Archive
Letter to the editor – Bill English admits immigration driving economy
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from: Frank Macskasy <fmacskasy@gmail.com>
to: Dominion Post <letters@dompost.co.nz>
date: 12 June 2017
subject: Letter to the editor.
The Editor
Dominion Post.
On 16 June last year, then-Finance Minister, Bill English attributed our growth to “other sectors” of the economy;
“Despite the dairy sector continuing to be under pressure, other sectors are performing well and contributing to an overall solid rate of economic growth.”
He never acknowledged the role played by massive immigration in our so-called “economic growth”. To do so would admit that our “growth” was artificial and unsustainable, and putting pressure on housing and social services.
As Labour unveiled it’s new immigration policy this week, English was forced to concede;
“A 30,000 reduction in migration right now will stall the economy, it’ll deprive businesses of the skills they need to enable them to make the investments they want to make, to grow New Zealand. “
It’s official: our “growth” is an illusion.
Like a “sugar hit” from junk-food, immigration is not really energising our economy. On 18 March last year, English admitted that real national disposable income-per-capita fell by 0.4%. Again, he put the blame anywhere but at immigration;
“You’ve got a big drop in national income, because dairy prices are down.”
Again he let slip;
“At the same time you’ve had surprisingly high migration numbers. So it’s not surprising that when you work the figures you get a drop in national disposable income.”
Like Auckland’s ballooning house-bubble prices, economic “growth” based on migration is a mirage. Eventually those balloons will burst and we’ll be left to tidy up National’s nasty mess.
It beggars belief how National ever gain it’s reputation for “sound economic stewardship”.
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-Frank Macskasy
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[address and phone number supplied]
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References
Fairfax media: Labour unveils plans to stop foreign students’ ‘backdoor immigration’ rort
Radio NZ: Incomes dropping despite GDP growth, English admits
Fairfax media: New Zealand’s economic growth driven almost exclusively by rising population
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This blogpost was first published on The Daily Blog on 14 June 2017.
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Letter to the editor – Bill English dives head first into the cover-up cess-pool
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from: Frank Macskasy <fmacskasy@gmail.com>
to: Listener <letters@listener.co.nz>
date: 4 April 2017
subject: Letters to the editor.
The editorThe Listener
.On 3 April, our esteemed Prime Minister, Bill English, announced that there would be no independent commission of inquiry into allegations of civilian deaths, injuries, and deliberately destroyed homes in a SAS-led raid in Tirgiran Valley in 2010. It was also alleged that a prisoner was handed over to Afghan security forces where torture was a well-known interrogation technique.
English’s excuse;
“After considering [that] briefing, [General Keating’s] letter to [Defence Minister] Gerry Brownlee and viewing video footage of the operation, I’ve concluded there is no basis for ordering an inquiry.”
I trust the facts as presented.”
English’s explanation for refusing an impartial inquiry defies credulity.
In effect, an instigator of an alleged crime – the NZ Defence Force – was asked to provide a reason to avoid an inquiry. The NZDF duly complied.
What did English expect, a full admission of wrong-doing by New Zealand forces in Tirgiran Valley? A written, signed confession?
Is this to be the new standard of accountability from National? That any allegations of impropriety is put to alleged offenders; they deny wrong-doing; and English accepts said denials without question?
Let us not forget that on 21 March, the NZDF responded to allegations of civilian deaths and injuries at Naik and Khak Khuday Dad with a flat-out denial;
“The investigation concluded that the allegations of civilian casualties were unfounded.”
Six days later, Defence Force chief, Tim Keating admitted “possible” casualties;
“Subsequent information, received after Operation Burnham indicated that civilian casualties may have been possible […] The investigation team concluded that civilian casualties may have been possible due to the malfunction of a weapon system.”
Both statements are currently viewable on the NZDF website.
By resisting calls for an inquiry, English has implicated himself in a possible cover-up.
There is no other way to interpret his words...-Frank Macskasy
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[address and phone number supplied]
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Appendix
Email addresses for newspapers for other budding letter-writers wanting to express their demand for a Commission of Inquiry. (Maximum word-length stated in brackets)
Daily Post (250 words)
editor@dailypost.co.nz
Dominion Post (200 word limit)
letters@dompost.co.nz
Listener (300 word limit)
editor@listener.co.nz
NZ Herald (200 word limit)
editor@herald.co.nz
Otago Daily Times (150 words)
odt.editor@alliedpress.co.nz
The Press (150 words)
letters@press.co.nz
Southland Times (250 words)
letters@stl.co.nz
Sunday Star Times (150 word limit)
letters@star-times.co.nz
Waikato Times (200 words)
editor@waikatotimes.co.nz
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References
Radio NZ: ‘No basis’ for Afghan raid inquiry – PM
New Zealand Defence Force: NZDF Response To Book
New Zealand Defence Force: Speech notes for Press Conference on Operation Burnham (p6)
Previous related blogposts
Letter to the editor – Commission of Inquiry, NOW!
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This blogpost was first published on The Daily Blog on 5 April 2017.
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Letter to the editor – Commission of Inquiry, NOW!
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from: Frank Macskasy <fmacskasy@gmail.com>
to: Dominion Post <letters@dompost.co.nz>
date: 31 March 2017
subject: Letter to the editor.The EditorDominion Post
.Since the release of Nicky Hager and Jon Stephenson’s “Hit and Run” on 21 March, the public has been treated to denials and conflicting information from the NZDF.
On 21 March, the NZDF responded to allegations of civilian deaths and injuries at Naik and Khak Khuday Dad with this statement on their website;
“The investigation concluded that the allegations of civilian casualties were unfounded.”
Six days later, Defence Force chief, Tim Keating stated;
“Subsequent information, received after Operation Burnham indicated that civilian casualties may have been possible […] The investigation team concluded that civilian casualties may have been possible due to the malfunction of a weapon system.”
Both statements are currently viewable on the NZDF website. They are irreconcilable.
Journalists Hager and Stephenson have presented considerable evidence to back up their investigation findings, including death certificates for those killed in the SAS-led raid.Bill English has refused to undertake a commission of inquiry for reasons that remain unclear.
Until an Inquiry is held, there exists a cloud of suspicion hanging over the NZDF, and the SAS. This is not good enough, especially as there is ample evidence innocent people may have been killed.
What more does Mr English need to warrant an inquiry?
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-Frank Macskasy
(Address and phone number supplied)
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Appendix1
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Appendix2
Email addresses for newspapers for other budding letter-writers wanting to express their demand for a Commission of Inquiry. (Maximum word-length stated in brackets)
Daily Post (250 words)
editor@dailypost.co.nz
Dominion Post, (200 word limit)
letters@dompost.co.nz
Listener (300 word limit)
editor@listener.co.nz
Otago Daily Times (150 words)
odt.editor@alliedpress.co.nz
The Press (150 words)
letters@press.co.nz
NZ Herald (200 word limit)
editor@herald.co.nz
Southland Times (250 words)
letters@stl.co.nz
Sunday Star Times (150 word limit)
letters@star-times.co.nz
Waikato Times (200 words)
editor@waikatotimes.co.nz
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References
New Zealand Defence Force: NZDF Response To Book
New Zealand Defence Force: Speech notes for Press Conference on Operation Burnham (p6)
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This blogpost was first published on The Daily Blog on 1 April 2017.
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The Mendacities of Mr English – The covert agenda of high immigration
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Context
Bill English was recently caught on-the-spot when challenged why National was permitting high immigration at a time when unemployment was still high, and rising.
Make no mistake, National has opened the floodgates of immigration because it is an easy way to artificially stimulate the economy. This was pointed out in May 2011, by then-Immigration Minister, Jonathan Coleman, who trumpeted the contribution made by immigration to economic growth;
“All of us have a vested interest in immigration and I’m pleased to share with you some specific actions the Government is taking to enhance Immigration’s contribution to the economy, service improvement and changes to business migration.
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…I’m confident that you will acknowledge the partnership approach that Immigration is now taking to provide tangible improvements to help support New Zealand’s economic growth.
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Considering the economic challenges the country faces, lifting immigration’s economic contribution takes on more importance.”
Justifying the need for high immigration to generate economic growth, Coleman cited “New Zealand [going] into deficit in 2009 after several years of surpluses and the economic situation has been compounded by the September and February earthquakes” and unsustainably “borrowing $300 million dollars a week to keep public services ticking over“.
Coleman admitted that “If we were to close off immigration entirely by 2021… GDP would drop by 11.3 per cent“. He revealed that, “new migrants add an estimated $1.9 billion to the New Zealand economy every year“.
Easy money.
The downside to high immigration has been to put strain on critical services such as roading and housing, and reduce demand for locally trained workers to fill vacancies. There is a downward pressure on wages, as cheaper immigrant-labour is brought into the workforce.
As Treasury pointed out in June last year;
“There is a concern that recently there has been a relative decline in the skill level of our labour migration. The increasing flows of younger and lower-skilled migrants may be contributing to a lack of employment opportunities for local workers with whom they compete.”
Faced with increasingly negative indicators from high immigration, English was forced to explain why we were seeing high immigration at a time of rising unemployment;
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English’s response was predictable if not offensive.
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Playing National’s Blame Game
As per usual strategy, English defaulted to National’s strategy of Default Blame-gaming. When in trouble;
- Blame the previous Labour government
- Blame ‘welfare abuse’/Release a ‘welfare abuse’ story in the media
- Blame Global Financial Crisis or similar overseas event
(If the trouble is Auckland-centered, Default #4: Blame Auckland Council/RMA/both.)
This has been the pattern of National’s policy to shift blame elsewhere for it’s consistently ineffectual policies;
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The Blame Gaming was applied recently to National’s appalling do-nothing record on housing;
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Resorting to Deflection #2, English had the cheek to blame young unemployed for our high immigration level;
“One of the hurdles these days is just passing the drug test … Under workplace safety, you can’t have people on your premises under the influence of drugs and a lot of our younger people can’t pass that test.
People telling me they open for applications, they get people turning up and it’s hard to get someone to be able to pass the test – it’s just one example.
So look if you get around the stories, you’ll hear lots of stories – some good, some not so good – about Kiwis’ willingness and ability to do the jobs that are available.”
His comments on 27 February were echoing previous, similar sentiments in April last year, when he again abused unemployed workers as “hopeless”;
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Quite rightly, English’s comments were condemned by many. English admitted that his comments were based solely on “anecdotal evidence” . This is the worst form of evidence possible as absolutely no confirmation by way of actual, real data is involved. “Anecdotal evidence” panders to prejudice – a difficult thing to shift even when real evidence proves to the contrary.
Real evidence surfaced only a day after English made his slurs against the unemployed, when it was revealed that out of over 90,000 (approx) welfare beneficiaries, only 466 failed pre-employment drug tests over a three year period. That equates to roughly to 155 failed tests out of 30,000 per year.
Government figures show beneficiaries have failed only 466 pre-employment drug tests in the past three years.
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The Ministry of Social Development said the 466 included those who failed and those who refused to take the test.
Some failed more than once.
The ministry did not have the total figure for how many tests were done over the three years, but said there were 32,000 pre-employment drug tests in 2015.
Those 466 over a three year period consisted of (a) those who failed the test, (b) those who refused to take the test, and (c) some failing more than once.
Put another way, 155 failed tests out of 30,000 per year equates to half a percent fail rate.
Which means that 99.5% of beneficiaries are clean, according to MSD’s own collected data.
