Limited Partnerships Bill 2007

One of the common catchphrases of this place is that a week is a very long time in politics.



So it is with the case of this Limited Partnerships Bill.



Last week New Zealanders woke to the news that Dr Cullen had introduced urgent legislation overnight, to constrain overseas investment applications in connection to a select group of strategically important assets.



And as the sun sets tonight, Government is pushing forward a Bill which actually flings the doors wide open to investment structures for overseas venture capital. We would suggest that it is no wonder that the polls are dipping so dramatically, when it would appear the right hand doesn’t know what the left hand is doing?



These two Bills Mr. Speaker establish a new regulatory and tax regime for limited partnerships. Limited partnerships are the internationally preferred investment structures to attract foreign venture capital.



Venture capital investment in Aotearoa is currently small as I understand, with the key sectors receiving investment being telecommunications, software development, biotechnology and other hi-tech developments.



Mr. Speaker as it stands, most Maori businesses are too small to get a look in.



But perhaps more to the point, the issues of ownership and accountability are the main issues of those in Maori Business. As Richard Jones, the Chief Executive of Poutama Trust concluded in TU MAI magazine back in 2006, and I quote:



“They will want to have a stake in the business as well as some control, even to the point of running it, so investment of this nature is not for the faint-hearted".



And this really, is our central concern as the Maori Party.



We wonder exactly what interest, foreign venture capitalists will have in Maori economic development.



Mr. Speaker, Te Ratonga Ture, the Maori Legal Service I am told advised the Select Committee that foreign capital investment will come at a price for share, equity, and a measure of control.



Te Ratonga Ture considered opinion that foreign capital investment would also bring forward the possibility of moving the centre of control overseas. This is something we take very seriously.



The new limited partnership business structure will open New Zealand up to foreign investment, holus bolus, without, we presume from its absence in the Bill, any consideration for the Treaty partner to be able to monitor, to assess, to support or indeed to oppose such investment.



We, the Maori Party, believe it is critical that before agreeing to allow any foreign investor access into Aotearoa, there needs to be extensive consideration of the conditions that will come with any such partnership.



Mr. Speaker, it is our belief that there are always ways to access funding without compromising what is important. The key point is not the limits of the funding – but more the limits of our imagination in terms of considering possible funding partnerships and negotiating the right terms and conditions.



As an example of the type of innovative thinking we need, I only need to look in the awesome electorate of Waiariki, at the Tuaropaki Trust, north of Taupo. The Trust includes a $30 million geothermal power generation plant; thirty acres of temperature controlled export tomato and paprika crops; and satellite/wireless communication.



In their case, the capital was raised through a non-recourse bank loan – the first of its kind. What it means in effect is that the bank has a claim over the project, but not over the land.



The Maori Land Court authorised the Trust to form a Single Purpose Company (also known as a Single Purpose Vehicle) and the company was therefore able to apply for the loan.



If it can work once Mr. Speaker, it can work again, and again, and again.



Another key issue for us is the suggestion from Select Committee that confidentiality clauses should be incorporated into this Bill.



The Commerce Select Committee recommended the deletion of clause 99, and a replacement clause which would stipulate that the Registrar must treat limited partner information as confidential.



But in a really curious twist, what the Committee recommended next was even more secretive than the privacy constraints.

For the Select Committee also recommended that the Official Information Act should not apply to limited partner information.



Mr. Speaker, submissions received by the committee put forward an alternative view. Lawyer Christopher Littlewood pointed out the inconsistency in the application of one law for limited companies and another law for limited partnerships.



He maintained that public registers should be public and there is no rational argument to justify hiding information such as contact details or the nature of the partnership.



We agree with the logic of Mr Littlewood, that the public have a fundamental right to know who they are dealing with, and to verify that information by consulting the Registrar.



Mr. Speaker, for an even more relevant opinion on the issues relating to privacy, we were interested in the advice of the Office of the Ombudsman who put forward the view that the privacy of individuals can be addressed through the routine application of the Official Information Act.



As such, the Ombudsman believed there is no need to exclude application of the Official Information Act from this Bill.



Mr. Speaker, four short words sum up what has lifted most successful individuals above the crowd – a little bit more. They do all what is expected of them, and a little bit more.



The Limited Partnerships Bill reinforces to business leaders that investment and support of initiatives may need a little bit more creative courage to search for the required funding from alternative sources.



There is no reason to fear that the only finance available will be that, with an overseas address tag, a tag which brings with it the downstream problems associated with majority share ownership.



Mr. Speaker, large scale foreign venture capitalists aim to buy in, make money and get out – regardless of the consequences.



And when we look at some of the development scenarios being considered we have to start being concerned about these consequences.



Biological materials from bio-prospecting activity on the foreshore and seabed; or geothermal developments are just some of the areas in which growth may bring with it additional risks and costs.



Capital is often traded for some form of ownership, control or relocation requirements.



The question remaining for the Maori Party is precisely around this issue of control, and how safe is any guarantee that we can retain ownership and control over our resources and over our development.



We have been thinking of the leadership and inspiration provided by organizations such as the Poutama Trust, the Tuaropaki Trust and other Maori businesses who deliver beyond all expectations.



Their managers, their boards, went a little bit more in taking the risks necessary to be successful.



We learn from their example, and believe we, the Maori Party, must also give a little bit more, in terms of responding to the model of leadership we see evident in te Ao Maori.

We know that Maori economic development, Maori businesses, can prosper without having to sell their soul and without having to sell off Aotearoa to foreign interests, purely on the basis of maximising the return to the investors.

What is needed in Aotearoa is economically and socially responsible investment, not economic and socially exploitative opportunism and greed.



We know that confidence for business leaders will demand high standards of professionalism but also of open and brave accountability.



We do not think hiding details away under confidentiality clauses, excluding potential investors from the reach of the Official Information Act, or opening up our domestic markets to foreign venture capitalists will work to support the long term aspirations and best interests of tangata whenua.



Without a doubt, many Maori businesses need access to seeding capital to take them from concept, through the start-up phase and to a point where they're a viable, long-term prospect. And without a doubt, if that capital was more accessible, perhaps more Maori businesses would be in a position to negotiate with foreign venture capitalists.



But what would remain are the fundamental questions of this time - the ownership and protection of customary resources - of whenua; of traditional knowledges; of forests, underground steam, minerals, water; of organisms on the foreshore and seabed - those resources that the Crown attempts to claim as their own, brokering deals for development that take ownership and profits elsewhere.



This Bill comes before things that need to be in place, are in place. We need settlement of the WAI 262 indigenous flora and fauna claim, we need repeal of the Foreshore and Seabed Act, we need fair and just settlement of Treaty claims.

When these things are in place, the Maori Party can return to the question of limited partnerships.



Until then, we will not be supporting this Bill.