11 May 2012

A letter to the Listener

The editorial (5/5/12; "Bring us your jobs: Without foreign investment New Zealand would be a poorer country") contained so many myths that it is difficult to choose which one to demolish first.

Let's start with the facts of just how many jobs are provided by transnational corporations. In 2011 17.4% of NZ's workers were employed by foreign-owned companies (source: Statistics New Zealand - Business Demographic statistics). A perusal of the last decade of those statistics shows that the highest percentage attained by foreign-owned companies was in 2000, when they employed 20.7% of the NZ workforce. Those figures are not be sneezed at but they're hardly the pot of gold at the end of the rather tawdry rainbow with which we're being bedazzled. The vast majority (four out of five) of Kiwi workers work for New Zealand-owned companies, which the transnationals need to enable them to operate their businesses in this country. So they need us more than we need them. Not only are they not big employers, in many cases they have actively contributed to mass unemployment and/or a serious downgrading of NZ workers' conditions (Telecom is the only example I need to give). By definition, transnationals are mobile and will ditch their Kiwi workers and move to another country when it suits them. There has been no shortage of examples of that.

In fact, New Zealand is a poorer country with foreign "investment" (which, in the vast majority of cases, comprises takeovers, not investment at all). Transnational corporations make massive profits out of NZ ($10.3 billion net left NZ in the year to September 2011), so they need our money more than we need theirs.

The editorial says foreign firms "increase revenue to the Government through PAYE and other taxes". Don't assume that at all. In 2009 the four big Australian-owned banks settled out of court with IRD for $2.2 billion of taxes they had avoided (that settlement was for less than the sum sought, and avoided penalties which would have been imposed by the court). It was the biggest tax avoidance case in NZ's history. Right now IRD is pursuing a number of big Australian-owned companies through the courts for tax avoidance. Transnationals can use tax dodging mechanisms such as transfer pricing which are not available to purely domestic companies.

CAFCA runs the annual Roger Award for the Worst Transnational Corporation Operating in Aotearoa/NZ. A financial analysis of one winning company's accounts revealed that it had paid no NZ tax in the previous five years and injected basically no money into the economy here, operating almost entirely on borrowed money. It was a liability not an asset to the NZ economy. And that is just one example that CAFCA studied in detail.

The editorial concludes by invoking the hoary old spectre of North Korea. I'm glad you raised that, because the level of pro-foreign investment propaganda and John Key personality cult in the transnational-owned corporate media could show the Pyongyang apparatchiks how to do it properly. By comparison they are rank amateurs.

Murray Horton
Secretary/Organiser