Overseas Investment Amendment Bill

Transcription

1 Overseas Investment Amendment Bill Submission Finance and Expenditure Select Committee 23 January 2018

2 Summary 1. The Overseas Investment Amendment Bill (Bill) is designed to ensure that investments made by overseas persons in New Zealand will have genuine benefits for the country. 2. Telecommunications services (as that term is defined is defined in the Telecommunications Act 2001 (Telecommunications Act) are reliant on network operators (again, as that term is defined in the Telecommunications Act) placing their equipment in locations which are chosen to optimise coverage and network capacity in a given area. These locations are quite often in areas which are classified as residential or lifestyle as these can be the best places for the Network Operator to serve local communities. 3. A consequence of the way the Bill is drafted is that it will become difficult for Network Operators to build new sites, or renew leases on existing sites, on residential or lifestyle land, because Network Operators are typically classified as overseas persons, and therefore risks limiting the availability and capacity of telecommunication services in these areas. This effect would be contrary to other Government policies which aim to make it easier for Network Operators to deploy networks on residential or lifestyle land and which recognise the economic value of high speed mobile and broadband connectivity to our economy and society. 4. To avoid this unintended consequence, Spark New Zealand Trading Limited (Spark) encourages you to introduce an exclusion from the new regime so that parties that are designated by the Minister of Communications as Network Operators under the Telecommunications Act 2001 can continue to acquire interests in land for the purpose of providing Telecommunications Services. 5. This will ensure Network Operators can continue to expand or augment telecommunications coverage in locations where it is needed, to ensure the benefits of modern communications network are available as widely as possible. Introduction 6. Thank you for the opportunity to submit on the Bill. Spark requests the opportunity to speak to this submission before the Select Committee. 7. Spark is New Zealand s leading provider of mobile and fixed line Telecommunications Services, with over 3 million New Zealand customers. Our networks rely on Spark owning, leasing or occupying approximately 1300 different properties across New Zealand, which house our key network equipment. These include mobile cell sites, data centres, network exchanges, and backhaul or transport fibre access points and associated infrastructure. 8. The location of these sites is necessarily linked to where our customers live, work and play, and therefore a number of our network sites are located on residential or lifestyle land, or on buildings or other structures located on that land. 9. We are a proud New Zealand organisation, staffed by New Zealanders and serving New Zealanders. But we, along with New Zealand s other mobile Network Operators Vodafone and 2 degrees, are classed as an overseas person by section 7 of the Overseas Investment Act 2005 (Act) by virtue of the fact that from time to time 25% or more of our shares are owned by overseas persons. Overseas Investment Amendment Bill Submission Spark 1

3 10. As a result, we are required to obtain overseas investment office consent to investments in significant business assets and in sensitive land under the Act today. This process is costly and often drawn-out, with no statutory timeframes attached to it. But because acquisitions of, or investments in, sensitive land (as that term is currently defined) or significant business assets are not an everyday occurrence for our organisation, the requirements of the Act do not materially impinge on our day to day business, or on the services and service experiences we offer to our customers. 11. The Amendment Bill (Bill) in its current form will dramatically alter the application of the Act on our business, and, we expect, on the business of almost every other major telecommunications provider in New Zealand. We expect up to a third of our existing and planned sites will be impacted by the changes proposed 1. We want to ensure that no communities miss out on telecommunications services because of this Bill 12. The extension of the definition of sensitive land in Part 1 of Schedule 1 to include residential land (which in turn is defined to include any land which has a property classification of residential or lifestyle (together, Residential Land)) will immediately impact Spark if the Bill is passed in its current form. 13. For example, in its current form the Bill would require Spark to obtain Overseas Investment Office consent every time we acquire an interest in land (whether purchasing or leasing) for the purposes of providing Telecommunications Services, in order to install a new cell site or negotiate a new leasing arrangement on a current cell site, if that cell site is on land that is classed as Residential Land. This will significantly impact our ability to efficiently manage and expand our networks so that they reach the areas customers expect and require them to. 14. This is not a trivial matter: right now our mobile sector is preparing for the advent of 5G technology, which will fundamentally revolutionise multiple sectors within New Zealand s economy, through the use of artificial intelligence, robotics and automation. 5G will be a key enabler of more effective and efficient utility network management, transport network and vehicle management, and will open up new frontiers in agri-business, industrial traceability and sustainability management. But in order for us to be able to deliver the real-time, low-latency, network coverage required by 5G, we will require many more cell sites than exist in New Zealand today any many of those new sites will likely be in residential or lifestyle areas. 15. Similarly, the second area we and other mobile networks are expanding our networks is rural New Zealand. Mobile coverage in rural New Zealand lags urban coverage, and as a sector we are doing all we can to address this gap. And the government is playing its part as well, subsidising the deployment of a further rural cell sites by the Rural Connectivity Group, of which Spark is a shareholder. Again, we expect many of these sites will be located on residential or lifestyle land given the nature of the deployment. 16. The following are examples of existing sites which will which require Overseas Investment Office consent when Spark enters into new leases on expiry of the current arrangements. They show 1 We cannot provide a more accurate estimate at this time as we do not currently record the rates classifications of our sites. Overseas Investment Amendment Bill Submission Spark 2

