It’s been two years now since the 2005 Overseas Investment Act came into force, along with its new “oversight” regime. And exactly as CAFCA predicted right through its two year long progression from a review of the old law to a brand new Act and in the two years since, it has thrown the door open ever more widely to a takeover of the country of gold rush proportions. The currently fashionable foreign private equity funds are but the latest in a giant tsunami of transnational corporate predators that destructively crash ashore on Aotearoa and suck everything back out to sea with them.

To mention just two of the most recent and biggest examples detailed in this issue – Telecom’s sale of Yellow Pages for more than $2 billion to a Canadian-led private equity consortium (while Telecom itself prioritises ill advised and loss-making Australian ventures over reinvesting its megaprofits into its badly rundown NZ phone infrastructure – and there’s a separate article inside detailing the consequences of that lack of reinvestment by Telecom); and Independent Liquor (which made its fortune hooking kids on “ready to drink” alcopops) sold for more than $1 billion to a Hong Kong-led private equity consortium.

The longest article is a very detailed analysis of who owns the news media in NZ, a sector that is almost entirely dominated by transnational corporations (TNCs) and one into which the foreign private equity funds are arriving in force, as evidenced most recently by the takeover of MediaWork’s NZ holdings, of which TV3 is the most high profile, by Ironbridge of Australia (another consortium including several foreign private equity funds failed in its bid to buy out APN News, which has the New Zealand Herald as its flagship).

Added to the mix are the big foreign pension funds, such as the US ones that are now among the very biggest owners of NZ’s plantation forests. The current TNC biggie is the $2.6 billion bid by Dubai Aerospace Enterprise to buy up to 60% of Auckland International Airport Ltd. And so on and on. The ever accelerating takeover of whole sectors of the economy reinforces the conversion of New Zealand into the $2 Shop of the South Pacific.

OIO “No Longer Obliged” To Supply Information

Since the law change two years ago it’s even more difficult to accurately gauge the full extent of foreign ownership. Any takeover under $100 million doesn’t require approval by the Overseas Investment Office (OIO). That limit used to be $50m and, until 1999, was $10m – so it was increased tenfold in the space of six years. Consequently, an awful lot of TNC takeovers fly under the radar of public awareness, let alone official oversight. And the OIO no longer provides the same level of official information that its predecessor, the Overseas Investment Commission (the dear old OIC), used to. It has told CAFCA that it is “no longer obliged” to supply half-yearly reports to Parliament or to issue annual statistics. There is no mention of these retrograde steps in the Act, so they must have been included with the Regulations that accompanied it. If you go to the OIO Website you will see that those reports and statistics stop at 2005, the year the law changed.

So when journalists contact us and ask (as they regularly do) how much of the economy and/or how much land is foreign-owned, it’s becoming harder for CAFCA to answer. And don’t expect the OIO to know (or care) – one journalist from a major paper came to us recently after she had asked the OIO that question about foreign land ownership and been told that it had never established a proper database on the subject. Both the OIC and OIO have clearly understood their brief to be to encourage and facilitate foreign “investment”, not to record it, let alone regulate or, God help us, hinder it. In other words, to be a doorman, not a bouncer. You will find what we know about how much of the economy is foreign owned, and how much land, at the Key Facts page on our Website (www.cafca.org.nz). If you don’t have Internet access, ask us to send you the hard copy leaflet (for the record, from official figures, we conclude that foreigners own more than one million hectares or about 7% of NZ’s commercially productive land – not to be confused with the total land area). Foreign-owned forestry land is more than one million hectares on its own.

In all the daily chatter about the economy and the posturing of politicians from the two main parties, this is the elephant in the room that none of them mentions or wants to acknowledge – the fact that the relentless transnational corporate recolonisation of NZ is a significant factor in many of the current economic problems, ranging from the huge balance of payments deficit (usually called the current account deficit) to the runaway price of housing. Foreign “investment” (which is a takeover, not investment at all, nine times out of ten) is not the solution to NZ’s problems; rather it is one of the very biggest of those problems.

