The Government has announced a new Investment Protocol for Australian investors in NZ, under CER. One of the new provisions is a vastly increased threshold of $477m – up from the present $100m. Anything below this sum will not require any kind of special approval, making a total joke of what is left of the “oversight” regime for foreign investment.
Australia is the biggest country of origin of foreign investors, so it is inevitable that the Government intends this new threshold for Australian investors to become the new benchmark for all others, as part of its further “liberalisation” of the 2005 Overseas Investment Act (which is in danger of being liberalised to death).
That is exactly what happened in 1999, when a CER Investment Protocol saw the threshold increased from $10m to $50m for Australians, and then become the benchmark for all others (Labour increased it again to the present $100m).
So, an increase from $10m to nearly $500m in just ten years represents an increase of the threshold of nearly 5,000%.
CAFCA has done some research to show just what that means in real terms. Below are some examples (all in the hundreds of million of dollars and in vital sectors of the economy) collected from the 2008 records of the Overseas Investment Office, of deals that would no longer require any kind of foreign investment “oversight” scrutiny under this new threshold.
This represents not so much leaving the key under the doormat but taking the door off the hinges and hanging a sign saying “Come on in and help yourselves”.
Examples of OIO decisions that would no longer require approval under the $477 million threshold.
Macquarie Bank’s Retirement Care (NZ) acquired Qualcare in February 2008 for $267 million. Qualcare is “one of the largest aged care operators in New Zealand, with 976 rest home and hospital beds, and 462 independent living villas and apartments. Ironbridge has invested A$36 million of equity for 60% of the business.”
Lend Lease Corporation (“one of the leading international property groups listed on the Australian Securities Exchange”) took over Babcock and Brown’s aged care operation, Primelife in December 2008. It manages Primecare retirement facilities in Aotearoa, which have over 1,300 residents.
Origin Energy bought Swift Energy’s assets for $110m in June 2008, including the Tariki, Ahuroa, Waihapa and Ngaere (TAWN) gas fields; the Waihapa production station; the Rimu, Kauri and Manutahi fields; the Rimu production station; and separate oil and gas pipelines from Waihapa production station to New Plymouth. Other assets which Origin acquired from Swift included 50% of two offshore exploration permits PEP 38495 and PEP 381201 south of the Kupe and Rimu — Kauri fields.
Private equity funds managed by CVC Asia Pacific bought 65% of the Stella tourism group for $133m in February 2008 from the failing MFS (Octaviar) group. The Stella Group was an amalgamation of travel operations amassed by the MFS group including for example the Gullivers Travel Group, New Zealand’s largest travel agent.
In March 2008, Ernslaw One owned by the Tiong family of Malaysia acquired Winstone Pulp International for $117m. This included 3,896 hectares of freehold at Waimarino Forest, the Karioi pulp mill, 10,059 hectares of leasehold at Waimarino Forest and the Tangiwai sawmill.
In December 2008, an application by Cheung Kong Infrastructure of Hong Kong to take over New Zealand Steel Mining Limited for $250,000,000 was declined. The mining company controls a leasehold interest in 1392 hectares at Taharoa Road, and 1.2 hectares of freehold land at Tahuri Street and Te Waitere Road, Kawhia, South Auckland. New Zealand Steel Mining Limited operates a titanomagnetite (ironsand) mine.