By Denis Bright
The ghosts from NZ’s Mixed Member Proportional (MMP) voting system from a National Party initiated referendum in 1993 are keeping Prime Minister elect Christopher Luxon at least temporarily out of office in 2023.
Five weeks have passed by since the NZ election on 14 October 2023 delivered no party with close to an absolute majority. In a dramatic development just announced by Radio NZ (21 November 2023) far-right minority leader David Seymour of the Act Party has put in a bid to become Deputy Prime Minister through his mandate over eleven seats in NZ’s unicameral parliament.
Under the first past the post voting system, Christopher Luxon would have a huge parliamentary majority. MMP makes the formation of a majority government difficult to achieve. It empowers minority parties as in most voting systems across Western Europe and in the Australian senate since the 1949 elections.
Against all odds, NZ Labour’s Chris Hipkins is still the leader of a caretaker government. Expect logic and self-interest to prevail. Both NZ First and the Act Party are striving for more cabinet posts in a virtual coalition of opposite values striving for some consensus in the corridors of power.
Despite the strong swing to the National Party on 14 October 2023, the return of overseas and out of town votes produced a slight decline in overall votes for the National Party which did not gain an initially expected fifty seats in the 122 seat NZ parliament. Returns from NZ’s Party List vote of 51 seats also delivered seventeen seats to Labour.
The results in the 65 seats for open contests on MMP protocols in the general electorates went largely to the National Party.
Should all negotiations fail, Winston Peters could support a four-part centre-left minority government of Labour, Greens, Te Parti Māori (Maori Party) and Family First with 63 seats. This would be a slender majority of just one seat. The conservative populist within Winston Peters secured the first term of minority government for Jacinta Ardern in 2017. This time, the potential centre-left grouping is much more diverse. However, there is little in common between Family First and the brash assertiveness of David Seymour with a total of eleven representatives for the Act Party.
Perhaps NZ’s diverse voting patterns as shown by the returns from the General Electorates justifies a quite broadly based government with a change in Labour Party leadership and quite conservative representation for NZ regions. Either side of the political aisle could offer this diversity in its coalition formula.
Media monitoring by Google Bard does suggest that NZ’s trading and investment ties with China were also a factor in generating distrust for policy processes in NZ Labour’s administration. The pressure came from intelligence partners in the Five Eyes Network.
An article in News Corporation’s New Zealand Herald from February 2023 noted that “New Zealand faces ongoing pressure to upgrade anti-China stance” from its Five Eyes partners. The article cited comments from Foreign Minister Nanaia Mahuta, who said that New Zealand was “uncomfortable” using the Five Eyes grouping to criticize China over human rights.
Another article, published in the US Government funded Voice of America (VOA) News in November 2022, reported that “New Zealand Criticized for ‘Five Eyes’ Alliance Stance on China.” The article described how New Zealand was criticized for its reluctance to sign joint statements from its Five Eyes partners condemning China’s actions in Hong Kong and Xinjiang.
US self-interest also prevailed in seeking a change in trading and investment relationships away from China across the Asia-Pacific Region. The US has a trading deficit with China. Imposing this problem on the entire Asia-Pacific Regions seems to be an added cost of loyalty to strategic policies in a US Global Alliance that currently excludes NZ because of its opposition to nuclear powered military vessels carrying nuclear weapons into NZ ports on their global sorties.
Even the previous Labour government took the advice from its overseas intelligence allies very seriously.
The mainstream media created the impression that China and Taiwan China are totally at loggerheads over strategic issues. The election of Democratic Party leader Tsai ling-wen in Taiwan in 2016 has not changed this situation even though military vessels from the US Global Alliance, including NZ jaunt through the Taiwan Strait on Freedom of Navigation sorties. Taiwan’s deputy minister pf economic affairs, C.C. Chen noted: “From day one, when President Tsai took office, China has been our largest trade partner. We don’t want to rock the boat. We want to make it stable.”
According to Google Bard, the NZ frigate Te Kaha traversed the Taiwan Strait to demonstrate the goodwill of NZ towards the US Global Alliance. The NZ Royal New Zealand Navy frigate HMNZS Te Kaha conducted a freedom of navigation operation (FONOP) on 13 July 2023 in the Taiwan Strait accompanied by the Canadian frigate HMCS Regina and the United States Navy destroyer USS Mustin.
Pressure was also placed on the NZ Labour Government to open a lucrative contract worth $NZ475 million to operate a national ticketing system for a decade which may be extended to charges for NZ motorways in the future (Radio NZ 20 November 2023). Delivery of the new tap-on fare systems in NZ is behind schedule and public transportation systems are having to patch up older electronic fare readers in Auckland which are currently operated by Thales, a French multinational company.
