trade and investment, New Zealanders can tap into the best of what the rest of the world can offer while leveraging off what we can offer other people in other places.
domestic and overseas investors in New Zealand. For reasons that appear to owe much to prejudice and the delusion of a free lunch, the OIA is predatory towards FDI in New Zealand.
Overseas capital markets provide valuable diversification opportunities for portfolio investors. This is why the next Government should keep such avenues open and undistorted. Nor should the Government put barriers in the way of Kiwis wishing to purchase overseas assets such as land, housing or businesses. These outgoing investment propositions are not contentious.
The Act’s opening statement asserts that overseas investors are privileged if the Government permits them to invest here. That essentially tells New Zealanders they are privileged if ministers allow them to sell an asset or obtain funding from an overseas person. Having denied Kiwis a basic liberty, the Act impairs the rule of law by allowing authorities to extort concessions of various sorts in an unpredictable and opportunistic manner. It does both these things for no good public policy reason.
What is contentious is the question of incoming investment, particularly incoming FDI that involves a degree of foreign control of assets. We have the dubious distinction of being the most restrictive of the 37 member countries of the OECD in this respect. Australia is appreciably less restrictive but is also at the more restrictive end.
The “free lunch” fallacy arises from the unexamined belief that the costs of the extorted concessions will fall on the buyer, not the New Zealand seller. But foreigners have plenty of alternative investment opportunities. Unfortunately, the world does not owe
It is a widely accepted principle internationally77 that policy should be neutral, as between
Figure 7: New Zealand inward FDI stock (USD) as a percentage of the Australian inward FDI stock (1990–2019)
30% 29% 28% 26%
13%
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1997
1998
1995
1996
1993
1994
1991
1992
1990
10%
11% 12% 12%
13% 13%
12% 11%
11% 11% 11%
2019
14%
2017
15%
2018
13%
2015
17%
2016
15%
2013
18%
17%
16%
2014
19%
2011
18% 16%
2012
20%
2010
23% 22%
Source: UNCTAD, “World Investment Report 2020,” Annex Table 3, “FDI inward stock, by region and economy (1990–2019)”.
30 ROADMAP FOR RECOVERY
