The “free” market can’t even build a bloody hotel?!

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Our crisis in construction reaches tipping point

According to recent reports in the media, New Zealand is no longer able to build and complete major projects;

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Speaking to Radio NZ on 8 February,  Building Recruitment managing director, Kevin Everett, lamented our chronic shortage of skilled building staff;

“There’s astronomical demand, there’s shortages everywhere from skilled to semi-skilled, to labours. We just can’t get reliable people.

The feedback we’re getting for 2018 from our clients is that they’re all expecting a big year this year and that’s putting pressures on everyone because they just can’t get the manpower.

I’ve heard of people going in and getting 40, 50 people in one hit. We’re looking at doing a campaign just now to go across to the UK, so we’re going to go to London, Manchester, and Glasgow and try and bring people in. We’re looking for at least 100 people in all different skill sets, in residential and commercial.”

The $200 million Park Hyatt hotel project was first announced on 4 July 2016 as a j.v. (joint venture) between Hawkins Group and China State Construction Engineering Corporation (CSCEC), the latter being one of the world’s largest construction companies;

In 2012, The Economist named CSCEC as the world’s biggest builder by revenue, then at US72.6 billion, ahead of China Railway Construction, China Railway Engineering and giant French builder Vinci which in 2003 had been the world’s biggest construction company.

Now, CSCEC has revenue of about US$100 billion.

The Economist article said Japanese builders had now disappeared from the world’s top 10 builders, overtaken by Chinese construction companies.

Fu Wah International Group itself is is a Chinese-owned multi-billion corporation. According to Forbes Fu Wah’s chairman, Chan Laiwa, ranked number 36 on the China Rich List and was worth an estimated  US$5.9 billion.  The hotel project is being built by a Chinese construction firm for it’s Chinese owners.

The Park Hyatt will be Fu Wah’s first project in New Zealand. The company has agreed to spend  an additional $2.5 million on  a public promenade, walkway and art display in the vicinity of the hotel.

In the Hawkins Construction 2016 press release Fu Wah New Zealand General Manager, Richard Aitken, said;

“Together with China Construction, they have the resources, experience and skills to deliver an outstanding outcome for Auckland.”

Panuku Development is a Auckland Council CCO responsible for the regeneration of eighteen hectares of Auckland Council-owned land in the Wynyard Quarter. This includes the Park Hyatt hotel construction site, which it apparently retains ownership of.  Panuku Development’s  then-Chief Executive, John Dalzell, echoed the sentiment;

“This appointment by Fu Wah International Group is a testament to the quality of work Hawkins has delivered on a number of Wynyard Quarter projects to date.”

In September 2015, as the Park  Hyatt project gained resource consent, then-PM John Key was singing the “benefits” accruing to the region;

“ The new $200 million Park Hyatt in Auckland and the $35 million Sofitel in Wellington will create jobs during construction and when the hotels are up and running.”

Gambling with promises of jobs

The arrangement sounds remarkably similar to a deal in between the National government and SkyCity Casino. In 2012, SkyCity was granted approval for up to 500 new pokie machines in return for a $350 million international convention centre in downtown Auckland.

At the time, Key also touted the promise of 900-plus construction jobs from the the Skycity development. This optimistic promise  was quickly revealed to be another of his shonkey “loose connections with the truth”;

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By June 2016, the reality of the Skycity deal revealed at least a hundred jobs going to offshore to an American contractor in Thailand. National’s response? This was “how the free market operated“.

Increasing tourism and “more jobs” appear to be the two main reasons touted for the Park Hyatt project.

But even the prospect of more jobs has recently been questioned.

Earlier this month (8 February), concerns were voiced that two hundred extra  workers from  China would have to be brought in from China, to “help the 300 local staff already on site“. According to Building Recruitment managing director, Kevin Everett, New Zealand evidently lacks the prerequite skills to complete the Hyatt project;

“There’ll be a number of skills mainly around fine decorating including stone work, tiling, wallpapering, painting, veneer work – there’s quite a lot timber veneer within the hotel, so they’ll bring those skills to us.”

Which is remarkable, as New Zealand once built and completed vast construction projects such as the Clyde Dam with minimal foreign labour;

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Clyde Dam is the largest concrete gravity dam in New Zealand consisting of one million cubic metres of concrete. It’s height is 100 metres, width at base is 70 metres, width at crest 10 metres and length at crest 490 metres.

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Plans to bring in two hundred Chinese workers appears to be part of China’s long-term strategy to engage and strengthen their state-owned construction companies. As The Economist pointed out in October 2012;

China’s construction firms have become good at finishing big projects on time. But analysts doubt whether they are ready for rich countries. Julian Bu of Jefferies, an investment bank, says their main advantage – low labour costs – is little help in places where they cannot bring lots of Chinese workers over. 

So much for claims that the project would create more jobs.

Fu Wah even issued a veiled warning that the Hyatt project could face disruptions and delays if  Chinese workers were not allowed into the country immediatly.

At a time when unemployment is still at 122,000 (most likely that figure is an under-estimation as Stats NZ has a narrow definition of unemployment) and under-employment has increased;

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– it is difficult to understand why New Zealand continues to import labour from overseas. Suggestions from some on the Right that these 122,000 constitute a group “unwilling” to work is not credible when taking into account that the under-employed group has risen sharply by a massive 7,000.

The economy – a legacy from nine years of National’s indifference to job-training and thirtyfive years of neo-liberal free market “hands off” ideology – appears paralysed and unable to engage with unemployed and under-employed for re-training. The new Coalition government Minister for Workplace Relations and Immigration, Iain Lees-Galloway, said as much on 8 February;

“We know that construction is a sector where the previous government failed to invest in the skills that New Zealanders need to participate in that sector, and there are significant shortages in the construction sector as we’re seeing a lot of infrastructure and a lot of construction being undertaken at the moment.”

It seems cheaper simply to import labour when needed, and return them to their home countries when that need has ended. That let’s businesses off the hook having to invest heavily in training local workers. It also increases labour exploitation by unscrupulous bosses.