Just why Australia and NZ cannot develop their own tap on fare systems is difficult to understand. Even in Victoria, the big end of town and multinational companies have a significant role in the Conduit Business Systems which were awarded fifteen-year contracts to deliver Myki fare systems (Banking Day 16 May 2023 and Google Bard):
- Australian Payment Network (APN)
- Cubic Transportation Systems
- Infineon Technologies
- Mastercard
- National Australia Bank (NAB)
- NTT DATA
- Thales Group
- Visa
- Victorian Government
In caretaker mode, NZ Labour is still beginning the role out of new facial recognition technology in tap-on fare systems in lucrative transportation contracts awarded to Cubic Transportation of San Diego according to Radio NZ (15 November 2023).
The NZ contracts in favour of Cubic Transportation were noted in media monitoring as Chinese companies were not short-listed:
i) The New Zealand Herald defended the government’s decision, saying that it was “necessary to protect national security.” The newspaper also quoted a government spokesperson as saying that the decision was “not about the country of origin of the companies involved, but about the security of our infrastructure.”
ii) The Dominion Post also defended the government’s decision, saying that it was “prudent to exclude companies from countries with a history of cyber-attacks.” The newspaper also quoted a cybersecurity expert as saying that the decision was “a sensible precaution.”
iii) The South China Morning Post reported that the Chinese government had expressed “regret” over the decision. The newspaper also quoted Chinese analysts as saying that the decision was “a sign of growing anti-Chinese sentiment in NZ”.
iv) Media monitoring also notes some of the problems associated with Cubic Transportation and its links with Cubic Defense Industries as an electronic provider to the US Global Alliance:
- Bribery Allegations
- Cubic has been embroiled in several controversies surrounding bribery allegations in various countries worldwide. In 2014, the U.S. Securities and Exchange Commission (SEC) fined Cubic $2.2 million for bribing officials in Mexico to secure a $100 million contract. Investigations revealed that Cubic had engaged in similar practices in India and Indonesia.
- Cost Overruns
- Cubic has a history of involvement in projects that have experienced significant cost overruns, raising concerns about its project management capabilities. In 2013, Cubic was contracted to develop a new fare collection system for the Metropolitan Transportation Authority (MTA) in New York City. The project, initially estimated to cost $500 million, has since ballooned to an estimated $1.2 billion.
- Tax Avoidance
v) Cubic has been accused of engaging in tax avoidance schemes to minimize its tax liabilities. In 2017, the Paradise Papers, a leak of millions of confidential documents, revealed that Cubic had used offshore entities to shelter profits from taxation.
Concerns in the mainstream and News Corporation’s media outlets over the extent of commercial relationships between NZ and China should perhaps be balanced by mention that a similar situation applies in most regional countries from Japan to Taiwan China, Indonesia, PNG and Australia. As in Taiwan China, there are negative consequences for local economic welfare if profitable commercial trading and investment ties with China are suddenly reversed in favour of weaker ties with the Quad countries of Australia, India, Japan and the US itself.
Both NZ Treasury and BNZ project a lean period for real economic per capita growth in NZ. Both sources project real per capita growth to be 0.6-0.7 percent in 2024.
Christopher Luxon has also said that he would take a more cautious approach to Chinese investment than the current Labour government. The National’s new Crown Infrastructure Fund (CIF) would also be involved in scrutinizing Chinese investment with enthusiastic support from the Act Party.
Throwing in NZ’s political lot with the values associated with a greater commitment to neoliberalism will create choppy and divisive influences across the Tasman if the coalition of opposites survives until the first budget is delivered in May 2024.
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Denis Bright (pictured) is a financial member of the Media, Entertainment and Arts Alliance (MEAA). Denis is committed to consensus-building in these difficult times. Your feedback from readers advances the cause of citizens’ journalism. Full names are not required when making comments. However, a valid email must be submitted if you decide to hit the Replies Button.
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Thanks Denis for this article. All the best to our NZ friends in their hour of need.
A case of high drama in politics across the Tasman. Hope that the tidal waves do not rise to epic proportions for the sake of our Kiwi compatriots.
Aus and NZ have similar problems in the global economy. There should be more reporting on NZ issues in Australia.
Winston Peters is a long-term supporter of the Maori voice, pragmatic, he can turn on a dime. He helped Jacinda Ardern to power in 2017, and backed her on her covid response in 2020 up until the point he realised how much damage her edits were doing. He pivoted and spoke against mandates and the whole bullying regime evident at that time. When he dropped a truth bomb on the public just prior to the election his popularity surged. From the aptly named ‘news’ outlet, Stuff-co-nz (‘fact check did 11,000 people really get a vaccine exemption’ 13Oct 2023), “A figure of “approximately 11,005” came from adding up the health and disability workers covered by these 103 applications.” Doctors, Health bureaucrats and politicians?
