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Archive for February, 2013

Health and safety jobcuts? Haven’t we been down this road before?!

28 February 2013 15 comments

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Ministry cutting 135 health and safety jobs

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Three things here…

(1) Sacking trained, experienced health and safety inspectors?! Haven’t we been down this road before?

Why yes – indeed we have.

In the early 1990s the Mining Inspectorate was amalgamated with the Labour Dept, and mines inspectors went from 7 to two  positions. And only one of those positions was filled to service the entire country.

The result was a shoddy and lax culture of safety in  mines – and on 19 November 2010, 29 men died as as result. (see:  Royal Commission on the Pike River Coal Mine Tragedy)

Mines Minister Kate Wilkinson took “responsibility” and resigned immediatly after the Commission report was released.

It was a faux resignation, of course. She ‘jumped’ before the Commission’s report forced Key’s hand. It was a cold, calculating strategy to minimise and close down media and public scrutiny of National’s past performance in de-regulation and reliance on “market” forces.

National does not seem to have learnt a single damn thing.

(2) The irony of sacking 135 people from the Ministry of Business, Innovation and Employment has also not escaped me.

Doublethink at it’s best?

I think so.

(3) The 135 sacked employees are expected ” to reapply for their positions through a rigorous process including psychometric testing “.

“Psychometric testing”?!

National is allowing government departments to use a technique that is controversial at best, and  voodoo ‘science‘ at worst,  to interview potential employees?! When  did this bit of hocus-pocus chicanery become State sector policy?

All in all, this is further indication of the mess that National is creating, and will leave an incoming government to clean up.

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Previous related blogposts

Heather Roy – head down the mine shaft?

W.o.F “reforms” – coming to a crash in your suburb

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Is this really the solution to our housing problem?

28 February 2013 4 comments

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Illustration by Tim Denee – www.timdenee.com

Illustration by Tim Denee – http://www.timdenee.com

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Our housing problem is getting worse with each passing year and each successive government.

In 1991, 73.8% of  households in New Zealand lived in their own home. By 1996, this figure had dropped to 70.7%.

By 2001 home-ownership rate was 67.8%, and by 2006, this had dropped below the half-way mark to 44%

(see: Stats NZ – Owner-Occupied Households, Home-ownership falls dramatically)

As with so many other indicators, the “free market” reforms of the late 1980s and 1990s were creating a flow-on effect that very few had foreseen.

The drop in home ownership was perhaps worsened after the 1987 share-market crash when  investors – many of them ordinary folk – were burned and lost theire lidfe savings, and often their homes.

Part of the problem is that the housing stock is insufficient to meet demand of New Zealanders wanting to buy their own home. Far from being a Local body council or RMA problem, this blogger sheets home responsibility on successive governments who have failed to,

  1. Introduce a comprehensive capital gains tax to stifle speculation,
  2. Speculation drove up property prices as investors played an out-bidding war against each other,
  3. Uncontrolled capital flowing into the country allowed prices to rise as vendor’s expectations grew for higher and higher sale prices (much like in the 1970s and ’80s when wage spirals led to price-rise spirals)

During the  2011 Election, Labour campaigned to introduce a Capital Gains Tax (CGT).  A CGT, Labour (and others) maintained, would put a dampener on housing speculation by removing it’s near total  tax-free status. As well as driving up house prices, speculation of this sort took investment away from more productive industry.

Speculation also relies on using overseas borrowings, pushing up the amount we owe to offshore lenders,

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- Treasury

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Predictably, the “genuises” at National – and especially John Key – trashed the idea immediatly,

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New property tax would send NZ 'screaming backwards' - Key

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Key’s criticism ranged from “complexity” (it is not more complex than other tax laws) to “when you put more taxes on the economy you slow things down” (the economy can’t be any slower than it is now).

A few days later, Key went one step further,

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Labour's capital gains tax aims misguided - Key

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According to Dear Dear, in one of his LSD-inspired moments of alternate-reality,

Labour are trying to put up, as a stalking horse if you like, a problem that existed when they were in government but doesn’t exist now.”

Source: IBID

That was Key being his usual mendacious self, of course. Despite his assertion that National had “solved the problem”, our housing crisis was worsening.

