Monday, 21 September 2015

A Dirigiste Turning Point

The NBR's Nevil Gibson agrees with us on the ridiculous Lochinver Farm decision.
At some time in the life of a government a single decision can be seen in retrospect as a turning point that may seal its historic reputation.

One of those occurred yesterday when the cabinet endorsed the decision of two government ministers to overturn fundamental property rights and signal the political interests of the state were supreme.

The blocking of the Lochinver Station sale to a Chinese-owned company, Pure 100 Farm, will cast a long shadow over future foreign investment proposals.
The government has protested that it wasn't a political decision.

I'm not sure how else one interprets a ministerial decision to overturn the OIO's approval of the sale.
Flaws in Overseas Investment Act

The New Zealand Initiative's 2014 publication, Open for Business: Removing the barriers to foreign investment, identifies a number of flaws in the Overseas Investment Act (OIA).

Its author, Bryce Wilkinson, says it has too many guidelines for decision-makers; in fact, there are some 19 factors in the original legislation before further condition were added by regulation.

“The OIA requires the Overseas Investment Office (OIO) to consider a multitude of potentially conflicting considerations and weight them arbitrarily,” he says.

“Ministers overturned the OIO's approval recommendation because they put different weights on the relevant considerations.”

Instead, Dr Wilkinson says there should be a presumption in favour of the vendor's property rights and the burden of proof put on the government to establish a good public interest reason for stopping a sale.

Unfavourable decisions should also raise the question of compensation.
Australians looking across the ditch for inspiration might be a bit cautious.

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