The Property Council’s acting CEO, Matt Paterson, frankly admitted that foreign companies and labour could be used as a weapon to lowering prices (including wages), when he disclosed in July 2016;

“One of the issues holding back the development and construction market in New Zealand is high prices, so any additional competition we get is good. We do need to make sure competition is also bringing us quality and they’re not taking short cuts with materials or labour. Construction costs have been high in New Zealand for a long time. We need to develop a stronger, more competitive, capable construction sector. In the short term, there’s work that needs to be done and overseas firms can play a part in that. But we need to build stronger New Zealand industry.”

In the case of Fu Wah and the Hyatt hotel project, at least one construction company disclosed to Radio NZ that they had attempted to tender for the contract;

However an Auckland company, which did not want to be named for fear of losing out on future work, told RNZ they had voiced their interest at the start of the project in 2016.

A staff member said soon after Hawkins and China Construction were appointed as the main contractors, his company was contacted about what the programme of work would be and asked whether they would be able to do it.

“We went back and said ‘yes, everything’s fine, things are going to be a little bit tight here, things will be fine here’, but nothing major that would lead us to believe we’d been crossed off as a potential subcontractor.”

He said while it was emphasised that they should lock in subcontractors early because of a busy schedule to meet the deadline, it was never an issue of lack of skills.

“At that point in time we more or less had a year or two to lock in labour resource, to build up the labour teams that we have if necessary. But we heard nothing for a couple of years, in fact we never even heard back in the end on whether we could tender for the main package.”

When asked whether they had the staff to do the work now, he said they did.

There appear to be several aspects to this story – all inter-related;

Globalisation

The drive toward globalisation is not simply a free movement of goods from one nation to another. Globalisation also requires a free, unhindered,  movement of services and labour. Allowing cheap labour to move around the planet has it’s predictable consequence, as Rana Foroohar wrote last year for the Financial Times;

The US’s economic model over the past 40 years has been predicated on a kind of globalisation that encourages low wages and outsourcing. The idea was that cheaper stuff would offset the loss of jobs and lower wages. But in an economy made up of 70 per cent consumer spending in which wages haven’t risen for most of the population since the 1990s, that maths stops working. “Globalisation can’t be just about outsourcing and low wages,” says [former General Electric CEO] [Jeff] Immelt (there’s an increasing body of research showing that low wages are a cause, rather than just a symptom, of the problems of globalisation).

In 2014, our own right-wing think-tank, the NZ Initiative (formerly Business Roundtable) said;

As technology improves, many of the unskilled jobs in advanced economies such as New Zealand will simply be replaced.

Even more pertinent, those unskilled jobs that can’t be replaced by technology are likely to be outsourced to those who can provide the cheapest labour, namely, developing countries.

Globalisation has already seen this effect occurring to a large extent.

Leaving labour to Market Supply & Demand

The free market sees unionised protection for workers as anathema to the concept of Supply and Demand for skilled, semi-skilled, and low-skilled workers.

During last year’s election, the supposedly “free market”  party, ACT, promised to increase teacher’s salaries – but with strings attached;

David Seymour is proposing to boost funding for schools – but only if they agree to take teachers out of collective pay agreements.

He said teachers had lost ground against the average wage over the past 30 years.

And Mr Seymour said the reason was a 1970s style pay system.

“The unions insist on paying the best teacher and the worst teacher in New Zealand exactly the same and often protecting under-performing teachers.

“What we’re saying is that we’ll raise teacher pay on average by $20k, but we won’t have that model anymore.”

The ACT Party education policy encourages “…schools to opt out of union contracts”. (Which seems to forget that teachers unions are already voluntary. People have a choice and can already opt-out of membership. Though the ACT Party espouses “personal freedom”, the word “choice” is strangely missing from their Principles statement.)

So what’s gone wrong?!

So if New Zealand has a free-market economy that according to one group is the third most open in the global economy – what’s gone wrong? Why do we have 126,000 unemployed and a further 108,700 under-employed when we have a skills shortage in the construction trade? (Note: Stats NZ’s definition of what constitutes an unemployed person is narrow and actual  numbers are most likely even higher than “official data” states.)

The Christchurch earthquakes of 4 September  2010 and 22 February  2011 damaged and destroyed large parts of the city.  In late 2011, the National-led government at the time was keenly aware that the cost of rebuilding was estimated to cost around NZ$13.5  billion. By 2014, Treasury increased that estimate to a jaw-dropping NZ$15.4 billion.

The need for skilled labour should have been obvious to all.

Obvious to everyone except the government at the time: the Key-led National government.

National’s “response” – an exercise in incompetence

National’s response to on-going problems in the construction industry can best be summed up in a March 2012 comment made by then Earthquake Recovery Minister, Gerry Brownlee;

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Leaving citizens to the “tender mercies” of the free market seems National’s de fault setting.

Which had its inevitable conclusions as the Christchurch re-build is yet to be completed; the entire country is suffering a housing crisis; affordability worsens; and homelessness increases. Even retiring “baby-boomers” have not escaped our deepening housing crisis;

“We risk discovering that New Zealand is going to have a population of homeless pensioners,” Salvation Army spokeswoman Sue Hay told Radio New Zealand.

Compounding housing unaffordability and homelessness was a critical shortfall in skill tradespeople.

At a time when over a hundred thousand New Zealanders were out of work and under-employment was rising, National was practically sitting on it’s hands.

Post 2008 Global Financial Crisis, enrollments for ITO trainees fell dramatically;

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In 2013 – two years after the second Christchurch earthquake, Waikato Plumbing Services office administrator,Gayelene Woodcock, warned presciently of a looming critical shortage of skilled tradespeople;

“During the early 1990s the same thing happened. When there was a decline after the 1987 crash it didn’t actually affect the whole industry until the early 1990s.

The lack of apprentices taken on there showed through about four or five years later when there was an extreme shortage of tradesmen.”

