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 tomorrow.

• READ MORE: Other NZ foreign investment reports

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.

A three-step test
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, would 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.

Inadequate regulatory process
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.

No ‘benefit to NZ’ test
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.

Locked in forever?
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.

Dr Jane Kelsey is emeritus professor of law, University of Auckland, Waipapa Taumata Rau. This article is republished from The Conversation under a Creative Commons licence. Read the original article.

While attention is focused on economists finding a $500 million-a-year hole in National’s tax plans, a similar-sized hole in climate costings is hiding in plain sight — and it applies to Labour, too.

National appears to have the bigger gap, however.

The gulf was highlighted in the Pre-election Economic and Fiscal Update (PREFU) — Treasury’s official word on the state of the government’s books — which explicitly excluded the cost of meeting New Zealand’s international climate target under the Paris Agreement.

• READ MORE: Other NZ election 2023 climate crisis reports

Asked how they would pay this week, politicians gave unclear answers. But the obligation was still very real.

Both Labour and National have said they are committed to meeting the country’s international climate target, known as an NDC (Nationally Determined Contributions).

Under the Paris Agreement, which covers almost every nation on the planet, New Zealand has promised to cut emissions by 41 percent off 2005 levels by 2030. Exporters and carbon market experts say failing to meet that pledge could jeopardise international trade — nevermind the fact that following the Paris Agreement is humanity’s best hope for avoiding more expensive and deadly heating.

New Zealand plans to meet its target in two ways. First, it will do as much as it can inside the country by meeting a set of “emissions budgets”.

No way to meet target
But when the Climate Change Commission ran the numbers, it concluded there was no way to meet the whole target with action at home. Because New Zealand started slow at tackling emissions, cutting transport, industry, farming and electricity emissions that quickly would cause too much economic pain, it concluded.

So there is also a second part to the target: buying carbon credits from overseas. Typically, economists assume this is cheaper than making cuts in emissions at home, though it depends on the project.

While no purchases will be made until after the election, the kinds of things that could qualify include retiring coal boilers in developing countries, or planting forests.

This is where the gap in the books comes in. Treasury had previously put the cost of buying these credits from overseas — and an estimated 100 million tonnes of them will be needed, at last count — at between $3.3 billion and more than $23 billion between now and 2030.

Even at the lower end of projections, it could work out at around $500 million a year.

Whichever way the government decides to do it, PREFU said the costs would be “significant” and will start biting “within the current fiscal forecast period”.

As things stand, according to Climate Change Minister James Shaw, one or possibly two rounds of purchases could be made in the next four years, with a third and final “washup” at the end of the decade.

Election may change timing
The election could change the timing, but whoever is in government will be expected to start showing progress towards meeting their Paris target well before the end of the decade, said carbon market expert Christina Hood from Compass Climate.

“There’s this common misconception that whoever the finance minister is in 2032 is going to have to get their chequebook out and square up by however much we missed by. It doesn’t work that way at all.

“Every emission (saving) we count has to actually occur during those years (before 2030), so we need to get on with funding that.”

Yet despite starting to fall due within the next four years, the costs did not appear as a liability on the government’s books. Nor do the major parties seem to be clear on how much to budget for them.

Bold claims, few details
This week, neither National nor Labour answered clearly how much they had planned to set aside for these costs nor how they intended to pay them. They instead focused their answers on wanting to cut planet-heating emissions more deeply inside New Zealand’s borders.

At times, politicians seemed to confuse domestic emissions budgets with the $3 billion-plus added cost of buying offsets to meet the Paris target, or they made heroic statements about how much they could do onshore, without supplying the figures behind them.

A quick reminder: the 100-odd million tonnes in overseas offsets that it was estimated we would need were on top of meeting New Zealand’s domestic emissions budgets, not instead of it. Only a truly incredible effort could meet the entire amount inside the country, requiring deep and fast climate action on a scale neither party has hinted at.

Currently, New Zealand is not even on track to meet its domestic emissions budgets, as Climate Change Commission chief executive Jo Hendy told a business and climate conference in Auckland this week.

“Latest projections show we are not on track in every single sector, so we are going to have to do more,” she said. “We are particularly reliant on pushing the dial in transport and in process heat.”