In fact, less than  two years later,  the headlines were screaming the problem from Bluff to Kaitaia,

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NZ housing 'seriously unaffordable'

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As per usual, National Ministers were pointing the finger at everyone except themselves (see:  Dear Leader Key blames everyone else for Solid Energy’s financial crisis) and English was quick to point the finger at the RMA ands local body councils.

Of course, the last time National interfered with home-building processes, they de-regulated the building industry; loosened the Building Act 1991; and gave New Zealand a legacy of thousands of rotting houses.

National’s most recent pronouncements are vapid and will do nothing except put  superficial band-aids over a deep cancer in our society and economy,

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House buyers may need bigger deposit

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Restrict high-loan-to-value ration lending in the housing sector”  translates to requiring first home owners – usually young couples – to have to save tens of thousands of dollars, whilst at the same time paying high rents and other out-goings.

Let’s be crystal clear what National is advocating here;

1. Without a capital gains tax, National is allowing the older generation (sometimes referred to as “Baby Boomers”) to;

  • keep their rental investments,
  • use the equity in their currents investments to buy more properties,
  • eventually ‘flick off’ their investmental properties for a tax-free profit

2. New home owners will have to;

  • build up a large savings deposit (returning us to a 1970s-style era),
  • create a demand for more expensive, second mortgages,
  • push up rents as more and more young people are forced to rent for longer,
  • compete with property investors who will continue to drive up prices,  to buy a home

In effect, young New Zealanders will find it harder and harder to get into their own home whilst Baby Boomers will continue  to make the most from increasing rents and a tax-free regime for property  (house) investments.

It will be young New Zealanders being penalised for high house prices – a situation not of their making.

And worse still – and this is truly salt in the wound for young New Zealanders – the money they will be forced, by National’s decree, to save, will be used by Banks to on-lend to housing speculators to buy more investment properties.

The sheer obscene unfairness of this scenario cannot be under-stated.

By what logic, or concept of justice, is it fair to make it harder for young New Zealanders to buy a home whilst older generations continue to enjoy their tax-free investments – which contributed to driving up house prices and our overseas borrowings in the first place???

If this country wants to send another 500,000 New Zealanders to Australia, I can think of no better policy with which  to achieve this enforced emigration. National is practically screaming at our kids to “bugger off !”.

Good on you, John Key, Bill English, Steven Joyce, et al. Another dumb idea.

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Previous related blogposts

A Capital Gains Tax?  (3 Aug 2011)

Blood from a stone? (27 Jan 2012)

Regret at dumping compulsory super – only 37 years too late (21 Jan 2013)

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Dear Leader Key blames everyone else for Solid Energy’s financial crisis

28 February 2013 12 comments

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Continued from: That was Then, This is Now #18 (Solid Energy)

A bit of  very recent history,

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Solid Energy starts work at Mataura Briquette Plant

Friday, 9 September 2011, 2:57 pm
Press Release: Solid Energy NZ

9 September 2011

Solid Energy marks the start of work at its Mataura Briquette Plant

The Hon Bill English, MP for Clutha-Southland and Minister of Finance, today marked the official start of work at Solid Energy’s Mataura Briquette Plant, by “turning the first sod” at a small event on site with neighbours, local authorities, and other guests.

The $25 million Mataura briquette plant is planned to start production by June 2012. It will produce up to 90,000 tonnes a year of low-moisture and higher-energy briquettes from about 150,000 tonnes of lignite mined from Solid Energy’s New Vale Opencast Mine and trucked to the Craig Road site. The plant will use technology developed in the USA by GTL Energy.

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Eighteen months later, on 19 February, the SOE Shareholders Bill English and Tony Ryall,  made this shock announcement to the public (see:  Statement on Solid Energy).

The media were quick to report the crisis,

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Solid Energy in debt crisis talks

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National’s response?

Default to Deflection #1 (see previous blogpost: National under attack – defaults to Deflection #2 )

As described in my previous blogpost (see:  Taking responsibility, National-style), National does not do Taking Responsibility very well. Their automatic instinct is to blame someone else – anyone – for problems of their making,

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National and John Key blames...

