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John Key, Tania Billingsley, The Waitress, and me

29 April 2015 5 comments

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it's never ok to touch someone without their consent

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After The Daily Blog published the story of the [then un-named] cafe waitress who has been harassed by our esteemed Prime Minister for seven months, it now becomes apparent why he was so reluctant in this case;

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Tania Billingsley - I won't apologise - PM on diplomat case - John Key

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Key’s reluctance to apologise to Ms Billingsley over the atrocious way in which MFAT mishandled the Malaysian Diplomat, at the center of attempted rape and burglary allegations, appears to be a pattern of misogynistic behaviour from the man.

Note Key’s statement why he would not apologise;

“I don’t make apologies unless there’s a serious reason to.”

Many New Zealanders now have a greater insight into Key’s psyche; he did not believe there was a “serious” reason to apologise to Ms Billingsley.

Just as  Key dismissed his behaviour with the waitress by minimising it as some sort of harmless play;

“There’s always lots of horsing around and sort of practical jokes and that’s all there really was to it.”

The problem for Key is that his (not hers) “lots of horsing” was non-consensual (as well as utterly inappropriate on many other levels). Very rarely is it acceptable in New Zealand – or wider Western Society – to touch complete strangers, unless invited; eg; a handshake.

The waitress made it clear that Key’s attention and touching were unwelcome;

On Saturday, 28th February (which I specifically recall as there was to be a protest outside his home the following day) he approached me from behind, security personnel by his side, as I stood with my back to him filling water glasses, and he pulled my hair before once again pointing the blame at Bronagh. I couldn’t believe it, he was still persisting and by now he had definitely got the message that I was not enjoying it – that seemed to be why he was enjoying it so damn much. It had really crossed the line by this point and I didn’t need to tell him to stop because now Bronagh herself was already telling him to stop what he was doing, and not for the first time I might add. I exclaimed “Really?!!”, to my manager beside me, and shot him a look of utter disbelief and frustration.

The waitress has nailed it;

I couldn’t believe it, he was still persisting and by now he had definitely got the message that I was not enjoying it – that seemed to be why he was enjoying it so damn much.

Let me explain why her observation that Key “ was enjoying it so damn much” is so apt.

My first job out of High School was at the age of 16, around 1974/75. I was employed in the mail room, sorting mail – this was waaaay before email. Or faxes. Everything was done by post, and the company – Blue Star Port Lines, situated at the time in the IBM House on The Terrace – received and sent hundreds of letters and shipping notifications every day.

A few months later, I was promoted to the role of a junior shipping clerk. I had my own desk, surrounded by (mainly) men doing similar work to me. Women were primarily in secretarial roles.

I was excited – my own desk! That excitement did not last long and after few weeks had passed, I began to receive unwanted attention from one of the male staff, who would lean close into me when talking; hold my shoulder as he looked over it at whatever work I was doing; and talking to me suggestively.

I’ve no idea if he was gay, hitting on me as a young man, or straight and just teasing the hell out of me.

It was a situation I had never faced before. High School had prepared me  for muddy games of rugby and the odd scrap with whichever bully was rostered on that day to give us smaller kids a hiding. (Stupidly, I almost always stood my ground and never ran. Subsequently received more than my fair share of bruises. I should have watched more “Dr Who” and realised there is nothing ignoble about running from a bigger foe…)

But sexual harassment? The term barely existed in the mid-1970s. It was simply an unknown concept. You might as well have come from the 21st Century and asked me where the nearest wi-fi hot-spot was…

It got worse. The touching. His face close to mine. Then, one day, he pressed his body close to mine in an otherwise empty elevator. I was terrified. I  felt repulsed. I felt totally powerless.

For fuck’s sakes, I was 16 (nearly 17) – hadn’t even lost my virginity. And here was a guy in his late 30s (early 40s?) coming on to me.

The next day, I called in sick. The following day, I went to work, hoping like hell he wasn’t there.

He was. It continued.

After a while, I simply quit. I couldn’t cope. I had no idea what to do; who to go to. I just felt totally powerless. To someone who has not experienced anything remotely like harassment, when you are utterly powerless and the abuser plays on that power-imbalance, then it is hard to comprehend. You cannot hope to feel what a victim has felt, unless it is in your head as well.

Luckily, it was the mid-1970s, and you could walk out of one job and straight into another. I collected my final pay; an additional reimbursement from Labour’s superannuation fund (about $25, if I recall), after Muldoon scrapped it; and never went back.

Everyone else in that office had seen what was happening (it was open-plan for ordinary workers – only managers got enclosed offices).

Not one person said or did anything. Not one.

And all the while – and this is a memory I retain decades later – I can remember the smiling and grinning on his face. He was enjoying my discomfort. That’s how he was getting his ‘jollies’.

People like that; they get pleasure from the discomfort of others. For them, it’s “horse play”.

It was my entrance into the world of being an adult.

So,  to hell with those who try to excuse Key’s behaviour. They are the enablers who allow bullies – whether it be a senior shipping clerk, or a Prime Minister – to keep raping a person’s mind.

 

 


 

References

The Daily Blog: EXCLUSIVE – The Prime Minister and the Waitress

TVNZ News:  I won’t apologise – PM on diplomat case

NZ Herald: John Key – Pony-tail pulling ‘just horsing around’

Additional

Amy Adams, MP for Selwyn: Prime Minister John Key jokes with Brooke Coburn about cutting her hair (Hat-tip:  Greg Presland)

NZ Herald: Audrey Young – Today I’m embarrassed John Key is Prime Minister

 

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This blogpost was first published on The Daily Blog on 24 April 2015.

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The closure of three prisons and loss of 262 jobs – five issues for the National govt

18 April 2015 2 comments

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justice-for-sale-600x337

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The closure of three prisons and loss of 262 jobs

The closure of units in Waikeria, Tongariro-Rangipo, and Rimutaka Prisons, and the subsequent estimated loss of 262 jobs has been openly conceded as a re-distribution of inmates to the new, privately run prison at Wiri.  Corrections chief executive, Ray Smith, stated on 9 April;

I am also proposing to close units at three prisons – Rimutaka, Waikeria and Tongariro/Rangipo…

… With the opening of Auckland South Corrections Facility (at Wiri), and the subsequent reduction in pressure on prison capacity, we can now look at closing these end of life facilities.

The Wiri facility will be managed by multi-national corporation, Serco, as a profit-making venture, paid by the tax-payer.

Smith has blamed the closures and redundancies on the Waikeria, Tongariro-Rangipo, and Rimutaka Prisons being  “50 years old, surrounded by facilities that are 100 years old“. He claims “it would be uneconomic to bring them up to scratch“.

The closure of units at Waikeria, Tongariro-Rangipo, and Rimutaka is estimated to save the National government $165 million. This will be a godsend to Finance Minister Bill English, who admitted on 10 April that National’s much heralded promise of a budget surplus was looking more and more unlikely;

We’re (the Government) is continuing to manage the books carefully but lower inflation, while good for consumers, is making it less likely that the final accounts in October will show a surplus for the whole year.

With the  planned sale of state houses to the  Salvation Army, and other social services, having collapsed, English’s expectation of reaping big cash dividends from the housing sell-of has evaporated.

As I wrote in October 2014;

Meanwhile, Bill English was outlining National’s true agenda, whilst Key was putting on his benign face to the New Zealand public.  As TV3’s Brook Sabin reported,

A big state-house sell-off is on the way, and up to $5 billion-worth of homes could be put on the block.

The shake-up of the Government’s housing stock will be a key focus for the next three years, with Finance Minister Bill English to lead it.

On the block is everything from a tiny 75 square metre two-bedroom state house in Auckland’s Remuera, on the market for $740,000, to a three-bedroom home in Taumarunui for just $38,000. Thousands more properties will soon hit the market.

The reason for putting up to  $5 billion-worth of homes  on the block?

