Dialogue: Multinationals must be held to account

By ROD DONALD*

The Green Party is not opposed to foreign investment per se, but we do have a strong preference for greater local ownership and control of our economy.

Too much of our land and too many of our businesses have fallen into foreign control for too little benefit to the people of New Zealand.

The reasons for this are first, there has never been a strategic plan, let alone a consensus, to determine which areas most need investment and whether foreign capital is the only way to meet those needs.

Secondly, there has never been adequate scrutiny of proposals before they are allowed to proceed, and thirdly, there are insufficient requirements placed on foreign investors to demonstrate that they are making an across-the-board contribution to our people and our environment.

We are unlikely to get a strategic plan under this Government, given its love affair with free trade and investment agreements, but we have taken some steps towards achieving greater scrutiny by persuading Government members of the finance and expenditure committee to support significant changes to the way the Overseas Investment Commission, which approves foreign direct investment, operates.

The changes, which have gone as recommendations to ministers, include appointing a commissioner to represent the wider community, extending the application of the national interest criteria to all foreign investment, not just the buying of land and fishing quota, and re-examining the commission's investment threshold, which was raised from $10 million to $50 million by the National Government.

We are also calling for the national interest test to be extended beyond the existing criteria, such as the creation of jobs, to include the environmental and social impacts of investments and their compatibility with Treaty of Waitangi obligations.

Lastly, we have recommended that a Code of Corporate Responsibility should be introduced which investors would need to agree to, and against which the commission would monitor compliance.

The Green Party believes such a code should be in place before any more free-trade and investment agreements are signed and before any more of our land and businesses fall into foreign control.

A responsibility code for foreign investors is neither a radical idea nor a new one. New Zealand is already a signatory to the OECD guidelines for multinational enterprises. Indeed, our Government has undertaken to promote the guidelines, but there has been little noticeable activity.

This is unfortunate as the June 2000 revision contains, in the words of Peter Costello, Australian Treasurer and chairman of the OECD ministerial committee, far-reaching changes that reinforce the economic, social and environmental elements of the sustainable development agenda.

The new guidelines now require multinationals to contribute to the abolition of child labour and the elimination of all forms of forced or compulsory labour and to respect the human rights of those affected by their activities.

What is more, the scope of the guidelines has been extended to cover subcontractors, which places an obligation on businesses to ensure that their partners and suppliers meet the same standards. No longer will big-name corporations be able to disavow responsibility when the inhumane practices of sweatshop subcontractors are exposed.

Multinationals are also expected to improve their environmental performance through better management and impact planning.

That includes addressing any environmental, health and safety impacts of processes, goods and services over their full life-cycle. They are also expected to develop products or services that are energy and resource efficient.

General policy guidelines include a commitment to local capacity building and human capital formation; refraining from seeking or accepting exemptions related to environmental, health, safety, labour, taxation, financial incentives or other issues; abstaining from any improper involvement in local political activities, combating bribery, not engaging in anti-competitive practices and paying taxes to their host countries.

Having endorsed these OECD guidelines last year, the Greens believe the Government should incorporate them into even more explicit legislation that must also include penalties for corporations which do not meet their responsibilities, both here and overseas.

Even zealous free-marketers would concede that not all foreign investment has been good for New Zealand. We welcome investors as guests but guests should never have the same rights and privileges as permanent residents.

* Rod Donald is the Green Party co-leader.