Socialist Republic(s) of Australasia?

The Australian ruling class is making a play to takeover its poor cousin kiwi capitalists. Aussie corporations already own large chunks of the NZ economy and dominate banking, energy, transport and retail sectors. But last month the Qantas chief headed a joint conference of business, government and academic bigwigs calling for a common currency and further economic integration. What’s going on? And where to workers fit into these plans? The Communist Workers Group has not got fully worked out position on these questions. So Class Struggle opens up a debate among workers on Australasian Union.

NZ the seductive semi-colony

The drive to integrate the two economies has been going on for 200 years. NZ began its colonial life as part of NSW, and was a self-governing colony within Australia until 1901 when it refused to go into the Australian federation. There is still a clause in the Australian federal constitution that allows NZ to join as a state of Australia.

The colonial capitalists in NZ led by then Prime Minister Dick Seddon had delusions of grandeur, of beating Australia as the “Britain of the south seas’’ with plans to rule the Island states to the north on behalf of the British Empire. From 1901 to 1984, NZ applied a policy of economic nationalism. This was the social democratic ideal that NZ was an independent nation whose economy could be controlled for the benefit of all. It tried to insulate its economy from Britain and Australia so that it could keep as much of the wealth generated in NZ as possible. And depending on which political party ruled this wealth was to be distributed among the various productive sectors in NZ.

However, the weakness in this national plan was that to develop industry internally, NZ had to turn to investment, technology and marketing agreements with overseas firms. So by the 1980s economic insulation had not stopped Aussie and UK (and increasingly Japanese and US) firms acting as the Trojan horses of globalisation and setting up ‘branch plants’ behind the protectionist barriers, and from sneaking profits offshore by ‘transfer pricing’.

Studies of foreign ownership since the early 80’s show that NZ was no longer run by a bunch of local families and the British banks, but that UK firms like Unilever, Aussie firms like Comalco, Japanese companies like Nissan and US corporations like Mobil had a dominant stake in the economy. NZ was still overseas owned but that ownership and control had shifted so that NZ was now, according to Bill Sutch, NZ’s foremost economic nationalist, only a ‘book entry’ in the accounts of the Multinationals.

Globalisation whacks home

What the century up to 1984 proved was that capitalism could be implanted and thrive under state protected hothouse conditions only until the local firms got too big for the domestic market. Once the biggest firms outgrew the market protectionist barriers had to come down, the economy deregulated and opened up to the global market. Barriers to trade and investment were largely removed and the NZ economy was now up for sale to the highest bidder.

Overseas companies moved in to buy out poor performers or undervalued companies or state enterprises (some already carved up for sale by asset strippers like Brierley and Alan Gibbs) like NZ Rail, Telecom, BNZ, Air New Zealand, NZ Steel etc. Ownership and control of homegrown industry rapidly passed from local and state hands into Australian, British, Japanese and US corporate hands.

CAFCA which documents trends in foreign investment produces statistics which back this up. Direct Foreign Investment (DFI) grew rapidly after 1984. By 1995 DFI in NZ had reached nearly 47% of GDP, and made about half the total profits. (Bill Rosenberg, Foreign Investment in NZ: The Current Position). Rosenberg showed that the overseas corporations tend to be the biggest, but employ fewer workers and pay less tax (25% average). They accumulate profits of the order of $30,000 per worker a year (compared with $20,000 for local firms). Today the foreign domination of the economy is higher still. Between 1994 and 2003 foreign corporations made over $42 billion in profits.

What all of this proves is that the NZ economy has been integrated into the global capitalist economy so that the main industries are owned and controlled by large monopoly corporations with their bases in the Australia UK, US, EU, Japan and the rest of Asia. China too, looms on the horizon as a major economic force in NZ. This is all part of the globalisation of production under the influence of the monopoly corporations (to say it is no longer imperialism is so much globalony). What motivates the corporations is access to cheap resources and labour and the lowest cost barriers imposed by national governments (taxes, environmental and labour laws etc) as possible. This explains the drive to free trade and investment agreements allowing global capital free movement in search of lowest costs and biggest profits.

Aussie bosses own a third of New Zealand

Of all the overseas countries to increase its stake in NZ, Australia now dominates. It owns 100% of the trading banks, NZ Rail, NZ Steel, major road transport companies, shopping malls and supermarkets (Westfield).