Winston Talks The Talk, But Doesn’t Walk The Walk

It must be coming up to election year, because one of the country’s canniest and most cynical politicians has dusted off his long lost speech notes on this subject. Winston Peters, speaking in his capacity as New Zealand First Leader and not as Minister of Foreign Affairs, said that the country is “enslaved by debt to foreign investors” and that “in the absence of … any meaningful controls over foreign investment, foreign interests have embarked on a systematic takeover of our economy ( Press, 11/5/07; “Peters criticises Govt on economy”, Colin Espiner). In a June press release he further said: “New Zealanders are rightly concerned about losing control of their country. The amendments (i.e. the 2005 Overseas Investment Act. Ed.) were made to provide greater ‘protection’ of our land from foreign ownership. New Zealand First vigorously opposed the changes back in 2005 when it was rushed through Parliament as we believed it would fail to protect Kiwi land from foreign ownership. Unfortunately, yet again, we were right…Too much of our land and property is in foreign hands, and it is increasing daily. The Government needs to be more alert to this reality and end the pretence that foreign ownership is of no consequence. We must take immediate steps to prevent any further loss of our valuable assets to foreigners” (26/6/07; “Godzown Now Owned By Everyone Else - Peters”). In July he came out very strongly against the Dubai bid to buy Auckland International Airport, correctly describing it as a foreign takeover, not foreign “investment”.

All very commendable but Peters also said that he wants to be Treasurer again. So, let’s all think back to when he actually was Treasurer (1996-98, when New Zealand First was in coalition with National) and remember what he actually did about this problem when he had every opportunity to implement some “meaningful controls”. That’s right – bugger all (bar a bit of minor tinkering on the sale of rural land to foreigners – and that wasn’t actually implemented until several years into the term of the present Government). Prior to the 1996 election Winston campaigned up hill and down dale about the evils of foreign investment (using CAFCA’s data and research, with grateful acknowledgement; we even hosted him at a very well attended Christchurch Town Hall public meeting on the subject). But once he got into power, in a portfolio where he could have actually done something about it (unlike his present job as Minister of Foreign Affairs under Labour), not a dicky bird.

To add insult to injury, he was actually Treasurer when National privatised Auckland Airport in 1998, with no conditions attached to stop it going into foreign ownership. That’s now come back to bite him on the bum (although, to be fair, he did resign later that same year when the Government went on to sell Wellington Airport). You can read our very detailed analysis of Winston Peters, and what he said versus what he didn’t do on this issue, in Watchdog 84, May 1997; “Winston’s Petered Out”, by Murray Horton. People aren’t fools – when we circulated Peters’ latest statements to our members and supporters with a reminder about what he hadn’t done about it, we got a strong response – one describing him as a “duplicitous turd”.

But CAFCA does congratulate Peters for actually raising the subject in any sort of critical way (the only Minister to do so, although he isn’t speaking in his Ministerial capacity, even if this fine distinction is one lost on the media. Much the same as when Progressive Leader and senior Minister, Jim Anderton, strongly criticised President Bush and the Iraq War at the beginning of 2007). Nobody in either Labour or National ever says anything critical on foreign “investment” or the laws that “control” it. Of course, the Greens have always been consistently on CAFCA’s wavelength about it – most recently they came out against the proposed Auckland Airport sale - and one or two Maori Party MPs have also spoken out ( Hone Harawira is Parliament’s staunchest opponent of the tobacco TNCs and their lethal product). Peters, however, has a track record of campaigning on the subject going well back into the 90s – the trouble is that he, and his party, then veers off into the murky waters of immigration policy, plunging into fullblown Asian bashing on plenty of occasions. That’s why CAFCA has kept a good bargepole’s length from New Zealand First, as they charge down a path that we have no wish to tread.

However we are indebted to Peters’ June press release for actually conveying some increasingly hard to come by information about the extent of foreign ownership of NZ land. “Figures obtained by New Zealand First reveal that 237,598 net hectares were sold to foreigners in the 21 months since ‘improvements’ to the Overseas Investment Act were made. This compares to just 1,935 net hectares in the 21 months prior to the changes to the rules relating to the sale of land to foreigners… We still have a rubberstamping process with only 3% of applications for land purchase by foreigners being declined. This rate is similar to that existing before the Act (26/6/07; “Godzown Now Owned By Everyone Else - Peters”). Michael Cullen, the Minister of Finance and the father of the 2005 Act, admitted that land sales to foreigners had skyrocketed since 2005 but attributed that to one-off and unusual forestry sales, such as by Fletcher Challenge and Carter Holt Harvey, which had skewed the figures. As he always does when confronted with such figures, Cullen made much play of the difference between gross and net sales, and emphasised how many of these land sales are from one foreign owner to another one. Which simply highlights the fact that the land shouldn’t have been allowed to be sold in the first place, as it just becomes something to be onsold to new foreign owners and thus permanently alienated from New Zealanders. Peters challenged Cullen: “Is he satisfied with an Act which is virtually rubberstamping the sell-off of our land to the highest foreign bidder?” ( Press, 27/6/07; “Land Sales To Foreigners: Peters blasts Govt policy”, Colin Espiner). Obviously, Cullen is.

