Selling NZ – in the news

Written By: - Date published: 8:05 am, December 29th, 2012 - 93 comments
Categories: business, economy, Environment, farming, overseas investment, Privatisation - Tags:

There’s been a couple of stories in the news over the last 24 hours that could do with some scrutiny.  The both relate to NZ’s involvement in the global market-place, and raise questions about benefits to NZ and it’s citizens.

The treasury has warned that selling three power companies in quick succession could be counter-productive. According to an RNZ article:

Newly released advice from the Treasury says it is only practical to sell one company every six months – two next year, and one in 2014. It says that still makes the programme vulnerable to a market downturn or a dip in a company’s performance.

Finance Minister Bill English has been considering selling all three power companies next year.

It was good to see that Labour MP Chris Hipkins was onto it quickly.  However, as some Standard commenters pointed out, he confused the situation by seeming to both oppose and support the government’s asset sales programme.  On TV One last night, Hipkins said:

“The Government would flood the market if they introduced three companies all in the same industry into the market in one year, it would mean the taxpayer wouldn’t get the best possible price for them,” says Labour MP Chris Hipkins.

…

“I’m not surprised that the Government are running away from this issue, they know the New Zealand public don’t want these assets to be sold,” says Hipkins.

On TV3, Hipkins seemed to totally support the asset sales,  by saying the over-crowded sale schedule would disadvantage “Mum and Dad” investors:

And Labour says it would disadvantage individuals wanting to invest.

“Mum and dad investors would struggle to scrape together enough money to invest in one electricity company in one year let alone invest in three of them,” says Labour spokesman Chris Hipkins. “So what this is going to do, if they force all these sales through in one year, we are going to see those shares going to corporate interests and overseas investors, not to mums and dads.”

In contrast, Green co-leader Metiria Turei issued a statement unequivocally opposing asset sales, as reported at the above TV3 link:

“Treasury’s saying don’t do it, the sharemarket can’t handle it – so let’s heed Treasury’s advice,” says Green Party co-leader Metiria Turei. “They’re not a radical organisation, they’re a conservative economic organisation and they’re saying it’s not possible.”

There’s another story today about a milk processing factory possibly being set up in NZ by an overseas company.  Some overseas investment is good for NZ.  NZ farmers appear to like this one. Others here will be a better judge of that than me.

Federated Farmers says the likely sale of Oceania Dairy to China’s largest dairy producer by market value should be good news for farmers looking to get the best price for their milk.

Inner Mongolia Yili Industrial Group (Yili) plans to buy Oceania Dairy to acquire the resource consents it holds over 38 hectares near Glenavy in South Canterbury, to build an infant formula plant on that site, according to media reports.

The deal is subject to approval from the Overseas Investment Office but if given the green light, Yili will reportedly invest $214 million in the plant.

The upside is that it will provide jobs for Kiwis.  However, that is often only a short-term benefit. This potential development should also be seen in the context of how the whole area is being developed.  Multiple initiatives in the area could result in over-stressing the environment.

There was still a “huge expansion” taking place in the dairy industry in that region, with a couple of big irrigation schemes like Hunter Downs and South Waitaki still to come off which would increase the amount of irrigated area down there and could lead to increased milk supply.

Leferink said he did not see “a hell of a lot of stretch” in the supply base until the country reached the maximum number of cows it could sustain in the long-term, and even then cows could produce more milk than they were currently.

However, I will leave it up to the knowledgeable Standard commenters to put such potential developments under scrutiny.  Many are far more knowledgeable than me about business and the economy.

93 comments on “Selling NZ – in the news ”

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  1. Curran's Viper 1
    29 December 2012 at 9:08 am

    Releasing potentially controversial news during quiet media periods has a long history.

    Selling power companies appears to fit into this category.

    NZ needs stable investment, and Yili needs milk formula so here has to be an equitable deal there somewhere, part of the attraction being “resource consents it holds over 38 hectares near Glenavy in South Canterbury” for expansion.

  2. felixviper 2
    29 December 2012 at 9:53 am

    Oh FFS Labour, what the hell are you doing?

    Hipkins has just handed the whole asset sales argument to National. He concedes that not only do assets have to be sold, but that they’re being sold for the benefit of “Mum an Dad investors”.

    Who the fuck is in charge of the Labour caucus? Why are these fucking idiots being allowed to support National’s narrative?

    • Te Reo Putake 2.1
      29 December 2012 at 10:07 am

      Time for a coffee, felix? Hipkins did not endorse the sales, he simply undermined National’s argument that ‘mum and dad’ investors would buy the stock. The same point applies to the post; pointing out that international investors will be the big winners and that Kiwis will be the losers is not an endorsement of the sales.

      • Saarbo 2.1.1
        29 December 2012 at 12:59 pm

        I’m with felix. Labour need to be absolutely clear in its message. For most people who dont live and breath politics, Hipkins message is that the Sales are ok, just don’t bunch them up within a 12 month period. So if English decides to spread the sales over a 2 year period, problem solved. Once again Labour dont have a CLEAR message.

        Regarding the sale of NZ’s milk productive capacity overseas: Dumb, just plain Dumb. Since Labour/Helen helped set up Fonterra in 2001 (Dairy Industry Restructuring Act), Fonterra has shown clearly that the Co op structure is the best way to structure our dairy industry, it maximises the amount of money that stays in NZ. Overseas ownership adds nothing to our dairy industry. It simply siphons of part of the profits to overseas to do even more damage to our current account deficit.

        • The Pink Postman 2.1.1.1
          29 December 2012 at 3:18 pm

          The message from Hipkins was perfectly clear .He was using the example the Nat’s use to discredit them. I just wish some people would listen properly before they rush out to discredit Labour.,The enemy is National .Do you critics want another 3 years of this awful
          Tory government ? Because reading what you moaners are writing will do just that. Go and moan on the Right-Wing blogs , there is certainly enough to moan about to that lot.

        • The Pink Postman 2.1.1.2
          29 December 2012 at 3:18 pm

          The message from Hipkins was perfectly clear .He was using the example the Nat’s use to discredit them. I just wish some people would listen properly before they rush out to discredit Labour.,The enemy is National .Do you critics want another 3 years of this awful
          Tory government ? Because reading what you moaners are writing will do just that. Go and moan on the Right-Wing blogs , there is certainly enough to moan about to that lot.

