Upton-on-line - Diaspora Edition 11th June 2002

Upton-on-line - Diaspora Edition

11th June 2002

In this issue

The alimentation of French political parties and why there are no fewer than 8,455 candidates at this weekend’s first round of the legislative elections; more on the trans-Tasman institute debate (this time from the Foreign Affairs & Defence Select Committee and Sir Frank Holmes>); Sir Hugh Kawharu on tino rangatiratanga; and a deliciously nostalgic romp through the debate about foreign investment in New Zealand circa 1975 featuring the nearly forgotten Geoff Datson and the perennial Dr Donald Brash.

But first an obituary and a promotional pitch

The Obituary ( for NZ-resident readers)

Upton-on-line announces the demise of his appearances on Radio NZ’s Nine-to-Noon show aligned with the publication of u-o-l. RNZ’s ‘new’ face, Linda Clark, is seeking brisk new judgements from real Europeans on events in the Old Continent. NZ readers who have e-mailed complaining that they are hearing about u-o-l before seeing it can now desist.

The Promotional Pitch ( especially for diasporan readers)

Upton-on-line warmly commends New Zealand Books, a review of (what else) New Zealand books that appears 5 – 6 times a year. It is a high quality publication now in its twelfth year. Its editors, Bill Sewell and Harry Ricketts recently editorialised on the similarities between their publication and the Times Literary Supplement that upton-on-line occasionally commends to readers. The parallel they draw is by no means unreasonable. Here’s how they characterised their aims:

“…as with the TLS good writing is at the heart of our matter. We strongly agree with A N Wilson’s remark that “Of course we would rather read a well-turned review than a dull book”, and we suspect that our readers would too. So the best of our reviews should be as engaging and satisfying as a first-rate short story or poem. By good writing, we mean vigorous prose and rigorous thinking, crisp as a fresh salad, robust as a kahikatea: something as entertaining as it is informative – and, if appropriate, with a dash of humour … And, as editors, we see it as a significant part of our job to act as literary midwives, who – miraculously – are not only present at the conception by commissioning work and suggesting angles, but also clean up after delivery to the point occasionally of ‘disinfecting reviews of jargon’, as Ferdinand Mount [the TLS’s editor] so astringently puts it. Finally, NZB aims for the same kind of pluralism and fair-mindedness as the TLS. Though, naturally, like the TLS we don’t always get it right. However, we like to think that, as with dodgy umpiring decisions in cricket, things usually even out in the end…”

Couldn’t have been written in Atlanta, could it? Or, for that matter, Sydney.

If you would like to subscribe (it is a paltry NZ$50 overseas, $35 domestically) write to the Subscription Manager, NZ Books, Level 5 Old Wool House, 139-141 Featherstone Street, Wellington, New Zealand or e-mail the editor at: billsewell@paradise.net.nz

Charging the political feed troughs

An unprecedented 8,455 candidates from 32 parties offered themselves to electors in the first round of the French legislative elections last Saturday. When you consider that the French electoral system is designed to weed out the small fry by having a run-off second round in those constituencies (or circumscriptions) where no candidate gets over 50% of the vote – only those with more than 12.5% can take part – it’s hard for the outsider to work out why so many good Gauls are lining up to be slaughtered. Until you dig into the rules surrounding the funding of political parties, at which point everything becomes clear – money.
Very simply, there are two troughs: one for parties already in Parliament (45,398 euros per MP, per year) and then one for every candidate (including the sitting MPs) which is distributed on the basis of 1,66 euros per vote received in the first round. It’s very simple – the more candidates you put up, the more money you get (subject to some rules including a requirement to stand in at least fifty seats unless you’re a regional or local party in which case the money flows for just a single candidate). So even if there’s no serious hope of getting past the 12.5% barrier, you can go for the maximum nation-wide coverage (and hence publicity) safe in the knowledge that extra votes will mean extra income.

The fabulous choice on offer

With rules like these, French taxpayers have, if nothing else bought themselves a fabulous choice of parties – une nébuleuse électorale as Le Monde put it. Out there in electoral star clusters can be found 6 parties of the right and 2 of the extreme right; 4 parties of the left and 4 of the extreme left; then there are 2 republican parties, a regional party (that is national, if you follow), 2 different parties especially for the hunting/fishing/shooting types, 5 parties that can best be described as single issue parties and a staggering 8 parties of varying shades of green. On top of that, there are all sorts of independent hopefuls, often carrying local parochial banners.
The names are occasionally Orwellian (the Solidarity of Regions & Peoples Party) but more often turgid - how about the League of French Taxpayers or the Man, Animals and Nature Movement. Upton-on-line’s man-in-the-boulevard judgement is that the further greenwards and leftwards you go, the smaller the print and the greater the number of words on the campaign posters. If this correlates with voter intelligence, M. Le Pen’s National Front won’t have too many candidates for the Academie Francaise.

