They Might As Well Be In Zhejiang Province
The Chinese interest in buying up a significant chunk of New Zealand’s dairying real estate has hit the headlines over recent weeks. Hard-pressed dairy farmers, perhaps including the Crafars or their receivers and creditors, might understandably be grateful that at least somebody is ready to pay a good price for dairy farms, especially when the Australian banks seem unwilling to lend for such a purpose.
Should we welcome the willingness of overseas buyers to invest in our productive industries? Or should we be concerned that a significant part of New Zealand and its productive capacity is passing into foreign control?
Those, after all, are the questions that now have to be answered by the Overseas Investment Office. The issue gives rise to allegations of xenophobia on the one hand, and a concern for New Zealand’s viability as an independent country on the other. And it arises at a time when it has emerged that Chinese investors have spent billions in acquiring important interests in a range of leading Kiwi companies such as Mainzeal and Fisher and Paykel Appliances.
It also has to be assessed in the light of New Zealand’s unenviable record of having already sold off a higher proportion of our national assets than any other advanced country. We had sold to overseas owners by 2006 $82.7 billion’s worth of our national assets, a 700% increase since 1989. The repatriation overseas of the profits made from these assets imposes a further burden on our endemically unbalanced current account, and the need to borrow more overseas as a consequence means that our problems are considerably exacerbated.
We should, in trying to assess these considerations, immediately rebut any suggestion that the nationality of the prospective purchasers is a relevant factor. Whether Chinese or Americans, British or Japanese, the issues are the same. Should we be happy to see our productive capacity pass in to hands other than our own?
It is at this point that the particular features of the proposed purchase become relevant. It is one thing to wave through the foreign acquisition of a New Zealand manufacturing company. New manufacturing capability, we hope, will always emerge. A company that passes into foreign ownership may see its profits go overseas and may even move its operations out of New Zealand, but there can always be the hope that the next one will come along before too long.
Even if the foreign purchase is of some asset of national infrastructure – a rail network or an airport – experience suggests that once the foreign owners have sucked out all the profit they can, they might well sell the asset back into New Zealand ownership. Whatever downside is suffered is not necessarily forever.
It is here, however, that the current Chinese bids have to be regarded as both different and more worrying. First, the asset that is being chased is an important piece of real estate, an asset of which there is a finite amount. We cannot in this instance sell it off and then look to recreate some more.
Our most important productive industry – dairying – is entirely dependent after all on the availability of suitable agricultural land. If that land is no longer available to us, then we suffer a permanent diminution in our productive capacity and therefore in our national wealth.
So it becomes very important to understand the nature of the Chinese interest in our dairy farms. We know that, in one major case at least, the proposal is not just to buy a large number of South Island dairy farms. It is also to build a factory or factories in which the milk from those farms will be processed and from which the product will then shipped to consumers in China. This is, in other words, a process which will be entirely controlled from cow to consumer by Chinese money in the Chinese interest. The farms will be to all intents and purposes part of China and will entirely serve the interests of the Chinese economy. They might as well be located in Zhejiang province.
The scale and purpose of this intervention strongly suggests that it is not intended to be a fly-by-night investment that will be quickly sold on. This is clearly intended to be a permanent transfer of productive capacity from New Zealand to China. It feels as though it reflects not just the Chinese commercial interest but the national interest as well.
Let us be clear. New Zealand workers may be allowed to keep their (relatively low-paid) jobs for the time being (though under the free trade agreement with China even that cannot be guaranteed), but the profits of the productive capacity and the capital value of the asset will have passed out of our control and will have become a Chinese asset rather than ours.
Given the huge sums that Chinese investors have available, is there any limit to the proportion of our productive industry we would be prepared to see sold off? If there is, should we not be clear what it is? And would this not suggest that this is not your average foreign purchase, but one to which the Overseas Investment Office should pay special attention?
Bryan Gould
24 April 2010
This article was published in the NZ Herald on 28 April.
The All Blacks – Just Another Team?