Crashing dairy prices had left a gaping hole in the National Government’s books, and their much-vaunted Budget surplus next year was under threat. Remember that  Key was candid in the implications for the economy and the  government’s tax-take; when he stated – also on 6 October;

It can have some impact because if that’s the final payout, the impact would be as large as NZ$5 billion for the economy overall, and you would expect that to flow through to the tax revenue, both for the 14/15 year and the 15/16 year. My understanding is Treasury is working on those numbers for the incoming Minister of Finance, which fortunately is the same as the outgoing Minister of Finance as well.”

Faced with the imminent sinking of one of National’s cornerstone election promises – a return to surplus by 2014/15 – $165 million saved by the closure of prison units will be  a relief to an increasingly frustrated Bill English.

Key and English couldn’t flog of $5 billion of state housing to social services. So now they are looking at what is effectively privatisation-by-stealth with our prison services.

And bugger the inevitable consequences…

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Justice not for sale logo

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Five issues for the National govt

The closure of units at Waikeria, Tongariro-Rangipo, and Rimutaka Prisons will not be without dire consequences that impact on nearly every aspect of New Zealand society, regions, and the economy.  Even the political landscape may be altered if this ill-considered plan goes ahead.

1. Sending “clients” to a private facility

There is something decidely immoral about up-rooting hundreds of prisoners whose freedom of movement and freedom of choice has been curtailed by State sanctions, and handed over into the hands of a private corporation – Serco – where the prime motivator is making a profit for shareholders. (Overseas shareholders, to be precise.)

In no way can this dystopian scenario be considered part of the “free market”, as all forms of choice have been removed from the prison “clients”.

Serco have been handed “clients” into their “care” whether wanted or not by the prisoners. Not since the slave trade from the 16th to 19th centuries have human being been treated as commodities by Western nations.

Make no mistake; private prisons turn human beings into “things”, to be used by business as investment commodities.

How long before prisoners are sold, bought, and traded by competing corporatised prisons? How long before their labour is sold to other businesses, for profit?

2. Regional economies and job losses

The loss of 262 jobs in Upper Hutt (Rimutaka),  Waikeria, and Tongariro-Rangipo will impact considerably on those regional economies already badly hit by loss of industries, closed businesses, population moving away, and continuing down-turn in the dairy industry.

It is this sort of regional neglect that resulted in Northland voters abandoning the National Party and electing NZ First leader, Winston Peters, as their electorate MP.

Waipa District mayor, Jim Mylchreest, was frustrated and angry at National’s further under-mining of what remained of regional economies;

Here they are with a major change and not even bothering to let us know plans are afoot.

I assume that they’ve done their sums and it’s more efficient for them but they’re not looking at New Zealand in terms of what are the benefits to try and keep employment in the regions.”

Mayor Mylchreest has every right to be angry – closure of a high-security wing at Waikeria Prison will  result in the loss of 148 jobs – creating considerable impact on nearby Te Awamutu (pop: 10,305), only sixteen kilometers away.

Is this how the National Party “supports” the regions?!

It seems that National has not learned a single thing from the Northland by-election.

Rimutaka may well be a safe Labour seat. But it also delivered 15,352 Party Votes for National – now at risk as Upper Hutt will be hard hit by job losses at Rimutaka Prison.

National may have mis-calculated the political fall-out from this move.

3. NZ First/Country Party

A loss of 262 jobs. Millions lost from regional economies. Small towns losing more people. Businesses closing, through lack of turn-over. Which, in a vicious circle leads to more job losses…

A recipe to increase NZ First’s re-positioning on the politicalk spectrum as a de facto “Country-Regional Party”?

It certainly sounds like it.

National may have handed Peters an early Christmas gift to campaign on. Disaffected voters seeing hundreds of jobs lost in their communities – with  subsequent closures of down-stream businesses in their town Main Streets – may wonder why on Earth they should keep voting for National? What’s in it for them?

Not much it would seem.

“Vote National – Lose Your Job” would appear to be the new slogan for National for the 2017 elections.

I have no doubt that even as I write this, and you the reader are reading my words, that Winston Peters and his NZ First strategists are already working on how to maximise these events for their own political gain.

I have no doubt whatsoever; the “Northland Experience” will be repeated throughout the country – much to Winston Peters’ delight.

4. Prisoner’s families

National’s Corrections Minister Peseta Sam Lotu-Iiga has stated;

I understand that this proposal may be unsettling for affected staff but Corrections will have extensive support and assistance in place should the proposal go ahead. I also believe that the proposal reflects our commitment to providing safe and secure working conditions for staff and a safe and productive environment for prisoners.

Prisoners have a much better chance of successful rehabilitation in modern facilities where they have access to education, training and employment opportunities.

Being close to their families is an important factor in rehabilitation for some prisoners.”

However, transferring several hundred prisoners from as far afield as Rimutaka, to Auckland – a distance of some 650kms – is hardly “being close to their families”  and one can only imagine how increasing isolation from family and community will give  “prisoners […] a much better chance of successful rehabilitation”.

The distances involved are considerable, as this Corrections Department map illustrates;

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[6] Waikeria Prison [8] Tongariro/Rangipo Prison [13] Rimutaka Prison

[6] Waikeria Prison
[8] Tongariro/Rangipo Prison
[13] Rimutaka Prison

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Minister Lotu-Iiga needs to explain why he thinks that isolating prisoners in this manner, can possibly assist in their rehabilitation and reintergration back into their communities?

It seems that transferring prisoners out of their communities flies in the face of the Minister’s assertions.

It may also prove more expensive, as prisoner’s families make increased calls upon the Child Travel Fund;

The Child Travel Fund provides financial support to eligible children traveling to visit a parent in prison. The fund also supports parents traveling to visit a child who is under 18 years of age and in prison.

Does National even care?

They should. Increasing prisoner’s alienation from family and communities undermines every effort made by the judicial/corrections system to rehabilitate prisoners.

It should definitely be cause for concern for  the corporate managers of Wiri, for whom rehabilitation and reduced re-offending is part of their contract, according to Corrections chief executive, Ray Smith;

They can earn up to $1.5 million in incentive payments if they can reduce the rate of reoffending by up to 10 percent more than the department can do.”

According to Derek Cheng at the Herald, writing three years ago;

For Wiri, Serco will face stiff financial penalties if it does not meet rehabilitation targets – which will be set at 10 per cent lower than public prisons.

The Corrections Department has a target to reduce re-offending by 10 per cent. If that is achieved, Wiri would have to achieve a rate 20 below the current rates or face fines, which have yet to be set.

Though Finance Minister Bill English – quoted in Scoop at around the same time – was more cautious;

It will also face financial penalties if it fails to meet short-term rehabilitation and reintegration measures including prisoner health and employment targets, and safe, secure and humane custodial standards.”

However, speaking to Paul Henry on Radio Live, Corrections chief executive, Ray Smith, was more circumspect when asked directly what penalties were involved in prisoners re-offended after release;

(@ 7:35)

Henry: “If rehabitation rates, if recidivism rates deteriorate, is there a penalty?”

Smith: “Well they just can’t earn the incentive payment if they can’t [meet the targets(muffled)].”

Henry: “So there isn’t actually a penalty?”

Smith: “[Stuttered words]...the penalties are associated with failure on security. The incentives are geared towards having to actually achieve better outcomes than the Department.”

So unlike penalties associated with prisoner escapes, where Serco actually has to pay the government, the only “penalty” associated with not meeting rehabilitation targets is foregoing $1.5 million in incentive payments?

Under Serco’s contract to manage Mt Eden Remand Prison, it is fined $150,000 each and every time a prisoner escapes, as happened in 2011 and 2012.

Under the contract to manage Wiri, it appears that the “penalty” is foregoing incentive payments.

