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Radio NZ: Focus on Politics for 21 February 2014

23 February 2014 Leave a comment

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- Focus on Politics -

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- Friday 21 February 2014  -

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- Brent Edwards -

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A weekly analysis of significant political issues.

Friday after 6:30pm and Saturday at 5:10pm

Disagreement about how to reduce poverty and inequality is looming as one of the big debates of election year.

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Radio NZ logo - Focus on Politics

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Click to listen: Focus on Politics for 21 February 2014 ( 16′ 38″ )

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Acknowledgement: Radio NZ

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Confirmed: National welcomes low-wage economy

28 December 2013 2 comments

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English-lower wages-australia

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From the mouth of our Dear Leader, Prime Minister John Key;

We think Kiwis deserve higher wages and lower taxes during their working lives, as well as a good retirement.” – John Key, 27 May 2007

We will be unrelenting in our quest to lift our economic growth rate and raise wage rates.” – John Key, 29 January 2008

We want to make New Zealand an attractive place for our children and grandchildren to live – including those who are currently living in Australia, the UK, or elsewhere. To stem that flow so we must ensure Kiwis can receive competitive after-tax wages in New Zealand.”   – John Key, 6 September 2008

I don’t want our talented young people leaving permanently for Australia, the US, Europe, or Asia, because they feel they have to go overseas to better themselves.” – John Key, 15 July 2009

Science and innovation are important. They’re one of the keys to growing our economy, raising wages, and providing the world-class public services that Kiwi families need.” – John Key, 12 March 2010

We will also continue our work to increase the incomes New Zealanders earn. That is a fundamental objective of our plan to build a stronger economy.” – John Key, 8 February 2011

The driving goal of my Government is to build a more competitive and internationally-focused economy with less debt, more  jobs and higher incomes.” – John Key, 21 December 2011

We want to increase the level of earnings and the level of incomes of the average New Zealander and we think we have a quality product with which we can do that.” -  John Key, 19 April 2012

Since 2007, Key has been explicit in his pronouncements; his policy is to see wages rise for New Zealanders. He has made those utterance every year.

Then, on  10 April 2011, on TVNZ’s Q+A, Guyon Espiner interviewed  Bill English and we heard this extraordinary admission from the Finance Minister;

GUYON Can I talk about the real economy for people?  They see the cost of living keep going up.  They see wages really not- if not quite keeping pace with that, certainly not outstripping it much.  I mean, you said at the weekend to the Australia New Zealand Leadership Forum that one of our advantages over Australia was that our wages were 30% cheaper.  I mean, is that an advantage now?

BILL Well, it’s a way of competing, isn’t it?  I mean, if we want to grow this economy, we need the capital – more capital per worker – and we’re competing for people as well.
 
GUYON So it’s part of our strategy to have wages 30% below Australia?

BILL Well, they are, and we need to get on with competing for Australia.  So if you take an area like tourism, we are competing with Australia.  We’re trying to get Australians here instead of spending their tourist dollar in Australia.

GUYON But is it a good thing?

BILL Well, it is a good thing if we can attract the capital, and the fact is Australians- Australian companies should be looking at bringing activities to New Zealand because we are so much more competitive than most of the Australian economy.

GUYON So let’s get this straight – it’s a good thing for New Zealand that our wages are 30% below Australia?

BILL No, it’s not a good thing, but it is a fact.  We want to close that gap up, and one way to close that gap up is to compete, just like our sports teams are doing.  This weekend we’ve had rugby league, netball, basketball teams, and rugby teams out there competing with Australia.  That’s lifting the standard.  They’re closing up the gap.

GUYON But you said it was an advantage, Minister.

BILL Well, at the moment, if I go to Australia and talk to Australians, I want to put to them a positive case for investment in New Zealand, because while we are saving more, we’re not saving more fast enough to get the capital that we need to close the gap with Australia.  So Australia already has 40 billion of investment in New Zealand.  If we could attract more Australian companies, activities here, that would help us create the jobs and lift incomes.

Source

Key responded in his typical fashion that we are all familiar with by now; he blamed the previous Labour government;

We inherited a mess from Labour and a real recession. We have a plan.”

Source

Considering that the previous Labour government had posted eight straight budget surpluses in a row, and paid down most of the country’s sovereign debt – it is unclear just what “mess” Key was referring to.

But as we all know by now, Key has zero hesitation in blaming others – especially the previous government – to avoid taking responsibility for any of his own shortcomings (which, by now, are legion).

So was English correct? Is it deliberate National Party policy to suppress wages in this country?

One might have accepted that English’s comments on Q+A were “mis-interpreted”.

However, two years later, National Party backbench MP, John Hayes, wrote this on his website,

Australian workers will get a 2.6 per cent rise to $A622.20 a week or $NZ750.50 at the prevailing exchange rate. That’s $A16.37 ($NZ19.75) an hour for Aussies’ 38-hour working week compared with $NZ13.75 an hour or $NZ550 for Kiwis’ 40-hour working week. I note that the Labour Party spokesperson on Labour issues is wringing her hands in despair at this news. I think we should celebrate because a rise in the minimum wage in Australia makes our labour force more competitive and will be helpful in attracting investment and jobs to New Zealand. About 18 months ago CHB Mayor Peter Butler and I approached Australian based food processors with the suggestion of moving across the Tasman to establish plants in New Zealand to process food produced under newly irrigated areas. We established that Australian food processors are interested to do this when our new irrigation is in place. A driver from the Australian perspective is that the New Zealand labour force is well educated, more productive and less unionised than their Australian counterparts.” – John Hayes, National MP, 5 June 2013

Bill English’s contention, that lower wages are a desirable means by which to be “so much more competitive” than Australian workers,was no mistake. It has been confirmed as covert National Party policy.

This is further backed up by National’s recent introduction of legislation to “reform” our labour laws.

Firstly, National reintroduced youth rates, euphemistically called the “Starting Out Wage” to young workers. Taking effect on 1 May 2013, the new youth rate cut wages  for  16-to-19-year-olds to  80% of the minimum wage.

National further disempowered workers and undermined their ability to negotiate by implementing the 90 Day “Trial Period”. First introduced in 2009 for small business of up to 20 employees, it was extended to all companies in 2011.

Unsurprisingly, the introduction of the 90 Day Trial Period had no appreciable effect on creating jobs,

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Source

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One of the most far-reaching aspects of National’s covert agenda to make the country’s workforce  “more flexible” (translation; more exploitable)  is their stated intention to remove Part 6A  of the Employment Relations Act (ERA),  which continues (or transfers under similar conditions and pay) the employment of  low-paid employees such as caretakers, cleaners, catering workers, hospital orderlies and laundry workers,  after a business is restructured or sold.

See: Part 6A – Continuity of employment if employees’ work affected by restructuring

Part 6A gives vulnerable, low-paid workers, the right to keep their jobs on the same terms of employment when  transferred to the new contractor.

See: Labour law changes announced

Then-Labour Minister Kate Wilkinson had assured the public that this law-change would apply only to  small and medium-sized businesses with less than 20 employees.

Which was precisely the same tactic used to implement the 90 Day Trial Period law, by degree,

Trial employment periods for up to 90 days for workplaces with fewer than 20 employees will be available from April 2009.” – Kate Wilkinson,  11 December 2008

See: National policy – 90-day trial period to provide job opportunities

Once National’s so-called “reforms” were bedded in, they changed it, implementing the real policy  they had wanted all along,

The 90-day trial period is to be extended to enable all employers and new employees to have the chance to benefit from it.” – Kate Wilkinson,  18 July 2010

Once Part 6A is removed from the lawbooks, the lowest-paid workers in our communities will be vulnerable. A new employer will  be able to re-write their contracts at whim; reduce  their pay; change their conditions, or dismiss them altogether. There are many such small business and the impact on their workers could be severe (Source).

Green Party industrial-relations spokeswoman, Denise Roche, was 100% on-the nose when she described these – and other “reforms” as,

This decision is straight from the Bill Birch era of industrial relations.”

Source

This is indeed a return to the Employment Contracts Act – by stealth. National is too gutless to present such radical plans to the voting public at election time.

This is indeed what National MP, John Hayes was referring to when he stated, 

…A driver from the Australian perspective is that the New Zealand labour force is well educated, more productive and less unionised than their Australian counterparts.”

And if National MP (Botany) Jamie Lee-Ross gets his way with his even more extreme Bill,  employers would be able to legally hire scab labour to replace striking workers .

Quite brazen in his actions, Jami-Lee Ross  admitted that he had colluded with POAL (Ports of Auckland Ltd) bosses to draft his proposed  strike-breaking amendment, the Employment Relations (Continuity of Labour) Amendment Bill.

On TV3′s The Nation on 22 June 2013, Ross confirmed that he had been in talks with employers during the height of the industrial dispute between the POAL and MUNZ (Maritime Union).  (source)

Ross’s hatred for Unions is on public record,

Up until recently, cool heads and rational people sitting around negotiating tables have meant that little focus has been placed on the role that unions play in society. However, with the bare-faced mockery that the Maritime Union is making of civilised negotiations New Zealanders will soon begin to question what position unions should hold in the modern Kiwi workplace.

Source

None, it would seem, according to Ross.

Though this radical move may be  a step too far, even for the

Make no mistake, National’s secret agenda is for a low wage economy, with minimal collective protections for workers, and as much power in the hands of employers as they can digest.

National has no other means by which to create jobs.

They intend to rely solely on the “market place”, and to do that, this country’s labour must become “more competitive”.

Translation; our wages must be driven down by any and every means possible.

Just ask Messrs English and Hayes.

Postscript

21 February 2013 MEDIA STATEMENT

AUS-NZ Wage Gap Now $180, More Than A Kiwi’s Daily Pay

How To Work A Four-Day Week? Move To Australia

The wage gap with Australia is now so large that Kiwis across the ditch earn a New Zealander’s weekly pay in just four days, says Labour’s Finance spokesperson David Parker

“The median weekly wage gap with Australia has ballooned by $60 to $180 per week under John Key’s leadership, despite National’s promise to close the gap.

“In Australia the median wage is $1067, in New Zealand it’s $887, according to the latest statistics[1]. To make up the difference Kiwis need to work another full day and another hour on top of that. It’s no surprise 182,000 Kiwis have left under National.

Source

National’s Grand Plan is a roaring success;  in July 2010 the wage gap was $22.36.

Source

This blogpost was first published on The Daily Blog on 24 December 2013.

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References

TVNZ Q+A: Bill English

TV3: Key blames Labour for his Govt’s wage gap failings

John  Hayes MP for Wairarapa: From the House: 5 June 2013

ODT: Labour law changes announced

Scoop media: Balloted Bill possibly a bridge too far

Green Party: Vulnerable workers’ rights go under National

Scoop media:  Union biting the hand that feeds – Jamie Lee-Ross

Scoop media: AUS-NZ Wage Gap Now $180, More Than A Kiwi’s Daily Pay

Previous related blogposts

Key’s broken promise on raising wages

Johnny’s Report Card – National Standards Assessment y/e 2012 – incomes

National MP admits collusion with bosses to set up strike-breaking law!!

Hat Tip

Paula Fern

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Solid Energy – A solid drama of facts, fibs, and fall-guys

14 June 2013 4 comments

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Cast of Charachters

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Clayton Cosgrove, Labour Spokesperson on State Owned Enterprises

Clayton Cosgrove, MP, Opposition  Labour Spokesperson on State Owned Enterprises

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Don Elder, CEO, Solid Energy, May 2000 – February 2013

Don Elder, CEO, Solid Energy, 2000 – 2013; avid gardener

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Bill English, MP, Deputy Prime Minister, Minister of Finance and Minister for Infrastructure,  Ministerial Shareholder of Solid Energy

Bill English, MP, Deputy Prime Minister, Minister of Finance and Minister for Infrastructure, Ministerial Shareholder in Solid Energy

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Mark Ford, current chairman of Solid Energy

Mark Ford, current chairman of Solid Energy

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John Palmer, CEO Solid Energy, 2006 -

John Palmer, former Chairman of  Solid Energy, 2006 – 2012

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Simon Power, former MP; former Minister for State-Owned Enterprises, 19 November 2008 – April 2011

Simon Power, former MP; former Minister for State-Owned Enterprises, 19 November 2008 – April 2011

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Tony Ryall, MP, Minister for Health; current Minister for SOEs; Ministerial shareholder in Solid Energy

Tony Ryall, MP, Minister for Health; current Minister for SOEs; Ministerial shareholder in Solid Energy

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Dear Leader, Minister for Funny Hats, Minister for Truth

Dear Leader, Minister for Funny Hats, Minister for Truth

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The story, thus far

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30 June 2008

Nil dividend paid to government, for year ending 30 June 2008.

Source: 2008 Annual Report

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8 November 2008

General Election

National-led government elected.  John Key becomes  New Zealand’s Prime Minister; Simon Power is Minister for State Owned Enterprises; Bill English becomes Minister for Finance.

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May 2009

“The Government, in its first term, looked at SOE [state owned enterprise] balance sheets and decided many of them could carry more debt… it made a decision to allow Solid Energy to take on more debt,” Mr English said.

Mr English acknowledged that in 2009 he signed a letter to Solid Energy approving a higher debt level.

Source:  Solid Energy was allowed to increase debt

The letter, as follows,

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letter from Simon Power to solid energy may 2009

Source: CCMAU & Treasury

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Thus was set in motion a decision that would have serious consequences four years later; the near collapse of an efficient and highly profitable State Owned Enterprise.

Not only did Minister Power demand higher dividends from Solid Energy, and instructed the SOE to borrow heavily  to achieve that goal, Power also demanded that Solid Energy “release all surplus capital to the shareholder as special dividends“.

In case the reader is wondering that that means, in plain english, National Ministers wanted all spare cash to be handed over to the government.

They were looting SOEs.

Accordingly, Solid Energy’s gearing ratio rose from 13.8% cent in 2009 to 41.7% by 2012. National’s demands had been met (see: Ministers pressured Solid Energy, Parliament told ).

Mission accomplished – the pillaging of Solid Energy (and other SOEs)  had begun.

Note: On 26 February 2013, John Key would try to insist that Solid Energy was “out of control” and was borrowing wildly.

He would say, “the Government was worried about Solid Energy’s ambitious investment plans and rosy view of coal prices as far back as 2009 but was unable to order the company to steer a safer course.”

So not only did SOE Minister Simon Power direct Solid Energy to borrow more; pay higher dividends; and hand over all spare cash – but four years later, Key would blame the coal company for the consequences;  it’s inevitable financial melt-down,

The causes of the financial crisis at Solid Energy are the usual suspects in failing businesses – too much debt, unsuccessful investments and no reserves to weather a slump in coal prices.

Prime Minister John Key’s comments yesterday indicated these problems and pointed the finger at an imprudent amount of debt and investments that have not returned any cash yet.

Key said the debt had climbed to $389 million when “typically coal companies do not have a lot of debt on their balance sheets”.

Source: State miner to return to coalface

Powers’ letter also put the lie to National ministers claiming that they were powerless to intervene in Solid Energy’s activities. As Simon Powers’ letter clearly demonstrated, Ministers were  exhibiting a total hands-on control over SOE’s finances, borrowings, investments, and dividend payments.

As Key himself claimed (without evidence) on 25 February 2013,

The government blocked proposals in 2009 from its coal mining company Solid Energy for a billion dollar capital injection to allow it to become “the Petrobras of this country,” Prime Minister John Key says.

National ministers had control alright, no two ways about it.

Power might as well have been sitting in Solid Energy’s Christchurch head office, in the CEO’s chair, with  his fingers in the cash register till.

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30 June 2009

$59.9 million dividend paid to government, for year ending 30 June 2009.

Source: 2009 Annual Report

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30 June 2010

$54 million dividend paid to government, for year ending 30 June 2010.

Solid Energy paid a dividend of $24 million on 30 September 2009. In accordance with the company’s dividend policy, the Board is proposing a dividend of $30 million to be paid by the end of March 2010 bringing total cash dividends paid during the current financial year to $54 million.

Source: Small half year loss for Solid Energy

Source: 2010 Annual Report

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27 August 2010

Treasury Report shoots down Solid Energy National Resource Company’s expansion  proposal

To: Bill English, Gerry Brownlee, Simon Power, Steven Joyce

5. In order for SEL to develop into a NRC, SEL has sought the following:

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• indicative approval for total capital investment (including dividends and cash flow)
of $2-3 billion per annum with cumulative investment of $27 billion…

Source: Treasury Report: Solid Energy National Resource Company Response

Note the figure referred above: $27 billion.  Two and a half years later, Key would refer to that figure.

The question is, does the statement – “SEL [Solid Energy Ltd] has sought the following: indicative approval for total capital investment (including dividends and cash flow) of $2-3 billion per annum with cumulative investment of $27 billionactually state where the $27 billion would be sought from?

Answer: no.

And yet, by 15 March 2013, Key would insist that the Solid Energy chairman, John Palmer, sought $27 billion from the government.

See: Key says Solid Energy papers show $27b plan

John Key’s flexibility with truth is now legendary.

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8 September 2010

Then-SOE Minister Simon Power writes to Solid Energy – states support for developing resources –

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Office of Simon Power
MP for Rangitikei
Minister for Justice
Minister for State Owned Enterprises
Minister of Commerce
Minister Responsibilble for vthe Law Commission
Associate Minister of Finance
Deputy Leader of the House

08 SEP 2010

Mr John Palmer
Chair
Solid Energy New Zealand Ltd
PO Box 1303
CHRISTCHURCH 8140

Dear Mr Palmer

National Resource Company (NRC) Proposal

I would like to thank you and your Chief Executive, Don Elder, for meeting me
on 31 August 2010 to discuss the Government’s response to the Solid Energy
Ltd (Solid Energy) NRC proposal.

Ministers are encouraged by the vision of Solid Energy in developing the NRC
proposal. We also appreciate the efforts of the Solid Energy Board,
management and staff that have gone into preparing  the proposal.

Shareholding Ministers have carefully considered the proposal and at this stage
do not support the development of a single NRC to maximise the value of New
Zealand mineral resources.

Shareholding Mnisters are, however, supportive of Solid Energy developing its
current natural resources, including lignite and unconventional gas. As
discussed with you, we expect that Solid Energy will develop resources on a
project by project basis.

We also expect to be consulted on significant projects, and have the opportunity
to discuss the proposals with you. The proposals should be supported by a
business case and assessed against standard business case investment
criteria.

Yours sincerely

Hon Simon Power
Minister for State Owned Enterprises

cc: Don Elder, Chief Executive Officer, Solid Energy

Source: Letter from Simon Power to John Palmer (NZ Herald website)

Interesting…  The Minister, Simon Power,  was;

A. Supportive of Solid Energy “developing its current natural resources, including lignite and unconventional gas. As discussed with you, we expect that Solid Energy will develop resources on a project by project basis”. No reference whatsoever of the Minister directing Solid Energy not to invest  “developing its current natural resources“.

B. Insisting that he be kept advised  “on significant projects“.  It would be interesting to know if Solid Energy advised National ministers of all projects? Including the ones that have been heavily criticised by Key, English, and Ryall.

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3 June 2011

Key endorses Solid Energy expansion plans

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Prime Minister John Key speaks at the opening of the WHK building in Invercargill.

Prime Minister John Key speaks at the opening of the WHK building in Invercargill.

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“At the moment companies like Solid Energy are growth companies and we want them to expand in areas like lignite conversion,” Mr Key said.

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“We know there is lots of resource there and we know they potentially have the capability [to convert lignite to urea or diesel] and so we will see how that progresses, but the briquette plant is a good starting point.”

Source: PM backs mining south’s lignite

Key is stating  with crystal clarity;  “we want them to expand in areas like lignite conversion” and “…so we will see how that progresses, but the briquette plant is a good starting point“.

Which would be in stark contrast to Key’s statements nearly two years later, when  on 23 February 2013, he condemns Solid Energy’s “… unsuccessful investments” and  ” and pointed the finger at an imprudent amount of debt and investments that have not returned any cash yet”.

Two days later, on 25 February 2013, Keywould again condemn Solid Energy – this time specifically distancing himself from the SOE’s expansion plans,

The government blocked proposals in 2009 from its coal mining company Solid Energy for a billion dollar capital injection to allow it to become “the Petrobras of this country,” Prime Minister John Key says.

It’s hard to keep up with a Prime Minister like John Key.

You have to wonder what his views will be in three, six, or twelve months time?

Key also said  at his  Invercargill speech,

However, Mr Key said companies were controlled by Government regulations and so there were always environmental obligations that needed to be met.

Which, again, totally contradicts what he said on 26 February 2013,

The Government was worried about Solid Energy’s ambitious investment plans and rosy view of coal prices as far back as 2009 but was unable to order the company to steer a safer course, Prime Minister John Key says.

Stories, eh? They’re so hard to keep straight sometimes.

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30 June 2011

$20 million dividend paid to government, for year ending 30 June 2011.

Source: 2011 Annual Report

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9 September 2011

Bill English – Don Elder – Opening new Mataura briquette plant

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Solid Energy chief executive, Don Elder and Hon Bill English at MatauraThe first sod has been turned in the construction of Solid Energy’s demonstration briquette plant near Mataura in Southland. This was undertaken on Friday September 9 by local MP, Bill English who is also Deputy-Prime Minister and Minister of Finance. (source)

Solid Energy chief executive, Don Elder and Hon Bill English at Mataura
The first sod has been turned in the construction of Solid Energy’s demonstration briquette plant near Mataura in Southland. This was undertaken on Friday September 9 by local MP, Bill English who is also Deputy-Prime Minister and Minister of Finance. (source)

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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.

Source: Solid Energy starts work at Mataura Briquette Plant

Which demonstrated to anyone (if demonstration was needed) that National was in no doubt about Solid Energy’s expansionary plans.

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4 November 2011

Treasury Scoping study reveals Solid Energy’s financial problems to Government Ministers

Ministers were  officially  made aware of Solid Energy’s severe financial problems. This would not become public knowledge until  two years later,  on  21 February 2013.

See: Treasury Report T2011/2373: Solid Energy New Zealand Scoping Study Report

The Scoping Study is noteworthy on these points,

  1. The considerable  number of redacted items which the reader has no way of knowing what they refer to. They could be sensitive commercial data. Or they could refer to political matters.
  2. In Paragraph 36, the Report states, “The scoping study also recommends that Solid Energy should have no debt at the time of IPO.”
  3. In Paragraph 46, fourth item, the Report states, “Indentified that the company’s free cash flow has been reinvested in the business, particularly the Renewable Energy and New Developments. As a result  dividend payments to the government have been funded by increasing debt.”

In two sentences, Treasury has just confirmed what all the evidence has pointed to; “dividend payments to the government have been funded by increasing debt“.

The very same increased debt demanded by SOE Minister Simon Powers in his letter in May 2009.

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17 February 2012

Bill English – Asset Sales – Proceeds “just a guess”

Finance Minister Bill English is attracting political flak over suggestions that some figures in yesterday’s budget policy statement for the proceeds of share floats of state-owned enterprises were “a guess”.

The Government has long estimated that the sale of up to 49 per cent of five SOEs would collect between $5 billion and $7 billion.

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Mr English said the Treasury “had to pick a number” so they picked the mid-point of the range.

“If we did get $6 billion, that would be a gain of sale [of $800 million] which is just a product of the accounting.

“I just want to emphasise that it is not our best guess; it’s just a guess. It’s just to put some numbers in that look like they might be roughly right for forecasting purposes.

Source: English admits his SOE figures just a guess

Well. Now we know why it was “just a guess”.

Because by now, the Treasury scoping study on Solid Energy had revealed to National Ministers that the SOE’s finances were a mess. There was no way English could’ve responded to journalist’s queries without either telling the truth – or outright lying (which they do anyway, but he would’ve been caught out on this particular ‘porky’).

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18 May 2012

Subsidy on bio-diesel canned – Biodiesel New Zealand – Price increase for bio-diesel

National removed it’s subsidy on bio-diesel – which Solid Energy was producing through one of it’s subsidiaries, as part of it’s   expansion plans.

Biodiesel prices in Queenstown are likely to rise after a Government subsidy to develop production of the fuel was scrapped.

The subsidy, worth 42.5 cents a litre, was introduced by the National-led Government in 2008, but was not renewed in this year’s Budget.

