Who Dropped the Ball? Democracy in Crisis

New Zealand once prided itself on its commitment to equity and justice; it was supposedly a place where ‘Jack was as good as his master’. Now we live in a country where terms like ‘domestic violence’, ‘child poverty’ and ‘youth suicide’ are all too familiar, and we take it for granted that an elite class of super-wealthy live in our midst. How did this happen?

David Chapman examines our recent political history to establish where and why our leaders dropped the ball. In doing so, he finds a system of democracy that is open to abuse – one in which party squabbling dominates, long-term planning is virtually impossible, politicians can lie with impunity and politics is driven by self-serving agendas.

Envisaging a government whose members are respected for their integrity and their commitment to the well-being of all New Zealanders, Dr Chapman argues that it’s time we changed the game. Rarely has a proposed alternative system of government seemed as feasible.

Read an extract

Chapter 1: An Anzac Story

In April 2016 I attended an Anzac Day service in Napier, accompanied by the children of my friends. It was a rambling affair, but I was glad to be there. The clergyman who made one of the speeches asked his audience: “What should we take from Anzac Day?” His answer was: “The courage to stand up for what we think is right.” His message struck a strong chord with me, so before I discuss politics and the history of our country, I would like to mention some of my own background.

My grandfather, Ernest James, was wounded by shrapnel at Passchendaele in 1917. His brother, Lewis Tom, a private in the Canterbury Regiment, had, by then, been killed on the beach at Gallipoli. Pop was in his late twenties when he went to war, and he had two children back home. He was a sergeant in the Otago Regiment. In my last year at high school he stayed with us while attending a regimental reunion. Pop was about eighty, and he talked to me at some length about his wartime experiences. These conversations were not so much about conflict, but more about his visits to family in England while recovering from his wounds.

It was a different world then. His parents had emigrated to New Zealand in the 1870s, so when in England, he visited relatives he had never met before, including his grandfather. As an honoured guest, he got to sleep in the same bed as the old man, which said a lot about their living conditions. But the important part of what he told me had happened when he was first wounded.

The battlefield at Passchendaele was a bog. Artillery fire had wrecked the drains and it had rained for weeks. The soldiers lived in mud. Knowing a big push was coming, Pop’s platoon collected all the clean water they could and had a communal bath. The men had decided that if they were going to die in tomorrow’s attack, they would at least die clean. They faced their fear together.

During the attack he was hit in the thigh by fragments from an exploding shell. Wounded and making his way back towards his own lines, he came across a group of a dozen or so German soldiers who had been left unscathed, but isolated, as the tide of battle swept around their position. Pop had only a grenade at hand, but I imagine the Germans were happy to be alive and surrendered without much fuss. Pop confiscated the officer’s pistol – his symbol of authority – and carried on towards his lines, with his prisoners in tow, to find treatment for his wounds.

When they reached a dressing station, the medical orderlies began robbing the prisoners and a bit of a ruckus ensued. At this, the British officer in charge emerged, and asked (I wish I could capture Pop’s imitation of a toffee accent here), “What seems to be the trouble, Sergeant?”

The answer? “I have just told your men that if they do not immediately return the prisoners’ property, I’m going to shoot them.”

There was a pause before the officer ordered: “Do as the sergeant says, men. I think he means it!”

Well, that at least is how Pop told the story. Among the incidents Pop related, this one especially leaves me confident that I know exactly what he fought for and what he believed in.

Obviously, I missed the grimmer details of Pop’s war experiences, but what he did tell me initiated several years of reading about our history of fighting in two world wars, and in World War I specifically. Thus, I feel reasonably comfortable talking about Anzac Day. It has become a metaphor for the heroism and sacrifice of those who fought at Gallipoli in particular, and in wars in general. Furthermore, the landing at Gallipoli in 1915 marks what is a foundational event, a catharsis, in our national history. Māori and Pākehā alike fought and died on the Gallipoli Peninsula, and through the shared anguish we began to identify as a nation separate from Britain.