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And true-to-form, National and Dear Leader are once again playing the Blame Game over Solid Energy’s woes,

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Prime Minister criticises Solid Energy

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Govt, Labour squabble over Solid Energy

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“They can’t wash their hands of the fact that from 2003 on, they were intimately involved with the plans that that company had,” sez Key?!

Really? 2003 ???

Why stop at 2003?

Personally, if I was John Key, I’d be asking serious questions on Labour’s role in the sinking of the Titanic. The Cuban Missile Crisis. And don’t forget the 2007/08 Global Financial Meltdown – that has Labour’s fingerprints all over it, surely???

Getting serious again…

National is supposedly Very Big on responsibility issues. Their website is constantly referring to responsibility,

The National Party is built on age-tested principles that reflect what is best about New Zealand. We are a party of enterprise; a party of personal freedom and individual responsibility; a party of family; an inclusive party; a party of ambition.” – John Key, 27 May 2007

We also need to remember the enduring principles on which the National Party is based – individual responsibility, support for families and communities, and a belief that the State can’t and shouldn’t do everything.” – John Key, 30 January 2007

It seems that their constant refusals to accept responsibility is also one of those things that “the State can’t and shouldn’t do”, according to Dear Leader.

A few questions spring to mind,

  1. How far back will Key go to blame others for his failures?
  2. How many terms in office will National have to win, before blaming Labour or Uncle Tom Cobbly is no longer tenable?
  3. If John Key and his cronies are unable to ‘man-up’ and take a hit for any one of their balls-ups, and constantly feel the need to sheet responsibility back to Labour – then why is National in government? Why not just resign and put Labour back in office? After all, what would be the difference?

We wouldn’t accept finger-pointing and blame-gaming from our children (or, at least I hope we wouldn’t). So why is the public and media letting Key get away with it?

I look forward to National’s next major cock-up.

Who will they blame next? Australia?

Meanwhile,  back to 9 September 2011…

Doesn’t Bill seem a happy chappy in this photo-op?

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Solid Energy chief executive, Don Elder and Hon Bill English at Mataura  - 9 sept 2011

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Bill English, poses with ex-Solid Energy CEO, Don Elder, as the ‘first sod is turned’ at a new  Briquette Plant in Mataura, Southland.

The same plant that was “Labour’s fault”.

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Oh Dear Leader, stop teasing us…

26 February 2013 4 comments

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Key not ruling out snap election over water rights

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What can I, and a million New Zealanders say?  Bring it on!

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319 million reasons not to part-privatise our power companies

26 February 2013 6 comments

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SOEs

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There are at least 319 million reason why it is sheer madness for National to be considering part-privatisation of  state-owned power companies,

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Half year profit jump for Meridian Energy

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Genesis Energy half-year profit

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Mighty River Power profit quadruples

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Acknowledgement for above media reports: Radio New Zealand

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The half year (not even a fullyear!) profit for the above three power SOEs is: $319.5 million.

Combined dividends paid the the government will be: $224 million.

If 49% of all three SOEs is sold to private investors, the State (ie, You and Me) will lose out on approximatelt $110  million.

That will be $110 going into bank accounts of  institutional investors, or the pockets of wealthy New Zealanders with sufficient income to buy shares.

It will mean a drop in government income.

Worse still, going by historic events in the late 1990s when the  ECNZ (Electricity Corporatrion of NZ)  was split up, and the newly formed Contact Energy was split off and fully privatised, power prices will continue to skyrocket,

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power-prices-set-to-soar

National-led government – NZPA – 12 May 1999

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Privatisation will not mean competition resulting in cheaper power prices any more than competing fuel companies are giving us cheaper petrol prices.

In fact, as Economics Professor, Geoff Bertram said on 13 February 2013, at an anti-asset sales rally in Wellington,

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“… It’s my view that probably the  most important political consequence of the part-privatisation of SOEs is to place private investors in those enterprises  and thereby immunise them against possible future policy that might reduce their value.

And since  I think an important part of an improved government policy would indeed reduce their value, I am opposed to the asset sales…

…The companies have a very high valuation. The reason why they have a very high valuation  is that they have successfully participated in a long-running rort to extract cash from residential electricity consumers by the inexorable driving up of prices of electricity.