Labour’s Grant Robertson could also see the rushing train bearing down on us;

“We have a shortage now in skilled tradesmen. It’s welcome that the Government worked out they need to do something but the impact of that skilled shortage is being seen at the moment. It’s being seen in Christchurch and it’s likely to be seen around the country.”

Report Card: F for Failed

We now have a shortage of tradespeople so critical that the viability of some  building projects’ is threatened.

Whatever tepid measures National implemented failed to address the growing problem. After the 2011 Christchurch earthquake, National had clear warning of the problems confronting the construction industry.

It chose to tinker with half-hearted solutions, but  these proved ineffectual seven year later as one media report after another highlighted the crisis.

One immediate solution has been to remove barriers such as tuition costs. The  Productivity Commission’s report appeared to reluctantly confirm this barrier;

There is some evidence that differences in subsidy, fee and student support arrangements can influence the study decisions of students (and employers). For example, members of the ITO sector expressed concern about these influences on decisions on undertaking industry training while in full-time employment through an ITP, PTE or ITO…

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The University of Waikato submitted that fees combined with geographic distance may still represent a substantial barrier to obtaining a university education. In particular, it notes:

While parents with professional incomes and substantial net assets may not be concerned about their
children acquiring large amounts of debt to fund tertiary study, the poorest families with minimal net
assets will quite rationally be averse to their children acquiring large amounts of debt. (University of
Waikato, sub.93, p.6)

[…]

The evidence suggests that higher fees reduce demand, that students in non-university tertiary education and lower-income students are more price-sensitive, and that some minority groups may be more price-sensitive (Leslie & Brinkman, 1987; Heller,1997). Where the actual cost students will pay is not transparent,
because various grants or discounts apply that mean actual cost is lower than the advertised price, students from lower-income families are more likely to be discouraged. The availability of loans and allowances will offset this, although students from lower-income households may also be more debt-averse.

In plain english, low-income families were “debt averse” – a scenario which contradicts many right-wing reactionary prejudice which parrots the myth that poor families are in debt because they make “poor choices”. In this case, a student debt is a poor choice that such families will unsurprisingly seek to avoid.

The new Labour-led Coalition government – not fettered by the dead-weight of user-pays ideology to which National is chained to – has understand this simply reality and taken blindingly obvious steps to remove this barrier;

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It took National nine years to allow the current mess we now have in the construction industry. A mess whereby over a hundred thousand New Zealanders are unemployed whilst the building industry is seeking to import cheap, skilled labour from offshore.

It has taken the Coalition just over three months to begin to tackle National’s toxic legacy of mis-management.

Postscript1

In March 2017, Fu Wah  applied to build 330 apartments on the Auckland waterfront, adjacent to the Hyatt Park hotel.

At this stage it is unclear who will  provide the labour for this project. Familiar claims have been made that the proposed NZ$500 million apartment project would “create more jobs”.

Past evidence suggests those claims should be regarded with caution.

Postscript2

Globalisation continues to wreak havoc with our local industries As Fletcher Building announced on 25 February has it has pulled out of the Ormiston Town Centre building project. This is the latest in building projects that Fletchers has either withdrawn from, or will not be tendering for, as local companies find it  impossible to compete with low-priced offshore competitors.

Postscript3

Fletcher’s chairperson, Ralph Norris announced his resignation from the debt-ridden company on 14 February.

Norris was also chairperson of the Business Roundtable until September 2001. The Business Rountable (later re-branded as the so-called “NZ Initiative”) was a pro-free market lobby pressure group  that was instrumental in the neo-liberal “reforms” of the late 1980s and 1990s. Part of those neo-liberal reforms was globalisation: allowing offshore companies to bid for contracts in New Zealand alongside local industries.

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References

Radio  NZ:  200 Chinese tradies to complete Akl hotel

Hawkins:  Hawkins and China Construction JV signs up for Park Hyatt Auckland

NZ Herald:  World’s biggest builder arrives in NZ for $375m in contracts

Forbes:  Profile – Chan Laiwa & family

TVNZ News:  $200M luxury hotel under way in Auckland’s waterfront

Panuku Development Auckland: Wynyard Quarter

NZ Herald:  New Chinese hotel investment for Wynyard Quarter

Panuku Development Auckland: Home Page

NZ Institute of International Affairs: Speech to the NZIIA – 3 May 2015

NZ Herald:  Go-ahead for $200m Auckland waterfront hotel

Fairfax media: Key defends Sky City casino deal

TVNZ:  Key defends convention centre job predictions as offshore contract raises fears

Radio NZ:  SkyCity centre steel jobs go to Thailand

NZ Herald:  Hyatt’s new $200m hotel ready for 2018

Wikipedia: Clyde Dam

The Economist:  Great wall builders

Radio NZ: Minister requests more info on Chinese tradies

Statistics NZ:  Unemployment falls to a nine-year low

The Wireless:  Left without a choice – How international students are exploited in New Zealand

Radio NZ:  Chinese tradies – Company says not given tender opportunity

Radio NZ:  300 apartments for Auckland waterfront

Financial Times: Why US big business listens to Bernie Sanders

NZ Initiative:  Degrees no longer a ‘golden ticket’

Radio NZ:  ACT leader blames unions for teachers’ poor pay rates

ACT Part: Education

ACT Party: Principles

Heritage: Economic Freedom – Country Rankings

Statistics NZ:  Unemployment rate down to 4.6 percent

Statistics NZ: Household Labour Force Survey – Revisions to labour market estimates

Mediaworks:  Unemployment – Bad news NZ, it’s much worse than you think

NZ Parliament:  Economic effects of the Canterbury earthquakes

Treasury: 2014 Budget –  Rebuilding Christchurch

Fairfax media: Christchurch rent crisis ‘best left to market’

Radio NZ:  Housing report paints ‘sobering picture’ of crisis

Fairfax media:  More NZ retirees will become homeless without action on housing – Salvation Army

Productivity Commission: Student characteristics and choices (pgs 41, 60, 73, 74)

TVNZ:  Shortage of skilled tradespeople exacerbating Auckland’s housing problem

BCITO:  Prime Minister encourages construction apprentices

Radio NZ:  Fletcher out of running on another big-ticket build

Noted:  Unfair overseas competition hurting NZ forestry, says industry leader

Fairfax media:  ‘Incompetence’ behind Fletcher Building’s woes, admits chairman Sir Ralph Norris

NZ Herald: Ralph Norris retires

Additional

NZ Herald:  Brian Gaynor – How to fix Fletcher Building

Fairfax media: Dearth of tradesmen foreseen

Other Blogs

The Standard:  Fonterra and Fletcher Building

Previous related blogposts

Roy Morgan Poll: Unemployment and Under-employment up in New Zealand!