You cannot read anything about the Anzacs without encountering the ‘Anzac spirit’. At Gallipoli, Australians and New Zealanders fought side by side, protecting and defending each other, with officers and men all caught up together in the chaos of battle. There were class distinctions, of course, but not like those of the British corps. The conditions were beyond imagination. Burials, for instance, were not possible. You couldn’t get food into your mouth without flies attached ‒ flies that were breeding and feeding on the bodies of your comrades just over the edge of the trench. At night, ships could navigate in towards the beach guided simply by the stench. Yet the Anzacs hung together in ‘mateship’, looking out for one another as best they could.

There was not a lot that was noble about Gallipoli, except for our enemy. We should not forget that we were attacking the Turks, who suffered even worse casualties than we did. Attacking them was part of Churchill’s hare-brained idea that Turkey was the ‘soft underbelly of Europe’. I remember the Turkish dead, partly because of the words of the commander of the Turkish forces, Mustafa Kemal Atatürk, who later became the founder of modern Turkey. As his country’s leader, he said this:

Those heroes that shed their blood and lost their lives . . . You are now lying in the soil of a friendly country. Therefore rest in peace. There is no difference between the Johnnies and the Mehmets to us where they lie side by side here in this country of ours . . . You, the mothers who sent their sons from faraway countries, wipe away your tears. Your sons are now lying in our bosom and are in peace. After having lost their lives on this land they have become our sons as well.

These words move me to tears, yet I have never heard any public reference to the statement at an Anzac Day service, nor have I heard the name of Mustafa Kamel Atatürk honoured in New Zealand as it should be. Consequently, as I think about what and who we are now, I think it is important to revisit where we have come from. Doing so does not seem possible without reference to the Anzacs and to those who died on both sides of a conflict that was not of their making.

I know what my grandfather valued. In the heat of battle, even when wounded, he was prepared to stand up for what was right and for the dignity of others – others who minutes before might have killed him. To gain perspective, I place his ethos beside the dignity and forgiveness of the Turks in treating our dead as their own sons. And when I do this, I find the state of our nation today, a hundred years later, to be an extremely poor one.

It is a nation where we concede that children go to school hungry. We are crippled by domestic violence, suicide and depression. It is “every man for himself and the Devil take the hindmost”, as my grandfather would have said. Māori are over-represented in most statistics that are bad. Against this background, our leaders squander $26 million on a new flag referendum, and we take it for granted that we have a class of super-wealthy in our society. This is not what members of my family fought and shed their blood for, and I should have the courage to say so.

Chapter 2: Can You Believe It?

I passed one of those significant birthday milestones in mid-2016. A few weeks before that day, I received a letter from my local MP inviting me to a special ‘super seniors’ morning tea. The letter arrived the week before Anzac Day. I decided to take the opportunity to reply, which I did as follows:

Dear MP,

Firstly, thank you for your invitation to your special super seniors’ morning tea. It sounds truly awful and I imagine you are dreading it intensely. I will thus spare you the ordeal of my attendance. However, since you have written, I would like to raise another matter with you.

It is Anzac weekend. We will remember the sacrifices made by our countrymen and women in defence of our notions of freedom and sovereignty. Members of my own family served and shed blood in both world wars.

When I remember them, I feel an increasing sense of anger that the independence they fought for has been, and continues to be, sold off, so that we are in fact less and less independent. It is timely to remember the ethos of the ANZAC: the egalitarian spirit in which ‘Jack is as good as his master’.

Our government continues to sell and allow the sale of New Zealand infrastructure and land. The dairy industry provides a wonderful example of individual greed and the complete lack of responsibility or leadership that underpins these sales, as I will outline.