The All Whites’ success reminds us yet again of the remarkable sporting record achieved by this tiny country which has for much of its short life been only about half as big – in population terms – as the City of Birmingham. When we add to the All Whites’ exploits the success enjoyed over the years by our teams in rugby league, softball, hockey, and cricket and the individual triumphs in athletics, rowing, cycling, equestrian events – the list is endless – we can see how much we punch above our weight in international terms.
Yet none of this – remarkable as it is – remotely approaches our record of achievement in a sport which is truly international and which could be regarded as one of the three or four most important team games in world sport. The All Blacks, who have again this week resumed their number one world ranking, have dominated the sport of rugby union for more than a century.
No other country gets even close. Over the whole history of rugby as an international sport, the All Blacks’ record is incomparable. This is not to say that the All Blacks always win, or are not at times overshadowed briefly by others. But year-in year-out, the All Blacks have established a statistical record that makes them the “winningest” national team not only in rugby but in any international sport.
Look at the figures. The All Blacks have over more than a century achieved a winning percentage in all their international matches of 74%. The next best percentage among major rugby nations is South Africa’s, at 63%, with the French, English and the Australians coming next at 55%, 53% and 52% respectively. All of these competitors trailing in our wake have both populations and in most cases rugby player numbers much greater than ours.
What’s more, the All Blacks have a positive winning record against every other international team. Even after three successive defeats this year against the Springboks, our winning ratio against them is 42 to 33. The record against another proud rugby nation – Wales – is 22 to 3.
Nor do the statistics tell the whole story. The “aura” of the All Blacks (something debated in some quarters over recent days) means not only that they are the best-known and admired rugby team in the world – the one that others most want to play and beat – but they are probably the most famous national team in world sport. The haka, the black jersey, the silver fern, are potent symbols of sporting success. Whereas the rugby teams of other nations are usually referred to by their country’s name, the All Blacks have established their own powerful identity.
One consequence of this success is that the All Blacks are hugely important to New Zealand’s national identity. For millions of people around the world, the All Blacks are what they know best (or perhaps all they know) about New Zealand. Their perception of our country is formed by what they see and know of the All Blacks.
And who can doubt the significance of the All Blacks in the development of how we feel about ourselves as a nation? Together with our experience on the battlefields of two world wars, nothing has contributed more to our sense of nationhood than our success on the world’s rugby fields. It is no accident that rugby is a game that requires great individual skills, courage, strength and resilience but also requires the individual to subordinate his or her interests to those of the team – exactly the qualities required to build our small nation from the earliest days.
And what a happy miracle that the qualities required were not only those demanded of the earliest settlers but were also displayed in abundance by the tangata whenua. Rugby asked our two founding cultures to make common cause by bringing to their enjoyment of the game an arena where they could also learn mutual respect. Rugby has done much to bring our society together.
Given the success of rugby and its importance to New Zealand, how surprising it is to find, at least in some quarters, that in recent times rugby is denigrated, the All Blacks diminished. Yes, of course, we should celebrate sporting success in other arenas, but we can surely do so without demeaning our achievements in rugby. It is almost as though some journalists and commentators resent our rugby success, or (reflecting their profession’s constant quest for novelty) have grown bored with it. They seize upon the chance offered by success elsewhere to compare rugby unfavourably with the latest (usually transient) triumph.
The All Blacks, and rugby’s administrators, make their fair share of mistakes, and should not be immune from criticism for doing so. But do the carping (and sometimes sneering) critics realise what a national taonga they so carelessly demean? Do we have to do ourselves an unnecessary injury by thoughtlessly devaluing something we might appreciate fully only when we have lost it?
Bryan Gould
18 November 2009
This article was published in the NZ Herald on 20 November.
Post-meltdown
The horror stories keep coming but – even so – it is doubtful whether we have yet grasped in New Zealand the scale and seriousness of what is happening in the global economy, and how greatly we will be affected by it. We know that others are in deep trouble but we see ourselves so far as transfixed spectators rather than actors (or victims) in the drama.
