remained on “constructive engagement and meaningful action with local stakeholders” through the legacy assessment.

The company said it was “seeking to partner with key stakeholders, such as the ABG and BCL, to design and implement a remedy framework.”

Copyright ©2015-2024, BenarNews. Republished with the permission of BenarNews.

Article by AsiaPacificReport.nz

A recent cash payment by the state for the release of three hostages held captive by armed gunmen in Papua New Guinea’s Southern Highlands province has set a “dangerous precedent”, says the opposition.

Deputy opposition leader Douglas Tomuriesa said in a statement that the Marape government had set a bad precedent in allowing ransom money to be paid to the kidnappers for the release of the three hostages late last month instead of eliminating the gunmen.

The shadow treasurer said that thankfully the three captives had been set free without any harm but he expressed sadness that such a bad precedent had been set for the country which was likely to spur similar hostage-taking incidents in future.

Tomuriesa said since the hostages were now free, Police Commissioner David Manning must ensure that the culprits would be brought to justice and face the full force of the law.

He said it was “shameful” that the Prime Minister had contradicted his Police Commissioner by initially denying that any ransom had been paid.

“I now demand the Prime Minister tell the truth and reveal the actual amount of ransom paid to the criminals and why a third party was involved,” Tomuriesa said.

One of three women captives was released on February 23 while the other two were released with Australia-based New Zealand academic Professor Bryce Barker on February 26 after K100,000 (NZ$46,000) had been paid, according to one news report.

“If all the government can do is pay ransom to terrorists, then PNG can forget about promoting tourism and foreign investment in the country as investors will view the country as too dangerous.

“By very quickly resorting to allowing payment of ransom money, the government has now realised that the PNG police and military are very ill-equipped to deal with a dangerous hostage-taking situation.

“The whole country will remain at risk unless the gunmen are made to surrender all their guns, including the high-powered machines stolen from the PNG Defence Force armoury.”

Tomuriesa said the government must now seek specialised training and assistance from friendly countries like Australia, New Zealand, United Kingdom, or the United States to establish and train a special task force for the PNG police and military.

The special force would need to be capable of undertaking search and rescue operations should similar hostage-taking situations arise in future.

Republished from the PNG Post-Courier with permission.

Article by AsiaPacificReport.nz

Foreign investors could be sent to jail in Fiji for breaking a new investment law, says the prominent Suva law firm Munro Leys.

The company said the “vague and unsatisfactory” new Investment Act could create greater uncertainty for foreign investors.

In a legal alert to its clients, Munro Leys lawyers also said aspects of the new law could do “more harm than help” and “poor legal drafting leaves us more confused and slightly alarmed”.

It said serious investors relied on the laws of their target country to give them certainty and transparency.

“The Investment Act, unfortunately, does the opposite. In place of transparency, there is significant potential for confusion and frustration,” the legal firm said.

Munro Leys criticises some of the wording of the new law as “vague and almost impossible to legally pin down”.

“If we don’t know who a ‘foreign investor’ is and when they are investing, it is impossible to know which rules apply,” the legal alert said.

New regulations criticised
The firm’s alert also criticised new regulations which required foreign investors to bring into Fiji their total investment amount within three months of “incorporation” and said an investor could be prosecuted for failing to do so.

“The penalty for the offence, for an individual, is a fine not exceeding $10,000 or imprisonment for a term not exceeding five years or both. Bodies corporate can be fined up to $50,000.

“To make matters worse, it’s not clear to whom this three-month rule applies. From a plain reading of the regulations, it applies only to those foreign investors investing in restrictive activities,” the legal advice said.

“However, the authorities appear to have expressed the view that it applies to all foreign investors.

“It is difficult to see the government prosecuting a foreign investor which does not bring in its money on time. But criminalising delay may create other issues for investors going to the legality of their investment and double down on the uncertainty that has already been created.”

Criticising Section 7 of the Act, Munro Leys said that an investor was required to send an investment proposal to the government for consent to invest in certain “critical sectors” but it was not clear what those sectors were.

“No one knows what the proposal should say, what criteria the minister will apply in his/her decision and how long the minister will take to approve it.

Other problems
“It seems that the government intends for regulations to be made to decide what sectors need ministerial approval. [But] with about a month to go before the new law comes into effect, there are no regulations.

“The problems are not confined to new investors.

“Existing investors, including those who complied with the old Foreign Investment Act, are not immune.

“They may now need to apply for permission to make new investments. Some companies who were not previous “foreign investors” may find they are now in that category (and vice versa).”

The Act will come into effect from August.

Questions sent to Attorney-General Aiyaz Sayed-Khaiyum, Fiji Commerce and Employers Federation (FCEF) and Fiji Chamber of Commerce and Industry remained unanswered.

Luke Nacei is a Fiji Times reporter. Republished with permission.

Article by AsiaPacificReport.nz

The frequent detention and questioning of some of Fiji’s political leaders by the police late last month for merely engaging in public debate on the contentious iTaukei Land Trust Bill No. 17 has raised questions about Fiji’s claim to be a champion of human rights.

All this has happened when the country was losing its grip on the escalating covid-19 pandemic, and experiencing the worst economic crisis in its history. The only silver lining for Fiji was the glittering Olympic gold won by its Rugby 7s men’s team and bronze by its women.

But these temporary celebratory moments should not divert attention away from the long-term implications of the repressive responses to alternative ideas by the government.

The coercive measures were justified by the police and government as important for sustaining national security, an often arbitrarily defined term. The rationale is that comments against the bill by politicians have the potential to stir up racial tension and public discord.

