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

Papua New Guinea’s Prime Minister James Marape is still confident of delivering the PNG-US Defence Cooperation Agreement despite the cancellation of US President Joe Biden’s visit, and the leaking of a draft copy of the confidential document on Tuesday.

He said PNG’s national interest was at the heart of the agreement, which was still expected to be signed on Monday in Port Moresby between himself and the US government leader or official who would step in for Biden.

Marape said yesterday the agreement that was leaked on Tuesday was still in draft format, and he would announce the finer details today following a cabinet meeting yesterday

By yesterday afternoon, the White House was still yet to confirm who would step in for Biden to visit Papua New Guinea.

Copies of the leaked agreement were circulated to PNG and regional media on Tuesday, with Radio New Zealand carrying it on its website the same afternoon.

Marape said the agreement would greatly boost PNG’s defence capabilities and provide key infrastructure in strategic air and sea ports.

“There is a lot of misinformation in the news release. I will announce to the country the upsides of these agreements on Thursday [today],” Marape said told the Post-Courier.

Still in draft form
“The agreement was still in draft form and we will discuss it fully at our cabinet meeting later today [Wednesday].

“I want to inform all that PNG’s national interest is the reason why we [are] elevating our traditional military relationship with USA to a higher and better level, including addressing the needs of our military, to upgrade and sea and airspace border protection.”

Speaking to the Post-Courier separately on Tuesday, and without making any particular reference to the US-PNG Defence Cooperation Agreement, Chief of the PNG Defence Force Major-General Mark Goina said budget support to the military over the years had been unsatisfactory.

“Such agreements with our bilateral partners are crucial in helping plug the gaps,” he said.

“We have devised plans where we have a budget put in place, in accordance to our needs, and based on that, we have identified where the gaps are, and that is where our partners are brought in, partners like Australia, New Zealand, US, China, India, UK and other partners we have relationships with.

“So they come and cover those gaps for us,” General Goina said.

“That’s how we have been addressing our budget shortfalls.

“And this will continue until such time, when we are able to meet our own needs satisfactorily.”

Pact yet to be finaiised
The 14-page agreement, a copy of which was also seen by the Post-Courier, will be finalised by the end of this week for signing on Monday in Port Moresby.

When signed, the agreement will work in line with all previous defence agreements between the two countries.

The draft agreement, titled “Agreement on Defence Cooperation Between the Government of the United States of America And the government of the Independent State of Papua New Guinea’, contains a total of 22 specific sections or articles, which deal with a broad range of issues.

The articles range from issues such as:

• the status of US personnel who will pass through or be based in PNG military facilities;
• access to and use of agreed facilities and areas covered in the agreement;
• pre-positioning and storage of equipment, supplies and materials;
• property ownership, security; entry and exit;
• movement of aircraft, vehicles and vessels; importation, exportation and taxes;
• driving and professional licenses;
• contracting;
• logistics support; medical and mortuary affairs, postal and recreational facilities and communications services; and
• utilities and communications; and o

Strategic specifics
The specific areas and facilities covered under the agreement include the strategically-valuable Nadzab airport and Lae wharf, the Lombrum naval base and Momote airport in Manus, and the Port Moresby seaport and Jackson’s International Airport.

Access to these strategic areas and facilities are covered in article five of the agreement, which states, in part, that: “The parties shall cooperate to facilitate the required approvals to enable unimpeded access to and use of the agreed facilities and areas to US Forces and US contractors as mutually agreed.”

“Such agreed facilities and areas may be used for mutually agreed activities including visits, training, exercises, manoeuvres, transit, support and related activities, refueling of aircraft . .” and others.

There were fears that the agreement would undermine PNG’s sovereignty, even though many similar agreements exist between the US and its allies around the world and the Indo-Pacific region — countries which still enjoy their freedoms and sovereignty.

Lawrence Fong and Gorethy Kenneth are PNG Post-Courier reporters. Republished with permission.

Article by AsiaPacificReport.nz