Economic and environmental history of Aotearoa - New Zealand

MAI - ready and willing

By Janice Moira Graham,
11 January 1998

The transnationals- multinationals are not particularly interested in manufacturing or production sectors (risky investments for shareholders) but are rather more interested in essential national and subnational services and infrastructure - publicly owned health, education, energy resources, public transport systems along with other universally available public services.

The privatisation regime has been underway in NZ since the mid nineteen-eighties, carefully monitored by the World Bank and International Monetary Fund, facilitated by the a succession of trade agreements via APEC, GATT and now the MAI; and implemented by a succession of right wing governments- advised & guided by the ideologically driven neo-liberal New Zealand Business Roundtable.

The economic benefits of private companies taking over public services are supposed to be that they are more efficient managers and that they are technically more advanced and that they bring capital investment. However the main efficiencies are not technical, but are in financial administration- through intensified invoicing. The other efficiencies are in labour cuts borne by workers.- i.e. 7000 job losses in our privatised telecommunications company, alone Most investment finance is borrowed privately at higher rates of interest than that which can be borrowed by the public sector so local people end up paying more anyway through increased prices or taxes. Share giveaways are a common feature of privatisation in the U.K but not in NZ. The London Financial Times (1995) called these share floats ""a systematic defrauding of the rate/tax payer" as only the wealthy can afford to buy up the shares. Within 6 months the number of share holders in water and electricity companies had decreased by over 50%.

A winding down of funding and/or privatisation, within our public health services, public education services, energy utilities-electricity, gas, coal, both wholesale and retail sectors, national roads, national transport systems (railways, shipping, airways, -ports, and airports), postal services, national works & maintenance services, traffic control, police force, prison systems, welfare system, telecommunications systems, state owned T.V, radio and newspapers has been underway for some time.

As more services are sold the government has had less revenue to continue funding other services so more services go on the auction block and so on. (We have not experienced any real corresponding reductions in taxation, in fact taxes and rates are higher than ever - this does not include corporations whose taxes have steadily reduced.)

Privatisations of sub-national government services such as: -water-wastewater systems, public transport, public maintenance services, crematoriums & cemeteries, parks, local roading, recreational centres and grounds, libraries, waste management services and sports grounds are being slowly implemented, primarily from a directive to local governments by central government via an amendment to the Local Government Act to assess and implement "user pays" on services. The local bodies must put forward their user pays propositions to government by July 1998.

Many local bodies have already started implementing 'user pays' regimes by the establishment of L.A.T.E.s The initial establishment of these fully commercialised ' local authority trading enterprises' on services such as roading , waste management and water-wastewater is being implemented progressively as, pre-privatisation programmes (we call it back-door privatisation) before being finally onsold to multinational-transnational corporations.

According to overseas research - we will experience a plethora of new pipe, concrete and steel technology within services such as roading and water. i.e. new reservoirs built on farming land and valleys - rather than any implementation of conservation measures, pipe repairs, smaller cisterns installed, or compulsory water metering - followed by large increases on water and waste water charges. Pollution, induced droughts, water disconnections and a rise in certain gastro-enteric diseases following water privatisation was experienced in the U.K. along with massive increases of directors salaries. As the same transnationals are lining up to purchase our water, I expect we will experience similar problems.

A proliferation of new roading is anticipated with corresponding user charges.. 'User pays' on roading has been widely discussed here. Our erstwhile Minister of Transport now our Prime Minister told the nation recently that it is intended that our road usage be calculated by inserting microchips in our cars which will be monitored by satellite, -road user charges will be automatically debited from our bank accounts.

All aspects of our education system have been subjected to change by the privatisation gurus; kindergartens have had funding reduced by the government and Universities now have very high fees. High schools are being subjected to pressure to take on bulk funding - a pre privatisation gambit. Skills based training is become institutionalised and I believe we are en-route to farewelling subjects such as history & sociology.

Welfare is being gradually turned over to organisations such as Salvation Army, the Catholic Church and Barnados, in accordance to directives from the neo-liberals, before funding is finally withdrawn. Our welfare system once the best in the world is a national disgrace. The first victims of new right philosophy -the withdrawal of funding- were single mothers and their children. They had their incomes slashed by 20% in 1991 and have experienced a continued assault on their living standards with creeping 'user pays' on essential services. Other victims of changes to the welfare system have been the aged, the sick, the disabled, the unemployed and state house tenants. The latter are now paying market driven rents which are higher than the private sector - there has been a mass exodus from tax payer funded housing. The government simply sells off the 'choice' empty properties to local property developers whilst building ghettos for sardines. We now have a homeless population described as the 'caravan, shack and garage dwellers.'