The two “penalties” are not exactly the same and Minister English was being less than clear when he referred to Serco facing “financial penalties“.

Repeating the question – does National care? Not in the least, one may rightly guess. After all, chances are that National will no longer be in government when the ‘chickens come home to roost’ on this little social time bomb, and John Key will be writing his memoirs somewhere on an idyllic Hawaiian beach.

5. Relocating staff?

There seems to be confusion as to what will happen to the 262 staff who will lose their jobs from  Waikeria, Tongariro-Rangipo, and Rimutaka Prisons.

In his interview with Paul Henry on Radio Live on 10 April, Corrections CEO Ray Smith offered to do his best to find replacement jobs at other facilities for 262 redundant staff.

Suggestions that staff would be relocated to Auckland, with a “$20,000 relocation assistance-payment” appears to be farcical for two reason;

1. $20,000 payment to a Corrections staffmember living in a small town, where properties are worth considerably less than the over-heated Auckland housing market, is unhelpful. There is a worsening housing shortage in Auckland, and it seems to be verging on incompetence for this government to be adding to the housing problem by encouraging more workers and their families to move to the the city, thereby adding to congestion.

2. According to various media reports, the new Wiri facility is already fully staffed;

And unfortunately for staff who will be laid off, the opening of a large new prison in South Auckland next month is no consolation as all jobs are already filled. – TV1 News

A new prison in south Auckland will pick up the relocated inmates, but it is already fully staffed.TV3 News

So where are the jobs? Certainly not at Wiri.

Which makes this statement from Corrections Minister Lotu-Iiga unconvincing;

It should also be noted that the number of prisoner places is not reducing and will in fact increase with the opening of [Wiri]. We will have a net increase of 433 beds.”

The closure of three facilities; 262 redundancies; and contracting out to a private provider all reeks of National’s mania for cost-cutting.

As with many other cost-cutting exercises, it is New Zealanders; their families; and economically-fragile regions and small towns, that are having to pay the price. Treating prisoners as commercial commodities adds a particularly nasty aspect to this exercise.

Meanwhile, foreign-owned Serco stands to gain $30 million of tax-payer’s money, per year, from managing the new Wiri prison.

Someone is benefitting, and it is not us.

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Justice not for sale logo

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Prison facts and statistics – December 2014

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Number of prisoners in each prison - nz prisons

Source

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Justice not for sale logo
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References

Fairfax media: Up to 262 prison jobs may be cut in major Corrections restructure

TV3 News: Union – Prison staff can’t afford to move to Auckland

TV1 News: Budget surplus looking increasingly unlikely this year, Bill English admits

TV3 News: State housing sell-off worth $5B

Hive News: Treasury re-crunching Budget numbers for low Fonterra payout

National Party: Remaining on track to Budget surplus in 2014/15

Wikipedia: Serco

TV1 News: Town’s fury at being left in dark over prison closure

Wikipedia: Te Awamutu

Election Results 2014: Official Count Results — Rimutaka

Department of Corrections:  Sustainable Development Framework

Department of Corrections:  Travel assistance for visits

TV3 News: Union – Prison staff can’t afford to move to Auckland

NZ Herald: New private prison at Wiri given green light

Auckland Scoop media: Amazing promises for new Wiri prison: less offending, better safety, superior service

RadioLive: Around 260 staff face redundancy at Waikeria, Rangipo and Rimutaka prisons (audio)

Auckland Scoop media: Private operator of Mt Eden fined $150,000 for prison escape; security improvements made

Radio NZ: Serco fined after another prisoner escape

TV3 News: Govt criticised over prison job cuts

Radio NZ: Serco expects $30m revenue from Wiri prison

Department of Corrections:  Prison facts and statistics – December 2014

Previous related blogposts

The lunatics are running the Asylum

Housing; broken promises, families in cars, and ideological idiocy (Part Rua)

 


 

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140105 Housing in prisons

 

 

This blogpost was first published on The Daily Blog on 13 April 2015.

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There’s never a towie around when you need one…

10 April 2015 2 comments

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UFO dumped stupid people

 

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On Tuesday (7 April) morning, in Kilbirnie’s Bay Road, we spotted this black ute parked on the road, blocking access to the disability carpark. Note that the ute wasn’t actually parked IN the carpark. He just parked blocking it, and creating a nuisance to those trying to drive past.

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towtruck parked blocking disability carpark - kilbirnie wellington - 7 April 2015 (2)

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towtruck parked blocking disability carpark - kilbirnie wellington - 7 April 2015 (3)

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The vehicle belonged to “Total Towing”. I wonder if I could’ve called up the company’s office and asked for their offending vehicle to be… towed?

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towtruck parked blocking disability carpark - kilbirnie wellington - 7 April 2015 (4)

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Note the car behind the ute, in the next image. The poor old bugger was patiently waiting to use the disability carpark. That made him double-park as well.

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towtruck parked blocking disability carpark - kilbirnie wellington - 7 April 2015 (5)

 

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Poor guy, I felt sorry for him. So decided to do something about it.

The ute’s engine was still running. That indicated that the driver had “popped out quickly” to do an errand, rather than longer-timed shopping.

Which suggested an errand quickly achieved… like going to the local Post Shop.

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towtruck parked blocking disability carpark - kilbirnie wellington - 7 April 2015 (1)

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Such as the Post Shop only a few metres from the carpark.

I walked inside and immediately saw the long queue waiting to be served. What’s the bet—?

In my best, loudest voice, honed after years of bellowing slogans at protest marches, I loudly asked,

 

“WHO OWNS THE BLACK TOW-UTE PARKED OUTSIDE THE DISABILITY CARPARK? THERE’S A DISABLED DRIVER WAITING TO USE IT!”

 

A guy with “Towtruck” emblazoned on his black t-shirt popped his head out of the queue…

Gotcha.

That would be me,” he said, quickly leaving the queue, “Sorry, thought I could just pop in and out quickly.”

No, mate, you weren’t thinking.

My reply was non-committal. I wasn’t going to sympathise with him one bit.

He quickly climbed into the ute, and drove off. The old guy moved in and parked his car.

Happy ending.

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(Originally posted on Facebook group, You’ve got my Car Park, want my Disability too?, on 9 April 2015)

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2015 – Ongoing jobless tally

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Unemployment logo

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Continued from: 2014 – Ongoing jobless tally

So by the numbers, for this year;

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Events

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January

February

March

April

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Statistics

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New Zealand Unemployment Rate - January 2014 - January 2015

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September 2014 quarter – Employment & Unemployment

In the September 2014 quarter compared with the June 2014 quarter:

  • The number of people employed increased by 18,000.
  • The employment rate increased 0.2 percentage points, to 65.2 percent. This came as employment growth outpaced population growth.
  • The unemployment rate fell 0.2 percentage points to 5.4 percent.
  • The number of people unemployed decreased by 4,000.
  • The labour force participation rate increased 0.1 percentage points, to 69.0 percent.
September 2014 quarter Quarterly change Annual change
(000) (Percent)
Employed 2,346 +0.8 +3.2
Unemployed    134  -2.8 -9.6
Not in the labour force 1,116  +0.1  +0.6
Working-age population 3,595 +0.4 +1.8
(Percent) (Percentage points)
Employment rate  65.2 +0.2  +0.8
Unemployment rate    5.4 -0.2   -0.7
Labour force participation rate  69.0 +0.1  +0.4

Notes:

1. All figures are seasonally adjusted. Source: Statistics New Zealand

2. Employed: Includes people who worked one hour (or more) per week, whether paid or unpaid.

Source

December 2014 quarter – Employment & Unemployment

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Employment at a glance
Dec 2014 quarter Quarterly change Annual change
(000) Percent
Employed 2,375 +1.2 +3.5
Unemployed    143 +5.8 -2.6
Filled jobs 1,800 +0.1 +2.5
Percent Percentage points
Employment rate  65.7 +0.4 +1.0
Unemployment rate 5.7 +0.3 -0.3
Labour force participation rate 69.7 +0.7 +0.9

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Notes:

1. All figures are seasonally adjusted. Data source: Household Labour Force Survey: December 2014 quarter

2. Employed: Includes people who worked one hour (or more) per week, whether paid or unpaid.

3. Statistics NZ  has combined the Household Labour Force Survey (HLFS), Quarterly Employment Survey (QES), and Labour Cost Index (LCI) information  into one combined Labour Market Statistics release.

