Bill Rosenberg is responsible for keeping up to date CAFCA’s Key Facts, which he does, with meticulous research. They are available in hard copy and are online, complete with sources, at http://canterbury.cyberplace.co.nz/community/CAFCA/key-facts.html They can also be viewed there as a striking set of graphs, as both a PDF and Powerpoint. We highlight here some of the most common myths about transnational corporations (TNCs) and foreign “investment” which are dispelled by these Key Facts.

Myth: They Put Money Into NZ

Question: What export from NZ is bigger than seafood and milk powder combined? The answer is the exported profits of transnational corporations. Proving that foreign “investment” actually sucks out more money out of New Zealand than it puts in. To quote from the Key Facts.

Transnational corporations (TNCs) make massive profits out of New Zealand. These can truly be called New Zealand's biggest invisible export. In the year to March 2015, they were $9 billion. Over the last decade they have averaged more than the combined exports of seafood and milk powder. In the decade 2006-2015, TNCs made $77.5 billion in profits from New Zealand, an average rate of profit after tax on their shareholdings of 12.5% (12% in the year to March 2015). Only 26% was reinvested (only 15% in the year to March 2015). Profits have averaged twice the increase in foreign direct investment holdings each year.

Another $7.9 billion left New Zealand in the year to March 2015 made up of investment income from debt and smaller shareholdings (portfolio investment), making a total $16.9 billion. Over the last decade this has averaged more than the combined dairy and forest product exports. More than two out of every five dollars of the $16.9 billion went to the owners of New Zealand’s banking sector: $6.9 billion. 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 four out of every five dollars of New Zealand’s current account deficit in the year to March 2015: $6.5 billion compared to $8.1 billion. The investment income deficit (income on New Zealand investment overseas less income on foreign investment in New Zealand) has been greater than the current account deficit for all but two years since 1989, which further increases New Zealand’s foreign liabilities.

Myth: They Create Jobs For NZ Workers

This is one of the hoariest of the myths. For example, Business New Zealand said (8/4/16; “Foreign Investment Essential For New Zealand”) that: “Today one in five New Zealanders works in a firm that is part-funded by FDI (Foreign Direct Investment)”. Not so. The actual figure is lower than that and is lower than what it was in 2000. And Business New Zealand is trying to gild the lily. What its press release does not say is that four out of five Kiwi workers do not work for TNCs.

It does not say that the TNCs need us more than we need them (to make the exorbitant profits that they ship out of the country and don’t reinvest back into it). It does not say that despite TNCs being such a dominant force in the NZ economy, they provide jobs for bugger all New Zealanders. To quote from the Key Facts: Foreign investors are not great for employment – they only employ 17% of the workforce (down from 21% in 2000), despite owning a large proportion of the economy. Foreign ownership does not guarantee more jobs. In fact, it quite often adds to unemployment. TNCs have made tens of thousands jobless.

Myth: Flogging The Country Off Helps To Reduce Debt

A common justification for flogging off NZ, particularly its publicly-owned assets, to foreign owners, is that it is necessary to reduce the county’s debt. In a word: nonsense. But don’t take our word for it. Hear what the Old Master of privatisation, Sir Roger Douglas himself, had to say (in a book praising him and his mates for privatising State forests): "I am not sure we were right to use the argument that we should privatise to quit debt. We knew it was a poor argument but we probably felt it was the easiest to use politically" ("Out Of The Woods", Reg Birchfield and Ian Grant, 1993). He was right that it was, and is, a poor argument. To quote from the Key Facts.

Foreign ownership does nothing to improve New Zealand's foreign debt problem. In 1989, total private and public foreign debt stood at $47.5 billion, equivalent to about two-thirds of New Zealand’s Gross Domestic Product, and worth $86.4 billion in March 2015 dollars. As of March 2015, it was $246.2 billion (or $270.9 billion including derivatives), equivalent to 102% of New Zealand's Gross Domestic Product despite being helped out temporarily by $20.2 billion of insurance claims for the Canterbury earthquakes and all of the asset sales and takeovers.

Myth: NZ Allows Only “Good Quality” Foreign Investment

The Panama Papers have shone a most welcome (and long overdue) light into the murky world of tax havens, offshore trusts and shell companies. It is worth noting that two notorious tax havens – the British Virgin Islands and the Cayman Islands – are among the top foreign owners of New Zealand companies. In both cases, they rank ahead of China, just to put it into perspective. So who are the actual owners?

They, of course, remain hidden or even “confidential”, because that is the purpose of tax havens. Who knows what dirty money and ill gotten gains, and from whom and from where, might be coming into New Zealand via these tax havens. But does the Government care? Of course not, because it is “foreign investment”, which must, by definition, be a good thing. Don’t ask, don’t tell. To quote from the Key Facts:

Statistics NZ figures, as of March 2015, list the biggest foreign owners of New Zealand companies as being from, in decreasing order: Australia, US, Hong Kong, UK, Singapore, Japan, Canada, Netherlands, British Virgin Islands, Ireland, Cayman Islands, China, Switzerland, Norway and France. All had over $160m in foreign direct investment in New Zealand. These accounted for 96% of foreign direct investment in New Zealand and Australia alone accounts for 52%.

British Virgin Islands and Cayman Islands are tax havens, and 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 2015, other tax havens with investments in New Zealand companies include Vanuatu, Channel Islands, Liechtenstein, Bermuda and the Bahamas, but for all except Bermuda, the value of their holdings has been suppressed as “confidential”. Bermuda has shown a negative investment in New Zealand companies since 2009 (negative $1.8 billion in 2015). So has Germany since 2013. Negative investment suggests that the companies may have been loaded with debt to their parents or are technically insolvent.