A minor trans-Tasman triumph

Readers may recall that earlier this year, upton-on-line tried to arouse interest in the idea of some sort of Trans-Tasman initiative to expose Australians and New Zealanders to one another’s preoccupations before emerging differences required the use of Döppler spectrography to measure rates of retreat. Readers will also recall that apathy killed the cat, so to speak. Upton-on-line is reliably informed that Australia’s High Commissioner in Wellington, Paul Cotton, was unequivocal in maintaining that Upton had “lost the plot”.

Imagine upton-on-line’s surprise, then, to find that no less a body than the Foreign Affairs and Defence Select Committee of the NZ House of Representatives has also lost the plot! For included in the report of its Inquiry into New Zealand’s Economic & Trade Relationship with Australia is an extensive quotation from this publication.

Specifically, the select committee has recommended that:

3. …the Government establish regular (at least annual) meetings of senior political, industry and academic leaders, modelled on the Königswinter Conference, to focus attention on the relationship from many perspectives, including but not limited to parliaments, governments, business, academic and non-governmental sectors of society. The 20th anniversary of CER in 2003 would be the obvious time to launch such an initiative.

6. …the Government discuss with Australia establishment of an ANZEC Institute on both sides of the Tasman. The Australian branch should be funded by the New Zealand Government, and vice versa. This institute would be an advisory ‘think tank’ like Asia 2000, having a strategic responsibility to facilitate ongoing work across all sectors. Analysis to assess outstanding issues, leading to a study to determine the viability of various currency union options, could be the institute’s initial work programme.

It remains to be seen whether politicians and officials on either side of the Tasman have the recklessness to lose the plot as well – or whether we will slumber on in the belief that contemptuous familiarity will tide us through.

[The full report can be found at: http://www.clerk.parliament.govt.nz/content/706/i4e.pdf Be warned: it is a large report and down-loading it is like asking for an illuminated manuscript]

Sir Frank joins the fray

One who is not affected by the torpor that normally envelops debate over New Zealand’s external relations is Sir Frank Holmes. Indeed, Sir Frank’s restless and constructive mind has probably done more to keep debate alive on the nature of the trans-Tasman relationship than anyone else has. In a recent paper published by the Institute for Policy Studies at Victoria University discusses the case for an ANZAC union. The full paper can be found at: www.vuw.ac.nz/inst-policy-studies/policy_papers/Policy_Paper_14.pdf

It contains an exceptionally useful distillation of recent contributions and some of the key facts about the relationship. Here are a few:

 From 1858 to 1965, 124,000 more people moved from Australia to New Zealand than vice versa. The flow has reversed since with about 450,000 New Zealanders now resident in Australia (as against 50,000 odd Australians resident in New Zealand).

 During the 1990s, arriving New Zealanders accounted for about one third of the net permanent and long-term arrivals into Australia (with the result that New Zealanders accounted for about 40% of Australia’s planned migrant quota)

 New Zealanders resident in Australia pay about $2.5 billion per annum in taxes yet represent a stock of human capital educated at the expense of New Zealand taxpayers (which raises interesting questions about the coherence of Australian concerns about arriving kiwis as a drag on their society).

 The combined GDP of the two countries is equivalent to that of ASEAN.

Sir Frank’s prescription is customarily sane and sage. He supports a proper assessment of the two countries’ regional priorities as the basis for shared defence priorities. He believes we should resist as irrevocable Hugh White’s conclusion (quoted previously in upton-on-line) that New Zealanders don’t even want to be on the same bus as Australia when it comes to regional defence. He believes that working co-operatively on defence is fundamental and that “the two countries working co-operatively … can achieve more than if New Zealand were merely a state of Australia and certainly more than if we continue to drift further apart on defence and security issues”. He calls for more compatible policies on immigration and gives a nod in the direction of a sort of council –of-the-wise ginger group to focus on regional issues.

His final conclusion is as follows:

“I do not see political union as a practical possibility for some years ahead. But I believe that both Australia and New Zealand will gain if we continue to progress towards a less far-reaching and more outward-looking union. We should continue to aim to create a real single market, to co-operate effectively on issues of defence and security in the region in which we live, and help one another to overcome the international disadvantages of relatively small size in the public sectors of our societies.”

