New powers to protect strategically-important assets from overseas investors are necessary due to the extremes of global capitalism, the government says.
Associate Finance Minister David Parker says new discretionary powers are crucial if New Zealanders' interests are to be protected. Photo: RNZ /Dom Thomas
Yesterday, new rules were announced to protect nationally-important assets - including ports and airports, telecommunications and electricity infrastructure - from being sold to overseas interests.
From now on a national interest test will be used by the Overseas Investment Office before the sale of sensitive and high-risk assets, although only in what is considered exceptional circumstances.
It forms part of a suite of new measures designed to toughen up the rules around investment from overseas interests.
Associate Finance Minister David Parker told Morning Report he expected the new powers to be rarely used, but that discretion was crucial if New Zealanders' interests were to be protected.
He highlighted the Wellington Electricity Lines company passing into overseas ownership and Canada Pension Plan Investment Board's $1.7 billion bid to buy 40 percent of Auckland International Airport as two examples over the past decade where these powers could have been applied effectively.
"One of the extremes we're seeing in global capitalism is that there are some enormous pulls of capital" - Associate Finance Minister David Parker
"On those sorts of occasions the government should have a discretion - it doesn't have to exercise it, but it should have a discretion - like they have in Australia," he said.
"Monopoly assets that have a regulated price path like lines companies always make a profit and you got to ask yourself why you would sell that profit stream overseas and you also want them to be aligned with the wider interests of the economy, so as to invest in a time when times are tough."
He acknowledged it was sometimes necessary to inject foreign money into infrastructure, but maintained some large assets over $100m and in some cases over $500m were too strategically important to the national interest to be sold. He said the new measures took this into consideration.
Geo-political considerations meant measures needed to be introduced to shore up asset protections, he said.
"We've got individuals who are billionaires. I think with those extremes it is appropriate the countries protect the interests of their people against those extremes effectively coming back and influencing what happens in New Zealand."
The "national interest" would take into account a broad range of considerations, including climate change and the environment.
Local Government New Zealand president Dave Cull this week said he did not want to lose crucially-needed foreign investment in local-body owned assets, so the new powers must be used cautiously.
"Recently Napier Port was partly privatised and the overseas capital that went into that has been used for vital infrastructure projects that otherwise ... wouldn't have happened if the partial sale hadn't gone through," he said.
National Party finance and infrastructure spokesperson Paul Goldsmith also warned the last thing the country needed was to disincentivise investment. He said excessive intervention by the government could cause potential foreign investors to baulk.
However, Mr Parker said the power to intervene would be restricted to the highest levels of government decision-making and that a decision would usually reside with the minister of finance.