Chief Reporter

OECD Prescription Is The Problem, Not The Solution

The old witch doctors of the OECD have issued another one of their repeat prescriptions for New Zealand and once again it’s based on that discredited old maxim – the operation was a success but the patient died. This slash and burn approach to economics is as useless as the (literal) slash and burn agriculture which wreaks terrible destruction on the land. The OECD’s approach owes everything to a failed and outdated ideology and takes no notice whatsoever of the vastly changed world that has been thrust upon all of us by the unregulated imposition of those very same policies.

It recommends (among many other things) the removal of foreign investment controls – or what few are left of them, and the Government has already declared its eagerness to oblige, by way of its current review of, and proposed further liberalisation of, the Overseas Investment Act.

We need to dispel some of the pernicious myths peddled by these cultists about foreign “investment” as the One True Path to the Promised Land.

* It doesn’t bring in “much needed money”. Quite the opposite, it sucks money out of the country. In the decade 1997-2006 transnational corporations made $50 billion profits in NZ. Only 32% of that was reinvested here; meaning that 2/3 of that enormous sum left the country. That is itself is a major cause of NZ’s Current Account Deficit (the Balance of Payments) being so high.

* It doesn’t provide “much needed jobs”. Foreign companies only employ 19% of the NZ workforce, despite owning a disproportionately large chunk of the economy. 81% work for NZ employers. And those very same foreign companies significantly add to the unemployment total, having made tens of thousands of NZ workers jobless in the decades in which we’ve had a “liberalised” foreign investment regime.

It does nothing to improve NZ’s foreign debt problem. This is one area highlighted by the OECD report and it is nonsense. In 1984, when Rogernomics started, NZ’s total private and public foreign debt was $16 billion. By December 2008, it was $248 billion, the vast majority of that held by the corporate sector, not the Government, and totaling 137% of GDP. So, despite all those numerous State asset sales, the foreign debt has just kept on soaring.

Rather than slashing, selling and privatising (those 1980s and 90s’ policies that failed so spectacularly in NZ and around the world), the Government needs to be following the lead of the major capitalist countries, and asserting control and ownership of those very sectors whose greed and stupidity got us all into this mess. In America, Britain and Europe, for example, the State has taken both control and outright nationalisation of some banks and financial institutions in return for bailing them out with taxpayers’ money. These are the leading countries of the very same OECD that is telling us to do just the opposite – very much a case of do as I say, not as I do.

To give just one example, NZ taxpayers are now the guarantors of the deposits of the banks, finance companies, etc. Yet we get no say in their running, let alone ownership. The Australian-owned banks go on their merry way piling up profits as if the crash has never happened, while at the same time turning off credit for their NZ customers. It’s time for the Government to remind the foreign banks of that old saying most favoured by moneymen: “He who pays the piper calls the tune”, and to translate that into action.

ENDS

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