That rort, has been possible, because government policy has allowed and has indeed supported the emergeance of a cartel of five, large, vertically-integrated, generator-retailers – three of whom are SOEs  – which have been able to operate without any effective regulation, at the expense of  consumers who were too vulnerable to protect their interests against price hikes.

And if you looked at the tracks of electricity prices over the last 20, 30 years you will have noticed that large industry has protected itself very successfully; commercial electricity buyers have done fine; residential who are the dis-organised, unrepresented, undefended, captive group of customers have seen their prices go up in real terms 100% since 1986.

And the main consequence of the electricity reforms has indeed been that doubling of the cost of electricity to ordinary  households. 

That’s a major cause of energy poverty; it’s been an important part in the growing  inequality of income and wealth in this country; and it’s something that a socially responsible government would,  in my view,  be taking serious action to reverse.”

Geoff Bertram continued,

“Just to put that doubling of the residential price in context. New Zealand’s pretty much on it’s own in the OECD and if you look at  the figures for other countries around the OECD, from 1986 to the present, the price of electricity to residential consumers  in OECD Europe, in Australia, and in the United Kingdom, is still the same as it was in 1986. In the United States, Japan, and France, prices are down 25% , compared to where they were in 1986, in real terms.  In South Korea they’re down 50%, compared to where they were in 1986.

New Zealand is the only only OECD country that has gone out there and driven up electricity prices 50%. We’re also pretty much the only country that doesn’t have a regulator in place, and where government doesn’t have any particular social policy relating to the pricing of essential services to the public.”

Prof Bertram explained,

And here’s how it works.

You take a bunch of assets with a given value, and you look at the existing price, to consumers of the product, and you say “well look, we can get the price up”; so you project  that higher price; you capitalise that; and then if you can get the price up the asset will be worth more; so then you re-value the asset; and then you go and use the higher value of the asset to justify raising the prices, and then you repeat.

And this is the circular process which has been going on in New Zealand now, in electricity, for more than a decade. It is completely legal under New Zealand law.

It is not illegal to profiteer or  to gauge captive customers in this country. [In] very few countries is that true.

And it’s consistant with New Zealand’s generally accepted accounting practice which basically tells you that there’s a rotteness at the core of accounting practices in this country.”

And added this shocking insight,

Here’s the problem. Electricity was once an essential service provided to households at the lowest price, consistent with covering the industry’s costs. 

Since 1986 the sector has been corporatised and part-privatised, and it’s pricing has been driven by the quest for profit by giant companies that have the market power to gouge their consumers.

As the owner of three of those companies, the New Zealand government has therefore become a predator. And now the Treasury wants to cash in on that rort by selling out half the government’s stake.

What that means in terms of the options for the future for government to turn around and come back from the predator model and return to a social service approach  for energy supply, is being closed off.”

Concluding with,

But if you want to deal with energy poverty and get kids out of hospitals with asthma and other respiratory diseases and so on, one of the really good  things that you can do is get cheap energy into New Zealand households and that would be sustainable on the basis of the current government owned assets.

About 300 kwh free. [But if] you sell Mighty River and what’s feasible comes down to 200 [kwh]. You sell Genesis and what’s feasible comes down to 100 [kwh]. You sell Meridian and it’s gone…

What I’m saying is the contract  that supplies the Rio Tinto smelter down at Bluff, the old Comalco contract, is the contract New  Zealand households should have had from the start.

And it still could be done.”

See previous blogpost: Wellingtonians rally to send a message to the Beehive! (part rua)

As Radio NZ reported on 21 February,

“Electricity prices paid by Mighty River customers rose 2% over the period while costs fell 22%.”

See: Mighty River Power profit quadruples

Which leads us to these points to consider,

  1. Despite a glut of electricity, prices continue to rise. There is price-gouging going on by all power companies, whether State Owned or by privately-owned Contact Energy.  There is no competitive force driving prices down. There is no indication that part-privatisation will create any competition.
  2. At least state ownership means that most electricity profits stay in New Zealand and contribute to the State, to pay for health, education, roading, etc. However, one wonders if this sort of punitive,  indirect-taxation, on low income families is fair, whilst more affluent households can afford insulaion, solar power, and other energy-saving strategies.
  3. As Prof Bertram maintains, partial privation will most likely close off future progessive governments’ abilities to reform  the electricity industry and return to a  social service approach.