Source

Analysis – Unemployment rising

Unemployment jumped from 5.4% to  5.7% in the December 2014 quarter. That translates into 8,000 more people being unemployed over the intervening quarter.

Data for March 2015 quarter will be released  6 May 2015.

Additional Information

The  under-employment stats;

People who are underemployed are those who work part-time, would prefer to work more hours, and are available to do so. In unadjusted terms, the number of underemployed grew by 12 percent over the year. While the number of part-time workers increased over the year, the ratio of people underemployed to employed part-time also rose – from 17.1 percent in June 2013 to 18.7 percent this quarter.

Official under-employment: up

 

Definitions

Jobless: people who are either officially unemployed, available but not seeking work, or actively seeking but not available for work. The ‘available but not seeking work’ category is made up of the ‘seeking through newspaper only’, ‘discouraged’, and ‘other’ categories.

Under-employment: employed people who work part time (ie usually work less than 30 hours in all jobs) and are willing and available to work more hours than they usually do.

Employed: people in the working-age population who, during the reference week, did one of the following:

  • worked for one hour or more for pay or profit in the context of an employee/employer relationship or self-employment 

  • worked without pay for one hour or more in work which contributed directly to the operation of a farm, business, or professional practice owned or operated by a relative 

  • had a job but were not at work due to: own illness or injury, personal or family responsibilities, bad weather or mechanical breakdown, direct involvement in an industrial dispute, or leave or holiday.

Source

Other Sources

Statistics NZ:  Household Labour Force Survey

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[To  be periodically up-dated]

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Christchurch City Council – Having your asset-cake and eating it

28 March 2015 2 comments

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christchurch city council logo

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Prelude

On 29 January 2013, Prime Minister John Key announced that the rebuild of Christchurch would be a Herculean, multi-billion dollar task;

New Zealand also faces a domestic construction boom. That will be centred, of course, on Christchurch, where the total spend is now estimated to be around $30 billion.”

By 15 May 2014, National’s Finance Minister, Bill English delivered his sixth Budget speech to Parliament. The cost of the Christchurch re-build  had escalated by $10 billion;

The total cost of the rebuild has been estimated at $40 billion and the Government’s share will be significant.

On current estimates, the Government’s contribution to the rebuild is expected to be $15.4 billion, of which $7.3 billion will be incurred by the Earthquake Commission, net of reinsurance proceeds.

Despite central government’s massive re-build bill for Christchurch, in his Budget Conclusion, English was at pains to repeat his new mantra;

The Government’s books are on track to surplus next year and are the envy of most developed countries.”

The surplus English referred to was an Operating balance Before Gains and Losses (OBEGAL),  forecast to be a hair-thin  $86 million for 2014/15.

English’s  Budget document pointed out;

Government is still borrowing a net $78 million a week, and in dollar terms, net debt is expected to peak at $64.5 billion in 2015/16...”

Little wonder that English stated, with blinding obviousness four days earlier;

It means we will need to maintain firm expenditure control beyond our return to surplus...”

Which is why an increasingly nervous Finance Minister, conscious of spiralling re-build costs, came down hard and crushed any suggestion that taxpayer’s money be used to subsidise the proposed SkyCity convention centre;

There’s no contingency for that. If the less preferred option ended up being the option then that money would be part of the Budget process.”

Firm expenditure control in this case meant that the government-purse was firmly shut. And padlocked.

National Government’s Predictable Response

In May 2011, barely three months after Christchurch’s devastating earthquake that killed 185 people, there were already suggestions from Gerry Brownlee that the Christchurch Council would have to sell part of their community-owned assets to fund the re-build.

National’s mis-handling of the economy, with two unaffordable tax-cuts,  as well as the Global Financial Crisis and resultant recession,  had left the government’s books deep in the red.

At first, Brownlee was coy at any suggestion of asset sales;

I don’t foresee the council having to sell any assets, though in the end that will be their choice.

But in the next breath, he added;

I would suspect that Treasury have had a look at the city council’s balance sheet, given that we are going to have to take a whole lot of debt onto our [the Government’s] balance sheet.

It’s only natural we would have a look at what the council can stand [to pay].

Yes, there is provision in this legislation for Cera [Canterbury Earthquake Recovery Authority] to suggest to council that they might need to sell something.

Brownlee denied that government or Treasury had been scoping CCC assets with a view to partial (or full) privatisation;

The accusation is that Treasury have been looking at council assets with a view to what the council will sell. That is, I think, completely erroneous.

On 9 February 2012, a year after the second earthquake,  Brownlee admitted in Parliament (in response to questioning by the future mayor of Christchurch, Lianne Dalziel);

In the days leading up to that particular injudicious comment from me there were numerous discussions going on with the council—between the senior executives, the mayor, me, and the senior executives of the Canterbury Earthquake Recovery Authority—over a number of issues that we want the council to take some responsibility, alongside us, for. Although Treasury officials will have talked to the council, I am unaware of exactly what that discussion would have been about. But let me tell you that when the Government is spending $5.5 billion anywhere we expect the recipients of that to have some plan for how they will participate in what will be a very, very expensive recovery, and that plan has to be a lot better than saying “We’re just going to put up the rates, and we’re going to borrow a lot more money”.”

Brownlee would have us believe that he was “unaware of exactly what that discussion would have been about” between Treasury officials and  Christchurch council?  As Minister of Earthquake Recovery of that devastated city, that proposition is simply not credible.

Brownlee was not being truthful.

The Minister’s denial was further shown to be less than truthful with this evasive response in Parliament on 2 August 2012;

I have received advice from Treasury and the Canterbury Earthquake Recovery Authority on a range of funding options for the rebuilding of Greater Christchurch, to which the Government has committed $5.5 billion to date. Alongside the Christchurch City Council, I support the regeneration of our city, which will be enhanced by the development of the central city plan, released on Monday. I have publicly acknowledged the funding challenges for both the city council and the Government. Councillors and I have agreed to discuss, alongside our respective organisations, a sensible and achievable time line and funding programme for the delivery of the blueprint. I approach these discussions in good faith, as the thousands of city residents would expect us to do so. I intend to say no further on this matter.

The full text  of a remarkable, and somewhat ‘testy’ exchange between Minister for Canterbury Earthquake Recovery, Gerry Brownlee, and the then-Speaker of the House, Lockwood Smith, under-scored the sensitivity of any suggestion that central government was putting the “squeeze” on Christchurch to sell community-owned assets and relieve pressure on English’s struggle to balance the books.

By May 2013, all pretences that asset sales were not being discussed were firmly kicked to the side, with John Key entering the political fray (and Gerry Brownlee standing pensively and obediently in the background);

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Christchurch rebuild - Council needs to come to the party - PM

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Key was clear with Christchurch residents in his expectations;

The only other option available to it is that it doesn’t actually embark on some of the projects it might want to embark on. In the end Cantabrians will have to have a say on what they think is the right mix.

I actually personally hold the view that for Canterbury, where you love sport, happen to be pretty darn good at it, and have climatic conditions that argue that a covered stadium might make sense, then actually it could be a really sensible thing to do.

And if it was up to me I would make that choice in a heartbeat if it meant changing the mix of assets, but I understand for lots of other people they might not hold that view.

This is the chance to get it right. I just urge everyone to think that through.  There is the opportunity to have some quite fantastic facilities here.

