Gordon Campbell: On Why The Regulatory Standards Bill Should Be Dumped
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RNZ News
14 hours ago
- RNZ News
Why has a bill to relax foreign investment rules had so little scrutiny?
By Jane Kelsey* of Photo: RNZ Analysis : 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 on 23 July. 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. 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, will 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. 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. 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. 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. *Jane Kelsey, Emeritus Professor of Law, University of Auckland, Waipapa Taumata Rau This story was originally published on The Conversation.
Scoop
3 days ago
- Scoop
New Zealand Reaches Deal With Canada In Long-Running Dairy Trade Dispute
Canada has agreed to allow access for New Zealand dairy products following a long running trade dispute, Trade Minister Todd McClay says. Dairy exporters had been blocked from the Canadian market, despite the move being in breach of the CPTPP trade agreement. On Friday morning McClay announced an agreement had been reached. He says Canada has committed to making changes to its dairy quotas which will deliver up to $157 million to New Zealand dairy exporters. New Zealand initiated formal dispute settlement proceedings over restricted access to the Canadian market for dairy exports under the CPTPP in 2022. A dispute panel found in New Zealand's favour, however, Canada failed to fully comply with the panel's ruling. New Zealand threatened further action last year including the imposition of retaliatory tariffs against Canadian exporters. "The government is pleased that this dispute has now been settled, and New Zealand exporters are guaranteed better access to the Canadian market," McClay said. Canada said the changes have been negotiated with "close consultation" with its dairy sector and the amendments will result in "minor policy changes". In a statement Canadian Agriculture minister Heath MacDonald said it was a "mutually satisfactory" resolution. Under the agreement, Canada has committed to changing the way it administers its dairy quotas under CPTPP, including faster and more efficient access to quotas for New Zealand exporters, reallocation of underused quotas, and penalties for importers who misuse quotas. "The CPTPP is a world leading agreement that unlocks significant opportunities for all parties, but its obligations must be upheld. Today's agreement reinforces support for the rules-based trading system," McClay said. He added Canada was a long-stranding friend and trading partner of this country and "constructive engagement" had brought about a resolution. Last year ACT Party trade spokesperson Dr Parmjeet Parmar called the dispute a "betrayal of our friendship". She said if Canada could not comply with the CPTPP, it should be "booted out of the deal". Deal welcomed Fonterra is pleased to see the end of a long running trade dispute involving NZ and Canada. Fonterra global external affairs director Simon Tucker told Midday Report Canada has a very protected dairy market and it has taken what he calls "dogged determination" by governments and officials to force Canada to comply with its obligations. He said dairy farmers could sell millions of dollars of products into Canada but it is only a small part of the Fonterra sales which has revenues of more than $20 billion a year. "Canada is one of those high value niches around the world which would be good for Fonterra. "This was the right to do; to use the disputes settlement over this issue. We won, and then governments and officials have worked hard to force Canada into compliance. "This is the right outcome." Tucker said the win opens up opportunities for New Zealand to pursue further moves especially around Canada's protein subsidies which are considered unfair. ExportNZ has also welcomed the deal, saying it will unlock higher export value for Kiwi business. Executive director Josh Tan said the outcome was a win for New Zealand dairy exporters, and a win for the rules-based trading system. "It's essential that our trade agreements function as they were agreed to - particularly in the current global trade context. Likewise, our trade partners should ensure they are playing by the rules." Canada was a valuable trading partner for New Zealand, Tan said. The Dairy Companies Association of New Zealand congratulated the Government for settling the dispute, which was first initiated under the previous Government. Executive director Kimberly Crewther said the outcome proved that dispute mechanisms were still a valid and viable approach to be taken. She said Ministry of Foreign Affairs and Trade estimated $157 million of trade revenue was not able to be used, due to breaches of the CPTPP. "Previously, it was giving the majority of export licences under these quotas to its own processors, many of whom had very little interest in seeing imports occur and they could hold on to those export licences and not use them without any penalty," Crewther said. "The changes introduce penalties... so that's a good improvement and we hope that it will lift the utilisation rates." She said Canadian dairy farmers received subsidies, which brought low prices to global dairy trading among nations without farmer subsidies, like New Zealand. "They're skewing the global dairy trade playing field quite significantly," she said. "Unfortunately, Canada's not a stranger to having these sizeable impacts on trade opportunities for New Zealand exporters. "Canada has a reputation for being amongst the most protectionist of dairy countries in the world, and they do that in a way that makes their market very difficult to access even with these CPTPP quotas, it remains 95 percent closed." Crewther said New Zealand had "virtually no tariff protections" on dairy into the market, and openly imported dairy into the country. "So we operate on an open basis, our farmers are not receiving direct subsidies and we are we're trading fairly in the world." She said its first preference is an on-demand licensing system which ensured those applying for the quotas would utilise them appropriately. "It's really important to hold them to account. This case has shown that dispute settlement can and does work, and it's important that New Zealand continues to move forward and uses these mechanisms where we need to."
