Giving Away Our Money To TNCs: - Murray Horton Watchdog 95 first alerted readers to the highly dicey Government policy (driven by Deputy Prime Minister and Alliance leader, Jim Anderton), of giving cold hard taxpayers' cash to transnational corporations (TNCs). We had a look through some documents kindly sent to us by Jim, on behalf of the newly created Industry New Zealand. The latter was set up to run Jim's generally worthy goal of regional development, one which has been sadly neglected in the past quarter century (when I travelled the North Island by bus in my 1999 CAFCA speaking tour, I saw for myself the reality of rural depression and neglect. And I didn't even go to the stereotypical depressed regions). Things have moved on since then. What was merely theoretical has become reality. Industry New Zealand (INZ) has emerged from the Ministry of Economic Development and is up and running. In November 2000, it launched the Major Investment Service (the documents quoted in #95 referred to it as the Strategic Investments Support Services, which was its ante-natal name). The Major Investment Service doles out public money from the Major Investment Fund (previously called Strategic Investment Support Grants). The criteria for payment are: direct investment in NZ involving at least $NZ50 million and/or 200 new jobs over five years, plus benefits such as new technology or new skills associated with the investment. The amounts offered are not chickenfeed, as least as far as the NZ taxpayer is concerned (Cabinet Ministers have lost their jobs for rorting their perks and allowances for much smaller sums than this). "Grants for pre-feasibility/feasibility studies for up to 50% of costs with a maximum of $50,000. In addition, a guarantee of funding is available from Government to meet significant implementation costs, not exceeding $1 million p.a. up to a maximum of $5 million for any one project..." (Information Sheet, Major Investment Service; Major Investment Fund, Industry New Zealand, 8/11/00). At the time of writing, we are negotiating with INZ to secure, under the Official Information Act, a regular supply of its approvals, along the same lines as those which we have received (for a fee) from the Overseas Investment Commission (OIC) for more than a decade. We asked for a monthly supply, with a quarterly one being our second preference. INZ has offered the quarterly option. INZ has informed us that, so far, it has funded one project. We weren't sent any official documents, but instead sent a Nelson Mail report (17/10/00; "US giant eyes Nelson") detailing how Brunswick Corporation, which manufactures Mercury outdoor motors, was looking at either Nelson or Wanganui as the site for a factory. Nelson could offer it the closed down Honda car plant, put out of business in 1998 when the previous National/New Zealand First government (Winston Peters, take a bow) instantly removed all tariffs on imported cars and, at the stroke of a pen, destroyed the NZ car assembly industry. 185 workers lost their jobs at Honda Nelson. The story mentioned a feasibility study (which was listed as a confidential agenda item for the Nelson City Council's finance and administration committee), so we can safely assume that the Major Investment Fund grant was made in connection with that. The paper reported that Brunswick executives had recently visited Nelson, with INZ helping to fund the trip (can't the poor buggers afford to buy their own air tickets?). "...Government trade agency, Trade New Zealand, confirmed that it had been involved with the project in a 'facilitation' role. Mr Rainey (the project's local partner. Ed.) said local body leaders had been asked to help 'facilitate' the venture. The chairman of Nelson City Council's Prosperity 2000 committee, Seddon Marshall, refused to say what assistance had been requested..."(ibid). Presumably, if the bid failed, that committee gets renamed Bankruptcy 2001. We are not aware of the outcome of this proposal for Nelson, but it is significant as the first one to get a Government handout, under this new policy of giving money to the least deserving players in the global economy, the TNCs. We asked INZ to supply us with the actual official documentation of this grant, the only one so far (according to a letter to us from Bruce McLean, INZ Acting Chief Executive, 15/3/01). We were refused as it "would be likely unreasonably to prejudice the commercial position of the person who supplied or who is the subject of the information" (ibid). That's a far from promising start to our Official Information Act relationship with the shiny new INZ. In March 2001, Mike Andrews, the Chief Executive Officer of Fletcher Challenge, was appointed INZ's first Chairman. Jim Anderton sang his praises. So transnational Big Business is set to dominate INZ, from the outset. Offering financial incentives to TNCs can be a bottomless pit. Throughout the first few months of 2000, it was trumpeted that Motorola, the American electronics TNC, was considering Christchurch as its Australasian software-engineering centre (see Watchdog 95 for details. Ed.). Both the Government and the Christchurch City Council offered it incentives. Obviously, we weren't in the same league as those big spending Aussies. In December 2000, Motorola announced that it had chosen Perth - the Western Australia State government fronted up with incentives worth $A5.4 million; the University of Western Australia will spend $A15m on a building to house 200 Motorola staff on campus. That's the sort of competition New Zealand faces if it wants to play the handouts game. But the Government plunges on