16 February 2011

The investment agreement signed by the Prime Minister today with Australia prevents significant changes in our investment rules, yet was signed without any opportunity for the public to have a say on its provisions, says CTU Economist Bill Rosenberg.

"It is deeply ironic that it contains provisions on Transparency that give Australian investors the right to such a say on any government actions that affect them. That includes explanations of what is proposed, the opportunity to present arguments against them, and a right of appeal. They are guaranteed better treatment than the New Zealand public got in being signed onto this agreement."

For example the new agreement rules out laws that would ensure New Zealanders hold and maintain a majority of shares in a strategic asset (such as in the Labour Party's overseas investment policy), unless it is one of the exceptions listed in the agreement. It raises the threshold for scrutiny of most business investment from $100 million to $477 million (a value which will be inflation adjusted). It rules out any requirements on Australian companies that they use New Zealand products or that they export a portion of their products. It makes it much more difficult to manage money flows in and out of the country, as countries are increasingly doing in the aftermath of the global financial crisis.

In short, it makes it very difficult for future governments to change the policies of the current one.

"The one saving grace is that it has no means of enforcement other than the two governments putting pressure on each other," said Rosenberg.

"This is a forerunner of what is happening with the TPP (Transpacific Partnership Agreement) negotiations. This agreement threatens to make it difficult for future governments to change a much wider range of policies including product safety, food and drug regulations, packaging and labeling rules. It is likely to include the ability for overseas investors to sue the New Zealand government in private tribunals for millions of dollars when they consider their profitability has been threatened. Governments are refusing to release drafts of the agreement and bring it out into the open before it is signed."

ENDS

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