4 the types of land that Spark needs to acquire in order to provide its Telecommunications Services (in this case its mobile network) to local communities: a. 179 Upper Harbour Drive, Greenhithe The total land area comprised in certificate of title NA is 1.77ha and the land is owned by a private owner. Spark has a mobile cell site on the land contained in a leased area of approximately 41m 2. This land is zoned Future Urban Zone, the land use is Lifestyle Style Single Unit, and the rating classification is Lifestyle. b. 31a Pantera Way, Manukau Central The total land area comprised in certificate of title is 1012m 2 and the land is owned by a private owner. Spark has a mobile cell site on the land contained in a leased area of approximately 66m 2. The land is zoned Residential Mixed Housing Suburban, the land use is Single Units (excluding Bach), and the rating classification is Urban Residential. c. 307 Harbour Road, Ohope This complex contains a number of apartments, owned by private owners, and is comprised in 31 stratum certificates of title. Spark has a lease with the Body Corporate for telecommunications infrastructure in and on the building. The land is zoned Residential and the rating classification is Residential. As illustrated in the following picture, our use of this site is minimal, and does not disrupt its use for residential purposes: 17. In addition to preserving our current interests in land and continuity of business, each of these 5G and rural site acquisition programmes is important to our sector and to our economy and society. We understand the intention behind the Bill, but are concerned at its potential to introduce significant cost and delay to each of these programmes, as well as our day to day activities which require Spark to acquire interest in land. This will likely result in fewer new cell Overseas Investment Amendment Bill Submission Spark 3

5 sites, and less 5G and rural coverage ultimately meaning less capacity and poorer coverage than would otherwise be available in an area. 18. We expect that the potential consequences for these programmes from the Bill is entirely unintended. Indeed, this Bill in its current form would be entirely inconsistent with the efforts supported by all parties of the House to facilitate faster and more cost-effective deployment of Telecommunications Services through the introduction of the: a. National Environmental Standard for Telecommunications Facilities in 2017, which is designed to set speed up deployment of new Telecommunications Services by setting nationally consistent planning requirements that prevail over district or regional plan rules, including with respect to Residential Land; and b. Telecommunications (Property Access and other matters) Amendment act 2017, which was also designed to speed up deployment of telecommunications networks through the use of existing utility infrastructure, including on residential land. We recommend that Network Operators be exempted when acquiring land for the purpose of providing Telecommunication Services 19. The Cabinet paper notes that a consequence of the legislation is that some companies may be restricted from acquiring (i.e purchasing ) Residential Land for a non-residential purposes (for example, a supermarket or shopping complex). The suggestion is that these companies can use the existing benefits tests in the OIA. 20. While this approach may make sense for significant and selective commercial developments (like a local supermarket whose application would be unique to the location of each request), this approach would be overly cumbersome for Network Operators providing necessary Telecommunications Services and facilities (often, pursuant to statutory obligations and rights). Further, these services and facilities are sometimes required as a matter of urgency. 21. As shown in the examples above, the interests we are acquiring in order to provide Telecommunications Services are usually just for a very small part of the land and on a leasehold basis. Our interests do not typically prevent the land continuing to be used for residential purposes. 22. Applying the same process and tests as used for a new supermarket to Network Operators to prove that their use of Residential Land to provide Telecommunications Services is beneficial on each site would add significant costs and cause unnecessary delays to network deployment. We also consider that the test is not required on the basis that the benefits of effective and efficient Telecommunications Services have already been established and are clear, accepted, and in line with wider Government policy. 23. We encourage you therefore to introduce a specific exclusion into the Bill to be included in the Act from the consent and conditions regime (Part 2 of the Act) for acquisitions, including both leasing and purchasing, of sensitive land that are made by a Network Operator (as that term is defined in the Telecommunications Act 2001) who is acquiring an interest in land for the purposes of providing Telecommunication Services (again, as that term is defined in the Telecommunications Act 2001). Overseas Investment Amendment Bill Submission Spark 4

6 24. Network Operators must be designated as such by the Minister of Communications which, in conjunction with the purpose of providing Telecommunications Services, will provide effective protection against misuse of this exclusion. 25. Thank you for the opportunity to comment on the Bill. Overseas Investment Amendment Bill Submission Spark 5