regardless. The latest proposed move is tax incentives to private sector investors in its new venture capital funds. The Government is being advised on this by Yigal Erlich, an Israeli venture capitalist and father of the Israeli venture capital industry (one of the models approvingly looked at by Labour/Alliance). Erlich said: "Because of the distance, they're (i.e. venture capitalists) not familiar with the market, the involvement of Government and some incentives may prove crucial, including tax breaks" (Press, 20/3/01: "Tax breaks on agenda for venture fund investors"). Politics And Sport: Jim is pressing on with his crusade to attract "smart" foreign investment to the country. In November 2000, he toured Singapore, Malaysia and Japan, mainly to visit forestry TNCs with NZ interests. He wanted to convince them to set up wood processing facilities in NZ, rather than simply exporting raw logs (which was the norm in the gold rush years of the 1990s, until the Asian crisis of 1997/98 wiped out that particular trade and prices plummeted). Attention has been focused on extremely depressed but forestry-rich areas such as the East Coast. Jim's motives are worthy - the criminal sale to a grab bag of TNCs of 70 years worth of cutting rights to the State's vast exotic forestry plantations was one of the hallmarks of the "sell your own grandmother" Labour and National governments of the 1980s and 90s. But begging for the beneficiaries of that fire sale to add value to their illgotten gains is not necessarily the best way to go about it, and we certainly should not be offering to help pay for it. In early 2001, it was announced that the former Hobsonville Air Force Base, in Auckland, will become home to an enterprise building super yachts. This is doubtless good news for the billionaires of the world who like to show off their floating phallic symbols (on my last visit to Auckland, in 2000, I checked out the super yachts in the Viaduct Basin, and they left me unmoved) and, much further down the food chain, the extremely skilled tradespeople who build them. But it begs the question as to what sort of development it is that is being touted here - is New Zealand going to become a nation of glorified shoe shine boys to the idle rich and amphibious parasites who have chosen, until their whim leads them to sail elsewhere, to grace us with their presence? It is presented as a spin off from the America's Cup, but that whole circus is a perfect example of transnational bludgers wrapping themselves in the flags of nationalism and patriotism to whip up public support and extort taxpayers' money for their own corporate Olympics. Superyachts are among the last visible manifestations of the 1980s, that decade of private greed and excess for which the public are still paying. And Jim has managed to seriously offend spectacularly successful Kiwi entrepreneurs, presumably the very people he is trying to help. New Zealand has become the home of adventure tourism, and very much the global HQ for endurance sport. The annual Coast To Coast race (biking/running/kayaking/staggering through the Southern Alps, from the Tasman Sea of Westland to the Pacific Ocean at Christchurch) is legendary throughout the world. There are a host of other such events now. One is the Southern Traverse, which takes place in the Alpine mountains, valleys, rivers and lakes of the Queenstown area. The 2000 race was filmed by the international pay TV Discovery Channel, which showed it as a four hour miniseries in April 2001, reaching 180 million subscribers in 150 countries. But, in December 2000, Jim announced that Tourism New Zealand and INZ would jointly contribute $500,000 to the rival, American-organised, Eco-Challenge multi-sport adventure race, to stage it in New Zealand in 2001. Jim was delighted at attracting this event, which is held in a different country every year, but the Southern Traverse organisers were livid. Not only was the Government funding a foreign event, when it had never done that for the local one, but the foreign event would take place a mere fortnight before the Southern Traverse, effectively wiping it out. There's no way endurance athletes can tackle two such gruelling events so close together. First in, first served, as far as the star competitors are concerned. Geoff Hunt, Southern Traverse race director, said: "We understand Industry New Zealand's objective is to facilitate development in New Zealand. So we are surprised they chose to support an independently welathy American company like Eco-Challenge to stage their event head-to-head with a similar New Zealand event. Rather than promote New Zealand business and sport, Industry New Zealand, with this decision, has severely disadvantaged an icon New Zealand sporting event in the Southern Traverse" (Press, 15/12/00; "Judkins slams 'bizarre' funding"). Fellow race director, Pascale Lorre, said: "The Government support of Eco-Challenge has now effectively destroyed any chance of Discovery Channel coming back to New Zealand to film the Southern Traverse" (ibid). The colourful Robin Judkins, who singlehandedly has built the Coast To Coast into what it is now, said: "Industry New Zealand are supporting an international event organiser whose stated aim is the destruction of his rivals. Jim Anderton has stated they're giving $500,000 to an American multi-millionaire to stage an event in New Zealand which will drive a New Zealand business broke. How bizarre is that!". Judkins said he was in competition with Hunt and they seldom saw eye to eye. "But this time I'm 100% supportive of him. He's been stabbed in the back by Tourism New Zealand and Industry New Zealand" (ibid). Jim was having none of this, and urged the Southern Traverse organisers to apply to INZ for financial assistance, on the same basis as the Eco-Challenge. "Mr Anderton said he had no desire to see the Southern Traverse disappear. 