Lies, Damned lies and Statistical Lies

Lies, Damned lies and Statistical Lies – ** UPDATE **

MSM catches up on Unemployment stats rort

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This blogpost was first published on The Daily Blog on 26 February 2018.

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= fs =

NZ Initiative – Bulk Funding Schools

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Insanity: doing the same thing over and over again and expecting different results. – Albert Einstein.

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On 6 July, the  “NZ Initiative” – a re-branded right-wing think-tank previously known as the NZ Business Roundtable – released a propaganda-piece entitled, ‘Amplifying Excellence: Promoting Transparency, Professionalism and Support in Schools‘. The so-called “report” advocated more sly “free market” forces unleashed onto our constantly-changing education system.

The title of the  “report” sneakily implies our education system is not transparent; is un-professional; and our schools un-supported.

Amongst the several vague recommendations was this one;

True to New Zealand’s self-managed school landscape, the government largely lets school boards and principals get on with leading their schools. However, in other respects, school leaders can be hamstrung by bureaucratic restrictions; for example, the Ministry prescribes how school leaders should spend parts of their teaching resource budgets.

Recommendation 6: Effective leaders should be trusted as true professionals and granted total budget autonomy to lead their schools.

“Total budget autonomy” is code for bulk-funding – a favourite agenda from the New Right.

Bulk-funding had previously been introduced as part of National’s “Ruthenasia reforms” in the 1990s. It was done away with by the Labour-Alliance government in 2000.

In June last year, then-Education Minister Hekia Parata attempted to resurrect the corpse of Bulk Funding under a new guise, “Global Funding“;

The change would set a “global budget” for each school, delivered as cash instalments for school expenses, and a credit system for salaries.

According to the documents, this would mean:

• Principals would determine the split between cash and credit, with the flexibility to make adjustments during the year.

• Unspent credit would be paid out at the end of the year and a process for recovering credit overspends would be established.

• Teaching staff salaries would be charged against the “credit” portion at an average rate.

• Non-teaching staff salaries would be charged against the “credit” portion at actual cost.

The global budget system would not be the same as the controversial bulk funding of teacher salaries that sparked protests 20 years ago, the proposal said. The documents said: “This is a significant difference from historical bulk funding proposals which would have seen schools charged the actual salary.”

The reaction was predictable, and Post Primary Teachers’ Association (PPTA) president, Angela Roberts, spoke for many when she warned;

“It is bulk funding. It is minor technicalities that make it something different, and I think it’s very cynical of the ministry to think that they can con people with a change in language.”

The schools get to decide how they spend that, how many teachers they purchase effectively and how many teacher aides. So schools will be incentivised through the averaging out to have cheaper teachers or fewer teachers because they can cash that money up.

Bulk funding was resoundingly rejected by the community 20 years ago because everybody understood the cost would be borne by the school when the government couldn’t be bothered putting more money into the system.”

Opposition to Parata’s Bulk-Funding-In-Drag plan was met with heated opposition by parents, teachers, school principals. Donna Eden, a teacher with 20 years’ education experience explained why she was so vehemently opposed to “Global Funding”;

“Teachers really don’t like bulk funding, so much so that they have been out of the classrooms meeting and rallying. And they’re talking to anyone who will listen about how our kids will be worse off.

And they will.

Why? Well, it will mean bigger classes and fewer teachers. It will mean our kids have less time with their teacher because instead of sharing him or her with 15 other children there will be 30 or more classmates needing the attention of their kaiako. It will mean less support for the kids that need it. It will mean fewer teacher aides for fewer hours.

It will likely mean untrained teachers in the classroom because they will be cheaper to pay.

It will mean winners and losers, and that, my friends, is not okay. Every child deserves the best, all of them, all over our country.

It’s simply that schools will be given a lump sum of money. And from this lump sum they will pay teachers’ salaries (which are currently centrally funded, meaning they don’t cost schools) and for everything else (think the power, water, supplies, first aid supplies, the caretaker, the office staff , support staff like teacher aides, any class room resources…)

There will be a separate pool of money for maintenance – property repairs and the like.

Why is it bad news?

[…]

Firstly, because there is no new money. It’s just moving around the money that is already there. And it’s already not enough.

For the first time ever school operations grants, the cash that keeps schools running, have been frozen.

While costs rise, this budget won’t keep up. This means cuts to what schools can offer. It will start with trimming the extracurricular stuff. It won’t stop from there.

Hekia Parata is looking to remove the caps to class sizes and the guaranteed teacher funding this brings. It will mean that classes will get bigger – they will have to in order to stay within budget.

It’s like trying to do the grocery shopping with the usual budget when you have four extra people staying for the week. It just won’t stretch; something will have to give.

If it comes down to a choice between paying the power bill and paying a teacher, it is principals and boards of trustees that will have to decide who goes. What a horrible decision to have to make.”

On 18 November last year, Parata caved to mounting public pressure and announced that National would not proceed on it’s “Global Funding” policy;

“I have therefore recommended, and Cabinet has agreed, that the global budget proposal not proceed. The global budget was a mechanism for payment, not for determining the level of funding, so this decision will not affect the core purpose of the review.”

The successor to Ruth Richardson’s Bulk Funding, Parata’s “Global Funding”, was quietly returned to the Historical Rubbish Bin of Very Bad Ideas.

