Sharman Stone (Murray, Liberal Party) Share this | Link to this | Hansard source

by leave—I thank our very able chairman, the member for Wills, for his reference to this dissenting report that I and the member for Forrest have attached to the Protocol on Investment in the Australian-New Zealand Closer Economic Relations Trade Agreement—ANZCERTA. This treaty was originally tabled on 11 May 2011. We are not, and certainly I am not, against the business of foreign investment in Australia—not at all. What we are concerned about is anything which further diminishes the transparency or scrutiny of any foreign investment proposal, and we are certainly concerned when this is done, as it appears to be, as a cost-cutting measure.

This protocol does not in fact harmonise current anomalies or increase scrutiny of investment proposals by foreign private parties between Australia and New Zealand. As I said, it diminishes scrutiny and increases the disparities which already exist between the investment potentials in Australia and New Zealand for private companies and citizens. While it presumes to be doing more, the new ANZCERTA investment protocol only focuses on significantly increasing the dollar thresholds that trigger screening in either country. The actual business of this protocol is to make sure that New Zealand enjoys the same treatment as our preferred trading partner, the United States of America, when it comes to investment protocols. With this protocol, New Zealand investors would see the threshold for the scrutiny of their proposals raised from 15 per cent of A$231 million for general investment, A$5 million for Australian heritage properties or A$50 million for commercial properties to the one all-encompassing trigger of 15 per cent of A$1.005 billion in assets for any investment by a New Zealand corporation or business.

Australians, on the other hand, would see the investment-screening threshold raised from 25 per cent of New Zealand's NZ$100 million to 25 per cent of NZ$477 million. The New Zealand Overseas Investment Office would retain its current 'sensitive assets' criteria, so in effect this protocol does not at all give a level playing field to the two countries' investment. The argument for that is that New Zealand has a much smaller economy and investment by Australians in New Zealand is, at this point in time, substantially greater than the reverse.

I have to say, however, that the protocol does not address different percentages of investment triggering scrutiny or the levels of proposed investment triggering screening. Neither does it deal with the different definitions of so called 'sensitive assets' in New Zealand, which include rural land over five hectares and any waterfront property, or Australia's prescribed 'sensitive areas', which include media, telecommunications, transport, defence related industries and uranium but not rural land or waterfront land. Those disparities would continue under this new so-called 'harmonising protocol'. As well, New Zealand citizen investors are given a special visa category which exempts them from Australia's residential property investment conditions. However, the same does not occur for Australian citizen investors in New Zealand. They will continue to be restricted by certain criteria, for example, in regard to water frontage and farmland over five hectares.

The New Zealand OIO also charges a significant application fee of some NZ$12,000. Australia does not charge anything at all. This is another anomaly which has not been considered. New Zealand Treasury has calculated the protocol as proposed would substantially reduce the current costs for investment in business assets by around two-thirds. But it would appear that this will largely come from Australian businesses less frequently triggering the New Zealand OIO application fees, and fewer New Zealand investors triggering the Australian thresholds. Therefore, this saving comes at a cost of less scrutiny and transparency for either country. It cannot be seen as a savings carrying a benefit of increased efficiency or effectiveness or ensuring the national interests of both countries are preserved. Australia accepted the conditions of the Australia-United States Free Trade Agreement for screening of non-government investment in Australia by US corporations or businesses. This is now the standard to be offered to New Zealand as the equivalent of USA preferred status. However, that Australia-United States Free Trade Agreement hardly had generous conditions for Australia and it was not reciprocated nor harmonised with the United States criteria. The USA, for example, has no formal dollar threshold triggering screening of private investment but instead requires voluntary notification of any proposed investment which may trigger national security sensitivities.

It seems we still have not learned much then about equal or reciprocal bilateral trade arrangements or increasing transparency and accountability. In particular, article 8, the senior management and board of directors section of the new protocol, provides that neither party may restrict the nationality or residence of the senior management or board members of an enterprise of that party who plans to invest. We are concerned that such an arrangement could lead to a diminishing of Australia's national interest if board members or senior management are not resident in either country and do not have Australian or New Zealand nationality but still get to enjoy the preferential investment-screening treatment.

In summary, the only new obligation imposed by this new protocol on investment to the Australia-New Zealand Closer Economic Relations Trade Agreement is the requirement that Australia substantially increases the thresholds before screening of New Zealand private sector investment proposals occurs. Fees charged are not harmonised and special considerations are not aligned. Given the growing public disquiet about the lack of transparency and accounting for foreign investment in Australia, especially for farming land and manufacturing, now is not the time to simply raise the bar to save costs by triggering less scrutiny, assessment of national interest and accountability. In fact, I believe we need to urgently review our non-government foreign investment triggers for scrutiny and our definition of 'national interest', in particular to include consideration of Australian food production capacity. Because of those points, we cannot support this protocol.