Trading Sovereignty For Investment Capital - Again: The suppression of local democracy is absolutely crucial to the success of the second “Great Tightening” exercise in New Zealand history. Unless the responsibility for making critical resource allocation and/or conservation decisions is taken out of the hands of elected local representatives and placed in the hands of unelected officials appointed by central government, then foreign investors will not feel sufficiently confident to risk their capital in major development projects.
ECONOMICALLY SPEAKING, it is difficult to define New Zealand as anything other than a colony. Its biggest export earner, agriculture, remains a price-taking not a price-making industry, and the other big foreign exchange earners: tourism and education; are essentially extractive. The former “mines” our spectacular scenery; the latter our status as a first-world, English-speaking nation.
That New Zealand is able to classify itself as a first-world nation is actually rather remarkable. A reliance on agricultural commodity exports and tourism is an economic condition generally associated with third-world states – most of which, only a century ago, were colonies of the major European powers. Officially, these former colonies are now free and independent states. But, if post-war history teaches us anything, it is that winning political independence, and becoming economically independent, are two very different things.
In order to grow and prosper, price-taking economies require a patron. For most of New Zealand’s history that role was fulfilled by Great Britain. It was British capital which financed the extensive infrastructure of its far-off farm, and it was in British markets that the produce of that far-off farm was sold. Without her capital and her markets, Great Britain’s far-off-farm would have failed. Certainly, New Zealand’s home-grown capitalists were too few and too poor to build a “Better Britain” in the South Pacific on their own.
More recently, the role of New Zealand’s principal economic patron has been taken over by China – which currently absorbs the lion’s share of New Zealand’s agricultural exports. If its history as a British colony is any guide, then the capital required to finance New Zealand’s future development will, increasingly, come from the Peoples Republic.
Like their British predecessors, Chinese investors are already attempting to secure control of the key supply chains to their domestic market. Just as New Zealand lambs were once raised on farms financed by British-owned banks; slaughtered in British-owned freezing works; transported to Smithfield in British-owned ships; and their frozen carcasses sold to British-owned retail outlets: New Zealand milk will soon be extracted from Chinese-owned cows; raised on Chinese-owned farms; processed into infant formula in Chinese-owned factories; shipped in Chinese-owned containers; and sold in Chinese-owned supermarkets.
One of the most interesting themes developed by the New Zealand historian, James Belich, in his 2001 book, Paradise Reforged, is what he calls “The Great Tightening”. In a nutshell, this describes the ways in which New Zealand politicians bound their countrymen ever more tightly to the British economy. New Zealand’s primary production went out to Britain; British manufactured goods came back; and woe betide anybody who got in the way (like visionary economic nationalists, socialist trade unionists, and other assorted pests).
It is rapidly becoming clear that a very similar tightening exercise is underway in twenty-first century New Zealand. In order to attract the foreign direct investment it believes New Zealand must have to keep its economy growing, the National Government of John Key is methodically emptying the statute books of every legislative impediment to economic development.
The suppression of local democracy is absolutely crucial to the success of this second “Great Tightening”. Unless the responsibility for making critical resource allocation and/or conservation decisions is taken out of the hands of elected local representatives and placed in the hands of unelected officials appointed by central government, then foreign investors will not feel sufficiently confident to risk their capital in major development projects.
Stripping local politicians of their power to manage and develop key infrastructure is an equally vital element of the same tightening programme. It’s what lies behind the draconian provisions of the Local Government Reform Bill currently before Parliament. Under this new law the unelected Local Government Commission will have the power to force local councils to hive-off key services, such as water reticulation, energy, ports and transportation to so-called “Council Controlled Organisations”. These Orwellian entities are, of course, anything but council controlled – as anyone living in Auckland, where they have been operating since the creation of the “Supercity” in 2010, will attest.
Auckland has not been the only laboratory in which the anti-democratic elements of National’s tightening have been tested. The people of Canterbury have been without democratic representation at the regional level since the Government sacked Ecan’s elected councillors and replaced them with appointed commissioners – also in 2010. With commissioners safely installed, the irrigation schemes deemed essential to dairy intensification in Canterbury could proceed without fear of democratic interference.
When most of the population of colonial New Zealand could trace their origins directly to Great Britain; and when the patriotic mists of Imperial Albion largely obscured the predatory commercial interests of the City of London, the first Great Tightening proved broadly acceptable.
The second will be very different. Those wondering how it feels to see one’s country subordinated to foreign interests should probably consult a Maori.
This essay was originally published in The Press of Tuesday, 6 September 2016.