Unemployment is reaching epidemic proportions whilst people are having benefit cuts in order to encourage them to find work. It's true. Policing has become increasingly private, with security firms now providing surveillance and night watch to many wealthy urban areas and to companies. Traffic management is now the domain of the increasingly burdened police force with speed and security cameras replacing men on the job. Our overcrowded prisons are being guarded by fewer wardens whose surveillance is becoming superseded by electronic technology. The injoke now, is, if you want to find work, go to prison. It's true!

Various inroads have already been made on our labour laws such as the Employment Contracts Act (1989) which effectively eliminated unions in one swipe. Workers must now sign 'individual contracts' - you don't sign the contract you don't get the job. Strikes have been outlawed. New Zealand workers have been rapidly losing most of the rights they had gained over 60 years of 'social democracy'.

The latest attacks are on the 'Holidays Act. We will soon be able to 'choose' whether you want to work or have statutory holidays off. Critics wonder how long it will be before the employees individualised contract will stipulate whether you work or take statutory holidays - don't sign, don't work.

Reservations to the MAI were supposed to have included the remainder of our State Owned Services such as TV1, National Radio, gas and electricity, ports, airports but we have since found our Coalition Government has just "reserved their position" on these assets but not reserved the assets themselves. They claim they are not going to sell these assets but have reserved the right not to constrain any future government from selling them. How ironic that no future government will be able to extricate us from the MAI regime for 20 years without incurring huge renationalisation costs and litigation, but we must protect any future governments right to sell our few remaining services to foreign investors. .

The government also stated in the Coalition Accord that not more than 24.9 % of certain local body assets could be sold without ratepayer permission. We are experiencing local bodies now selling 50%+ of the asset without public consultation because the service/asset (LATE) has been entered on the Companies Register and as such the information is now considered commercially sensitive so the ratepaying 'owners' do not have to be consulted.

The impact of the MAI widens the scope of transnationals investment ambit considerably on our public services. There simply won't be any competition, for the remainder of services and assets, for who can afford to compete? The power of the mega-corporations is enormous, their investment interests widely diverse; they establish mergers and cartels to eliminate competition and they can defend their monopolies with a variety of measures.

Even if local investors could afford to compete they are at a distinct disadvantage under MAI for the avenues for compensation under the MAI are open only to the transnationals and multinationals. Domestic companies may not be compensated., but foreign companies can be, and at a higher amount. Smart domestic companies will do joint ventures with foreign investors to take advantage of the benefits. This contributes to the problem of monopolies.

Investment is exceptionally broadly defined under the MAI. with the MAI everything falls within its ambit unless it is specifically excluded. (see Barry Appleton.) Our government has hardly excluded a thing. The same corporations who are queuing for our water also have interests in private health provision, education, public transport, waste management, telecommunications, roading, agribusiness and agricultural land, media, energy, catering- you name it & they have investments.

The expropriation rules mean that any investor whom the government may attempt to regulate re -environmental infringement can sue for 'loss of enjoyment' for there doesn't have to be 'a taking' under expropriation, just a 'deprivation.'

Our environmental laws will be subjected to repeated charges of expropriation should central or local government try to enforce the Resource Management Act - our domestic environmental law. (The Tener case is prime example where the British Columbia Government 'argued' that "expropriation" (where the Crown had to pay) was different from "injurious affectation", where it did not. The Crown lost the case.)

Foreign investors can gain access to our assets (already set up for privatisation ) without facing any duties which do not apply to local firms- requirements to create jobs, employ local people, or locate to regions which require development i.e. water not supplied by water systems, bus services to areas devoid of public transport, postal services not covered by direct mail, electricity, gas and TV where there is no supply, policing to rural areas, or roading to homes where there are no roads.

There was a recent signing of another O.E.C.D. agreement recently in which government officials were prohibited from taking bribes, because corruption of both local and central government officials, (I have been given to understand) is part and parcel of the transnational corporate agenda..

There have been repeated corruption charges brought against the same transnational-multinational corporations for irregularities in tender processes/asset purchases, globally.

One of the most recent investigations (to my knowledge) were brought against a mega TNC-MN in Adelaide, Australia over a 1.3 billion water franchise. I believe this same corporation is now facing an environmental pollution charge in Adelaide for causing a toxic stink which lay over the city for some three months in 1997 and for which it consistently denied responsibility.

I have tried to cover my main concerns - "New Zealand - a country set up for sale to transnationals" and a bit on the charter of rights & freedoms of the MAI, and a few thoughts on how that may impact on the systems, the services.

Cheerfully,
Janice

p.s. Keep a eye out for any new developments to your Local Government Acts. (New Zealand)

Bob Olsen Toronto bobolsen@arcos.org (:-)

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