Barely a year later and the NZ Initiative/Business Roundtable has attempted to breathe life back into Bulk Funding/Global Funding. This time referring to the model as ‘Total Budget Autonomy‘. (No doubt  Crosky-Textor or some other tax-payer funded spin-doctor will come up with some new clever, shiny name.)

But it’s still a pig. Perhaps with a new shade of lipstick. But a pig still.

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The question is, why the Neo-libs keep beating the same drum?  Why keep trying to implement a policy that has been tried; failed; and almost no one wants.

More importantly, the evidence is that Donna Eden’s fears are well-based and grounded in reality.

New Zealand has had bulk-funding in another area of the State Sector – and it has proven to be a dismal failure;

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Analysing budget short-falls and DHB deficits two years ago, Fairfax journalist Stacy Kirk wrote;

Specifically, [Treasury]  documents say DHB underfunding will put pay increases for public sector health workers, including nurses and doctors, at risk.

Cost pressures mean DHBs have not been fully funded to cover wage increases for the 40,000 workers whose contracts are up for renegotiation shortly.

Ms Kirk reported Treasury officials as saying;

“The fiscal strategy presents some tough choices for Budget 2015, there are a number of fiscal pressures across the social sector, and Ministers will need to review options and trade-offs to determine an appropriate Budget package.”

The Treasury document that Ms Kirk quotes makes this observation on funding DHBs;

There are material cost pressures affecting the Ministry-managed NDE [non-

departmental expenditure] service lines that need to be managed as part of

this process. These cost pressures will include demographic demand growth,

wage and price inflation, and other factors. As for DHBs, it is unlikely that

these pressures can be fully funded, so we will be looking to the sector to

deliver substantial efficiencies. To maintain current levels of service

provision, it is likely that a reasonably large injection of new funding will

be needed – in addition to the $275 million already agreed for DHBs – or

Ministers will need to make choices on what services are to be altered or cut back.

Note this bit; “…cost pressures will include demographic demand growth, wage and price inflation, and other factors. As for DHBs, it is unlikely that these pressures can be fully funded, so we will be looking to the sector to deliver substantial efficiencies”.

Treasury’s admonition that “it is unlikely that these pressures can be fully funded” for DHBs is borne out by the number of Boards that are in deficit – and  worsening. A forecasted $58.7 million deficit has blown out to $89.9 million. Half of DHBs either in the red, or perilously close to it;

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In the case of Capital and Coast DHB – currently $28 million in deficit – it is noteworthy that there financial woes started in the mid-1990s;

In 1995-96 Capital Coast Health reported a deficit of $26m, which the following year grew to $70m. Chief financial officer Tony Hickmott said the $68m debt hole left by the construction of the regional hospital in 2008 had contributed to deficits for the past 10 years.

Increased demand for services, high labour costs, increased complexity of patients, and the increasing and ageing population had compounded the issue.

Building construction. Labour costs. Demand for services. Increased complexity. Increasing population. Each one of those factors can easily be translated into the education sector which also requires building upgrades or building entire new class-rooms; growing students rolls; increasing special-needs; and rising population due to National’s exploitation of migration to create the illusion of economic growth.

Now add Bulk Funding/Global Funding/’Total Budget Autonomy’ into the mix for schools.

How long would it be before schools found themselves in precisely the same precarious  financial woes that our DHBs are currently suffering?

As things currently stand, parents/guardians are having to dip more and more into their pockets to pay “school donations”, to make up for obvious shortfalls in the Vote Education budget;

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Of course, the National government still claims – without a hint of self-awareness of the Big Lie – that education is still free in New Zealand;

It’s free to go to a state school — but the school can ask for donations towards their running costs.

But at least one school – St Heliers – is unashamedly upfront in why school “donations” are necessary;

A donation is requested of parents to contribute towards the shortfall in funding from the Government.

Even with direct Ministry funding, schools are still having to make up a “shortfall in funding from the Government“. This dire situation has been compounded by National’s decision to freeze school operational funding this year;

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The above Herald story goes on to report;

The targeted approach means more than 1300 schools will get less money than they would have received, had that money been used for a general increase.

The difference ranges from a few hundred dollars up to $24,000.

About 816 schools will get more, and information on a further 242 schools is suppressed for privacy reasons because fewer than five students are at-risk.

Now imagine the funding constraints that  schools would have to deal with if Bulk Funding/Global Funding/’Total Budget Autonomy’ was re-introduced for their sector.

But we don’t have to imagine, do we? Because half the District Health Boards in this country have already shown us what would be in store for schools throughout the country.

Which is something that the  NZ Initiative/Business Roundtable seems to have studiously over-looked when they compiled their rubbish report, ‘Amplifying Excellence: Promoting Transparency, Professionalism and Support in Schools‘.

Never under-estimate the ability of the New Right to suggest policies that that been tried, tested, and failed. Just keep repeating the experiment over and over and over again.

One day the result will be different.

Of course it will. Just ask Albert Einstein.

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References

NBR:  Roundtable and NZ Institute morph into new libertarian think tank

NZ Initiative: Amplifying Excellence: Promoting Transparency, Professionalism and Support in Schools

Victoria University: The Bulk Funding of Teacher’s Salaries – A Case Study in Education Policy

NZ Herald:  New funding system for schools including a ‘global’ salary criticised

Radio NZ:  Teachers fear ‘bulk funding in new guise’

The Spinoff:  A teacher tells you what you need to know about bulk funding

Fairfax media:  Education Minister signals end of school bulk funding and decile systems

Fairfax media:  DHBs ‘considerably’ underfunded – and more deficits predicted

Treasury NZ: Treasury Budget 2015 Information Release Document July 2015

Fairfax media:  DHB deficits blowing to $90m. Health sector dying ‘by 1000 service cuts’ – Labour

Fairfax media:  Capital & Coast DHB’s debt hole deepens as boss admits 20 years of deficits

Fairfax media:  Parents prop up schools to tune of $250m

NZ Herald:  School costs – $40,000 for ‘free’ state education

NZ Herald: Parents fundraise $357m for ‘free’ schooling

NZ Herald: Parents paid $161m for children’s ‘free education

NZ Government: Education – school fees

NZ Herald: ‘At risk’ school funding revealed – with 1300 to lose out under new model

Other Blogs

Save our Schools:  Parata backs down on bulk funding plans

Chris Trotter: Morbid Symptoms – Neoliberalism’s Room for Manoeuvre Keeps Shrinking

Previous related blogposts

Can we afford to have “a chat on food in schools”?