But upton-on-line found another judgement more revealing:

“In the absence of a crisis, the vision of political union between the two countries seems unlikely to emerge from political leaders currently holding office or leading the Opposition in Australia.”

Undoubtedly true. The same holds for New Zealand. The key words are “in the absence of a crisis”. In upton-on-line’s judgement, New Zealand is rather good at coping with crises. But until they come along, day-today hedonism seems the preferred strategy. That strategy has allowed the gap in living standards between the two countries to widen steadily since the 1960s. One wonders just how big a gap is needed before we trigger a ‘crisis’. And then, what sort of door will be open on the other side of the Tasman. As upton-on-line concluded in an earlier edition (cited by Sir Frank), “let’s hope we don’t all meet at the visa application counter one day”.

Further insights on rangatiratanga

A correspondent has helpfully drawn upton-on-line’s attention to the report of the Waitangi Tribunal on the Kaituna River claim in which the opinion of Sir Hugh Kawharu is cited on what it was Maori understood by tino rangatiratanga. In Sir Hugh’s opinion, the nearest one can get is “all the powers, privileges and mana of a Chieftain” or, even more succinctly, “chieftain-ness”. Here are the key extracts that quote Sir Hugh:

“…Customarily the Maori has had his options shaped almost as much by the oratory and the reputation of those whom he listens to on the marae as by the merits of the options themselves. This would certainly have been the case in 1840. Thus the missionaries’ reputation as honest men, reasonably coherent in the Maori tongue and knowledgeable in the ways of the European enabled them to persuade the Maori to sign the treaty with a degree of success far beyond that which any others, particularly Hobson, could ever have achieved…”

“…the major problem arising from the first Article turns on the issue of sovereignty, a system of power and authority (as would have been intended by the Colonial Office) that was wholly beyond the Maori experience, a network of institutions ultimately to comprise a legislature, judiciary and executive, all the paraphernalia for governing a Crown Colony.”

“The Maori people’s view on the other hand could only have been framed in terms of their own culture; in other words, what the Chiefs imagined they were ceding was that part of their mana and rangatiratanga that hitherto had enabled them to make way, exact retribution, consume or enslave their vanquished enemies and generally exercise power over life and death. It is totally against the run of evidence to imagine that they would wittingly have divested themselves of all their spiritually sanctioned powers – most of which indeed they wanted protected. They would have believed they were retaining intact apart from a licence to kill or inflict material hurt on others, retaining all their customary rights and duties as trustees for their tribal groups…”(Pars 4.8-4.9)

Paragraph 4.10 of the report is particularly interesting:

4.10 The guarantee of their “rangatiratanga” was associated with the grant to the Crown of the right of pre-emption by the Crown of such lands “as the Proprietors thereof may be disposed to alienate” (Article II). Professor Kawharu is of the opinion that this would not have assumed much importance for a Maori Chief in 1840. He goes on to say

“…(it) is essential not to lose sight of the quid pro quo of the Treaty; that the collective surrender to the Crown of the power to govern was made primarily in return for the Crown’s protection of each Chief’s authority within his tribal domain…”

The right of pre-emption certainly became important later. When the Maori sold his land to the Crown for sixpence an acre and the Crown then sold the same land to settlers, almost immediately, for ten shillings an acre the Maori began to see unfairness. If the land was worth ten shillings an acre why was he not paid that price? The truth is, of course, that this policy was adopted to provide the Colonial Government with revenue – to Maori eyes, at the expense of the Maori.”

Sir Hugh’s account seems perfectly sensible to upton-on-line. Certainly, it does not support the notion of a sharing of the same sovereignty. Rather, it supports an element of dilution in chieftainship (the cession of the right to make war etc); more strongly, it supports the conclusion suggested in these pages that the parties (perhaps not so very surprisingly) did not understand the same concepts in the same way. None of which leads to any inevitable conclusions.
The full report of the Tribunal can be found at:

http://www.waitangi-tribunal.govt.nz/text/wai004/doc007.html

Echoes from another age

Upton-on-line’s attention was recently drawn to a slender publication by the NZ Institute of Public Administration dating from 1975 entitled Foreign Investment Policy in New Zealand. Its slightly faded pages induced, for him at any rate, an almost Proustian reverie of the world before Rogernomics (if economic history is capable of being Proustian). Here was the leading edge of intellectual debate on New Zealand’s economic direction in the slack water between the 1967 nil wage order and the first hesitant attempts at de-regulation by Sir Robert Muldoon in 1976. Globalisation hadn’t been heard of and upton-on-line was safely sitting bursary.