Pigs. No wonder there was voter backlash against Labour.
NZ seems to have similar problems to Australia in defence of its national sovereignty from our so-called trusted buddies: More critical discussion and political participation might assist from this end as Australia at a grassroots level is far from being a conservative country. Mainstream Australians need to get more involved through interactions with political insiders in unions and progressive political parties.
Cubic is a big player in Australian transport and defence on both sides of the Tasman.
The accountability of Cubic is virtually zero. Cubic is currently owned by two private equity firms, and its shares are not publicly traded.
An unaccountable Cubic has links to the US military industrial complexes through investments by private equity firms Cubic:
Here are the top shareholders in Cubic:
Veritas Capital and Evergreen Coast Capital: Veritas Capital and Evergreen Coast Capital are private equity firms that acquired Cubic Corporation in May 2021 for approximately $3.0 billion. They currently own approximately 74% of Cubic’s outstanding shares.
Vanguard Group Inc.: Vanguard Group Inc. is a global investment management company that owns approximately 6% of Cubic’s outstanding shares.
BlackRock Inc.: BlackRock Inc. is a global investment management company that owns approximately 4% of Cubic’s outstanding shares.
State Street Corporation: State Street Corporation is a global financial services company that owns approximately 3% of Cubic’s outstanding shares.
Dimensional Fund Advisors Ltd.: Dimensional Fund Advisors Ltd. is a global investment management company that owns approximately 2% of Cubic’s outstanding shares.
Other Shareholders
In addition to the top five shareholders, there are numerous other institutional and individual investors that own shares of Cubic Corporation. These shareholders collectively own approximately 20% of Cubic’s outstanding shares.
Overall Ownership Structure
The ownership structure of Cubic Corporation is relatively concentrated, with the top two shareholders (Veritas Capital and Evergreen Coast Capital) owning over 74% of the company’s outstanding shares. This suggests that these two private equity firms have significant control over the company’s direction and operations.
Is this US democracy in action on the world stage?
Why did the NZ Labour government invite such obscure links into its transport system with trials of facial recognition technology?
Readers might try a search and report back on Veritas Capital and Evergreen Coast Capital to see who they really represent: Certainly not the loyal commuters who use public transport across NZ.
The electronic company Cubic seems to be involved in most countries. NZ is not an isolated case of its influence.
Having our own fare systems should not be beyond the resources available through co-operation between Australia and NZ.
Denis, Thanks for a well-researched article about the NZ election and economy.
Labor governments should be careful of getting too involved with suspect defence companies.and their extension into civilian transportation.
Cubic may run our ticketing systems in both Australia and NZ. It is deeply involved in defence services on both sides of the Tasman. Are readers comfortable with this Cubic influence being extended to facial recognition technology in NZ for users of tap-on cards?
Veritas Capital and Evergreen Coast Capital ( VCEC) acquired control of Cubic in 2021. These firms are largely investment conduits for defence and aerospace industries across the US Global Alliance.
Ironically, these companies are also involved in benign industries such as routine cyber security, electronic ticketing systems for public transport and motorways, healthcare and pharmaceuticals.
In awarding contracts, progressive governments should perhaps look to companies which are not so tied up with investments in state of the art military projects such as Israel’s Rafael Advanced Defense Systems or Israel’s Aerospace Industries.which are involved in current disputes with Palestine.
What’s happening in a peaceful country like NZ should always be best practice and create distance from involvement in great power rivalries.
Good work Burleigh Waters in helping to expose the quiet secrets of the neoliberal era from a NZ perspective. With all the resources available to NZ Labour some better alternatives to control of ticketing systems by obscure multinational investment companies should have been available. The HQ of Veritas Capital and Evergreen Coast Capital, an affiliate of the Elliott Management Corporation are indeed a long way from NZ commuters using buses and trains in major NZ cities. The same names are involved in many of our own transport systems in Australia and are involved in export defence technology to both sides of the Tasman.
Thanks Rubio for applying your MBA skills. I also see that the Elliott Management Corporation,as a major shareholder in Cubic Transportation, has a history of investigating Israeli defence companies through Rafael Advanced Defense Systems and Israel Aerospace which took control of Rafael Defense in 2016. Elliott Management has involvement with other defence sectors in Israel. This is indeed a long way from operating fare readers and motorway networks across the globe from NZ to the Kiev Metro in Ukraine.