Auckland Airport The TNCs’ Latest Infrastructure Target

The issue of rural land sales to foreigners is, of course, only a small (but highly visible and emotionally resonant) part of a much bigger picture. In any given year, the sum total of such land sales might be in the low hundreds of millions of dollars (if that). And thus completely dwarfed by either one of the two billion dollar plus TNC takeovers that I’ve already detailed (Yellow Pages and Independent Liquor). And those are only the most recent examples of any number of billion dollar TNC takeovers, multi billions in some cases. Corporate takeovers are where the action is, they have the greatest significance for the whole NZ economy. The ownership of a company that operates throughout the whole country – such as a bank, supermarket, airline, TV network, phone company, etc, etc – affects all of us, whereas the ownership of a particular coastal property or high country station has more of a local or regional significance (but quite often a national emotional resonance).

One area where the TNCs want to take over even more is that of publicly-owned infrastructure (what’s left in public ownership, that is). In this issue there is an article detailing the continued reluctance of Christchurch City Council, its holding company (Christchurch City Holdings Ltd) and the management ideologues driving the privatisation agenda, to abandon their wrongheaded desire to flog off the Lyttelton Port Company (the subject of a singularly bungled attempt by the Council in 2006 to sell it to Hutchison Port Holdings of Hong Kong). There is another article giving updated details of the very murky 2003 sale of the South Island power grid by Transpower, which then profitably leased it back. That story was broken in the mainstream media in 2005 and Sue Newberry, who was then at the University of Canterbury, was a regular feature in the Press that year as the revelations kept coming. Sue is now at the University of Sydney from where she keeps Watchdog updated.

Currently, the TNC predators sniff blood in the form of Auckland International Airport, which was privatised in 1998 but is still nearly one quarter owned by the Auckland and Manukau City Councils. A huge Canadian pension fund was the first to declare its hand but has been gazumped by Dubai Aerospace Enterprise’s bid (which has the backing of the airport company’s board). By a timely coincidence this story first broke in the same week in June that our old mates Sir Michael Fay and David Richwhite agreed to pay the Securities Commission a record $20 million in an out of court “no liability” settlement in relation to insider trading of Tranz Rail shares (Fay and the wonderfully aptly named Richwhite are long gone. Having made their hundreds of millions in the crony capitalism of Rogernomics, they followed the advice of the beer advertisement and exported themselves and their horde of loot – it took a chartered jumbo jet to shift it).

Let’s learn from the past to avoid repeating the same cockups being repeated ad nauseum in the future. In 1993 the sale of TranzRail to American owners and their Fay/Richwhite partners by the National government was presented to the public as the best thing since sliced bread.  For the best part of the next decade, TranzRail presented the textbook example of why vital transport infrastructure should not be flogged off to foreign owners. What happened is well known and resulted in the ironic spectacle of some of the country’s biggest corporates (including other foreign-owned ones) begging the Labour government to renationalise TranzRail (which Labour partly did, for the track network but the railway system itself is still foreign-owned, by Toll).

In the first six years of the annual Roger Award for the Worst Transnational Corporation Operating in Aotearoa/New Zealand, TranzRail won it three times. In the end the Award organisers, in order to give somebody else a go, disqualified this most glaring corporate recidivist from being nominated again. (The detailed reasons why TranzRail kept winning the Roger Award can be found at www.cafca.org.nz, follow the Roger Award Links from the Views, Analyses and Research page).

Let’s not keep on repeating these mistakes. The country’s biggest airport is a monopoly cash cow (which is why the Arabs and Canadians et al want to milk it). It is also an absolutely critical part of the nation’s transport infrastructure. The same Labour government that has had to partly renationalise the railways has also had to wholly renationalise Air New Zealand, which it proclaimed to be a vital part of our transport infrastructure and in the national interest. It would be madness to let Auckland Airport go offshore. TranzRail was a train wreck (quite literally, in some cases) and an object lesson on why vital transport infrastructure needs to be kept in New Zealand public ownership (and not just until “the price is right” either).