Yet when RNZ asked about the $3 billion-plus cost on the campaign trail, politicians appeared to be planning to overperform on those budgets, sometimes by impressive amounts. Their answers suggested they may not need to worry too much about that $3 billion-plus.

Here’s what Labour leader Chris Hipkins said, when asked if he had costed for meeting Paris: “We still have a way to go before we have to make a final decision on how best to meet our commitments there. We’re on track to meet our first emissions budget.

Working harder
“We’ve still got the second and third emissions reduction budgets to go. If we don’t meet our targets there is a period of time when we can figure out how best to remedy that, and that includes working harder in the second period to compensate for that.

“But we’re confident that with the stuff we’ve got in place at the moment, we’re on track to meet our first target.”

Hipkins did not address paying for offshore credits, which were required even if the country met all three domestic budgets. As prime minister, he rolled back a biofuel policy and, like National, has focused his transport promises mainly on building new roads rather than a strong shift to lower-emissions modes.

He has also promised help for home insulation and solar, but it was not clear if his new promises compensated for the cuts.

Asked the same question, National leader Christopher Luxon took aim at the government for undermining the Emission Trading Scheme (ETS), saying the scheme should do more of the “heavy lifting”.

He, too, skirted the question of paying for offsets.

For context, the ETS made polluters pay for around half the country’s domestic climate pollution (the other half was from agriculture) and was already factored into projections of needing 100 million-odd tonnes of extra ‘top up’ help from overseas.

The scheme could do more, particularly if carbon prices went higher (taking petrol prices with them), or if farming was included, or if there were no limits on planting land in cheap pine trees, but Luxon did not detail how National would navigate these kinds of changes.

Cutting domestic emissions
Meanwhile, other party spokespeople talked-up cutting domestic emissions.

Labour environment spokesperson David Parker told the conference in Auckland he wanted to look at claims that native afforestation could meet the entire Paris target (without overseas help).

National’s climate spokesperson Simon Watts told the same gathering — the annual Climate Change and Business Conference — that National believed it could meet 70-75 percent of the 2030 target inside these shores, a figure considerably higher than previous estimates by the Climate Change Commission.

Watts did not supply details on how that would be achieved, though he discussed lightening regulation on wind and solar energy.

His party has said it would scrap Labour’s Clean Car Discount and major grants to companies to switch off coal boilers, and it would also delay pricing farming emissions a further five years, until 2030. There were questions about how it would meet even the current domestic emissions budgets.

The cost of waiting
Hood had a spot of good news on the cost front. She told RNZ that based on recent purchases by Switzerland, the cost of overseas carbon offsets was likely to be towards the lower end of Treasury’s range.

Even if the government winded up buying 100 million tonnes of savings offshore, that was still only around half the quantity the John Key-led government expected it might have to stump up for when it made its first Paris Agreement pledge, despite the first pledge being weaker on climate than the current one, she noted.

But getting offsets at the lower end of the cost range relies on the government getting moving on lining them up and buying them, she says.

Shaw told RNZ that environmental integrity would be a bottom line after New Zealand was burned for buying valueless “hot air” credits from Russia and Ukraine in the early years of carbon trading.

As well as Switzerland, Singapore and others had already started striking deals to buy the offsets they needed.

While the New Zealand Government has been scoping out prospective sellers overseas, it has refused to reveal who it is talking to, citing commercial sensitivity.

The ministries for Foreign Affairs and the Environment were working on advice to Cabinet on how to make these purchases and ensure the carbon saved was real. But that advice will not land until after the election.

Most expensive time to buy
One thing is clear. 2030 will be the most expensive time to buy, Hood said, because many countries will be panic-buying from overseas projects to meet their missed domestic commitments. Shaw agreed.

“A whole bunch of countries will be going, ‘Oh crap, I’ve missed my target,’ and scrambling around trying to find ways to fill the gap.”

Shaw wanted Paris costs to go into PREFU, making it clear to the government that any money spent on domestic action on climate change was also a cost saving in terms of buying fewer offshore credits.

“This is one of the things that worries me about what some of the other parties are saying, is that they aren’t really accounting for [Paris] in their fiscal plans.”

