Fran O'Sullivan: TPP needs own investment

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Tim Groser has a sales job in front of him after the Trans-Pacific Partnership kept the doors open wide to foreign investment in Auckland's red hot housing market.

Labour made the ability to apply a ban to foreign investment in New Zealand housing one of its pre-conditions for supporting the TPP.

It's clear that the non-discrimination provisions within the TPP prevent the Government from banning nationals from the 12 signatory countries from buying property in New Zealand. But New Zealand has retained the ability to impose some types of new discriminatory taxes on property.

The nature of those discriminatory taxes is not disclosed in the fact sheets being released by the Ministry of Foreign Affairs and Trade.

But it appears the Government's recent move to apply a withholding tax to foreign investment in housing and hit up investors with a capital gains tax if they sell within a two-year period of acquisition would fall within the proposed discriminatory rules.

These issues will inevitably be canvassed when Steven Joyce unveils a new investment attraction strategy at the NZ Institute of Finance Professionals (Infinz) conference in Auckland on Wednesday.

There will also be a report on investment growth into New Zealand, to be released with the investment chapter of the Government's Business Growth Agenda.

Within the ranks of officialdom there has been a great deal of work done examining how to entice overseas investors and their capital into backing sectors the Government wants developed. There have been a number of proposals floating within the bureaucracy.

These include special visas for talented and high-net-worth individuals who might want to invest in New Zealand and work between, for example, Silicon Valley and Auckland.

Proposals advanced by the Icehouse for foreigners coming in under various investor schemes to put more commitment into "at risk" categories have also been in the mix.

The TPP will increase the threshold for approving investments in New Zealand business assets. But it's clear that under the TPP, Cabinet ministers will still be in the box seat when it comes to approving applications from foreign investors to buy farms -- or businesses -- that happen to be on "sensitive land".

Under the TPP, the threshold above which an investor must get approval to invest in New Zealand will increase from $100 million to $200 million for investors from the 12 signatory nations to the deal.

Foreign direct investment out of the TPP countries makes up 75 per cent of the total in New Zealand. China and South Korea will automatically enjoy the same investment thresholds as the TPP nations because of the existing "most favoured nation" clauses in their respective free trade agreements.

Chinese firm Shanghai Pengxin is yet to declare its hand on its own investment intentions in New Zealand after two Cabinet ministers vetoed its $88 million bid to buy Lochinver station.

Neither China nor South Korea have a huge foreign direct investment footprint in New Zealand. But China in particular will be wanting more reassurance from Joyce that the investment regime will be transparent.