      • Murray Olsen 2.1.2
        29 December 2012 at 4:43 pm

        I’m also with Felix. Hipkins comes across as wanting to do the asset sales “properly” rather than feeling any depth of opposition to them. I can only imagine that he rose through the ranks due to the patronage of some Labour apparatchik, not due to any involvement in class struggle nor strongly held beliefs in the role of a progressive left. Every time this undergrown schoolboy opens his mouth is another reminder that the traitors in caucus value loyalty to a loser of a leader far more than ability or ideology. They’re worse than useless.

        • Saarbo 2.1.2.1
          29 December 2012 at 9:05 pm

          Agree Murray. Hipkins outburst after the Conference was disgusting, I still have not heard what happened to New Lynns complaint re this? Hipkins is not Labour MP material.
          Makes you wonder what Labour’s criteria is to choose their MP’s.

      • Populuxe1 2.1.3
        29 December 2012 at 11:34 pm

        Oh come on Former Voice Of Reason, have you already forgotten David Parker’s Robert Walters Finance Breakfast Speech?

    • Dr Terry 2.2
      29 December 2012 at 10:10 am

      One can only guess that were Labour in office it would carry right on with the asset sales. I am so heartily sick and tired of hearing that awful phrase “Mum and Dad investors”. Probably most investors will be neither mum’s or dad’s! (But we have to be seen to comply with those other meaningless words “family values”).

      • Rodel 2.2.1
        29 December 2012 at 2:57 pm

        Dr Terry I too am sick of the expression ‘mum and dad investors’. It’s nearly a mantra.

        I’m also sick of ‘asset sales’. The term should be ‘asset theft!…asset theft!…asset theft!…..’ repeated endlessly until it sinks in to the public mind.

    • QoTViper 2.3
      29 December 2012 at 1:56 pm

      +1

      Another note to Chris Hipkins: “Mum and Dad investors” are a myth. Most Kiwis actually can’t “scrape together” enough to invest in anything. Also, doesn’t flooding the market with three companies simultaneously make it easier for “Mum and Dad” to invest, since it means the prices will be lower?

      Of course, Labour could just stop tying itself in knots by saying “Asset sales are wrong, National are clearly motivated by giving their mates more successful companies to invest in, Mum and Dad investors are a myth” but that would involve some basic political nous.

      • Draco T Bastard 2.3.1
        29 December 2012 at 6:46 pm

        +1

        But we won’t get that as Labour are just as much about propping up the failure of capitalism as National are.

        • marty mars 2.3.1.1
          29 December 2012 at 8:50 pm

          + 1 so true D, so true.

        • Populuxe1 2.3.1.2
          29 December 2012 at 11:37 pm

          Labour always more or less has been – however prior to the clusterfuck of Labour 4 (or ACT 1 if you prefer) and again during Labour 5 (or at least it seemed to me), they were doing it for the right reasons, ie the country as a whole, not just the rich pricks.

    • Fortran 2.4
      29 December 2012 at 2:26 pm

      I have spoken access to two very senior staff at major KiwiSaver Managers and they have said that they are cashed up to get as many shares, in any, or all of the partial sales, as possible on behalf of their savers as they believe that they are all good long term investments.

      • VindowViper 2.4.1
        29 December 2012 at 5:20 pm

        Well in that case how about just allocating say 50% of the shares to the NZ Super Fund and the rest can be bid among from various New Zealand based Kiwisavers and/or iwi’s?

        That’s about the only basis on which this asset sale program makes any sense whatsoever. Anything else is just the usual theft by privatisation.

        • Georgecom 2.4.1.1
          29 December 2012 at 10:23 pm

          Got to disagree. If Kiwisaver fund managers are so keen on investing in power generation that says strongly that the assets are worth keeping in collective ownership and socialising the dividends.

          The argument I have heard mounted in support of sales, deepening the stock market, isn’t much of an argument to me. Why does the state need to prop up the stock market? Any economic future NZ has is not about state handouts for financial capital. We have tried variants of that. 2008 showed financial capital doesn’t respect any help it receives.

          Better that financial capital concentrates on building new companies. If the stock market is weak, ‘bring to market’ attractive new ventures, don’t simply expect handouts from the state.

          On the matter of dairy processing. My strong preference is for NZ concerns, including money, to be tied into joint ventures where the total benefits of production and consumption provide a national benefit. That is, where the full benefits flow back to NZ. There can be some capital put up by foreign entities but that should be matched with domestic investment – a joint venture. It is all good and well processing product in NZ, that is part of the equation. The sharing of profits from the supply network, sales and consumption are other parts in the full circuit of capital. The full value to NZ lies in having fingers in those pies as well.

          I am not of course expecting the Key Government to have much interest in developing the conditions to allow NZ inc to extend its fingers into such pies. That would necessitate having a plan. Long and recycled shopping lists, nebulous goals and vague intentions don’t add up to plans.

    • Fortran 2.5
      30 December 2012 at 10:03 am

      According to Reserve Bank figures there is something like $111 billion currently with banks in New Zealand on short term deposit.

      Kiwisaver managers will take as much of the partial sales as they can get there hands on –
      Two million or so New Zealand members.

    • infused 2.6
      30 December 2012 at 3:54 pm

      Heh, Hipkins is a tool. Never liked the guy.

  3. bad12 3
    29 December 2012 at 10:17 am

    Inherent within the Yili industry Group plan to build a baby-formula plant is the problem of the de-industrialization of New Zealand,

    We know that the demand in Asia for baby-formula is so huge that individuals have been resorting to the mass buying of the product from New Zealand super-markets and it’s exportation,

    It is then market failure here in New Zealand where the demand has not been met by any growth of production here to attempt to match the demand in the Asian economy’s,

    So much for the ‘smart’ or ‘knowledge’ economy, what New Zealand is increasingly looking like is an ‘out-smarted’ economy with little ‘knowledge’ of it’s markets,

    Admittedly 240 million dollars isn’t a small investment for any local appetite to be able to service, BUT, we either watch as more and more of the profits from the New Zealand dairy industry flow off shore or Government either directly or through a mechanism such as the New Zealand superannuation fund begins to directly invest in New Zealand production…

  4. Rob A 4
    29 December 2012 at 10:48 am

    I work in the Dairy Industry. And I think you may be missing the real point regarding Oceania. They tried for years to raise capital in NZ and couldn’t do it. Eventually they gave up and sold thier milk supply contracts to another company. Now Yili have come in and are going for the resource consents and land to build the factory.
    There was a similar case a couple of years ago with another dairy company Synlait. They had tried to raise local money for over a year in NZ for expansion and in the end could only source the money by selling 51% of themselves to a Chinese company.
    There was also NZ Dairies in South Canterbury which was 100% owned by Russians. They got it at a bargain price because they were first bought in as investors then things turned south for the company and they NZ owners wanted out. The investors again tried to raise money in NZ but were unable to
    And now we have Fonterra portions heading overseas with thier new share trading scheme which began so they could look at future changes to thier structure to make it easier to raise capital.