There was further confirmation of low fail rates from another media story. On the same day as the Ministry of Social Development released it’s data on failed drug tests, The Drug Detection Agency revealed that fail-rates were as low as 5%;
While the rate of positive tests has remained at about 5 percent, the company is doing more tests and therefore failing more people, said its chief executive, Kirk Hardy.
“We’ve seen an increase overall in our drug testing and we now, annually, conduct about 144,000 drug tests,” he said.
Looked at another way, 95% of the workforce was clean.
Which simply confirms Bill English to be the typical manipulating, lying, politician that the public so consistently distrust and despise.
However, English has his own sound reasoning for blaming welfare beneficiaries for this country’s immigration-caused problems. He has to do it to obscure the two reasons why National has opened the tap on immigration as far as they can possibly get away with…
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Cargo-cult Economics
Remember that in May 2011, then-Immigration Minister, Jonathan Coleman revealed;
“If we were to close off immigration entirely by 2021… GDP would drop by 11.3 per cent“.
A 11.3% fall in GDP would have pushed New Zealand into a deep recession, matching that of the early 1990s.
This was especially the case as only a few years ago the economy was suffering with an over-valued New Zealand dollar. Manufacturing and exports had slumped;
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Combined with the multi-billion dollar Christchurch re-build, mass-immigration was National’s “quick-fix” solution to boosting the economy. It might cause problems further down the track, but those were matters that National could address later. Or better still, leave for an incoming Labour-Green government to clean up the resulting socio-economic mess.
This is quasi-cargo-cult economics, 21st century style.
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The Not-so-Free-Market
In Coleman’s May 2011 speech, he also referred – indirectly – to the second rationale for opening the floodgates of mass-immigration;
“If we were to close off immigration entirely by 2021… The available labour force would drop 10.9 per cent“
This was critical for National.
A crucial tenet of free market capitalism (aka neo-liberalism) is that the price of labour (wages and other remuneration) should be predicated on supply and demand;
The higher the wage rate, the lower the demand for labour. Hence, the demand for labour curve slopes downwards. As in all markets, a downward sloping demand curve can be explained by reference to the income and substitution effects.
At higher wages, firms look to substitute capital for labour, or cheaper labour for the relatively expensive labour. In addition, if firms carry on using the same quantity of labour, their labour costs will rise and their income (profits) will fall. For both reasons, demand for labour will fall as wages rise.
Note the part; “At higher wages, firms look to substitute capital for labour, or cheaper labour for the relatively expensive labour“.
Mass immigration may or may not supply cheaper labour per se, but more people chasing a finite number of jobs inevitably “stabilises” or even drives down wages, as migrants compete with local workers. As pointed out previously, this is precisely what Treasury warned off in June last year;
“There is a concern that recently there has been a relative decline in the skill level of our labour migration. The increasing flows of younger and lower-skilled migrants may be contributing to a lack of employment opportunities for local workers with whom they compete.”
National is wary of wages rising, thereby creating a new wage-price inflationary spiral, reminiscent of the 1970s and 1980s. English said as much on TVNZ’s Q+A in April 2011;
Guyon Espiner: “Can I talk about the real economy for people? They see the cost of living keep going up. They see wages really not- if not quite keeping pace with that, certainly not outstripping it much. I mean, you said at the weekend to the Australia New Zealand Leadership Forum that one of our advantages over Australia was that our wages were 30% cheaper. I mean, is that an advantage now?”
Bill English: “Well, it’s a way of competing, isn’t it? I mean, if we want to grow this economy, we need the capital – more capital per worker – and we’re competing for people as well.
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Well, it is a good thing if we can attract the capital, and the fact is Australians- Australian companies should be looking at bringing activities to New Zealand because we are so much more competitive than most of the Australian economy.
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Well, at the moment, if I go to Australia and talk to Australians, I want to put to them a positive case for investment in New Zealand, because while we are saving more, we’re not saving more fast enough to get the capital that we need to close the gap with Australia. So Australia already has 40 billion of investment in New Zealand. If we could attract more Australian companies, activities here, that would help us create the jobs and lift incomes.”
National is circumventing their own neo-liberal ideology by importing large numbers of workers, to drive down wages (or at least permit only modest growth).
In times of scarce labour, wages should grow. Demand. Supply.
This is the counter to recessionary-times, such as the 2008 Global Financial Crisis, when wages remain static, or fall, due to heightened job losses and rising unemployment. Supply. Demand.
But National is subverting the free market process by ‘flooding the labour market’ with immigrant labour. The price of labour cannot rise because National has interfered with the process of supply by widening the field of the labour market. The labour market is no longer contained with the sovereign borders of our state.
This reveals “free market economics” to be a fraud. It is permitted to work unfettered only when it benefits the One Percent, their business interests, and their ruling right-wing puppets.
The moment there is a whiff that the “free market” might benefit workers – the goal-posts are shifted. (Just ask Nick Smith about shifting goal-posts.)
The game is fixed. The dice are loaded. We cannot hope to beat the House at their game.
Time to change the game.
Inevitable Conclusion
Welfare beneficiaries. Drugs. Drug testing. It was never about any of those.
The real agenda is for National to create a false impression of economic growth and reign-in wage growth, through immigration. Anything which threatens to expose their covert agenda is to be countered. Especially before it becomes fixed in the public consciousness.
Welfare beneficiaries are very useful as National’s go-to scapegoats. Or herring of a certain hue…
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Postscript: A case of REAL workplace drug abuse
Meanwhile, in what must constitute the worst case of workplace drug abuse, took place on 14 June 1984;
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…Muldoon had made up his mind. In one of the biggest miscalculations in our political history he decided that he would go to the country. At 11.15pm a visibly intoxicated Muldoon made his announcement to waiting journalists.
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References
NZ Herald: Beyond the fear factor – New Kiwis can be good for us all
Fairfax media: NZ unemployment jumps to 5.2 per cent, as job market brings more into workforce
Fairfax media: New Zealand’s economic growth driven almost exclusively by rising population
Beehive: Immigration New Zealand’s contribution to growing the economy
NZ Herald: Budget 2016 – Feeling the Pressure
NZ Herald: Treasury warns of risk to jobs from immigration
TV3 News: Bill English blames unemployment on drug tests
Radio NZ: Employers still struggling to hire NZers due to drug use – PM
Radio NZ: Farmers agree Kiwi farm labourers ‘hopeless’
Radio NZ: Tens of thousands drug-tested, hundreds fail
Radio NZ: Drug use not the whole worker shortage story – employer
NZ Herald: Willie Apiata our most trusted again
Radio NZ: Exporters tell inquiry of threat from high dollar
Wikipedia: Cargo cult economics
Economics Online: The demand for labour
TVNZ: Q+A – Guyon Espiner interviews Bill English – transcript
Radio NZ: Unemployment rises, wage growth subdued
Statistics NZ: When times are tough, wage growth slows
Fairfax media: Shock rise in unemployment to 7.3pc
TVNZ: Frontier Of Dreams – 1984 Snap Election
Additional
TV3 News: Government gets thumbs down on housing
Other Blogs
The Standard: English hammered on druggies smear
Previous related blogposts
Election ’17 Countdown: The Promise of Nirvana to come
When National is under attack – Deflect, deflect, deflect!
National under attack – defaults to Deflection #2
National under attack – defaults to Deflection #1
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This blogpost was first published on The Daily Blog on 5 March 2017.
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The Mendacities of Mr English – Social Services under National’s tender mercies
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Context
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On 25 January, as Radio NZ returned to it’s normal broadcasting schedule (and putting away it’s dumbed-down “summer programming” until next December/January), John Campbell had his first interview with John Key’s replacement, Bill English.
Campbell raised several issues with English; the US withdrawal from the TPPA; the Pike River mine disaster; and the housing crisis. At this point, English made this staggering claim;
@ 5.58
“We’ve got a government actually with a good record on addressing, in fact, some of the toughest social issues. There may be disagreement over means by which we’re doing it, ah, but our direction is pretty clear. And you know over, certainly heading into election year we think that the approach the government’s developed around social investment, around increasing incomes is the right kind of mix – “
English’s bland assertion that “government actually with a good record on addressing, in fact, some of the toughest social issues” is at variance with actual, real, mounting socio-economic problems in this country.
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Key indicator #1: Unemployment
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The latest HLFS unemployment stats show an increase from 4.9% to 5.2% in the December 2016 Quarter. However, in all likelihood, the unemployment numbers are actually much, much, higher since Statistics NZ arbitrarily altered the way it calculated what constituted unemployment.
On 29 June 2016, Statistics NZ announced that it would be changing the manner in which it defined a jobseeker;
Change: Looking at job advertisements on the internet is correctly classified as not actively seeking work. This change brings the classification in line with international standards and will make international comparability possible.
Improvement: Fewer people will be classified as actively seeking work, therefore the counts of people unemployed will be more accurate.
The statement went on to explain;
Change in key labour market estimates:
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Decreases in the number of people unemployed and the unemployment rate
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Changes to the seasonally adjusted unemployment rate range from 0.1 to 0.6 percentage points. In the most recent published quarter (March 2016), the unemployment rate is revised down from 5.7 percent to 5.2 percent
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Increases in the number of people not in the labour force
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Decreases in the size of the labour force and the labour force participation rate
The result of this change? At the stroke of a pen, unemployment fell from 5.7% to 5.2% for the March 2016 Quarter (and subsequent Quarters).
If the “current unemployment figures” from Stats NZ are reported as “5.2%’, they may well be back to the original March 2016 figure of 5.7%, before the government statistician re-jigged definitions.
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Key indicator #2: Housing
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– Home Ownership
According to the 1984 NZ Yearbook, in 1981 the number of rental dwellings numbered 25.4% of housing. 71.2% were owner-occupied. Nearly three quarters of New Zealanders owned their homes.
Home ownership reached it’s maximum height in 1991, when it stood at 73.8%. Since then, it has steadily declined.
By 2013 (the most recent census survey), the numbers of rental dwellings had increased to 35.2% (up 33.1% in 2006). Home ownership had decreased to 49.9% (down from from 54.5% in 2006). If you include housing held in Family Trusts, the figure rises to 64.8% of households owning their home in 2013, down from 66.9% in 2006.
Whether you include housing held in Family Trusts (which may or may not be owner-occupied or rented out), home ownership has fallen steady since the early 1980s.
Renting has increased from 25.4% to 35.2%.
More and more New Zealanders are losing out on the dream of home ownership. Conversely, more and more of us are becoming tenants in our own country.
As Bernard Hickey from Interest.co.nz said in December last year;
Nearly two thirds of the 430,000 households formed since 1991 are tenants.
Think about that for a moment. It is a stunning revelation of how the young and the poor have been hit the hardest by the changes in New Zealand since the mid-1980s, and on an enormous scale.
It means two thirds of the kids born in those families grew up in rental accommodation, and more than 80% of those are private rentals (although the Housing NZ homes are often no better). That means they often grew up in mouldy, damp, cold and insecure housing. It’s true that some homes occupied by their owners are also below par, but it’s a much lower proportion and owners have the option to improve their homes through insulation and ventilation.
The NZ$696 billion increase in the value of New Zealand’s houses to NZ$821 billion between 1991 and 2015 means the 64% of owners in live-in houses have also had plenty of financial flexibility to improve those houses. Renters have had no access to that wealth creation and are not allowed to put a pin in the wall, let alone put in a ventilation system or some batts in the ceiling. The take-up for the Government’s home insulation and heating subsidies were vastly higher among home-owners than they were for landlords.