Cutting taxes toward more user-pays – the Great Kiwi Con

The Legacy of a Dismantled Prime Minister

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This blogpost was first published on The Daily Blog on 15 July 2017.

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Letter to the Editor: Business Roundtable up to their old tricks?

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More right-wing nuttery…

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But who is the “NZ Initiative”?

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FROM:      "f.macskasy" 
SUBJECT: Letters to the editor
DATE:        Thu, 01 May 2014 10:39:22 +1200
TO:            "Sunday News" <editor@sunday-news.co.nz>

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The editor
Sunday News



Dr Bryce Wilkinson, recently authored a report for the
so-called "NZ Initiative", calling for more unrestricted
"investment" in New Zealand - specifically allowing foreign
property speculators unfettered right to buy up housing.

At a time of falling home ownership - 49.8% in 2013; 53.2%
in 2006;  67.8% in 2001; 70.7% in 1996; and 73.8% in 1991
(Statistics NZ) - the last thing we need is for New
Zealanders to be competing against well-financed, wealthy
speculators from overseas.

In effect,  we are denying our own children the right to own
their own home.

So who, precisely, is "NZ Initiative" and what is their
agenda?

"NZ Initiative" is the Business Roundtable, rebranded, when
the BRT and right-wing think tank, New Zealand Institute,
merged in 2012.

I guess that puts things into perspective that this is the
same group of well-heeled oligarchs who would sell New
Zealand to the highest bidder from Boston, Berlin, or
Beijing.

It is high time to put an end to this neo-liberal dogma 
which has benefitted a small minority, leaving the rest of
us to pick up the scraps.After 30 years of "rogernomics", I
think it's safe to say that the Great Experiment in
neo-liberalism has been a spectacular failure.


-Frank Macskasy
[Address & phone number supplied]

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References

Fairfax media: NZ needs foreign money – NZ Initiative

NZ Herald: Census 2013: Property ownership keeps falling

Statistics NZ: Owner-Occupied Households

Wikipedia:  NZ Initiative

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Above image acknowledgment: Francis Owen/Lurch Left Memes

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11 June – Issues of Interest

A look at issues that’ve hit the headlines (or not)…

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Hekia Parata – grasping at straws

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Acknowledgment: Radio NZ – National standards pass rates rise

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So let me get this straight. After only one year of National Standards – which is supposedly nothing more than  a means of measurement – Parata is claiming that ” new figures show students are doing better at reading, writing and maths”?!?!

Even die-hard National sycophants would look askance at the claim.

Parata is so desperate for good news that she’s willing to invent it. Some call it “political spin”. In the Real World, we refer to it as bullshitting.

However, the above Radio NZ report is sadly lacking in detail.

The NZ Herald headline was far more realistic and damning;  Parata: Concerning trends in National Standards data.  In the Herald piece, Parata concedes the reason for a slight increase in increased achievement,

“We have a range of support in place to help children including Reading Recovery, Reading Together and targeted programmes to accelerate progress in reading, writing and mathematics.”

Acknowledgment: IBID

So it wasn’t ‘National Standards’ that have increased achievement. It’s the hard work of teachers in classrooms slogging their guts out and implementing “Reading Recovery, Reading Together and targeted programmes to accelerate progress in reading, writing and mathematics”.

Well, that’s nice to know.

Even Parata acknowledgment the role of teachers in raising achievement;

“It’s a credit to our teaching profession to see progress being made child by child and school by school.”

So, nothing to do with National Standards then, Hekia? As usual, it’s the professional’s quietly working away in the background, while you trot out unworkable policies and spin bullshit to make it look good?

Got it.

Acknowledgment: IBID

Time for some Frankly Speaking Standards Report  Card:

Teachers: A+

Parata’s spin: F – fail

Radio NZ’s reporting: C – can do better

Winston Peters and those emails

Up until the weekend, Winston Peters has been straight-forward in his responses to media questions on the Dunne-Kitteridge Report-Vance Affair. Peters claims to have possession/access of Peter Dunne’s incriminating emails.

Since the weekend, however, his “yes” and “no” answers have given way to evasiveness and obfuscation. No more straight “yes” or “no” answers.

Peters ‘performance’ on Campbell Live yesterday (10 June) was a frustrating exercise in typical Peters evasiveness to straight forward questions. At one point, John Campbell brought up Peters sharply when the wily old politician tried to pull a ‘swiftie’,

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Acknowledgment: TV3 – Campbell Live 10 June 2013 (at  7.50)

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This morning (11 June), Peters was no better on Radio NZ’s Morning Report, giving Simon Mercep the royal runaround. Listen: Radion NZ – Morning Report –  Winston Peters bats away PM’s suggestion of a bluff

Conclusion? Peters does not have the emails in his possession. If he had them;

1. His answers would be more decisive (you can tell when Peters is bending the truth)
2. He would be drip-feeding them to the media by now

As our American cuzzies so poetically put it, he ain’t got nuthin‘,

 

Kim Hill on Morning Report

Listening to Kim Hill interviewing political figures on Radio NZ’s Morning Report is simply electrifying. The woman has more  journalistic talent than those on Q+A, The Nation, Third Degree, et al, combined. She holds nothing back.

Check out her interview with John Key on  10 June on Morning Report;  John Key responds to claims from Winston Peters

Powerful stuff. Excellent interviewing.

John Armstrong; the NZ Herald,Greens, and media voice for the Nats

Ever wondered what a state-sponsored media voice would be like?

