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Without foreign investment New Zealand would be a poorer country.
Next it was Opposition finance spokesman David Parker’s turn, with his assertion that having Australian firms invest in New Zealand puts us at risk of becoming “Australia’s Mexico”, carrying out “lower-value jobs such as making cigarettes”. The inference was that the US exports its low-paid, dirty work to Mexico, and Australia is doing the same to New Zealand.
The problem with Parker’s argument is that some of New Zealand’s highest-paid and best-educated workers are employed by Australian firms – in the trading banks, for a start, and many other industries, too. The irony is that many of the journalists reporting on Parker’s comments work for foreign-owned media companies. There are, of course, also many lower-paid jobs at companies with overseas owners and those jobs are also welcome. Not everyone can be or even wants to be a politician. Thank goodness for that.
Further, as Mexican Ambassador Leonora Rueda was quick to point out, Parker is wrong about Mexico. Mexico this year assumes the annual presidency of the G20, a grouping of the world’s 20 most-infl uential developed and emerging economies. She politely refrained from pointing out that New Zealand is not among them. More importantly, she said Mexico was now one of the world’s largest recipients of foreign investment. The Mexican aerospace industry ranks first in manufacturing investment in the world, with investments greater than those of the US, Russia, China or India, and it would export goods worth US$4.5 billion this year, Rueda said.
Her intervention provides a reminder, so soon after the bitterness over Shanghai Pengxin’s New Zealand dairying venture, that high-quality foreign investment injects wealth and jobs into the recipient country. Foreign firms operating here are bound by New Zealand’s laws and regulations. They spend money in our economy, provide jobs, skills, security and prospects to local workers, and increase revenue to the Government through PAYE and other taxes, just as New Zealand-owned companies do.
For many employees, the nationality of company ownership is irrelevant. The quality of the management, being valued and respected at work and having prospects for extra training and promotion are much more important to workers than accents in the boardroom. The Council of Trade Unions, rather than welcoming news of jobs coming to New Zealand from Australia, said this was a sign that New Zealand was a low-wage economy.
There certainly is a signifi cant gap between New Zealand and Australian wage rates – about 30% in Australia’s favour. Of course, New Zealanders would like to see it close, and attracting more jobs here should help. It is highly likely that lower New Zealand pay rates are one factor in Heinz Australia, Woolworths and Philip Morris making the shift across the Tasman. When deciding where to make their investment, the lower Kiwi dollar, an educated but less unionised workforce, a more transparent tax system, the absence of corruption, a familiar business culture and the existence of good infrastructure probably also played a part.
New Zealand does not grovel to overseas companies. But nor should New Zealanders, especially politicians, denigrate the jobs those companies provide. It is a tiresome fact of life that most people of working age need to work. In the absence of New Zealand fi rms offering more employment, foreign investment is the next best thing; without it, New Zealand would be a poorer country.
It is important, however, that New Zealand try to turn more of its own small-to-medium-sized businesses into international companies. That is most likely to happen when they are big enough to make overseas investments of exactly the kind that New Zealanders are often squeamish about being made here. We should not fear it. A country that did not welcome foreign investment, or was unattractive to it, would be a dire place. North Korea comes to mind.
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