Those 284,000 renting households formed since 1991 have also often been forced to move schools and communities and all the roots that build families because New Zealand’s rental market is so transient.
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It illustrates the scale of the fallout from that collapse in home ownership from 1991. Not only has it handicapped the education, health and productivity of a entire generation of New Zealanders, but it is set to magnify the likely growth in pension and healthcare costs of our ageing population. And that’s before the wealth and income inequality effects.
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– Affordability
In 2016, the 13th Annual International Demographia International Housing Affordability survey rated New Zealand as one of the most unaffordable housing markets in the world;
The most affordable major housing markets in 2015 are in the United States, with a moderately unaffordable Median Multiple of 3.9, followed by Japan (4.1), the United Kingdom (4.5), Canada (4.7), Ireland (4.7) and Singapore (4.8). Overall, the major housing markets of Australia (6.6), New Zealand (10.0) and China (18.1) are severely unaffordable. (p2)
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In New Zealand, as in Australia, housing had been rated as affordable until approximately a quarter century ago. (p24)
A 2014 report by the NZ Institute for Economic Research stated the “the average house price rose from the long-run benchmark of three times the average annual household income to six times“;
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The NZIER report refers to several reasons for increasing housing prices; slow supply of land; demographic demand (from ‘Baby Boomers’); and investor demand caused by lack of a capital gains tax. Interestingly, the Report also refers to an “over-supply of finance”;
The loosening of financial standards and rising household debt relative to income has happened over a long period of time. The increase in indebtedness has coincided with rising house prices relative to incomes. This suggests that increased household indebtedness has at least partly contributed to the increasing price of homes. (p14)
Prior to Roger Douglas de-regulating the banking/finance sector, New Zealand banks could only lend depositor’s funds as mortgages.
As a result, mortgage money was “tight”, and scarcity helped keep house prices down. Vendor’s expectations were kept “in check” by scarcity of bank funds. Prior to the mid 1980s, Vendor’s Finance (by way of a Second Mortgage) were commonly-used financial tools to assist house-owners to sell and buyers to complete a purchase.
Once the banking sector was opened up, and monetary policy relaxed, cheap money flooded in from overseas for banks to on-lend to house-purchasers. As property investor, Ollie Newland vividly explained in the 1996 TV documentary, Revolution;
“I got a phone call from my bank manager to say some bigwigs were coming up from Wellington to have a chat with me. I thought it was just one public relations things they do. I had a very small office, it wasn’t much bigger than a toilet cubicle, and those five big fellows crowded in with their briefcases and books and they sat on the floor and the arms of the chairs – I only had one chair in the place – and stood against the walls. Their first words to me were, we’re here to lend you money. As much as you want. For somebody like me, and I’m sure it’s the same for everybody else, to suddenly be told by the bank manager that you could have as much money as you want, help yourself, that was a revelation. We thought we had died and gone to heaven.”
Unfortunately, the side affect of this was to increase vendor’s expectations to gain higher and higher prices for their properties. Combined with recent high immigration, and a lack of a comprehensive capital gains tax, and the results have been troubling for this country;
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As well as increasingly unaffordable housing, we – as a nation – are sitting on a trillion-dollar fiscal bomb.
Think about that for a moment.
Little wonder that in September last year, the Reserve Bank issued the sternest warning yet that we were headed for impending economic mayhem;
A sharp correction in house prices represents a key risk to the financial system, and one that is increasing the longer the current boom in house prices persists. A severe downturn in house prices could have major implications for the banking system, with over 55 percent of bank loans secured against residential property. Moreover, elevated household debt levels and a growing exposure of the banking system to investor loans could reinforce a housing downturn and extend reductions in economic activity, as highly indebted households are forced to reduce consumption and sell property.
As with many other individuals, institutions, organisations, business leaders, left-wing commentators, media, political pundits, political parties, the NZIER was (and still is) calling for a comprehensive capital gains tax to be implemented.
Even then, this blogger suspects we may be too late. National (and it’s predecessor, to be fair) have left it far to late and the economic horse has well and truly bolted.
Even a Capital Gains Tax at 28% – New Zealand’s current corporate tax rate – may be insufficient to dampen speculative demand for properties.
Meanwhile, the dream of Kiwis owning their own homes continues to slip away.
Depressingly, New Zealanders themselves have permitted this to happen.
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– State Housing
If the Middle Classes and their Millenial Offspring are finding it hard to buy their first home, think of the poorest families and individuals in our communities. For them, social housing consists of packing multiple families into a single house; living in an uninsulated, drafty, garage; or in cars.
Last year, the story of mass homelessness exploded onto our media and our “radar” as New Zealanders woke up to the reality of persistent poverty in our cities;
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Although on occassion, the mainstream media found them themselves in embarrassingly ‘schizophrenic’ situations as they attempted to reconcile reporting on our growing housing crisis – whilst raising advertising revenue by promoting “reality” TV programmes that were far, far removed from many people’s own disturbing reality;
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According to UNICEF;
295,000 New Zealand kids are living beneath the poverty line, which means they are living in households where income is less than 60% of the median household income after housing costs are taken into consideration.
One way to alleviate poverty is to provide state housing, at minimal rental, to families suffering deprivation. Not only does this make housing affordable, but also strengthens a sense of community and reduces transience.
Transience can have deletarious effects on families – especially on children – who then struggle with the stresses of losing friends; adjusting to new neighbourhoods, and new schools.
A government report states that transience for children can have extreme, negative impact on their learning;
Nearly 3,700 students were recognised as transient during the 2014 year. Māori students were more likely to be transient than students in other ethnic groups.
[…]
Students need stability in their schooling in order to experience continuity, belonging and support so that they stay interested and engaged in learning.
All schools face the constant challenge of ensuring that students feel they belong and are encouraged to participate at school. When students arrive at a school part-way through a term or school year, having been at another school with different routines, this challenge may become greater.
Students have better outcomes if they do not move school regularly. There is good evidence that student transience has a negative impact on student outcomes, both in New Zealand and overseas. Research suggests that students who move home or school frequently are more likely to underachieve in formal education when compared with students that have a more stable school life. A recent study found that school movement had an even stronger effect on educational success than residential movement.
There is also evidence that transience can have negative effects on student behaviour, and on short term social and health experience
Writing for The Dominion Post, in April 2014, Elinor Chisholm and Philippa Howden-Chapman pointed out the blindingly obvious;
Continuity of education and supportive relationships with teachers are critical for children’s educational performance.
“Churn” is not good for educational performance or enrolment in primary health care, where staff can ensure children are properly immunised and chronic health problems can be followed up.
It was for this reason that, in our submission on the Social Housing Reform Bill late last year, we strongly recommended that families with school- age children should be excluded from tenancy review.
Secure tenure and stability at one school would allow children the best chance of flourishing. In high- performing countries such as the Netherlands, children are explicitly discouraged from changing schools in the middle of the school year.
The bill had announced the extension of reviewable tenancies to all state tenants (new state tenants had been subject to tenancy review since mid- 2011). However, the housing minister, as well as the Ministry of Business, Innovation and Employment, had made clear that the disabled and the elderly were to be excluded from tenancy reviews.
In our submission, we acknowledged the Government for recognising the importance of secure tenure.
People who are compelled to move house involuntarily can experience stress, loss, grief and poorer mental health. Housing insecurity is also associated with poorer physical health.
National’s policy of ending a state “house for life”; increased tenancy reviews for state house tenants, coupled with the sale of state houses, is inimical to the stabilisation of vulnerable families; the well-being of children in those families; and to communities.
In 2008, Housing NZ owned 69,000 rental properties.
By 2016, that number had dropped significantly to 61,600 (plus a further 2,700 leased). National had disposed of some 7,400 properties.
Between 2014 and 2016, at least 600 state house tenants lost their homes after “reviews”.
This, despite our growing population.
This, despite John Key’s own family having been provided with the security of a state house, and Key enjoying a near-free University education.
This, despite John Key, ex-currency trader, and multi-millionaire, admitting in 2011 that New Zealand’s under-class was growing.
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Key indicator #3: Incomes & Inequality
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In June 2014, Oxfam reported on New Zealand’s growing dire child poverty crisis;
The richest ten per cent of New Zealanders are wealthier than the rest of the population combined as the gap between rich and poor continues to widen.
Oxfam New Zealand’s Executive Director Rachael Le Mesurier said the numbers are a staggering illustration that the wealth gap in New Zealand is stark and mirrors a global trend that needs to be addressed by governments in New Zealand, and around the world, in order to win the fight against poverty.
“Extreme wealth inequality is deeply worrying. Our nation is becoming more divided, with an elite who are seeing their bank balances go up, whilst hundreds of thousands of New Zealanders struggle to make ends meet,” said Le Mesurier.
Figures for the top one per cent are even more striking. According to the most recent data, taken from the 2013 Credit Suisse Global Wealth Databook, 44,000 Kiwis – who could comfortably fit into Eden Park with thousands of empty seats to spare – hold more wealth than three million New Zealanders. Put differently, this lists the share of wealth owned by the top one per cent of Kiwis as 25.1 per cent, meaning they control more than the bottom 70 per cent of the population.
Oxfam New Zealand’s Executive Director, Rachael Le Mesurier, was blunt in her condemnation;
“Extreme inequality is a sign of economic failure. New Zealand can and must do better. It’s time for our leaders to move past the rhetoric. By concentrating wealth and power in the hands of the few, inequality robs the poorest people of the support they need to improve their lives, and means that their voices go unheard. If the global community fails to curb widening inequality, we can expect more economic and social problems.”
A 2014 OECD report placed New Zealand as one of the worst for growing inequality;
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Not only was inequality a social blight, but according to the report it impacted negatively on economic growth;
Rising inequality is estimated to have knocked more than 4 percentage points off growth in half of the countries over two decades. On the other hand, greater equality prior to the crisis helped increase GDP per capita in a few countries, notably Spain.
According to the OECD assessment, income inequality had impacted the most on New Zealand, with only Mexico a close second;
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The OECD Report went further, making this “radical” observation;
The most direct policy tool to reduce inequality is redistribution through taxes and benefits. The analysis shows that redistribution per se does not lower economic growth.
The statement went on to “qualify” any suggestion of socialism with a caveat. But the declaration that “analysis shows that redistribution per se does not lower economic growth” remained, constituting a direct contradiction and challenge to current neo-liberal othodoxy.
In August 2015, former City Voice editor, and now NZ Herald social issues reporter, Simon Collins revealed the growing level of child poverty in this country;
The Ministry of Social Development’s annual household incomes report shows that the numbers below a European standard measure of absolute hardship, based on measures such as not having a warm home or two pairs of shoes, fell from 165,000 in 2013 to 145,000 (14 per cent of all children) last year, the lowest number since 2007.
Children in benefit-dependent families also dwindled from a recent peak of 235,000 (22 per cent) in 2011, and 202,000 (19 per cent) in 2013, to just 180,000 (17 per cent) last year – the lowest proportion of children living on benefits since the late 1980s.
But inequality worsened because average incomes for working families increased much faster at high and middle-income levels than for lower-paid workers.
The net result was that the number of children living in households earning below 60 per cent of the median income after housing costs jumped from a five-year low of 260,000 in 2013 to 305,000 last year, the highest since a peak of 315,000 at the worst point of the global financial crisis in 2010.
In percentage terms, 29 per cent of Kiwi children are now in relative poverty, up from 24 per cent in 2013 and only a fraction below the 2010 peak of 30 per cent.