    I don’t know much about the other areas you’ve mentioned but right through the NZ dairy industry the common thread is that if you want to raise capital for expansion, you’ve got to get that money from overseas.

    How much money dies the Cullen fund have invested overseas?
    Cullen was a brilliant finance minister but I think he missed a real opportunity to invest a lot of money in NZ and create jobs and companies here. If National have a drop of sense they would take a look at the schemes rules, not that they even care about it

    • bad12 4.1
      29 December 2012 at 12:28 pm

      Part of the lack of investment capital ‘problem’ in New Zealand goes back to the machinations of the 1980’s sharemarket and it’s later ‘correction’ or ‘crash’,

      Having been severely burned by what was in essence acts of theft and fraud surrounding the ‘industry’ which services the share-market the growing and increasingly cash rich,(bloated), middle class looked for an investment that they could personally control,

      We have to go way off topic here, but, any explanation around the lack of investor capital in this country need address the issue across the whole economic paradigm,

      The investment of choice of that cash rich New Zealand middle class then became rental housing aided and abetted by Governments who either gave scant regard to increasing the number of State Owned Housing within the context of a population that in the period was grown artificially from 3 million odd souls to over 4 million, or, as in the case of the National Government of the time directly added fuel to the fire by selling off 1000’s of the housing stock owned by the state,

      Such a situation created by successive Governments seen rental housing as the choice of investment for the middle class, a side effect of this being that prices were soon driven above what an average wage could afford to purchase via a mortgage which of course simply created more of a demand for rental housing,

      Private household debt in New Zealand is at the moment in the realm of 150 billion dollars and much of this is locked into rental investment housing and if successive Governments had of taken the necessary steps to alleviate rental demand as this occurred much of that 150 billion dollars would have to be invested elsewhere, such as the share-market,

      I can address at some other time what is ‘needed’ to remedy the investment imbalance from the point of view of the doubling o the provision of State Owned Rentals at some other time, but, in view of the middle class being ‘gun-shy’ when it comes to share-market investment, (and who could really blame them), it would be a simple matter for Government to establish an investment vehicle similar to the ‘Cullen fund’ designed specifically to take in the cash excesses of the middle class, invest these in New Zealand production where possible and give a guaranteed minimum return on the investments while also giving investors a bonus issue where like the ‘Cullen Fund’ the investment vehicle out-performed it’s expectations,

      As sole investors the New Zealand middle class lack the financial literacy and the gravitas of capital mass to be able to realize a reasonable return from the New Zealand share-market, but as an organized collective of capital managed under a fund such as the ‘Cullen Fund’ they could be persuaded with a guarantee of return to invest in New Zealand’s productive base…

      • Rob A 4.1.1
        30 December 2012 at 12:21 am

        I like your thinking and there really isn’t anything there I disagree with. I for one would like to hear you explain what you think is needed.

        • bad12 4.1.1.1
          30 December 2012 at 12:16 pm

          As far as an investment vehicle??? it would seem reasonably simple for Government to establish a ‘fund’ where it,(the Government),invests dollar for dollar along with private New Zealand citizens in New Zealand production where the Government guarantees a specific return for those investors,

          As far as dairy goes there is no reason why such an investment vehicle could not be invested from the cows teat,(actual farm ownership), right through the processing chain to the exportation of product such as baby formula and i am sure many ordinary Kiwi’s would be more than thrilled to be able via the capital mass of such a fund invest in such ownership,

          Such an investment fund managed in much the same fashion as the present Cullen Fund with a guaranteed minimum return would surely attract a risk averse middle class back to investing in the share market,

          Having said all of that, i will add the codicil that it is my firm belief that the middle class of New Zealand has by successive Government’s design been allowed to ‘capture’ far to much of the profits of New Zealand’s capital base,

          This capture of capital as wages and salary’s has been at the expense of (a) those who daily labour at pushing the heavy wheel of capitalism, working for the minimum wage or just above, and (b), the capture of a bigger share of the capital base by the middle classes has been at the cost of actual employment, where for every $10,000 of pay rises the middle class have done at least one of those who have the least skills out of the chance of employment,

          My writing above simply deals with ‘what is now’ and is definitely not what i consider to be the ideal for our economy or society into the future…

        • bad12 4.1.1.2
          30 December 2012 at 12:29 pm

          PS, i have deliberately not addressed the issue of ‘housing’ in my reply to you as to do justice to such a fundamental area of society and economy would (a), drag the current post way off topic, and (b), as ‘affordable housing’ is at the heart of my economic and social views to address what i see as ‘needed’ along with the history and reasoning behind such beliefs would take one very very very long comment and is probably best left for future comments in a post dealing specifically with that question…

    • Ad 4.2
      29 December 2012 at 1:15 pm

      Well observed Rob A. Dairy farmers are grinding their way through mortgage debt from expansion and increased mechanisation over the last decade. Even that has been a massive step in gearing for them.

      But there is not enough local capital, often, to reach beyond that. Dairy farmers know that, which is one reason Fonterra’s foreign capital raising was so narrow, and hard fought. It’s been heartening to see central north island post settlement iwi go beyond farm ownership into processing.

      What I see missing is mechanisms to bind the interests of the state with Fonterra. Being an active shareholder through the shareholders group (via Landcorp) would be a start. Buying more tradable shares on behalf of NZSuperfund would be another.

      But there are others. For example the last Labour government formed the Fast Forward Fund with its Crown Research Institutes and most of the pastoral sector, binding massive pastoral productivity research together. Hopefully Labour brings something similar back. Would have been worth over $2 billion by now.