See also previous related blogpost – with Max Bradford’s response on this issue: History Lesson – Tahi – Electricity Sector “reforms”

Meanwhile, some of our past political leaders are waking up to the realities of historical state asset privatisations,

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Bolger -Telecom sale a mistake

See: Bolger – Telecom sale a mistake

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Better late than never?

Nah. Better now than later.

These mistakes are too expensive and we all end up paying.

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And the Oscar for Union-Smashing and Manipulating Public Opinion goes to…

26 February 2013 2 comments

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… Peter Jackson, John Key, and Warner Bros, for their cunning performance over, ‘The Hobbit‘!

In 2010, Jackson, Key, and Warner Bros, created mass public hysteria by suggesting that film production of ‘The Hobbit‘ would be moved overseas,  unless labour laws were changed; the union,  Actors Equity neutralised; and film subsidies increased.   (see:  Hobbit tax rebate swells to $67.1m in second year of production).

Only private schools and soon-to-be-set-up Charter Schools enjoy similar taxpayer funded subsidies.

Key duly bent over,  changed labour laws (See: Employment Relations (Film Production Work) Amendment Act 2010 – Legislative history) and turned actors and film technicians from being employees to “contractors”.

At the stroke of a pen – similar to a Decree issued by a lone despot in some authoritarian regime – National unilaterally changed workers from being employees to sub-contractors. The resulting changes were stark;

  • Employees can negotiate collectively for a collective agreement
  • Sub-contractors cannot
  • Employees had minimum wage; sick pay; holiday pay; appropriate employment/termination protections; etc.
  • Sub-contractors do not.

The law was passed in under 48 hours.

It subsequently turned out, according to an email from Jackson to National Minister, Gerry Brownlee, that the threat of moving ‘The Hobbit‘ overseas was non-existent,

Sir Peter Jackson told the Government he did not believe an international actors’ boycott would force The Hobbit overseas, emails show.

The message, sent to the office of Economic Development Minister Gerry Brownlee on October 18, is in stark contrast to comments the film-maker made earlier in the month.

On October 1, he said: “The Hobbit is being punished with a boycott which is endangering thousands of New Zealand jobs and hundreds of millions of dollars of foreign income, for no good reason.”

Sir Peter dismissed the idea that movie production was moving overseas because it was cheaper to make films there.

“It’s completely absurd! Eastern Europe is only being considered because a minority group of the New Zealand acting community have invoked union action that has blacklisted our film, making it impossible to shoot in New Zealand.”

But on October 18, Sir Peter said the boycott had nothing to do with the movies potentially moving overseas.

“There is no connection between the blacklist (and it’s eventual retraction) and the choice of production base for The Hobbit,” he wrote.

“What Warners requires for The Hobbit is the certainty of a stable employment environment and the ability to conduct its business in such as way that it feels its $500 million investment is as secure as possible.”

The October 18 email also suggests Sir Peter thought the boycott had been lifted, even though he said in television interviews three days later he was unsure if it had been officially ditched.

Sir Peter declined to comment through a spokesman yesterday.

See: Sir Peter: Actors no threat to Hobbit

Actors, as well as film technicians, lost many rights, and Warner Bros got everything they demanded.

Two and half years later, and consequences  remained to be played out.

Yesterday (25 February 2013), the Oscar Awards were held in Hollywood.

The Hobbit‘ did not fare well,

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Weta misses out on Hobbit Oscar

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It might be said that events in New Zealand in 2010 – with the craven capitulation to Hollywood business moguls – did not escape the attention of actors and others in the film-making industry. The corporate-government assault on the rights of film workers has not been forgotten.

What is ironic, though, is  that Jackson, Key, and Warner Bros have forgotten that, in Hollywood movies, the ‘little guy’ triumphs in the end.

What was Frodo’s journey all about, Mr Jackson?

