Why be Concerned?

There are several aspects of this visit which are worrying. First, there's the secrecy. We are concerned that decisions may be made in secret. While our little confusion with Trade & Industry about the briefing document may not be suspicious in and of itself it increased the uneasy feeling that public involvement is less than welcome. Comalco is the classic case of the problems created by government secrecy. But even as recently as three months ago, our government bought a third-hand ammoniaurea plant and only afterwards let the public in on the secret. The public has a right to know about such major investments before they are signed.

Secondly, is the issue of political face-saving. We need to be wary of our government using German and other foreign investment to prop up bad decisions. Clutha and Maui gas may be examples of this. Both are cases where resources have been developed for "demands" which have not existed. Creating the demand later, is fraught with dangers, as these are in essence patch-up solutions which are often expensive and inefficient. It is simply not acceptable to attempt to justify the destructive Clutha scheme by encouraging electricity-intensive industies which may themselves be poor producers of jobs and net foreign exchange.

Finally, is the issue of exploitation of New Zealand's resources. In a mood of political expediency and an atmosphere of secrecy, we are definitely more vunerable to exploitive deals. Those few New Zealand industries like Comalco and the pulp mills which match the scale of German enterprises, at present employ very very few people for the amounts of energy, capital, and natural resources which they consume, and often pollute extensively. In fact, the five biggest energy consuming companies in New Zealand (three of which have substantial foreign investment) have a very bad record. They consumed two-thirds of our industrial electricity in 1974, and yet only provided 5.5% of the industrial output and only 3.7% of the industrial employment.

The Trade & Industry Department's briefing for the BDI mission notes the small scale of New Zealand operations and suggests the developments should be of an appropriate scale. However, in other sections of the briefing, where investment opportunities are outlined, it appears that large scale investment is in fact being encouraged: "The Government is currently examining a number of proposals for the establishment of new energy-intensive industries in New Zealand. Currently, the most attractive options appear to be the ferro alloys field ... although other major electricity users are being considered."

The briefing also notes the government's receptiveness to overseas investment - with more than 90% approval of applications for overseas companies taking over or establishing businesses in New Zealand in the seventies. A wide range of incentives and assistance measures to industrial development " are available to companies irrespective of ownership." Such investment is controlled by the Overseas Investment Commission, under powers delegated by the Minister of Finance.

"Very few hard and fast rules have been laid down for the evaluation of companies in New Zealand and every case is assessed on its merits. As a conseguence investment is welcome in almost all sectors." Those sectors where it is not so welcome are ownership of farm land, or additional investment in tanks, finance houses, or insurance companies. "Apart from these sectors reservations, overseas investment is virtually unrestricted up to a level of 24.9%. Beyond this percentage level, the Commission assesses proposals for acceptability according to an all-embracing set of criteria including effects on environment and employment........Approval may be given to a majority or even 100% foreign ownership."

It seems not unlikely that the German investors will be seeking majority ownership. After all, what purpose do the German's have in coming here? To help New Zealand out of its present economic difficulties so that it is less dependant on the whims of foreign nations — of course not. NZ is at present in a very weak economic situation threatened by the growing agriculture protectionism of most other countries, notably Germany in the EEC. The Germans are not here to discuss importing our agricultural produce - having helped get NZ to its knees, they are ready to expand.

Perhaps, in the short term, the economy may improve (tho' even this is not certain) and unemployment may drop. But, ultimately, the Germans will prosper - why else would they invest in NZ. if it wasn't to their ultimate advantage? Are we again to be on the receiving end, as Comalco has do effectively demonstrated?