If you sell farms to overseas competitors, as we have, you also sell all of our technological development, systems of management and competitive edge. Let us remember that on the so-called ‘level playing field’, many of these overseas buyers have access to low or no-interest state funding, while potential New Zealand buyers have to attempt to compete at market rates. But selling our farms is not enough, we also sell dairy stock – our genetics – to overseas buyers.

Given that we have sold our land, our technologies and our genetics to our competitors, I rhetorically ask: Who would be in the slightest bit surprised at the plummet in dairy prices? Of course, the low farm-returns which follow, and the subsequent further sales to overseas buyers, reinforce the cycle. It is not rocket science, and the fact that all this repeats the mistakes of the kiwifruit industry shows an almost farcical lack of leadership by people who claim to have New Zealand’s national interest at heart: our government.

The sale of state infrastructure assets has a similar tragic pattern. Overseas buyers restructure, shedding jobs, and move their profits offshore. Dole queues lengthen and the growing social ills that inevitably follow are paid for by the reduced number of Kiwi taxpayers. In several notable cases over recent decades, we taxpayers have paid this cost multiple times. The BNZ, Air New Zealand, NZ Railways, and South Canterbury Finance are a few cases that should not need elaboration. Cases in which the taxpayer has shelled out billions in welfare payments to support inept businesses in a kind of reverse socialism, socialising losses while privatising profits.

This kind of behaviour is what draws many New Zealanders to the conclusion that our leadership is somehow corrupt. Why else, a person with some sense of the obvious would ask, would we follow such stupid and destructive policies? Policies which clearly have done very little for large numbers of New Zealanders.

I think I have clarified the background to my question more than adequately. So, as we remember our fallen country folk, the Anzacs, I would like to ask you: What is your view on the sale of New Zealand land and infrastructure to overseas ‘investors’? Land our forebears shed their blood to defend.

Yours sincerely, etc.

In due course I received the following reply:

Hello David,

To answer your last question first: I am comfortable with foreign investment into New Zealand.

I do not believe our ANZACs (sic) fought to keep foreign investors out of New Zealand, but rather to ensure we were rid of tyrannical governments and we maintained a democracy.

Overseas investment allows New Zealanders to realise the full value of their business by selling to the highest bidder, enabling that New Zealander to cash up and invest elsewhere. For example, owners of Montana Wines (a New Zealand listed and owned company) sold to a foreign buyer. Now that business has grown enormously, as the new owner had access to markets and was able to distribute and sell the wine product. Without that new owner, the New Zealand industry would be a fraction of what it is today, earning now more than $1.5 billion in export dollars.

The foreign investor cannot take the land away. They generally improve the quality of the land, as conditions set by OIO demand the vendor of the property is able to invest in new projects. The vendor believes that selling one thing to buy another will improve their net position. The new buyer is also aiming to improve their net position, and so each party is happy with the transaction. I am indifferent to the origin of the funds or the residency of the investor. As long as there continues to be good guardianship of the land, and there are demonstrated economic benefits from the investment to the local economy, then I am happy to allow foreign capital into New Zealand.

Regards, etc.

I confess to being taken aback by the naïvety of the reply. But quite unusually, it is a reply that actually responds, in part at least, to what I asked. My letter was also answered by the MP himself, rather than by an assistant. That aside, there are some serious issues buried in his reply. Moreover, this man is a member of the government, so I faced a dilemma about what to do. Leave it as a waste of effort, or pursue the matter further?

First, the issues. The argument illustrated by the sale of Montana Wines refers only to the owners of businesses, and it affirms their right to do whatever they want to “improve their net position”, as the MP put it. This seems to be the only relevant consideration. It is also assumed that the new owners will improve “the quality of the land”, that is, maintain and improve their asset. This is an assumption that is not justified. For instance, the owners of the New Zealand rail system, in simple terms, bought the asset and progressively and deliberately ran it down, maximising their profits by minimising reinvestment and maintenance, then bailed out. This is not a unique example. Bluntly, my MP’s oft-stated mantra is crap.

