KEY POINTS:
Unions fear that a Government decision to help local businesses set up foreign operations is sending the signal it is acceptable to relocate jobs to other countries.
Economic Development Minister Trevor Mallard yesterday outlined a plan to use taxpayer money to assist local companies establish overseas operations, instead of just helping them to export their goods.
The shift in focus came alongside comments from Mr Mallard that foreign investment into New Zealand in recent years had not been as strategic and valuable as it could have been.
Council of Trade Unions economist Peter Conway yesterday said he did not want to be overly critical of Mr Mallard's moves, but he did have some concern about the message being sent.
"The key concern we would have would be that it does tend to send a signal that relocating offshore is just fine - and it's not just fine with us," Mr Conway said.
A number of New Zealand companies have been shifting manufacturing operations overseas this year leading to worries that the manufacturing sector is in crisis.
The Government's new support for companies looking to expand into overseas markets will come in the form of information, such as help with feasibility studies to decide where to put roots down and when.
Mr Mallard is not proposing to give out grants.
Government support has previously been focused more around helping companies to export goods that have been made in New Zealand.
The changes carry some political risk for Labour as they could be seen as helping firms expand at the expense of local jobs.
The CTU's concern underlines that risk, although Mr Conway said he could understand where the Government was coming from.
"As a union movement we'd want to say that, of course, we want New Zealand firms to be able to thrive as global companies," he said.
The shift had to be seen in the context of a government that had invested in industry training and increased spending on infrastructure.
Greens co-leader Russel Norman welcomed Mr Mallard's views that foreign investment in New Zealand had not been as good as it could have been, but said the Government should therefore be changing the Overseas Investment Act.
"Why is he being critical of this low quality inbound investment as he calls it, when our overseas investment regime is being constantly loosened to enable that?" Dr Norman asked.
The Employers and Manufacturers Association said the Government's decision to focus on investment offshore was an admission it had failed to create a sound domestic business environment.
"If our businesses were sufficiently profitable they would be investing much more, both locally and offshore," association chief executive Alasdair Thompson said.
However, Export New Zealand president Jon Mayson said some exporters would have to consider moving operations overseas to keep their organisations competitive and keep earnings flowing back to New Zealand.
- additional reporting NZPA