Check out John Armstrong’s pro-National spin on the recent Green Party conference and his petty bagging of Russell Norman. More here, on The Daily Blog;  Sparks fly with yet more shocking right wing nuttery…

Armstrong hasn’t got a leg to stand on to criticise The Greens, so he focuses on the most trivial, pointless, and childish issues to pick on. This isn’t  media independence – this is being a mouth-piece for the National Party. It’s Soviet-era Pravda and Izveztia, right here in New Zealand.

 

Demeaning rubbish.

John Key, GCSB, Prism, and denials

As reported in the NZ Herald today, Key denied using the “Prism” system to circumvent New  Zealand law to gather information on New Zealanders,

“I can’t tell you how the United States gather all of their information, what techniques they use, I just simply don’t know. But if the question is do we use the United States or one of our other partners to circumvent New Zealand law then the answer is categorically no.”

Acknowledgment: NZ Herald – Key: No GCSB legal loophole

Whut?

And remind us all, Mr Key, why we should believe you?

Especially when we already know that the GCSB has spied on 88 New Zealanders, despite  Section 14 of the Government Communications Security Bureau Act 2003 distinctly prohibiting such activities on New Zealand citizens and permanent residents. (See related blogpost: The GCSB law – Oh FFS!!!)

As well, John Key’s reputation for  brain-fades, mis-representing facts, and outright lying,  is now legendary.

I wouldn’t believe a word that comes out of his mouth.

And finishing on a positive note…

Bryan Bruce on his Facebook page, Inside Child Poverty New Zealand, today wrote,

I don’t know about you but I ‘m getting really tired of people who say “Yes … but.” They agree something is a good idea … but find a reason for justifying their inactivity.

Yes.. paid parental leave is a good idea… but we can’t afford it.

Yes feeding our kids healthy meals at school is a good idea … but.. it’s too expensive….

No it’s not. It’s about priorities.

Do you want mothers to be able to look after their babies or force them to earn a few dollars so that strangers can look after them?

Do you want Roads of National Significance or Children of National significance?

No more Yes… buts.

If it’s YES..if it’s morally right… if it’s sensible… then let’s just do it.

And Yes we can find the money for these things … we could put Company tax back up to 30%, we could make more effort catching tax cheats who rob us of up to 5 Billion dollars a year ( any idea how that happened Mr Dunne?) we could put a tax on all non-personal Bank transactions and get companies run by Charitable Trusts to pay tax on their profits and apply for rebates on the good works the ACTUALLY do.

Just say Yes… no more buts please.

Acknowledgment: Inside Child Poverty New Zealand

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10 June – Issues of Interest

A look at issues that’ve hit the headlines (or not)…

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Beware of Think Tanks bearing “solutions”

Ex-politician and right wing ‘pundit’ Michael Bassett appeared on TVNZ’s Q+A on 9 June 2013, promoting something called the ” Priced Out” study (see: TVNZ – Q+A –  Dr Michael Bassett on housing affordability)

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The report blamed local government bodies for being part of something called  the “compact cities cult” and supposedly being unduly restrictive in zoning policies that would free up land for development to build more housing.

“Having compact, dense inner cities is fine but often that is prioritised at the expense of urban development. Most people want to live in suburbs.”

Sourse: New Zealand Initiative – Priced Out

One of the report authors, Luke Malpass, stated,

Malpass also notes that the peak of new homes in the 1970s was fuelled by government welfare policies after World War II that subsidised and promoted house construction.

“The New Zealand Government basically printed money for about 50 years to pay for those policies, which is why no-one is really considering them now.”

Acknowledgement: Fairfax Media –  Cult of compact living blamed for high prices

Interesting comments… And they sounded strangely familiar. The ‘tut-tutting’ of State investment in housing; criticism of local body regulation;  the promotion of free market “solutions”…

Who/what is the “New Zealand Initiative” I wondered?

Why, it’s no less than a reincarnation of the right-wing NZ Business Roundtable, merged with the right-wing ‘think tank’, the  New Zealand Institute. (see:  Roundtable and NZ Institute morph into new libertarian think tank)

Well that explains where Bassett and Malpass are coming from – a far-right “think tank” that advocates more lunatic “reforms” that would benefit the top 1% in this country.

Yes, we have a housing shortage in this country.

But as per usual, right-wing fanatics find others to blame for the failure of the marketplace to meet social needs. The New Right steadfastly  refuse to take any responsibility for the failure of their screwy policies – the ones that have been in place since 1984.

It’s funny how the Q+A programme and Fairfax report both neglected to inform the viewer/reader that this was a product of the Business Roundtable.

And by the way, why did the BRT change it’s name?

Perhaps because the “Business Roundtable  brand” is somewhat tarnished?!

See also:

Evening Post: Poor better off than before: Kerr (7 Nov 1996)

Otago Daily Times:  Poor not poorer, Kerr (12 June 1999)

NZPA – Kiwis urged to take responsibility – 12 August 1999

National cares? Whodathunk it???

From the Dominion Post on 28 May, 2013,

Mr Key told the National Party’s northern conference  at the weekend that it was a “myth” that the party did not care about the less-well-off.

Acknowledgment: Dominion Post – Scheme may see kids clothed as well as fed

Also not myths, according to Dear Leader,  are  the Loch Ness monster, flying saucers, and Sasquatch.

Of course, it’s only a sheer coincidence that the Nats have been  engaged in wide-spread beneficiary-bashing at a time of high unemployment caused by the Global Financial Crisis.

The same GFC that Dear Leader automically falls back on to excuse National’s poor performace with the economy;

“We did inherit a pretty bad situation with the global financial crisis. We have had three terrible earthquakes in Christchurch. We have had the collapse of finance companies. We have had to bail out what is, in terms of the earthquakes, the single biggest economic impact on a developed economy as the result of a disaster. The public don’t agree with every decision… but I think they believe on balance it’s been a tough three years and we’ve handled most things well. The second thing is it’s all relative. Yes, our unemployment went to 7 per cent and now it’s 6.5, but in America it’s 9 per cent officially and 14 per cent unofficially and in Spain it’s 20 per cent... ”  – John Key, 11 September 2011

National using the GFC as an excuse for poor economic performance: ok.