To facilitate the smooth operation of Australian capital to further its ownership and control of NZ capital, the bosses are now making a play to remove all the barriers to form a common market like the EU. What is planned is a common currency which would be run by the Australian Reserve Bank, a single stock market, and a common border for citizens and travellers. This would certainly reduce the compliance costs for Australian capital.

But Australian capital is itself dominated by US (and to a lesser extent Japanese) capital. The Australian-US free trade agreement has opened up Australia to US investment. So an Australian-NZ common market would facilitate the ability of US capital to piggyback into NZ and increase its holdings and profits. The US (along with its Canadian partner-state in NAFTA) already owns a large slice of key industries such as merchant banking, power and communications, forestry, tourism etc.

Australia and NZ as ‘Pacific Powers’

Jane Kelsey’s recent paper “Big Brothers Behaving Badly” (

attacks Australia’s and New Zealand’s role in forcing free trade onto the small Pacific nations. In particular she accuses them of bullying these nations to remove tariffs, export subsidies and any protectionist measures for agriculture, so they can sell more goods. As Kelsey points out in the case of Tonga’s agreement to remove $6 million tariffs on NZ meat exports (mainly mutton flaps) will be a cut of 40% of state revenue for services to a people made up of 80% subsistence farmers!

Behind all this is the plan of Australia to subordinate NZ and the rest of the South Pacific into its ‘EU-style’ Pacific Economic Community in the interests of Australian imperialism. NZ grandiose delusions of 100 years ago that it could be a junior imperialist power in the South Pacific are now fully deflated. Via its subordination to Australia, NZ, along with the rest of the South Pacific, is being further incorporated into the US imperialist bloc as a semi-colony of US imperialist finance capital.

What’s it got to do with the workers?

But this is the way the capitalism operates. It doesn’t matter which country owns capital, workers are still exploited. The question is: what is the workers position on the future of NZ as a semi-colony exploited by imperialism? And in particular being dominated by its nearest imperialist big brother, Australia? Should we fight to remain economically independent of both Australia and the US? Or should we fight to speed up the move towards a united states of Australasia in preference to union with the US? Then, maybe we should remain neutral in what is like a game of musical chairs where it doesn’t matter which boss sits down on us when the music stops, we still get shat on?

Our starting point has to be to distinguish between our interests as workers and those of the bosses. We fight for our interests and oppose those of the bosses. We fight against the bosses measures to make us boost their profits and pay their debts whatever the nationality of the boss. Our basic fight has to be the defence of our jobs and conditions. Without these the working class becomes divided and demoralised. Regardless of the nationality of the companies that own industry we demand nationalisation without compensation. Any closure or sacking of workers has to be met by occupations under workers’ control.

Because the Aussie and NZ bosses are heavily integrated, struggles against them must obviously unite NZ and Aussie workers - but not at the expense of foreign workers. For example we should fight for a common border to allow free movement of workers. But the common border has to be an open border. We don’t beg our bosses to legislate to protect our jobs at the expense of foreign workers. On the contrary we unite with the workers of all countries against the global corporations that exploit and oppress them, so that the demand for nationalisation becomes socialisation on a global scale.

Workers’ control means workers’ planning

How would this solidarity between Aussie and Kiwi workers operate? If we take those sectors where Australian and NZ capitalist ownership is most integrated, the unions should also be integrated. In Banking, NZ workers cannot fight the Aussie banks without the support of Aussie workers. As soon as we get into wage and job negotiation the boss plays one off the other. We need to call for the nationalisation of the banks under workers control. The division of the banks assets between Australia and NZ workers would automatically raise the need to unify the two countries.

Same with NZ Steel, 100% owned by BHP the largest mining corporation in the world. BHP jointly owns the huge Cerrejon Zona Norte coal mine in Colombia where it ‘manages’ its relations with the indigenous Wayuu and the unions by using the notorious paramilitaries to kill their leaders – the same death squads that recently entered Venezuela to kill President Chavez.

The US United Mine Workers and United Steel workers unions have taken solidarity action with the Colombian miners. Australian and NZ workers need to demand the nationalization under workers control of BHP!

Same with Toll Rail that now owns NZ Rail. Nationalising Toll Rail under workers control would call for workers in both countries to exercise ‘joint control’ and pose the question of a single shared planned economy. Automatically the demands for workers control mean workers planning and a workers state. Would this be a single socialist republic or a union of socialist republics? We can’t say until workers have come to power and decided democratically what workers states would look like.

For Occupations and Nationalisations without compensation under workers control!

For a workers’ planned economy!

For a Socialist United States of the Pacific! 

From Class Struggle 56 June-July 2004

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