In September 2016, Statistics NZ confirmed the widening of income inequality from 1988 to 2015, between households with high and low incomes;
- In 2015, the disposable income of a high-income household was over two-and-a-half times larger than that of a low-income household.
- Between 1988 and 2015, the income inequality ratio increased from 2.24 to 2.61.
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The neo-liberal “revolution” took place from the mid-to-late 1980s. Hardly surprisingly, the rise in income inequality takes place at the same time.
Income inequality dipped from 2004 when Labour’s “Working for Families” was introduced.
However, income inequality worsened after 2009 and 2010, when National cut taxes for the rich; increased GST (which impacts most harshly on low-income families and individuals); and increased user-charges on essential services such as prescription fees, ACC levies, court fees, etc. Increasingly complicated WINZ requirements for annual re-applications for benefits and complex paperwork may also have worsened the plight of the country’s poorest.
Despite all the promises made by the Lange government; the Bolger government; and every government since, our neo-liberal “reforms” have not been kind to those on low and middle incomes.
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Key indicator #4: Child poverty
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According to Otago University’s Child Poverty Monitor in 2014;
Child poverty has not always been this bad – the child poverty rate in the New Zealand many of us grew up in 30 years ago was 14%, compared to current levels of 24%.
Thirty years prior to 2014 was the year 1984. David Lange’s Labour Party had been elected to power.
Roger Douglas was appointed Minister of Finance. The Member for Selwyn, Ruth Richardson, was also in Parliament, taking notes.
The term “trickle down” entered our consciousness and vocabulary. It promised that, with tax cuts; privatisation; winding back state services; and economic de-regulation, wealth would trickle down to those at the bottom of the socio-economic ladder.
How is that working out for us so far?
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So much for the “aspirational dream” offered to us by “trickle down” economics.
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Key indicator #5: The Real Beneficiaries
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In June last year, Radio NZ reported the latest survey of household wealth by Statistics NZ. It found;
“…the country’s richest individuals – those in the top 10 percent – held 60 percent of all wealth by the end of July 2015. Between 2003 and 2010, those individuals had held 55 percent. The richest 10 percent of households held half of New Zealand’s wealth, while the poorest 40 percent held just 3 percent of total wealth.”
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Following hard on the heels of the Stats NZ report, Oxfam NZ made a disturbing revelation;
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Three years after her previous public warning, Oxfam New Zealand’s, Rachael Le Mesurier, was no less scathing. Her exasperation was clear;
“The gap between the extremely wealthy and the rest of us is greater than we thought, both in New Zealand and around the world. It is trapping huge numbers of people in poverty and fracturing our societies, as seen in New Zealand in the changing profile of home ownership.”
National minister, Steven Joyce responded. He was his usual mealy-mouthed self when interviewed on Radio NZ about the Oxfam report;
“There’s always inequality but again you have got to look at those reports carefully because in that report a young medical graduate who has just come out of university would be listed as somebody who is in the poorest 20 per cent because they have a student loan.They’ll pay that student loan off in about four years and they’ll be earning incomes of over $100,000 very quickly.
So although they’re in those figures today, they won’t be in those figures in five years’ time.”
Which appears to sum up the National government’s head-in-sand attitude on child poverty and income inequality.
Economist, Shamubeel Eaqub, though, had a different “take” on the issue and warned;
“Every time we see a new statistic on inequality, whether it’s in terms of income, opportunities or wealth, it shows very clearly that New Zealand is being ripped apart by our class system.”
When economists begin to issue dire social warnings, you know that matters have taken a turn for the worse.
So where does that leave our New Dear Leader Bill English with his insistence that “we’ve got a government actually with a good record on addressing, in fact, some of the toughest social issues”?
English’s assertion to John Campbell on Radio NZ, on 25 January, (outlined at the beginning of this story) makes sense only if it it is re-phrased;
“We’ve got a government actually with a good record on addressing, in fact, some of the toughest wealth-accumulation issues. There may be disagreement over means by which we’re doing it, ah, but our direction is pretty clear. And you know over, certainly heading into election year we think that the approach the government’s developed around private investment, around increasing incomes for the wealthiest ten percent is the right kind of mix – “
Not a very palatable message – but vastly more truthful as income inequality continues to wreak appalling consequences throughout our communities and economy.
Otherwise, English appears to reside not so much in the Land of the Long White Cloud, but in the Realm of Wishful Thinking.
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References
Radio NZ: Checkpoint – Bill English on the challenges of his first month as PM
Scoop media: Unemployment rate rises to 5.2 percent as labour force grows
Statistics NZ: Household Labour Force Survey – Revisions to labour market estimates
NZ 1984 Yearbook: 3A – General Summary – Census of population and dwellings 1981 (see “Tenure of Dwelling”)
Statistics NZ: Owner-Occupied Households
Statistics NZ: 2013 Census QuickStats about national highlights – Home Ownership
International Demographia: 13th Annual International Housing Affordability
NZ Institute for Economic Research: The home affordability challenge
Monetary Meg: What is vendor finance?
Radio NZ: NZ immigration returns to record level
NZ On Screen: Revolution
NZ Herald: New Zealand residential property hits $1 trillion mark
Reserve Bank: Regulatory Impact Assessment of revised LVR restriction proposals September 2016 – Adequacy Statement
The Guardian: New Zealand housing crisis forces hundreds to live in tents and garages
Fairfax media: One in 100 Kiwis homeless, new study shows numbers quickly rising
Al Jazeera: New Zealand’s homeless: Living in cars and garages
NZ Herald: Homelessness rising in New Zealand
Radio NZ: Homeless family faces $100k WINZ debt
TV3 News: The hidden homeless – Families forced to live in cars
TV1 News: Housing crisis hits Tauranga, forcing families into garages and cars
UNICEF: Let’s Talk about child poverty
Education Counts: Transient students
Dominion Post: Housing policy will destabilise life for children
NZ Herald: State housing shake-up – Lease up on idea of ‘house for life’
Radio NZ: Thousands of state houses up for sale
Housing NZ: Annual Report 2008/09
Housing NZ: Annual Report 2015/16
Fairfax media: Nearly 600 state house tenants removed after end of ‘house for life’ policy
NZ Herald: Key admits underclass still growing
Oxfam: Richest 10% of Kiwis control more wealth than remaining 90%
NZ Herald: 300,000+ Kiwi kids now in relative poverty
Statistics NZ: Income inequality
Law Society: Civil court fee changes commence
Fairfax media: Prescription price rise hits vulnerable
Salaries.co.nz: ACC levies to increase in April 2010
Radio NZ: Thousands losing benefits due to paperwork
Scoop media: Health Issues Highlighted in Child Poverty Monitor
NZ Herald: Hungry kids foraging in pig scraps ‘like the slums of Brazil’
Fairfax media: Damp state house played part in toddler’s death
NZ Herald: More living in cars as rents go through roof
NZ Doctor: Tackle poverty to fight rheumatic fever
Radio NZ: 10% richest Kiwis own 60% of NZ’s wealth
Fairfax media: Wealth inequality in NZ worse than Australia
Radio NZ: Steven Joyce responds to Oxfam wealth inequality report
Additional
Dominion Post: Kids dragged from school to school
Other Blogs
The Standard: John Key used to be ambitious about dealing with poverty in New Zealand
Previous related blogposts
Lies, Damned lies and Statistical Lies
Lies, Damned lies and Statistical Lies – ** UPDATE **
National exploits fudged Statistics NZ unemployment figures
2016 – Ongoing jobless tally and why unemployment statistics will no longer be used
CYF – The Hollowing Out of a State Agency
The Mendacities of Mr Key # 18: “No question – NZ is better off!”
Foot in mouth award – Bill English, for his recent “Flat Earth” comment in Parliament
The Mendacities of Mr English – Fibbing from Finance Minister confirmed
Rebuilding the Country we grew up in – Little’s Big Task ahead
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This blogpost was first published on The Daily Blog on 7 February 2017.
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Foot in mouth award – Bill English, for his recent “Flat Earth” comment in Parliament
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“I won’t be wanting to see any hint of arrogance creeping in… One of the big messages I’ll be wanting to give incoming ministers and the caucus is that it is incredibly important that National stays connected with our supporters and connected with the New Zealand public.“ – John Key, 22 September 2014
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It appears that Finance Minister, Bill English did not get the memo from Dear Leader Key’s office: “Dont get arrogant!”
On 29 June, near two years after Key’s warning, Bill English’s cockiness has landed him in deep, fetid water when he responded to a question from Labour’s Grant Robertson in Parliament;
Grant Robertson: “Does he agree with the statement of Pope Francis I that “Inequality is the root of social evil”, given that inequality has risen in New Zealand on his watch, and is it not time he got back to confession?”
Hon Bill English: “… There is no evidence that inequality in New Zealand is increasing. “
A day later, interviewed by an exasperated Guyon Espiner, English again denied that inequality was increasing in this country. English’s tortuous mental and verbal gymnastics to deny rising inequality was utterly unconvincing and judging by the tone of his own voice, he wasn’t convincing himself either;
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English’s assertion that inequality in New Zealand is not rising beggars belief, when nearly every metric used has come precisely to that conclusion.
From the Salvation Army, last year;
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The Children’s Commissioner reported on increasing child-poverty, rising by 45,000 over a year ago to now 305,000 children now live in poverty;
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Statistics NZ’s report on the problem was unequivocal – “Between 1988 and 2014, income inequality between households with high incomes and those with low incomes widened“;
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1988 – When Rogernomics began in earnest. What a surprise.
Interestingly, income inequality fell slightly in 2004, when Working for Families was introduced by the Clark-led Labour Government. Working For Families was the same policy derided by then-Opposition Finance spokesperson, John Key, as “communism by stealth“.
From the last bastion of “radical marxism”, the OECD, came this damning report on rising inequality in New Zealand impacting on our economic growth;
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The Report stated that “rising inequality is estimated to have knocked more than 10 percentage points off [economic] growth in Mexico and New Zealand“.
And even our Dear Leader once admitted that New Zealand’s “underclasses” was growing;
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So, is everybody – including Bill English’s boss – wrong?!
Is Bill English the sole voice-in-the-wilderness trying to spread The Truth, whilst everybody else – including faraway OECD – is wrong?!
Or has he run foul of Dear Leader’s prescient warnings not to become arrogant?
Enjoining the poor to ignore hunger and simply “Let them eat cake” did not work out well for a certain person 223 years ago. Bill English may not lose his head over his obstinate refusal to see the world around him – but he may lose the election next year.
So for Bill English, on behalf of those who are low-paid; homeless; unable to afford to buy a home; unemployed; poor; and will be spending tonight in a car or an alleyway, I nominate Bill English for a Foot In The Mouth Award;
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References
NZ Herald: Election 2014 – Triumphant PM’s strict line with MPs – Don’t get arrogant
Parliament Today: Questions & Answers – June 29
Radio NZ: Porirua family can only afford biscuits (audio)
Fairfax Media: Child poverty progress ‘fails’, Salvation Army says
Radio NZ: A third of NZ children live in poverty
Statistics NZ: Income inequality
MSD: Future Directions – Working for Families
NZ Herald: National accuses Government of communism by stealth
OECD: Trends in Income Inequality and its impact on economic growth
NZ Herald: Key admits underclass still growing
Newstalk ZB: Demand for food banks, emergency housing much higher than before recession
Additional
Office of the Children’s Commissioner:
Previous related blogposts
When National is under attack – Deflect, deflect, deflect!