We may not remain in that comfort zone for long. As the world enters recession, and the markets for our goods are decimated, we will feel the pain. And, although our financial system seems unscathed for the moment, the price we will inevitably pay for being one of the world’s most indebted countries is waiting just round the corner. As foreign investors take their money home, and as our banks have to re-negotiate the credit arrangements on which they rely, stand by for a succession of damaging body blows to the already fragile underpinnings of our economy.
There is little sign yet that our political and business leaders have grasped the dreadful vulnerability of our position. The cool reception given to the thoughtful paper issued last week by Mark Weldon and David Skilling – with Peter Dunne expressing concern about the impact on the government’s deficit, as though that was the foremost of our worries – shows that we do not yet recognise the imperatives that have driven governments around the world to take steps that would have been unthinkable just a couple of months ago.
There is of course room for considerable discussion about the precise recommendations of the Weldon/Skilling paper. But it does at least represent the first awareness of the scale of the problem and of the need for new thinking. Even more interestingly, it points the way to a post-meltdown future where the world will (hopefully) never be the same again.
The paper is notable mainly for its (perhaps unconscious) willingness to slaughter some sacred cows to which we have been solemnly assured for nearly three decades “there is no alternative”. Governments must be kept well away from the main levers of economic policy? No. As the paper now asserts (and as even George Bush agrees), government action is essential. Monetary policy is all that matters? No. The paper says that fiscal policy is now the most important weapon in the armoury. Bankers should be entrusted with the important decisions in our economy? No. As is apparent to everyone, banks worldwide have failed us and must in many cases be taken into public ownership. “Free” markets must be left unregulated and will always produce the best results? No. The market has failed and created a catastrophe. All that matters is the bottom line? No. The goals of economic activity are wider than profit for a few.
The truth is, in other words, that if we are to survive the crisis in reasonable shape, we must now abandon the nostrums that have proved so self-destructive. We need governments to acknowledge their responsibilities, to take a major role in the rescuing of our economy, to use a much wider range of policy instruments, and to treat markets as hugely valuable servants but dangerous masters.
We should be in a better position than most to recognise this, since we have given those nostrums a longer and more comprehensive trial than anyone else. While the great super-tankers and luxury liners of the big economies have plied their trade on the great ocean of the global economy, and amassed large fortunes until they suddenly sprang a leak and began to sink, our tiny craft has been waterlogged for years. For us, the dogma of the unregulated “free” market has not led so much to sudden collapse as to long decline.
We now have the chance, if our leaders have the necessary wit and imagination, not only to change direction in order to escape the worst of the world recession in the short term, but to set a new course which will produce in the medium term a better balanced economy in a world where markets are no longer regarded as infallible.
The lesson of this crisis is that unregulated markets lead to economic disaster and – even more importantly – that they are incompatible with democracy. If markets are always right and must not be challenged, the result is not only economic meltdown but government by a handful of greedy oligarchs rather than by elected representatives.
The whole point of democracy is that it ensures that political power will be used to offset the otherwise overwhelming economic power of the big market players. If democratic governments do not, will not or cannot exercise that power to protect their electorates, the course is then set inevitably not only for the crisis we now face but also for the abuses and failures that disfigured our economies in the years preceding the crisis.
Shouldn’t our politicians be called to account? Shouldn’t these issues be what our general election is all about?
Bryan Gould
12 October 2008
A Fibre Optic Network – Twenty Years Earlier
One of the leading issues in today’s New Zealand news is the desirability of establishing a nationwide fibre optic cable network so that high-speed broadband can be extended to the whole country.
The National Party has proposed a NZ$1.5 billion investment; the Labour government has promised its own plan within a few weeks; and visiting international experts at an IT conference have urged that the whole project should be completed within less than ten years.
The news coverage rang a distant bell with me and prompted me to go back to check my own records. I was able to confirm (it is referred to on page 204 of my autographical Goodbye to All That) that, when I chaired the British Labour Party’s Working Party on the Productive and Competitive Economy in 1988, I had pushed a proposal that a new Labour government should invest in a fibre optic network for the whole of Britain.
