Foreign Control - Key Facts

† indicates source. Last updated: May 2022

Note that there are often revisions to official data, leading to some changes to reported data for past years.

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Key Facts

Foreign direct investment (ownership of companies) in New Zealand increased from $15.7 billion in March 1989 to $140.6 billion at March 2020 - nine times. As a proportion of the total output of the economy, Gross Domestic Product, it has risen from 22% to 43.1%. This is the highest proportion since 2016, on the back of an $11 billion (3%) increase in the year to March 2021, the largest single-year increase since 1996. Ownership of overseas companies by New Zealand residents has grown almost six times, from $6.8 billion to $39.1 billion. In other words, net foreign direct investment has grown more than ten times from a net liability of $8.8 billion to a net liability of $101.4 billion As a percentage of GDP, NZ's net liability has more than doubled, from 13% of GDP to 31%.

Foreign Direct Investment from International Investment Position, National Accounts, Statistics New Zealand, InfoShare series IIP088AA. GDP from National Accounts, Statistics New Zealand, InfoShare series SNE038AA.

Foreign owners controlled 37.8% of shares listed on the New Zealand Stock Exchange in 2021, the lowest level in the past five years. In 1989, foreign ownership of the NZSE was 19% and it was estimated to be below 5% in 1986. It peaked in 1996-97 at 61%.

At March 2020, foreign owners owned an estimated 24.5% of the value of all corporate equity (shareholdings) and 29.3% of privately owned equity of corporate enterprises in New Zealand, including shares not listed on the stock exchange. Household wealth appears to have been reappraised upwards in the provisional 2020 data but some values are missing. I have used the previous year's (lower) figures for these missing values, so this part of the graph jumps around a bit!

1986, 1987: "Brian Gaynor: New Zealanders buy back their sharemarket", New Zealand Herald, 19 October 2013; and "Brian Gaynor: Potential problems in NZX's high level of foreign investment", New Zealand Herald, 31 January 2015; 1989-1997: "Corporate Governance Research on New Zealand Listed Companies", by Mark Fox, Gordon Walker and Alma Pekmezovic, Arizona Journal of International & Comparative Law Vol. 29, No. 1, 2012, Table 4, p.16. 1997-2004: "Savings and the Equity Market" - JBWere submission to the Savings Working Group, November 2010, p.2. 2005-2020: Equity Ownership Survey - New Zealand 2020, JBWere, 12 December 2020, p.3, "Ownership structure of NZX primary listed stocks since 2005". 2021: Equity Ownership Survey New Zealand 2021, JBWere, shared directly to the author.

Foreign investors' share of total net wealth in New Zealand dropped 5% to 18% in the year to March 2021. While the overall scale of this foreign investment (still $481 billion since March 2020) has barely moved, the decline can be attributed to a significant increase in total net wealth, increasing 24% to $2.63 trillion at March 2021. This half a trillion-dollar increase is mainly accounted for by major increases in the total value of owner-occupied housing and land ($215 billion, a 23 % increase), household wealth ($268 billion, a 27% increase) and Government net worth ($42 billion, a 36% increase).

Total wealth comprises housing, land, other property, plant, equipment and financial assets owned directly or indirectly by households, government, non-profit organisations and foreign investors. New Zealand residents owned a further $316 billion of investments abroad. (These totals exclude shared natural wealth such as rivers, and human and social capital.)

Wealth is calculated from Statistics New Zealand's Annual Balance Sheets 2007-20 (provisional), and the corporate equity estimates (which do not include households' equity in unincorporated enterprises) are calculated from equity data from the same source, eliminating double-counting of share value by including only holdings by government, households, overseas residents, and non-profit institutions serving households.

In the year to December 2021, the Overseas Investment Office (OIO) approved foreign investment totalling $19.6 billion, the highest amount approved since 2006. The average for the decade 2012-2021 was $10.5 billion. Of the $19.6 billion in the year to December 2021, $12.4 billion was sales from one overseas company to another or from one New Zealand part-owner to another ($8.9 billion on average over the decade 2012-2021). Only company takeovers involving $100 million or more need OIO approval, except those involving land or fishing quotas. For private Australian investors the threshold was $552 million in 2021, and is adjusted upwards each year for inflation: it is $560 million in 2022. For investors covered by the following trade and investment agreements, the threshold is $200 million: the CPTPP Agreement, the Korea FTA, ANZTEC (the agreement with Taiwan), the Hong Kong CEP, the China FTA, and the P4 Agreement. There is a lower threshold for government-owned investors. Until 1999, the threshold was $10 million, it then became $50 million, and from August 2005 the government increased it to $100 million.

Overseas Investment Commission and Overseas Investment Office. In earlier years, statistical releases provided summaries of data. Until 2019 data for each year was now supplied with the release of December decision sheets. 2020 and 2021 data was provided by request to the OIO.

Threshold for Australian Investments: see
https://www.gazette.govt.nz/notice/id/2021-go869 and
https://gazette.govt.nz/notice/id/2022-go1148
For thresholds for the other trade and investment agreements see Subpart 2 of the Overseas Investment Regulations.