State house sell-off in Tauranga unravelling?
The Mendacities of Mr English – Fibbing from Finance Minister confirmed
Why is Paula Bennett media-shy all of a sudden?
Park-up in Wellington – People speaking against the scourge of homelessness
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This blogpost was first published on The Daily Blog on 5 July 2016.
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Unemployment, Christchurch, dairy prices – Bill English confirms blogger’s analysis
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Leg #1: Treasury reported in 2012, on the Christchurch re-build;
The Canterbury rebuild is expected to be a significant driver of economic growth over the next five to ten years. The timing and speed of the rebuild is uncertain, in part due to ongoing aftershocks, but the New Zealand Treasury expects it to commence around mid-to-late 2012.
Leg #2: The Reserve Bank, in 2014, on our Dairy sector;
The New Zealand dairy industry is experiencing prosperous times, continuing the strong growth in export earnings of the past eight years. Animal numbers and prices have increased and on and off farm productivity growth has been impressive. And the future looks bright. There seem to be important structural reasons behind the rise in dairy prices that should continue into the medium term.
Leg #3: Steven Joyce, Associate Minister of Finance, this year, on the Auckland housing boom;
“Closer to home, the Reserve Bank … highlights several factors continuing to support growth domestically, including robust tourism, immigration, the large pipeline of construction activity in Auckland, and, importantly, the lower interest rates and the depreciation of the New Zealand dollar.”
There we have it – the three basic “legs” comprising National’s economic development policy. One is predicated on fluctuating international market-prices; another is an unsustainable property boom funded by billions borrowed from off-shore; and the other is the epitomy of ‘disaster’ capitalism.
In debating the fragility and unsustainability of these three sectors of our economy, I (and other bloggers from the Left) have pointed out time and again the transitory nature of the dairy sector boom; the Christchurch re-build boom; and the Auckland property market boom. Acolytes of the so-called free-market – ever dedicated to their quasi-religious right-wing notions – have dismissed our warnings.
On 4 November, the National government’s Finance Minister and sheep farmer, Bill English, made a statement in Parliament that has backed up our dire warnings – albeit somewhat late in the day;
“Of course, if unemployment was a direct choice of the Prime Minister of New Zealand, there would be none of it. You would just decide to have none. But, of course, it is not. It is a product of the world economy and its low growth rates, and of particular circumstances in New Zealand where the rebuild in Christchurch has flattened out and there has been a drop in national income of billions of dollars from the decrease in dairy prices, which was always going to affect the number of jobs in New Zealand, and now it is happening.”
Indeed; “and now it is happening”.
Two of National’s economic stimulators are either belly-up, or in the process of falling flat.
Only the Auckland housing boom remains. When that collapses, it will be much, much worse than the depressed Dairying sector. At that precise moment, international lenders will have noticed that we have been borrowing-up-large for one helluva massive property splurge-party – and they will be wanting their money back.
All $200 billion of it.
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According to Squirrel mortgage broker, John Bolton;
“People are completely oblivious of what’s going on. If you overlay what’s going on around the rest of the world, all bets are off.”
New Zealanders are about to wake up with the biggest “hang-over” since they first got trolleyed at teenagers.
Is this where I say, “I told you so”?
Will it matter by then?
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References
NZ Treasury: Recent Economic Performance and Outlook (2012)
Reserve Bank: The significance of dairy to the New Zealand economy
Parliament Today: Questions and Answers – Sept 10 2015
Parliament: Hansards – Questions for oral answer – 2. Unemployment—Rate
Fairfax media: Mortgage debt tops $200 billion
Additional
Metro: 10 ideas that could solve the Auckland property crisis
Previous related blogposts
Labour’s collapse in the polls – why?
“The Nation” reveals gobsmacking incompetence by Ministers English and Lotu-Iiga
The Mendacities of Mr Key # 12: No More Asset Sales (Kind of)
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This blogpost was first published on The Daily Blog on 7 November 2011.
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State houses – “wrong place, wrong size”?
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Information released under the Official Information Act (OIA) suggests that National’s oft-repeated claim that around “one third” ( or 22,000) of state houses are in the “wrong place and wrong size” is not supported by Housing NZ’s own figures.
Various ministers, including our esteemed Dear Leader, have indicated that up to “a third” of state houses are “in the wrong place or wrong size (or ‘type’)“.
The “wrong size/wrong place” claim is the argument being used by National to advance a major sell-off of Housing NZ properties.
On 1 November, 2014, Social Housing Minister Paula Bennett said on TV3’s ‘The Nation’,
“It’s about being smart in what we’re doing. So you just look at us having the wrong houses, in the wrong place, of the wrong size..”
“Yes. As recently as just last month Housing New Zealand issued a press release that said: ‘around one third of our housing stock is in the wrong place, wrong configuration or is mismatched with future demand’.
[…]
… in fact, a third of them are the wrong size, in the wrong place, and in poor condition.”
On 28 January this year, John Key announced in his “state of the nation” speech;
“Around a third of Housing New Zealand properties are in the wrong place, or are the wrong type to meet existing and future demand.”
Housing NZ currently “manages 67,245 homes” (as at 30 June 2015). When Key, and other National ministers refer to “around a third of Housing NZ properties”, simple arithmetic translates that fraction into 22,190 homes being the “wrong size/wrong place” .
On 17 September I lodged OIA requests to Ministers Nick Smith, Paula Bennet, and Bill English. Only English was prepared to answer – and even that took 42 days (30 working days) to eventuate after a reminder was emailed to the Minister’s office.
In a response eventually received on 29 October, information in the form of a chart -“Stock reconciliation taking into account impaired properties as at 31 January 2013” – was attached;
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In two columns headed “Right Place, wrong home” and “Wrong Place“, the respective figures add up to 13,560. This constitutes a little over half of the “22,000” that is being bandied about by National.
I specifically asked Bill English; “How many [state houses] are the “wrong size“ and in what manner are they the “wrong size“? “Do they have too many rooms; too few rooms?”
English replied;
“In general terms, Housing New Zealand has a shortage of smaller two bedroom homes and
larger family homes and a surplus of three bedroom homes, with the exception of Auckland
where there is a demand for homes of all sizes. The type or configuration of particular
properties may also affect demand making them difficult to let.”
English totally ignored the direct question “How many [state houses] are the “wrong size“. He either does not know, or is unwilling to admit the number. “In General terms” is not a specific quantity.
Furthermore, English says that “Housing New Zealand has a shortage of smaller two bedroom homes and larger family homes and a surplus of three bedroom homes, with the exception of Auckland where there is a demand for homes of all sizes.”
Unsurprisingly, the 2014/15 Housing NZ Annual Report confirms the high demand for housing in Auckland;
“Across the country we also have too many three-
bedroom properties, while demand has grown for smaller
one- or two-bedroom homes or for much bigger homes.
Demand for homes in the Auckland region is high and
more Housing New Zealand homes are needed.” (p22)
Yet, the chart referred above (“Stock reconciliation taking into account impaired properties as at 31 January 2013“) states that there are 8,180 houses in the Auckland region that are supposedly “Right Place, wrong home” and a further 420 that are in the “Wrong Place” – 8,600 in total.
This would appear to contradict the Minister’s assertion that “there is a demand for homes of all sizes” throughout Auckland. Both cannot be right.
This contradiction is further compounded by the fact that, as of 30 June, there were 2,267 people on the waiting list in the Auckland City area;
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Even where houses have been the wrong size, Housing NZ has been undertaking a programme to add extensions, or entire new, smaller dwellings on larger sections;
“Overcrowding is an issue that affects many of our
tenants’ health and wellbeing, especially in Auckland,
where there is high demand for larger homes. Our
bedroom extensions programme is helping to meet
demand from the social housing register in Auckland
by converting three-bedroom homes into four- and
five-bedroom homes. Adding an extra one or two
bedrooms (and another bathroom where necessary)
means more of our tenants are living in appropriately
sized and healthier homes. During 2014/15 we
completed bedroom extensions to 247 homes.Our existing land in Auckland will also house more small
families, couples and single people in need. We are
building new two-bedroom homes on Auckland sections
that are big enough to have another dwelling. During
2014/15 we built an additional 107 two-bedroom units
on existing Housing New Zealand sections, which also
included making improvements to the existing homes
where these were required.“(p23)
If we substract the 8,600 homes in the Auckland region, from Housing NZ’s original estimate of 13,560 (see above chart), this leaves 4,960 houses “wrong place/wrong size”.
Nearly five thousand homes supposedly in the “wrong place/wrong size” category in Auckland – and there are still 2,267 people on Housing NZ’s waiting list in Auckland City. How is that feasible?
I further enquired from English; “Could you please explain what the term “wrong size, in the wrong place” actually refers to? Where are they situated that are considered the “wrong place“?”
English replied;
“In 2011 Housing NZ carried out an assessment of it’s future projected stock
requirements for the purpose of forward planning, based on its future use of intention of its
properties and informed by demand forecasting. This assessment was not intended to reflect
current demand at a point in time…[..]
The analysis identifies some properties as being the wrong home, not specifically the wrong
size.”
It is worthwhile noting English’s comment that “Housing NZ carried out an assessment of it’s future projected stock requirements for the purpose of forward planning, [but] this assessment was not intended to reflect current demand at a point in time”.
The apparent purpose? According to English’s 29 October statement to me;
“This relates to the number of bedrooms that a property has and also includes
properties that are wrongly configured to meet demand for social housing.“
“Social housing” is National’s code for private providers.
The 2011 Housing NZ assessment of it’s “future projected stock” appears to have been designed to meet the needs of “social housing”, aka private providers.
In respect to answering my question “Where are they situated that are considered the “wrong place”?”, English’s response was vague and lacked any informative value (as did many of his answers);
“A property being in the wrong place refers to the location of the property in relation
to demand. On a regional basis, there are areas of general low demand. However, some of
Housing New Zealand’s properties may be in locations with high concentrations of state
housing or existing social issues that may contribute to them being difficult to let or
result in a high turnover of tenants.”
There were no geographical locations; no cities or towns; no suburbs given. The statement in itself is meaningless twaddle with a vague reference to “some of Housing New Zealand’s properties may be in locations with high concentrations of state housing or existing social issues”.
Where these “wrong places” might be is anyone’s guess.
My follow-up question – “How many areas have been designated “wrong places”?” – was ignored entirely.
In an effort to drill down and assess where houses might be in the “wrong place”, I asked English; “where houses are in a particular “wrong place”, how many people are on HNZ waiting lists in those same “wrong places”?
The purpose of this question was straight-forward. Where demand for housing is high in a given region, it seems inconceivable that any properties in that same region would be in the “wrong place”. Auckland being a prime example.
I wanted to know how many other regions had high numbers on their waiting lists – whilst also having houses in the “wrong place”.
According to the above chart, the following regions designated as having houses in the “wrong places” have the following numbers of houses attached to them;
Auckland: 420
South Island: 740
Central North Island: 870
Lower North Island: 1,740
“Community Group Housing”: 100
Total: 3,870
Because of the (deliberate?) vagueness of English’s response, we have no way of knowing where, for example, the South Island’s supposed 740 houses are located in the “wrong place”.
It is difficult to understand why the Minister could not be more precise.
If the “wrong size/wrong place” issue is real, then National must have hard data, with supporting numbers, identifying where state houses are located in the “wrong place”. This information should be on-file; readily accessible; and easily released to interested parties. Then again, my OIA lodgement to Minister English took 30 working days (including one “request” for an extension) to complete.