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Previous related blogposts

Foreign fishing boats, Hobbits, and the National Guvmint (2 March 2012)

Key: When I say ‘no’, I mean ‘no’. Maybe.  (4 Oct 2012)

Muppets, Hobbits, and Scab ‘Unions’ (9 Oct 2012)

John Key’s track record on raising wages – 1. The “Hobbit Law” (11 Nov 2012)

Peter Jackson’s “Precious” (28 Nov 2012)

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Charter Schools – contrary to ACT’s free market principles?

25 February 2013 8 comments

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we're trialling an ideological approach

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When the blogger, Imperator Fish  asked in a blogpost headlined – Did You Vote For Charter Schools? – he wasn’t just using a catchy title. He was raising a valid point.

Nowhere on the ACT website is Charter Schools mentioned in any of their policies.

Not. A. Word.

Instead, ACT’s education policy page mentions the usual waffle about “more choice” and some disturbing rhetoric about “the benefits of making education more market-like and entrepreneurial” (1), and principals setting salary for teachers “like any other employer” (4),

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ACT - Education policy

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If that is ACT’s Charter Schools policy, the message is hidden deep amongst the swirl of right-wing rhetoric.

Curiously, for a Party that allegedly has an innate aversion to taxpayer-funded subsidies for business enterprises such as farming, exporting, manufacturing, etc, etc, etc – they seem more than eager to subsidise private schools (3 & 5).  Which seems more than contradictory, since one has to question what is the difference between private schools and other private businesses.

If ACT is comfortable  (indeed, eager) to subsidise private schools, including their Charter School agenda, why not subsidise private hospitals? Private power companies? Private radio and TV broadcasters? Private mining compnies?

There appears to be no rhyme or reason to exempt private schooling and Charter Schools from ACT’s policy opposing state subsidies for business.

Unless they’re chasing votes for the Middle Class Aspirationists?

ACT’s “Principals” are quite clear when it comes to using taxpayers’ money,

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ACT - Principles policy

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Paragraph 5 clearly outlines that the role of central government is to provide “economic support for those unable to help themselves and who are in genuine need of assistance“. It’s hard to see where private enterprise such as private schools and Charter Schools fit with this notion.

Paragraph 8 states that ACT supports  “a free and open market economy“. Are state-funded subsidies to private business conducive to “a free and open market economy“?

Ditto for paragraph 9, which states that ACT will  ” limit the involvement of central and local government to those areas where collective action is a practical necessity“. Is ACT telling us that taxpayer subsidies to private enterprise is a “practical necessity”?

Rob Muldoon thought so, and his government paid millions to farmers through various subsidies, making them beneficiaries of the State.

ACT’s plan will be that whilst Charter will be owned and operated by private institutions (religious groups, businesses, etc), that they will be funded by the taxpayer. And Charter School operators will be able to run these “schools” at a profit.

If this ain’t the State subsidising private enterprise – when very few other businesses are able to enjoy similar benefits – then I fail to see the difference.

After all, we’ve lost 23,000 construction jobs and 18,000 manufacting jobs. If any sectors need state support, via subsidies, shouldn’t it be  Construction and Manufacturing?

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Data reveals drop in manufacturing, building jobs

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(It’s a shame that the loss of 41,000 construction and manufacturing has been offset by the creation of approximately 68,000 personal/community services – traditionally low-paid roles. See: PM – No money for aged care workers)

The question this blogger is asking is; if Charter Schools are a viable business proposition, why is the taxpayer  paying for it?

Perhaps someone from ACT can explain it to us?

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Previous related blogposts

Privatisation of our schools?! (13 Dec 2011)

Charter Schools – Another lie from John Banks! (2 Aug 2012)

Q+A – 5 August 2012 (5 Aug 2012)

Christchurch, choice, and charter schools (15 Sept 2012)

Charter Schools – John Key’s re-assurances (2 Nov 2012)

Other Blogs

Imperator Fish: Did You Vote For Charter Schools?

Sources

Fairfax media: Education shake-up ‘biggest for years’ (7 Dec 2011)

The Press: A controversial way of learning (7 April 2012)

NZ Herald: Editorial: Partnership opportunity for teachers (17 Oct 2012)

NZ Herald: Charter schools escape scrutiny (17 Oct 2012)

References

ACT Policies: Economy

ACT Policies: State Owned Assets

ACT policies: Spending Cap

ACT Policies: Education

ACT Policies: Principals

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