When it comes to assets wholly or partly owned by you and I via councils, their retention in public ownership needs to be rated highly as an election issue in this year’s local body elections. Find out what the candidates say on this issue and tell them that you’ll only vote for those that commit to continued public ownership. In cities and towns where public assets have already gone, ask your candidates what they will do to get them back. That’s our property that’s been stolen.

All Black Criticises TNCs, Joins Roger Award Judges

The very biggest of the TNCs not only want to rip off us, they want us to love them while they’re doing it to us. They are forever wrapping themselves in the flag (patriotism being the last refuge of the scoundrel and Kiwiana. Even better from their point of view is to attach themselves, leech-fashion, to the country’s sporting heroes and what better one than the All Blacks, “ New Zealand’s leading brand”. Rugby is the leading example of the corporate capture of sport. So it was disappointing, but not surprising, in June when All Black captain, Richie McCaw, signed on to be Ambassador for Westpac for the next two years.

It’s hard to pick which one of the four big Australian-owned banks is the worst of the lot, which is why the judges of the 2005 Roger Award declared Westpac and BNZ to be joint winners (the Judges’ Report on why they made that choice can be read at www.cafca.org.nz, follow the Roger Award Links from the Views, Analyses and Research page). These Big Four banks have sucked billions in profits out of the country, are a major player in the overheated housing market, aggressively push credit onto customers, which increases personal and national debt, and have a poor record when it comes to the way they treat the public, their customers and staff. They need all the help they can get in trying to make themselves look good to the NZ public and it’s a pity that the All Black captain has agreed to lend his considerable mana to Westpac. They are not worthy of it.

But all is not lost from the All Blacks, that most unlikely source for criticising the TNCs. At the same time as the present captain was happily signing up to let Westpac bask in his reflected glory, Anton Oliver (a current All Black and former captain) came out swinging at a couple of big TNCs, namely Comalco and Holcim (the Swiss-owned cement company). Oliver’s much publicised criticism came in the context of his high profile opposition to Meridian Energy’s proposed massive Otago wind farm and his critique of national energy policy. Comalco and the outrageous sweetheart deal given to its Bluff aluminium smelter was the original motivation for CAFCA’s birth, way back in the mid 1970s and we congratulate Oliver for once again focusing attention on the seriously distorting role that it plays in the national electricity market. For nearly 40 years it has been NZ’s single biggest power user (using 13% of the national total, 24/7 – down from a high of 16%) and for all that time it has been subsidised by the long suffering NZ taxpayer, paying a super cheap and still top secret price for its power. It has been guaranteed uninterrupted supply, regardless of how other electricity users are faring. Successive governments, National and Labour, have kowtowed to it and given it special treatment.  If politicians genuinely do want to give taxpayers a break, then that smelter should be closed, and this prime example of corporate welfare brought to an end.

And Anton Oliver didn’t end it there. CAFCA was so impressed by his outspoken courage in attacking the TNCs (I can’t think of any other top sportsperson, from within the corporate bubble that engulfs elite sport in this country, saying anything similar) that we invited him to become one of the six judges of the 2007 Roger Award. We’re delighted to report that he accepted with alacrity. CAFCA is not into the cult of “celebrity” but we’re delighted to welcome an All Black into the hallowed ranks of those who have judged the Roger over the past decade (cricketing great Glenn Turner was long retired from playing – but not administration – when he was a Roger judge). We need more sportspeople to speak out on this issue which adversely affects all New Zealanders (and, as a rugby fan, the fact that he is shifting to play in France after this year’s World Cup means that I don’t need to feel obligated to shift my allegiances to the Highlanders and Otago). Good on you, Anton and welcome aboard. The five other judges are unchanged from last year - Laila Harre (chief judge), Geoff Bertram, Paul Corliss, Brian Turner, and Cee Payne-Harker. Anton has replaced Mary Ellen O’Connor, who has retired.

It’s Much Better To Own Our Own Home

That’s a positive note upon which to conclude. I’ve detailed some of the various articles which appear in this issue chronicling the various TNC owners of the $2 Shop that NZ is in danger of becoming. But you will also find your nomination form for the 2007 Roger Award enclosed with this issue. Every year the Roger Award gets stronger and stronger, it has become an institution in its own right, as more and more Kiwis, from all walks of life, want to be associated with something that sticks it up those very same TNCs (any puns involving rogering are entirely intentional). It is a small but very tangible, and surprisingly effective, weapon in the fightback. So let’s get on with it, we have a country to reclaim. This is our home, the only one we’ve got, and New Zealanders know that there’s nothing better than owning your own home.