Media coverage of last week’s meeting between John Key and Kevin Rudd focused on defence issues, moves towards liberalised border control procedures, and even which tie the respective PMs would have to wear depending on the outcome of Saturday’s test.
But there was no publicity about the announcement that a new CER Investment Protocol, to be concluded by the end of 2009, is going to hugely increase the screening threshold for Australian investors wanting to buy New Zealand companies or rural land.
Currently that threshold is $100 million (above which all foreign investors have to get their applications rubber stamped by the Overseas Investment Office). The new threshold will be $477m. Considering that it was $10m until 1999, this represents a nearly 5,000% increase in only ten years!
Australians comprise the biggest percentage of foreign investors in NZ, so it follows that this new, vastly increased, threshold for Australians will become the benchmark for all other foreign investors. This is exactly what happened in 1999 when an increase from $10m to $50m for Australians became the benchmark for all others (it was increased again, to $100m, in 2005). Yes, the threshold for NZ investors into Australia is also substantially increased but let’s not kid ourselves that this is some sort of equal trade off. NZ investors have nothing like the impact on the Australian economy as their investors have on ours.
This latest massive increase in the threshold is even more unexpected when recent media reports had quoted John Key as saying that it was likely to be increased to $200m. So, what happened, John? Did you go weak at the knees because Kev gave you a tie and had you driven around Sydney in a motorcade?
The implications of this become obvious when it is realised that the current sharemarket valuation of the Lyttelton Port Company is $245m, meaning that it (and similar vital infrastructure assets) could be snapped up without any “foreign investment oversight” required at all.
The Government is already in the process of further “liberalising” the Overseas Investment Act (which is in danger of being “liberalised” to death). Its intentions are plainly obvious. This measure alone will lead to more and more NZ companies becoming mere branch offices of Australian businesses, as we have seen with the four big banks.
When Bill English recently announced the first moves towards liberalising the Act, he offered up the tired old propaganda that “we need foreign investment because we need their money and their jobs”. Well, actually, Bill, they need our money to fatten their balance sheets (and, doubtless, their CEOs’ bonuses). From 1997-2006, transnational corporations made a combined profit of $50 billion and only 32% was reinvested – meaning that two thirds of that colossal profit permanently left NZ.
And as for foreign investors creating jobs – tell that to the Telecom telecommunications technicians who are taking industrial action today, in protest against attempts to force them to become contractors.
This is just another step in the process of transnational corporate recolonisation of NZ and another blow to any chance of this country having an independent economy that operates in the interests of the New Zealand people.