The Government is quite happy to step up and put $15bn in, and there is a limit as to how much we can put in, and some of it must come from the council.

The threat is obvious; ‘cough up the extra cash by selling some of the family silver, or  no more rugger for you lot’!

Faced with National firmly closing off any options to meet ever-increasing re-build costs, Christchurch was faced with few alternatives and on 1 August last year the Council caved to central government pressure in the form of a report from investment bankers, Cameron Partners. As Mayor Lianne Dalziel admitted;

We’ve got nothing, there isn’t even wriggle room any more, there’s just nothing there, we’re over the line and we have to pull it back before 2017.

Creating financial certainty will attract much needed investment in the rebuild. We want to work alongside the Canterbury earthquake Recovery Authority (CERA) to scope the possibilities for a one-stop landing point for both local and foreign investors.”

Note the year Dalziel refers to: 2017. An election year.

Dalziel’s reference to “both local and foreign investors” is an oblique acknowledgement that the Christchurch City Council will have to part-privatise community assets to raise money that will not be forthcoming from Key’s government.

She was more forth-coming here, on the same day;

Releasing capital from our balance sheet alongside the other options, (including increased income, reduced operational expenditure and government assistance), is clearly one of the ways we can address the uncertainty around the city’s finances.

Dalziel also hinted at why Christchurch was forced to undertake asset sales;

The purpose of releasing capital would be to generate funds to assist in solving the identified funding shortfall; provide the level of confidence and certainty required to develop a credible long term financial strategy and get on with the rebuild of our community facilities, infrastructure and housing; allow CCC to buffer Christchurch residents and businesses from the exponential rates increases; and allow CCC to align our vision and strategic objectives for the rebuild with our asset portfolio – that is, what we own and operate.

It is simply untenable – both from a commercial perspective, as well as morally – that citizens in one city should be forced to pay for the rebuild of their infra-structure. This was a disaster not of their making.

Any suggestion that the cost should not be spread more evenly around the country would create a precedent that we are each solely responsible for any disaster that might befall our own region. Do New Zealanders really want to go down that road? They should think long and hard if that is the kind of society they want for themselves and their children.

Earthquake Recovery Minister could not endorse the Cameron Partners report fast enough, releasing this statement on the same day – 1 August;

The Cameron Partners report makes it clear some major areas of financial uncertainty are causing headaches for Christchurch City, including the cost of repairing and replacing the city’s essential horizontal infrastructure [pipes, roads, waterways].

When we signed the cost-sharing agreement with the council in June 2013 we foresaw this and undertook to do a thorough review of where the shared costs of the rebuild lay by 1 December this year.

Once we have this information we can consider if any amendments are required to the cost-sharing agreement.

Officials from CERA and the Treasury are working with the council already to ensure the review provides Christchurch City with the clarity it needs to help make some of the big decisions ahead of it.”

National had won.

Brownlee had successfully forced Christchurch Council to adopt unofficial National Party policy; that Council’s were expected to divest themselves of strategic assets if funding for extraordinary projects was required. This was the same policy that Brownlee had forced on Auckland, to fund it’s rail loop, and which he outlined on TV3’s ‘The Nation‘, on 30 June 2013;

Rachel Smalley:John Key said on Thursday that Auckland should consider selling its assets in order to meet some of these costs. Should the Council consider that?”

Gerry Brownlee: Well I think it’s one of those things that’s inevitably going to be on the table. Remember that we’ve got a programme that is now set out for the next 10 years, and as we come up to the point where you’re getting the business case together for the city rail link and that huge expense that’s involved in that, and recognise that you’ve got a 2016 Local Body Election as well, I’d be very surprised if it wasn’t something that was considered by some people.”

But more was come on 6 December 2014, Brownlee was demanding that Christchurch Council increase the level of asset sales;

So it’s a positive step but it’s not the end yet. I do have some worries that it might be a little timid and particularly if it were to lead to much higher rates there in Christchurch.

Murray Horton, from the lobby group ‘Keep Our Assets Canterbury’, was correct when he warned;

Once a chunk of ownership of those assets, the council’s assets, is gone then it won’t be long before there are calls for more to go.

Horton’s prescience was proved barely three months later.

Costs & Consequences

On 26 February, 2015, four years and four days after the city’s second quake, the Christchurch City Council voted;

“...subject to public consultation, the council will release $750m in capital through the sale or partial sale of assets the council owns through its commercial arm, Christchurch City Holdings, to help plug its $1.2 billion funding shortfall.

By the following day, Brownlee was demanding more asset sales, which he repeated more forthrightly on TVNZ’s Q+A on 

I don’t think you can put a particular price on it. What I think they need to do, and I’m sure that the council will get there. I’ve got to say the council have been edging their way to a position that I think will leave them in a good space progressively. What really is necessary is a sales process that gets you the highest possible price. If you go out and say, ‘Look, I’m just going to sell a little bit of this and a little bit of that,’ then you’re not going to get any premium on it at all. And if you’re going to sell something, you may as well get as much for it as you possibly can. That’s my real point.

[…]

…if you look at something like the airport. It’s essentially a real estate company that just provides parking for planes. You could break it down to being that simple. It’s still going to get used. It’s still going to provide the service the city requires whoever owns it. It is partly price controlled through the Commerce Act, as is Orion. Completely price controlled. So the idea that someone else would buy it and the pricing of your electricity lines are going to become completely out of control is completely wrong. ”

The sale of community assets is a perfect fit with National’s ideological and fiscal needs;

  1. Ideologically, National is as wedded to privatisation as it ever was. It is only held back from a  more radical asset sales programme by public opinion – a point no doubt reinforced through National’s on-going secret polling.
  2. Fiscally, forcing local territorial authorities to finance infra-structure through sales of community-own assets lets central government off the hook, and gives English his desperately needed surplus.

Territorial Authorities have little control over Point 2.

With regards to Point 1, however, Territorial Authorities finding themselves under financial pressure can be more strategic when it comes to finding ways and means to navigate political pressure from the likes of right-wing governments and ministers like Gerry Brownlee.

One such mechanism is found within Christchurch City Council’s own document, “Council decision on proposed Financial Strategy“, where it states;

The sale of 14.3 % of Orion on condition that the shares are only offered to another public entity, such as another TA [Territorial Authority], or an institutional investor such as NZ Super Fund, and that any agreement would be subject to the shares returning to the CCC should the investor wish to sell down its share at a future date.

The same document suggests the sale of 34% of Lyttleton Port Company and 9% of Canterbury International Airport Ltd to “a suitable strategic partner“.

The latter measure opens the proverbial slippery slope to further down-selling of Christchurch Council’s shares in both companies. As such, it would be unacceptable to most Cantabrians (and New Zealanders, who have experienced the down-side of sales of strategic assets).

The NZ Super Fund would be an ideal partner for a Territorial Authoritory such as Christchurch Council. At present the NZSF’s investment in New Zealand amounts to only  13.8% in 2014  (down from 14.2% in 2013).

Not only would the NZSF offer an ideal means by which to keep these assets in New Zealand ownership, but would retain the profits instead of seeing them sent off-shore, worsening our Balance of Payments even further.

It would also fulfil the Super Fund’s  2009 directive from the Minister of Finance “requiring us to, while always investing in a prudent and commercial manner, identify and consider opportunities to increase the allocation to New Zealand assets in the Fund“.

Lastly, the Christchurch Council could eventually re-purchase the shares from the NZSF once the city’s re-build was essentially completed and it’s books were back to some semblance of normality.

The first option should always be that local strategic assets remain in local ownership, so that everyone in the community benefits.

In the face of intransigence from an ideologically-bound, and fiscally inept National Government, the best we can hope for is Plan B.

Plan B: transferring ownership, by temporary sale, to the New Zealand Super Fund. It ticks nearly all the boxes.