      Next time Fonterra asks for another legislative tweak, Labour should require a seat at the board.

      Labour has little understanding of how patriotic and commercial farmers are together. They had a sniff of it over the Crafar Farms debate. But they did nothing with it. Unless they grapple hard with the vital importance of dairy, and fight to retain partial ownership here of as much as they can via foreign ownership rules, they will see the electoral map remain largely deep, deep blue.

    • Saarbo 4.3
      29 December 2012 at 8:18 pm

      Fonterra have as part of their mission statement to never turn away farmers milk,so I’m not convinced that there is a need for alternative production capacity.The problem with new capacity created by private organisations (synlait etc)is, to get started is very capital intensive and the new corporate manufacturers can’t get the critical mass to make a buck, while Fonterra can simply absorb the extra capacity within its system. I guess my point is, why do synlait and Oceania need to exist? A supplier owned single desk seller will always be the best way to maximise the return for New Zealand. But regulation is essential for domestic supply!
      Regarding Fonterra’s Trading Among Farmers, I don’t believe that this was needed. It was created to deal with redemption risk by Fonterra suppliers. Fonterra has only had one year when farmers redeemed a large number of shares, in 2008, due to drought. Since then Fonterra has strengthened it’s balance sheet and redemption of a large number of shares would not be a huge problem. I suspect TAF was done to help strengthen the NZ capital markets (one of the reasons National is keen to sell our power co’s as well) and it is the neo lib sort of thing to do. I understand that the National Party were quite resistant to setting up Fonterra in the late 90’s, a Dairy Board director mentioned that if it wasn’t for Labour, Fonterra wouldn’t have been set up. I suspect that National wanted a number of competing corporate manufacturers.
      Time will tell whether TAF was the right thing to do.

      • Rob A 4.3.1
        29 December 2012 at 11:12 pm

        Fonterra is really struggling to meet capacity. They’ve just built a new factory in Canterbury and there are expansions going ahead at two sites next season. You sound like you know what you are talking about but for any others reading milk is very seasonal. Factories are built to take a maximum amount of milk but this is only for 4-6 weeks of the year. The rest of the season factories are running below capacity. Because they have to take all milk offered to them this is Fonterras weakpoint, they have to process x amount of milk, thus thier plants are designed to do so.
        Fonterra is mainly a normal powder manufacturer. There is only 1 Fonterra Infant Formula plant, there are a lot of extra rules and hygiene requirements on plants that make Infant formula. Whereas the smaller companies largely make higher end products and have a good history of paying farmers more than Fonterra does

        • Saarbo 4.3.1.1
          30 December 2012 at 8:40 am

          Thanks Rob, yes I was aware that Tatua in Morrinsville pay more than Fonterra (Tatua is another Co op though, just a small one), I wasnt sure about other factories.
          I am a bit of a fan of Co op structures compared to Corporates. I’ve seen a lot of Corporates fold over the last 20 years CHH, Fletcher Challenge etc while Fonterra has grown and done well dealing with the challenges of dairy expansion. I could do a decent rant on co ops versus corporates but I havent got time now. And am very aware of the huge environmental issues created by dairying, these must be dealt with…and soon. But at least Fonterra has made it mandatory for all suppliers to fence water ways by the end of May 2013….which is heading in the right direction. Farmers wont spend money on environmental improvements unless it is mandatory.
          Regarding the capacity issue where fonterra has to take a huge amount of milk in the 4 to 6 weeks, I guess this drives their capacity towards powder. But I would imagine in absolute terms Fonterra would dwarf any other NZ supplier manufacturing Baby Formula? Maybe you can confirm Rob?

          • Rob A 4.3.1.1.1
            30 December 2012 at 12:49 pm

            I agree with what you’re saying about co-ops, but I’m not the GM 🙂

            The environmental impact is also something that the dairy industry has to get sorted and soon.

            For infant powders it has been a bit of a one horse race until recently. Synlaits infant plant is only 18 months old and is the biggest infant dryer in the world but typically the first year or two of a plant is commisioning and just learning how to run it. Rumour is they are looking to start building another infant dryer shortly. If that’s true they must be going really well.
            Westland has resource consents to build an infant plant in Rolleston Canterbury and there is another company starting in Otago shortly that has been saying they are going to build an infant plant.
            OCD (that Talleys outfit) doesn’t make it, probably the biggest thing holding them back is they’d have to get some skilled operators and they don’t like paying the going rate. They are fast becoming Fonterras training academy. I’m being a prick here, their plants are cheap peices of shit, if I was a buyer I wouldn’t take normal powder off them let alone infant.
            I don’t think Tatua does infant, they do some other pretty high end products. The only other one I know of is Dairy Goat in the Waikato, but that site is tiny.

            • Saarbo 4.3.1.1.1.1
              30 December 2012 at 4:52 pm

              Interesting what you say about OCC/Talleys Rob. The same goes for their farmer suppliers,no fences around waterways. Proves my theory that farmers won’t do anything environmental unless mandatory.

  5. Phaedrus 5
    29 December 2012 at 12:00 pm

    One sign of ‘oppression’ is buying into the terminology. By using ‘mum and dad investors’ Hipkins has done just this. Education is a good example, where the meaningless phrase ‘raising achievement’ is being used by all and sundry. Lakhoff and Chomsky both highlight the use of language in this way.

    • The Al1en 5.1
      29 December 2012 at 12:28 pm

      “One sign of ‘oppression’ is buying into the terminology. By using ‘mum and dad investors’ Hipkins has done just this.”

      Not surprising when his boss has gone on about brighter futures already.

      Like I said, die already cast.

      “Go back to your constituencies and prepare for defeat” 😆

  6. tc 6
    29 December 2012 at 12:29 pm

    Hipkins as spokesperson……facepalm.

    No better way to show you don’t give a F about agenda setting labour, great opportunity to get a jump on the hollowman spin as they always unleash the bad news in the festive break and you assign the village idiot.

    The mallarfia stands back and with more than a touch of arrogance to admire their boy’s work.

  7. gobsmacked 7
    29 December 2012 at 12:45 pm

    I thought Labour’s message on Asset Sales was obvious … referendum, referendum, referendum.

    Keep saying it, until there is one. How hard is that?

  8. Draco T Bastard 8
    29 December 2012 at 1:39 pm

    Some overseas investment is good for NZ.