Unemployed, solo-mums, and other beneficiaries doing likewise: not ok.

Abusing animals for drug-heads

Green Party MP, Mojo Mathers sez,

“A pack of gorgeous beagles and their human companions helped deliver to me a 60,000 strong petition calling for the ruling out of animal testing in legal high regulations. I’m sure many of you signed this petition so thank you.

Some of these beagles were rescued from an animal testing facility and I have been working hard to make sure their voices are heard by MPs who are making decisions on the safety testing regulations for legal highs.

If we don’t specifically rule it out, animals will be used to test the safety of legal highs, even though those tests are cruel and unnecessary. I have been meeting with other parties to gather support for my amendment to the Bill to rule out animal testing. “

As demanded by law, if retailers of synthetic cannabis want to peddle their ‘wares’, like this crap,

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– they need to test their products on animals like these,

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– to prove their safety.

Now, I have difficulty at the best of times with the knowledge that we already test products like shampoos, soaps, toothpaste, and other stuff we humans “need” to hide our natural body odours.

But causing harm, pain and eventual death to animals to test “herbal highs” so that a bunch of hedonistic party-goers can turn on, tune out, and  trip Up is a step too far.

There is something terribly wrong with out humanity and so-called compassion when we can even contemplate such an atrocity.  This is evil.

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Wishing Death Upon Him…

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A week or two ago, I happened to catch a segment of    Lindsay Perigo’s TV blog,  “Perigo!“, on Stratos TV.  It is a Libertarian response to  Bomber Bradbury’s more left-wing “Citizen A” and “War on News”, on the same network.

Lindsay Perigo holds some views that are similar to mine – and others that are  diametrically opposed. It’s all part of the fascinating, grand political rainbow upon which we all move.

The episode in question was a repeat  of one broadcast by Stratos TV on  July 12, 2011, and was Perigo’s commemoration of the passing of Roger Kerr, Chief Executive of the Business Roundtable.

In part, Perigo said this,

“When Roger’s illness was made public, there was an outpouring of that unique kind of hatred only the Left are capable of. One poster on one political blog said:

He is getting what he deserves.

Millions of ordinary Kiwis have suffered because of HIS greed and desire to turn us all into a nation of slaves.

Let’s see you try to take all your money with you now, you TRAITOR.

This is why God exists, BECAUSE there MUST be a hell for evil of the likes of Roger Kerr, Ruth Richardson, Jenny Shipley, Rodger Douglas, etc etc.

Actually, there is a place beyond hate, (which is how ordinary Germans felt about Jews), caused by years of hardship and suffering), and it is where my reaction to Roger Kerr, et al is, and I would quite happily send the Business Round Table to the gas chambers.

And their families too. Why? Because you MUST get the evil OUT of the gene pool.

That, ladies and gentlemen, is what we’re up against. Generations of New Zealanders conditioned to believe they shouldn’t have to pay for anything; the world via the government owes them a living and any expectation they should make any effort themselves is a cosmic impertinence. Government should be all-providing … and all-powerful. Not merely mediocrity but sub-mediocrity is the goal … and those who would beckon us to a higher path should be gassed and damned to hell for it. This envy-and-hate-ridden, mindless, soulless and soul-destroying mentality brought us to the brink of catastrophe in 1984 and is threatening to do so again. Roger Kerr has fought the good fight against it for decades.

Whatever they may have said about him, most of his detractors, who are legion, have grudgingly, respected him. In their hearts they know he’s right. The prosperity of all us depends on wealth creation, and wealth creation flourishes under conditions of small government, minimal regulation and low taxes, underpinned by personal freedom and responsibility. Hanker though they might for the former Soviet Union or East Germany, the present-day North Korea or Zimbabwe, the socialists know that if prosperity rather than equality of destitution is our aim, then the Roger Kerrs of this world are … on the money.” – Source

At about this point, I switched channel. Not because I disagreed with certain aspects of Perigo’s views – but because in my view he was exploiting Kerr’s death to “have a go” at the Left. Quite distasteful. Bad form.

And I say that as a left-winger who disagreed with much of Kerr’s views.

However, the comment made by the “left winger”, that Perigo quoted, was  somewhat… familiar. So I employed that great Oracle of the  21st Century – Google.

And I discovered from whence that derisory comment had emanated from. It  most certainly was  not a “Blog” – leftwing or otherwise.

It was from a messageboard belonging to “Trademe“.

Yes, folks, that great icon of  innovative, Kiwi capitalism; Trademe. Here’s the link to a website that has ‘captured’ and stored that particular Thread, entitled simply, “Roger Kerr“. The comment was actually made by an anonymous User, “321mat”, in Reply 2 – though it is visible only as a “reply-to-reply 2”, under a post made by Username “Silas”.

I remember the post from “321mat” quite clearly. I myself recall posting on that same Thread (which has not been ‘captured’ by this website, “boardreader.com”). I made my own views quite clear; one may disagree with Kerr’s political opinions, but to wish him dead was simply  unacceptable. By all means let us be passionate in our views – but not psychotically so.

Wishing Kerr dead was as obscene as Cameron Slater wishing the same on Winston Peters, as he did today,

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Source

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I would add that I am no fan of Winston Peters. In fact, during the late 1990s I was a trenchant critic of him; his Party; and his fellow NZ First MPs. But I cannot recall ever wishing him to fall under a bus or similar fate. There is a vast gulf of difference between opposing the man’s ideas and actions – and desiring his demise.

Perigo might care to reflect that it is an unfortunate fact of life that fantatics exist in all religions;  in every political grouping; and throughout the left-right spectrum. This does not reduce the possible validity of a  philosophy – it simply means that disturbed individuals tend to gravitate to more extremist religious/political groupings.

That, Mr Perigo, is what we’re up against…

… extremists.

… and political commentators who use the death of a public figure to “have a go“.

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Sources

Boardreader: Thread – Roger Kerr (originally published on Trademe)

Roger Kerr Special—Peritorial: Capitalism Derangement Syndrome

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