TNC Takeover Reaches Gold Rush Proportions, Exactly As We Predicted- Murray Horton
The process which became the 2005 Overseas Investment Act comprised the cover story in every issue of Foreign Control Watchdog from 104 to 109 inclusive (December 2003 until August 2005). You can read those issues online and you can read detailed material on the Act itself on this website. When this Act came into effect, in September 2005, CAFCA predicted that it would result in an open slather for transnational corporations (TNCs). It gives us no pleasure in saying that we were spectacularly right.
An enterprising journalist, Patrick Crewdson of the Dominion Post, researched the first year of the Act and of the Overseas Investment Office (OIO), the new body set up within Land Information NZ to “oversee” it. He then rang CAFCA for comment. His article was so startling that it was the front page lead story of the Press (13/11/06, “Foreign buy-up of $16b in assets”), it was on the front page of that day’s Dominion Post, and got prominent coverage in every other Fairfax newspaper, plus on Fairfax’s Stuff Website. The fact that I was prominently quoted in it led to me doing Radio Live and Radio New Zealand interviews that day, plus I was invited to write an op ed for the next issue of Farmers Weekly, which is not CAFCA’s natural constituency.
Crewdson’s research of the OIO’s records showed that it approved the sale of $15.8 billion worth of businesses, assets and property to overseas owners since its creation in August 2005. In just over 13 months, the OIO approved 194 applications and refused only four. How does this compare with its lamentable predecessor, the Overseas Investment Commission (OIC)? Well, in 2004, the last full year of the OIC’s existence, it approved $6.9 billion of sales to foreigners. The average for the 1993-03 decade was $8.6 billion, which means that the OIO approved nearly double that in its first year.
It was the sheer size of the figure ($16b is still a figure that commands attention) that led to the media flurry on that one day (the story had vanished within a couple of days, replaced by much more important issues like where to build Auckland’s Rugby World Cup stadium). One radio host who interviewed me said that he’d had no idea of the scale of the foreign takeover and that New Zealanders were on track to becoming “serfs” in our own country.
And bear in mind that the 2005 Act increased the threshold for corporate takeovers requiring OIO permission from $50 million to $100 million (until 1999 the threshold was $10 million). So, that means that corporate takeovers under $100 million don’t require any kind of special permission or oversight. So there’s an awful lot of TNC takeovers (right up to $99,999,000.99 in any given transaction, for which sum you can still buy a pretty decent sort of NZ company) flying under the statistical radar, which means that the $15.8 billion figure is actually a very conservative one.
Crewdson’s article was unusual in terms of media coverage in that it made plain that the corporate takeovers are the real story, and that they dwarf the much higher profile issue of rural land sales to foreigners (in fact, any one medium to small TNC takeover would be worth more than the combined total of land sales in any given year). But the follow up media coverage, as usual, latched onto the land sale angle only. That’s all that the two radio hosts wanted to talk to me about (definitely not about the media TNCs which own their networks), and the cockies’ paper wanted me to write about land only. Crewdson’s article dramatised the amount of land sold to foreigners in the OIO’s first year – about 170,000 hectares - by saying that it was equal to three Lake Taupos, which definitely captured the imagination of North Island readers. In fact, that is 28,000 ha less than what the old OIC approved for sale to foreigners in 2004, its last full year.
Bouncer Needed, Not A Doorman
The Dominion Post wrote an editorial (15/11/06, “A foreign affair with our land”): “Critics of New Zealand’s overseas investment rules have described them as setting up a ‘come on in and help yourselves’ regime (which is an unattributed quote from CAFCA. Ed.). The public could be forgiven for thinking those critics are right and that all the Overseas Investment Office needs is a big rubber stamp and a clerk to apply it to the applications as they cross the desk (actually CAFCA has long said that all that the OIC/OIO needs is a monkey with a rubber stamp. Ed.)…”. It went on to stoutly defend foreign land ownership and foreign investment in general (well, it wouldn’t it, being part of an Australian-owned media empire) but concluded: “…However, there is a justified belief that if land owners live here, they are more likely to be mindful of the neighbours’ concerns than if they fly in from Los Angeles, London or Tokyo for a couple of weeks a year. Those are the concerns the Overseas Investment Office cannot afford to ignore”.
The Nelson Mail, another Fairfax paper, bore out exactly that point the same day in an article (“’Worrying’ foreign investment in NZ”). It quoted Nelson lawyer Brett Daniell-Smith, who has acted for foreign land buyers, as saying that some foreign investors “are contributing nothing to New Zealand”. He said that he was worried about the national level of foreign investment. “He used to do work for overseas clients seeking to invest here, and now compares the situation with poorer European countries such as Turkey and Croatia being bought up by British people looking for a cheap holiday ‘bolthole’. It was even easier to buy properties in New Zealand ‘in some respects’, he said. ‘Ordinary residential property is dead easy to buy, there are no impediments at all. It’s very different if somebody is going to come here, be productive and pay taxes, and put something back into our economy so we can build our roads and pay for our hospitals’. The last client he represented two or three years ago owned homes around the globe and did not pay tax in any country, he said. ‘Nice work if you can get it but…what are they actually producing, achieving for this country?’”.
CAFCA has always said that the OIC/OIO is a doorman, whereas what the country needs is a bouncer. It would seem that under the new Act the door is permanently wedged open and that the doorman is offering a shoeshine service as well. Defenders of our virtually unrestricted foreign investment regime call it globalisation. I think that we need a new word- gobbleisation – to more accurately describe what is happening, namely that our country is being gobbled up. There’s a very nice banquet going on, but it’s us who are on the menu.
|
|
Compiled by: Campaign Against Foreign Control of Aotearoa, P. O. Box 2258 Christchurch. |