    No, foreign investment is always bad for the local economy as it deprives the local economy of ongoing investment and the benefits of it’s own work.

    The upside is that it will provide jobs for Kiwis.

    Unlikely. In fact it’s more likely to result, overall, in less jobs. That massive investment is to be able to produce more product using less people. As everyone should know I’m not against using automation and machinery to decrease the amount of work but the present capitalist structure of our economy means that we will just end up with more poverty while the benefits of the use of the nations resources goes overseas.

    • karol 8.1
      29 December 2012 at 5:28 pm

      I did say that the creation of jobs from such overseas investments is often a short term benefit.

      I had thought that if an overseas investor chose to live in NZ, and put a significant amount of profits into funding NZ businesses, along with up-skilling and up-resourcing said NZ business, it might be a good thing. TGhat also takes into account what bad12 and ad said about the lack of NZ funding to invest in businesses providing necessary goods and services for NZ.

      • Draco T Bastard 8.1.1
        29 December 2012 at 7:06 pm

        I had thought that if an overseas investor chose to live in NZ, and put a significant amount of profits into funding NZ businesses, along with up-skilling and up-resourcing said NZ business, it might be a good thing.

        That would make them a NZ investor which may make it a Good Thing – for a short term anyway until the dead weight loss of profit overwhelms it.

      • RedLogix 8.1.2
        29 December 2012 at 7:24 pm

        FDI can be a very mixed bag.

        One of the relatively few good examples I can think of is Juken Nissho. They actually came here and built new plant, with unique product, serving a market that no local company was ever likely to enter. They employ about 1000 New Zealanders and have proven to be stable employers.

        (While it’s true that for some years in the 90’s the local management struggled to get up to speed with acceptable workplace safety, they’ve improved a lot in the last decade.)

        At the very least they add one hell of a lot more value than shipping raw logs over the wharf, which is what happens to most of them.

        Contrast this with the behaviour of Wisconsin after they purchased NZ Rail, undertaking an utterly reprehensible, rapacious asset stripping. Literally they had guys going round tearing out any and every piece of equipment, spares, sidings, wagons, tracks, tools … anything they could get away with gas-axing off the floors, walls or trackside…. and hocking it off for whatever price they could get. Scrap metal prices often.

        Two extremes examples. By and large the long-term loss of economic sovereignty usually doesn’t turn out to be worth any short-term gain in employment or taxes.

        • McFliper 8.1.2.1
          29 December 2012 at 7:27 pm

          Agree entirely.

          shame our own government is copying Wisconsin these days.

        • karol 8.1.2.2
          29 December 2012 at 7:48 pm

          RL, your argument looks sound to me. I do not claim to be an expert (or anywhere near it) on business operations.

        • Molly Polly 8.1.2.3
          29 December 2012 at 10:17 pm

          (Inner Mongolia Yili Industrial Group (Yili) plans to buy Oceania Dairy to acquire the resource consents it holds over 38 hectares near Glenavy in South Canterbury, to build an infant formula plant on that site, according to media reports.)

          What I don’t understand is why is there such a market for baby formula in China (or in Asia in general)? What has happened that babies are no longer breastfeed and therefore require cows milk specially formulated to feed them? Why is cows milk for babies so popular?

          Is it because breastfeeding is not fashionable any more and cows milk is somehow better/more healthy these days? Obviously Chinese babies have been breastfeed since time began and survived (like the rest of the world) perfectly well.

          Or is it because mothers return to paid work soon after their babies are born and are unable to keep breastfeeding?

          What is going on? In NZ (and western countries) breastfeeding is promoted as the healthiest option for infants. And this is of course backed up by research. Although you don’t actually need research to tell you that cow’s milk is not what nature intended for human babies. We all know breast is best. And Mums are encouarged and supported to breatsfeed even if they are returning to the work force while their babes are little.

          But it’s Ok apparently for Chinese babies to have second best. And it’s obviously OK for companies to market baby formula as great for these babies – andin the process make huge profits from it’s manufacture.

          Just saying…

          • xtasy 8.1.2.3.1
            29 December 2012 at 10:23 pm

            Well, NZ is staunch on anti-smoking policy too, but a year or two ago, a major tobacco manufacturer opened a brand new factory in a suburb of Wellington, exporting heaps of cigarettes to Australia.

            NatACT and capitalist whoredom and hypocrisy at its best, that is NZ (clean, green 100 per cent pure tobacco, made in NZ, same as baby formula to enable Chinese women to spend more time working their butts off)!

            • Molly Polly 8.1.2.3.1.1
              29 December 2012 at 10:36 pm

              Chinese women working their butts off because they have to return to work soon after giving birth to their one child (maybe two if they get permission from the govt) for poor wages and work conditions to produce cheap goods for the world. Meanwhile they PAY for their babies to be fed formula. Poor women, poor babies.

              • xtasy …
                29 December 2012 at 10:39 pm

                Given the scandals about food poisoning and what one reads at times, maybe the mother’s milk in many Chinese women is also at danger of high levels of detrimental toxins. Hence the obsession with “clean, green” NZ milk powder, better than nothing??

                • Molly Polly …
                  29 December 2012 at 10:49 pm

                  You would think that the formula milk scandal where thousands of babies suffered kidney probelms (and some died) would have encouraged Chinese mother’s to maintain breastfeeding not buy NZ made baby formula. I find it hard to believe that Chinese women’s breastmilk is inferior due to toxins but I may be wrong. More likely that formula is thought of as a better alternative and is popular because it is “european” – as what has happened in other developing countries. And because it fits into getting women back to work quicker.

                  • Rob A …
                    29 December 2012 at 11:04 pm

                    By Infant formula they mean different formulations upto 2 years. Where I work we make 24 different recipes only 3 of which are Step 1 for kids 0-6 months old. There is also GUMP powder (growing up milk powder) for upto 4 years mainly as a dietry supplement.
                    The tainted milk scandal was actually what created the big demand in China for foreign formula. There is a big mark up for products manufactured and packed in reputable countries.
                    I forget the exact number but there are over 30 million babies in China being supported by 6 incomes because of the 1 child rule. The market there and what they are prepared to pay is absolutely huge, some brands are pushing $100 a tin.

