Home > Dollars & Sense > The road to poverty?

The road to poverty?

One of the greatest challenges facing us as a nation is how we will treat the  natural wealth that we possess.  Make no mistake – do not under-estimate the incredible riches that exist in our tiny little country.  It is not just Australia that is blessed with minerals – so is New Zealand.

But on top of Australia’s minerals, New Zealand is also blessed with a rich, fertile land that produces an abundance of food; dairy, meat, fruit, vegetables, fish – a cornucopia of foodstuffs that Earth’s growing population desperately needs.

New Zealand is the planet’s eighth largest milk producer, with about 2.2% of world production. Total production was 1.3 billion kg of milk solids, and we exported NZ$8.38 billion of dairy products in the year ending 30 September 2007. By 2010, this had increased to a staggering NZ$11 billion.

That cash flows in to New Zealand, and is paid out to farmers, who in turn spend it locally.

Other food producers – whether apples, hoki,  or beef – also generate an income for New Zealand that other nations envy.  With Earth’s population expected to reach 9 billion by 2050, food will become the #1 resource that other, heavily populated nations with less arable land and usable water, will  desperately need to acquire.

And make no mistake – we are being targetted by countries wealthier than us, with considerable funds, to acquire our means of production. (As opposed to buying our produce, they seek to buy the means of producing those goods.)

Some nations will want to acquire our resources for profit.  Others, to feed growing populations. The end result will be;

  • Produce will continue to be exported
  • Profits will continue to be generated
  • But those profits will not come to New Zealand – they will end up in the bank accounts of the new, foreign owners of our farms or mines.

Think of a country like Saudi Arabia.  They have vast reserves of oil (264.6 billion bbl – 1 January 2010 est). Saudi Arabia sells the oil they extract from their wells. They do not sell the wells – they own the means of production – they sell only the oil that is extracted.  Their GDP last year is estimated to be $621.9 billion.

New Zealand is precisely in the same situation. We produce food and minerals and export these goods to overseas buyers. The profits flow back to New Zealand and creates wealth for us, as a nation.

That will change if the means of production is sold to overseas investors,

Coal miner Solid Energy is also on the Government’s list for partial privatisation after the election.

Mr Cheng said some “xenophobes” were unreasonably fearful of any Chinese investments, regardless of the benefits.

“But on the other hand, we should also discipline our Chinese businesses when they go abroad … to let them know they should take corporate social responsibilities as a commitment to the New Zealand side.”

Only “qualified” enterprises were encouraged to go global, he said.

“The Chinese Government’s wish is not to push every enterprise to your country.”

Finance Minister Bill English had said during a visit to China that the Government in principle supported investment but, Mr Cheng said, “We know there are some sensitivities when we buy so-called strategic assets.” The Crafar farms are an example.

“We need to be prudent, we need to be careful. But it is a two-way interaction and the New Zealand side should welcome foreign investment on an equal footing.”

Mr English had said that so far there had been very little Chinese investment here and that the Chinese owned no farms.

I will make one thing perfectly clear: I make no distinction whether an overseas buyer is Chinese, Australian, or a transnational corporation such as Nestlès. The loss of profits will be the same regardless of where a foreign investor hails from.

 

 

As John Key himself was moved to remark, “Looking four, five, ten years into the future I’d hate to see New Zealanders as tenants in their own country and that is a risk I think if we sell out our entire productive base, so that’s something the Government will have to consider.”

Indeed.

Unfortunately, neither Labour nor National have done much to address this potential threat to our future and economic sovereignty. Whether we sell of our means of production and watch the weath that is created siphoned off to overseas investors – or retain these assets and become the new “Saudi Arabia” of the South Pacific, is entirely in our own hands.

We face a fork in our path to the future;  the road to wealth, or the road to poverty.

Something to ponder when electing our next government.

Save The Farms

CAFCA

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Categories: Dollars & Sense
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