Therein we encounter the young(ish) Roderick Deane in fine form, vanquishing the phantoms of central planning (“an economist could be excused for doubting whether the bureaucrats are the best judges of the national interest when inhibiting the flow of funds at a microeconomic level”).

The contribution from the Prime Minister of the day, Rt Hon Bill Rowling, glows with the sort of idealistic nationalism that sent frigates to Mururoa:

“We begin, now, from a point where our history and our policies have generated a level of overseas control which is excessive in relation to our aspiration to be an independent nation, initiating and shaping our own economic future. This aspiration is primarily nationalistic. That I admit, frankly and unashamedly. It stems from a rapidly maturing sense of national identity whose further development is very close to the centre of my Government’s objectives …

“This vision is by no means a new one. But we are today coming much closer to its fulfilment. Not least of the foundations for this claim is the maturing of the post-war generation, a generation educated, travelled, undogmatic, and positive in comparison with the previous generation. These people are just now assuming key creative and decision-making responsibilities, but their influence is already making an impact in our national life. The nationalism of this generation is comparatively low-key, but it is definite and rooted. Its impulse will have a profound effect on the direction of our economic, cultural and social development.” (p.19)

Little did he know what revolutionary (and frequently ideological) prescriptions this ‘undogmatic and positive’ generation was about to unleash. If breathing in the stifling atmosphere of the electric blanket approach to industry protection is your particular nostalgia, it is hard to go past the paper by Geoff Datson, then Deputy Secretary of the Department of Trade and Industry. The complacency and sense of economic self sufficiency is overwhelming even when Datson is finding arguments not to slavishly imitate the industrial development policies of other countries: “I doubt whether we are the kind of society that would want to copy other people’s mistakes, especially in the human and social areas.” A judgement direct from the Olympian heights of Sutchian utopia.

Most revealing is Datson’s astonishingly smug view of New Zealand’s technical prowess. Despite graciously conceding that “overseas investment can in some cases be a stimulant to the growth of indigenous technology”, his account of New Zealand technology as something springing from exclusively New Zealand insights and motivations made it sound as though we were in a different universe:

“Let us look at … industrial and professional electronics…

“It happens that many of the innovators, and successful ones, of new electronic devices, or mechanical equipment associated with the field, are of New Zealand origin. I am thinking of the equipment for polarisation of ion sources for use in nuclear research; of the binaural sonar spectacles for use by the blind; of the multi-stylus recorder; of the monitor for ambulant heart patients. These are exclusively New Zealand developments, arising from New Zealand needs and conditions – except for the ion source equipment which arose from a Rutherford-like objective interest within the Physics Department of Auckland University.

“Now I should follow on by saying that in two of these cases the work was further developed by companies with overseas parents. But my point is that the technology – and very desirable technology – originated in New Zealand and could have been developed by an New Zealand company here with management as good as the New Zealanders who ran the two overseas-owned subsidiaries I mentioned …

“I am not exaggerating when I say that New Zealand is brimming with original technology, especially arising from our own conditions, but highly relevant to countries like ours in Asia and elsewhere which are glad to take our exports in preference to others because no one else has exports like them…”(p.31)

Identifying areas of indigenous strength such as dairy equipment and vaccines as “examples of the wisdom of concentrating on and selecting the kind of research and development work most suited to us” Datson gravely concluded:

“I see no need for foreign technology here. Although I recognise that foreign investment has made a contribution, this was not an essential element in the industry’s development.” (p.33)

Datson even found room for a spot of aesthetic nationalism (although upton-on-line can’t recall it unless it was all those dreadful chocolate brown carpets and orange plastic chairs that invaded public spaces in the 1970s):

“A New Zealand designer will design for New Zealanders and – as with Scandinavia and other areas – we will find that some other people like our designs too. Products are made for people in their own environment. The worst form of design is thumbing through an overseas catalogue to see what might be saleable here…”

All one can say is: Thank God New Zealand wine makers decided not to pursue the palettes of Cold Duck drinkers but immersed themselves, myopically, in learning everything there was to learn about the ultimately subjective goals of some of the greatest wine producers around the world – and choose them as the standard to be beaten.

