Published by The New Zealand Initiative (Wellington), 14 February 2018 (PDF)
The New Zealand Initiative recommends that this Bill should not proceed until parliamentary debate can be informed by a competent official assessment of its likely net benefits (or costs) for New Zealanders. Treasury’s Departmental Disclosure Statement and its Regulatory Impact Statement (RIS) make it clear that Cabinet’s decision to proceed with this proposed ban was not informed by such an analysis. The Treasury’s RIS provides no analysis of the merits of the proposed ban.
No evidence has been provided in the material we have reviewed (for a list see the Appendix to this submission) that the proposed measure will have a material effect on either house prices in New Zealand or on the supply of new homes. Nor has a case been made that these objectives could not be achieved more effectively and efficiently by the more direct measures we have recommended in our research reports on housing affordability.
We submit that this is not good enough. The public funds the public service. It is entitled to expect value-for-money assessments of public benefits to be made prior to decisions being taken.
New Zealand’s existing Overseas Investment Act makes it clear to the world that New Zealand is one of the least open for business. The measures in the Bill will make it more intrusive and more restrictive.
Of course, governments are free to pass measures for which they have a mandate and a parliamentary majority. But this does not justify failing to provide Parliament and the public with a professional assessment of the likely scale and distribution of costs and benefits for affected New Zealanders.
In our view Parliament should be routinely imposing this professional reporting discipline on executive government. It is particularly important when a measure has the potential to adversely affect global willingness to invest in New Zealand. New Zealand’s prosperity has always depended on its access to global trade and capital.
Our major 2014 recommendations for changes to the Overseas Investment Act still stand.
A narrower recommendation is to amend the Bill, and indeed the Overseas Investment Act itself, to ensure that all benefit tests for an application will treat the additional value to the New Zealand seller of a sale to a foreign buyer as a national benefit.