Some years ago, there were significant and crippling power outages in Auckland because the operating company had not kept the network up to scratch; they had not invested in maintenance and development. This prompted a change in the rules set by government so as to better protect Auckland, the country’s economic nerve centre. It is not a given that new owners will maintain their assets. Let’s keep this in mind.

New Zealand now has virtually no manufacturing sector because it has been moved to Asia to utilise their cheap labour supply. This is a complex issue, of course, but I simplify it to illustrate a general point. How many news reports have we heard over the last couple of decades involving businesses moving offshore and the associated job losses, often with no severance payments to workers? I recall some years ago an executive from Fisher and Paykel announcing another 250 job losses as the company moved most of its manufacturing overseas. He expressed his ‘regret’, describing the day as a sad one for the workforce but a great day for the company.

In the context of the reply from my MP (which sounded like a cut-and-paste extract from Economics for Beginners), it is worth pointing out that a company is a front for the actions of its owners (directly or indirectly). Thus, the owners are quite happy to see their workers, and taxpayers in general, suffer while they maximise their positions. The simplified ideological summary offered by my MP ignores this fact.

As another example, I would point out that while the government had a ‘Buy New Zealand’ campaign going, the Defence Force terminated their clothing supply arrangement with a New Zealand company in 2013, and then awarded the contract to an offshore supplier. It is easy to explain how this happens, of course. The military have a limited budget and are forced to seek the lowest prices. Aside from the issue that cheap and good may be different things, the example illustrates the point perfectly. There is little loyalty to New Zealand, only to the God of Cheap. (Except when the Prime Minister wants a new flag, naturally.) Moreover, the backing of New Zealand products by the government is both cynical and a sham.

Events in the dairy industry, however, take the biscuit. Note that over previous years, the National Government had emphasised its goal to increase production in the dairy sector as a major plank of its economic policy. Despite this, we allow the sale of dairy farms to overseas buyers, and some significantly large sales have occurred amid great controversy. One of the underlying issues is that there are overseas buyers who have access to low-interest or interest-free capital from their governments. Why would this be, I wonder?

As I have mentioned, having bought these farms, our competitors have access to all our technical innovation and competitive efficiencies. Add to this scenario the fact that dairy farmers wishing to “improve their net position”, as my MP put it, have been involved in the trade of dairy calves and heifers to China. So, on top of handing over our knowledge on dairying, we have also ‘given away’ our generations of livestock genetic improvement.

Suddenly there was an oversupply of milk, and the dairy payout dropped from $8.50 in 2013-14 to $4.65 the next year, and down to $4.30 in 2015-16. Let’s remember that the dairy industry, largely controlled by a single company, is a significant part of New Zealand’s economy. While this may seem tedious, the point is that there are multiple examples of this sort that severely undermine the argument put forward by those supporting overseas investment in New Zealand. There is plenty of evidence to show that, when it suits them, individual Kiwis, New Zealand companies and overseas companies are happy to improve their own positions at the expense of the nation in general.

If you would like to look further, a relevant article by Matt Nippert, titled ‘Top multinationals pay almost no tax in New Zealand’, was published online by the New Zealand Herald on 7 June 2017. The title speaks for itself, and the content casts considerable doubt in my mind about the value to New Zealand of these ‘investors’ who my MP seems so confident about. It seems that the top twenty overseas companies in New Zealand pay virtually no tax, and this is legal.

The other significant issue in my letter is the bailout of stricken businesses. South Canterbury Finance was bailed out to the extent of $1.8 billion in 2010. Over $350 for every man, woman and child in the country. Bailouts in New Zealand, over the last couple of decades, must total at least $3 billion. The government has always said that these businesses (the BNZ, Air New Zealand, the buy-back of the rail system) are too important for us to allow them to fail. Remember the Auckland power network? Well, I would ask: If they are too important to be allowed to fail, why put them in the hands of private companies whose first priority is to maximise profit? It is stupidity. What makes it especially painful is that having taken the profits, these companies are bailed out by ordinary New Zealanders – me and you. Remember that it is also us who pay the benefits to the workers who are sacked by such companies when they move in and acquire what were state assets.

