• How Much Foreign Control Is Acceptable?

    To express concern about foreign ownership and control in New Zealand is often to invite accusations of xenophobia and economic illiteracy. It is worthwhile, therefore, to rehearse the grounds for that concern, and to explore the various forms it can take.

    The most obvious manifestation of foreign influence is when New Zealand assets pass into foreign hands. The downsides of that change of ownership are largely to do with the loss of economic benefit.

    If a significant part of the New Zealand economy is bought by overseas interests, the economic benefits produced by that asset – the income stream, the capital appreciation, the technological know-how, and so on – flow offshore rather than remain in New Zealand.

    The consequence of such developments and of the repatriation of profits to foreign owners across the exchanges is that we are a smaller and less wealthy economy than we would otherwise be, and have greater difficulty in balancing our overseas payments – which acts in turn as an inhibitor to future growth.

    We might include, in this catalogue of disadvantage, assets which have other than a purely monetary value. Foreign companies that bottle our water for export to profitable markets overseas, for example, are using an asset to which we do not attach a market price, but we should not kid ourselves that we are losing nothing of value; in a world when clean water is increasingly scarce, to allow its consumption by overseas profit-seekers is short-sighted in the extreme.

    The fact that our major commercial banks are owned by Australian interests and that the multi-billion profits they derive from their New Zealand operations are repatriated each year across the Tasman represents a further loss of national wealth and a further burden on our balance of payments.

    Nor is that the only price we pay. Given the important role played by banks in our overall economic development, their Australian parentage means that essential elements in the economic management of our own economy are in some senses beyond our control, since the significant decisions taken by our banks will reflect Australian interests rather our own.

    So, our own government – however much it may want to see that decisions taken by the banks on interest rates, mortgage policies, and monetary policy more generally, reflect New Zealand priorities – has to deal with important agencies whose primary loyalty is to their Australian owners.

    There are other examples of foreign entities, by virtue of their significant involvement in our economy, being able to influence domestic policy to suit their own interests. We need only recall the demand made by Warner Brothers some years back that the influence of trade unions in the film industry should be reduced, and the shameful readiness of the then National government to accede to that demand by changing our labour laws so that film industry workers became self-employed contractors rather than employees, to understand how vulnerable we can be to powerful overseas interests.

    We can amplify this analysis by looking at a further instance of potential damage if we allow foreign interests to become too powerful. No one doubts that one of the most formidable obstacles to effective protection of our vulnerable environment is the primacy we accord to profit-seeking enterprises and commercial interests more generally.

    How much more significant does this consideration become if the commercial interests involved are foreign, rather than New Zealand-owned? How much more likely is it that environmental downsides will be discounted if the oil company seeking permits to drill in our coastal waters is answerable only to foreign shareholders rather than to the New Zealand public?

    And will foreign enterprises display the cultural sensitivity and awareness that are required and appropriate in today’s Aotearoa/New Zealand? Will they understand the value we place on the bicultural and multi-cultural dimensions of life in our country or on the social and workplace advances we have made, often ahead of the rest of the world?

    A truly sovereign country will legitimately want to limit the influence of those who are based overseas but seek to play a significant role in our national life – a role that might have deleterious consequences not just for our economy as measured in dollar terms but also for our national identity, our social cohesion and our environment.

    Bryan Gould
    19 June 2019

1 Comment

  1. KJT says: June 30, 2019 at 10:21 amReply

    While I generally agree, without Keating’s regulation of the Aussie banks, our banking system would have been cut loose with leaky home style “freedom” to go the way of Leeming brothers and our, at the time, lightly regulated finance companies.