The Queenstown Biodiesel Consortium has more than 20 companies running more than 70 commercial vehicles on the fuel.

The consortium’s provider, Allied Petroleum, is supplied by Biodiesel New Zealand, a Solid Energy subsidiary that makes the fuel out of canola seed and used cooking oil, in Christchurch.

Source: Biodiesel loses subsidy, prices to rise

This thoroughly  undermined Solid Energy’s business projections for income and profits, as they could no longer rely on the subsidy to produce bio-diesel on a viable basis.

So not only were National ministers stripping Solid Energy of it’s cash reserves and demanding higher and higher dividends – they were now tying it’s hands and undermining potentially profitable ventures.

A year later, on 22 February 2013, English (as well as Key and Ryall) would be blaming Solid Energy’s financial collapse on, “… a drop in world coal prices, and spen[ding] too much investigating other sources of energy”.

It would be safe to say that undermining a company’s commercial venture, by moving the goal posts half-way through, and changing rules,  is also not particularly helpful.

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23 June 2012

Solid Energy Chairperson, John Palmer resigns

John Palmer is quitting as chairman of state-owned Solid Energy because at the age of 65 he is unwilling to stay on and see it through to partial privatisation.

Mr Palmer, who is also chairman of Air New Zealand, took up a strong public position in calling for the partial privatisation of state-owned companies and he welcomed the government’s plan to sell down stakes in electricity companies and Solid Energy.

Source:  Solid Energy chairman quits over asset sales

Palmer  resigned some 18 months before his contract was due to expire. The question, as always, is,

Was he pushed?

Or did he jump?

Writing on 16 March 2013, Tracey Watkins suggested a Great Big Shove helped Mr Palmer on his merry way,

There is, of course, nothing unusual about SOE chairmen and chief executives being subjected to a lengthy interrogation. But it is rare for committees to offer a platform to SOE bosses who have been manoeuvred out of their jobs by the Government.

See: Solid questions still remain unanswered

I tend to agree with her. This has all the makings of a politically-inspired, fall-quietly-on-your-sword, exit.

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SOE Minister, Tony Ryall comments on Palmer’s resignation – Acknowledges company’s developments

State Owned Enterprises Minister Tony Ryall announced Mr Palmer’s departure from Solid Energy on Friday.

“While it is disappointing to lose such a senior director, I wish to recognise Mr Palmer’s commitment to the company since his appointment in 2006, and the developments the company has made under his leadership,” Mr Ryall said.

Source:  IBID

Two months later, Bill English would be announcing that Solid Energy had  “…some fairly substantial issues” and would not be saleable.

Another six months after that, and the sh*t would be hitting the Big Fan. “Fortuitously”, Palmer would have been long-gone by the time English announced that Solid Energy was insolvent and  $389 million in debt.

Palmer would return, however on 14 March 2013,  for an encore performance before the Commerce Select Committee, to answer some hard questions.

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30 June 2012

$ 30 million dividend paid to government, for year ending 30 June 2012.

Source: 2012 Annual Report

Note that two months before English announced that  “Solid Energy faced “a number of commercial issues” and was “rethinking its business”, National ministers were  still taking dividends from Solid Energy.

Did English, Ryall, and Key not read the  2012 Annual Report which listed Solid Energy  posting a Net Profit after Taxation (NPAT) of  a  $40.2 million loss – on Page 2, under bold headlines, “FINANCIAL PERFORMANCE“???

Even though he maintains that “we wouldn’t be planning to float it any time soon”, they were still taking money out of what would prove to be a financially stricken company. This alone indicated that English and Ryall were being financially irresponsible in their role as Ministerial shareholders. As such,  Key was either ignorant of what was happening under his nose, or was irresponsible in not taking action.

Perhaps his adopted affectation as a “typical, non-political kiwi-bloke” who didn’t get his hands dirty with politics; grinned and shrugged off problems; and left matters to his sub-ordinates – had become a dangerous vulnerability for him? (See Tim Selwyn’s blogpost on John Key’s political/management style:  Rudderless Within The Great Game)

Either way, 30 June 2012 is an important date. This is when National Ministers should’ve known that something was seriously amiss.

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21 August 2012

English announces “issues” with Solid Energy

In August 2012, Bill English announced that Solid Energy had  “…some fairly substantial issues” and was not ready for sale.

Solid Energy “certainly isn’t” in shape for a partial sell-down, Finance Minister Bill English says.

English today said Solid Energy faced “a number of commercial issues” and was “rethinking its business”.

“We would only take any of these companies to the market if they are in good shape for investment and Solid Energy right now certainly isn’t. It’s got some fairly substantial issues that they have signalled. Whether it ends up being able to be floated would depend on whether they can get in suitable shape for public investors,” English said.

“We wouldn’t be planning to float it any time soon.

[...]

English said Solid Energy needed to be in “considerably better shape than it is now” before it could be floated.”

Source: English: Solid Energy not ready for sale

Perhaps National Ministers should have keep their fingers out of  Solid Energy’s petty cash box?

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9 September 2012

Coalminers redundancies – $200 million revenue shortfall – first mention of a ‘bailout’

Steven Joyce says Government capital for Solid Energy has not been ruled out.

The minister met with the company’s group manager of coal on Friday to discuss the situation. Mr Joyce says he has not promised a bailout, but if Solid Energy has a good business plan there may be funding options.

“Ministers get approached by state-owned enterprises to invest capital at different times. The thing that they would be interested in would be what’s the reason for doing it and what’s the opportunity.

“There’s a number of things that are up in the air with Solid Energy’s business plan at the moment that they need to work through with the new chair.”

Source: No decision on Spring Creek workers – Solid Energy

If National bailed out Solid Energy, they would  – in effect – simply be returning the dividends and spare cash that Simon Powers demanded way back in May 2009.

It would not be “new” money. It would be giving back what was looted from Solid Energy’s coffers, as National desperately tried to balance the government’s books, and return to surplus by 2014/15.

This entire sad, incompetant, wasteful,  exercise has provided no  benefit to anyone. National Ministers have ended up looking inept, manipulative, deceitful, and grasping. All for what?

The sole outcome has been to damage the reputations of businessmen who were hired for their business acumen (and who had been successful in their own fields), and destroy the name of Solid Energy.

In a bizarre twist, by sending Solid Energy into near-bankruptcy, National successfully delayed the partial privatisation of that SOE. Something that asset-sale opponants would welcome with delight.

.

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21 February 2013

Solid Energy in crisis – debt revealed to the public

The depth of Solid Energy’s financial woes have been laid bare with the Government confirming the company is in talks with bankers over its debt levels.

[...]

State-owned Enterprises Minister Tony Ryall said a number of factors had weighed against the company, in particular world coal prices dropping by 40 per cent.

“It is facing very serious financial challenges,” Ryall said.

Ryall declined to say whether Don Elder received a payout on his departure as chief executive on February 4.

Solid Energy’s debt stands at $389 million and its interim result, which is due shortly, will show additional losses.

Earlier this week Prime Minister John Key said it was very unlikely Solid Energy would be sold in the near future.

Source: Solid Energy in debt crisis talks

Time to duck – the poo has hit the fan.

Watch Ministers scurry for cover; invent fictitious tales; and blame anyone/anything they can think of. John Key’s fingers will be moving at supersonic speeds, pointing at others, to apportion blame.

.

.

22 February 2013

English blames Solid Energy management, bonuses, coal price fall, and expansion projects

Mr English said Solid Energy’s woes have two primary causes: it failed to predict – and adjust to – a drop in world coal prices, and spent too much investigating other sources of energy.

“Four or five years ago they set out on a big programme of expenditure on alternative energy, including researching into lignite down south to coal gasification and other research-based speculation, and that hasn’t turned out the way they thought.”

Source:  No more bonuses at Solid Energy – English

And yet, English and former SOE Minister, Simon Power had actively encouraged Solid Energy to expand. (see comments 8 September 2010 and 3 June 2011)

But if there was a cause for Solid Energy’s financial woes, a $389 million debt most certainly accounted for most of it.

Even the most profitable, efficient, well-managed company will collapse if it is over-geared (borrowed too much) and too much capital is  extracted in dividends (as well as tax).

Therefore, when English blames Solid Energy’s problems on “world coal prices, and spen[ding] too much investigating other sources of energy”; and when Key and Ryall blame Labour; massive debt; bonuses; mis-management; etc – the facts  show otherwise.

.

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23 February 2013

Key blames too much debt and unsuccessful investments

The causes of the financial crisis at Solid Energy are the usual suspects in failing businesses – too much debt, unsuccessful investments and no reserves to weather a slump in coal prices.

Prime Minister John Key’s comments yesterday indicated these problems and pointed the finger at an imprudent amount of debt and investments that have not returned any cash yet.

Key said the debt had climbed to $389 million when “typically coal companies do not have a lot of debt on their balance sheets”.

Which is  supreme irony – as nineteen days later, a letter will emerge showing that the former SOE minister, Simon Power,  instructed Solid Energy to borrow heavily and pay huge dividends to the National government. National was intent on using Solid Energy as a ‘cash cow’.

Source: State miner to return to coalface

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25 February 2013

Prime Minister discloses Treasury scoping study of Solid Energy

The PM was asked when the government first became aware Solid Energy was accruing big debts, given that such businesses were not normally expected to take on large amounts of debt.

He replied that the government had undertaken a “scoping study” when they were preparing the formulation of the Mixed Ownership Model and that their examination of Solid Energy’s accounts at that time indicated a degree of poor investment, over-valuation of the expected price of coal–which neither the industry nor government agreed with—and related financial problems stemming from this.

Source: PM Press Conference Dominated by Solid Energy Debacle

.

Key claims Solid Energy wanted $1 billion cash injection

The government blocked proposals in 2009 from its coal mining company Solid Energy for a billion dollar capital injection to allow it to become “the Petrobras of this country,” Prime Minister John Key says.

Source: Govt blocked grandiose Solid Energy plans in 2009

Key’s claim is later rejected by ex-Chairman, John Palmer.

Documents released by Key – in an attempt to back up his claims – wound up shooting the Prime Minister in his foot. The documents do not show that Solid Energy (or it’s CEO or Board) asked National ministers for anything.  The documents show only that the government was informed that Solid Energy would have to borrow from somewhere.

As usual, Key had been bending facts to suit himself. (And he thought no one would notice?!?!)

.

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26 February 2013

Ryall confirms Treasury  scoping study

Tony Ryall confirmed that the scoping study was carried out in “late 2011″,

Hon TONY RYALL: The member can repeat whatever he likes. The simple fact of the matter is when Ministers became aware of the issues raised in the scoping study at the end of 2011 we took the appropriate steps to address the issues that were raised. As the member knows, the company now has a new chair and new board, and we are currently dealing with the banks to resolve those issues.

Source: Parliament Hansards – State-owned Enterprises—Commercial Expertise

Despite that Treasury scoping study on 4 November 2011, National was still extracting dividends from Solid Energy, right up to 30 June 2012 ($ 30 million).

.

Key blames Labour

He said his support for the project in 2011 came four months before a scoping study revealed the true state of Solid Energy’s financial woes, and the former Labour government needed to take some responsibility for the situation.

“They can’t wash their hands that from 2003 on they were intimately involved when they purchased the land for lignite,” Key said.

Source: Govt forced to defend handling of Solid Energy

2003?

How far back does this man want to go in history as he tries to deflect responsibility for his government’s incompetance? It seems strange, but one gets the distinct feeling that John Key never learned how to take personal responsibility as a child.

Continually blaming others is not the mark of a mature individual. After a while, the public begins to notice.

.

Key blames Solid Energy’s expansion plans

Mr Key says his Government was cautious about Solid Energy’s expansion and said it could “take some baby steps”.

Really? Key’s government was “cautious”?

Funny, that’s not how it looked on 8 September 2010, when then-SOE Minister, Simon Power, endorsed Solid Energy’s expansion plans in a letter, stating,

Shareholding Mnisters are, however, supportive of Solid Energy developing its
current natural resources, including lignite and unconventional gas. As
discussed with you, we expect that Solid Energy will develop resources on a
project by project basis.

Or on 3 June 2011, when John Key supported Solid Energy’s expansion, when he gave a speech in Invercargill,

“At the moment companies like Solid Energy are growth companies and we want them to expand in areas like lignite conversion.

We know there is lots of resource there and we know they potentially have the capability [to convert lignite to urea or diesel] and so we will see how that progresses, but the briquette plant is a good starting point.”

Or on 9 September 2011, when,

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.

.

Key blames inability to control Solid Energy

The Government was worried about Solid Energy’s ambitious investment plans and rosy view of coal prices as far back as 2009 but was unable to order the company to steer a safer course, Prime Minister John Key says.

[...]

But after getting advice on the company’s plan, Mr Key said his Government rejected it, “but of course under the SOE Act the company had the right to draw down debt and make investments and could do that without reference to the shareholder”.

Source: Govt worried about Solid Energy in 2009

Two things jump out about that statement,

A.  If  National ministers were so “worried about Solid Energy’s ambitious investment plans ” – why did they not change the Board of Directors? Or issue a new Ministerial Directive?

After all, Simon Power did just that in a letter dated 8 September 2010 (see above), when he issued an instruction to Solid Energy’s Chairman, John Palmer, not to proceed with a specific expansion plan,

Shareholding Ministers have carefully considered the proposal and at this stage
do not support the development of a single NRC to maximise the value of New
Zealand mineral resources.

B. Why did Tony Ryall acknowledge “Mr Palmer’s commitment to the company since his appointment in 2006, and the developments the company has made under his leadership” on 23 June 2012, when John Palmer stood down as Solid Energy’s chairperson – if  “Government was worried about Solid Energy’s ambitious investment plans and rosy view of coal prices as far back as 2009…“?

C.  How can Key state that “the Government was … unable to order the company to steer a safer course” - when legislation states otherwise? As the Crown Ownership Monitoring Unit (COMU) states,

Most SOEs are subject to ministerial direction in relation to the content of certain aspects of the company’s Statement of Corporate Intent and the level of dividend payable to the Crown. Shareholding Ministers may remove board members by shareholder resolution under the Companies Act 1993. Under the Companies Act 1993, an alternative process may be followed if allowed by the company’s constitution.

Source: COMU: State-Owned Enterprises

As stated above, then-SOE Minister Simon Power did just that: issued a Ministerial Directive.

Of course, “steering the company to a safer course” should have included reducing National Minister’s demands for hefty dividends.

That might have helped.

Either Key is grossly ignorant about SOEs and their ministerial oversight – or once again he’s deliberately misleading the public to suit himself.

.

Key Blames Solid Energy

At that point, the company approached his Government seeking a capital injection “in the order of about a billion dollars to turn this company into the [Brazilian state-owned energy company] Petrobras equivalent in New Zealand”, Mr Key said.

Source: IBID

As a 27 August 2010 Treasury report – released on 15 March 2013 – showed,  Key’s claim that Solid Energy approached the government for “a billion dollars to turn this company into the [Brazilian state-owned energy company] Petrobras ” would prove to be false.

As ex Chairman John Palmer was to tell the Select Committee on 14 March,

“Were we talking to the Government about the possibility of capital and receiving that from the Crown? The answer is no.”

.

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14 March 2013

Former chairman John Palmer  and CEO, Don Elder appear before Commerce Select Committee

Now we start to hear the “other side” of the story – and much of it conflicts with what we’ve been hearing from English, Key, and Ryall.

.

National confirms big dividends paid out

For the first time it is publicly acknowledged – Solid Energy has been used as a cash cow by National, to extract big dividends from 2009 onward,

The government concedes the pressure it put on Solid Energy to increase its debt is partly to blame for the company’s financial failures.

The state-owned coal mining company owes $389 million in debt, and is negotiating a rescue package with Treasury and banks.

Government documents reveal that in May 2009, then-State Owned Enterprises Minister Simon Power wrote to Solid Energy’s then-chair, John Palmer, saying he was disappointed its profitability and dividends were forecast to drop over the next three years.

At the same time, the government wanted the company to increase its gearing (debt to equity) levels to 40 per cent and its dividends to 65 per cent of operating cash flow.

A ministerial briefing paper shows Solid Energy’s gearing level in March 2009 was 10 per cent, and was forecast to reach 27 per cent in June 2010, while its dividend was 50 per cent.

Parliamentary Library figures show Solid Energy’s gearing leapt from 9.4 per cent in June 2008 to 34.4 per cent in 2010, dropping back to 29.6 per cent in 2011 and jumping again to 41.7 per cent in 2012 as coal prices began to slump.

Finance Minister Bill English admits the government pressure was perhaps too strong.

Source:  Govt pressure on Solid Energy revealed

National had to come clean, as ex-CEO Don Elder appeared before the Commerce Select Committee to explain what went horribly wrong at Solid Energy. National’s ministers knew that the truth was coming out, and had to pre-empt any public disclosures of massive borrowings and payments of dividends,

Mr English says there was a pushback against the debt increase from Solid Energy, which he expected Mr Palmer and former chief executive Don Elder to explain when they fronted a select committee later on Thursday.

Labour leader David Shearer says the documents show ministers had a greater degree of involvement in Solid Energy’s failure than they were publicly letting on.

Source: IBID

Push back against debt“? By now we all understand that English is lying his arse off to Heaven and back. There was no push back.

The only “push” was to increase dividend payments and gearing up to 40%.

The only reason politicians tell such howling lies is because they do not expect people to remember all the facts; to connect the dots; or for an under-resourced media to tell the whole story as a continuous narrative. Politicians expect people to forget; not hear all the facts; or become confused with too much non-contextual facts and testimony from the main players.

That’s how they get away with it; we’re not paying close enough attention.

.

Don Elder appears before Commerce Select Committee – Confirmation of Govt wanting Solid Energy to increase debt – endorsed expansion

Firstly,  former Solid Energy chairman, John Palmer,  publicly confirmed that the National Government,

  • wanted Solid Energy to borrow more, and pay higher dividends to government coffers,
  • endorsed Solid Energy’s expansion plans

Labour’s finance spokesman David Parker asked whether the company was in any doubt that the Government wanted them to expand production, increase debt and dividends.

Palmer said it was “self evident” that increased gearing meant increased debt.

The Government was supportive of plans to expand, including into lignite.

Palmer’s comments contradicted Bill English’s comments on 22 February 2013 and John Key’s comments reported on 23 February, 2013, where both politicians lambasted Solid Energy for high debt and expansion plans.

According to Palmer, neither English nor Key were worried about Solid Energy’s expansion programme.

Next,

Palmer said that in late 2011 or early 2012, when it was clear what was going to happen, he spoke to minister Tony Ryall about a $200m revenue hole (twice the annual profits), which would have a dramatic effect on the balance sheet.

Which ties in with Bill English’s announcement on 21 August 2012, that Solid Energy had  “some fairly substantial issues… We wouldn’t be planning to float it any time soon”.

Now we know what he was referring to: Solid Energy was broke. He knew it then, but did not disclose the full nature of Solid Energy’s status until forced  by officials.

.

Ex-CEO rejects Key’s assertion of Solid Energy requesting a $1 billion cash injection

“Were we talking to the Government about the possibility of capital and receiving that from the Crown? The answer is no,” Mr Palmer said.

“A specific $1 billion capital injection, I’m reasonably sure we did not ask for it in exactly those terms.”

However he said the company did have discussions with the Crown about potential large investment in lignite processing but it was also talking to potential overseas partners, “because it made no sense to us to think that Crown as the sole shareholder should finance that”.

He also said the company discussed with the Crown a national resource strategy that would have required large investment.

“My recollection is there was no dollars attached to that proposal.”

Source: Solid Energy opposed Government’s debt plan

.

Curious case of politicians and executives receiving identical media-coaching

Meanwhile, National’s taxpayer funded media-staff had been busy coaching politicians and company executives;

.

Don Elder – Blame,  “Perfect Storm”

This was the perfect storm.”

Source: Palmer: Elder deserves applause

Tony Ryall -  “Perfect Storm” – blames downturn in coal prices – blames wrong investments

“State owned enterprises minister Tony Ryall blames the distressed financial state of Solid Energy on a “perfect storm” of events.

Mr Ryall says a wrong choice of investments, along with a worldwide collapse in coal prices, led to the coal mining company’s current state.”

“A wrong choice in investments, together with the most significant collapse in world coal prices in 2012 led to a perfect storm. The perfect storm has created the situation this company is currently in,” Mr Ryall says.

Source: Ryall blames ‘perfect storm’ for Solid Energy’s crisis

Bill English  – “Perfect Storm”

On TVNZ’s Q+A, on 17 March, English refers – not once, but twice! – to the “perfect storm”,

“That’s right. Look, in retrospect, they would have been better off with lower levels of debt, but as I think Don Elder and John Palmer said at the Select Committee, the board is there to make the decisions about what the actual levels of debt are. Bear in mind, in 2011 their debt had peaked and was declining, and then they got hit by the perfect storm in 2012.”

And a moment later, again,

“…And in 2011 their debt levels were actually declining from that, and then they got hit by the perfect storm…”

Source: TVNZ Q+A

Lotsa ‘stormy weather’ around? I thought we were experiencing a drought.

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15 March 2013

Palmer says  Solid Energy did not want to take on high level of debt suggested by the Treasury

 Prime Minister John Key is facing claims he misled the public after former Solid Energy chairman John Palmer said the company resisted Government pressure to take on more debt – the very thing the Prime Minister said caused the company’s problems.

[...]

Appearing the day after Labour revealed former State-Owned Enterprises Minister Simon Power told the company to take on more debt and pay higher dividends, Mr Palmer said the company opposed that request.

The debt levels or gearing suggested by Mr Power and Treasury officials were higher than “we thought was an appropriate level of gearing given the nature of the industry we were involved in”, Mr Palmer said.

Source: Key under fire over Solid Energy claims

.

Key claims Solid Energy wanted $27 billion

Prime Minister John Key this morning released documents detailing Solid Energy’s ambitious expansion plans which would have required capital investment of $2-3 billion a year until 2021 or a total of up to $27 billion.

Key released the papers in response to Labour’s claims he misled the public about Solid Energy approaching his Government about a $1 billion investment to become the “Petrobras” of New Zealand, a request he says his Government turned down.

[...]

Key this morning said the documents showed the proposal “absolutely required, as Treasury pointed out, somewhere between two and three billion dollars of Government money”.

Source: Key says Solid Energy papers show $27b plan

Remember the Treasury report, dated 27 August 2010, referred above? Key is saying that the Solid Energy proposals would have required “between two and three billion dollars of Government money”.

Yet the 27 August 2010 Treasury report said nothing of the sort. Solid Energy could have obtained that money from the same commercial sources  it was already borrowing from.

And don’t forget, Solid Energy had already been borrowing significant amounts – pushing it’s ‘gearing‘ (debt to equity ratio) up:

Solid Energy’s gearing ratio [borrowings] was 13.8 per cent in 2009, but that rose to 34.4 per cent in 2010 and 41.7 per cent last year.

Source: Ministers pressured Solid Energy, Parliament told

To this day, Key continues to mis-represent the truth.

.

Key – Solid Energy wanted foreign investment and shareholders

“Key this morning said the documents showed the proposal “absolutely required, as Treasury pointed out, somewhere between two and three billion dollars of Government money”.

He said Palmer proposed selling a stake in Solid Energy to an offshore cornerstone investor “and that would involve taking more than 10 per cent of the company and not putting mums and dads first.”.

“I made it quite clear to him that we had campaigned on a mixed ownership model which didn’t involve someone having more than 10 per cent in the company”.

Solid Energy’s proposal “didn’t involve a situation where kiwi mums and dads would be first and so the only way to get that money was through the Government.”

Source: Key says Solid Energy papers show $27b plan

Now this is yet another contradiction from Key. First he tells us that Solid Energy executives wanted $1 billion (or was it $27 billion?) from Government.

But in the next breath – on the same day – he say Solid Energy wanted foreign investors/shareholders to buy 10% stakes in the SOE.

So which was it Dear Leader?! Government funding? Foreign investors/shareholders? Pixies at the bottom of the garden?

One can only conclude that former CEO, John Palmer, was correct, when he rejected any assertions that Solid Energy was looking to borrow money from government,

“I cannot recall that we have ever asked him explicitly for $1 billion dollars.”

Source: Key Must Front Up With $1 Billion Evidence

It was also interesting to note that Key derided Solid Energy’s plans for 10% foreign investors/shareholders blocks by stating that it contravened National’s policy of putting “kiwi mums and dads would be first“.

