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Take the money and run

Written By: - Date published: 4:23 pm, July 24th, 2008 - 37 comments
Categories: workers' rights - Tags:

I just read Gordon Campbell’s latest Scoop column about the omnibus tax bill and quickly followed it with Frog’s piece on the matter and I am not impressed.

The first reading of the government’s bill took place last night and within its myriad of dull tax stuff was a hidden barb for the quarter of a million New Zealanders who work in manufacturing.

That barb is the move to give tax breaks to manufacturers who move their production offshore. Yep. You heard right. The government will be providing New Zealand manufacturers with a tax incentive to outsource their production. Just as long as they keep their head office in good old NZ.

Sue Bradford has pointed out the absurdity of this situation most succinctly:

What the Government is proposing will give Icebreaker a tax cut for making lovely outdoor wear in China, but not Earth Sea Sky making lovely outdoor wear in Christchurch. Norsewear, that former iconic brand, will reap a financial benefit for having taken its jobs to Asia, while Swazi, staunchly staying local, will miss out.

This Bill will give tax cuts to large firms that send fish to China for filleting and packing, but not to small fishermen who process locally, and who create environmental and social benefits by not carting fish back and forth across the planet.

This Bill would give Fisher and Paykel a tax cut for the whitewear it makes in Mexico but not for the whitewear it makes in Auckland.

Cullen’s answer to this is that we will lose the whole kit and kaboodle if we don’t pay people to ship their manufacturing jobs overseas and we’ll be stronger in the long run. I’d like to see the not-so-good doctor tell that to the workers at F & P and their families.

And they wonder why people call them the red tories.

Hat-tip: Gordon Campbell; Frog

37 comments on “Take the money and run ”

  1. higherstandard 1

    Thanks IB

    Are you sure they’re incentivising people to move offshore.

    While they should be free to manufacture offshore if it is in the best long-term interest of the company (I’m sure you might disagree and if I was holding your position I damn well would too)…. I find it extraordinary it’s being incentivised.

    I’ll go and have a read.

  2. Rex Widerstrom 2

    Once upon a time this would have been a vote winner for NZ First. Now they’re too busy whitewashing their own corruption and ineptitude. And anyway, just as the PM is prepared to hold her nose on Peters’ “donations”, he’ll hold his over this, which goes against many of its Fundamental Principles:

    Economic policy will comprise a strategy for export-led economic development… The employment of New Zealanders is our first planning priority.

    If they had any integrity – or even any shame – I’d be saying “watch them squirm as they all rise like well-trained meerkats to support this”. But they have none… they’ll support it without blinking an eyelid, because the bottom line is now nothing more than the preservation of their distorted sense of self-importance.

    There’s a market for a party opposed to this sort of policy out there for the taking…

    IrishBill says: There is. It’s called the greens.

  3. darryl 3

    What??? Surely this can’t be right? Surely it’s the smaller developing NZ companies that need the tax breaks more – otherwise where is your future growth going to come from? This seems ridiculous. Can we now negotiate with the government the amount of tax we pay if we are a big enough company?

  4. BeShakey 4

    Why not give the tax break to all NZ manufacturing companies with a NZ head office? It’d be more expensive, but would actually acheive what they are trying to, which is surely the point.

  5. Phil 5

    So… Labour is now in the pocket of big business too?

    Maybe Trav is right about this consiracy stuff!

  6. Tane 6

    I’d say they still have a strong vein of neoliberalism in them, a hangover from rogernomics. You see it from time to time in legislation like this.

  7. RedLogix 7

    Or you could just see it as one of the downsides of unrestrained globalisation.

    Anyone recall Nandor Tancos explaining how the govts of nations are being increasingly rendered impotent in the face of global interests that are either more powerful or bypass them on the one hand, and regional/cultural groupings on the other that seek their own self-determination?

  8. Draco TB 8

    Policy like this is absolutely stupid. They’d be paying people to make NZ worse off. Thankfully it’s only at the first reading – get your objections ready for the select committee stage.

  9. monkey boy 9

    I enjoyed this:
    “New Zealand’s approach to globalization is a bit like the stereotypes that people had of the Italians during World War II we’ve made an art form out of acts of surrender, and called it realism.”

  10. rave 10

    This is the logic of capitalism mates. Labour is a capitalist government which has always backed NZ manufacturing. Now the manufacturers are moving offshore, Labour is trying to serve its masters by dropping double taxing on profits.

    So while you condemn this neoliberal ‘aberration’, you applaud buying back rail etc., when this is actually socialising the manufacturers losses facing transport emissions they don’t want to pay for.
    So par for the course, privatising the profits and socialising the losses.