Additional – Christchurch City Asset Holdings

  • Christchurch City Holdings Ltd (CCHL) is the commercial/investment arm of the Christchurch City Council.
  • CCHL manages the Council (ratepayers’) investment – worth around $2.6 billion – in these seven fully or partly-owned council-controlled trading organisations.
  • CCHL is forecasting to paying $46 million in dividends for 2015/16 period.
  • CCHL Special dividend for 2015/16 period: $549,300,000
  • “The return on our CCHL investment from cash dividends has averaged 3 per cent in the last three years and 4 per cent in the last 10 years. When the appreciation in the capital value of its investments is taken into account, CCHL has achieved an internal rate of return over the past five years of 8.0per cent a year, or 25.9 per cent a year since its inception in 1996.” (Source)

Trading Organisations

Orion New Zealand Ltd: 89.3% shareholding

Christchurch International Airport Ltd: 75%

Lyttelton Port Company Ltd: 78.9%

Christchurch City Networks Ltd (trading as Enable Networks): 100%

Red Bus Ltd: 100%

City Care Ltd: 100%

Selwyn Plantation Board Ltd: 39.3%

[Acknowledgement Fairfax Media]

 

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References

National Party: Prime Minister’s Statement to Parliament

NZ Treasury: 2014 Budget Speech

NZ Treasury: Rebuilding Christchurch

NZ Treasury: Budget Priorities

Beehive.govt.nz: Budget will confirm track to surplus in 2014/15

Interest.co.nz: Finance Minister prefers not to spend taxpayer cash to avoid Sky City ‘eyesore'; no money in Budget 2015 for it

Fairfax media: Christchurch door open for asset sales

TV3 News: Government accounts show $18.4 billion deficit

Scoop media: Parliamentary Questions And Answers Feb 9 2012

Green Party: Eugenie Sage questions the Minister for Canterbury Earthquake Recovery on Christchurch asset sales

NZ Herald:  Christchurch rebuild – Council needs to come to the party – PM

Fairfax media: Cameron Partners Review – full report

TV One News: Christchurch facing huge financial black hole

Sharechat.co.nz: Christchurch considers selling strategic assets stake to fund rebuild

The Press: Council asset sales mooted to help raise $900m

Scoop media: Brownlee says its up to Len to sell assets for loop

Radio NZ: Asset sales plan ‘may be too timid’

The Press:  Christchurch City Council votes for $750m asset sales

The Press: Gerry Brownlee says Christchurch rate rise as ‘too much’

Scoop media: TV1 Q+A – Govt will protect identities of NZ troops – Brownlee

NZ Super Fund: 2014 Annual Report

NZ Super Fund: 2009 Ministerial Directive

Statistics NZ: Balance of Payments and International Investment Position – December 2014 quarter

Christchurch City Council: Christchurch City Long Term Plan 2015 – 2025

Christchurch City Council: Council decision on proposed Financial Strategy

Additional

Christchurch City Council: Long Term Plan consultation document adopted

Previous related blogposts

Christchurch, choice, and charter schools

Christchurch – Picking the bones clean?

The “Free Market” is a fair-weather friend


 

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key1

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This blogpost was submitted to the Christchurch City Council as a submission to the Long Term Plan, on 22 March 2015.
This blogpost was first published on The Daily Blog on 23 March 2015.

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= fs =

The Mendacities of Mr Key #9: The Sky’s the limit with taxpayer subsidies!

20 February 2015 2 comments

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key and skycity

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We all know the story by now; how Key admitted to discussing a convention-centre deal over  dinner with Skycity executives on 4 November 2009,

“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″.

The lack of transparency in the deal-making process was subsequently criticised by the Auditor-General in February 2013. Toby Manhire from The Listener listed ten quotes outlining the AG’s dissatisfaction with Key and his officials’  behaviour;

1. “We found a range of deficiencies in the advice provided and steps taken leading up to [the] decision.”

2. “Although decisions were made on the merits of the different proposals, we do not consider that the evaluation process was transparent or even handed.”

3. “By the time it was expected that SkyCity would put a firm proposal to the Government for support, officials should have been working to understand and advise on the procedural obligations and principles that would need to govern the next steps. We found no evidence that officials were doing so at this stage.”

4. “The meetings and discussion between the Government representatives and SkyCity were materially different in quantity and kind from those between the Government and the other parties that responded.”

5. “SkyCity was treated very differently from the other parties that responded and the evaluation process effectively moved into a different phase with one party. In our view, the steps that were taken were not consistent with good practice principles of transparency and fairness.”

6. “Overall, we regard the EOI [expressions of interest] process in stage two as having been poorly planned and executed. Insufficient attention was given to planning and management of the process as a whole, so that risks were not adequately addressed and managed.”

7. “We did not see any evidence of formal discussions or decisions on the evaluation process and criteria, or mapping out of the basic options for what might happen next, or advice to Ministers on how the process would be managed and their involvement in it. We do not regard this as adequate for a project of this potential scale, complexity, and risk.”

8. “We have concluded that the preparation for the EOI process and the EOI document, fell short of good practice in a number of respects.”

9. “In our view, the result was that one potential submitter had a clearer understanding of the actual position on a critical issue – that the Government did not want to fund any capital costs – than any other potential submitters … We accept that it is unlikely that this flaw made a material difference to the outcome. However, we have spent some time discussing it because we regard it as symptomatic of the lack of attention to procedural risks, and therefore to the fairness and credibility of the process.”

10. “We are unable to comment on the value of any contribution the Government might make as part of any eventual agreement with SkyCity, because negotiations have not yet been concluded.”

Key’s response, in Parliament was an outright denial;

“Absolutely, and the reason for that, as the member will be aware, is that the Auditor-General’s report was divided into three parts. The first part of it was focused on my involvement, and I was totally and utterly cleared and vindicated in that. That was my only involvement.”

The Auditor General, Phillipa Smith, was less than impressed by Key’s attempts at mis-representing her Office’s report as a ‘vindication';

”That fact that [the report] took 50 or 60 pages suggests that nothing was entirely clear cut. We have said that we found problems with the process that was adopted and so I think the report speaks for itself.”

Right-wing NZ Herald columnist and National sympathiser, John Armstrong, was trenchant in his condemnation of Key’s comments. On 20 February, 2013, he wrote;

Verging on banana republic kind of stuff without the bananas – that is the only conclusion to draw from the deeply disturbing report into the shonkiness surrounding the Government’s selection of SkyCity as the preferred builder and operator of a national convention centre.

The Prime Minister’s attempt to downplay Deputy Auditor-General Phillippa Smith’s findings in advance of their release yesterday by saying he had not lost any sleep from reading draft copies may turn out to be a costly political miscalculation.

John Key may have escaped personal blame for the serious flaws in the old Ministry of Economic Development’s handling of the convention centre project but the report is far worse than he had been leading people to believe.

He is taking refuge in the report’s assurances that no evidence could be found to suggest “inappropriate considerations”, such as connections between political and business leaders, were behind the final decision for the Government to negotiate with SkyCity as the preferred bidder.

In other words, no corruption. Or at least none that could be found.

Right-wing commentator, Matthew Hooton, was more scathing and pulled no punches;

The procurement process for the Auckland centre was a farce and as close to corruption as we ever see in New Zealand.

As reported by the Deputy Auditor-General, Mr Eagleson – whose best friend and Las Vegas gambling buddy is Mark Unsworth, SkyCity’s Wellington lobbyist – had been conducting private talks with SkyCity through 2009 and early 2010, including about what regulatory relief SkyCity wanted.

Mr Eagleson argued a procurement process was unnecessary and that the government should just go with SkyCity on the grounds no one else could realistically compete.

(Hat-tip: No Right Turn.)

Read Hooton’s full column. It is far more critical and insightful than any left-wing commentator (including myself) has been on this issue.