Which contradicts a statement that John Key made in a speech in 2005, on 4 March, where a private partner was something that National would welcome,

“In respect of Solid Energy, if an opportunity arose to introduce a private sector partner, we would consider that seriously.”

Source: John Key Speech: State Sector Under National

And how does Key reconcile that with other Public Private Partnerships (PPPs) such as Wiri Prison,

Corrections Minister Anne Tolley says a contract has been signed allowing the SecureFuture consortium to design, finance, build, operate and maintain the new 960-bed public-private partnership (PPP) prison at Wiri, South Auckland.

The new prison will deliver value for taxpayers and support the Government in reaching the target of a 25 per cent reduction in reoffending by 2017.

The 25 year contract is worth approximately $840 million, which is 17 per cent less than if the prison was procured through conventional means, representing a $170 million saving for taxpayers.

Fletcher Construction will build the new facility which will be operated by Serco and maintained by Spotless Facility Services. Construction will begin soon, with the prison set to open in 2015.

“The PPP will allow Corrections to draw on the experience and expertise of SecureFuture’s international partners,” says Mrs Tolley.

Source: Beehive – Contract signed for new PPP prison at Wiri

How many “mums and dads” invested in Wiri Prison?

There are many more PPPs of this nature where “mums and dads” have nil investments, and instead are the sole preserve of corporate investors – many from offshore.

.

Palmer denies Solid Energy wanted to borrow $1 billion from government

“Were we talking to the Government about the possibility of capital and receiving that from the Crown? The answer is no,” Mr Palmer said.

“A specific $1 billion capital injection, I’m reasonably sure we did not ask for it in exactly those terms.”

Source: IBID

Palmer is correct. According to the 27 August 2010 Treasury Report (referred to above),  Solid Energy did not ask Government for that money. The money could have been borrowed from any source – just as Solid Energy had already been doing.

This was also confirmed by a spokesperson for Bill English,

“We told them all to improve their performance and that, if they wanted to expand, they had to pay for it off their own balance sheet, rather than asking the cash-strapped taxpayers for money.”

Source: Ministers pressured Solid Energy, Parliament told

So it has becoming apparent that our Dear Leader Key is attempting to re-write recent history to suit his own agenda by shifting the blame elsewhere…

.

Key attempts to spin Assumption into “Fact”

“I think it is pretty self explanatory that when you come to the Government with such a very large proposal, we’re the 100% owner, that’s what’s required.”

Source: Details of Solid Energy’s expansion bid released

So let’s get this straight…

(i)  Solid Energy management presented  an expansion plan to National Ministers

(ii) The plan includes figures for said-expansion.

(iii) National Ministers had been encouraging of Solid Energy’s expansion plans (see comments 8 September 2010 and 3 June 2011)

(iv) There was no mention made of where borrowings would be made from – though up till now, Solid Energy had borrowed from private sources, and not the Crown. (See comments 27 August 2010)

(v) And from all that, the Prime Minister suggested that “ it is pretty self explanatory that when you come to the Government with such a very large proposal ” that Solid Energy expected finance from the  Crown?

I have one question: how on Earth did Key manage to amass a personal wealth of $50-$55 million when he  makes up  such fancifuul  “leaps of logic”?!?!

.

And the cover-up starts?

The head of the committee that grilled Solid Energy’s former bosses says he is unconvinced a full inquiry is needed.

Opposition MPs are pressuring for a full inquiry into the collapse of the state-owned coalminer, which is now reliant on government support to manage its $389 million debt pile.

Commerce select committee chairman Jonathan Young allowed yesterday’s appearance by former Solid Energy chairman John Palmer and former chief executive Don Elder to run for an hour longer than was originally expected.

Young, the National MP for New Plymouth, said this morning that he believed the committee now had “a very clear picture” of what had happened to Solid Energy, which was hit by falling coal prices, a strong New Zealand dollar and poor investment decisions.

In recent days it has emerged that the Government leaned on the company to take on more debt, after it warned it may pay less dividends.

Young said that “in hindsight we can look back and see if they didn’t have debt they would be in a better situation”.

Despite this, Young said he was yet to be convinced that a full select committee inquiry was needed into the collapse, saying there were “multiple levels of inquiry” already under way, with the company talking to its financiers, and the Government “looking at all of the issues”.

He told TV3′s Firstline: “I am personally yet to be convinced that we are going to uncover anything new or different that wouldn’t be uncovered” anyway.

Source: Solid Energy probe call rejected

“…the National MP for New Plymouth, said this morning that he believed the committee now had “a very clear picture” of what had happened to Solid Energy…”

That statement boggles the mind; drops the jaw to the ground; and is so, so, wrong on many levels. But wholly expected from a National member of Parliament; chairing a Select Committee; stacked with five National MPs out of nine committee members (see: Commerce Select Committee members); supposedly ‘investigating’ wrong-doing/ineptitude by National ministers.

Let’s see… what part of that is wrong? A government investigating itself and coming up with a verdict of nothing-to-see-here-folks-move-along-please? How is Young’s assertion that the Government was “looking at all of the issues” supposed to reassure us?! By what measure of common notions of justice is a  Government  “looking at all of the issues” supposed to be a non-partisan, transparent, and objective investigation into this issue?

It would be like directors of failed companies (many of whom are either in jail or waiting to be tried in Court or sentenced) investigating their own actions and coming up with the same comments as Young made,

“In hindsight we can look back and see if they didn’t have debt they would be in a better situation…”

Directors are “looking at all of the issues”.

“We are  personally yet to be convinced that we are going to uncover anything new or different that wouldn’t be uncovered”

Yeah, right, Mr Young. You can stop putting lipstick on that pig.

Listening to  the main players – especially John Key, Bill English, and Tony Ryall – there are too many conflicting statements to believe that an Inquiry is not needed. National ministers are simply unable to get their stories straight and have contradicted each other (and themselves) on numerous occassions.

Young asserts that the committee now had “a very clear picture” of what had happened.

Bollocks.

The only thing even remotely “clear” about all this is that remains remain to be asked – and answered.

As Tracey Watkins wrote on 16 March 2013,

“But something clearly went seriously wrong if those talks were not enough to stop the collapse of an SOE on an unprecedented scale.

Beneath the flurry of claims and counter claims that is the question which has still not been properly answered.”

See: Solid questions still remain unanswered

Indeed.

.

.

17 March 2013

Bill English – TVNZ Q+A

The following is a transcript from  Corin Dann interviewing Finance Minister (and half shareholder in Solid Energy) on 17 March 2013,

CORIN

All right, if we could move on to Solid Energy. Can you give us an update on where things are at with the banks? When will we know whether the government is going to have to bail out Solid Energy?

BILL

Well, that will be some months yet. There’s discussions going on with the banks now about stabilising Solid Energy. Some of the information around its cash flows is a bit more positive than we might have expected. But we will get a period of two to three months through to the end of June where we can look at all the options for recovering value for the taxpayer in the first place and, secondly, to decide whether there is an on-going viable business in the middle of this-

CORIN

Are you saying it’s making a bit more money than you thought now and that it might be able to get itself out of trouble?

BILL

Well, I wouldn’t go that far. All I’m saying is the cash flow numbers are just a bit more positive than we expected. I mean, if you look back, Solid Energy made some very substantial investments in some of its mines. Some of those worked out, such as in Stockton; some of them didn’t, such as in Spring Creek. But where they have invested, they’ve got capacity for production and for value, and if coal prices are at some kind of reasonable level, then there is a business there.

“All I’m saying is the cash flow numbers are just a bit more positive than we expected. ” – In which case, Mr English, keep your sticky hands of that cash.

I sincerely hope that if National Ministers attempt to gouge SOEs again, that Board Directors resign on masse and publicly disclose political attempts at such interference.

The public is entitled to be reassured that politicians will not use SOEs as “cash cows” simply to balance their books.  Especially after two unaffordable tax cuts – a glorified ‘lolly scramble’ – left a gaping hole in government accounts.

CORIN

Do you want the banks to take some of the heat on this?

BILL

Yes, I think that’s really important. They’ve lent money, and as lenders, they take risks. And if they lend to a company that’s affected by a very sharp downturn in coal prices and then loss of a quarter of their export sales, they’ve got the same risks as banks who leant to resource companies all around the world that have got in trouble.

CORIN

You can see the irony in that, though, because you told them to borrow more.

BILL

Well, and you were talking about it as a revelation. We did a press conference back in 2009 about the need for our SOEs to take on-

And it took Labour to advise the public, Mr English. Bill English, Key, and Ryall were more than happy to keep that 2009 letter from Simon Power under wraps.

That was part of National’s ‘spin’ that the massive borrowings and  debt were a ‘creature’ of Don Elder’s and John Palmer’s making. But as Corin Dann pointed out;

CORIN

But you know that timing is everything with these things, and that was a revelation coming at this time, given your government had tried to distance itself from this issue. You even blamed Labour for it, for what they said in 2007.

BILL

No, I don’t agree with that. In 2009, the government was facing a decade of deficits because of the Labour Party and the recession. And we quite reasonably said that our taxpayer-owned companies should contribute more cash to the coffers. That’s the point of owning them. And Solid Energy had paid barely- had paid almost no dividends for the previous five or six years, and they had very low levels of debt compared to their asset value. So, look, in retrospect-

Here we go again; more blame-gaming,

In 2009, the government was facing a decade of deficits because of the Labour Party and the recession.

English blames the recession?

In which case why did National Ministers extract 163.9 million in dividends from Solid Energy, during the worst recession since the 1920s/30s?

Is this what National calls “prudent fiscal management”?

Notice also that  English lied by  blaming “ a decade of deficits because of the Labour Party” – even though Cullen was posting surpluses from 2002-08 Labour-led period?! And paid down sovereign debt from 33.4% of  GDP to 17.4% GDP? (See previous blofpost:  Bill English – do you remember Colin Morrison?)

This is symptomatic of a National-led government that is desperate to avoid all responsibility.

CORIN

But there was a good reason for that, wasn’t there? Because they were a coal company.

BILL

That’s right. Look, in retrospect, they would have been better off with lower levels of debt, but as I think Don Elder and John Palmer said at the Select Committee, the board is there to make the decisions about what the actual levels of debt are. Bear in mind, in 2011 their debt had peaked and was declining, and then they got hit by the perfect storm in 2012.

Look, in retrospect, they would have been better off with lower levels of debt“…   “In retrospect“?!?! Little wonder that Solid Energy’s board and management resisted National’s demands for higher and higher dividends (as English concedes in his next statement).

That statement - ”Look, in retrospect, they would have been better off with lower levels of debt“  – totally destroys the argument put forward by Key, English, and Ryall that Solid Energy’s debt and subsequent crisis was of it’s own making.

Quite simply, National was desperate for cash to pay for the 2009 and 2010 taxcuts, and were prepared to bleed SOEs dry to get it’s hand on their money. Even if those SOEs had to borrow to do it.

This is ministerial incompetance at best – or outright economic sabotage at worst. (No wonder ACT and Libertarians maintain that politicians can’t run businesses. Correction: National politicians can’t run businesses.)

CORIN

But you were telling all SOEs to raise their debt to a 40% gearing, and Solid Energy told you they were not comfortable with that, and there was a good reason: because they were a volatile coal company. Surely that was too much pressure you were applying to them.

BILL

Well, clearly not, because their debt peaked at under 35%, which was the level the board set, which was lower than what the government was expecting. And in 2011 their debt levels were actually declining from that, and then they got hit by the perfect storm. So, yes, would they have been better off with no debt? Yes, just like lots of businesses and households would be better off with no debt. Then they got hit by these circumstances which may well have put the company into trouble even if it had no debt.

Yes Mr English, Solid Energy did get hit by “a perfect storm”. A storm largely made up of rapacious politicians.

It appears that by not gearing up to the full 40% demanded by National, that Don Elder and John Palmer may have done their best to prevent the collapse of Solid Energy.

CORIN

The issue also, of course, has been around their investments. Now, your government must take some responsibility, surely, for the oversight of what they were investing in. You were the one down in Southland turning the first sod with the lignite plant. You knew what they were up to.

BILL

Well, and it’s yet to be seen just whether that particular investment has on-going potential or not. Clearly, some of them don’t. Some of them may do. That’s what’ll happen over the next two to three months. But what you’ve got to keep in mind here is that under the SOE model, politicians are not there to run the companies. We do not make the investment decisions. The boards make the investment decisions, and the weakness in the model is that there’s no market scrutiny of those board decisions, and that is why the partial sell-down of the electricity companies will help with the monitoring and the performance of those companies.

But what you’ve got to keep in mind here is that under the SOE model, politicians are not there to run the companies. We do not make the investment decisions. ” – Really, Mr English? And yet Simon Power felt he had the ministerial authority to write to Solid Energy demanding higher dividends.

In reality, under the State-Owned Enterprises Act 1986, shareholding Ministers can and do issue directives to SOE Boards. So English is being disingenuous when he tries to indicate that Ministers are powerless. They are not powerless,

13.  Powers of shareholding Ministers in respect of new State enterprises
  • (1) Notwithstanding any other provision of this Act or the rules of any company,—

    • (a) the shareholding Ministers may from time to time, by written notice to the board, direct the board of a company named in Schedule 2 to include in, or omit from, a statement of corporate intent for that company any provision or provisions of a kind referred to in paragraphs (a) to (h) of section 14(2); and

    • (b) the shareholding Ministers may, by written notice to the board, determine the amount of dividend payable by any company named in Schedule 2 in respect of any financial year or years,—

    and any board to whom such a notice is given shall comply with the notice.

    (2) Before giving any notice under this section, the shareholding Ministers shall—

    • (a) have regard to Part 1; and

    • (b) consult the board concerned as to the matters to be referred to in the notice.

    (3) Within 12 sitting days after a notice is given to a board pursuant to this section, the responsible Minister for the company concerned shall lay a copy of the notice before the House of Representatives.

Source: State-Owned Enterprises Act 1986 – Section 13

They have the power.

It’s the responsibility for their stuff-ups that seems to elude them.

CORIN

And are you confident there will be much better decision-making, that these MOM companies, in general, are going to have better board making decisions?

BILL

I think mixed-ownership companies will, but there’s a real challenge for government with the lessons from Solid Energy. When you look ahead, the companies that the government will own all have their challenges – NZ Post with the shrinking postal market, TVNZ and the digital media environment, a coal company if there is still a coal company. And we are going to have to change the way we work with these companies to ensure that we don’t lose taxpayers’ money. Because the taxpayers’ money in these companies doesn’t come out of the sky; it comes from the PAYE and the GST paid by NZ households. And we have a strong responsibility for the stewardship of that money.

Source: TVNZ Q+A

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22 March 2013

The NZ Herald reported that “seven years’ worth of documents about Solid Energy have been released by Treasury… It has been released after a number of Official Information Act request centred around how much the Government knew about the financial troubles the state owned coal miner was in“.

Source:  Big Solid Energy document dump from Treasury

[Note: This blogger has viewed only a fraction of documents. There's no telling what other revelations and incriminating evidence is contained therein. Perhaps something to be re-visited on a quiet, wintry evening?]

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25 March 2013

Papers confirm Govt pressure on Solid Energy

A week after English’s attempt to ‘spin’ the collapse of Solid Energy and blame everyone under the sun, Radio NZ reported,

Official papers confirm the Government put pressure on Solid Energy to increase its debt and then appeared later to criticise it for borrowing too heavily as it got into difficulty.

The state-owned coal company is in debt to the tune of $390 million.

The papers released on Friday also show that despite strongly disagreeing with the company’s business plan, the Government left it late to act.

In 2009 the then State-Owned Enterprises Minister, Simon Power, wrote to Solid Energy chair John Palmer recommending the company raise its gearing ratio – a measure of debt – to 40%.

By June 2012, when it was clear the company was in trouble, the ratio had risen to 37% and, according to the Treasury, Solid Energy had taken on significant debt.

It was only at that point, after arguing with the company for three to four years about its business plan, that the Government decided to make changes.

Source: Papers confirm Govt pressure on Solid Energy

By  this time, public attention and media focus had waned. There were other issues and problems to deal with, and National ministers could breath a sigh of relief. They were “off the hook”.

Let us recall that Treasury’s scoping report, released on 4 November 2011, confirmed everyone’s suspicions that National had cash-stripped Solid Energy;

 ”…dividend payments to the government have been funded by increasing debt“.

Source: Treasury Report T2011/2373: Solid Energy New Zealand Scoping Study Report

The ‘up-shot’ of all this?

  • A billion dollar state own enterprise had been milked as a “cash cow” and left to collapse.
  • English, Ryall, Key, et al – off the hook.
  • There would be no ministerial accountability; no resignations; no one held to account.

And for good measure,

  • Blame Labour for everything.

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8 May 2013

Bill English preps public for Solid Energy’s write-off?

In a Radio NZ story (see: English questions viability of Solid Energy), Bill English contradicted his earlier assertion that Solid Energy would not be allowed into receivership,

“We’re not going to keep propping up businesses where we don’t think there’s a long term future. Where we think there there is, we put strong support in. So Kiwirail would be a good example.Where the government’s  already invested around a billion in them in the last 3 or 4 years and they will… all of their,um, surpluses will be reinvested in the business, probably for the next decade. So the taxpayer won’t take anything out of them. But there may be… it’s possible that there’s other businesses, as has been revealed say in the  Solid Energy case where their particular mix may not be viable so we have to look at  whether they can be restructured or whether in the long run there’s a viable proposition there. But at the moment Solid Energy is the only business where that’s in question.”

Listen RNZ interview: Bill English on Morning Report

By questioning the viability of Solid Energy, English is preparing the public for the day when National announces the demise of the company.

Having gutted it of cash and forced it to borrow millions for unsustainable dividends, National is now ready to administer the coup de grâce to finish it off. (If the Nats could eliminate all witnesses to their bare-faced thieving, I bet you they’d be considering it…)

Meanwhile, a week later…

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14 May 2013

$1 billion for KiwiRail

Radio NZ revealed that KiwiRail was receiving government funding to keep operating,

Overall the Government has committed about $1 billion to the effort, and Finance Minister Bill English has said the Government is unlikely to take a dividend for the next decade so KiwiRail can reinvest any profits in the rail service.

Source:  Solid Energy problems pose risk for KiwiRail

See also: Beehive.govt.nz: Next steps in KiwiRail’s Turnaround Plan

How is it that Solid Energy,  a once viable company – earning millions in revenue from overseas exports of coal (admittedly not a very environmentally-friendly product) – may be allowed to go into receivership?

Meanwhile, National is quite happy to keep investing in KiwiRail, which has never generated a profit in modern times. (Though admittedly, KiwiRail is  an environmentally-friendly transport enterprise with a positive future, as we pass the oil peak.)

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A message to businesspeople:

National Ministers are attempting to sheet blame for Solid Energy’s financial crisis to it’s former Chairperson, John Palmer, and CEO, Don Elder.

Key, English, and Ryall  have  resorted to mis-presentation of facts; omission of facts;  exageration; and in some instances, outright lies.

This should serve as a clear warning to businesspeople. Think carefully before accepting managerial or Board positions during a National-led government.

Because if things go wrong – even if caused by political interference – then they will have no hesitation to smear your reputation.  They will hang you out to dry, whether you are at fault or not.

A message to Voters:

National has a reputation as “prudent fiscal managers”.

For the life of me, I cannot understand how they have earned that reputation.

To allow a billion dollar SOE to crash and burn; run into the ground; and now   facing bankruptcy suggests to me that Key, English, Ryall, Brownlee, Joyce, Collins could not run a corner Dairy without getting into financial trouble.

I don’t think these clowns could run a sausage sizzle without losing money by the end of the day.

Perhaps, as a test,  those voters who are disbelieving should keep voting National? Let’s see what other SOE will collapse on their watch, eh?

What the hell. After all, it’s only our property. And tax dollars.

This blogpost was first published on The Daily Blog on 17 May 2013.

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References

Solid Energy: Annual Reports Index

Crown Ownership Monitoring Unit – SOE Disclosures

Treasury: SOE/Solid Energy Disclosures

Previous related blogposts

That was Then, This is Now #18 (24 Feb 2013)

National caught out over Solid Energy – changes story on coal prices, debt, and other matters (13 March 2013

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12 June – Issues of Interest

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Looking at the pieces

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Nigel Latta on National Standards

On Facebook, child psychologist and TV host, Nigel Latta, had this to say about the recent National Standards “results”;

‘National Standards’ aren’t.

The latest national standards ‘results’ being reported in the media are utter nonsense. Pure and simple. Even if we ignore the large inconsistencies between the way that the ‘standards’ are measured (and we can’t because the inconsistencies make comparisons all but impossible), and the fact that it assumes all children of a given age are maturing at the same rate (which they don’t), and we ignore the impact of little things like child poverty (which some politicians like to do much to their shame), it’s still impossible to say anything at all about a change in the numbers when you only have two data points.

They can’t say that a difference of 1.2-2% on the various measures between last year and this year is an ‘improvement’, because we simply don’t know.

If you had assessed all of those very same children again the day after they were assessed for these numbers, in the exact same conditions with the exact same measures, then you would also get a different number. That’s because in the real world we have this little thing called statistical variation–things never work out exactly the same. To make any meaningful statements about ‘improvements’ you need meaningful measures (which national standards aren’t anyway) over several different data points (i.e. over several years).

I wish the media would get that very simple, but very important point. Politicians will spin it as a gain, but it isn’t. It’s simply meaningless statistical ‘noise’.

The government went with national standards because they thought voters would like it, not because it’s the best thing for making progress on education. If we really wanted to lift our ‘national standards’ then, perhaps as a beginning, we’d take more care of the large numbers of our kids living in poverty.

When they produce their ‘rankings’ of schools I’m pretty sure it’s going to show a trend whereby higher decile schools meet/exceed the ‘standards’ much more than lower decile schools. I wonder why that might be? And who do we blame for that? Teachers?

Don’t be sucked in by all this political positioning. My advice is to ignore the national standards tables because they don’t mean anything. There’s a reason teachers were so opposed to the way these ‘national standards’ are being used… fundamentally because it’s nonsense!

Nigel Latta, Facebook, 12 June 2013

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100% Pure brand busted!

New Zealand’s distance from it’s major trading partners (except Australia) has always been a major impediment to our trading. Our point-of-difference has  been the quality of our food products, and has made them desirable commodities on that basis.  Branding ourselves as “100% Pure” and  “Clean and Green” were marketing tools that created a multi-billion dollar export industry.

But that is coming to an end.

We are not “100% Pure” and nor are we “Clean and Green”. Anything but.

National has paid lip service to being green.

Pollution has been allowed to increase.

It’s focus on “reforming” the RMA to allow for exploitation mof sensitive environmental areas; more and more chemicals ion our farms; allowing dangerous deep sea drilling of our coastline; mining in Conservation lands; and ditching our committment to the Kyoto Protocol – have not gone unnoticed by our trading partners.

And those trading partners  are starting to react accordingly,

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Sri Lanka demands DCD testing on NZ milk powder

Acknowledgment: Radio NZ – Sri Lanka demands DCD testing on NZ milk powder

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An over-reaction?

Not when National has appointed a  board to over-see a resource consent application to allow an increase of nitrogen pollution  in the Tukituki River  by a staggering 250% !

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Nitrate proposal seen as death knell for river

Acknowledgment: Radio NZ – Nitrate proposal seen as death knell for river

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This will not doubt be ratchetted back to “only” 50% or 100%, and National will claim that they are “listening” to public concerns. It’s an old political trick when a deeply unpopular policy is put forward. Make a number unfeasibly large; then offer a lower number, and claim that government has listened to the public. In reality it was the lower number all along that was the preferred option.

National has consistently undermined environmental protections in this country, as well as knee-capped DoC by sacking staff and under-funding it’s operations.

We are now starting to pay the price of right-wing policies that pursue business and profit ahead of  preserving our environment.

What National and it’s one-eyed supporters don’t seem to comprehend is that business and profits are dependendent on our clean and green environment. Mess up the environment and expect to lose customers and profits.

Just ask the Sri Lankans.

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User-pays healthcare?