Shaw called the huge variance in Treasury ‘s $3 billion-23 billion estimate “unhelpful”.

“It’s such a wide variance it’s hard to trust it. At the moment… people are putting their fingers in their ears and saying ‘lalalala”.”

But asked how much the Green Party had costed for meeting New Zealand’s offshore climate commitments, Shaw would not be drawn on naming a more accurate number.

Treasury estimate best
“The best estimate I’ve got is the Treasury estimate. The Ministry for the Environment and MFAT (Ministry for Foreign Affairs and Trade) are doing a lot of work on this at the moment, but they’re not going to have a report back until just before Christmas. If I was to give you a number I would be pulling it out of thin air.”

As for how to pay for it, Shaw said ETS proceeds from polluters could do a lot of it.

“In a good year that’s a billion dollars, so if there’s seven years for us to do that it’s $7 billion.”

But Shaw also acknowledged there were a lot of other calls on that money — including for adapting to climate change, paying for domestic carbon savings, and helping low-income families weather the costs of higher emissions prices, which boost fuel and electricity costs.

National has said it would use ETS proceeds to help fund its tax cuts, meaning it will need to pay for the Paris target (both the offshore and onshore parts) some other way.

This article is republished under a community partnership agreement with RNZ.

One of New Zealand’s wealthiest people says he supports a capital gains tax, as new research lays the groundwork for a fresh tax debate.

A two-year investigation by Inland Revenue has found New Zealand’s ultra-rich pay tax at less than half the rate of the average person.

The findings come as no surprise to many, including one of the 311 richlisters who responded to the government survey.

• READ MORE: Other reports on NZ economy

The man, who did not want to be named, made his fortune on untaxed capital gains but supports taxing those gains — saying it was only fair to bring New Zealand into line with other countries.

However, he said a more broad-brush approach — like a capital gains tax on all properties beyond the family home — would do more for the government’s revenue.

“You could take all the money off [rich listers] and it would fund the government for a day. The government spends about $100 billion a year and taxes about $100 billion a year, so anything that happens needs to materially contribute to the revenue side of things. Otherwise, it’s just the politics of envy.”

In a speech on Tuesday, Revenue Minister David Parker described the report’s findings as “ground-breaking” but would not venture any suggestions as to how the government might respond.

Answers – for the future
“What, if anything, do we do about that [disparity] here in New Zealand? We’re not providing the answers today. That is for the future.”

Other political parties have split down ideological lines with National and ACT on one side and the Greens and Te Paati Māori on the other.

National leader Christopher Luxon on Tuesday came to the defence of New Zealand’s uber-wealthy, arguing they already pay their fair share of tax.

“It’s not the wealthy that are the problem here… this government has pumped up asset values and the wealthy have done well,” Luxon told reporters.

“The top 2 percent of New Zealanders are paying about 26 percent of all our income taxes and I think that is entirely fair.”

Luxon said National would deliver “middle working-class New Zealanders” a tax cut, while Labour was “softening us up for a tax grab”.

ACT leader David Seymour criticised the study as a “politically-driven fishing expedition to find people with money and take it from them”.

‘Fishing expedition’
“[Parker’s] fishing expedition wasn’t about gathering information,” he said. “It was about creating a narrative that he can ride to more taxes on Kiwis.”

On the other side of the argument, Green revenue spokesperson Chlöe Swarbrick put up an empassioned argument for a comprehensive capital gains tax or wealth tax.

“The super rich in Aotearoa are much much richer than we thought them to be,” Swarbrick said.

“To allow millionaires to continue to not pay their fair share after this explosive evidence is a political choice. Poverty is a political choice.”

Te Paati Māori co-leader Rawiri Waititi told RNZ there was no excuse for inaction.

“It’s just absolutely shocking, cruel and very unkind. Until they do something about it Labour, National and ACT will continue to be the bullies at school picking on the poor people.”

The government was yet to announce a new tax policy but is promising to bring one to this year’s election campaign and Parker has signalled it will be informed by this latest research.

This article is republished under a community partnership agreement with RNZ.

More than two million New Zealanders will get a one-off $350 sweetener as part of the Budget’s centrepiece $1 billion cost-of-living relief package.