This is of nearly archaeological interest today. More intriguing is the paper by Don Brash, then a thirty-something rising star in the financial sector as General Manager of Broadbank. In his NZIPA paper, Brash recounts his (oft since repeated) Damascene conversion from the autarchic analysis of Wolfgang Rosenberg to market liberalism. His prescription – then very much at the leading edge – has become the orthodoxy and Brash would probably stand by almost everything in the paper he wrote then. But its closing paragraph caught upton-on-line’s eye:

“As the General manager of New Zealand’s most Mew Zealand-owned merchant bank, which has a parent company that is proud to be wholly New Zealand-owned, I am the last one to deny the strength of nationalism. I think we must advise Governments to be more rational, and must assist Governments in that goal by educating the public at large to the real issues. But it might also be relevant to note that attitudes to foreign investment in New Zealand may mature only when New Zealand companies themselves expand internationally, when we have more companies like New Zealand Insurance and South British Insurance, and to a much smaller extent at this stage such companies as Broadlands and U.E.B., raising the national flag abroad. It seems significant that there is very little resentment against foreign investment in Switzerland, which has spawned a number of major international firms, and comparatively little resentment in the United States, which has spawned even more. This possibly suggests that it would be desirable to protect from takeover by overseas companies those rapidly growing New Zealand companies which might, given time, expand overseas themselves – even though such protection would not be economically rational in itself.”

Thirty years on, the companies mentioned have long since vanished. In the intervening years, we both pitted our best management against the world and opened our doors to overseas investment. If it was a test of managerial skill, the outcome was a sobering one as a succession of (once) rapidly growing New Zealand multi-nationals like Fletcher Challenge pursued their various paths to the destruction of shareholder value and eventual off-shore acquisition. How, one wonders, does Brash feel today?

In his first speech as a political candidate recently, he touched on a subject that has haunted him for some time – the chronic lack of savings that sees New Zealand continue to support its lifestyle through borrowing. Here’s an excerpt:

“ …as individuals we are increasingly unable to afford the goods and services which people living in more affluent societies take for granted. For a time, we will no doubt try to keep up our standard of living by borrowing from foreigners, as we have increasingly done in recent years. But we are already more heavily indebted to foreign creditors than any other developed country – and possibly more heavily indebted to foreign creditors than any other developed country has ever been. Without faster growth in what we produce, either our debt to foreigners is going to keep going up or we are simply not going to be able to afford to buy the things that those in more affluent societies buy.”

Of course, selling assets is the other way to maintain lifestyles, and New Zealanders haven’t been averse to that either. Brash is scarcely going to argue for a return to controls which would be the ultimate admission of failure (and wouldn’t work any way). But he has always been acutely aware of the long-run social and political consequences that can erupt in a society that is chronically unable to manage itself with the long term in mind and, by living for today, mortgages control over the future. The single most interesting thing about politics on the centre-right of New Zealand politics over the next three years will be the extent to which Brash, come down from the Paradise of central banking to the Purgatory of politics, will tackle this concern and attempt to focus public debate on what is at stake.

[Brash now finds himself, for the second time in 25 years trying to enter Parliament – something that has so far proved for more difficult for him than any of the far more technically demanding tasks he has attempted in finance, kiwifruit or monetary policy. A man of enormous intellectual and personal integrity amidst a sea of mediocrities, and one of the most outstanding New Zealanders of his generation, upton-on-line wishes Dr Brash well on his daunting quest]

The invisible editor

Standing guard over the debate, and author of the introduction, was Richard Carey. Described in that era as a “senior investigating officer” in the Treasury (do they still have such creatures), Carey trod a careful path designed to allay any fears of imminent upheaval or ideological rancour. Having deftly noted that governments of both left and right to have swallowed their ideological principles on the matter of foreign investment, he calmly predicted no major changes in the direction of New Zealand’s foreign investment policies. But even then it was apparently kosher for Treasury officers to have a swipe at Dr W B Sutch. Here is his cursory appraisal of Sutch’s philosophy:

“Dr Sutch … has relied very little on formal economic analysis. His arguments basically amount to a radical critique of New Zealand’s social and political evolution since the 1930s. This is made particularly clear in the initial chapters of his [then recently published: 1972] book Takoever New Zealand. Indeed, it is doubtful whether Dr Sutch would regard any conventional economic analysis as relevant. ‘The struggle is between the strong and articulate who want the old colonial system, and the rising generations who are victims of the philosophic superstructure of the nineteenth century’. Dr Sutch is passionately convinced that New Zealanders had the potential to grasp control of all sectors of the economy in the 1930s and to develop a unique and beneficent society with a strong national identity and under fairly complete national control. Whether this aspiration ever had any possible prospects of becoming a reality is beside the point: the concept is an appealing one to many and the autarchic policies advocated on the basis of it have enjoyed wide, if somewhat uncritical support.”

All good fun. And even more so for upton-on-line who has unearthed this saucy official here at the OECD where he has devoted the last XX years of his life to the equally contentious field of development economics. Richard has agreed to feature in the next issue as Diasporan of the Month.

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