For those neo-liberals and naive National supporters who advocate replacing our socialised healthcare system with privatised healthcare insurance, I present the reality,

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NZ private health insurance uptake hits 6-yr low

Acknowledgment: NZ Herald – NZ private health insurance uptake hits 6-yr low

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Private health-privider,  Wakefield chairman Alan Isaac said,

“The total number of New Zealanders with private health insurance (is) decreasing.”

Acknowledgment: IBID

Well, no wonder!

Even as private healthcare companies like Wakefield are complaining about losing customers, they are hiking premiums and still making a 27% increase in full-year earnings. Twentyseven percent! Compare that to other investments, and you begin to realise that these companies aren’t doing too bad.

That’s 27% that could have been re-invested in healthcare – but is instead going into the pockets of shareholders.

What would happen, I wonder, if New Zealand’s healthcare system was fully privatised and  went totally “free market”, as ACT policy demands?

This OECD chart suggests the result, if we were ever foolish enough to go down that road,

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OECD - private - public - healthcare expenditure -2007

Source: OECD – Total health expenditure per capita, public and private, 2007

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At 7,290, the United States spends nearly three times as much on healthcare as we do. Their private/public health costs are vastly greater than the entire public/private expenditure we have here in New Zealand with our “socialised” system.

And ACT wants to emulate our American cuzzies?!

The only thing the USA has demonstrated is that a privatised healthcare system will result in a massive blow-out in costs and rapacious profits for shareholders.

The argument from the neo-liberal Right is that private enterprise is “more efficient” and better for consumers. This is absolute bollocks.

If anything, private health insurance is highly ineffective at delivering  universal healthcare for it’s clients,

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Ongoing jumps in health insurance costs

Acknowledgment: Fairfax Media – Ongoing jumps in health insurance costs

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As has been observed by others in the past, private health insurance is relatively cheap when you are young, healthy, and make few demands for medical intervention.

But with old age; increased infirmity; and heightened vulnerabilty comes increased premium payments for policy-holders. Just when they most require increased medical services.

This is the fatal flaw in private medical insurance; those who most require it, will pay the highest premiums. And pay, and pay, and pay…

Just ask the Americans.

See also: NZ Herald – Jack Tame: Sickness is too expensive in the land of the free

Other blogs:  Canadian and U.S. healthcare – a debate

Canadian and U.S. healthcare – a debate
Canadian and U.S. healthcare – a debate
Canadian and U.S. healthcare – a debate

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Some good news at last…

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It has been a stain on our reputation that despite our anti-nuclear legislation, our Superannuation Fund was still investing in overseas companies engaged in producing atomic bombs and cluster munitions. This was a problem (I refuse to call it an “issue”)  that I highlighted  in December, last year.

Previous related blogposts:  New Zealand’s OTHER secret shame

Previous related blogposts:  New Zealand’s OTHER secret shame – *Update*

The Superannuation Fund has done the right thing by no longer continuing to invest in Babcock & Wilcox, Fluor Corporation, Huntington Ingalls Industries, Jacobs Engineering Group, Serco Group and URS Corporation;

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Super Fund sells nuclear investments

Acknowledgment: Fairfax Media – Super Fund sells nuclear investments

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The other weapons we are no longer investing in is the manufacture of cluster-munitions. These vile things are the weapons-of-choice for vicious dictators and other repressive regimes which they use against their civilian population.

They have been used in Syria, against unarmed civilians. Children have been killed by these monstrous devices.  (see: Syrian children ‘killed by cluster bombs’)

Cluster munitions have been outlawed by  nearly 100 nations which signed a  treaty to ban cluster bombs.  In 2009, to their credit, the current National-led government  passed legislation banning these obscene weapons from our country. This included the possession, retaining, stockpiling, assistance, encouragement, or even inducement to deal with them.

NZ Parliament: Cluster Munitions Prohibition Act 2009 (17 Dec 2009)

It would take a ruthless person to discount this human suffering and advocate for our continued investment in their manufacture.

The Superannuation Fund was effectively breaking the law with it’s investments in General Dynamics, L-3 Communications, Raytheon, and the Goodrich Corp.

It’s good to see that our fingers are no longer bloodied by such  investments.

As for right-wingers who dismiss investment in atomic bombs or cluster munition – go play with a cluster bomb.  Come back to me after it’s detonated in your hands. Then we’ll talk.

Just ask the Syrians.

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The bucks stops with me over there, somewhere…

I guess it was inevitable, really…

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Deputy Secretary resigns over Novopay

Acknowledgment: Radio NZ – Deputy Secretary resigns over Novopay

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Did we really, really expect any one of the three Ministers who signed off on Novopay to put their hand up and admit responsibility?!

No less than three ministers signed off on Novopay, to allow it to “go live”;

  • Education Minisrer Hekia Parata
  • Associate Education Minister Craig Foss
  • Finance Minister Bill English

Because doesn’t it strike people as  indicative that Minister for Everything, aka, Mr Fixit, Steven Joyce was appointed Minister in charge of Novopay – thereby taking responsibility for this ongoing balls-up away from Parata?! (see: ODT – Joyce to take on handling of Novopay)

Despite the so-call “ministerial inquiry”, Joyce had a very interesting point to make on 31 January;

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Government sticking with Novopay - for now

Acknowledgement – Radio NZ – Government sticking with Novopay for now

Steven Joyce revealed that Education Minister Hekia Parata, Finance Minister Bill English and former education minister Craig Foss approved the use of Novopay despite being told that it had bugs.”

So… how can  Joyce’s statement be reconciled with his statement, five months later,

Reporting to Ministers was inconsistent, unduly optimistic and sometimes misrepresented the situation.”

Source: Beehive.govt.nz: Ministerial Inquiry report into Novopay released

Either Ministers were “told that it had bugs” or  reporting wasunduly optimistic and sometimes misrepresented the situation“. Which is it?!

By the way, the Ministerial Inquiry was undertaken by Maarten Wevers and Chairman of Deloitte New Zealand Murray Jack.

Mr Weavers was former head of the Department of the Prime Minister (John Key) and Cabinet.

Connect the dots.

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WhiteWash

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Other blogposts: Gordon Campbell on the latest Novopay revelations

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Budget 2013: Child poverty, food in schools, and National’s response

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Maria and the children of the poor - "Metropolis" (1927)

Maria and the children of the poor – “Metropolis” (1927)

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There is a problem with National’s response to child poverty and meals in schools…

First, to re-cap, there was no announcement made in the Budget on 16 May regarding meals in schools,

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Key tight-lipped on food in schools

Acknowledgment: Fairfax Media – Key tight-lipped on food in schools

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Finance Minister Bill English was adamant that any announcement would be  weeks away,

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food in schools

Acknowledgment: NewstalkZB – Budget 2013: No food in schools programme

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Interestingly, whilst National is luke-warm on the idea of feeding hungry children in our schools, they have little  hesitation in throwing our tax-dollars at private, profit-making businesses such as Charter Schools. What next – state subsidies for farmers to produce fatty sheep meat and a butter mountain?

National – the self-professed champion of the free market – throwing taxpayer’s money at private enterprises?

Regarding food in schools, Bill English had this to say about the subject on Maori TV’s Native Affairs last night (20 May),

Mihingarangi Forbes prefaced the interview by reminding viewers of a statement made by John Key with he was leader of the Opposition in 2007,

MIHINGARANGI  FORBES: ” [John Key]… from the Opposition benches, promised, a Food In Schools programme.  Back then he said he wouldn’t wait because “kiwi kids deserved better (see: National launches its Food in Schools programme). So earlier today I asked Bill English why, after six years, thousands of  kids still wait.”

BILL ENGLISH:   “[...] but I think we should keep it in perspective. In the budget there was a wide ranges of measures that are going to have a positive  impact on the complicated problem of children and families who suffer from  persistant  disadvantage.”

MIHINGARANGI  FORBES: “Can I ask, do you personally support, believe that central government should be providing food for children?”

BILL ENGLISH:   “I think we have to deal with the reality that children turn up to school unable to eat, we believe that it’s parent’s respons-,  unable to learn.We believe it’s parent’s responsibility to feed their children. And I think we would find that where children are turning up hungry, there’s probably any number of other issues in the life of that family that are difficult and need resolving. But we need these kids to learn, we can’t punish them for the circumstances that  they’re born into or living in and so that’s why we support feeding them so they can learn.”

When asked when National would implement a plan,  Mihingarangi reminded English that Key had stated that it  was just a “couple of sleeps away”, he responded,

BILL ENGLISH:  “Well, look, I think you should just wait for the announcements in a couple of weeks.”

Acknowledgment: Maori TV – Native Affairs (20 May 2013)

So what is  the  problem with National’s response to child poverty and meals in school that I referred to above?

Firstly the Nats appear to having some kind of internal crisis on this issue – leading to Bill English   delaying any announcement for two weeks after the Budget was released.  (Some have suggested that there is a ‘power struggle’ going on behind the scenes in Cabinet? It has been suggested that an announcement was going to be made on Budget Day – but was pulled at the last minute.)

But the real problem of any food-in-schools programme?

National has not budgetted for it.

The Mana Party “Feed the Kids” Bill is estimated to cost $100 million to implement (see: Mana Party – Fact Sheet). Any plan from National – unless it is half-hearted and watered down – will also require considerable resourcing.

Where is National’s Budget allocation for implementing any meaningful food in schools programme?

There does not appear to be any.

As National continues to dither and delay on this problem (I refuse to call it an “issue”), there is a feeling of  growing dread within me that National ministers are going to deliver the biggest cop-out to the country since… whenever.

No food, no money, no solutions.

Message to John Key & Bill English

Prove me wrong.

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Leaving the Rich untouched

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References

Mana Party: A MANA Analysis of the 2013 Budget:  Increasing Poverty, Not Reducing Poverty

Scoop: National launches its Food in Schools programme ()

Radio NZ: Labour criticises ‘funny money assumptions’ on surplus (20 May 2013)

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A Clear Warning to Investors in SOEs…

11 March 2013 12 comments

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soe powercos

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The recent financial crisis and near-collapse of Solid Energy – one of the five, state owned enterprises planned for partial-privatisation – should serve as a warning for those investor-vultures circling to buy shares in any of the SOEs.

In fact, recent history regarding Air New Zealand, Kiwiwail, and (non-privatised) BNZ in 1991,  are indicators that privatisation of state assets is not a guaranteed roadmap to wealth,

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The Air New Zealand crash

Source

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It is noteworthy that one of the cause of Air New Zealand’s collapse was it’s foolhardy buy-out of Australian airline, Ansett,

First, the decision by Air New Zealand to pay dividends and second, the decision to buy the second half of Ansett. Both moves turned out to be considerably more beneficial to the interests of Brierleys than those of Air New Zealand.

Take the Ansett purchase. In early 1999, Cushing announced that Air New Zealand was vetoing Singapore Airline’s bid to buy News Corp’s 50% of Ansett Holdings (Air New Zealand had held the other 50% of Ansett since September 1996). Instead, it decided to pay News Corp $A580 million and get 100% control.

It’s most likely true that Air New Zealand paid too much for the stake and that directors had too little information about Ansett’s financial and engineering state. These are well-aired opinions, but are secondary to the main question that should be asked: Why did Air New Zealand buy the second half of Ansett at all? It’s not just that it was hopelessly out of its depth buying an airline twice its size. It’s just hard to see any benefits – to Air New Zealand, that is.

Source: IBID

On top of that were big dividend demands from one of Air Zealand’s major shareholders, Brierley’s,

The at times cash-strapped investment company held between 30% and 47% of shares over the period so, based on the total dividend of $765 million, Brierley reaped an estimated $250 million to $380 million from the airline. And Air New Zealand’s decision to buy the second half of Ansett, cutting Singapore Airlines out of the deal, contributed to Brierleys being able to do its own deal with Singapore.

In April last year, two months after Air New Zealand bought Ansett, Brierleys sold Singapore Airlines all its Air New Zealand “B” shares for $285 million, or $3 a share. It was arguably the last exit option for Brierleys from these shares, and, apart from a spike at the end of last year, Air New Zealand shares have largely tracked downwards ever since – they were trading around 30 cents as Unlimited went to press.

Source: IBID

In other words, Air New Zealand had over-extended in unwise investments (as has Solid Energy), and was bled dry by rapacious demands for dividends (as did Faye Richwhite in NZ Rail in the early 1990s).

How does this relate to the upcoming partial-sale of Mighty River Power?

Recent revelations that Mighty River Power has shaky investments on Chile, should cause potential investors to pause for thought,

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Key struggles to push Chilean investments

Source

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According to the TV3 story above, “Mighty River Power has spent $250 million at the geothermal plant in southern Chile, but has just written off $89 million as the investments struggle“.

To which Key responded casually,

There is always risk.”

Dear Leader  seems somewhat blase about investors’ risks? Of course he is. It’s not his money.

The Crown Ownership Monitoring Unit (COMU) reported,

Impairments

During the period, the Company recognised $91.4 million of impairments principally reflecting its investment in the GeoGlobal Partners I Fund (GGE Fund), and its greenfield explorations for potential developments in Chile and Germany.

This impairment followed higher than expected costs at the Tolhuaca project in Chile due to the worst winter in 40 years adversely affecting drilling performance and only one of the two wells having proven production capacity. The value of GGE’s investment at Weiheim in Germany, has been impacted by increased costs due to required changes in the drilling location following the 3D seismic surveys and delays from environmental court challenges which have been resolved post balance date.

The GGE Fund had not raised capital from other investors by the end of the 2012 and Mighty River Power made the decision not to invest further capital into the existing structure. Overall, the impairment charge of $88.9 million for the German and Tolhuaca assets and the management company of GGE LLC leaves a residual book value of $91.8 million.

Source: Mighty River Power LtdResults for Announcement to the Market

On top of  Mighty River Power’s dodgy investment in Chile, New Zealand is now experiencing what is being called the worst drought in seven decades  (see:  North Island’s worst drought in 70 years). As Climate scientist Jim Salinger said about New Zealand’s current weather patterns continuing, and becoming  similar to the Mediterranean,

What it means is that if it just doesn’t rain for at least four months of the year, it means you have to bring in your water from elsewhere.”

Source: IBID

As all investors should bear in mind; most of our power generation is generated from  hydro stations. Mighty River Power, especially, derives most of its electricity from eight  hydro-electric stations on the Waikato River.

Mighty River Power CEO, Doug Heffernan has given a clear warning,

Following the lower than average inflows into the Waikato catchment during the last quarter [to December 31], Mighty River ended the half year at just 69 per cent of historical average [hydro storage].”

And Equity analyst Phillip Anderson of Devon Funds stated,

The same period last year they got really strong inflows, and this is the exact opposite . . .

In the second half of this reporting year they’re going to have to buy a lot more electricity to feed their customers, either on the spot market at a lot higher cost or use their [Southdown] gas plant.

We expect the second half of this year is going to be a lot tougher for them, they should get their margins squeezed if that all plays out.”

Source: Parched Waikato could hit Mighty River Power

The equation is blindingly simple,

Less rain = less water = less electricity generation

The question that begs to be asked is; where does the risk of investing in SOEs fall – private investors, or the State?

The answer I submit to the reader is, that like Air New Zealand, it will be private investors who bear the brunt of all risk. The State will simply pick up the pieces,  buying up shares at bargain basement prices, should anything go wrong.

Electricity generators like Mighty River Power will simply never be allowed to fail. Had the Labour government in 2001 allowed Air New Zealand to collapse, the fall-out to the rest of the reconomy would have been too horrendous to contemplate, and flow-on effects to other businesses (eg; exporters and tourism) and the economy would have been worse than any bail-out.

But any bailout will involve a massive loss for investors, as their share-value plummets. Again, Air New Zealand was an example to us all.

As the impact of climate change creates more uncertainly for our state power companies, investors need to think carefully before committing one single dollar toward buying shares,

Do I really want to bear all the risk?

Those who lost out on their investments in Air New Zealand in the 1990s will probably answer,

No.

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References

The Air New Zealand crash (1 November 2001)

A history of bailouts (7 April 2011)

Foreigners important for SOE sell-downs: Treasury (30 June 2011)

No law stopping foreign investors (16 Dec 2011)

Parched Waikato could hit Mighty River Power (22 Feb 2013)

Mighty River Power shares float mid-May (4 March 2013)

Taking the plunge in Mighty River (9 March 2013)

Key struggles to push Chilean investments (9 March 2013)

North Island’s worst drought in 70 years (10 March 2013)

Other blogs

Seemorerocks: An Appeal for a New Zealand Risk Assessment

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Dear Leader Key blames everyone else for Solid Energy’s financial crisis (Part Rua)

9 March 2013 4 comments

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national blighted hoarding 12 it's all labour's fault

Acknowledgement

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

Opposition Party members of the Commerce Select Committee are demanding that  ex-CEO, Don Elder appear before the Select Committee to answer questions what went wrong at Solid Energy.

With unanswered questions about Solid Energy’s financial crisis; a murky history leading up to current events; big bonuses paid out as the company’s accounts were sinking into the red; and revelations that Don Elder is still recieving his  $1.3 million annual salary  – whilst working from home “serving out his notice” – pressure is mounting on National.

Solid Energy went from a multi-billion dollar company to being heavily indebited to $389 million.

How did this happen?

Did ministerial shareholders Bill English and Tony Ryall not notice?

Were they not receiving reports from Solid Energy’s Board of Directors?

Were no rumours or conversations floating around?

How does one keep a secret like that in a small country like New Zealand? (In which case  should Solid Energy take over our country’s security, from the GCSB and SIS?)

Why were we paying Don Elder for ($1.3 million p.a., plus bonuses no doubt) if not to be held to account?

On 8 March, Key was reported as saying,

“If he wants to go [to the Select Committee hearings] and they want him to go he is not going to get any opposition from my office.”

Source

And SOE Minister chipped in with this,

“It’s a matter for the Commerce Select Committee, Solid Energy and Dr Elder whether or not Dr Elder attends, but I don’t have a problem either way.”

IBID

Good. Because the public – who own Solid Energy – deserve answers. Thus far all we’ve had is the usual finger-pointing by National, with childishly pathetic  attempts to blame Labour for Solid Energy’s woes. As if Labour was still in government and the 2008 and 2011 general elections never happened.

This statement from Key, on 26 February 2013, simply doesn’t wash,

“They  [Labour] can’t wash their hands of the fact that from 2003 on, they were intimately involved with the plans that that company had.

The argument that somehow we would have gone in, in 2009 when the company was performing well, its results were good, the valuation of the company was going up, and just gone and sacked the board on day one is a bit fanciful.

Maybe we should have re-tested those [Labour-approved] initiatives but actually we gave [Labour] the benefit of the doubt that they might get one thing right.”

Source

“2003″?

That was ten years ago!  What has National been doing in the meantime?

As far back as September 2011, the Nats were abundantly aware that Solid Energy was embarking on expansion plans,

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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.

Source

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Here’s the photographic evidence, from National’s own ‘Flickr’ account, same date, 9 September 2011 – that’s Finance Minister Bill English, “turning the first sod of earth” for Solid Energy’s  Mataura Briquette Plant  in Southland. That plant was part of their expansion plans,

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solid-energy-chief-executive-don-elder-and-hon-bill-english-at-mataura-9-sept-2011

Source

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Only three months earlier, in June 2011, Key himself was supporting Solid Energy’s explansion plans,

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national business review - nbr - Key supports Solid Energy's lignite plans

Source

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Note Key’s comment in the above article in the National Business Review (hardly a leftist rag),

At the moment companies like Solid Energy are growth companies and we want them to expand in areas like lignite conversion.”

So for Dear Leader to blame Labour is not only disingenuous – it is cowardly.

It shows the entire country that the man who is supposedly or Prime Minister hasn’t got the balls to take it on the chin and admit that he and his Party f****d up. Big time.

Even the editorial from the Dominion Post said, with unconcealed exasperation on 2 March 2013,

There are always excuses when a company starts to fail. John Key’s explanation for the trouble at Solid Energy, however – he blamed the Labour government – was pitiful.

It was Trevor Mallard’s fault, apparently, for encouraging SOEs to spread their wings and fly. That was in 2007 or 2008.

This won’t do, and not just because Mr Key’s Government has been in power for more than four years. His argument also contradicts itself. A Labour government was seemingly omnipotent and could have its way with the state-owned coal company. But National had no such power.

The Government certainly said no when Solid Energy asked for a billion dollars to turn itself into a super-company along the lines of Petrobras, the Brazilian giant. Mr Key says it had grave doubts about the company’s expansion plans. His political opponents point out that he and Bill English had publicly backed Solid Energy’s big plans for lignite conversion and briquetting.

Source

This blogger welcomes Don Elder fronting up to the Commerce Select Committee.  However, that is simply not sufficient. In the interests of full justice, the following should occur,

  • John Key should front up and answer questions as well,
  • Bill English should front up and answer questions,
  • Tony Ryall should front up and answer questions,
  • All documentation should be made available to the Committee,
  • The Chairperson of the Select Committee – National MP Jonathan Young, should stand aside and  be replaced by a non-partisan senior judge or Queen’s Counsel,
  • If necessary, if the Committee is unable to answer questions, a full Royal Commission in Inquiry should be held.

National prides itself on being the party of ‘personal responsibility‘. It is no such thing. It is the party of personal advantage and not much more.

Thus far all we’ve had are evasiveness  and pathetic attempts to blame others. We’re also seeing more of the same from our Prime Minister;  bullshit.

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Previous related blogposts

National under attack – defaults to Deflection #2

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

Taking responsibility, National-style

References

NZ National Party: Solid Energy chief executive, Don Elder and Hon Bill English at Mataura (9 Sept 2011)

Scoop.co.nz: Solid Energy starts work at Mataura Briquette Plant (9 Sept 2011)

NBR: Key supports Solid Energy’s lignite plans (3 June 2011)

TV3: Govt, Labour squabble over Solid Energy (26 Feb 2013)

Dominion Post: Editorial: Solid Energy excuses fuel anger (2 March 2013)

TVNZ: Pressure grows on Don Elder to front over Solid Energy (8 March 2013)

Fairfax media: Minister, PM fine for Elder to appear for grilling (8 March 2013)

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

28 February 2013 11 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.

Source

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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

Source

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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

Source

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Govt, Labour squabble over Solid Energy

Source

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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

Source

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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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Bill English – do you remember Colin Morrison?

4 February 2013 20 comments

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A message to the Hon. Bill English;

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English slams Shearer's speech

Source

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From the NZ Herald on 27 January, uttered by Bill English,

On top of that, Labour still hasn’t apologised for their wasteful policies the last time they got their hands on the economy.

See: IBID

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Firstly, let’s review recent history in decidely more accurate terms,

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New Zealand Government Debt To GDP

Source

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The IMF (International Monetary Fund) chart above shows that from 2000 to 2008, the Labour government paid down debt, from 33.4% in 2000 to 17.4% in 2008  (a near-halving of our sovereign debt) to  when National took the reigns of government.

Some will even recall that Labour Finance Minister, Michael Cullen, posted several surpluses during his tenure as Finance Minister,

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$2,300,000,000: Dr Cullen’s finest hour (29 May 2002)

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Cullen prepares to trumpet high surplus (21 Feb 2003)

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Cullen Unwilling To Share Fiscal Surplus Through Tax Cuts (18 Oct 2004)

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Hide attacks Cullen for hiding huge surplus (16 March 2005)

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Record surplus, but Cullen ‘won’t know about tax cuts until December’ (11 Oct 2006)

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Cullen confirms huge surplus (10 Oct 2007)

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Cullen quick to emphasise volatility after surplus hit (19 Feb 2008)

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Just as well that Cullen resisted strident calls for massive tax cuts. Instead, perhaps being the wisest man in the decade, realised that common sense demanded that we pay down our sovereign debt, rather than splurge out on an almighty cash-lolly scramble.

Had Cullen yielded to calls for tax cuts instead of addressing our debt, our current sovereign debt would probably be approaching  Greece’s.

But Bill English and other National/ACT sycophants don’t want us to know this. It makes Labour look good. And that’s the last thing they want.

After 2008, as National gave away tax revenue on the form of two unaffordable tax cuts in 2009 and 2010, debt skyrocketed from 17.4% to 37% of GDP.

Now, if  one was to use the same mis-information as Bill English, John Key, et al, I could shout from the roof-tops that the rise in debt was due wholly to National’s mis-management of the government books.