    Green capitalism? That’s something to behold. Manufacturers and farmers won’t pay for pollution. So who is going to pay? Those workers whose jobs the Greens save?

    Time for survival socialism.

  11. “survival socialism” – Ha! tell you what bro, you go off and do your survival socialism and then come back and tell us how it works out for you…

    Oh and Cullen should be ashamed for this shit. I very much doubt he is though…

  12. I agree Robinsod , hey rave you know where you can insert your “survival socialism”.What a sucker.

  13. vto 15

    are you fullas friends?

  14. r0b 16

    vto – If i was in to psychobabble I might describe them as “co-dependants” rather than friends…

  15. r0b -ease up on the psychotropic meds matey.

  16. Agreed dad – ‘sod depends on nobody. I’d say Dad doesn’t either.

    But back on topic – why is it that Labour seems so intent on sucking up to business when it just gets spit on by them again and again? I’m thinking lack of self-esteem – whaddya reckon r0b?

  17. RedLogix 19

    And if we do nothing manufacturing in NZ is stuffed anyhow. National seem to be opting for the ‘lets cut pay and conditions until we are competitive with China/Vietnam/Hellhole of the Day’ approach, and while Cullen’s strategy sure has a bad taste to it, but has anyone else got any better ideas?


  18. r0b 20

    Don’t worry dad, with Hunter S Thompson as my spirit guide, what could possibly go wrong?…

  19. Billy 21

    And if we do nothing manufacturing in NZ is stuffed anyhow.

    There’s manufacturing in NZ?

  20. r0b 22

    I’m thinking lack of self-esteem – whaddya reckon r0b?

    I wrestle with this. In truth it is one of the main reasons I got politically active – to find out what it is that seems to go so wrong. Idealists become pragmatists, or they become extremists, Balkanised into tiny warring factions (People’s Front of Judea!) when they should be working together – witness The Standard / IS / 08wire / Frog spats we’ve had recently. I find it all very depressing.

    Anyway, focus. Labour as red tories (ech!). I think most of the answer is there in the early part of Cullen’s talk to Drinking Liberally. Our confrontational system, our short electoral cycle, our rabidly entrenched vested interests, our rather sad media, our short national memories and attention span – it all conspires to force tradeoffs between ideals and the pragmatics of staying in government and getting stuff done.

    Now Cullen is one of the MPs I know a bit better than most. He is no Tory, red or otherwise. I will personally give the man the benefit of just about any doubt when it comes to his good intentions. I haven’t caught up enough on the issues of this particular thread to make a case, but my first inclination is to believe what Cullen says. I’d wager that he’s no happier about it than some of the commenters here. But he has to balance ideals and pragmatics. He doesn’t have the luxury of being an armchair expert, who is never tested in the real world.

    My 2c.

  21. Don’t melt that 2c and make a bullet to insert in the side of your head just like your “spirit guide” did r0b.Talk about going wrong when your lonely brain cell is splattered.

  22. vto 24

    sheesh d
    i suspect there is a good heart behind that
    brutal lingo

  23. ak 25

    Yep, bit of a swede-scratcher this one (and a turnip for the books) – Labour forced into the corner of “give us more money or we’ll piss off overseas”.

    No surprise but: old Karl predicted it way back. The logical progression of dog-eat-dog is ginormously powerful dogs – way bigger than Cully. The progression’s just sped up lately.

    Anyone who’s ever stood in the Warehouse scratching their nut as to how “they” can make a disc grinder for ten bucks knew in their heart that days like this were coming. And that days like that couldn’t last.

    Solution? Let the fat-cats piss off and instead concentrate on buffing up our enviable social and environmental house. Man really doesn’t live on bread alone: kiwis understand this.

    Let’s lead the world again – build on the proud legacy of people like JC, Te Whiti and Savage and give them more than a gimcrack toaster.

    If the ground’s right, anything will grow.

  24. “witness The Standard / IS / 08wire / Frog spats we’ve had recently. I find it all very depressing.”

    Think of it as keeping each other blog honest. Better than a tory style kiwiblog, whaleoil, cactus kate, nzconservative circle jerk.

  25. T-rex 27

    ak – I’m inclined to agree. We can’t compete on low skill manufacturing in the current environment – we shouldn’t even be trying. It’s not who we want to be anyway. Granted, we also don’t want to be unemployed and impoverished, but that’s the usual story. If people want to compete with the chinese on price, they need to be prepared to live like a chinese peasant. They’re not, so an alternative is required. I can’t see the benefit in ignoring reality.