                    • Molly Polly …
                      29 December 2012 at 11:13 pm

                      As we know breastfeeding is easy, cheap and healthy. The Chinese are being conned.

                      And I also don’t get why formula has been extended to older children. What did they feed their children on before formula became so popular? Milk is not a staple diet in China.

                    • Rob A …
                      29 December 2012 at 11:22 pm

                      Once past the stage 1 which is meant to be as close to mums milk as possible I believe it’s purely as a supplement. Milk and it’s benefits have been pushed very much in China for the last decade at least and the market there has been growing rapidly. About 10% per year for the last decade, in a market as big as China that’s huge. I’m in manufacturing not marketing or Tech but our Chinese formulas compared to other recipes for western countries have lots of trace minerals and vitamins probably not available in the usual diet.

                  • xtasy …
                    29 December 2012 at 11:06 pm

                    Molly Polly: Hey we want em working, working, working, that is the purpose of life, as Paula Bennett also tells beneficiaries. And if you have any doubt, do a Google search on NZ doctor David Bratt, the Principal Health Advisor for WINZ and MSD. He has many presentations going around, telling us about the great health benefits of work, and that worklessness is evil and living off a benefit is like drug dependence.

                    Work, work, work, and your health will be good.

                    Time of work is evil, encourages laziness and imagined illness and worse. Maybe the Chinese love Dr Bratt and his philosophy???

  9. Yoza 9
    29 December 2012 at 5:22 pm

    The sale of publicly owned assets serves the purpose of increasing corporate influence over the New Zealand economy while decreasing the influence publicly elected officials can exert. In the minds of the right the government exists to manage the population for the benefit of private enterprise – a euphemism for corporate rule. As private interests ‘strip mine the economy’ a greater number of people are forced to squabble more strenuously for diminishing scraps from the table.

    ‘Fortunately’ we have corporate run prisons for those people who can not psychologically cope with a system designed to prevent them making any meaningful contribution to society.

    I haven’t been able to watch any of the previous Batman movies (mind numbingly boring), but seeing the shorts for the latest one I thought I would get it out on video and was quite surprised to hear Anne Hathaway/Catwoman admonishing Christian Bale/Bruce Wayne: “There’s a storm coming, Mr. Wayne. You and your friends better batten down the hatches, because when it hits, you’re all going to wonder how you ever thought you could live so large and leave so little for the rest of us.”

    There must be alarm bells going off somewhere if dialogue this subversive is getting into corporate mass media products. Just to clarify, Batman, A Dark Knight Rises, is not a subversive movie, but there is definitely an attempt to garner credibility through paying lip service to the perceptions the average person has about the disproportionate influence corporations exert on the decision making processes throughout Western society and the way those decisions are concentrating a greater share of wealth in fewer hands.

    “There’s a storm brewing Mr Key…”

    • karol 9.1
      29 December 2012 at 5:31 pm

      Hathaway/Catwoman admonishing Christian Bale/Bruce Wayne: “There’s a storm coming, Mr. Wayne. You and your friends better batten down the hatches, because when it hits, you’re all going to wonder how you ever thought you could live so large and leave so little for the rest of us.”

      Often in Hollywood movies the baddies say things that come from the left and/or revolutionaries. It does acknowledge such ideas, but contains and undermines them.

      • McFliper 9.1.1
        29 December 2012 at 5:44 pm

        Yeah, it’s a mixed bag. It shows the opinions are powerful and popular enough to denigrate, but it’s still an attack.

        Although Goebbels would have been smart enough to have the opinions expressed not by the charismatic and/or attractive “baddie”, but by one of their weak and cowardly henchmen folk es lickspittles.

      • McFliper 9.1.2
        29 December 2012 at 5:47 pm

        heh – the “G” man is obviously a trigger for moderation 🙂

      • Draco T Bastard 9.1.3
        29 December 2012 at 7:01 pm

        Yeah, I’ve been noticing that. The Good Guys almost always are rich, influential and think of everybody while the Bad Guys are poor, violent and are only concerned for themselves. See it in books as well. The whole lot propagates the Randian Super-Hero myth that the RWNJs seem to believe without question.

        • RedLogix 9.1.3.1
          29 December 2012 at 7:28 pm

          Yes. Propaganda woven deep into the warp of Hollywood’s ‘popular entertainment’ is enormously potent.

          This is why storytellers were always such subversive people.

          • Draco T Bastard 9.1.3.1.1
            29 December 2012 at 11:11 pm

            And an article about this pops on Craked.com

            So, yes, for the fucking love of God, movies matter. TV shows matter. Novels matter. They shape the lens through which you see the world. The very fact that you don’t think they matter, that even right now you’re still resisting the idea, is what makes all of this so dangerous to you — you watch movies so you can turn off your brain and let your guard down. But while your guard is down, you’re letting them jack directly into that part of your brain that creates your mythology. If you think about it, it’s an awesome responsibility on the part of the storyteller. And you’re comfortable handing that responsibility over to Michael Bay.

            No, it’s not a conspiracy – it’s just that the only people making the decisions about which movies are made all think the same.

            • Yoza 9.1.3.1.1.1
              30 December 2012 at 3:41 am

              I can’t help but agree with all the comments here. And thanks for the link to the piece at Cracked by David Wong, Draco, it was well worth the read.

            • karol 9.1.3.1.1.2
              30 December 2012 at 7:15 am

              Thanks, Draco for the link. Excellent source. It reminded me of a plan and notes I had for a post for a slow news day over the summer. Just pulled out my document for it, and will use your link in the post.

        • Zaphod Beeblebrox 9.1.3.2
          30 December 2012 at 10:34 pm

          Except in James Bond. The rich guys are super rich right wing manipulative control freaks who use their power (and media inteersts) to manipulate the political process (purely hypothetical of course!!)

          Bruce Wayne strangely chooses to fight corrupt politicians with violence- why doesn’t he just bribe them!

      • Populuxe1 9.1.4
        30 December 2012 at 2:07 pm

        Catwoman isn’t exactly a baddy per se, and the Batman mythos has always played ironical about the Bruce Wayne side. Wayne must play the billionaire playboy so as to hide his Batman activities. Considerably more complex than you are painting it. Nothing about Batman is black and white – so all in all a really bad example.