The reality, of course, is that the 2007/08 Global Finance Crisis – as well as National’s incompetance in giving away tax cuts we could ill afford – both had a part to play in our increased borrowing.

Secondy, let’s deal with English’s claim,

On top of that, Labour still hasn’t apologised for their wasteful policies the last time they got their hands on the economy.

Budget expenditures from the early 1990s to 2012 reveal an interesting story,

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New Zealand Government Budget

Source

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The early 1990s (characterised by Finance Minister, Ruth Richardson) was one of massive cuts to health, welfare, sale of State houses,  and other social services. The same can be said of the late 1990s, where de-regulation; so-called “reforms“; cuts to state services;  and increasing User Pays led to growing poverty and the widening income gap.

Eventually, those cuts to state services had dire consequences. For example, the health sector was particularly badly hit,

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Claim many burned out by health sector reforms – (21 Dec 1996)

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More health changes tipped – (8 March 1997)

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Must pay for ‘wants’ – (19 July 1997)

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Cuts to hospital services expected – (8 Aug 1997)

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‘Serious flaws’ in Govt’s health funding formula – (31 Jan 1998)

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GP hits out at health reforms – (3 Feb 1998)

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Funding for Dunedin Eye Clinic Slashed – (26 Feb 1998)

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Shipley, Bolger sorry for deaths of patients  – (3 April 1998)

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Health cuts spell doom for services – (30 April 1998)

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Hospitals now owe $1.3 billion – (4 June 1998)

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Staff shortages could hit patient care, say nurses – (4 May 1999)

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Public hospital ills blamed on funding – (20 Aug 1999)

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Health spending rates poorly  – (24 Aug 1999)

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The Health “reforms”, along with chronic under-funding, had their inevitable consequences,

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Death The Northland Way (15 Oct 1997)

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Died waiting for by-pass  (6 April 1998)

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Rau Williams and Colin Morrison – both with entirely different lives;  living at opposite ends of the country; one Maori, the other Pakeha – both suffered the same fate. They died because government cutbacks on spending (see red square in  above chart) had reduced the Health budget, and as media reports above show – were impacting harshly on our society.

These two men – and  perhaps others who died quietly, shunning the glare of publicity – died on Bill English’s watch.  As Minister responsible for Crown Health Enterprises and later Minister of Health, English could not shift responsibility to anyone else.

At one point, English was forced to concede that the Health system and funding mechanism was “flawed”,

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English may review waiting list funding  (11 April 1998)

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English agrees system flawed (19 May 1998)

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Tragically, Mr English’s “Road to Damascus” experience was too late for Mr Williams and Mr Morrison and their families.

Is it me, or does  it seem that everything National touches turns into one, big, steaming cow-patty?

Finally, by 1999 the country had had enough. On 27 November, the country went to the polls and National and their coalition ally, NZ First, were roundly defeated.

The incoming Labour-Alliance government was faced with a crippled health sector (amongst other state services that had been cut back) that had been impoverished and  was struggling to perform it’s most basic core services,

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Cancer patients face string over staff shortage – (9 June 2001)

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Maternity crisis set to get worse -  (6 July 2001)

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Despair at lack of young doctors – (11 Nov 2001)

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Local cancer patients die waiting for radiotherapy – (17 Nov 2001)

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A crisis that could only be remedied by a hands-on government prepared to make appropriate funding decisions,

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Waiting lists for elective surgery cut – (24 April 2000)

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Health Minister will end user-pays wards – (9 July 2000)

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More money promised to fund GPs, health clinics – (17 Nov 2001)

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$1.5b injection for health – (9 Dec 2001)

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Upshot of this, Mr English?

Any increase in funding of state services was necessary. After savage cuts, National created a situation where our healthcare system was unequivocally unsafe.

In fact, it had  become lethal. People were dying for lack of appropriate medical intervention.

That was the legacy of the National Government, 1989 – 1999.

So before Mr English or any of his cronies complain that Labour  spent more than National did – damn right they did. And the increased health funding under Labour probably saved an unknown number of lives.

Tell us, Mr English, do you remember Colin Morrison and Rau Williams?

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Addendum 1

By the way, Mr English, with reference to your criticism of the Green Party regarding job creation,

And to make it worse, at the same time their coalition partners the Greens are up in Auckland busy working out how to stop everything they don’t like – which includes everything to do with growth and jobs.

Source

There’s no need to point the finger at the Greens and blame them for lack of growth and jobs. The  inept National Party are quite efficient at stifling the economy and creating rising unemployment,

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New Zealand Unemployment Rate jan 2012 - dec 2012

See: Unemployment rate lifts to 6.7pc

See: 8000 more jobless as rate hits 6.8pc

See: Unemployment up to 7.3pc – a 13 year high

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Economy may be going backwards

See: Economy may be going backwards

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No need to invoke the Green Party (who aren’t even part of the National-led coalition) – it seems National is quite adept at grinding  the economy into the ground.

Credit where it’s due, Mr English, credit where it’s due.

Addendum 2

The Bolger-led National cut taxation-revenue by implementing two tax cuts, in 1996 and 1997. (see: Reserve Bank – New Zealand’s remarkable reforms)

Why does this sound more and more familiar?!

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References

Reserve Bank: Reserve Bank – New Zealand’s remarkable reforms (4 June 1996)

OECD: Economic Surveys: New Zealand 1996

Treasury: Briefing to Incoming Government 1996 (12 Oct 1996)

NZ Herald: McCully: Jobs backtrack no surprise

Dominion Post: Key hands-on in MFat restructuring

NZ Herald: Defence Force plan to cut costs a failure – Auditor-General

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Did we just hear Steven Joyce sh*t all over his colleagues?!?!

31 January 2013 14 comments

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Government sticking with Novopay - for now

Acknowledgment: Radio NZ – Government sticking with Novopay – for now

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Steven Joyce,

Steven Joyce revealed that Education Minister Hekia Parata, Finance Minister Bill English and former education minister Craig Foss approved the use of Novopay despite being told that it had bugs.”

See: IBID

In colloquial terms, that is what is known as ‘dropping someone in it’ – “it” being brown, smelly, and heading for waste-treament ponds.

Is there a civil war going on within National, comprising two factions with one led by technocrat Steven Joyce and the other by neo-liberal Bill English?

Or is there something even more disquieting going on within National’s ranks.

Joyce added,

There was definitely knowledge there were bugs at the outset of going live. But the advice of all involved was that the thing should proceed. I doubt they’d give the same advice today.

Noticeably, when queried by media, all three Ministers had similar responses – obviously coached by the same tax-payer funded Party spin-doctors and media-minders,

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Mr Fix-It has Novopay plan

See: Mr Fix-It has Novopay plan

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Hekia Parata

I think hindsight’s a wonderful thing....

Bill English

In hindsight....

And the tongue-tied Craig Foss,

Well in hindsight… is a benefit of hindsight...

See: IBID

You can always tell when a politician has been coached; they use the same words and phrases over and over again. Spin doctors/media-minders develop a mantra, and their clients are expected to learn and parrot it, by rote. It takes a skilful journalist/interviewer to peel away the carefully-crafted coaching and get to the truth.

This indicates that Parata, English, and Foss had been pre-warned of Joyce’s press conference and admission of the three Minister’s actions.

So is this some sort of carefully managed internecine warfare?

Or a very subtle, clever strategy to neutralise possible Opposition disclosures in Parliament?

Joyce’s statements that there will be on-going problems with Novopay could be seen as an attempt to minimise future media reports on Novopay errors.After all, if National admits that there will be ongoing problems – does that make it news when it happens?

Whichever is the case, this is Steven Joyce at his most cunning, and the Opposition will need to be on their toes. As will the media, if they are not to be out-manouvered by National’s “Mr Fix It”.

“Mr Fix It” does not apply to sorting out computerised pay systems. “Mr Fix It” fixes political messes.

This certainly qualifies as the Mother of all Messes.

Addendum

As is common with National, Joyce attempted to shift blame onto advisors/bureacrats/Uncle Tom Cobbly, when he stated,

There was definitely knowledge there were bugs at the outset of going live. But the advice of all involved was that the thing should proceed…

My bet is that we will never, ever see this “advice”.

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= fs =

Finally – mainstream media is catching up…

9 November 2012 4 comments

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Full video

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In an extraordinary development, TV3 launched a full scale criticism of National’s failure to meet it’s Budget Day promise, last year, to create 170,000 new jobs.

Bill English at first tried to dismiss the horrendous rise in  unemployment (7.3%, from the previous 6.8%) as,

You could call it a blip. There are slow patches but we are on track for 2 to 3% growth.”

But he was eventually pressured to admit,

In the past two years, [there are] 26,000 people in new jobs, but in the last quarter no new jobs – which is why we want to crack on. We are behind the 170,000 track.”

Which  is as close as we will ever get to a National politician conceding that they and their neo-liberal, free market, hands-off, approach has failed.

Every other country on this planet is actively engaged in proactive management of their economies and social policies. Only New Zealand – ‘governed’ (and I use that term loosely) by  a Party that is slavishly pursuing a thirty year old dogma – is standing back as our economy goes down the proverbial toilet and will end up flushed out somewhere in the Cook Straight.

The economic realities;

  • Unemployment: up from 6.8% six months ago, to 7.3%
  • Export sector: in crisis as our over-valued dollar makes selling our products overseas barely worthwhile, losing profits and ending up with staff redundancies
  • A critical housing shortage
  • A growing poverty-wealth gap
  • and thousands more New Zealanders heading overseas

This is in stark contrast to John Key’s vision of the  ‘Bright New Future’ that he promised us last year, and the many fine-sounding speeches he made before that  in 2008 and since. Unfortunately the rhetoric doesn’t match National’s deeds or results – not by a long shot.

Faced with trenchant criticisms from all direction, English lamely replied,

We think we have the balance about right.”

God help us.

TV3′s handling of the story left the viewer in no doubt that National was being hauled over the coals. And with a critical analysis not seen for a long time during Dear Leader’s reign.

The steep rise in unemployment was the final signal that National has had an Epic Fail, and from now on it is “gloves off ” by the mainstream media.

As BERL’s economist, Ganesh Nana said bluntly,

You have a seven in front of unemployment, you have a five in front of dairy forecast payout, a zero in front of inflation and export growth – how many warning signs do you need on the dashboard until you do something different?

Without changes to our policy settings, the short term picture is not pretty, with our models projecting even further rises in jobless numbers.

Only a year ago, centre-left bloggers  had come to this same conclusion when,  after the last election, it quickly became apparent to the likes of Tumeke!, The Jackal, The Standard, Bowalley RoadWaitakere News The Dim Post, et al, that National was reliant on a failed neo-liberal agenda to ‘govern’.

National was not going to govern with pragmatic common sense – it was going to govern from an ideological stance, and nothing was going to change it’s direction.

Since last year’s election, New Zealand has been at undeclared war with it’s own “government”, as unpopular policy after unpopular policy was dumped on us.  Coupled to Key’s unhealthy, blind support for the corrupt Member for Epsom;  the lies that followed from both men;  and this was a “government” we were losing faith in.

TV3′s Duncan Garner simply repeated what bloggers and other commentators have been saying for the past year,

Key says now is not the time to change course. But economists are all largely saying the economy has gone into a fragile state.

[...]A change of course is urgently required if New Zealand is to avoid yet another damaging recession.

The Government was shell-shocked by yesterday’s numbers, but it’s praying with its fingers crossed that things come right.

It’s risky. The expensive tax cuts from three years ago have had little impact.

Christchurch needs to be rebuilt fast and Auckland has alarmingly softened, although its house prices haven’t.

That’s seriously concerning, especially when your second largest city is in rubble.

Forget gay red shirts, comments about ‘batsh*t’ and what Key knew or didn’t know about Dotcom.

This blows all that away in terms of importance. This is fundamental. This is the serious stuff.

It’s people’s lives, their jobs, their mortgages, their families, their hopes, their dreams and their security.

It’s the economy, stupid. It wins and loses elections.

The Prime Minister’s sole focus needs to be the economy.

If he can’t turn this around or halt the slide – National will likely lose the Treasury benches in 2014.”

See:  Opinion: Is our economy collapsing?

“Is our economy collapsing” askes Duncan Garner? The answer, Duncan, is yes; it is. You just needed to pay closer attention to what the rest of us were saying all along.

As for John Key – I suspect he’ll be avoiding other media from now on, and not just Radio New Zealand.

Dear Leader’s bunker awaits, as critics close in on him and his harried Party.

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Dear Leader, GCSB, and Kiwis in Wonderland…

1 October 2012 5 comments

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As the Dotcom-GCSB Affair drifts further into ‘The Twilight Zone‘ (or Wonderland),  we learn the latest anouncement that Secretary of Cabinet, Rebecca Kitteridge, will be seconded to the GCSB to oversee a review of the Bureau.

The NZ Herald reports,

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Full story

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The Herald lists Ms Kitteridge’s responsibilities to include:

  • Review the systems, processes and capabilities underpinning the GCSB’s collection and reporting,
  • Build capability and provide assurance to the GCSB director that the compliance framework has been reviewed, improved and is fit for purpose.
  • She will establish new, specific approval processes for activity in support of police and other law enforcement agencies.

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Meanwhile, NZ First Leader, Winston Peters, managed to extract this gem from Dear Leader during Question Time in Parliament,

Government Communications Security Bureau—Briefings Since November 2008

3. Rt Hon WINSTON PETERS (Leader—NZ First) to the Prime Minister: How many times has he been formally briefed by the Government Communications Security Bureau, by year, since November 2008?

Rt Hon JOHN KEY (Prime Minister) : My diary indicates that I have been formally briefed by the Government Communications Security Bureau the following number of times, by year, since 2008: twice in 2008, 15 times in 2009, 11 times in 2010, 10 times in 2011, and 15 times in 2012.

Source: Parliamentary Hansards, 25 September 2012

Key’s response is extraordinary for two reasons,

  1. He gave a serious answer and not the flippant, juvenile wise-cracks he normally indulges in (which, we, the taxpayer, have to pay for as he wastes Parliamentary time)
  2. The answer he gave revealed that Key had met with the Government Communications Security Bureau (GCSB) fifteen times this year alone – and the subject of GCSB surveillance on Kim Dotcom – possibly one of the most colourful, controversial, and contentious people in the country – was never raised once?!?!

John Key. Met. With. The. GCSB. Fifteen. times.

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It is worthy to note that Ms Kitteridge’s  three areas of responsibilities,

  • Review the systems, processes and capabilities underpinning the GCSB’s collection and reporting,
  • Build capability and provide assurance to the GCSB director that the compliance framework has been reviewed, improved and is fit for purpose.
  • She will establish new, specific approval processes for activity in support of police and other law enforcement agencies.

… and nowhere is it written that she should ask the question on all our minds: how can the Prime Minister – the one man who has oversight  over the SIS and GCSB – not have discussed Kim Dotcom with either of the Security Agencies?

There can be only two possibilities;

#1.

Key lied – and the matter of Dotcom was discussed.

#2.

The GCSB deliberately witheld this matter from the Minister in charge of the GCSB.

Either way,

Why are there no resignations/sackings?

Why is Ms Kitteridge not charged with finding out the truth of this issue?

Why is John Key refusing a full inquiry on this issue?

Why did Bill English sign off on a warrant to suppress the GCSB’s wrongdoing?

Who lied?

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Sources

Parliamentary Hansards, 25 September 2012 (25 Sept 2012)

Inspector-General’s report released by PM (27 Sept 2012)

Dotcom case: GCSB review ordered (1 Oct 2012)

Cabinet Secretary to head review of spy agency (1 Oct 2012)

Other Blogs

5AA Australia: Across The Ditch With Sean Perry & Selwyn Manning – The Illegal GCSB Spying Scandal

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Christchurch, choice, and charter schools

15 September 2012 14 comments

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National is a Party of choice. National loves to give individuals choice. National hates the idea of  “Nanny State” taking away the individuals’ right of  choice and governments making decisions on their behalf. National believes that  individuals know better than the state.

“Choice is good”.

“State decisionmaking is bad”.

According to National.

Which is why, when National announced it would be adopting ACT’s policy of implementing Charter Schools (in poor areas only – but no doubt that was just a coincidence), choice was high on the list of rationale’s for this policy,

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Full Story

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Dear Leader John Key stated,

” It’s a step towards more choice, at the end of the day I expect the vast bulk of schools will be the same as they are now.”

See: Ibid

Little Dear Leader, Bill English, parrotted the Party line; Charter Schools offered choice,

Hon BILL ENGLISH: As the member knows, the issue of whether teachers are qualified is being discussed in the context of charter schools, which will offer an element of choice, although a very small element of choice, in the general school system. All other schools will continue to run with registered teachers.

Hon BILL ENGLISH: In respect of the State-run schools, no. In respect of the charter schools, it is an aspect of providing choices for young New Zealanders that are not currently available to them. “

See: Parliament: Questions for Oral Answer

National MP for Maungakiekie, Peseta Sam Lotu-Iiga, repeated the mantra (in case we missed it the first time),

With our Government’s focus on raising achievement for all our students, I see partnership schools as just another option for our parents and students. It will give them more freedom to choose the type of education that best suits their children’s learning needs.

See: Scoop.co.nz – Partnership Schools are Good for High Needs Communities

And the only human member of ACT with high-functioning mental processes, Catherine Isaac, chipped in (as it was ACT policy after all – even though it had never been announced during last year’s election campaign),

Well, what is different is that these schools are going to get greater freedom to innovate, to find different ways of engaging with children who are struggling to learn, and you need more opportunities, more freedom... “

See: Scoop.co.nz – Q+A – Corin Dann interviews Catherine Isaac and Ian Leckie

It is abundantly clear that National’s preference is always; choice. Lots and lots of choice!

Except…

When National takes away an entire city’s choice.

Like with Christchurch,

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On 13 September, National announced the closure or mergers of dozens of schools in the quake-hit city of Christchurch. Amongst those closing or merging, according to  NBR and Radio NZ stories on 14 September,

Schools to close include:

  • Aranui High years 1 to 13
  • Aranui Primary
  • Banks Avenue Primary, or relocate depending on geotech report
  • Branston Intermediate
  • Burnham Primary
  • Burnside Primary
  • Chisnallwood Intermediate years 1 to 13
  • Duvauchelles Primary
  • Glenoor Primary
  • Greenpark Primary
  • Hammersley Park Primary
  • Le Bons Bay Primary
  • Linwood Intermediate
  • Manning Intermediate
  • Ricmond Primary
  • Wainoni Primary

Who will merge:

Avonside Girls High will merge with Christchurch Girls High as a “dual shift” or may close depending on geotech report.
Christchurch Boys High will possibly merge with Shirley Boys High as a “dual shift”.
Central New Brighton Primary will merge with New Brighton Primary.
Burwood School and Windsor School on Windsor School site
Discovery One School and Unlimited Paenga Tawhiti as Year 1 to 13 school
Freeville and New Brighton North School
Linwood Avenue School and Bromley School on Bromley School site
Lyttleton Main School and Lyttleton West School
Philipstown School and Woolston School (moving to new site)
South New Brighton School and Central New Brighton School
Te Kura Kaupapa Maori o te Whanau and Te Kura Kaupapa Maori o Waitaha

See:  Up to 13 Chch schools to be closed, as many as 18 will merge

See:  13 schools to close, others to merge in Christchurch

The shock news was delivered to a packed meeting of  principles and Boards of Trustees members by these three,

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DELIVERING THE NEWS: Earthquake Recovery Minister Gerry Brownlee, Education Minister Hekia Parata and Secretary for Education Lesley Longstone deliver the news.

Source

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The proposed closures and mergers would result in hundreds of teachers losing their jobs; thousands of students uprooted and moved; and the remaining  centres of communities – which have lost many of their infra-structure and services – finally eradicated.

The response from many Christchurch education-sector workers, parents, and residents was unsurprisingly one of anger and disgust. It seems that what the earthquakes had begun – National was hellbent on finishing off.

For many, this was an unprovoked, unforeseen, craven attack on their communities,

I state here and now … Shirley Boys’ High School as a school exists and will continue to exist – mark it. There is no way in God’s creation that we cease to exist. (source)

We are not going to merge for the most practical reason. I have 1300 students in the school I think Trevor McIntyre at Christchurch Boys’ will have something similar.

To simply say that Shirley closes and suddenly Christchurch Boys’ High School is equipped to double in size is absurd. They don’t have the land, they don’t have the infrastructure. It’s nonsense. (source)”

- John Laurenson, Shirley Boys’ High School principal

I just don’t understand what’s going on . . . my boy’s got three years left and I didn’t want him to move.

We live nearby and yes, it’s damaged but this is our community so you can’t just pick us up and move us.”

- Tracey Dearden, Parent

We’ve got five classrooms at our school, excellent staff doing wonderful things and just can’t for the life of me see why they would want to close Ouruhia.”

” I wonder how many people who were staying so their kids had stability and didn’t have to be uprooted from schools, will now leave and follow all the others to Brisbane… say 20 schools x 500 pupils/school… is a lot of affected families…. “

- Anonymous

Men and women are in tears at the possibility of losing their jobs, their schools and communities.

Schools are the focal point of their communities. Schools are identified by the names of their community. Families now have to gravitate, take their children to other places, create new identities.

This is going to affect families in a major way. This is going to affect parents in a major way, just like it is going to affect teachers and children.”

- Paul Kennedy, Cathedral Grammar school headmaster

Our house is TC3 and everything around this school is red-zoned pretty much, but Banks Ave has been the one and only constant in their lives since the earthquakes.

Children had gone through enough without having their school taken off them“.

- Haley Thompson, Parent

We got more than we bargained for today.”

- Philip Harding, Paparoa Street School principal

 “Where are the kids supposed to go? Haven’t we been through enough? Half the kids are on medication because of the earthquakes.”

- Thea Turner, Parent

No parent is going to enrol their child in an intermediate school that they know is closing so already we’re looking at losing half our pupil population next year alone.

I need to look after my staff, maintain the quality of teaching and keep looking after the children because they’ve been heroes since the quakes . . . everyone has gone through so much and now we have to go through this.”

- Geoff Siave, Shirley Intermediate principal

As this blogger pointed out above; National loves choice.

Except when it’s not convenient.

Then it will  act with all the ruthlessness of a mad Arab dictator or  ex-Soviet Asiatic republic that never quite “got democracy“.

National will give us the ‘choice’ of Charter schools, whether we want them or not.

Whilst at the same time it will gut the heart out of Christchurch, inflicting more heartache, stress, misery, and uncertainty on a city that has endured more than the rest of us could possibly imagine.

I leave the reader with this piece, taken from a National Party 2011 policy-document on education,

12. Support Canterbury

Rebuilding Canterbury is a top priority for National. We supported the people of Canterbury in the immediate aftermath of the earthquakes and we are committed to getting greater Christchurch back on its feet over the coming months and years.

National:

• Ensured all schools were up and running eight weeks after the February earthquake.
• Double-funded students who moved out of Christchurch for 2011. That is, we funded the Christchurch school they no longer attended and also funded the school outside of Christchurch they did attend.
• Created new exemptions so that Christchurch students would not unfairly miss out on NCEA qualifications.

National will rebuild the Canterbury school network

* Ensure schools make the most of their facilities and resources, and they collaborate rather than compete with each other.
* Ensure there is a range of education provision so parents can continue to have choice about what type of school they send their children to.
Schools in Christchurch will become part of the most advanced schooling network in New Zealand with facilities that support education in the 21st Century.

See: National Party – Education in Schools – Building Better Public Services

Choice.

We all have it.

Especially on Election Day.

- Christchurch schools -

- Lest We Forget -

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Additional

Scoop.co.nz: Christchurch schools to reopen as charter schools?

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The real cause for Solid Energy mass redundancies?

5 September 2012 4 comments

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4 September 2012: Citizens of Greymouth, protesting at impending job losses from Solid Energy mines.

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On 16 August, Solid Energy undertook a review of it’s operations and workforce. CEO, Dr Don Elder,  announced,

 “While many in the industry still expect demand, driven by Asia, to pick up again strongly sometime in 2013 Solid Energy needs to plan to withstand these market conditions for at least the next 12 months and possibly for 24 months or longer.” he says. “As a consequence, we are reviewing all areas of our business, including current and future operations, all fixed and variable costs, and the values of some of our assets, which will result in us taking significant impairments. Our aim is to preserve cash through reduced spending while, as far as possible, maintaining our longer-term value opportunities.”

