Labour scathing about merger

Press, 25 October 1980, Page 2

Labour scathing about merger

PA Wellington The Fletcher-Tasman-Chal-lenge merger came under the spotlight in Parliament yesterday when the Opposition attacked the decision of the Examiner of Trade Practices not to refer the merger to the Commerce Commission for scrutiny. The Leader of the Opposition (Mr Rowling) said the examiner’s decision was incredible in the light of the attitude he had adopted towards the Nathan-McKenzies move and the Fletcher-Car-ter Holt manoeuvrings.

“One might be prepared to suppose that the question has been subject to some kind of political pressure,” Mr Rowling said during ‘ a snap debate.

The examiner was a person who had a considerable reputation. On the other hand, he had been placed under .“quite intolerable strain” by previous decisions of the Commerce Commission.

“Had the examiner . . . thrown in the sponge and said, ‘Look, let them sort it out at political level?” Mr Rowling asked. Challenge’s chairman, Mr R. R. Trotter, had said that the merger would avoid conflict in the marketplace. “I would have thought a literal translation of that was to get rid of competition,” Mr Rowling said. “It looks more like nationalisation of industry, private-sector style.”

He accused the Government of backing monopolies and “the big” while ignoring initiative of individuals and the small businessman.

Mr Rowling suggested that the conglomerate might next turn its sights on N.Z. Forest Products or the financial and banking sector. On its own, the conglomerate was as big aS A.H.1., Watties, South British, New Zealand Insurance. New Zealand Steel, Lion Breweries and Waitaki N.Z. Refrigerating all combined. Mr Rowling described the conglomerate as New Zealand’s first zaibatsu — a Japanese term for huge companies with interests right through the economy. “The experience in that nation;,has been, a pretty .grim orie ' for the smaller operators.-They have found themselves entirely dominated, dependent upon the goodvyill of their industrial ‘Big Brother’.” - ’ /He 'reiterated an earlier assertion that the - sale of Government shares in Tasman had paved the,way for .the rherger. Through , capital appreciation' of those shares, Fletcher’s had “creamed off” $2O million from the New Zealand public and been able to move “very smoothly” into the merger. Mr Rowling asked the Prime Minister (Mr Muldoon) .what impact the merger would have on the three companies’ taxation figures. • Experience suggested that the conglomerate would not attract much tax.

Last year Tasman made $27.7 million and had paid no tax; Challenge had paid $9.3 million in tax, and had a net profit of" $l6 million; and Fletcher’s paid $2.6 million, being left with a profit of $33 million:

"The little guy down the line cannot dodge the system and because the big guys are able to operate in this way, it is the little guydown the line that has to carry the extra burden,” Mr Rowling said.

Mr Muldoon, who on Wednesday welcomed the merger, replied to Mr Rowling’s attack by saying it was clear that the Labour Party’s policy for next year’s General Election would be, “Think small.” The Government had no control over the Examiner of Trade Practices, who was now independent of the Minister of Trade and Industry, Mr Muldoon said.

The merger would allow“these great enterprises” to; compete more effectively internationally and mobilise the capital of small individual New Zealanders. - It would play a big part in the “great industrial devel; opments of the next decade.”

The capital of the “ordinary” New Zealander would be mobilised either directly through his shareholding in the companies or indirectly through his interest in institutions such as insurance companies, Mr Muldoon said.

Replying .to a statement critical of the move, by Federated Farmers’ sepior vicepresident, Mr R, Storey, Mr Muldoon said that when .the federation talked about it, it would realise that the merger was to itsjadvantage. The total’cash flow of the enterprise would be able to flow into its stock and station section more effectively, particularly at times of seasonal pressure. The new enterprise would be taxed according to the law and there would be no special deals. Reacting to interjections, Mr Muldoon suggested that the Labour Party was thinking of dropping export incentives.

The Government was determined to “think big, create more jobs and create more wealth” he said, in contrast to the “think small” Labour Party. Mrs Ann Hercus (Lab., Lyttelton) said: “It signals to small and medium-sized

businesses and ’ farmers, that; the Government is saying,, ‘Too bad,’mate, the big boys; will get ,the resources and muscles.” ■ ’ '' ?

The decision by the Examiner of Commercial Practices; not to take .the merger question to the Commerce Com-i mission was “inexplicable; and unjustified.” The public; and consumers'were entitled to a full, inquiry by the.com--mission, Mrs Hercus said. i

The Deputy 'Prime .Minis-; ter (Mr Taiboys), said that; the examiner must refer a.i case to the,'Commerce Corri-1 mission if he had any doubt about the -wisdom of- an enterprise. He had done so: in the proposed Fletcher take-over-of Carter Holt but in the latest merger he approved. ,

The Social Credit leader, (Mr B. C. Beetham) argued against- the merger,. . predicting that New 1 Zealand would approach a similar industrial structure of the fascist States of the 1930 s —countries such as Germany, Japan, and Italy. Mr Beetham also predicted that the company might obtain a charter to start a bank of its own.

Mr M. K. Moore (Lab., Papanui) challenged the idea of “think big” advanced by National. Logically, he said, if the Government wanted a large company to increase borrowing power, it should also bring N.Z, Forest Products into the merger, and Watties. J

The Minister of Lands (Mr V. S. Young) said the attitude of Labour and Social Credit to development in New Zealand was bogged down with prejudice against size, success and logic. The Deputy Minister of Finance (Mr Templeton) said: “Both socialist parties are allowing their fear to undermine their reason.” In Hamilton yesterday, the Wellington financier, Mr F. H. Renouf, said that at least three more mergers of big New Zealand companies would occur in the next two years. He told the Hamilton West branch of the National Party that the Challenge merger would benefit New ‘Zealand.