        • karol 9.1.4.1
          30 December 2012 at 5:29 pm

          Yes, it’s a double play of good and bad. But it enables Wayne/Batman to look like a good guy, while having the trappings of wealth and glamour. Batwoman is one of the more attractive villains, but she doesn’t have the power of Batman, so who anti-establishment/revolutionary ethos, can be savoured, but not allowed to be victorious.

          It allows for some resistant readings by some in the audience, but for most, reinforces the belief in the goodness of the status quo.

  10. People's Power Ohariu 10
    29 December 2012 at 5:47 pm

    “We’re gonna stop the asset sales”
    To the tune of Down by the Riverside

    Chorus:
    We’re gonna stop them flogging off our dams
    Down by the riverside
    Waikato to the Clyde
    We won’t be satisfied
    Til we’ve stopped them flogging off our dams
    Down by the riverside
    Because the Government lied …

    Verse one:
    They said its for the mums and dads
    That we would be so glad
    To cough up for some shares
    But it will cost a grand or two
    Too much for me and you
    But we’re gonna STOP THE ASSET SALES!

    Chorus:

    Verse two:
    Stock brokers, bankers and their mates
    Yes they’re all on the take
    One hundred million plus
    All their snouts are in the trough
    We’ll get them all to BUGGER OFF!
    Cos we’re gonna STOP THE ASSET SALES!

    Chorus:

    Verse three:
    They said they’ll paint some schools for you
    A hospital or two
    Its just a big brush off
    After the power companies are gone
    Other state assets won’t last long
    So we’re gonna STOP THE ASSET SALES!

    Verse four:
    We can forget the puppet Dunne
    We’ve got him on the run
    He thought that he could hide
    He never showed up in the House
    Ohariu will chuck him out
    And we’re gonna STOP THE ASSET SALES!

    Chorus:
    We’re gonna stop them flogging off our dams
    Down by the riverside
    Waikato to the Clyde
    We won’t be satisfied
    Til we’ve stopped them flogging our dams
    Down by the riverside
    Because the Government lied …
    Because the Government lied …
    We’re gonna STOP …THE …ASSET …SALES!

    People’s Power Ohariu
    save.our.soes@hotmail.co.nz
    August 2012

    • Matthew Hooton 10.1
      30 December 2012 at 6:27 am

      Contact Energy, which owns the Clyde Dam, was 100% sold in 1999, so the reference to Clyde should probably be changed in the chorus, because otherwise it doesn’t really make sense.

      • tc 10.1.1
        30 December 2012 at 12:06 pm

        But otherwise you’ve no issues with it, thanks Matthew.

        • Populuxe1 10.1.1.1
          30 December 2012 at 2:13 pm

          Accuracy is important.

          • Napkins 10.1.1.1.1
            31 December 2012 at 9:28 am

            True. But just because the Clyde Dam is lost doesn’t mean that you can’t sing about the times it still belonged to all of us, it helps us realise how much more we have to lose.

            • felixviper 10.1.1.1.1.1
              31 December 2012 at 8:21 pm

              But that’s one of Matthyawn’s mantras, Napkins. You can’t protest about things that haven’t happened yet because you don’t know for sure that what you’re protesting against will definitely happen if you don’t, and you can’t protest after something has already happened or is inevitable because it’s over and done.

              Fuckwits’ rules to be sure, and entirely arbitrary bullshit dressed as reason, but that’s our Hoots.

            • Matthew Hooton 10.1.1.1.1.2
              1 January 2013 at 5:39 am

              I don’t think you’ll find the Clyde Dam is lost. Last time I was in Central Otago it was right where it had always been, producing electricity at a competitive price for NZ firms and households. I’m just amused that someone would write a song protesting the sale of 49% of a state asset that, in fact, has been 100% privately owned for more than a decade – without the songwriter even knowing. It underlines to me the shallowness of the opposition to the MOM policy. It doesn’t really matter at all who owns a dam as long as it keeps generating electricity at the market price, just as they all do now.

              • felixviper …
                8 January 2013 at 9:48 am

                “It doesn’t really matter at all who owns a dam as long as it keeps generating electricity at the market price, just as they all do now.”

                Correct. Unless you’re able to grasp that market prices have fuck all to do with generating and distributing electricity.

  11. xtasy 11
    29 December 2012 at 9:53 pm

    Anyone “dreaming” of “job creation” by Mainland Chinese companies investing and building a factory to supply goods to Mainland China, better wake up! Wakey, wakey, have a read of the China NZ FTA and the text, before you may think any further:

    http://www.chinafta.govt.nz/1-The-agreement/2-Text-of-the-agreement/11-Chapt-10-Movement-of-natural-persons/index.php

    What will be expected is, that under this particular FTA Mainland China can easily move their own “temporary” and “skilled” workers here, to build the factory and to staff it. The FTA has provided for that to be possible.

    They may simply claim that they need that particular “expertise” from their own workers, to produce the quality and types of goods they want to export to their particular market.

    This has been raised by me before via NZ Herald debates, and Fran O’Sullivan, a fan of Mainland China investment here, was not happy with that.

    I do not wish to sound “racist”, but that FTA was a kind of agreement, which Labour, when in government, should never have signed as it was. Typically the Nats fully supported it, so there again, we have a “grand coalition” of light blue “Labour” and the Nats, right in front of us.

    NZ is being sold off, piece by piece, acre by acre, home by home and business by business. All internationalist solidarity with workers elsewhere will never convince me that this is a good thing!

  12. Fran O'Sullivan 12
    31 December 2012 at 8:38 am

    Xtasy

    There is an Annex to the FTA which puts firm numbers on how many Chinese can come in and for what purpose. It would tend to suggest Yili would have to pass a labour market test if the factory workers were to be brought in from China. At today’s unemployment rates can’t see how relevant authorities would pass that.

    During the OIO process Yili will also have to demonstrate how it benefits NZ – employment would have to be part of that.

    http://www.chinafta.govt.nz/1-The-agreement/2-Text-of-the-agreement/0-downloads/NZ-ChinaFTA-Annex-11-Commitments-temporary-employment-entry-natural-persons.pdf

    • One Tāne Viper 12.1
      31 December 2012 at 8:59 am

      After all they only approved 230 overseas hospitality industry workers last year, and 110 workers to install “building fronts”.

      I have a question. Do people think Fran O’Shillivan’s faith in the approval process is a result of stupidity or mendacity?