See:  Solid Energy – Continuous Disclosure

By 29 August, Solid Energy announced  140 jobs to go and a suspension of  operations at Spring Creek mine on the West Coast. A further 123 jobs were  to be cut at Huntly East Mine in Waikato.

See: Spring Creek mine work suspended

The following day, that number had risen to 250 job losses on the west Coast, and as one Greymouth retailer put it,

Two-hundred-and-fifty jobs, we’ve got a population of 8000 – it’s probably the equivalent of 40,000 people in Auckland jobs getting affected, so that puts it in perspective. “

On the same day, Solid Energy  reported a “loss” of NZ$40.2 million in the year to June 30, 2012,  compared to  a profit of NZ$87.2 million in 2011. (More on this shortly.)

See: Solid Energy reports $40m loss on big writedowns

No one can rationally argue that job losses on this scale, with ensuing loss of wages and company spending, will  have a devastating impact of the West Coast economy.  The losses will cause incalculable harm.

Solid Energy has attempted to justify redundancies by pointing to a drop in international coal prices; a fall in demand from  China; and a $40.2 million “loss” in profits.

Two of the above reasons have a degree of merit – the third reason has been mis-represented to the public.

International Coal Prices

Coal prices have indeed dropped.

From a recent high of NZ$185.47 per metric tonne in January 2011 – to NZ$113.33 at the end of July, this year. This is a drop of NZ$72.14 per metric tonne.

However the July 2012 price (NZ$113.33 per metric tonne)  is not  much different to the November 2009 price of NZ$115.52 per metric tonne. As a result of the November 2009 low price, Solid Energy had minimal redundancies,

There were 18 redundancies in the year at a cost of $367,050.”

See:  Commerce Committee 2009/10 financial review questions: Solid Energy New Zealand Ltd

That figure of 18 redundancies is in stark contrast to the 360 redundancies  this year.

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Source

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Demand from China

There is no doubt; demand for coal from China has  dropped,

Globally diversified miner Anglo American PLC said the global thermal coal market looks bearish in the short term, partly due to displacement of U.S. coal demand by shale gas and an economic slowdown in China, but it is still an attractive market over the medium to long term.

“In the short term, we will have a bearish market,” Norman Mbazima, chief executive of Anglo American’s Thermal Coal division, told analysts at a seminar. But “there is very good demand outlook for coal. Coal will continue to be the mainstay of electricity production in the world and this will underpin good prices into the future,” he said.

Gareth Griffiths, head of Anglo American’s Thermal Coal Marketing department, said that the main reason behind the recent collapse in thermal coal prices has been a slowdown in Chinese coal consumption growth.”

See: Anglo American – thermal-coal outlook bright (14 June 2012)

Coal demand is also expected to be fragile amid a weak economic outlook for the rest of the year.

A Reuters poll forecasts this year to see the slowest full-year of economic growth since 1999 as demand for China’s factory goods falls due to the debt crisis in its biggest customer the European Union.

“The coal market will remain challenging,” said Ivan Lee, a coal analyst at Nomura Bank.

FACTORY-DRIVEN REBOUND

Chinese coal prices can only rebound if demand recovers considerably, which requires the manufacturing purchasing managers index (PMI) to rise above 50, economic growth to climb above 8 percent and power plants’ coal stocks to fall by half, Lee said.

The data, however, is not encouraging. The latest PMI showed China’s manufacturing sector contracted at its sharpest pace in nine months in August, with the index falling to 47.8 from 49.3 in July.

Even if China decided it needs more coal, which is unlikely, it will not seek it abroad as imports have become more expensive than domestic supplies, traders said.

Australian imports, based on the globalCOAL index, now cost around $3 per tonne more than Chinese prices, although some traders are selling blended material at lower rates.

See: Reuters – Output cuts help steady China’s coal prices, outlook (29 August 2012)

Whilst this may impact on Solid Energy’s profits (as compared to this year and 2011), Solid Energy’s viability does not seem threatened.

The only threat to Solid Energy is it’s saleability.  The more profit Solid Energy makes – the higher the share price when it is floated on the Stock Exchange. By contrast, the lower the the profit, the lower the share price.

Which may explain Bill English’s comment in the media item below, “English – Solid Energy not ready for sale”.

Solid Energy Profits

According to Solid Energy’s own Results Announcements 2012 report,  the company’s income was actually better than the preceding year,

Good operating performance overtaken by asset write downs

• Trading performance was good in a deteriorating market with strong NZD. Underlying earnings were $99.7 million (2011: $86.2 million).
• Asset write downs of $110.6 million net of tax and other adjustments have resulted in a $40.2 million loss after tax (2011: $87.2 million).

See: Solid Energy New Zealand Ltd Results Announcement 2012

In plain english (not the mumbled  Prime Ministerial  version), Solid Energy made an after-tax profit of $99.7 million – an increase from $86.2 million in 2011.

Employing a  book-keeping, accountancy “trick”, Solid Energy  reduced their own asset values by $110.6  million. (That’s like saying your house was worth  $300,000 in 2011, but only $250,000 this year. You still have your house and you’re living in it – nothing else has changed. Only the theoretical valuation has ‘reduced’. Next year that valuation could rise back to $300,000 or even more or maybe less. That’s creative accountancy for you.)

The point is that Solid Energy’s profit rose from $86.2 million to $99.7 million.

In fact, Solid Energy’s revenue in 2012 was $978.4 million – almost a billion dollars – an 18% increase from the previous year.

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See: Ibid

“Good earnings” indeed!

Any “loss” by Solid Energy is there a paper loss only; an accounting mechanism to revalue assets.  It’s profits remain unchanged.

Solid Energy therefore cannot rely on an imaginary “loss” to justify redundancies – because there was no loss.

It is noteworthy that Solid Energy’s decision to “mothball” Spring Creek mine and reduce staff at Spring Creek and Huntly follows one week on from this event,

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Full story

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Don Elder rejects all allegations that planned  redundancies are a covert attempt to increase Solid Energy’s profitability by reducing it’s labour costs,

This restructuring is not about increasing value, this is about saying `we have to do what we can afford to do.”

See: Mining job losses unrelated to asset sale: Elder

To which this blogger replies,

  1. There has been a downturn in international coal prices, and,
  2. Despite that, Solid Energy is profitable and it’s 2012 revenue exceeded last year’s, and,
  3. Bill English stated on 21 August that  “We wouldn’t be planning to float it [Solid Energy] any time soon”, and,
  4. A week later Solid Energy announced 250 redundancies and the closure of Spring Creek mine and,
  5. By contrast, there were only 18 redundancies in November 2009, even though the price per metric tonne was similar.

Coincidence? I think not.

Despite Elder’s protestations to the contrary, this blogger has no doubt whatsoever  that Solid Energy employers and the entire West Coast are paying dearly for National’s privatisation agenda.

There are some very dirty back room deals going on, and the wafting smell ain’t methane escaping from West Coast mines.

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Additional

English: Solid Energy not ready for sale

NZX: Solid Energy responds to very tough market

Solid Energy: Business Sustainability Principles

Good operating performance overtaken by asset writedowns

Hundreds turn out to support Spring Creek workers

Solid Energy reports $40m loss on big writedowns

Outlook for coal market worse than at the bottom of the GFC, Solid Energy says; ‘Reason why full Crown ownership is not suitable’

Index Mundi: Coal, Australian thermal coal Monthly Price – New Zealand Dollar per Metric Ton

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What’s up with the Nats? (Part wha)

20 August 2012 4 comments

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Continued from: What’s up with the Nats and ACT? (Part toru)

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The Tories are slipping.

Firstly, if you’re a politician representing an actual electorate, and you promised to do something for your constituents (remember them – the folk who were nice enough to elect you into Parliament?) – then you damn well  do it

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Source

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Secondly, if you decide at the last minute to back out – because you realise that representing your constituents conflicts with your ultra-cosy relationship with you corporate backers – then make sure that everyone is telling the same lie.

Because it ain’t a good look, Mr English, when one of your cronies fellow MP’s  explanation for your absence conflicts with that given by your office;

Eric Roy:  “Apparently the acting Prime Minister has just been caught up with something that’s captured his time and he’s asked me to accept it on his behalf – which I’m very happy to do. We kind of work together a bit in the South.”

- vs -

Mr English’s office:  “He pulled out at the last minute because the Government must be seen to be objective, and he would meet petition organisers later in the day“.

And politicians wonder why we don’t trust them?!

Well, wonder no more, Member for Clutha-Southland.

Just as well that Clutha-Southland is a National safe-seat. Voters there would probably vote for a piece of furniture if it had the blue “N” logo stamped on it.

So not much hope there that voters would take umbrage at being lied to, Mr English.

Just don’t do it again.

(Or at least, hide it better.)

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Roads, grandma, and John Key

18 July 2012 9 comments

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“However, the Government could not afford to give DHBs the $140 million required to enable rest homes to pay their staff more,”

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“It’s one of those things we’d love to do if we had the cash. As the country moves back to surplus it’s one of the areas we can look at but I think most people would accept this isn’t the time we have lots of extra cash.” – John Key, 28 May 2012

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In March of this year, rest home care workers went on strike throughout New Zealand, demanding an increase in their pay rate of $13.61 an hour.

That paltry sum is only 11 cents an hour above the minimum wage, which as Finance Minister said on TVNZ’s “Q+A“, on 6 November last year, was not liveable for any long period of time,

GUYON:  Okay, can we move backwards in people’s working lives from retirement to work and to wages?  Mr English, is $13 an hour enough to live on? 

BILL:  People can live on that for a short time, and that’s why it’s important that they have a sense of opportunity.  It’s like being on a benefit.

GUYON:  What do you mean for a short time?

BILL:  Well, a long time on the minimum wage is pretty damn tough, although our families get Working for Families and guaranteed family income, so families are in a reasonable position.Source

If $13 an hour is ‘ pretty damn tough’ and ‘people can live on that for [only]  a short time’  – then how much better is $13.61 an hour? Not by much, one would think.

But, as Dear Leader told the nation on 28 May,

It’s one of those things we’d love to do if we had the cash. As the country moves back to surplus it’s one of the areas we can look at but I think most people would accept this isn’t the time we have lots of extra cash.

You could certainly change the proportion of where you spend money in health. We spend about $14.5 billion in the overall health sector.

What’s going to go to pay the increase in this area? If you said all of the increase is going to go into this area, that would be roughly $600m over the forecast period which is four years… So that would have left us $1bn for other things.

“We put the money into cancer care and nursing and various other things. On balance, we think we got that about right.”

See: PM: No money for aged care workers

“On balance”, I think National is about as incompetant as it was in the 1990s, and as it was under Rob Muldoon.

To make sure that the peasantry (ie, us) got the message,  he shifted blame on to Labour by insisting, that the former Labour government “had a lot more cash floating around and didn’t meet the bill“.

I wonder how many times he’s going to blame Labour?

I thought National was BIG on people  taking responsibility?

But just when the public get used to the idea that paying hundreds of  heroic careworkers in resthomes – who look after our grandmas, grandpas, the sick, and the infirm – a measely $13.61 is the best we can afford, we discover that National does have access to pots of  cash (our cash, by the way).

And boy, do they  know how to spend it like it’s going out of fashion by 2014,

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Full story

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A total of  $336 million spent on consultants, and various “fees” for selling our own state assets to “mums and dads”  (aka,  corporate investors).  Of that, $216 million has already been spent on “consultants” – and that’s without  one metre of tarseal being laid.

And yet, our smiling and waving Dear Leader has the cheek to say that we can’t pay resthome careworkers any more money? He insists that,  “it’s one of those things we’d love to do if we had the cash. As the country moves back to surplus it’s one of the areas we can look at but I think most people would accept this isn’t the time we have lots of extra cash.”

When I found and collated these three media stories, my jaw dropped.

I have long since given up trying to understand John Key’s “moral compass” (if he actually has one).

But I wonder what those 1,058,636 New Zealanders who voted for this wretched Party must be feeling when they read this sort of thing? Does it even register with those 1,058,636, I wonder?!

But there is a delicious irony that will eventually fall upon most of those 1,058,636.  For they too, are growing older…

And eventually, they will end up in resthomes, being cared for by low-paid, exploited, careworkers.

I wonder if those careworkers, by then, will still be the conscientious, dedicated, saints that  Human Rights Commissioner, Dr Judy McGregor said of them,

The complexity of the job was actually a surprise for me. It’s quite physical work, and it’s emotionally draining because you are obliged to give of yourself to other people.

Saint-like women do it every day so that older New Zealanders can have a quality of life.”

See: Resthome spy hails saint-like workers

Will Resthome careworkers still be Saint-like in their care for us?

Or will they have had a gutsful by then, and not give a damn? If we continue to pay them $13.61 an hour (or a future-equivalent) – is that the value of service we’ll end up receiving?

If so, I hope those exploited, burnt-out, angry workers will vent their frustrations on a specific group of 1,058,636 New Zealanders. After all, they will have paid for their care. All $13.61 of it.

Karma.

As for the rest of us – those who understand the utter futility of electing John Key into power – I hope that National’s apalling waste of our valuable tax-dollars will motivate you all for the next election.

I know that most readers who visit this blog are fair minded, decent, people. I know you will be voting to get rid of this rotten, morally-corrupt,  government in 2014 (if not earlier).

But that’s not enough. Simply voting is insufficient.

If, after reading this (and similar examples of National’s wretched policies)  you are angry and want to get rid of John Key – then at the next election, find one other adult who did not vote last year and encourage that person to walk to the nearest polling booth with you to cast his/her vote.

About a million people did not vote last year. We need to find them and explain to them why their vote is crucial.  The future of this country lies in their hands.

Our most powerful Weapon of Mass Democracy – our vote.

It is our vote that makes us powerful.

Let’s do it.

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Related Blogposts

No Rest for the Wicked

“It’s one of those things we’d love to do if we had the cash”

1 March – No Rest for Striking Workers!

Additional

Service & Food Workers Union

NZ Nurses Organisation

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When the mask slips

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Politicians take utmost care when the media are anywhere within cooee. They understand that a slip of the tongue or the wrong facial expression can be recorded, and reported, for the rest of the population to witness firsthand.

The “tea party” between John Banks and John Key was  a conversation they believed to be private; was recorded;  and subsequently made public.  With thirty-plus media within a metre of the two politicians, what were the chances of holding a ‘private conversation‘ separated by a few millimetres of glass?  Slightly better than wining 1st division Lotto Powerball, one would have thought.

So politicians choose their words carefully and present their best possible image to the voters.

Every so often, though, their guard drops and we glimpse their real personas.  Once their  public mask slips, we discover what they really think – especially of us, the voting public…

4 May – The Prime Minister’s blokey facade is momentarily displaced by his obvious disdain for New Zealanders who oppose him, and oppose his planned state asset sales.  With mocking dismissiveness, he said,

How many people did they have?  Where was it? Nope wasn’t aware of it.

Well over a million New Zealanders voted for National in the full knowledge we were going to undertake the mixed ownership model.  So look, a few thousand people walking down the streets of Wellington isn’t going to change my mind.” – Source

The words were bad enough, but look at the expression on his face and vocal tone, @ 2:14,

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His arrogance was laid bare for all to see. He was laughing  at us.

*

25 May – Following the release of Budget 2012, University students showed their displeasure and protested on the streets of Auckland. The protestors blockaded streets; over-turned rubbish skip-bins; and vented their frustrations at guests who attended a post-Budget-related function where Dear Leader was giving a speech.

English responded with breathtaking, derisory, arrogance,

Yes, there’s a protest movement out there but who’s really listening to them?   They get on TV and they can make a bit of a racket … dragging a few rubbish bins around, they need some Greeks to show them how to do it.

It gets reported, mainly because it blocked the traffic, [but] who’s listening? Most people actually think the students got a pretty fair go and they should count themselves lucky that they’ve still got interest free loans and get on with it because, you know, get your training finished and get a job and start contributing. ” – Source

Aside from the fact that politicians like Bill English and John Key took advantaged of free tertiary education (prior to fees being introduced in 1992), and others like Paula Bennett had their tertiary fees paid by WINZ – it is staggering that English could respond with a comment inciting protestors to riot !?

When English said that ” they need some Greeks to show them how to do it  “, what else could it be called, except incitement? See video @ 1:19,

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Frank Macskasy Blog Frankly Speaking

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It seems fairly clear as to the contempt that National politicians have for the rest of us. But that’s ok. Many of us feel precisely the same contempt for John Key, Bill English, Paula Bennett, et al.

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Media sources

TVNZ:  English suggests jobless move to Christchurch

TVNZ:  Key unfazed as protesters descend on Parliament

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= fs =

National’s numpty numbers

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Source

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National’s latest budget promise,

Ms Tolley says that’ll go towards the aim of a 25 percent reduction in re-offending by 2017.”

By 2017? Five years away?!

Who will remember National’s promise in five years’ time?

Just as, how many people remember this budgetary promise, made only last year,

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Full story

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One year ago, National’s promises included,

  • 170,000 new jobs
  • wages growing 4% each year, for the next three years
  • 4% growth by 2013

Let’s put National’s 2011 Budget to the test,

1. 170,000 new jobs

In June 2011, employment and unemployment stats showed the following,

Employed: 2,214,000

Unemployed: 154,000

Unemployment rate: 6.5%

Source

By March 2012, employment and unemployment stats showed the following,

Employed: 2,230,000

Unemployed: 160,000

Unemployment rate:6.7%

Source

Summary:

  1. Increase in employment: 16,000
  2. Rise in unemployed: 6,000
  3. Rise in unemployment rate: 0.2%
  4. Verdict: fail

Instead of 170,000 new jobs, there have been only 16,000 – and unemployment has risen at the same time.

2. Wage Growth

Promised: Budget 2011;

4%

Actual:  In the year-to-March 2012 Quarter;

Salary and wage rates (including overtime) increased by 2%

Overtime wage rates increased 2.5%

Private sector  salary and ordinary time wage wages increased 2.1%

Source

Verdict: fail

Growth in wages has been half of that predicted by National.

3. Annual Growth

Promised: Budget 2011;

4% by 2013

Actual: in the year-to-March 2011 Quarter;

Gross domestic product (GDP) increased 1.5%

Source

Actual:  In the year-to-December 2011*  Quarter;

For the year ended December 2011, gross domestic product (GDP) increased 1.4%

Economic activity increased 0.3% in the December 2011 Quarter

Source

(* March 2012 Quarter figures not available until 21 June 2012.)

Verdict:  At 1.4% to December last year, GDP growth is unlike to have  reached 4%  by March this year. Probable fail.

*

Moral of the story; take National’s Budget predictions with  several very large grains of salt. They are likely to be more propaganda than precision.

After all, will Anne Tolley even be around in five years to be held accountable for her wish list?

We’re still waiting for the 170,000 new jobs.

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= fs =

The National Party, common sense, and sausage sizzles

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Frank Macskasy Blog Frankly Speaking

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I’ve been involved in politics, in one form or another, for much of my life. I think I have a fairly good ‘handle’ regarding politicians; their ideologies; and their Parties.

I’ve seen Muldoon come and go; Bolger and Richardson; Shipley and English; and now Key and English, try their hand at managing our economy and spending our tax dollars.

Without exception, folks, every single National Government, from Robery Muldoon onwards, has been an apallingly bad fiscal manager.

National’s modus operandi,

  1. Cuts short term spending, worsening long-term social problems, which will become more expensive eventually, as social ills remain unaddressed,
  2. Cuts state sector employees and services, then realises that essential issues still remain,
  3. Cuts taxes when we can least afford it,
  4. Implements fiscal, political, and social policies that impact negatively on economic and social indicators,
  5. Borrows from overseas lenders when it was never necessary in the first place (or reduced borrowing, had tax cuts not been implemented)
  6. And generally makes bad choices that, long term, will cost the taxpayer more.

So – how on Earth has National ever built up a reputation of being a “sound fiscal manager” of our economy?!?!

Because every time National has been in office, it has left the country in an absolute economic shambles.

From Ruth Richardson’s “Mother of All Budgets”, to Jenny Shipley’s and Bill English’s “slash and burn” of the health sector,  state housing, Police force, and other essential state services in the late 1990s – National  has proven time and again it’s ineptness.

This Party is utterly clueless when it comes to simple matters of cause-and-effect.

One thing, though, has escaped me utterly.

How have they  sucked in the public to effect a (undeserved) reputation of sound fiscal management?

Whilst National runs deficits,  Labour, in the 2000s, ran surpluses. (A fact National attempts to hide by clumsily  persisting in re-writing history.)

See previous blogpost: Labour: the Economic Record 2000 – 2008

Case in point; Dear Leader and his minions has made a great deal about slashing the state sector. National has made deep cuts into state sector services and sacked over 2,500 much-needed employees,

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Frank Macskasy Blog Frankly Speaking

Full Story

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As 2,500 people were sacked from their jobs – all for a grand saving of $20 million,  National belatedly realised that their slash-and-burn was little more than a false economy.

It soon became apparent that many of the sacked workers were much-needed experts in their field, and essential personnel to make the State function smoothly.

National took “appropriate action”,

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Frank Macskasy Blog Frankly Speaking

Full Story

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Frank Macskasy Blog Frankly Speaking

Full Story

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Frank Macskasy Blog Frankly Speaking

Full Story

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Two thousand, five hundred of our fellow kiwis lost their jobs for “savings” of $20 million.

The Economic Development Ministry alone  increased spending on consultants, contractors, etc,  from $6.7 million in 2008-09 to $19.2 million in 2010-11. Other ministries most likely spent several million on their consultants, contractors, advisors, and Uncle Tom Cobbly.

See: ‘Consultancy culture’ cost $525m last year – Labour

So much for “savings” of $20 million.

One can only try to imagine what those 2,500 people who were sacked by National, must be feeling right now.

So the question remains; how has National managed to paint itself as a “responsible steward” of the country’s economy? Especially when a cursory study of their real performance reveals otherwise?

Tracey Watkins, writing in today’s (19 May)  ‘Dominion Post‘, may have  offered a clue,

But while these sorts of measures might be an annoyance, they do not cause widespread pain.

And in a perverse way, Europe helps Bill English’s cause. It maintains a sense of crisis while the sight of workers marching in the streets only underscores the gentle and low-fuss nature of our own austerity drive.

This is why Labour has struggled so far to run a coherent argument against National’s management of the books – the danger has always been that protesting any cuts to date look not only shrill, but profligate. To voters, less is more at the moment.

See: Kiwis are tolerating moderate austerity

A sense of crisis “. It may well be that the Middle Classes have been panicked by overseas events. There may be an under-lying fear that – like households in tough times – the country needs to cut back on spending, to avert a Greece-like melt-down in our own economy.

There may be an underlying belief  within the collective consciousness of New Zealanders that, in “tough times”, National is better at cutting than Labour. In “tough economic times”, cutting expenditure may appear to the public as more of a priority than, say, job creation.

Such feelings are not necessarily based on any reality or logical analysis of the country’s true economic situation; nor of the side-effects of cutting back on State expenditure. These may be deep-seated feelings based on how people may view the economy.

Generally speaking, people have very little experience with macro-economics; Keynesian-vs-Friedmanite economic systems; nor any real understand of how government economic policies work.

For most folk, their only experience is running the finances of their own households. Doing a household budget; paying bills;  and balancing the chequebook is the extent to most peoples’ exposure to finances.

And yet, government finances is not like household finances at all. The former is more complex, with control over fiscal and taxation policy; revenue streams;  and policies that can work to generate income for the state. The State has access to borrowings (if necessary) not open to ordinary households. By widening the tax-base, the State can increase its revenue – no easy task for ordinary households.

In short, the State has options not readily available to households.

But  through a dumbed-down media which focuses mostly on superficial political issues; mindless entertainment; and on the Here-And-Now, the public have become low-information voters.

By not being aware of the true extent of the State’s abilities, the public are trapped in a narrow paradigm of  the State being akin to “household budgets”.

So when National cuts expenditure, services, and jobs – it appears to the public to be a “common sense” plan to follow.

The public are not so aware that austerity measures can have negatives impacts on our economy and society, even in the short-term. Cutting back on government economic activity means a drop in all-round economic activity.

It is no coincidence that following Ruth Richardson’s “Mother of all Budgets“, that unemployment, company liquidations, economic growth, and other indicators worsened.