Even before the AG’s investigation and damning report, Key’s figures of extra jobs resulting from the proposed convention centre were in doubt.

On 3 April 2012, Key stated in Parliament;

“I might add, when we were out announcing that we were doing a deal with Len Brown in Auckland, he was quite a little lamb chops before the election, because Len Brown knew as well that it will create 1,000 jobs in its construction, 900 jobs ongoing, hundreds of thousands of visitor nights for a convention centre, and tourists who will be spending twice as much in New Zealand.”

By June, Key’s claims for “1,000 jobs in its construction, 900 jobs ongoing” were questioned by hospitality and travel specialist analyst, Horwath Ltd. Horwath director, Stephen Hamilton, was blunt;

Horwath director Stephen Hamilton said he was concerned over reports the convention centre would employ 800 staff – a fulltime-equivalent total of 500.

He said the feasibility study put the number of people who would be hired at between 318 and 479.

“That’s not the number of employees at the convention centre. That’s the number in the whole economy. Some will be at the convention centre, some will be in the hotels and some will be additional taxi drivers.”

[…]

He also questioned the construction job figures, saying: “I’m not quite sure what the source of that 1000 was.”

The original Horwath report said 150 jobs could be created over a five-year construction period for a total of 750.

But the most well-known promise from Key was that the convention centre would not cost tax-payers a cent. In May 2013, Key justified his deal-making with SkyCity by stating;

“The construction of the new convention centre will not cost taxpayers or ratepayers a cent, with SkyCity meeting the full project costs in return for some concessions from the Government.”

Nearly two years later, inflation appears to have  turned “not a cent” into an estimated “$70m to $130m shortfall”, with SkyCity hustling National for a tax-payer bail-out.

On 10 February, Key appeared to have caved to SkyCity pressure to pay a massive taxpayer-funded subsidy to the casino operator;

“I’m keen to see the best convention centre I can for Auckland, because this is a very long-term asset, so I would hate to see some sort of eyesore constructed down town.

There are issues around the construction of it. Obviously you can spend more and get something that looks a lot better, or spend a bit less and get something that looks worse.

In a nutshell, the Government has an agreement with them [SkyCity]. It could make them meet that agreement but the escalation in prices to build the convention centre, which is bigger than was proposed and flasher than was proposed, means there is a hole.

So there are a couple of options. Option one would be to say to Sky City, ‘Build the convention centre exactly at the price that we all agreed, on the conditions of the deal that we agreed’, but it would be smaller I think than we had hoped and less attractive.

Or the second option is to see if there’s any way of filling that hole and to identify how big that hole is, and that’s the process we’re going through.”

By the following day, as a public and media furore exploded in Key’s face, and even his own Finance Minister was cool on the proposed bail-out,  he was forced to do a sudden 180-degree u-turn;

“We agreed a deal at $402 million…our strong preference is that the SkyCity convention centre is built and paid for by SkyCity.”

It seems that the public and media have become weary of Key’s continual back-tracking; broken promises; and often outright lies.

This was not the first time that Key had promised the public one thing – and then delivered something else. In October 2010, as an industrial dispute erupted between SPADA and Actor’s Equity, there were threats that Peter Jackson’s “Hobbit”  movie project would be moved off-shore (an empty threat as Jackson later revealed).

On 26 October, Key was telling the public that his government would not be paying extra incentives to Warner Bros and that there would be no “bidding war” with other countries to provide greater incentives to the U.S. movie industry;

“If we could make the deal sweeter for them that would help; that’s something we would consider… but we can’t bridge the gap that is potentially on offer from other locations around the world. We’re not prepared to do that and… I don’t think the New Zealand taxpayer would want us to do that.”

When asked about any possible taxpayer subsidies, to match other countries incentives, he added;

“It’s not in the tens of millions, put it that way. There’s a lot of noughts.”

Key was  adamant; Warner Bros would not screw another cent out of the New Zealand tax-payer. There were already generous tax breaks in place. So said Dear Leader at 11.45am, on the morning of 27 October;

“They’ve got movies to make and in the end, money talks in Hollywood. That’s just the way it works. We can’t stop other countries around the world putting up much better and more financially-lucrative deals. If it’s just simply a matter of dollars and cents, I’m just not going to write out cheques that New Zealand can’t afford.”

By 7.38pm – barely eight hours later – Key had pulled out the taxpayer chequebook,

Tax rebates will also be changed for Warner Bros, which will mean up to an extra $NZ20.4 million per movie for Warner Bros, subject to the success of the movies…

… The Government will offset $NZ13.6 million of Warner Bros’ marketing costs as part of the strategic partnership.”

As Key lamely explained,

 “It was commercial reality. We did the business.”

The subsidy that was supposedly “ not in the tens of millionsbecame a $34 million tax-payer funded gift to Warner Bros  – on top of a 15% tax-break given to the movie industry – a tax-break not available to any other industry in this country.

Key had caved to the movie moguls from Hollywood, and the tax-payer would foot the bill.

Three years later, the next corporation to hold a “gun” to Key’s head and extort millions in tax-dollars was Rio Tinto.

As State Owned powerco’s were being partially privatised, the multi-national corporation demanded their electricity-supply contract be “re-negotiated” and tax-payer “assistance” to keep the smelter at Tiwai Point  afloat during low aluminium prices – or else the facility would be closed. The threat was the loss of 800 jobs (some claimed indirect jobs up to 3,000) and economic activity that was claimed to be 10% of Southland’s GDP.

With the possible closure of the smelter – which uses 15% of the country’s electricity – the price of power would collapse, making shares in Meridian, Genesis, and Mighty River Power worth only a fraction of their float price.

Key bravely asserted  on 3 April 2013  that government and the New Zealand tax-payer would not  be “held hostage” to Rio Tinto’s threats of closure;

“It’s quite possible that that power could be used either by new ventures that come to New Zealand or, alternatively, it would allow some less productive assets to be closed down or it would allow New Zealand not to build as much generation as might be required.”

Five months later, on 8 August 2013, Key had surrendered to Rio Tinto’s demands and as well as a deal for increased  electricity subsidies, National handed over a cheque for $30 million to the corporation.

Key justified the tax-payer bail-out and increased subsidies by pointing to saving jobs;

“If Tiwai Point had closed straight away then hundreds and hundreds and hundreds of jobs would have disappeared and the Greens would have said the Government doesn’t care about those workers and is turning their back on them so they really can’t have it both ways.”

However, the loss of thousands of jobs from the economy seems not to have taxed Key’s concerns when it came to thousands of State sector workers being made redundant;

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State-sector job cuts 'will make life tough'

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By February the following year, Rio Tinto  posted a US$3.7 billion profit, and issued a 15% increase in dividends to it’s shareholders. Part of the dividends pocketed by shareholders was no doubt made up of $30 million gifted  from the pockets of hard working New Zealand tax-payers.

Soon after the tax-payer funded bail-out of Rio Tinto, Green Party MP, Gareth Hughes made this remarkably prescient comment;

“Treasury told National right from the start ‘don’t give them any money’ – it just means every corporation will have its hand out for public money whenever they have any leverage over the Government.

[…]

Is that how you want your government to govern? Do you want your government playing fast and loose with public money; using your cash as a bargaining chip to cut deals over the phone with multi-nationals every time it finds itself backed into a corner?”

I can answer Gareth’s question: the next corporation with it’s hand out is SkyCity.

John Key plays fast and loose  with tax-payers’ money – not to save jobs – but to present an appearance to the public that National is “saving” jobs. It is a matter of the public’s perception he is focused on.

If that involves handing out cheques to Warner Bros, Rio Tinto, and now possibly SkyCity – he will do it.

This is the party that prides itself on being a “sound, prudent, fiscal manager” of the government’s books. Except that New Zealand governments have not engaged in this kind of  tax-payer funded largesse since Supplementary Minimum Prices were paid to farmers in the 1960s and 1970s.