The temporary short-term support is counterbalanced by a record $11.1 billion for the health system as the government scraps district health boards (DHBs) and replaces them with a central agency.

“Our economy has come through the covid-19 shock better than almost anywhere else in the world,” Prime Minister Jacinda Ardern said in a statement. She is in covid isolation.

• READ MORE: RNZ coverage of the Budget 2022 and reaction
• Ardern hails ‘budget for uncertain times’ as pandemic subsides
• Political parties respond to NZ Budget 2022
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“But as the pandemic subsides, other challenges both long-term and more immediate, have come to the fore. This Budget responds to those challenges.”

Ongoing uncertainty over inflation, covid-19 and the Russian invasion of Ukraine continue to cast a pall over the economy until at least the end of the year.

A large $19 billion deficit is expected this year, returning to surplus in 2025.

Treasury is forecasting house prices to ease and unemployment to drop as low as 3 percent.

Cost-of-living sweetener
New Zealanders aged 18 and over will be eligible for the $350 payment unless they earn more than $70,000 a year or already receive the Winter Energy Payment.

The sum will be paid in three instalments over August, September and October, working out at roughly $27 a week.

The temporary payment is estimated to cost $814 million — funded out of the remaining money in the covid-19 war-chest which is now being wound up.

NZ Finance Minister Grant Robertson delivers Budget 2022. Video: RNZ News

The support comes with a two-month extension to the fuel tax reduction and half-price public transport given the current high fuel prices.

New Zealanders who have a community services card will continue to get half-price public transport permanently from mid-September.

“While we know the current storm will pass, it’s important we do what we can to take the hard edges off it now,” Ardern said.

The government will also rush through legislation under urgency over the next few days to crack down on supermarkets in an effort to reduce grocery bills.

The legislation will ban supermarkets from using restrictive covenants to prevent competitors from accessing land to open new stores.

Ministers flagged further announcements in response to the Commerce Commission’s recent report in the sector “in the coming days”.

Health service
The Budget contains “the largest investment ever in [the] health system” — $11.1 billion — as the government presses ahead with its plan to replace DHBs with a centralised health service.

An initial $1.8b annual investment this year will help clear DHBs’ debt, giving the replacement Health New Zealand service and Māori Health Authority a “clean start”.

Health Minister Andrew Little said the 20 DHBs had collectively run annual deficits in 12 of the 13 years since 2008.

“As Health NZ takes over the books from the 20 DHBs on 1 July, a funding boost is being provided so the national system can start with a clean slate.”

The Māori Health Authority will get $168m over four years to directly commission hauora Māori services.

New Zealand’s drug-buyer Pharmac will also get an extra $191m over the next two years – in what Little says is the medicine budget’s “biggest-ever increase”.

It brings total funding to $1.2 billion which is 43 percent higher than when Labour was elected in 2017.

“Pharmac has assured me it will use this funding to secure as many medicines on its list as it can, with a focus on better cancer treatments, to ensure as many New Zealanders as possible benefit from this biggest-ever increase to its medicines funding,” Little said.

More than $166 million has been put aside over four years for ambulance services, adding more than 60 vehicles to the road fleet and about 250 more paramedics and frontline staff. Another $90.7 million will go towards air ambulance services to replace ageing aircraft with modern helicopters.

The Budget increases dental grants for low-income families from $300 to $1000 in line with Labour’s 2020 campaign promise.

A new Ministry for Disabled People is also being established at a cost of $100 million.

Housing support
While the housing market is showing signs of slowing, the Budget includes more support for first home buyers with funding available for about 7000 more grants.

House price caps across regions have been increased to line up with lower quartile market values for new and existing properties.

It means some significant shifts — both Wellington’s cap and Queenstown’s jump from $650,000 to $925,000, and Tauranga’s jumps from $600,000 to $875,000.

The income caps remain the same but will be reviewed every six months along with the new house price caps.

A new $350 million housing fund has also been set up where not-for-profit developers can apply for grants to build affordable rental accommodation.

Education equity
Replacing school deciles is the single biggest area of new spending for education.

The Budget provides more than $80 million a year for the equity index which replaces deciles as the measure of disadvantage in schools.

Most of the money, $75 million a year, will go directly to schools, adding to the $150 million they currently receive through the decile-based system.