This is a Party that I would barely trust to run a sausage sizzle. They’d get rid of the volunteers; sell the barbeque; pay themselves a hefty fee; and claim success,

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The ‘mother of all budgets’

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Frank Macskasy Blog Frankly Speaking Mother of all budgets

Prime Minister Jim Bolger and Finance Minister Ruth Richardson make their way to the House of Representatives for the presentation of the 1991 budget. Richardson was from the radical wing of the National Party, which promoted individual liberty and small government. This was reflected in the budget, which severely cut government spending, including on welfare. Richardson proudly proclaimed her plan as the ‘mother of all budgets’, but such was its unpopularity among voters that it – along with high levels of unemployment – nearly cost National the next election.

Source

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Frank Macskasy Blog Frankly Speaking

Source

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Frank Macskasy Blog Frankly Speaking

Source

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In the above graph, note the two ‘spikes’ in unemployment. The first in the early 1990s, after cuts (through the “Mother of all Budgets”)  created a rise in unemployment. The second rise occurred in the late 1990s, when the Shipley/English government again cut government services.

However, unemployment fell after the election of a Labour-led government in late 1999.

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Frank Macskasy Blog Frankly Speaking

Source

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Source

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The implications of austerity policies should be crystal clear to everyone:  reducing government expenditure and activity in the economy dampens overall economic activity.  Everyone is affected – no one escapes the inevitable downturn.

Hence why the new French President, Francois Hollande, has rejected austerity policies for his country. President Hollande understands full well that cutting government expenditure will result in reduced state services; more unemployment; and a drop in economic activity and  growth.

As long as the public are aware of these facts, then they can make decisions accordingly.

Ignorance of these facts will be painful, as anyone with memories of the 1990s will attest to.

In this case, ignorance is not most definitely not ‘bliss’. And no one will be exempt.

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Additional

Dominion Post: Public service cuts get deeper

Bloomberg:  Hollande Vows to Fight Austerity After Beating Sarkozy

References

Te Ara: Story – Business failures and corporate fraud

Te Ara: Story – National Party

Trading Economics: New Zealand

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= fs =

The wheels are coming off, and there’s a funny ‘plink-plink’ sound…

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… coming from the noddy-car that is the National Government.

So far this year -

We saw the resignation of Nick Smith;  Minister of Foreign Affairs Murray McCully blaming his own Ministry for enforcing government mandated budget and staffing cuts;   Minister Banks with worsening Alzheimers; as well as other bad-news and cock-ups for National…

When McCully  discovered a planned million-dollar upgrade of our Tokyo Embassy,  he was not a happy chappy,

It runs expressly against the instruction I gave some weeks ago that at a time when people were having to have their jobs reappraised for the ministry, we should cut back the capital expenditure budgets and significant maintenance to bare essentials only.”

Oh? Mr McCully issued “instructions“? So the cuts to MFAT’s budget and staffing was a Ministerial directive, and not an initiative by MFAT  chief executive John Allen because he was bored and had nothing to do on a Friday afternoon??

If I understand Murray McCully correctly, the fact that National has cut 2,500 jobs thus far from the State Sector – has nothing to do with proposed staff cuts at MFAT?!

Because that’s the inescapable conclusion from media reporting of Murray McCully, such as this Radio NZ piece,

Minister of Foreign Affairs Murray McCully is criticising his own ministry for cost-cutting measures he says he disapproves of.

The measures – unveiled a month ago in a bid to save $25 million a year – will now be revised.

One of the ministry’s ideas was the outsourcing of jobs to contracting agencies.

But Mr McCully says that would not work in many places where New Zealand is represented, such as the Pacific Islands.”

Well, obviously. I wonder how many advisers it took to come up with the blindingly obvious?!

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The furore over the ACC continues to simmer, and  so far involves,

  • Files mistakenly emailed  to ACC clientBronwyn Pullar,
  • Nick Smith’s letters to ACC to help friend and National Party activist Bronwyn Pullar,
  • Ex-National Party president, Michell Boag’s involvement,
  • Ms Pullar’s name and details leaked to the media by ???
  • Claims and counter-claims of demands/offers for a ACC benefit to be paid to Ms Pullar,
  • Nick Smith’s resignation,
  • Ms Pullar’s public letter expressing her “regret” at Dr Smith’s political demise,
  • Calls for a full Inquiry by Labour, The Greens, and by Nick Smith himself!
  • Lyn Provost, the Auditor-General  says she is “considering requests for an independent inquiry”.
  • And Bronwyn Pullar’s recording of her meeting with ACC, which shows that ACC misrepresented what was said between the two parties. Extraordinary!

Whilst this blogger has no time for the National Party and it’s proven illicit love-affair  with  cronyism; nor it’s disastrous economic and social policies – that does not diminish a sense of fair play. If Dr Nick Smith requests an Inquiry, then in all fairness there should be one.

It is heartening to see the Auditor General becoming involved.  Dr Smith and all  New Zealanders deserve this most basic aspect of justice. We need to know what the hell is going on.

As for Dear Leader stating that he sees no reason for an Inquiry,

“”Everyone has moved on…”

Yes, well, Key would say that, wouldn’t he? Especially if, as many suspect, there is much more to this story than we’ve been made aware.

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In March, John Key announced that local bodies would be constrained by a new law to fund “core business” only. When asked what a “core business” was – he couldn’t say – but it would be a “broad focus“.

Nick Smith then complicated matters by saying that the words “social” and “environmental” were being removed from the broad focus, and that “ it was clear councils had an important social role and environmental role through the Resource Management Act“.

Well that’s clear. As clear as a Rotorua mud-pool.

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Finance Minister, Bill English, has conceded that partial-privatisation of Meridian, Genesis, Mighty River, Solid Energy, and further sell-down of Air New Zealand might result in the government having to borrow hundreds of millions of dollars to invest in those SOEs.  But that’s ok, because English said,

You’re looking at over the next three or four years growth in the Crown balance sheet net value of 20 or 25 billion dollars, so a few hundred million here and there is not acutally that big a commitment.

Oh, that’s ok then;  “…a few hundred million here and there is not acutally that big a commitment “, eh?

It’s a pity that English isn’t quite as generous with ” a few hundred million here and therefor sufferers of Pompe’s Disease – who have a life threatening disease – and are campaigning for National to fund life-saving medicines for half a dozen people in the country. The cost would be far less, and would save lives.

Is saving lives enough of a  “big committment“, I wonder?

After all, in 2008, Key campaigned on over-riding Pharmac’s purchase-policy on herceptin, to make it  available for a longer period of time. But that was 2008 – Election Year. Things tend to be a bit different Election Time.

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Nearly two months ago, in his 15 March “State of the Nation” speech, John Key announced that his Party had “four priorities this term”. Then, because four is not enough, he stated that he wanted “10 areas” that would be targetted by National.  Which, of course, is still less than the “economic action plan with the 120 key things“…

Personally, I’m hanging out for the 1,000-Point Uber-Plan to Conquor the Universe… [cue: Darth Vader's Imperial March]

So what is Dear Leader’s Master Plan to bring fiscal salvation and neo-liberal nirvana to our islands?

Well…

We’ve brought the Ministry of Fisheries, MAF and the Food Safety Authority together to make the new Ministry for Primary Industries…”

Huzzah!

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After two tax cuts; sacking 2,500 state sector workers; reforming/restructuring/re-anything government departments; the 90 day employment trial-period law; cutting social services; and turning a blind eye to employers attempting to force Unions out of workplaces – what have we got to show for ?

Unemployment is back up to 6.7%.

That’s right, folks; National is implementing classical neo-liberal policies, as per doctrinal orthodoxy,  and still economic growth is low and unemployment is increasing, not decreasiing.

This isn’t what the Friendmanites promised us!

On top of that, youth unemployment (definied as between 15 to 24 age bracket) has risen from 58,000 last year – to a disturbing 83,000 this year. When questioned on this rise, Welfare Minister Paula Bennet said,

We’ve been supporting them. We’ve seen that the number of youth unemployed come down.

That’s right, folks, you haven’t mis-read it: Paula Bennet considers an increase of 25,000 as “youth unemployed coming down”.

However, she was gracious enough to admit a simple truth the the rest of the country already knew,

“… There’s not a job for everyone that would want one right now, or else we wouldn’t have the unemployment figures that we do.”

Which then begs the question; if there aren’t enough jobs – what is the point of National’s proposed welfare “reforms”?!?! What good will come of  “reforming” welfare when welfare ain’t broke – the job market is?!

But then again, this is the same government that sacked 2,500 state sector workers to cut back on the $74.2 billion debt that National has incurred since 2008.  How much has National “saved” by sacking 2,500 workers?

$20 million.

That’s 10% of the .2 billion figure previously mentioned.

If it weren’t for the tragedy of workers having lost their jobs because of this mickey mouse government, I’d be laughing my arse off at that.

  • $74.2 billion in debt.
  • 2,500 men and women lost their jobs.
  • $20 million ‘saved’.
  • *facepalm*

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Unemployment is up – 160,000, at last count, and National is shown to have little in the way of job creation policies. According to  National, job creation is the prerogative of the free market – not central government.

When National  does become  involved, it is  a weird, mutant-form of   “Think Big”,  consisting  of mining on conservation estates (hugely unpopular); deep-sea drilling (perceived as dangerous by the public); and building a convention centre in Auckland (raising eyebrows).

The problem with the latter is that Sky City wants a quid-pro-quo. If they win the contract to build a $350 million convention centre they want legislation amended to permit an extra  350 – 500  pokies and/or gaming tables. Legislation-for-sale, as some call it.

This is viewed with concern by some – and outright dismay or hostility by others. New Zealand already has a considerable  social problem with  gambling addiction, affecting many families and communities.

John Key attempted to sooth community concerns by stating,

In a casino they are in a better environment say than attached to a pub deliberating targeting low income people in South Auckland.” – Source

By now, people tend to view Key’s assertions with a  generous measure of  suspicion. He has previously demonstrated a willingness to ‘bend the truth‘ when it suits him. So claiming that “casinos are a better environment” went down like a pool of cold vomit on a Courtney Place footpath, after a normal Friday night.

The issue was not helped when Sky City boss, chief executive Nigel Morrison, asserted that,

The incidence of harm cited from Lotto is greater than that from pokie machines in casinos. Getting those facts across is difficult.” – Source

Yes, Mr Morrison, it is difficult getting that across. Difficult because it is rubbish.

The actual facts surrounding problem gambling is;

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POKIES v LOTTO

Number of problem gamblers seeking help for:

2011:
* Pub gaming machines:  681
* Casino electronic gaming machines:  100
* Casino tables/cards:  57
* Lotto:  6

2010:
* Pub gaming machines:  693
* Casino electronic gaming machines:  91
* Casino tables/cards:  64
* Lotto:  0
(First time callers, Gambling Helpline New Zealand Report for National Statistics)

Source: NZ Herald,  Experts trash ‘Lotto danger’ claim

See also:  Problem gambler numbers swell at SkyCity

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Soon after,  Key put his Prime  Ministerial foot in it, by revealing that the Sky City pokies-for-convention-centre deal was his bright idea,

I attended a dinner with the Sky City board 4 November 2009 where we discussed a possible national convention centre and they raised issues relating to the Gambling Act 2003“. – Source

As this blogger pointed out, in a previous blogpiece, Key seems to be in a habit of doing deals in “informal social settings”; Doing ‘the business’ with John Key – Here’s How. It is not the first time that Dear Leader has stitched up a deal over a few drinks and nibbles.

This may be how business is done in Wall St or City of London – but not in any Westminster-style Parliament. The word dodgy springs to mind.

And that, folks, is the rep that Dear Leader seems unwittingly to be creating for himself;  dodgy.

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And then, we come to the players of the next National Guvmint drama-farce,

  • Kim Dotcom
  • John Key
  • Maurice Williamson
  • Sky City Casino
  • and our favourite ACT MP (actually, our only ACT MP) – John Banks!

ACT MP and Leader is in serious trouble over donations he received from Sky City Casino (2010) and Kim Dotcom (last year).  The problem for Banks is,

  1. Why did he declare the $15,000 donation from Sky City as anonymous – when Len Brown – who received the same amount – declared Sky City as the donor on his Electoral Return?
  2. Has  John Banks change his views on gambling after the $50,000 donation from Sky City and will he vote to allow Sky City to install 350-500 new pokies?
  3. How does one forget a helicopter ride?
  4. How could John Banks have had time to seek legal advice regarding  speaking to the media, when the first conversation with John Campbell, on TV3, on 27 April, 7pm, could not possibly have allowed him the chance to phone his lawyer(s)?
  5. If Banks didn’t know that Dotcom had donated $50,000 to his mayoral fund in 2010 – why did he phone Dotcom to thank him?
  6. How does Banks reconcile his initial statement of “barely knowing” Dotcom and “having met him” for only 20 minutes – when he met the web entrepreneur four times; attended a Party with him; raised a toast in Dotcom’s honour; and then had Big Man Hugs with our Germanic cuzzy afterwards?!

As for our esteemed Dear Leader, here are some questions for him,

  1. Why has Key set the bar so low for Banks, when he stood down Richard Worth, Phil Heatley, and Pansy Wong whilst they were being investigated? Phil Heatley was stood down over two bottles of wine, for gods’ sakes!
  2. Majority of 15 – good; majority of 1 – bad?
  3. What is Key’s new definition of “ethics” – and is it a ‘dynamic situation’; “There is quite a wide definition of ethics“.
  4. How on Earth does John Key arrive at the conclusion that he trusts Banks’ word when, (a) Banks’ story has been changing/evolving/mutating  since 27 April, (b) nothing that Dotcom has alleged has been disproven, and,  (c) Key has not even personally met with Banks to discuss this issue?

The last item is perhaps the most bizarre of this entire ‘Pythonesque‘ affair; John Key has admitted to the media that he has not met John Banks to discuss this issue, and nor has he directly asked Banks for an explanation!?!?

Instead, Key has stated that he has left the matter for his Chief  of Staff,

Key said his chief of staff has received assurance from Banks that he paid for all expenses on the trip.” – Source

It’s not like John Key has been too busy to meet Banksie;  “John Key reveals his dream job“,

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Mr Key was interviewed by a group of year six students during a visit to Lower Hutt’s Eastern Hutt School this afternoon, and answered a range of questions stretching from his exercise regime, to what he carries in his pockets at all times.
When asked about the most rewarding aspect of his job, Mr Key said he got to do quite a lot of “cool things”.
“In about three weeks I’m going to London for the Queen’s Diamond Jubilee, and I’m going on the boat with the Queen … and I get to have lots of free food,” he told the students.

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Ok, so Dear Leader and his political advisors reckon that by not meeting Banks face-to-face and avoiding  directly asking awkward questions, that Key can keep his hands clean?!

If they truly believe that, then they are seriously deluded. If/when more sh*t hits the fan, or Police prosecute Banks, then the media will be all over John Key, demanding to know why the Prime Minister avoided his responsibilties in the first place.

Got a ready-made answer waiting for that curly one, Teflon John?

John Key is playing a dangerous political game here, and has backed himself into a corner should the Banks-Dotcom-Sky City affair worsen.

By not confronting Banks,  he will be seen  by the public as  having abrogated his duty as Prime Minister. He may have to smile and wave a bit harder to get out of that particular pickle…

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National has decided to be magnanimous and spare Ambrose Bradley from the chopping block; they will not be seeking court costs from the cameraman.

Ambrose Bradley flared into brilliance in the public consciousness last year when his recording device was discovered on the cafe table where John Key was enjoying a quiet cuppa tea with John Banks. Along with thirty-plus media reporters, photographers, cameramen, etc. It was all very ‘cosy‘…

… until the recording device was discovered; allegations of deliberate spying were made against Mr Ambrose;  complaints were laid with the Police; and media offices around the country were raided by Darth Vader’s Stormtroopers searching for a little droid Police armed with search warrants,

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It never went anywhere, of course. No one was arrested or prosecuted. The only ‘crime’ committed was  an assault against the sensibilities of Epsom voters – but unfortunately our law books are silent on such matters. Pity.

So it was quietly dropped, and an appeal to the Supreme Court by Mr Ambrose was inconclusive – though the bill for it was not. National contemplated seeking court costs – $13,600 – from Mr Ambrose.

It was an exercise in petty  vindictiveness by National – much like Paula Bennett mis-using the personal files of two solo-mothers, when they dared criticise the Minister of Social Welfare.

Make no mistake – there was no point whatsoever in unleashing the paramilitary arm of The State onto media and one lone journalist. This was Latin American/Middle East/former Soviet republic stuff. It was a naked mis-use of  Police  power with the aim of coercing people into silence and submission.

The most tragic aspect of this entire fiasco is that many/most National Party apologists and their low-information support-voters  approve of what took place. (Hell, some of them would probably approve of a One Party police state – as long as it was National that was the One Party, and ‘not those other fullas‘.)

That is the single thing that saddens me the most. That some of my fellow New Zealanders have a closet, quasi-fascist streak within them.

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Frankly Speaking - Blog - Frank Macskasy

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On a more positive note, as the wheels of the National government are coming off, and there’s a funny ‘plink-plink‘ sound coming from under the Party bonnet, the public are beginning to wake up to the ‘lemon’ that they’ve been sold. National is not the finely-tuned, high-performance sports-car they were presented with last year, at the Election Show Rooms.

Instead, it’s an old ‘clunker‘, with a second-hand motor,  and it’s about to be written off the road.

It’s replacement, a two-tone red-green model is bound to be an improvement.

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Other Blogs

Fearfactsexposed:  Key’s budget spin gets another free ride on stuff.co.nz

Pundit:  National 101: How to hate debt & raise it at the same time

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Dear Leader: No plans, no credibility, no shame!

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2008…

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Prime Minister John Key - Twat

“We will be unrelenting in our quest to lift our economic growth rate and raise wage rates.” – John Key, Prime Minister, 29 January 2008

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2011…

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Prime Minister John Key - Prat

“The driving goal of my Government is to build a more competitive and internationally-focused economy with less debt, more jobs and higher incomes.” – John Key, Prime Minister, 21 December 2011

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2012…

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Prime Minister John Key - Dick

“We want to increase the level of earnings and the level of incomes of the average New Zealander and we think we have a quality product with which we can do that.” – John Key, Prime Minister, 19 April 2012

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2013…?

2014…?

Is it me… or… am I hearing an echo?!

We seem to be getting more repeats from John Key – than summertime viewing on television.

Perhaps his comments would not be so bad, except for the industrial disputes around the country from workers from industries as diverse as resthome workers; meatworkers, and port workers.

In the case of rest-home workers, their pitiful wages are as low as $13.61 an hour – whilst being charged with the responsibility of caring for our aged and infirm. Poor recompense for such responsibility, one would think?

In the case of meatworkers and Auckland portworkers, hundreds have been locked out by two ruthless employers that are focused solely on de-unionising their respective workplaces and casualising the workforce.  Talleys AFFCO and Ports of Auckland Ltd (POAL) have one agenda; to  drive down wages and increase their own profitability.

It was not long ago that Finance Minister Bill English let slip on TVNZ’s Q+A that our 30%  lower wages gave New Zealand a competitive advantage over Australia,

“Well, it’s a way of competing, isn’t it? I mean, if we want to grow this economy, we need the capital – more capital per worker – and we’re competing for people as well…

“… we need to get on with competing with Australia. So if you take an area like tourism, we are competing with Australia. We’re trying to get Australians here instead of spending their tourist dollar in Australia.” – Bill English, 10 April 2011

And in October last year, the Seafood Industry Council (SeaFIC) told a ministerial inquiry into Foreign Charter Vessels that their industry needed more cheap foreign labour,

SeaFIC says FCVs hiring Asian crews was no different to companies going to low wage countries.

“Many New Zealand businesses have exported jobs previously done in New Zealand to other countries with wage rates considerably less than minimum wage rates in New Zealand.” ” – Source

Australian businesses duly obliged, and several corporations moved some of their operations here to New Zealand,

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Full Story

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Some folk reading this may be scratching their heads in bewilderment, wondering what’s wrong if our Aussie cuzzies decide to relocate some aspects of their operations here to New Zealand. After all, that’s good isn’t it? It’s more jobs, isn’t it?

After all, isn’t that what Hollywood did – sent their biggest film productions down under for Peter Jackson to produce?

No, not quite.

Peter Jackson offered a production services of  a highly-skilled, talented workforce.

The Australians are exploiting our cheaper wages – just as Bill English anticipated back in April last year.

If foreign companies come to New Zealand in pursuit of a low-waged , “flexible’, workforce – then expect pressure to be brought to bear on National to maintain these low wages, and to suppress any union activity that would try to raise wages.  National has already demonstrated it’s unreserved willingness to bow to pressure from local and foreign businesses.

Just as it’s happening now.

  • National changed the law to satisfy Warner Bros, so that Peter Jackson’s workforce would become “contractors”, rather than employees. This had the immediate effect of de-unionising every film crew member, with the result that  wages would be negotiated as IEAs (Individual Employment Agreements) rather than collective contracts.
  • National is willing to change the law to allow Sky City to install 350 to 500 more pokies and gaming tables, in return for a $350 million convention centre.
  • National has resisted raising the minimum wage from $13 to $15 an hour, citing employer “unnaffordability”. This ignores the reality that even Bill English agreed that living on $13 an hour was not possible “in the long term”,

GUYON:  Okay, can we move backwards in people’s working lives from retirement to work and to wages?  Mr English, is $13 an hour enough to live on? 

BILL:  People can live on that for a short time, and that’s why it’s important that they have a sense of opportunity.  It’s like being on a benefit.

GUYON:  What do you mean for a short time?

BILL:  Well, a long time on the minimum wage is pretty damn tough, although our families get Working for Families and guaranteed family income, so families are in a reasonable position.Source

There is nothing desirable about attracting businesses from overseas that are keen and eager to employ people at low wages. Aside from the fact that none of us (except for some rightwing extremists) would like out children to face such a prospect – it will not grow the economy, nor help raise wages.

It will, though, maximise profitability for those companies.

This, folks, is what happens in Third World countries where,

  1. Wages are low
  2. Legislation is weak, or is easily changed
  3. Unions are powerless or non-existent

Welcome to New Zealand, 2012AD.

Is this what we have to look forward to? Becoming the “Mexico” of the South Pacific?

No wonder that 53,000 New Zealanders leaving for Australia in the last year.  These are our fellow kiwis, voting with their feet for better wages, working conditions, Union protection, longer paid parental leave, and probably more valued as citizens than in their own country of birth,

Aucklander Shane Ball is moving to Western Australia for a better life and will be joined by his wife, Kelly, and their children by Christmas. “I’m leaving because the economy here sucks … I can’t afford to buy a house here, or even have any savings, and I need to have a different lifestyle,” he said.
“I’ve been working like a dog here and getting hold of that first home is still an impossible dream.”
Auckland-born Mr Ball said he was following in the footsteps of his sister, who had gone to Australia before him and was now “far better off”.
“I have seen how much my sister’s kids have progressed in school too, and decided my kids deserved a better future too,” he said.
Mr Ball does not have a job lined up but is confident of getting one, having worked as a mental health support worker in Sydney in 2005.
“Then I was working half the hours and earning twice as much.”
Mr Ball, who was living in Manukau, said he chose Kalgoorlie because it had a “more relaxed pace” and “affordable housing”.

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People like Shane and Kelly cannot wait for John Key’s pie-in-the-sky promise of higher wages. For all we know, Dear Leader will make the same empty promises next year, and the year after, and…

Because John Key and his fellow National ministers have no plans for job creation and higher wages. They are reliant solely on an economic ideology called neo-liberalism that says quite plainly that only the private sector can create jobs and only the free market can  raise wages.

One problem though. That ideology doesn’t work.

Or rather, it works only for a small sector of society – those who control wealth and the means of production. Neo-liberalism is not geared to do anything except facilitate “market responses”. Neo-liberalism is certainly not an ideology that concerns itself with  society, communities,  nor the needs of families.

One would think that after 27 years of neo-liberalism here in New Zealand and it’s many failures, that our elected leaders would conclude that it is a failed ideology. (But then again, it took our Russian cuzzies 70 years to learn that their opposite ideology, marxist-leninism, was also a failure. Do we really need another 43 years of neo-liberal dogma controlling our lives?!)