Perhaps such data does not exist.
According to Housing NZ itself, every district within it’s authority has people on their waiting list;
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There is no district recording zero-need.
I asked English; “What replacement houses are being built to replace those that are the “wrong size”, and how many rooms will they have? More? Less?” and “Where Housing NZ houses are in the “wrong place” – will new State houses be built in exactly the same place?”.
The Minister responded;
“Housing New Zealand’s Asset Management Strategy provides for the redevelopment of its
land holdings in order to align the typology, location and size of its portfolio with demand.
As a result, it is building more two, four and five bedroom properties. Where there is low
demand, Housing New Zealand will look to sell surplus properties and reinvest the proceeds
into providing homes in areas of high demand.“
As outlined above, Housing NZ has a current programme of adding bedrooms to existing three bedroomed houses, and, where the land is big enough, adding two bedroom houses onto an existing built-up section.
English’s reference to selling “surplus properties” is troubling, as we are still none-the-wiser where such properties exist. Especially when all Housing NZ districts have people on waiting lists.
As for English’s assertion that “Housing New Zealand will look to sell surplus properties and reinvest the proceeds into providing homes in areas of high demand” – Paula Bennett was not willing to give that assurance on 1 November last year, speaking on Q+A.
Which leads on to the last question I put to the Minister; “If HNZ houses that are in the “wrong place” are sold/given away to community organisations – what will make those houses suddenly become in the “right place”?”
Because if it’s in the “wrong place” when owned by Housing NZ – why would it suddenly be in the “right place” owned by someone else?
The Minister’s response was baffling;
“The Government has no plans to offer Housing New Zealand properties that have been
identified as being in the ‘wrong place’ to community housing providers. In Tauranga and
Invercargill for example, the areas identified for initial potential transfers of social
housing properties from Housing New Zealand to community housing providers, MSD’s purchasing
intentions anticipate stable demand. Following a transfer, any new provider would receive
both the properties and a contract with MSD to continue to provide social housing.”
That statement appears to be at complete variance with this undated Beehive document, headed “Social Housing Reform Programme – Media Qs and As“;
SOCIAL HOUSING REFORM PROGRAMME – Media Qs and As
“Around one third of the $18.7 billion Housing New Zealand portfolio is in
the wrong place or of the wrong type to meet this need.”[…]
“To help community housing providers grow, there will be sales of
Housing New Zealand properties and we will involve these providers
in the redevelopment of Crown land…”[…]
“Details will be determined after national engagement, including
with community housing providers and iwi,over coming months.
Providing we can achieve better services for tenants and fair
and reasonable value for taxpayers, we will look to sell
between 1,000 and 2,000 Housing New Zealand properties over
the next year.”[…]
“15. Will properties being sold be tenanted, and if so what
happens to the tenants?In most cases where houses transfer to a community housing
provider, the properties will have tenants. The new owners
will continue providing social housing with the income-
related rent subsidy.”[…]
“Look at selling between 1,000 and 2,000 Housing New Zealand
properties for continued use as social housing, run by approved
community housing providers. These providers might buy
properties on their own or go into partnership with other
organisations lending them money, contributing equity, or
providing other services.”
The document specifically refers to the sale of state housing, that are “the wrong place or of the wrong type“, to community service providers.
And in Parliament, on 24 March, Bill English himself made reference to the sale of “wrong place” Housing NZ properties to Community providers;
“In the first place, Housing New Zealand has an ongoing sales
policy, and often it is selling houses that we do not need or
that are in the wrong place, or some of them have just become
unsuitable to be lived in and cannot be upgraded at reasonable
cost. In respect of the transactions that are coming up over
the next 6 months or so, there is a process of testing what
the real values of those houses are. For instance, many
community providers believe those houses are not up to date
on maintenance, and therefore are overvalued when they are
valued as if they can be sold for the best price on the day
in the location that they are in. Those are exactly the things
we are having discussions about over the next few months.”[…]
“Neither property developers nor community housing providers
are compelled to buy houses off the Government. If they do
not want to do that—if they do not want to manage the tenants
or own the stock, which may be the wrong size in the wrong
place—then they certainly do not have to do that.”
Which creates doubt over English’s assertion that “the Government has no plans to offer Housing New Zealand properties that have been
identified as being in the ‘wrong place’ to community housing providers”.
So if Housing NZ properties that are in the “wrong place” are sold to community housing providers – as confirmed by Minister English on at least two occassions – what will transform those “wrong place” houses into “right place” houses?
Very little of National’s “wrong size/wrong place” proposition makes sense – unless viewed through the lens of raising revenue by way of partial asset-sales.
That is the only thing that makes any sense of this issue.
The only reason that the “wrong size/wrong place” meme has worked for National thus far is that very few (if anyone) has delved behind the phrase to check it’s validity.
Perhaps it is time this issue was scrutinised more carefully?
The apparent fudging of Bill English’s response to my OIA request, in itself, speaks volumes.
Postscript
On 29 October, I wrote to Bill English expressing my dissatisfaction with his response to my OIA lodgement;
from: Frank Macskasy <fmacskasy@gmail.com>
to: “B English (MIN)” <B.English@ministers.govt.nz>
date: Thu, Oct 29, 2015 at 8:01 PM
subject: Re: State houses – wrong place, wrong size
Thank you for your letter dated 29 October.
I refer you to two questions which you have not answered in my OIA request;
4. Where are they situated that are considered the “wrong place”?
5. How many areas have been designated “wrong places”?
Please advise if you do not intend to answer those questions, and I will lodge a formal complaint with the Office of the OImbudsman.
Regards,
-Frank Macskasy
Appendix1
In 2014/15 Housing NZ “returned” $321 million to the government’s Consolidated Fund. This comprised of $118 million in tax; $96 million in interest costs, and $107 million as a dividend. (2014/15 Annual Report, p24)
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References
TV3: The Nation – Social Housing Minister Paula Bennett
Parliament: 6. State Housing—Suitability of Housing Stock
Fairfax media: John Key Speech – Next steps in social housing
Housing NZ: 2014/15 Annual Report
Housing NZ: Register by priority and Auckland local board – 30 June 2015
Beehive.govt.nz: Social Housing Reform Programme – Media Qs and As
Parliament Today: Social Housing Reform — Objectives
Other Blogs
The Jackal: More homelessness under National
Previous related blogposts
Government Minister sees history repeat – responsible for death
Housing Minister Paula Bennett continues National’s spin on rundown State Houses
Letter to the Editor – How many more children must die, Mr Key?!
National under attack – defaults to Deflection #1
Another ‘Claytons’ Solution to our Housing Problem? When will NZers ever learn?
National’s blatant lies on Housing NZ dividends – The truth uncovered!
National recycles Housing Policy and produces good manure!
National Housing propaganda – McGehan Close Revisited
Housing; broken promises, families in cars, and ideological idiocy (Part Tahi)
Housing; broken promises, families in cars, and ideological idiocy (Part Rua)
Housing; broken promises, families in cars, and ideological idiocy (Part Toru)
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This blogpost was first published on The Daily Blog on 1 November 2015.
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= fs =
A Message to Radio NZ – English continues fiscal irresponsibility with tax-cut hints
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To: Radio NZ, Morning Report
Txt no: 2101
Date: 15 October 2015Hospital DHBs are in debt; community groups underfunded; and there’s a $60 billion government debt hangjng over our heads – and English is planning an election bribe with hints if tax cuts? This is irresponsible in the extreme. Question is, will kiwis buy this bribe? As long as they know we will end up paying for it with higher debt and slashed public services. We get what we pay for, or in this case, what we don’t pay for.
-Frank Macskasy
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References
Radio NZ: English won’t guarantee future surpluses
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= fs =
The Rise and Fall of John Key – who will be the next Leader of the National Party?
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It was all set to go: Teamkey would be the cult of personality that would do Stalin, Mao, Reagan, Thatcher, or any of the Nth Korean Kim Dynasty, proud. National and it’s “Teamkey” propaganda strategy would cash-in Big Time on Key’s immense public popularity.
It was a popularity that seemed impervious to all the scandals, stuff-ups, and questionable economic and social policies enacted by this government over the years. Every time a minister stuffed up, Key’s popularity remained unblemished.
People couldn’t work out how it was being achieved. Despite shitstorms surrounding so many National ministers – many of which resulted in sackings/resignations – Key walked through it, much like Superman might walk through an atomic bomb-blast, barely feeling a tickle.
But Key is no extra-terrestrial super-powered being (despite accusations to the contrary). His seeming talent for invulnerability wasn’t a preternatural super-power. It was wholly manufactured by mere mortals, working in back-rooms, funded by tax-payers, and played out with ruthless efficiency.
The plan, as outlined in Nicky Hager’s expose, “Dirty Politics“, and based on leaked emails, was that Key would be kept “above politics”. Others would do the dirty work, and he would maintain an “apolitical”, almost Presidential style. It was a form of fake neutrality.
When Key said in January 2011,
“I don’t think it suits me as a person. I’m not a negative person and a lot of Opposition is negative.”
– he wasn’t talking about his own persona, he was reciting a pre-prepared script.
Nicky Hager’s book has stripped away the secrecy to this plan and Key’s closeness to the players in dirty politics has been exposed to public scrutiny.
Russell Norman once pointed out that there is a great deal of similarity between John Key and Robert Muldoon. Russell was half-way correct. Key’s politics was every bit as destructive as Muldoons, attacking, destabilising, and under-mining critics of the government.
The only difference is that Muldoon did his own dirty politics. He never hid behind others.
“Dirty Politics” has achieved more than simply revealing unwholesome machinations between National party apparatchiks, ministers, and halfway-insane right-wing bloggers. The book has explained the nature of Key’s seemingly “Teflon” nature. The secret is revealed; the mystery is stripped away; and now, when Key is confronted by a media pack, the brown smelly stuff is sticking to him.
Result? Key is just another self-serving politician and his bloody-mindedness in continuing to shield Judith Collins is corroding his reputation and public standing. I am guessing this will be reflected in coming polls. It’s game over for this government.
If National loses this election, Key has already made it abundantly clear what his intentions will be;
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Which then begs the question – who would replace Key?
Of the options available to National, I offer these insights;
Steven Joyce
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Style: loud, abrasive, intolerant of dissenting views.
Low points: his “debate” on TV3’s “The Nation“, with Labour’s Grant Robertson, where he continually shouted over his opponant and almost hijacked the show. Or his veiled threats against protesting tertiary students in September 2011.
Leadership chances: 5/10
Electoral saleability: 3/10
Comment: Joyce alienates people by shouting them down. It is bullying and as a political strategy makes him a liability. His pugnacity is more openly Muldoonesque than any other politician.
Judith Collins
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Style: abrasive, intolerant of dissenting views, 100% Pure vindictiveness in high-heels.
Low points: her relationship with National’s black-ops team headed by Jason Ede and Cameron Slater; lying about journalist Katie Bradford; dodgy dealings with Oravida; mis-use of ministerial power; etc, etc, etc, etc, etc.
Leadership chances: 2/10
Electoral saleability: 0/10 (nil)
Comment: Collins would be a gift for the Left if she were elected Leader of the National Party. She brings back memories of Jenny Shipley – and didn’t that end ‘well’? The Nats would be unelectable with her as Leader. (In simple terms, her political career is over.)
Bill English
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Style: inoffensive.