That, to, was initiated by the supposedly pro-free market National Party.

Which leads on to an interesting situation regarding this government; it’s lip-service to the “free market” and supposed hands-off by the State. Committed right wing National/ACT supporters should be asking themselves three very pertinent questions:

  1. Is it ok if future Labour governments intervene and gives subsidies to various businesses as National has done?
  2. Does on-going State intervention by this National government signal the end of the neo-liberal experiment?
  3. Has National’s intervention in the “marketplace” illustrated the failure of neo-liberalism?

One thing, though, should now be clear to all; Key will say one thing, and then renege and do completely the opposite if it suits him politically.

One would think that any self-respecting journo from the media (no, not you, Mike Hosking) these days would be asking Key a very simple question;

“Mr Prime Minister, you have issued statements in the past and then flip-flopped months down the track. Why should we take anything you say at face value value, when you have back-tracked so many times previously?”

Put another way;

“Mr Prime Minister, you’ve said what you intend to do. How long before you change your mind when it becomes convenient to do so? You do have ‘form’, you realise?”

Or, even more bluntly;

“Mr Prime Minister, how long will this decision last? Days? Weeks? Six months?

I’ll leave it to esteemed members of the Fourth Estate to frame their questions in a suitable manner.

Just don’t be expecting an honest answer.

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Opening of Masu at SkyCity Grand Hotel, L to R, Nigel Morrison, Julia Smith Bronagh Key and PM John Key, October 12th 2013

Opening of Masu at SkyCity Grand Hotel, L to R, SkyCity CEO Nigel Morrison, Julia Smith Bronagh Key and PM John Key, October 12th 2013

Image acknowledgement: “The A List

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Postscript 1

As I wrote on 6 February;

In terms of past events; past scandals; and past instances where the PM has been caught out – it is by no means the worst.

This time, however, matters have reached a critical flash-point. The media has awoken to a smell of a government on the defensive and where Dear Leader has pushed the envelope once too often. Journalists and media commentators are no longer as tolerant;  no longer awed; and no longer willing to be mollified by a popular prime minister.

The Shipley Factor has kicked in.

At this point, nothing that National does will counter the  same style of growing clamour of criticism it’s predecessor faced in the late ’90s.

Nothing that has happened since then has caused me to resile from my earlier expressed belief that Key’s current administration is terminal.

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Postscript 2

‘Natwatch’ from The Standard wrote on 12 February;

“The focus group results are in and John Key is backing off from the Government injecting further money into the SkyCity convention centre.”

Which probably makes more sense than anything else this shabby government has done since 2008.

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References

NZ Herald:  SkyCity deal was PM’s own offer

Office of Auditor General: Skycity

NZ Listener: The SkyCity convention centre deal: 10 quotes from the Auditor-General report

Parliament Today: Questions and Answers – June 4 2013

Fairfax Media: Auditor-general backs Sky City report

NZ Herald: John Armstrong: Sky City report ‘deeply disturbing’

NBR: Close to corruption

Parliament: Prime Minister—Statements and Statements Made on His Behalf

NZ Herald:  Puzzle of Key’s extra casino jobs

Fairfax Media: Govt at odds over SkyCity convention centre

NZ Herald: John Key warns of SkyCity ‘eyesore’ if more money is not found

NZ Herald: John Key backtracks on taxpayer cash for SkyCity convention centre

NZ Herald: Sir Peter – Actors no threat to Hobbit

Fairfax Media: Key – No Hobbit bidding war

NZ Herald: PM – I’m not going to write cheques NZ can’t afford

NZ Herald: Hobbit to stay in NZ

NBR: Key on Hobbit deal: ‘It was commercial reality. We did the business.’

NBR: Key comes through: $34m deal sees Hobbit stay in NZ

TVNZ News: Relief in Southland over Tiwai Point deal

Radio NZ: Tiwai Point closing could have some advantages – PM

Otago Daily Times: PM defends Tiwai payout

Fairfax Media: State-sector job cuts ‘will make life tough’

RadioLive: Why John Key handed $30 million of your money to Rio Tinto

Te Ara:  Government and agriculture – Subsidies and changing markets, 1946–1983

Additional

Fairfax media: SkyCity’s ‘fair deal for all’ questioned (hat-tip Mike Smith, The Standard)

Previous related blogposts

Muppets, Hobbits, and Scab ‘Unions’

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

Peter Jackson’s “Precious”…

National under attack – defaults to Deflection #2

Dear Leader caught telling porkies (again)?! (part rua)

Doing ‘the business’ with John Key – Here’s How

Doing ‘the business’ with John Key – Here’s How (Part # Toru)

The Maori Party, the I’m-Not-Racist-Pakeha Party, the Gambling-My-Money-Away Party, and John Key’s Party

ACC. Skycity. NZ Superannuation. What is the connection?

Skycity: National prostitutes New Zealand yet again

Witnessing the slow decay of a government past it’s Use-By date

The Mendacities of Mr Key #8: A roof over your head, and boots on the ground

Other blogs & blogposts

Imperator Fish: It’s about friends helping friends

Insight NZ: National splits in two over Sky City bailout

Liberation: NZ Politics Daily – 13 February 2015: SkyCity

Local Bodies: SkyCity’s Glorious Deal

No Right Turn: More money down the drain

No Right Turn: “Close to corruption”

Polity: Fleeced

Polity: Mo’ money

Polity: Small on “free” convention centre

Polity: I agree with DPF, Jordan Williams, and (mostly) with Matthew Hooton, too

Polity: Why all governments are bad at commercial deals

The Civilian: Disappointment as meteor misses Sky Tower

The Daily Blog: Key’s SkyCity Scam is a dirty deed done relatively expensively

The Daily Blog: Brenda McQuillan – A Problem Gamblers View of the Deal

The Dim Post: On Hooton on Sky City

The Dim Post: Win by not playing

The Standard: The SkyCity Deal

The Standard: Sky City’s playing us for suckers

The Standard: Key is in reverse gear about Sky City

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This blogpost was first published on The Daily Blog on 15 February 2015.

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= fs =

Letter to the editor – hitting charities where it hurts, courtesy of the Nats

16 February 2015 1 comment

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Frank Macskasy - letters to the editor - Frankly Speaking.

A cash-strapped government – having frittered billions away in two tax cuts for the rich – now seeks to penny-pinch voluntary organisations and charities to make up for the gaping deficits they have created?!

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Fee for police background checks slated by charities

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from: Frank Macskasy <fmacskasy@gmail.com>
to: Sunday Star Times <editor@star-times.co.nz>
date: Mon, Feb 16, 2015
subject: Letter to the ed

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The Editor
Sunday Star Times

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This government is planning to implement a user-pays charge whereby charities; other voluntary organisations, and non-profit groups are required to pay for police vetting of volunteers and employed staff.

How long will it be before the $5 or $7 vetting fee becomes $10? $20? Then full recovery costs? If there is one thing we know about government charges, once they are introduced, they invariably increase as governments look to cut taxes, and raise user-pays charges for state services. Tertiary fees, fuel taxes, gst, prescription fees, court costs, are all examples of government shifting costs on to the individuals and public organisations.

One day, New Zealanders will wake up to the realisation that far from being “prudent fiscal managers”, National’s track record in managing the government books are ad hoc and worse still, penalise those who need help the most.

This is penny-pinching in the extreme, and shows how we are still paying for two ill-considered and unaffordable tax-cuts in 2009 and 2010.

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-Frank Macskasy

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[Address and phone number supplied]

 

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References

NZ Herald: Fee for police background checks slated by charities

Radio NZ:  Education and charity sector worry about cost of police checks (Audio - 12′ 24″ )

 


 

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Skipping voting is not rebellion its surrender

Above image acknowledgment: Francis Owen/Lurch Left Memes

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= fs =

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