Government is Reviewing the 2005 Overseas Investment Act

Below is a press release following the Governments decision to review the 2005 Overseas Investment Act.


LIBERALISING FOREIGN INVESTMENT LAW YET AGAIN EXPOSES GOVERNMENT’S DESPERATE CARGO CULT MENTALITY

News that the Government plans to urgently review the 2005 Overseas Investment Act, with a view to further liberalising it, comes as no surprise. Nor was it any surprise that the Prime Minister made the announcement at the Act Conference. This is another example of the Act tail shaking the National dog (or maybe that dog was wolf in disguise). Key campaigned on a policy of changing very little from what was the status quo under Labour and since winning power has systematically set about changing as much as possible. Along with moves towards privatisation in areas such as ACC, infrastructure and prisons, emasculating what is left of an “oversight” regime for foreign investors is part of that process.

New Zealand already has one of the most liberal foreign investment laws in the world. If the door is already left permanently unlocked, with a sign saying “Come On In and Help Yourselves”, this proposed law change will simply remove the door (and probably offer it for sale as well).

But the ironic thing is that it may not make any difference. One glaringly obvious fact about the National/Act government is that it has only a passing acquaintance with reality. It seems to have escaped its notice that the global capitalist economy is undergoing a major crisis and that retrenchment and sheer survival are currently higher priorities for many of the very transnational corporations whose dominance of that economy has got us into the mess we’re in. Investing in NZ, regardless of how much easier it is made, is probably not on top of their To Do list at present. The global economic crisis is the reason that foreign investment in NZ nearly halved in 2008 (as compared to 07), not because of “red tape” in the approval (read “rubberstamping”) process.

The Government’s actions in this area (as in so many others) are further evidence of its desperate cargo cult mentality. The original cargo cultists in the Pacific were so impressed with the “cargo” that came from the sky during WW2 that after the Americans had long gone, they built “airstrips” in the bush and patiently waited for the “cargo” to come back and solve all their problems. That’s what the Government is doing with this proposed law liberalisation – building the airstrip and waiting for the cargo to come back out of the sky and solve all our problems.

It shows no recognition of the fact that dependence on open slather foreign “investment” (“takeover” being the correct word), free trade agreements and globalisation, by both National and Labour governments, has done nothing except turn NZ into a branch office economy, a country which has been recolonised by transnationals. Globally, the dominance of that voodoo economics has landed the world into the deep hole from which it is currently trying to escape. Countries such as the US are facing this painful reality, however reluctantly, and are re-evaluating previous policies (which is why it has indefinitely postponed negotiations with NZ on the proposed Free Trade Agreement – another example of the cargo cult mentality). Not NZ though – it thinks that even more of the same, only “better”, is the answer. Very similar to a drug addict who suffers withdrawal symptoms and insists that the best solution is to give him more drugs so that he can do it all over again.

It has already been pointed out that under the free trade agreements to which NZ is already party, such as with China, any further liberalisation of the foreign investment law cannot be reversed under any future Government. And it is truly ironic that the front man for this proposed liberalisation is Bill English who, as recently as December 2008, declined a proposed $250 million foreign investment proposal (namely the takeover of NZ Steel Mining Ltd, a subsidiary of BlueScope Steel Ltd, by Cheung Kong Infrastructure Holdings Ltd). Why? “Because CKI did not meet the Overseas Investment Act 2005 criteria of substantial and identifiable benefit which was relevant to the acquisition of business assets which included sensitive land” (Bill English press release, 17/12/08, “Purchase Of NZ Steel Assets Declined”). Those were exactly the grounds used by Labour to stop the Canadian purchase of Auckland Airport in 2008 and they are exactly the grounds that English says the proposed liberalisation is aimed at removing. Funny therefore that he, as the Minister of Finance, had no hesitation in using them to block such a huge proposed foreign takeover only three months ago.

We need more of that sort of pragmatism exhibited by the Government, one which puts the national interest first, and less of the ideological wet dreams of those within its ranks who are still stuck in the 1980s.