Low points: rorting the ministerial accomodation allowance (double dipping) in 2009. A silly thing to do for minimal gain. Mostly forgotten by the general public.
Leadership chances: 7/10
Electoral saleability: 7/10
Comment: English has been mostly untainted by all the scandals swirling around Richard Worth, Phil Heatley, Pansy Wong, Nick Smith, Aaron Gilmore, John Banks, Hekia Parata, Judith Collins, et al. In fact, he distanced himself from Collins’ actions in leaking a civil servant’s personal information to far-right blogger, Cameron Slater, by saying,
“I certainly wouldn’t condone an attack by a blogger on a public servant doing their job.”
If English is positioning himself for a future leadership bid, it was a good move.
English was Leader of the National Party from 2001 to 2003, and was dumped after the Nat’s worst electoral result in decades. During that time, he’s kept his head down; focused on economic issues; and avoided public controversies.
He comes across as likeable, and the public might be persuaded to give him another shot as a Leader.
Conclusion
The political dramas will only be beginning on 20 September.
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References
NZ Herald: Key says he’ll quit politics if National loses election
Fairfax media: Key’s staff can’t disprove reptilian theory
NZ Herald: Norman – Key ‘acting like Muldoon’
TV3: The Nation – Debate: Grant Robertson and Steven Joyce on the wealth of the nation
NZ Herald: Bill English to pay back part of allowance
Wikipedia: Bill English – Leader of the Opposition
Wikipedia: 2002 General Election
Radio NZ: Key, English distance themselves from Collins
Previous related blogposts
It’s official: Political Dissent Discouraged in NZ!
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Above image acknowledgment: Francis Owen/Lurch Left Memes
This blogpost was first published on The Daily Blog on 21 August 2014
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Radio NZ Debate: Bill English vs David Parker
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Check out this excellent debate between National’s Bill English and Labour’s David Parker. Well worth listening to;
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Alternative link: Listen to Bill English and David Parker debate the economy on Nine to Noon
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Above image acknowledgment: Francis Owen/Lurch Left Memes
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The Donghua Liu Affair: Evidence of Collusion between the NZ Herald and Immigration NZ?
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1. Prologue
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The Donghua Liu Affair hit the headlines on 18 June, with allegations that David Cunliffe wrote a letter in 2003, on behalf of business migrant, Donghua Liu.
Four days later, on Sunday 22 June, the Herald ran stories alleging massive donations to the Labour Party by Liu. Tabloid- style stories of $100,000 paid for a bottle of wine and $15,000 for a book, along with a $50,000-$60,000 dinner party hosted for then Labour minister, Rick Barker, and a donation to a rowing club, raged for several days.
By Wednesday, on 25 June, the Herald was forced to retract Liu’s claims. The “new” story was that Liu’s “donation” was,
“… close to $100,000 and that is my closing comment in my statement…that is how much I believe I have donated in total to Labour and some of their MPs during their last term in Government.”
The so-called Yangtze River boat “dinner for Rick Barker” turned out to be some sort of staff function that Liu had invited the Labour minister to attend.
Only Liu’s donation – of $2,000 – to the Hawkes Bay Rowing Club, was confirmed. Considering that any “link” between the NZ Labour Party and Hawkes Bay Rowing Club is tenuous at best (Barker’s daughter was a member of the club), the value of this aspect of the Liu Affair is dubious, to put it mildly.
Cunliffe’s 11 April 2003 letter was far from “avocating on Liu’s behalf”. Instead, the eleven year old letter turned out to be a stock-standard inquiry sent to Immigration NZ with the rather banal request ,
“I am aware of the difficulties facing the Business Migration Branch of New Zealand Immigration Services in coping with the overwhelming numbers of applicants that have applied for consideration under these categories and the time taken to verify documents. However it would be very helpful to Mr Liu to be advised of an estimated period of time period [sic] in which he could expect a decision on his case.”
Requesting “an estimated period of time period” seems a stretch to describe it as advocating.
Accordingly, this blogger lodged a formal complaint with the Herald’s editor-in-Chief, NZ Press Council; and OIAs lodged with Deputy PM, Bill English; Immigration Minister Michael Woodhouse, and the Office of the Prime Minister.
A letter seeking clarification was also emailed to Herald journalist, Jared Savage, which he has responded to.
The responses thus far, and the next steps taken…
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2. The NZ Herald – formal complaint to the Press Council
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On 28 June, I sent a formal complaint to Tim Murphy, Editor of the Herald, regarding his paper’s handling of the Donghua Liu story. (See: The Donghua Liu Affair: responses from NZ Herald and Prime Minister’s Office – Is the PM’s office fudging?)
On 4 July, Mr Murphy responded. I considered his formal response and explanations to be inadequate and in one instance (John Armstrong’s column calling for David Cunliffe’s resignation) no attempt was made to address the issue.
Accordingly, I lodged a formal complaint to the Press Council on 5 July.
Two days later, the Press Council referred the complaint to the Herald;
From: Mary Major [mailto:info@presscouncil.org.nz]
Sent: Monday, 7 July 2014 8:27 a.m.
To: Tim Murphy
Cc: Sarah Lawrence
Subject: FW: Online ComplaintDear Tim and Sarah,
Please see below for a complaint from Frank MacSkasy. Could we please have
your response within the next 10 working days.Kind regards,
Mary
On 15 July, the Herald’s editor responded to the Press Council;
From: Sarah Lawrence [mailto:Sarah.Lawrence@nzherald.co.nz]
Sent: Tuesday, 15 July 2014 5:00 p.m.
To: Mary Major
Subject: FW: Press Council complaint – Frank MacskasyHello Mary
Please find below a response from Tim Murphy to the Frank Macskasy
complaint. Also enclosed is the full record of Herald stories for the
Council’s information as mentioned by Tim below (I had to split them into
two parts, hope that’s OK), and also our responses to his initial
complaints.Thanks so much.
Kind regards
SARAH LAWRENCE
PA to Editor in Chief of Herald Titles
[phones numbers redacted – FM]—–Original Message—–
From: Tim Murphy
Sent: Thursday, 10 July 2014 10:55 a.m.
To: Sarah Lawrence
Subject: RE: Press Council complaint – Frank MacskasyDear Mary
We have corresponded with Fran [sic] Macskasy twice on this issue. I have
enclosed our two replies, which I believe address his concerns. The second
reply is to a complaint almost exactly the same as the one below forwarded
to the Press Council. At this point we believe those responses should stand
as our submission to the Council. We have included the full record of
Herald stories on the Donghua Liu-Labour donations issue for your reference.
Many thanksTim Murphy
Editor-in-chief, New Zealand Herald titles.
A day later, the Press Council contacted me with the Herald’s response;
from: Mary Major <info@presscouncil.org.nz>
to: Frank Macskasy <fmacskasy@gmail.com>
date: Wed, Jul 16, 2014 at 9:51 AM
subject: FW: Press Council complaint – Frank MacskasyGood morning Frank,
Please see below and attached for the response from the NZ Herald.
You now have the opportunity to make a brief final comment (around 150
words). We would be pleased to receive this comment within the next 10
working days. The complaint will be considered by the Press Council at the
next meeting, which is on August 4, and the decision will be released about
two weeks after that.Kind regards,
Mary
My final comment (unfortunately, not so brief, because of the complexities of this issue), was made on 19 July;
from: Frank Macskasy <fmacskasy@gmail.com>
to: Mary Major <info@presscouncil.org.nz>
date: Sat, Jul 19, 2014 at 3:01 PM
subject: Re: FW: Press Council complaint – Frank MacskasyKia ora Mary,
I have read Mr Murphy’s response to my complaint and I do not believe they are a satisfactory response to the issues I have raised in my complaint.
1. Many of the Herald stories relating to David Cunliffe’s letter to Immigration NZ, regarding Donghua Liu, did not refer to the actual date of the letter (11 April 2003). In several subsequent stories referring to this letter, the Herald omitted any reference to the date, thereby leaving an unknown number of readers with the impression that the letter was recently written. This is a salient, critical fact of the story and it’s omission may have created a mistaken perception in the minds of many readers.
There was simply no valid reason to with-hold that vital fact from subsequent stories.
2. Tim Murphy wrote on 4 July, ” We stand by our report that a book was purchased and expect further ‘evidence’ of this to be made public shortly”.
As of this date (19 July), over two weeks have passed and no ” further ‘evidence’ of this [has been] made public” to date.
The Herald has presented an unsubstantiated claim as fact, thereby mis-representing the truth and giving readers an impression that this claim was verified as true.
Promises of “further evidence” have not materialised. There is no indication when “further evidence” will ever materialise.
3. Regarding the Herald’s “clarification” of Donghua Liu’s claims for $100,000 spent on a bottle on wine.
(A) The “clarification” was inadequate because more coverage was given to the initial (false) claims than the clarification. This is bound to create a lasting impression in the minds of many readers that the initial (false) allegation was correct, being unaware of a subsequent “clarification”
(B) No apology was made to Labour leader, David Cunliffe.
The story was therefore false and only a cursory attempt made to rectify it.
4. I wrote in my complaint that “It is manifestly unfair, unreasonable, and unconscionable that the Herald has not released, in full and verbatim, Liu’s “signed statement” as it did with David Cunliffe’s 2003 letter.”
Mr Murphy replied, “We do not automatically make public documents which we obtain as part of ongoing journalistic inquiries. There are many reasons for this, including the conditions upon which they were obtained from whatever source and the need for us to pursue further matters contained within. While there seems to be an expectation that journalistic inquiry must be ‘open source’ this ignores these conditions and also the competitive nature of news gathering. The Cunliffe letter was obtained under the Official Information Act and was released to all media, so is thus automatically a public document.”
I maintain that Mr Murphy has not provided solid grounds for with-holding Mr Liu “signed statement” except reference to “the competitive nature of news gathering”. This is wholly inadequate and gives only a one-sided view to this story. The public are unable to determine for themselves precisely what is is that Mr Liu has stated.
Given that he has already been shown to be less than credible with his allegation (see Point 3 above), I maintain this is a salient aspect of the story.
It is also worth noting that the media rails against governments of various hues for restricting the flow of information under the guise of “commercial sensitivity” and it is supremely ironic that the Herald – a news media organisation – is now following suit and employing the same tactic.
5. Mr Murphy fails to respond in any way to my complaint regarding John Armstrong’s column on 18 June.
6.
(A) The Herald’s stories regarding former Labour MP, Rick Barker attending a river boat cruise in 2007 were not based on fact, and instead relied on nothing more than hear-say from Donghua Liu – who has already had to retract his allegations of a $100,000 bottle of wine. Mr Murphy stated, “You seem to have accepted without question MP Rick Barker’s claim he attended only a staff party in China. We do not accept this and expect further details of the hospitality for him and others in China to be revealed in due course.”
As Bervan Hurley wrote these allegations on 22 June, it is now one month later and no “further details of the hospitality for him and others in China [have been] revealed in due course”.
In effect, the Herald has made allegations on one man’s unproven assertions and is now promising to “reveal in due course further details”. Mr Murphy offers no hint of when “due course” will arrive.
(B) Mr Murphy writes on the issue of Liu’s $2,000 donation to the Hawkes Bay Rowing Club; “It would be wilfully naïve to assume that the donation to the rowing club associated with an MP, the day after that MP has hosted Liu in the region, is unconnected to that MP. The donation was made and Liu made it with the intent of it being in favour of the MP.”
