Thwarting Australian interest

Press, 1 May 1984, Page 16

Thwarting Australian interest

It seems extraordinary, almost bizarre, that one of the greatest possible benefits to New Zealand under the Closer Economic Relations agreement cannot occur because of New Zealand’s own choosing. One of the intentions in C.E.R. is that there should be rationalisation of industry across the Tasman. Some Australian companies have been showing considerable .interest in setting up in New Zealand. A shift of industry to New Zealand would help employment in New Zealand and increase exports substantially, yet that shift cannot take place because of a ban imposed in June of 1983 on Australian businesses becoming established in New Zealand. On June 27, last year, the Prime Minister and Minister of Finance, Sir Robert Muldoon, instructed the Overseas Investment Commission that all applications from Australian firms to take over New Zealand businesses or to carry on business in New Zealand were to be declined. Since that time 35 applications have been approved personally by the Minister of Finance and another 125 are waiting. It is not known how many more would seek approval to set up business in New Zealand but for the fact that they do not want to be subjected to the moratorium imposed by the Minister of Finance. Inquiries about investment have certainly been made. Even without those firms which have merely expressed interest, the 125 still waiting are significant. How long their interest will last is hard to gauge, but it may not be for ever. The moratorium was imposed because Sir Robert Muldoon considers that the investment policies of the two countries should be in harmony. The investment rules of the countries differ somewhat. Sir Robert wanted, in particular, the National Bank to be allowed to establish itself in Australia. He was also concerned about the 90-day waiting period for take-overs required by the Foreign Investment Review’ Board in Australia, and the rules

governing the proportion of shareholding. The moratorium was imposed as a lever to make the Australian Government come around to harmonising investment rules. If it ever had any virtue, the move helped to bring the attention of the Australian Government to the issue. At present it comes close to being a classical illustration of cutting off one’s nose to spite one’s face. An article in the “Australian” last Thursday is one of the most recent about Australian interest in establishing business in New Zealand. Various factors are mentioned as making it attractive for Australian firms to come to New Zealand. One is the inflation rate of 3.5 per cent, compared with Australia’s 9.6 per cent. It is intriguing to observe the belief that New Zealand’s inflation rate will remain down. The inquiries by Australian businesses around Christchurch show that the lower value of the New Zealand dollar, the more stable labour force, and lower costs make New Zealand attractive as a place to manufacture for the Australasian market. The article says that the Victorian Employers’ Federation is making a plea to the Australian Federal Government over the payroll tax and over export incentives and is referring to the possibility of a move across the Tasman to New Zealand as an action being considered by a number of firms. If Australian companies are after the export incentives paid by the New Zealand Government they may be disappointed. These are disappearing fast under C.E.R. Some of the other factors may remain. Some of the interest in New Zealand may disappear after investigation, some of the reasons for setting up in New Zealand may be spurious, some may be well founded, and in some cases it may be part of the whole rationalisation of industry envisaged under C.E.R. Whatever the reason, it is time that the investment moratorium was lifted so that the processes of C.E.R. can work unfettered.