Note that the OIO suppresses some values. In 2017, final totals were suppressed and were estimated by us. The actual values were supplied in the December 2018 release.

In the year to December 2021, the OIO approved the sale of 25,863 hectares of freehold rural land to foreigners. While this is higher than 2020 it remains well below 2019 when the sale of 78,678 hectares was approved, and from 2018 when the sale of 137,834 hectares was approved. It is well below the average for the decade 2012-2021 of 113,036 hectares. The sale of 22,318 hectares of leases, forestry cutting rights and other interests in land was approved in the year to December 2021. In the year to December 2021, 43,943 hectares of the freehold land and 10,676 hectares of the leases and other interests in land were from one foreign investor to another or one New Zealand part-owner to another.

Statistics on sales of land to overseas interests are poorly recorded and incomplete. In 2011 our best estimate was that at least 8.7 percent of New Zealand farmland including plantation forestry, or 1.3 million hectares, was foreign-owned or controlled and it could have reached 10 percent. In a more recent investigation, Radio New Zealand identified the 100 largest private land owners in 2019. The list was dominated by forestry companies. Radio New Zealand estimated that "at least 3.3 percent of New Zealand's land is foreign-owned." The percentage of farmland would be almost double: in 2018, 13.7 million hectares were in farmland out of New Zealand's total land area of 26.7 million hectares. However, that does not include smaller land owners, or the widespread overseas ownership of leases, forestry cutting rights and other forms of control of the land.

Overseas Investment Commission and Overseas Investment Office.

"Overseas Ownership Of Land: Far Greater Than The 1% The PM Claims", by Bill Rosenberg, 2012 (www.converge.org.nz)

Farm land area from Statistics New Zealand's Agriculture Production Survey, InfoShare series AGR001AA.

"Green Rush: Foreign forestry companies NZ's biggest landowners", by Kate Newton and Guyon Espiner, 10 October 2019, Radio NZ.

Statistics NZ data shows the countries where $100m or more in foreign direct investment was based as of March 2021 as being, in decreasing order: Australia, Hong Kong, US, Singapore, Japan, UK, Canada, Netherlands, Cayman Islands, Switzerland, China, British Virgin Islands, Germany, Luxembourg, Belgium and France (though the investments from some countries have been suppressed). These accounted for 93.4% of foreign direct investment in New Zealand. Australia alone accounts for 50.5% with $66.1 billion of the $130.9 billion total. Australian FDI in NZ accounted for two thirds of the almost $10 billion increase in the last 12 months.

International Investment Position, Statistics New Zealand: Directional basis stock of direct investment by country (Annual-Mar), InfoShare series IIP081AA. Note that these statistics are compiled on a different basis from those also from Statistics New Zealand above, so the total does not match. These are compiled on a "directional" basis, based on ultimate nationality of ownership; the above are on a "balance sheet" basis, based on residency of the company. Industry statistics below are also compiled on a directional basis.

Mallika Kelkar. (2011). "The ultimate sources of foreign direct investment (p. 19). Presented at the New Zealand Association of Economists (NZAE) Conference, Wellington, New Zealand. Retrieved from http://archive.stats.govt.nz/methods/research-papers/nzae/nzae-2011/ultimate-sources-foreign-direct-investment.aspx

Hong Kong, British Virgin Islands, Cayman Islands and Luxembourg are tax havens, in the year to March 2021 FDI from these companies totalled $13 billion. The Netherlands, Singapore and Switzerland are also used to avoid tax, responsible for a further $13.2 billion in FDI. This means that between 9.9 and 20% of all FDI in New Zealand could be structured to avoid tax. A Statistics New Zealand study showed that in 2010, large proportions of the foreign direct investment from the Netherlands, Singapore, Hong Kong and tax havens was in fact from other countries, led by the UK, US, Germany and Canada. In 2021, other tax havens with investments in New Zealand companies include Bahamas, Barbados, Bermuda, Dubai (United Arab Emirates) and Isle of Man, Lithuania but the value of all their holdings has been suppressed as "confidential".

Bermuda showed a negative investment in New Zealand companies between 2009 and 2011 and data released in 2015 showed it was negative up to 2015 (negative $1.8 billion in 2015), but all values since 2004 (when it had $1.85 billion) have now been suppressed. Germany has also showed negative investment from 2013 to 2017, and Fiji since 2002. Ireland's ownership went negative in 2017 following steadily falling direct investment and was negative $87 million in 2019, while Belgium fell to negative $21 million. Negative investment suggests that the companies may have been loaded with debt by their owners (which can be a tax avoidance mechanism) or are technically insolvent.

Tax havens are identified from taxhavens.org and oxfam.org

The Financial and insurance services sector, which includes the four big Australian owned banks, accounted for by far the biggest part of foreign ownership of New Zealand companies by industry in March 2021, with $51.2 billion (39.1%). Next was Manufacturing at $16.9 billion. Other industries that have more than $1 billion of foreign investment were (in decreasing size): Agriculture, forestry, and fishing; Wholesale trade; Retail trade; Rental, hiring and real estate services; Health care and social assistance; Professional, scientific and technical services; Accommodation and food services; Electricity, gas, water and waste services; Information media and telecommunications; and Mining. $16.3 billion was unable to be allocated to an industry because of the way foreign direct investment is estimated, or was suppressed as being confidential.