      • weka 12.1.1
        31 December 2012 at 9:27 am

        Ideology.

        What kind of visas are those numbers OTV? I think the fruit growers get to bring in labour from overseas too. Should we add to that the numbers of foreign people working on work holiday visas?

    • xtasy 12.2
      31 December 2012 at 7:40 pm

      “Temporary employment entry for skilled workers to work in specified skilled occupations” …

      Well, thanks for your reply, a reminder of that annex and your position re this, Fran. Welcome also to The Standard!

      All Yili or any other Mainland Chinese company setting up a factory or whatever in NZ needs to prove is, a skills shortage of specified skilled occupations. Whether they may try to recruit workers under the FTA or use the usual immigration process, there have been enough companies already succeeding in “convincing” immigration or the government as such, that they have certain skills shortages.

      Some employers, being restaurants with particular ethnic backgrounds and particular meals prepared by chefs and cooks speaking perhaps a foreign language, and feeling more comfortable to communicate in their language at the workplace, have been able to argue, that a staff member they may need to work with the kitchen staff also must be fluent with the language of the existing staff.

      There are now a fair number of Chinese tour companies, all employing only Chinese, only catering for Chinese, and they seem to be getting away with this, without employing New Zealanders who may just speak English or Maori.

      If a dairy company may be able to bring in some specially skilled senior dairy processing staff only able to speak in Mandarin, and if they then make part of the job requirement the ability to converse fluently in Mandarin, there you go! They could successfully argue they need staff to speak that or another Chinese language they may use, as otherwise they could not follow instructions or whatever.

      The agricultural sector is in general also increasingly hiring overseas workers from certain Asian and other countries, clearly partly for cost saving reasons, and they seem to be able to do this, while there are some New Zealanders in rural areas unable to get jobs, in agriculture or whatever.

      If you believe that the law will be applied as ideally and fairly as you try to state here, then you are wearing somewhat rosy tinted glasses, I fear.

      And we have here in Auckland not just a few restaurant and retail shop staff from China, India and so on, who work below the minimum wage. There are hudreds of students working more hours than they are allowed, others (some “tourists” and whatsoever) also working illegally.

      Immigration sometimes just gives the employers a wet bus ticket warning, as I know very reliably.

      Seeing the follow up report about underpaid workers in certain Chinese or similar shops and fast food restaurants in Auckland on TV One weeks ago, it was clear, that NOTHING has changed. Little enforcement, just window dressing was the reality. The DOL does not enforce much, as most involved are too scared anyway, also to lose their right to stay in NZ.

      And wait until the reality will shine through when that dairy factory will be built and get running down south. We will keep monitoring this, for sure, how many “Kiwis” or other migrants perhaps may be employed there.

    • xtasy 12.3
      31 December 2012 at 7:53 pm

      Further to my response to Fran’s comment above:

      Any dairy or other manufacturer, who may start producing particular products that are not known yet in NZ, that are not produced here, that have particular qualities and manufacturing processes (perhaps being as basic as preparing and using special formulas, recipes and mixtures of substances), thus producing goods specifically targeted to certain export markets, will be able to claim they need “specialist” staff from their home base (e.g. Mainland China), to run such production in New Zealand.

      If New Zealanders cannot offer those skills, there the door is wide open, to prove a “skills shortage”, re-enforced even if communications skills at the work place require particular language skills, to communicate with fellow staff, to read labels or whatever.

      In Christchurch whole construction teams have been brought in from various countries too, admittedly because there is such an imminent need for construction and other technical workers there now. This is happening while many NZers have moved to Australia, to work there, in the mines largely, but also elsewhere, applying their skills there.

      So skills development here must be an absolute priority for any future government, and that must also involve some “bonding mechanisms” and incentives to make skilled workers stay in NZ.

  13. Fran O'Sullivan 13
    31 December 2012 at 9:14 am

    One Tane Viper

    I’m pointing out that that the FTA does place limits on the numbers of Chinese who come in under those provisions. It’s up to MBIE (formerly DOL) to monitor this. And that there are OIO provisions.

    Thought you wanted an informed debate.

    If you don’t believe the OIO and MBIE are/will do their job challenge them.

    The FTA provisions were negotiated by the previous Labour Government – If you don’t like the legal framework vote in a Government that will make changes to the foreign investment laws.

    • muzza 13.1
      31 December 2012 at 9:46 am

      The FTA provisions were negotiated by the previous Labour Government – If you don’t like the legal framework vote in a Government that will make changes to the foreign investment laws.

      You’re being facetious right?

    • Saarbo 13.2
      31 December 2012 at 3:45 pm

      “The FTA provisions were negotiated by the previous Labour Government – If you don’t like the legal framework vote in a Government that will make changes to the foreign investment laws”

      Fair enough Fran, Labour is currently looking at that:

      Remit 4: Land ownership THAT Labour develop robust and consistent policies to ensure that an appropriate portion of New Zealand land remains in New Zealand ownership.

      Although this remit, from the Nov conference has not been worded strong enough for my liking, it is heading in the right direction. There is NO way we should be selling our valuable farm land to foreign owners. It wrecks our communities and adds no value to NZ farming whatsoever, so what is the point.

      If foreigners want access to our farm produce, then they can buy the produce, we shouldn’t be letting them buy the source. Simple as that.

    • Foreign Waka 13.3
      31 December 2012 at 8:43 pm

      Have you got in mind to retire in NZ? Then better get your Mandarin sussed, because all the application will be in the main Chinese lingo, on the back pages in very small print a translation in Thai, Japanese, Hindi, Tongan, Samoan, Maori and last but not least – English.
      I belief it should be spelled out by the Government where NZ aligns itself to, be it historically, culturally or politically, just to give some orientation to prospective immigrants. Even people living here might consider moving somewhere else if they don’t want to be part of China in – say 10-15 years.

  14. xtasy 14
    31 December 2012 at 7:57 pm

    See the “network connections” between political “spin meisters” and supposed “commenters”, clearly linked to the National Party (M. Hooton) showing so well here in this thread now!

    First Hooton surfaces early in the morning (respect, early rise and early shine, they say!), and a bit later suddenly Fran O’Sullivan – senior NZ Herald journalist – pays us a visit.

    Impressive and revealing developments, I must say.

    I never read a comment from Fran on the Standard before, did anybody else???

    TS is taken note of!

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