Salient. Victoria University Student Newspaper. Volume 38, Number 13. 12th June 1975

Cafcinz — Save power — turn off Comalco

Cafcinz

Save power — turn off Comalco

These days it isn't too hard to find examples of foreign control in NZ. Comalco is busy churning away our power, Shell and BP are lapping our oil, the Japanese are after our forests and ironsands while most of our consumer goods bear overseas brandnames.

Also, it isn't hard to notice that recently the activity of foreign capital in NZ has increased. Intensive exploration by foreign companies has discovered oil and gas, new coalfields and various minerals. At the same time exploitation of known resources has intensified (e.g. wood, fish, hydroelectricity (Comalco) etc.). More foreign capital is being invested in 'New Zealand' companies and more foreign products crowd onto our markets.

This intensification of the activity of foreign capital in NZ is not an isolated trend. It reflects the world-wide intensification of the activities of the imperialist powers in their struggles for control of the world's resources.

In NZ, Japanese and American interests are growing at an alarming rate.

As a result of this the NZ people are increasingly having to bow down before the demands of foreign capital (saving power for Comalco, etc.). The Labour govt. has passed some legislation but has had little real effect on the growth of foreign capital.

Cafcinz (Campaign Against Foreign Control in New Zealand) was formed originally in Christchurch, to reverse this trend towards foreign domination of the NZ economy under the slogan of 'New Zealand for the New Zealand people'. Members of the Christchurch Cafcinz organised the South Island Resistance Ride at the start of this year (report in Salient 2) which resulted in the formation of Cafcinz's in other centres including Wellington. A handbook issued in conjunction with the ride gave these reasons against foreign control:

Why we oppose foreign domination of NZ industry, commerce and trade:

According to a recent official statement (March, 1974, NZ Monthly Abstract of Statistics) about 30% of all company income in NZ accrues to foreign-controlled companies.

The profitability of foreign-controlled companies is equivalent to a return of about 46% of shareholders' funds (compared with an average of about 31% in NZ-controlled companies).

In other words, big business in NZ (and the most profitable business at that) is largely owned or controlled by residents overseas. It is the big companies which are foreign owned and controlled, not the small ones. It is the profitable companies which foreign residents take over, not the unprofitable ones.

There are some advantages in having foreign companies coming to NZ — but if there are too many, and they are too big, the disadvantages outweigh the advantages.

These are the disadvantages:

Foreign ownership of NZ resources is costly to NZ. For every dollar remitted overseas in profits, New Zealanders can import a dollar less for themselves. The product of NZ labour (expressed in money values) should remain in NZ hands — not be remitted abroad to enrich foreign investors.

Image of men dressed the same wearing corporate logos

2) Foreign ownership of NZ industry stunts the development of our industry:

We have to buy (at prices set by the foreign companies) parts and raw materials from their head offices — not in the best market. NZ ingenuity is used to enrich foreign companies; but new developments channelled into NZ (usually long after they have been introduced abroad) are charged heavily to NZ branches and offshoots of foreign companies. Export markets are restricted — why should a NZ radio manufacturer, owned by a British firm, having also a branch in Australia, export to Australia? Foreign nationals take up the leading positions in foreign-owned companies and know-how may be kept from NZ. Specifically NZ developments (suitable only for our own small market) are not encouraged.

3) Foreign ownership makes the NZ Government subservient to foreign capital:

Foreign companies like 'political stability' and will use their great power to support governments which keep doors open to foreign investment and which suppress movements disturbing the profitability of foreign investment in NZ. Foreign companies are more dependent on imports than local companies, because often they are established merely to make use of overseas components to be assembled in NZ. Foreign companies can put pressure on NZ by withdrawing their capital and accumulated reserves and rapidly reducing NZ's foreign exchange reserves. Foreign companies — like Comalco — are granted such favourable terms for establishing themselves here that the rest of the country has to suffer. Electricity charges paid for by Comalco are a miserable fraction of what we New Zealanders have to pay.

4) Foreign ownership of NZ industry makes it more and more difficult for the NZ Government to maintain full employment:

Overseas-controlled companies can avoid taxation by charging high costs to their local industry branches. Profits are then made overseas and no tax is paid in NZ.

'Truth' reported on November 2, 1965 (and this has continued):

'The Inland Revenue Department has clamped down on what is probably the biggest financial scandal in NZ history. Over the years, overseas companies by manipulating the profits of NZ subsidiaries have cheated the Government and people of this country of millions of pounds of tax'.

Borrowing from international capital (particularly the IMF and World Bank) is conditional on Government supervision. When Government imposes credit controls and NZ firms have to contract, overseas companies will have to be forced to contract all the more or be taken overseas companies.

5) Defence and foreign policy may be affected by foreign companies: Canadian companies have been forbidden by their United States head offices to export to Cuba; British companies have transferred production facilities to Germany when they did not like British Labour policies.

The development of NZ by the NZ people may appear slower than when overseas companies are called in, but in the long run it is the only way to build up this country for ourselves and our own children rather than for the benefit of foreign financiers and capitalists.