While my fellow New Zealanders make up their minds, I’m going to start on writing John Key’s speech for next year. It goes something like this,

We, my government and I, will be striving  to dedicate ourselves to raising wages and standards of living for all New Zealanders. We will endeavour to stem the flow of  our children to Australia by creating a wealthy society that will draw them back to our shores, to share in our prosperity and bright new future… “

It amazing how easy it is that write that kind of crap. And more amazing how many people  believe it.

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Another National Disgrace!

12 April 2012 1 comment

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Q: National intends to spend $900 million on one of the above. Can you guess which one? (Answer at the bottom of page.)

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National’s arrogance in the last month has stunned most of the country. Aside for some diehard, right wing, National/ACT groupies – many people who voted National last November must  be seriously questioning their decision.

In an all-out effort to alienate the public and paint themselves as arrogant autocrats, National has, or is currently involved in;

  • Secret negotiations with Sky City to  amend current legislation and allow the casino 500 extra pokie machines in return for a $350 million convention centre. Neither John Key nor any other Minister will disclose what these secret negotiations entail, citing “commercial sensitivity”.  Which is kinda strange as there are no other casino operators in Auckland to be sensitive about. What is certain is that more pokies = more problem gamblers.
  • Secret negotiations with a private secondary school in Whanganui, to facilitate integration with the State schooling system. What on Earth could be so sensitive as to keep details secret – how many pieces of chalk can they possibly  use?!
  • National’s intention to prevent further public scrutiny of SOEs once they are part-privatised. This will treat part-privatised SOEs as full private companies rather than  semi-public enterprises.
  • National is keeping secret contract details of first to part-private, part State-owned schools (Public Private Partnership)
  • Proceeding with massively unpopular State Asset part-privatisation despite over-whelming opposition from the public.
  • Mining on the  conservation estate (never a popular move).
  • And now a threat by National Minister, Bill English, to use the government veto on all private members’ Bill, irrespective of  any Parliamentary  mandate.

It is this increasingly public display of arrogance from National that is now colouring their style of government.  They are no longer even bothering to hide their disdain for the democratic process;  transparent government; or public opinion.

Associate Education Minister, Craig Foss was particularly arrogant in his attitude to answering questions on Whanganui Collegiate’s secret integration into the State school system, when he was interviewed on Radio NZ’s “Morning Report” on 11 April,

Listen to more from Craig Foss on Morning Report

Bill English is on record as stating categorically that even if Parliament votes to put the Bill to a Select Committee, that National will veto it (at the third reading).  In effect, regardless of a majority in Parliament voting to consider the Bill – the minority National Party  will ‘kill’ it. A minority dictating to the majority?

We know what that’s called, don’t we?

In fact, we haven’t had this kind of authoritarian rule since this chap ran practically everything,

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Sir Robert Muldoon, Prime Minister of New Zealand, 1975 to 1984

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English has complained that our economy cannot cope with an estimated extra $150 million on extending paid parental leave from 14 weeks to six months. He claims,

We have maintained paid parental leave and we currently spend about $150 million [a year] on it.

But we are still two or three years from getting out of the woods on the deficit so we think it is a bit soon to be trying to expand entitlements when our big challenge has been to maintain them as they are.

That’s just misleading the public. The fact is doubling it will cost another $150 million a year. You’d have to borrow half a billion over the next three or four years. We’re simply not willing to do that.

Expanding entitlements at this stage would be ”getting a bit ahead of ourselves when we are still $10 billion away from clearing our overdraft.

“We’ve got to get on with that and be fair to everybody in achieving surplus and people can have those choices once we get there.” – Source

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If our $10 billion overdraft was such a major sticking point, it obviously did not stop National from “investing” $220 million into a rugby tournament,

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Full Story

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Or State Owned Enterprises lavishing $54 million in staff bonuses,

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Full Story

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Or any of the following government expenditure for “must haves” such as,

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PSA National Secretary, Richard Wagstaff, is certainly correct when he states that recorded crimes rates are dropping and the  projected prison muster for 2016 has been calculated to drop from  11,561  to about 8200.

Which makes one wonder why National is about to squander nearly a billion dollars on another prison we may not need, and is likely to end up being moth-balled. (National has a tradition of indulging in ‘Think Big’ projects – only to have them closed down later.)

One billion dollars… twice the amount we could be spending on paid parental leave, according to Bill English,

“You’d have to borrow half a billion over the next three or four years.”

A new prison is a “must have”.

But according to National’s Labour Minister Kate Wilkinson,  extending paid parental leave was “simply unaffordable“.

Every parent in New Zealand should be thoroughly dismayed at National’s priorities. Throwing hundreds of millions of dollars at rugby games and prisons seems to make National positively delirious with joy – but investing in the future of our children is “simply unaffordable“?!

Nothing describes the warped nature of National’s priorities worse than this.

Parents take note:  National will not invest in your children.

Not until they grow older;  go off the rails;  and end up in prison.

Then, National will positively lavish your child with cash.  For a prison  cell.

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Related Blogpost

Priorities?

Media reports

Nats under pressure over parental leave

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Answer to above question (as if you didn’t already know):  $900 million will be spend on a new prison at Wiri, in Sth Auckland.

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National signals epic fail – and waves flag of surrender (Part #Rua)

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When National took office in November, 2008, unemployment was on the way up. From a record low of 3.4% in December 2007, it stood at 4.8% a year later.

By December 2009, the Quarter Household Labourforce Survey unemployment rate had risen  to 7.3%,

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Source

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The unemployment rate has since dropped back to 6.3%, for the December 2011 quarter. The slow drop from 7.3% to 6.3% has taken two years to achieve – and even the cause of that outcome is debateable, as New Zealand  “baby boomers”  start retiring and others  escape our stagnating economy to Australia.

I will make one thing clear; I do not lay blame nor responsibility for the doubling of our unemployment at the feet at National. The 2008  global banking crisis, ongoing recession, and massive debt-problems were issues beyond any political Party in any country. National inherited an international situation not of it’s direct making. (Though National does espouse a neo-liberal ideology which most certainly contributed to the crisis in capitalism.)

As an interesting aside; National and it’s groupies  (quite rightly) blame the 2008 recession for our high unemployment rate. However, they conveniently ignore the 2008 recession when engaging in beneficiary-bashing – then the issue of  increased unemployment is a “lifestyle choice”.

However, this blogger maintains that whilst the rise in unemployment was not National’s fault – that National has been derelict in it’s duty to address the crisis in joblessness. Bashing beneficiaries and painting them as lazy layabouts indulging in a “lifestyle choice” will not create one single job.

Blaming beneficiaries for a global situation they had no hand in making is an abrogation of responsibility by National.

I think we all know by now that National hasn’t a clue when it comes to job creation. They have no policies to generate jobs, and what what they have been doing has been tragically counter-productive,

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Full Story

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This blogger is aware of one solo-mum who used the TIA to go through University; upskill; find a well-paid job;   move of welfare; and is now a tax-paying member of society. But I guess that is not the meme that National wants  entering the public consciousness. Their agenda is better served by scapegoating solo-mothers. (But never solo-dads.)

See:   Once upon a time there was a solo-mum

Paula Bennett  used the TIA to put herself through University; upskill; and then move on to a more well-paid benefit; she became Minister of Welfare.

See: Hypocrisy – thy name be National

Bennett’s axing of the TIA and other cutbacks in training and upskilling is what is colloquially known as a false economy.  It may save a few million bucks now – but will only delay the Day of Reckoning when we end up with an untrained, low-skilled society.

Even John Key made this a theme of his speech four years ago,

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The National Party has an economic plan that will build the foundations for a better future.

  • We will focus on lifting medium-term economic performance and managing taxpayers’ money effectively.
  • We will be unrelenting in our quest to lift our economic growth rate and raise wage rates.
  • We will cut taxes, not just in election year, but in a regular programme of ongoing tax cuts.
  • We will invest in the infrastructure this country needs for productivity growth.
  • We will be more careful with how we spend the cash in the public purse, monitoring not just the quantity but also the quality of government spending.
  • We will concentrate on equipping young New Zealanders with the education they need for a 21st century global economy.
  • We will reduce the burden of compliance and bureaucracy, and we will say goodbye to the blind ideology that locks the private sector out of too many parts of our economy.
  • And we will do all of this while improving the public services that Kiwis have a right to expect.  

Because the hard truth is that Labour’s economic underperformance hasn’t delivered the social dividend they promised us.  

So, make no mistake: this election won’t be fought only on Labour’s economic legacy.  National will be asking Labour to front up on their social legacy, too. Many of the social problems the Government said it would solve have only got worse.

This time a year ago, I talked about the underclass that has been allowed to develop in New Zealand. Labour said the problem didn’t exist.  They said there was no underclass in New Zealand.

But who now could deny it?  2007 showed us its bitter fruits. The dramatic drive-by shooting of two-year-old Jhia Te Tua, caught in a battle between two gangs in Wanganui. The incidence of typhoid, a Third World disease, reaching a 20-year high. The horrific torture and eventual death of three-year-old Nia Glassie. The staggering discovery of a lost tribe of 6,000 children who are not enrolled at any school.” – John Key, “State of the Nation Speech”,  29 January 2008

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John Key finished of that speech  by saying,

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We will not sweep problems under the carpet.  We will not meet the country’s challenges by quietly lowering our expectations.”

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So how has National performed?

Not so good, I’m afraid. (But that’s hardly surprising.)

Aside from cutting back on training, National seems to be engaged in a clandestine programme to actually keep wages depressed. Bill English admitted as much last year, on TVNZ’s Q+A when he let slip that New Zealands lower wages were a competitive advantage to Australia,

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“”Well, it’s a way of competing, isn’t it? I mean, if we want to grow this economy, we need the capital – more capital per worker – and we’re competing for people as well…

“… we need to get on with competing with Australia. So if you take an area like tourism, we are competing with Australia. We’re trying to get Australians here instead of spending their tourist dollar in Australia.” – Bill English, 10 April 2011

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Despite a low-wage economy being counter-intuitive for a multitude of common-sense reasons, it appears that – with National’s coded  assent – some local industries are attempting to drive down wages and develop a low-wage economy.

The current industrial disputes with AFFCO and Ports of Auckland Ltd are based purely around driving down wages  by cutting conditions; casualisation; and crushing unions in the workplace.

In October last year, the Seafood Industry Council (SeaFIC) told a ministerial inquiry into Foreign Charter Vessels that their industry needed more cheap foreign labour,

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SeaFIC says FCVs hiring Asian crews was no different to companies going to low wage countries.

“Many New Zealand businesses have exported jobs previously done in New Zealand to other countries with wage rates considerably less than minimum wage rates in New Zealand.” ” – Source

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See: Is this where New Zealand is heading?

See: Foreign fishing boats, Hobbits, and the National Guvmint

The prospect of slave crews on foreign fishing vessels in our territorial waters was a step too far, even for right-wing blogger and National Party cadre, David Farrar. He seemed horrified at what a ministerial inquiry and US journalist had uncovered. (Or perhaps it was faux-disgust, to try to distance National from slavery on New Zealand’s high seas. Who can tell.)

See: A Slave By Any Other Name

However, it was not a good look for one of our industries to be lobbying National to permit more cheap labour into New Zealand. Even if it was to be far out at sea, out-of-sight-out-of-mind, our US-based clients were not too happy when they found out what was going on under our noses, and from which we were seen to be profitting,

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Full Story

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Now, National’s inaction on job creation, training, and upskilling is beginning to bite. Reliance on the free market has not achieved any desirable, measurable goals. In fact, business is still luke-warm at hiring and training new staff.

Global finance and accounting firm Robert Half’s director director, Andrew Brushfield, expressed surprise at  the “cautious hiring predictions among New Zealand CFOs”. Really? No sh*t, Sherlock.

So where does that leave us;

  • A National government that is cutting training allowances
  • No government employment-creation programme to speak of
  • No state apprenticeship programme
  • Leaving job creation and training to the ‘market’
  • The ‘market’ being reluctant to generate employment

No wonder unemployment is still at 150,000.

And little wonder that, with 150,000 jobless, and no jobs training, the Christchurch re-build is now hampered by a shortage of skilled tradespeople,

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To illustrate how short-sighted National (and it’s right wing hangers-on and sycophantic businesspeople),  Weltec offers seventeen week (full time) courses in the painting trade,

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Source

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If has been fourteen months since the tragic, devasting quake of 22 February 2011. We could have had a small army of in-training workforce ready to go by now.

FBG Developments managing director, Fletcher Glass,  could have his 50 painters – and more – instead of complaining bittlerly,

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You can’t train skilled tradespeople in two years, and even if you could train 24,000 tradespeople, you would over-saturate the market after the rebuild.  If you get tradespeople from other parts of the country, you will deplete those places of tradespeople, and that will drive rates up. That will make house prices go up, so buying a house would be even less achievable.’

Hiring overseas workers would prevent Christchurch from turning its problem into a nationwide problem. If you need 6000 painters at the peak of the rebuild, that’s every painter in Dunedin and Wellington.” – Ibid

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What absolute rubbish.

I have a sneaking suspicion that Mr Glass , like SeaFIC, is seeking  painters from Southeast Asia because they will accept minimum wage.

So we can add the following to the above list, as to why we have a shortage of trained tradespeople to take part in Christchurch’s re-build,

  • Employer self-interest

As a point of interest, the above media article also conducted a poll. It asked a simple question,

Should New Zealand fast track visas for overseas tradesmen?

Yes, we need more workers urgently
85 votes, 20.4%

No, we should train more NZers
332 votes, 79.6%

Nearly 80% of New Zealanders have enough common sense to realise what we should be doing. Obviously, none of those 80% are represented by any of National’s current  59 members of Parliament.

In case anyone is foolish enough to accuse this blogger of being fiscally naive, I refer to a BERL report, last year,

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Industry training has billions in benefits – study

A new study suggests the country could lose between $7.2 and $15.1 billion dollars annually if the Government withdrew its investment in industry training.

The study by the Business and Economic Research Limited (BERL) sets out to quantify the costs and benefits of industry training both to businesses and to the country.

According to one model, it found a cut in all public funding towards industry training would result in a loss in gross domestic product of 0.6 to 1.8 percent by 2014, and between 2.9 and 6 percent by 2021.

That equated to a loss of between $1.2 and $3.7 billion annually in the short-term and between $7.2 and $15.1 billion in the long term.

BERL said under such a scenario, the loss of skilled labour would have a detrimental effect on the export sector, crimping its capacity and reducing its competitiveness as industries competed for a smaller pool of talent.

The report, commissioned by the Industry Training Federation, said the results underlined how the country’s skill levels could ”positively impact on the quality and value of the goods and services produced, and the standard of living in New Zealand”.

However, it also noted the economy was complex and warned that ”any attempts to prioritise or isolate particular industries, sectors, occupations or skills as being more or less important are economically unsound  “.  – Source

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Training up unemployed New Zealanders who’ve lost their jobs over the last four years of recession; it’s not just a good idea or a “nice to have” – it’s bloody well obvious!

National’s faith in free market forces is admirable. But the rest of us gave up believing in Father Christmas, Easter Bunny, and Superman as we grew up. (Though having Superman around might be useful.)  It is high time that John Key and his Merry Band gave up their quasi-religious belief in the Invisible Hand of The Free Market.

Ideology will not re-build Christchurch. We need many hands – trained up and paid well – to do the work. 150,000 pair of hands!

I leave (almost) the last word to  Dear Leader,

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We know this isn’t as good as it gets.  We know Kiwis deserve better than they are getting.  We are focused on the issues that matter and we have the ideas and the ability to bring this country forward. 

National is ambitious for New Zealand and we want New Zealanders to be ambitious for themselves. ” – John Key, “State of the Nation Speech”,  29 January 2008

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Wouldn’t that be a fine thing?

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Another day in a lie of the National Party

4 April 2012 1 comment

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Key & English: Lying Bastards

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= That Was Then =

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Liar, liar! Pants on fire!

"National’s rebalancing of the tax system is self-funding and requires no cuts to public services or additional borrowing." - http://www.national.org.nz/files/2008/ECONOMY/Tax_Policy_Paper.pdf

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Still Lying

"This makes it absolutely clear that to fund National’s tax package there is no requirement for additional borrowing and there is no requirement to cut public services." - http://www.national.org.nz/files/2008/ECONOMY/Tax_Policy_Paper.pdf

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"If National is elected to lead the next government, I personally guarantee that we will...
...Ensure government spending is focused on frontline services such as health and education by capping the number of bureacrats and putting real discipline around government spending." - http://img.scoop.co.nz/stories/images/0810/9610985fe02ddcb32279.jpeg

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= This Was Before=

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Of course, the “cap” soon turned into cuts. Two thousand five hundred cuts.

It’s not very  fashionable to say it these days – but these were 2,500 hard working, dedicated, state sector workers who made sure that the wheels of government moved efficiently. They made sure police got their cars, radios, and tasers. They made sure doctors got their hi-tech machines-that-went-*ping*  and medicines.  They made sure schools were resourced (as much as penny-pinching politicians might permit).

And all the other jobs that are quietly done, out of sight, and which make our society function. John Key said pretty much the same thing in a speech, in March 2008.

Key was also adamant that National would not cut front-line staff, and instead would re-direct resources to where it was needed,

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Still telling porkies

"We are not going to reduce the number of front-line staff. Let me make this absolutely clear – under National the numbers of doctors, nurses, teachers, social workers, police and other front-line staff will grow.
In addition, we are not going to radically reorganise the structure of the state sector. Our focus will be on delivering services. Just as Labour has done, we will take opportunities to make changes to some agencies as part of the usual business of government. However, there will be no wholesale reorganisation or restructuring across the state sector." - http://www.johnkey.co.nz/index.php?/archives/335-SPEECH-Focusing-on-the-Front-Line.html

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Both Key and English repeated the mantra; “no cuts to frontline staff, no cuts to frontline staff, no cuts to frontline staff, no cuts to frontline staff...”

The public came to believe Dear Leader and Little Leader.

Until the day of reckoning, and the lie was exposed…

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= This Was Before=

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The first lie was that there would be a cap on the state sector.

The second lie was that there would be not cuts.

The third lie was that cuts would be made on the “backroom bureacracy”  (whatever that is), and not on the front line.

All  lies.

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Full Story

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Does anyone know if, or when  John Key, Bill English, aren’t telling lies?

This blogger has been politically involved since his late teens.  I have lived through the Muldoon regime; the Lange/Douglas “reforms”; the cock-ups of the Bolger/Richardson/Birch/Shipley circus; and the safer, more steady stewardship of Clark and Cullen.

I can tell the reader one thing: of all the governments we have had since the 1970s, the two most mendacious; dishonest; deceptive and manipulative ones have been;

*drumrolllllll*
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May we have the envelope please.

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And the winners are…

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#1. Key & English
#2. Lange & Douglas

No need to clap.

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Even Bolger – to his credit – kept to his word on most of his policies and pledges.

To my fellow New Zealanders – even to you folk who naively voted for National last November – I offer you this prediction; by the time the next election rolls around, you will be climbing over each other to cast your ballots, and to vote to throw out this shabby, dishonest, visionless ratbag regime.

You will have had a gutsful of Key’s empty promises and National’s shady dealings with casinos and other corporate interests.

You will have had enough of the relentless bad news; the growing inequality; the lack of jobs and spreading poverty; and losing more of your friends and family to Australia.

You may not even be here in New Zealand by the next election.

But I hope you still vote. We will need it.

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Is this where I insert, “I told you so, NZ!”?

In the last couple of years,  this blogger has been pounding away, wearing out one keyboard after another; shooing cats of piles of documents; drinking enough coffee to deny me sleep for the rest of the decade…

To make a point.

By early 2008, recession was looming following a banking crisis that started in the US,

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John Key’s history in international finance would have alerted him immediatly of the looming crisis. It was irresponsible of him to campaign on tax cuts when he must have known they were unachievable, as New Zealand’s economy began to slump.

To point out the blindingly obvious:  New Zealanders in 2008 voted tax cuts for themselves that we could ill-afford as a nation. We were warned, even as far back as 2008,

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No one who voted for National in 2008 can genuinely claim ignorance – we were warned. News of the building crisis and recession filled the media. New Zealanders’ greed for money simply outstripped their common sense,

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We should have taken note when John Key “assured” us,

Our tax policy is therefore one of responsible reform…  We have ensured that our package  is appropriate for the current economic and fiscal conditions… This makes it absolutely clear that to fund National’s tax package there is no requirement for additional borrowing and there is no requirement to cut public services… National’s rebalancing of the tax system is self-funding and requires no cuts to public services or additional borrowing.’ “ – National Party: Tax Policy

Yeah, right.

Despite all the media reports; despite all the warnings; despite all the criticisms that National’s programme of tax cuts was unaffordable, on 8 November 2008,  1,053,398 New Zealanders voted for National.

As a result of cutting taxes in April 2009 and October 2010, government revenue dropped. The supposedly “fiscally neutral “tax-switch” wasn’t so much a “switch” as a parlour-trick. It wasn’t our money that John Key was giving back to us – it was money borrowed from overseas.

The first tax cuts kicked in on 1 April 2009. That was followed by this media report,

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The second round of tax cuts took effect on 1 October 2010. Predictably, that was followed by this media report, eight months later,

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Yesterday, the NZ Herald  published this piece penned by Bernard Hickey. It wasn’t just highly critical of the National  – it accused the John Key’s government of;

  • being fiscally irresponsible
  • enacting policies designed to please its wealthy backers
  • borrowing money overseas, to fund taxcuts
  • economic treason
  • and generational selfishness

Bernard Hickey did not mince his words,

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Hickey went on to state,

“The charts reveal the results of the cut in the income tax rate from 39 to 33 cents, which was in theory partly paid for by an increase in the GST rate from 12.5 to 15 per cent. They also reveal a massive reversal in a decade-long trend of improvement in New Zealand’s public debt position.

Our tax-to-GDP ratio has crashed from almost 34 per cent in late 2008 to 29 per cent last year, which means yet more borrowing on the horizon.

At the same time, the tax from individual incomes has fallen from around 32 per cent to around 24 per cent.

This is a direct result of the cut in the top personal tax rate and consumers’ shift to spending less and saving more. This means the higher GST rate is not collecting the revenue expected.

Meanwhile, interest-free student loans and Working For Families are deepening budget deficits. That is being paid for with increased Government borrowing to the tune of 15 per cent of GDP.

A collapse in the corporate tax take is only partly responsible and is largely due to the recession rather than any change in policy. It is now rebounding but the tax-to-GDP ratio is worsening.

This is unsustainable without an immediate and extended surge in economic growth, which few expect.

Voters will have to repay this debt in decades to come. Why are they not revolting at this national act of selfishness?” – Ibid

To illustrate his point, Hickey charted New Zealand’s economic progress (or lack, thereof),

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Hickey condemns the borrowing-funded tax cuts by calling it for what it is: inter-generational theft. It is a massive debt that will have to be repaid by loading that debt onto future generations of taxpayers.

Like hell !!

Many of the next generation won’t have a bar of paying of their parents’ debt. They’ve already decided to take the only logical step,

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Bernard Hickey, and many other political, economic, and social commentators have highlighted the bad decisions that voters continually make. Unsurprisingly, we all like tax cuts – who wouldn’t want more money to spend on nice, new, shiny things.

Voting for wealth is not enough to make us wealthy. Especially if, at the same time, we expect all the nice things that a modern social democracy has to offer; free education; free healthcare; good roads and public transport; a pension at retirement; and lots of other state services funded by – taxation.

Well and truly, we have shot ourselves in the foot. We voted for more wealth, through taxcuts, and comprehensive social services – and we’ve ended up with neither.

And we have no one to blame but ourselves. We did this; 1,053,398 New Zealanders voted for it.

Here’s an idea: every single person who voted for National in 2008 and 2011 should be sent an invoice for their share of our country’s debt. Wouldn’t that be a lovely prospect?

Meanwhile, the final word goes to National’s Finance Minister, Bill English,

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A few previous blogposts on tax cuts

A warning from a very, very rich man (17 August 2011)

Greed is good? (28 August 2011)

Blood from a stone? (27 January 2012)

Tax cuts & school children (2 February 2012)

Authors of our own mis-fortune? (20 February 2012)

The Muppet Show – Kiwi style! (21 February 2012)

Additional

Surplus date looks increasingly tough, says Key

Budget deficit keeps getting worse

 

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