    I can see where Cullen is coming from with this legislation. The alternative is that the companies in question will just leave altogether. Obviously there’s a significant degree of unfair competition, but no worse than that which we already face through competition with China. I think this is the best of a bad bunch of choices. As for the local fisheries etc – simple – buy local fish. If people don’t want to do that, then you have to question how serious they are about not wanting to see the little guys go under.

    We’re a nation of strong education, high literacy etc. Cutting wires to length is for robots.

  26. r0b. There’s nothing wrong with healthy disagreement. if we disagree there’s no reason not to do so openly, as long as it’s done in a constructive and respectful manner – we all still exchange emails on issues and it’s friendly.

    I think the philosophy of 08wire and ourselves (and the writers of the Standard have nothing to do with 08wire) towards politics is quite similar… in general, I think it’s we’re pro-Labour-led government but also very pro Green, a heavily green influenced Labour-led government would be what I want to see out of the coming election and I would think that applies to the other Standardistas and 08wire. I think Frog sometimes sees us and 08wire as ‘Labour’ quite distinct from Green and sees our pan-Left philosophy as, ironically, some kind of arrogant Labour control seeking and the Greens have a seep opposition to that streak in Labour… I/S I think sometimes sees us as blindly pro-Government, ie not principled, the fact that what we are interested in tends to be more the combative side of politics than the deeper stuff I/S does so well probably helps confirm that view….

    you’re quite right, r0b, that in some ways this division is between pragmatism and idealism, wanting to influence and win vs principles first… but that divide and diversity and tolerance of diversity are the strength at the heart of the Left.

  27. Rex Widerstrom 29

    IrishBill: Are the Greens opposing the Bill? Will they maintain their opposition all the way through the Third Reading if these provisions aren’t removed? If they do, I’ll take my hat off to them. But I’m not holding my breath.

    But with no stretch of the imagination could the Greens hope to pick up the high levels of support NZF once enjoyed, mainly at the expense of Labour. Those people are economic and social conservatives – they might have warmed to Rod Donald and find Jeanette Fitzsimons acceptable, but the high economic costs of spme of the Greens’ environment policies and especially the agenda of the Nandor / Bradford side of things ensures they’re unattainable for the Greens.

  28. r0b 30

    but that divide and diversity and tolerance of diversity are the strength at the heart of the Left.

    Ahh you’re an optimist Steve! Remember how badly we nearly messed up the 02 election over GE? Still and all, perhaps you’re right. Let’s hope so…

  29. Brownie 31

    Why not drop this stupid legislation, use the money to incentivise business, such as Oracle R&D, Microsoft, Motorola etc whom wanted to come here years ago and went to Ireland instead, to get back over here and use some of our great talent?

    Dumb move Doctor

  30. ak 32

    but that divide and diversity and tolerance of diversity are the strength at the heart of the Left.

    Wish you were right Steve: sadly, like r0b I think Left history since pre-1951 right through to the classic Alliance disaster paints the exact opposite picture of a recidivist defeat-from-the-jaws-of-victory snatcher.

    Keep the big picture in mind and avoid even minor division at all costs: “healthy diversity” within underdog groups leads easily to rapid and alarming metastasis – a fact appreciated and exploited by divide-and-rule tyrants for centuries.

  31. Bill 33

    Redlogix has asked if anyone has any better ideas to Cullen’s attempt to make the best of a crap situation whereby corporations are able to hold governments to ransom.

    Here’s an analysis of an idea that is being realised in the real world right now. It’s too long to summarise but well worth the read.


  32. Even if it isn’t possible to keep New Zealand’s 300,000 manufacturing jobs, I’d like to see a Government that tries. Which is why I’m so frustrated with Labour – on so many issues; trade, crime, immigration, environment, they’re well to the right of the political spectrum.

    Labour don’t have neo-liberal remnants, they are strongly in favour of an almost completely liberalised international free market. This does not preclude strong protection for workers, but inevitably jobs are shipped to where it’s cheapest to produce, as per economic theory. This is why the labour movement has to be international, and why the union movement supporting Labour this election is despicable. Unfortunately, as evidenced by the surprise expressed here, a lot of Labour’s friends and allies don’t realise this.

    (lprent – I can’t remember if I’m still banned, but it’s been about two weeks)

    [lprent: correct – I was otherwise engaged today. Just removed from moderation – I have to find or write a dbapp to do this.]

  33. George. Idon’t think Lynn’s looking 😉

  34. RedLogix 36


    Thanks. A very thoughtful link.

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    BeehiveBy beehive.govt.nz
    2 weeks ago