I had been supported in that idea by Ken Livingstone (himself recently in the news when he lost the London mayoralty). Although we had got our own way on most of the issues covered by the report we produced, we had been defeated on the fibre optic proposal which apparently seemed too way out for most of my colleagues.
It is interesting to reflect on what might have been if an idea that only now seems to warrant serious consideration and whose advantages are now so widely proclaimed had been acted on twenty years ago. Foresight in politics is not always rewarded.
Beaches – for Cars or People?
The following article appeared in the New Zealand Herald on 11 January.
“The Kiwi beach holiday used to be about picnics, sunburn, surf and games on the sand. Today, it is increasingly about the internal combustion engine.
In 2008, cars, motor bikes, quad bikes and all sorts of motorised vehicles are a dominant presence on our beaches. And if land-based motorisation is not enough, there are always the motor boats and jet skis to add to the jollity.
The traditional beachgoers now need to have their wits about them. The danger to swimmers and sunbathers, picnickers and walkers, is constantly there, and can easily become real, as recent well-publicised events have shown. Small children and dogs are particularly at risk.
Our beaches offer in many cases the kind of flat open space that can be hard to find elsewhere. Little wonder that the eyes of drivers, who have chafed under the constraints of the Road Code and a growing volume of traffic on our roads, light up when they see the chance of opening the throttle.
But it is not just the threat to life and limb from speeding vehicles that has grown. As our beaches have been transformed into race tracks and test beds, the beach environment suffers as well. The motorised holidaymakers will return to their everyday lives oblivious of the damage done to the habitats of rare nesting birds or of vulnerable native plants.
And then there are the various forms of pollution that come inevitably in the wake of the internal combustion engine. The peaceful enjoyment of a beautiful beach can be ruined for hundreds by the noisy exhaust of a single motor bike doing wheelies on the wet sand all afternoon.
Hearing is not the only sense to be assaulted. I recall snoozing under a pohutukawa tree one afternoon, listening to the rustle and rumble of the sea, when I suddenly realised what it was in my nostrils. It was the smell of diesel, the first indication that a large four-wheel-drive vehicle was approaching and the last thing one expected to smell on a pristine beach.
And then there is the visual pollution – the rutted tyre marks disfiguring the sand and making walking difficult, the rows of parked vehicles at the water’s edge looking more like an urban car park than a beautiful part of our once-beautiful country.
I should make it clear that it is not the fisherman looking for the best surfcasting spot who is in my sights. I regret that it seems necessary to use vehicles for such a purpose, but I recognise that fishing is a legitimate, pleasurable and traditional leisure activity on our beaches, and that the careful use of a vehicle should be accepted as a reasonable balance between the interests of fishers and of other beach users.
The people I object to are those who seem to have lost the use of their legs. I know of a beach where a car park has been thoughtfully provided just metres from the sand and less than a hundred metres from the water’s edge. Drivers regularly by-pass the car park, drive their vehicles on to the sand and up to the water’s edge, before getting out to swim or picnic or play games on the beach.
It is almost as though they have become so enamoured of their vehicle, so dependent on it, that it has become such an integral part of their lives, that they cannot bear to be more than a few metres from it. So much for the outdoor life!
I have even less sympathy for those who have no regard for other beach-users but are determined to inflict their vehicle noise, danger, smell, environmental damage and all on everyone else. Or for those who ignore an easily available road route for getting from A to B in favour of a short-cut along a populated beach.
In vain do local authorities put up notices proclaiming that vehicles are forbidden on the beach. The proclamation, we are told, is unenforceable. The police solemnly intone the mantra that the beach is regarded for legal purposes as a highway; but, if this is the case, how is that so many unlicensed vehicles and drivers are being allowed to destroy our beaches? A change in the law is long overdue.
There can be no bright side to the tragic accident in Northland this summer. But, while it will be of no comfort to the bereaved family, it may awaken us to the damage we are doing to ourselves through carelessly allowing what Mrs Thatcher once described as “our great motor car culture” to harm the beautiful and vulnerable environment in which we are privileged to live.