Source: International Investment Position, Directional basis stock of direct investment by industry (Annual-Mar), InfoShare series IIP080AA - Statistics New Zealand. Like the country statistics (see above), these are compiled on a directional basis.

Transnational corporations (TNCs) make massive profits out of New Zealand. In the year to March 2021, the profits were $8.1 billion, steady on the previous year. Over the last decade they have averaged as much as the combined exports of seafood and milk powder. In the decade 2012-2021, TNCs made $88 billion in profits from New Zealand. They made an average rate of profit after tax on their shareholdings of 7.5% in the year to March 2021, well below the 20-year average of 11.6%. On average only 28.1% of this has been reinvested, however the year to March 2021 saw a relatively higher rate of reinvestment at 69.6%. In most years profits have averaged three times the increase in foreign direct investment holdings each year, however 2021 saw a significant $11 billion in foreign direct investment, $3 billion higher than the average profit of TNCs over the previous decade.

Balance of Payments: Current account primary income (Annual-Mar), InfoShare Series BOP058AA; Current account investment income by sector (Annual-Mar), InfoShare series BOP059AA; and Balance of payments major components (Annual-Mar), InfoShare series BOP055AA – Statistics New Zealand. Detailed sectoral income is from BPM6 Annual, Directional basis investment income by industry (Annual-Mar), InfoShare series BOP063AA. : Key Statistics Table 7.04 - Value of principal exports (excl re-exports), InfoShare series EXP005AA - Statistics New Zealand.

Exports: Key Statistics Table 7.04 - Value of principal exports (excl re-exports), InfoShare series EXP005AA - Statistics New Zealand.

Another $6.2 billion left New Zealand in the year to March 2021 made up of investment income from debt and smaller shareholdings (portfolio investment), making a total $14.4 billion. While this figure fell by 28% in the last two years, it has averaged as much as the combined dairy and forest product exports over the last decade (NZ's number one and number three largest exports).

In 2021 the investment income deficit (income on New Zealand investment overseas less income on foreign investment in New Zealand) was smaller than the current account deficit. This has been the case for all but four years since 1989, further increasing New Zealand's foreign liabilities.

Balance of Payments: Current account primary income (Annual-Mar), InfoShare Series BOP058AA; Current account investment income by sector (Annual-Mar), InfoShare series BOP059AA; and Balance of payments major components (Annual-Mar), InfoShare series BOP055AA - Statistics New Zealand. Detailed sectoral income is from BPM6 Annual, Directional basis investment income by industry (Annual-Mar), InfoShare series BOP063AA.

Exports: Key Statistics Table 7.04 - Value of principal exports (excl re-exports), InfoShare series EXP005AA - Statistics New Zealand.

Almost one in every two dollars that left New Zealand in the year to March 2021 went to the owners of New Zealand's banking sector: $7.1 billion out of $14.4 billion, the highest proportion since this data has been available. The investment income from overseas ownership of the banking sector ("Deposit taking corporations") after taking account of its small investment income from abroad, accounted for 75% of New Zealand's current account deficit in the year to March 2021: $6.2 billion compared to $8.2 billion. The finance sector, which includes banking, finance and insurance, accounted for almost two thirds (69% or $10 billion) of the investment income going overseas.

Business demography statistics: Enterprises by industry and overseas equity 2000-21, Statistics New Zealand, available in NZ.Stat here.

Foreign investors are not great for employment - they only employ 17.2% of the workforce, the lowest level since 2013 (down from 21% in 2000). Foreign ownership does not guarantee more jobs. In fact, it can add to unemployment such as in examples of private equity takeovers including NZ Rail, Feltex, Cadbury's and Dick Smith Electronics.

Foreign ownership has not improved New Zealand's foreign debt problem. In 1989, total private and public foreign debt stood at $47.5 billion, equivalent to about two-thirds (68%) of New Zealand's Gross Domestic Product. As of March 2021, it was $289.3 billion (or $311 billion including derivatives), equivalent to 88.6% of New Zealand's Gross Domestic Product (95% including derivatives) despite all of the asset sales and takeovers.

Source: Statistics New Zealand as follows:
International investment position (IIP) (Annual-Mar) - InfoShare series IIP088AA;
External lending and debt by sector and relationship (Annual-Mar) - InfoShare series IIP078AA;
International non-equity financial instruments by sector (Annual-Mar) - InfoShare series IIP074AA;
New Zealand's A&L - Level 3 Components (Discontinued March 2000) (Annual-Mar) - InfoShare series IIP007AA;
GDP(P), Nominal, Actual, Total (Annual-Mar) - InfoShare series SNE038AA.

 

Campaign Against Foreign Control of Aotearoa,
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Christchurch 8140.