Need to rethink unregulated foreign investment

Green Media Release 20th December 2007

Today’s figures showing a widening of the current account deficit to 8.3% of GDP shows the long term damage done to the New Zealand economy by two decades of reckless liberalising of foreign investment rules by successive Labour and National governments says the Green Party. Surely a $14.2 billion current account deficit is enough to force a rethink.

“Both Labour and National have succumbed the new right ideology of placing no restrictions on foreign investment in New Zealand, and the result is a huge current account deficit” says Dr. Russel Norman, Green Party Co-leader.

“Perhaps just once they should read what the Statistics New Zealand says about the impact of their ideological blinkers:

The increased deficit was due to a larger deficit on investment income…The larger investment income deficit was mainly due to an increase in profits earned by foreign-owned New Zealand companies, and higher interest payments made on New Zealand's rising levels of overseas debt.

“Labour and National facilitated the sale of most of our large corporations and banks to overseas owners and now the dividends go to those owners, draining resources from our economy.

“We are borrowing money from overseas to fund the housing market bubble, and now we have to service that debt. Net overseas debt increased 11.7% over the 12 months to September 2007, but the economy overall only grew by 2.2% (12 months to June 2007- latest figures). We are growing our debt at a faster rate than we are growing our ability to service the debt.

“The current Labour-led administration loosened the rules on foreign investment in New Zealand, exacerbating the problem.

“We need measures to produce long-term stability in the housing market and we need to apply a public interest test to foreign takeovers of New Zealand companies.”

ENDS

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