I look upon this as being a special brand of socialism. Our governments (of either political hue) share-out, or ‘socialise’, the losses, but privatise the profits. Win-win if you are a big company; lose-lose if you are an average citizen and taxpayer. This is what brings me to the verge of thinking our leaders must be corrupt. But I do not believe corruption is the real issue, although it may occur. I think that many simply serve their own interests and the interests of those they represent ‒ their financial supporters, and not necessarily the interests of the electorate. My MP does not even live in his electorate.

A scary alternative is that these people really do believe their own simplistic ideology. It is hard to contemplate how you might get through to someone who rationalises that “since land can’t be taken away, it is fine to sell it”. Have these people heard of eviction? Do they know anything about colonialism, or history for that matter?

To deal with the dilemma I mentioned earlier ‒ whether to try again or forget it, I decided, remembering Anzac Day, to write to my MP once more. My reply did not examine in any detail the issues I explained above. A letter to an MP has to be reasonably concise, or it will be dismissed.

Dear MP,

Thank you for responding to my initial question.

Please could you outline some of the economic benefits to New Zealand rather than to the owners of businesses? The two are not the same thing. I suppose I am asking if you could identify those to whom these benefits accrue?

I find your faith in oft-stated economic theory a little quaint if it is not substantiated. For example, what happens to the export dollars earned by the new Montana Wines? Perhaps they are shipped straight offshore again? That aside, lighthouse examples do not make a general case. Can you give me or direct me to the data that supports such a general case?

I would imagine there should be a compelling data set by now. You might also clarify for me whether it is Montana Wines earning the 1.5 billion dollars, or the whole industry? If it is the latter, you might need to explain the links you make between new ownership of Montana and the success of the industry.

I note that your view that land cannot be taken away is identical to that of Te Rauparaha when he sold land in the Wairau district to the New Zealand Company. He thought the colonists were mad for ‘buying’ something that could not, as you say, be taken away.

I do not wish to sound uncharitable, but I have been listening to arguments about the value of market competition and the power of the deregulated economy for over thirty years. Contrary to the rhetoric, these promises seem to have failed economically, while their proponents, such as your own party, continue to strangle us all with regulations. I’d like you to explain this for me too. You are, after all, a man who is developing a profile as a future leader of our nation.

I would note that in responding to my initial letter you completely ignored the point I raised about the fiasco that is the New Zealand dairy industry, a fiasco brought about by exactly the behaviours you mentioned in positive terms in your reply relating to Montana. In the dairy case, individuals maximised their own short-term gain – emphasis on ‘short-term’ – to the detriment of the industry and the country, themselves included.

You also neglected to mention the multiple cases of government bailouts of large business failures. The economic argument you did mention would also have it that businesses fail through inefficiencies and poor decision-making. This is not a concern of the state. The market will ensure that new and more efficient businesses spring up in response to the new opportunities provided by the collapse of failed ventures.

I would really appreciate it if you could explain some of these mysteries to me. I have asked a lot of you, forgive me, but I hold the view that people putting themselves forward as national leaders should be able to elaborate sound logical and evidence-based points of view and policies. I am not impressed by those who fog the air with a few bites of polysyllabic jargon and then vanish.

I look forward to your reply.

Yours sincerely, etc.

I should emphasise that this was an email correspondence and that I have edited it in a few places for clarity. The reply to my first email took thirteen days to arrive. It was, therefore, very much to my surprise that I received the following message only two hours after sending the second email:

Hello David,

Let’s sit down for a discussion on this. Pam will get in contact with you to arrange a time.

Regards, etc.

That is when I began to write this book.

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© Copyright David Chapman 2021