The brutal domestic politics of the Trans Pacific Partnership began to become more obvious yesterday as Labour unveiled what at first sight seemed like a simple work around to achieve its ban on foreign home buyers.
But in the process, some of the partisan politics that dominated the TPP debate became more obvious.
Prime Minister Jacinda Ardern accused the previous Government of never having sought advice on whether it would be possible to ban foreign buyers even though they persistently claimed it was not possible to implement the ban under the TPP.
Former Finance Minister Steven Joyce, speaking in response to Ardern’s press conference conceded that National had never sought the advice but said that banning foreign buyers was not an issue that troubled National voters anyway.
The suspicion that National played partisan politics with the TPP has been reinforced by a claim in an agricultural publication AgriHQ, which said in September that former National Party Trade Minister Tim Groser tried and failed to persuade Cabinet colleagues to accommodate the Labour Party’s previous policy of restricting house purchases by non-residents to preserve a long-standing consensus on trade policy between the two major parties.
The AgriHQ article was tweeted yesterday by the former trade negotiator, Charles Finny, yesterday saying he wanted to draw attention to it.
Finny was a long time colleague of Groser’s when both were MFAT officials.
Labour’s solution to the foreign buyer’s ban is simple.
It will include sales of existing urban houses to foreigners who are neither New Zealand citizens nor permanent residents within the “sensitive land” schedule of the Overseas Investment Act.
Ardern and Trade Minister David Parker say as long as the legislation to give effect to this is passed before the TPP comes into force, probably early next year, then their solution should be okay.
Annex Two to the TPP Chapter on Investment says New Zealand “reserves the right to adopt or maintain any measure that sets out the approval criteria to be applied to the categories of overseas investment that require approval under New Zealand’s overseas investment regime.
It says these categories are: “acquisition or control, regardless of dollar value, of certain categories of land that are regarded as sensitive or require specific approval according to New Zealand’s overseas investment legislation.”
The Government argues that means “existing legislation” which means the legislation that is in existence on the day the TPP comes into force.
“We’ve been advised that it is best to act with alacrity,” said Trade Minister, David Parker.
Asked if officials had failed to offer the National Government free and frank advice on the TPP, Ardern said that was an aspersion she was not going to cast because that assumed that advice was sought.
(Though Joyce later conceded it had not been sought)
She said the previous Government’s argument that it was impossible to have a foreign buyers’ ban and be part of the TPP was false.
But MFAT were not just saying this in advice to their Minister; they also went public in a briefing paper, prepared in October 2015 which said exactly the same thing.
The notes said: “The non-discrimination provisions in TPP would prevent the Government banning TPP nationals from buying property in New Zealand. New Zealand retains the ability, however, to impose some types of new, discriminatory taxes on property.”
Both Ardern and Parker say they have advice from officials who now say it is possible to implement a ban.
That calls into question the quality of the advice given to the previous Government on the TPP and raises the question as to whether it was advice tailored to be acceptable to the National Government who wanted to oppose Labour’s proposal to ban foreign sales.
The idea that it might be possible to impose discriminatory taxes — probably stamp duties — on foreign land sales was promoted by then Trade Minister Tim Groser in a meeting in 2015 with the-then Labour leadership as a solution to the party’s problems.
But Parker said he now had been advised by offcials that would not work.
“I have copies of statements made by National during the election campaign saying that a ban would cut across existing trade agreements with Australia and Korea and cause considerable difficulty with China,” said Parker.
“They are just wrong on that.
“They have also said we could introduce a stamp duty, but we now learn that would breach the South Korea Free Trade Agreement.”
It’s not all over for Labour yet.
Ardern wants to discuss the Investor-State Disputes Settlement clauses with the other TPP 11 partners in Viet Nam at APEC.
But she may find more support there.
The Nikkei Asian review reporting on a Monday meeting of TPP negotiators in Japan said “New Zealand’s softening solves just one of the many problems negotiators must address.
“Countries still need to determine which portions of the original TPP agreement will be suspended in response to the U.S. withdrawal, and they have around 50 sections left to consider, including contentious points such as eliminating textile tariffs and rules for settling disputes between states and investors.”