The budget increases school operations grants and tertiary and early childhood education subsidies by 2.75 percent.

There is also $266 million over four years to give early education teachers pay parity with school teachers.

In tertiary education, the Budget provides $56 million a year to pay for an expected increase in enrolments next year and in 2024.

There is also $40 million for modernising polytechnic facilities.

Māori health, wellbeing
More than half a billion dollars is being pumped into the Māori Health sector with $579.9 million going towards Māori health and wellbeing.

The Māori Health Authority, Te Mana Hauora, is set to be launched July 1 and will receive $188.1 million over four years for direct commissioning of services.

Some $20.1 million will go to support iwi-Māori partnership boards, and $30 million will be invested into Maori providers and health workers to provide support and sustain capital infrastructure.

Lack of workforce capability has been identified as a key factor in being able to bolster Te Mana Hauora — and $39 million will be used for Māori workforce training and development to support them within the new health system.

The $579.9 million invested in Māori health and wellbeing is on top of the $11.1 billion health allocation.

This article is republished under a community partnership agreement with RNZ.

Papua New Guinea’s opposition has declared it will fight a good fight to expose and oppose what it describes the 2018 state money plan as a “fake budget”, reports the PNG Post-Courier.

However, the rival daily newspaper, The National, quotes Prime Minister Peter O’Neill as decribing the K14.7 billion (NZ$6.6 billion) Budget as Papua New Guinea’s “best in 16 years”.

The opposition’s Shadow Minister for Treasury and Finance Ian Ling-Stuckey presented the “alternative government” 2018 Budget response titled “Fake Revenues, Fake Loans and a Fake Budget”, the Post-Courier reported.

He said the 2018 Budget was filled with misguided spending priorities, failed plans for financing and yet another huge deficit that would burden “our children” with too much expensive debt.

“Put simply, when I look at the budget, I think of PNG as being similar to a very large and diverse company-PNG Government Limited,” Ling-Stuckey said.

“Is PNG Government Ltd broke? Our people are feeling the pain through a lack of jobs, a lack of incomes, a lack of foreign exchange and a lack of important government services.”

Ling Stuckey said that since 2011 debt had grown from K8 billion (NZ$3.6 billion) to more than K24 billion (NZ$10.8 billion) in just five years.

‘Fake revenue’
“The 2018 Budget has, at this early stage, some K2 billion in ‘fake revenue’. This is not the ‘building block’ that the Minister for Treasury promised. So where is this K2 billion in fake revenue?”

He said to assume that revenues were going to increase as much as 20 percent from K10.6 billion to K12.7 billion in 2017 was wrong.

He said the opposition supported the increase in health expenditure of K285 million but relative to the 2015 Budget, health had been cut by 16 percent in real terms.

“It’s no wonder our health services are declining. It is good that more funds are being provided for medical supplies. However, the underlying issue is a lack of transparent competitive tendering in the medical supply contract,” he said.

Ling Stuckey said the biggest winners in this budget were interest costs, administration, health and APEC.

“Are some of these really the right priorities at this time of severe economic pain and failing government services?

‘Bad signal’
However, The National’s Clifford Faiparik reported that Prime Minister O’Neill criticised the opposition budget response, calling on Ling-Stuckey to withdraw his “fake budget” remark.

“This is very disappointing as it will give a bad signal to our international investors. I’m calling on the Shadow Treasury Ian Ling- Stuckey to withdraw his statement,” he said.

“This is by far one of the best budgets that I have ever seen since I have been in this Parliament for 16 years now. That includes the budget that I have presented as well.”

O’Neill had served as a treasurer in the Sir Michael Somare-led government.

“I say this because this budget is now putting us on a course to make sure that this country’s economic base and growth will be such that it can be self-sustainable,” he said.

“So it is quite disappointing that some of the terminologies that he [Ling-Stuckey] used are unbecoming of leaders of this honourable House. We have to be careful of how we portray the image of our country, our parliament and ourselves.

“Sometimes for short political convenience and point-scoring we say things and do things that are not really in the best interest of our country. We have to be constructive.”

The Post-Courier and The National are Papua New Guinea’s only two daily newspapers.