Scoop
3 days ago
- Scoop
Parliament Versus Executive: Regs Review And The Regulatory Standards Bill
, Editor: The House Analysis - Parliament recently heard a single week of public submissions on David Seymour's Regulatory Standards Bill. The submissions were seldom complimentary. The Finance and Expenditure Committee is considering that bill, but this week a different select committee heard briefings of its own on issues that arise from the bill, because the bill's aims seem in conflict with the purpose of the Regulations Review Committee - even its existence. The Regulatory Standards Bill's own description lists its aims as being to: promote the accountability of the Executive to Parliament for developing high-quality legislation and exercising stewardship over regulatory systems; and support Parliament's ability to scrutinise Bills; and support Parliament in overseeing and controlling the use of delegated powers to make legislation. That may sound good on paper, but the bill does not create or support parliamentary bodies to keep a check on the Executive. Instead, the bill creates an external board which works under the Executive. Parliament already has a committee tasked with the express job of evaluating regulations, including hearing public complaints - the Regulations Review Committee. Regs Review, as it is commonly described, is traditionally one of Parliament's most cross-party, collaborative committees. It is usually chaired by a senior opposition MP; currently that chair is Labour MP Arena Williams. Among the committee's briefings on the bill this week was a public briefing from former Prime Minister Sir Geoffrey Palmer. Because it was public, this article uses that discussion to help outline the reason the Regs Review Committee is concerned enough to ask for briefings on a bill being considered by a different committee. Williams outlined one purpose to the former prime minister thus: "I would like to progress usefully for the Standing Orders Committee, what the role of the Regulations Review Committee is now." Note: The Standing Orders Committee is the body that considers changes to Parliament's rules. If the Regulatory Standards Bill is passed, the Standing Orders Committee will likely need to adjust Parliament's rules to try and make it all fit. Background to Regulations and Regs Review It was Geoffrey Palmer's parliamentary reforms in the 1980s that created the Regulations Review Committee and gave it the job of fixing regulations, with the power to ask Parliament to disallow (ie. kill) bad regulation. Earlier this year the current committee asked the House to do exactly that to a regulation regarding law school curricula - and the House agreed. More often though, the committee asks ministers to fix poor regulation, and is successful in doing so. This role clashes with aspects of Seymour's new bill, which would empower its own non-parliamentary board to review regulations - a board appointed by the minister for regulation and working together with their Ministry for Regulation. Sir Geoffrey provided background to the Regs Review Committee's creation in the 1980s. It was part of a response to a period of government under Robert Muldoon when New Zealand was often governed by executive decree, without much reference to Parliament, in spite of the fact that Parliaments - not governments - have supremacy. Sir Geoffrey listed a few former laws that gave ministers vast powers. "The Economic Stabilisation Act, the Commerce Amendment Act of 1979, the National Development Act that allowed you to develop New Zealand by Order in Council, and not by Parliament. These were very grave exercises of executive power, and that led to the repeal of all those statutes. And it also led to the setting up of this committee." The Economic Stabilisation Act from 1948 for example, was used by Robert Muldoon's National Party government in the 1970s and 1980s to freeze wages and prices across the entire country, and to determine interest rates. As one response to the 1970s oil shock, people were forced to choose a day they could not drive their cars. That was all done without reference to Parliament. Despite his own government's repeal of such broad powers, Sir Geoffrey argued that regulation is not inherently bad, but is necessary. "You cannot run a country on the basis of primary legislation alone. It is not possible. And the ministers have to be able to have the ability to have administrative arrangements that are within the competence of the enabling provisions in the primary act that allows detail to be dealt with." Ministers need to be able to act without constant reference to the boss. Many powers are necessarily delegated to a minister or a ministry. That delegated authority is enabled by primary legislation (statute law), and is referred to as secondary legislation - mostly it is regulation. Imagine if no authority was delegated. How would that look? Maybe you couldn't get a new passport until your name had been included in legislation, or your passport was approved by the governor-general. Every price change for a government service (eg. a DOC campsite), and every new-build classroom would need specific approval. That all sounds ridiculous, but power is delegated, and without delegation things must be confirmed at the centre of power.. "The enthusiasm for terrific deregulation makes me nervous," Sir Geoffrey told the committee. "I don't quite know where that desire comes from, because the evidence has not been put in front of this Parliament. It's asserted, but it's not generated as evidence anywhere that I have seen." The double-up Putting aside other criticism of the Regulatory Standards Bill, what exactly is the issue for the Regulations Review Committee? Sir Geoffrey noted one glaring issue: "There was nothing said about the Regulations Review Committee in the legislation, or indeed, as far as I can see in any of the consideration that led to the drafting of this ill-considered bill." That is a monumental oversight, or possibly a snub, because the job of the Regs Review Committee and that of the Board that the bill creates will, at best, overlap. They may clash terribly. It's like a second referee being sent onto the field during a game - a referee that answers to someone different, and one with a vested interest. "The conduct of this Parliament," Sir Geoffrey said, "already pretty unsatisfactory in many points of view, is going to get a whole lot worse when you have these confusing areas of responsibility that don't fit." Green MP Lawrence Xu-Nan asked the former prime minister which group would have supremacy if they both tried to consider the same regulation - board or committee? "The Regulatory Standards Board is a creature of the minister, and it is not a creature of Parliament. This committee is a creature of Parliament." Only one of those creatures has the power to ask Parliament to strike out bad regulation. Sir Geoffrey indicated that was everything you needed to know. In other words, since Parliament has supremacy over the Executive, Parliament's Regulations Review Committee would have supremacy over the Executive's proposed Regulatory Standards Board. Sir Geoffrey argued that the bill ought to be amended to have no role in secondary legislation at all. He also had advice for the committee and for its backbencher colleagues. "If you are left alone, that would be good; but what you need to do is to be more muscular. …The bad habits of New Zealand legislation have been somewhat restricted by the activities of this committee, but not enough. The bipartisan thing that is necessary to make the committee work properly needs to extend to backbenchers from the governing parties feeling that they can exercise their judgement without fear or favour." He suggests that non-executive MPs-regardless of their political affiliation-ought to do their jobs as parliamentarians, not as voting automatons without a role in keeping a check on governments. * RNZ's The House, with insights into Parliament, legislation and issues, is made with funding from Parliament's Office of the Clerk. Enjoy our articles or podcast at RNZ.