At the centre of the controversy is the attempt by the government to liberalise the use of indigenous Fijian land and give more power to lessees to carry out such things as sub-leasing and mortgaging without the consent of the iTaukei Trust Board (ITB), which was established in 1940 to administer indigenous land.

Opposition to the bill spans a variety of political positions. Those on the nationalist end of the spectrum argue that it was part of a “Muslim conspiracy” to alienate indigenous land. Certain individual keyboard warriors even resorted to the use of online racial threats.

The more moderate ones argue that given the cultural and racial sensitivity around land issues, the bill was insensitive and itself a security threat. There was nevertheless consensus that the process used to push through the bill lacked proper and meaningful consultation with landowners and the public generally and thus lacked democratic legitimacy.

One of the fears raised is that removing the regulatory process of subleasing and mortgage by lessees can lead to the Vanuatu situation where 90 percent of land on the main island, Efate, has been alienated through extensive subleasing and selling by foreign investors with little income for the landowners.

To get their land back at the expiry of the lease period, landowners have to pay back millions of dollars worth of land improvement value, something no one is able to do.

Cycle of vengeance
The response by Fiji’s government and the police was to invoke the Public Order Act, a leftover from the British colonial days, which was made even more coercive through the 2012 Public Order Amendment Decree by the then military government. The Act gives the police unlimited powers to arrest anyone they deem to be a threat to public order and safety.

The arrests of leading opposition politicians, MPs and former prime ministers have raised a number of fundamental questions about human rights and freedom of expression in Fiji’s struggling constitutional democracy.

One of the critical issues is that the institutional norms, political psyche and behaviour associated with military coups have been embedded implicitly in Fiji’s constitutional and legislative systems.

Despite the elections and global projections of being a vibrant democracy, the arbitrary use of repressive means to suppress alternative views remains a lingering issue.

Well-meaning actions and words by citizens are securitised and considered a threat, while the entire security apparatus of the state is let loose on so-called perpetrators of instability.

The second point here is that this military psyche permeates through society in various subtle ways, creating a culture of fear and distrust and worsened by what people see as the government’s uncompromising tactics in micro-management of the civil service, as well as the use of the merit system as a tool of nepotism and patronage in civil service and board appointments.

Normalisation of the use of fear and psychological intimidation in the civil service, Parliament and society generally may result in short-term compliance but can spawn silent resistance which can explode into a major security issue in the future.

Driver of political antagonism
A third and related factor here, resulting from the hardline stance of the government, is the way in which Fiji politics has taken a dangerously dichotomous cycle of vengeance and counter-vengeance as a driver of political antagonism.

Both sides of the political divide have dug into their trenches with hardly anyone in “No Man’s Land” to keep a sense of restraint. The repressive tactics will only fuel counter-vengeance sentiments at a time when the country needs to focus on covid-19 and associated problems.

A fourth issue here is the battle for the moral high ground. The government policy of “racial blindness” has given them the licence to cast almost anyone who raises issues relating to identity and culture as “racist” or trying to inflame racial strife. This is certainly the case with the bill in question.

Public criticism of acts of nepotism, patronage and racial favouritism by government have often been constructed with racial lenses and thus framed as security threats.

Sociological research in various countries has shown that the policy of so-called racial blindness is ironically a racist prism in itself because it does not allow one to appreciate the value of racial diversity and it can actually be used as a Trojan horse for cultural nepotism and ethnic patronage by states. Many have accused the Fiji government of doing exactly that.

Who benefits from development in Fiji
The fifth and last point relates to what the bill represents in terms of the broader development strategy of Fiji. Because of the four points raised above, the efforts of the government to sell its rationale have not gone smoothly.

The critical question here is whether the bill was originally intended to benefit the landowners or was it to serve the interests of foreign investors and other local entrepreneurs who have been part of the government’s lobbying and patronage system.

I do not want to speculate on this but the point here is to do with what type of development is best for the landowners?

Covid-19 has shown us the fundamental fragility of the tourism-based economy and the need to strengthen the land-based social solidarity economy. This requires developing a comprehensive land innovation plan which includes training for landowners in modern agriculture, developing food processing plants and creating global markets in a holistic way throughout the value chain.

This will allow landowners to commercialise and acquire direct benefits from their land, empower them economically and address prevalent poverty.

A number of communities in Fiji have been able to do that at a very localised level, making millions of dollars even without any government support. A much larger model to look at is the multi-billion dollar Ngai Tahu indigenous corporation in New Zealand’s South Island.

Rather than remain passive lease money recipients and subservient players in the market economy as the current system promotes, landowners can be active players in the market.

The land bill in question will simply perpetuate the system of post-colonial servitude. Rather than making minor “administrative” adjustments which will only benefit some foreign and local individual entrepreneurs as the bill suggests, it is time to relook at alternative, equity-based and innovative development strategies with landowners as active participants and direct beneficiaries as empowered partners with other investors.

This will address the issues of poverty and inequality as well as create a much more favourable climate for national security for all.

The future of security in Fiji depends not on using repressive tactics to impose government’s will on the population, but on using an approach which incorporates equitable and people-centred development strategies, empathetic political governance and a reconciliatory way to unite different ethnic, cultural and political groups.

Arresting political leaders will only exacerbate tension and shamefully reveal the deeper structural and normative weaknesses of the ruling political class.

Dr Steven Ratuva is a global award-winning political sociologist and is director of the Macmillan Brown Centre for Pacific Studies at the University of Canterbury.This article was first published by RNZ News and is republished with the permission of the author.

Article by AsiaPacificReport.nz