'Of course I don't want to see that. Who wants to see a New Zealand company go to the wall? Am I mad? I don't think so'" (Press, 19/12/00; "Anderton denies ruin claims"). But no amount of financial assistance to the local event will solve the problem that champion endurance athletes cannot compete in two such events a mere fortnight apart. The Southern Traverse is likely to miss out. "New Zealand Welcomes Foreign Investment" Meanwhile, the relentless takeover of New Zealand by TNCs continues apace, with little or no comment (let alone opposition) from the Labour/Alliance government. Investment New Zealand, a branch of Trade New Zealand, has taken on an American agent in its bid to attract large US investors. Jane Cunliffe, INZ's New York-based director for North American investments, said: "Our goal is that, within eight months, we will get 20 serious investors to take a serious interest in New Zealand" (Press, 28/11/00; "NZ hires US agent to find investors"). Major transnational corporate takeovers are a fact of daily life, with Lion Nathan's shonky buyout of Montana only the most recent example. Watchdog 95 examined, in great detail, the Government's 2000 refusal to allow the Overseas Investment Commission (OIC) to approve the sale offshore of Brierley's share of Sealord, NZ's biggest fishing company. We were supplied with official documents detailing how the OIC went to extraordinary lengths to try and facilitate the sale, but the Government refused to roll over and play dead, citing the broader national interest. However, in December 2000, it was nnounced that Brierley's 50% Sealord stake will be sold to Japanese fishing TNC, Nissui, for $207 million, with Sealord's fishing quota going to the joint venture's other partner, the Treaty of Waitangi Fisheries Commission. In January 2001, Michael Cullen and Pete Hodgson, the same two Ministers (of Finance and Fisheries, respectively) who had turned down the original sale, approved it, and gave the green light to the OIC. Their joint statement said "...New Zealand welcomes foreign investment, especially of the quality represented by this agreement" (Press, 18/1/01; "Green light for Sealord share deal"). The TNCs know that they are dealing with a Government that is friendly to both Big Business and foreign investment (there is no more mention of the hysteria of mid-2000, when the corporate ideologues and their media and political mouthpieces ran around shouting that this "anti-business Government" would ruin the economy, lead to all our young people leaving the country, and generally be the end of civilisation as they knew it. They can play a different tune now, as the Government is largely doing as they wish). In a roundup of 2000, Jim O'Neill, chief currency economist of "heavyweight US investment finance house, Goldman Sachs...cited the go-ahead for Shell-Apache's $4.1 billion purchase of Fletcher Energy as the catalyst. It indicated that foreign investors were still welcome in New Zealand and international firms continued to see business opportunities here" (Press, 4/1/01; "Kiwi discovers wings after poorly performed year". See the October 2000 OIC decisions, elsewhere in this issue, for full details of that takeover. Ed.). Not that the TNCs still don't want the playing field tipped even more precipitously in their favour. World Investment Prospects, a report prepared by the Economist Intelligence Unit, compares business opportunities around the world. It concluded that the Treaty of Waitangi is a discouragement to foreign investment here, describing it as "notoriously unclear" (Press, 3/3/01; "Treaty discouragement to investment - report"). That, along with "the Labour/Alliance government's ambivalent attitude towards investment in natural resources" (ibid). And some of the TNCs are very definitely throwing their weight around here, apparently secure in the knowledge that the Government is on their side. For months, in 2000 and 2001, American-owned Carter Holt Harvey has been making a concerted effort to smash the Waterfront Workers' Union by flying in members of a company union (scabs, in other words), protected by State violence in the shape of the Police, to take the jobs of local wharfies in ports around the South Island. This has stirred up enormous community resentment, created major industrial strife on the wharves, and set back industrial relations appreciably. Only the feeblest of squeaks has come from the Government (see the article on this, elsewhere in this issue, for more details. Ed.). So, Jim, you're playing with fire. The very people you're trying to lure to NZ with handouts (which are mere nickels and dimes to them) are the same ones who want to interfere more and more with the very fundamentals of the New Zealand State and its founding document. The very same forestry TNCs that you want to encourage to make "smart" investments are the ones who are waging war on NZ unions, local workers and small communities. If you're going to shake hands with the TNCs, don't forget to count your fingers afterwards. Non-Members: It takes a lot of work to compile and write the material presented on these pages - if you value the information, please send a donation to the address below to help us continue the work. Foreign Control Watchdog, P O Box 2258, Christchurch, New Zealand/Aotearoa. April 2001. Email |
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