It is simply astounding that Mr Murphy explains away the story regarding Liu’s donation as “Liu made it with the intent of it being in favour of the MP”. Since when can one man’s intent to “curry favour” be turned into a story implicating Rick Barker and the Labour Party of inappropriate activities? What Mr Liu “intended” cannot be laid at the feet of Mr Barker.
Conclusion.
It is obvious that the Herald relied on one man’s (Donghua Liu) unsubstantiated assertions – of which one has been retracted; one remains unproven; whilst others have been mis-represented.
This was a story predicated on very little, and which has caused untold damage to a main political party* in a critical juncture in election year.
As such, I maintain that the Press Council should act accordingly in fairness and to send a strong signal to the media that unfair and unbalanced stories based on hear-say are grossly irresponsible and unacceptable.
Regards,
-Frank Macskasy* Note: I am not a Labour Party member or supporter.
Now we wait to 4 August for a decision from the Press Council.
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2. NZ Herald journalist Jared Savage – Clarifications sought
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On 19 June, I lodged an OIA request with Immigration Minister Michael Woodhouse (to be reported in the next chapter of this story; The Donghua Liu Affair: OIA Responses from the PM; Deputy PM; the Immigration Minister, and next steps).
A response from the Minister’s office was received on 17 July.
Within that response were various pieces of information that required clarification from Herald reporter, Jared Savage, who had been covering much of the Donghua Liu “story”. Accordingly, I wrote to Jared with my questions;
.
From: fmacskasy@gmail.com
Sent: Thursday, 17 July 2014 8:52 p.m.
To: Jared Savage
Subject: OIA Request; Donghua Liu; clarification on your involvementThis message has been sent via the NZ Herald Website
——————————————————Frank Macskasy
fmacskasy@gmail.comKia ora Jared,
I am in receipt of information from Minister Michael Woodhouse’s office released to me under an OIA request.
The information provided requires some clarification on your part.
1. You lodged an OIA request on 16 June 2014 with Minister Woodhouse’s office, seeking, “Any correspondence, including emails, letters or queries, from any Members of Parliament in regards to Donghua Liu’s immigration status prior to 2005”.
2. You received a response, with relevant information, two days later on 18 June 2014.
3. Can you explain why you specifically mentioned “Donghua Liu’s immigration status prior to 2005”? Why did you mention the specific year of 2005?
4. You received material from Minister Woodhouse’s office within 48 hours – an unusually rapid “turn-a-round” time for an OIA request, which normally take weeks, if not months, to complete. Can you shed any light on why you received the information (including the 11 April 2003 letter from David Cunliffe to Immigration NZ) so quickly?
5. Can you confirm that you received a “tip off” to make the OIA, and, specifically, that you were aware of the Cunliffe/Donghua Liu/Immigration NZ letter prior to receiving a copy of it from Minister Woodhouses’ OIA release?
These questions are part of an on-going story I am writing on the Liu Affair. There appears to be unanswered questions surrounding the Herald’s involvement in this issue and any assistance you can provide to clear up unresolved issues will be appreciated.
Regards,
-Frank Macskasy
Blogger
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Jared Savage replied later that day;
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from: Jared Savage <Jared.Savage@nzherald.co.nz>
to: “fmacskasy@gmail.com” <fmacskasy@gmail.com>
date: Thu, Jul 17, 2014 at 11:27 PM
subject: RE: OIA Request; Donghua Liu; clarification on your involvement
mailed-by: nzherald.co.nzHi Frank,
Happy to answer questions as I’ve previously answered these on Twitter.
You might recall that prior to writing about Donghua Liu’s links to Labour, I wrote extensively about his links to the Nats.
It all started with queries about his citizenship while the Nats were in power, against advice, specifically after Maurice Williamson writing an email in support in 2010…it eventually led to Mr Williamson’s resignation as a Minister for intervening in a police matter and the discovery that Liu was also lobbying Immigration Minister Woodhouse to change policy.
I’ve also previously written about another citizenship case, Bill Liu (no relation), which was also granted against advice, but this was when Labour was last in Government.
It got me thinking about Donghua Liu’s bid for residency in 2005, which was also granted by Labour against official advice by Damien O’Connor, and whether he was lobbied.
I initially asked for his entire residency file under the OIA on May 8. I note that the next day Minister Woodhouse asked for the file.
I was declined the entire file on privacy grounds on June 16. As I was really only interested in whether MPs were involved in his residency bid, I refined my request to ask for any correspondence from MPs because this is clearly in the public interest.
I specifically mentioned prior to 2005 because this is when Mr Liu was granted residency, against advice. There would not be any correspondence after he gained residency.
Unfortunately, it was clumsily worded because Immigration officials interpreted the word prior to exclude 2005 in the response. I then lodged a further OIA request which revealed Mr O’Connor intervened 3 times in the lead up to residency being granted – including waiving the English language criteria – the day before the 2005 election.
I also wrote that Mr Liu has spent considerable time with Labour Minister Rick Barker in 2007 – the Minister in charge of citizenship under Labour- including hosting him in China and the Hawke’s Bay.
Coming back to the June 16 request, two days later, I received the letters. I have no idea why Immigration released it so quickly. Probably because they had already processed my earlier request of June 16 so the file was available, but you’d have to ask Immigration.
The reason why I asked questions about the potential involvement of MPs in Liu’s residency bid was that I was suspicious in the same way I was suspicious about the involvement of MPs in the citizenship bid.
Does your OIA response focus on Minister Woodhouse’s OIA response to me, solely, or to all media outlets?
Because it was not a Herald reporter asking direct questions of Mr Cunliffe’s potential involvement the day before the release of the letters…
Hope that helps
Jared
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Awaiting information from several OIA requests and a Press Council complaint, I held off responding to Mr Savage. However, I have since received responses to OIA requests lodged with the offices of John Key, Immigration Minister Michael Woodhouse, and Deputy PM Bill English. A decision from the Press Council is due today (21 August).
Today (21 August), I wrote back to Jared Savage, asking for clarification on certain matters;
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from: Frank Macskasy <fmacskasy@gmail.com>
to: Jared Savage <Jared.Savage@nzherald.co.nz>
date: Thu, Aug 21, 2014 at 9:34 AM
subject: Re: OIA Request; Donghua Liu; clarification on your involvementKia ora Jared,I am in receipt of your email dated July 17, 2014 at 11:27 PM, in reply to my email dated earlier the same day. Your prompt response is appreciated. (My own apologies for taking so long to reply.)I have some follow up questions which, I hope, may clarify the answers you have already provided. (I am still pursuing this story, as I believe there are facts yet to be uncovered, especially in the light of Nicky Hager’s book, “Dirty Politics”.)
1. You write; “Coming back to the June 16 request, two days later, I received the letters. I have no idea why Immigration released it so quickly.”
Question A: Have you, or any other NZ Herald staffer asked Immigration NZ why the letter was released so quickly?Question B: Was this rapid turn-a-round for an OIA request discussed at NZ Herald, and if so, what was the outcome?Question C: Do your happen to have a copy of the email from Minister Woodhouse/Immigration NZ and specifically, the date-time on it?
I would appreciate a copy of the covering letter that accompanied the 2003 Cunliffe-Liu letter. I am assuming that will not break journalistic standards in protecting your sources, as the source of the letter is now public information.Question D: What other correspondence have you had with Minister Woodhouse, Immigration NZ, or any other Third Party on this matter?2. You write; “Does your OIA response focus on Minister Woodhouse’s OIA response to me, solely, or to all media outlets? Because it was not a Herald reporter asking direct questions of Mr Cunliffe’s potential involvement the day before the release of the letters…”
I have searched the internet for prior references to David Cunliffe’s involvement with the Donghua Liu Affair, and can find only two media reports that *appear* to precede your 18 June Herald story. One is from Interest.Co.Nz (http://www.interest.co.nz/news/70461/cunliffes-labour-leadership-under-pressure-letter-shows-he-advocated-donghua-liu-2003-des), and the other from TV3 (http://www.3news.co.nz/Controversial-Chinese-donor-also-gave-to-Labour/tabid/1607/articleID/348740/Default.aspx). However, they both refer to your newspaper as the source of the story.
The TV3 story does not refer to the Cunliffe 2003 letter.
The Interest.co.nz story by Bernard Hickey referring to the Cunliffe 2003 letter was published at 1.45pm on 18 June – earlier than your story (http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=11276510) at 2.29 and yet still appears to link to your story, published 44 minutes later.Question E: Can you suggest how Interest.co.nz came to have that information?I understand that TV3 journalists were putting questions to David Cunliffe on 17 June (one day BEFORE you or anyone else had received the 2003 Cunliffe-Liu letter, via an OIA request) regarding what contact he had with Mr Liu.Question F: Do you have any idea why they asked those very specific questions, and how they tied in with the 2003 Cunliffe-Liu letter?3. You wrote; “It got me thinking about Donghua Liu’s bid for residency in 2005, which was also granted by Labour against official advice by Damien O’Connor, and whether he was lobbied..”Question G: Where did you first learn about this?
Question H: Were any of O’Connor’s letters already in the public arena? (I can’t locate any prior to your Herald story.)
Your Editor, Tim Murphy, has stated that there is much more to come on the Donghua Liu Affair, with new evidence to confirm his allegations.Question I: Will there be follow up stories on this issue? Are any in the pipeline?5. You wrote, “I also wrote that Mr Liu has spent considerable time with Labour Minister Rick Barker in 2007 – the Minister in charge of citizenship under Labour- including hosting him in China and the Hawke’s Bay.”
Question J: Have you had any contact with Simon Lusk (who also happens to live in the Hawkes Bay area), or any of his associates with regards to this matter?
Question K: Did you recieve a tip-off on Rick Barker’s association with Mr Liu? (I won’t ask you for your sources, for obvious reasons.)
6. Question L: Are there any facts that I may have over-looked in this issue that may have a bearing on clarifying the story?Hopefully, you can assist me to clarify these outstanding questions – especially if you can supply me with a copy of the covering email/letter from Immigration NZ/Michael Woodhouse, including email headers, which pertains to receipt of the 2003 Cunliffe-Liu letter. I would be interested in receiving a copy of that, in conjunction with an OIA request I have lodged on the matter with relevant Ministeries.
Regards,
-Frank Macskasy
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3. Immigration NZ and NZ Herald – more questions and a suggestion of collusion
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Now, here’s the thing.
In Nicky Hager’s book, “Dirty Politics“, the author’s remarks on the rapid turnaround of OIA requests made by extremist right-wing blogger, Cameron Slater, to various government departments including the secretive SIS;
“Documents like the SIS briefing notes are not usually released to the public, under the official information law [OIA] or otherwise. Someone had overruled the usual practice and then fast-tracked the release. The released documents were stamped as being declassified on 26 July 2011, the same day that Slater sent off his request. Where was the time for decision-making and consultations?” – “Dirty Politics”, p40
And,
“[Jason] Ede recommended the wording that Slater use in his official information request: ‘Written and email communications within, to and from, Paula Bennett’s Ministerial office and its staff in relation to Ira Bailey from the beginning of last week til today’ and Slater sent the request that day, using exactly the same words, apart from inserting a bracketed date, ‘Mon 8 October 2012’, after ‘last week’. Slater received the information from Bennett by the following day and was able to publicise it with a government-friendly spin – “Bennett’s office in the clear’ less than two days after Ede wrote to him.” – “Dirty Politics”, p41/42
This blogger can testify to one immutable fact-of-life: OIA requests to Minister’s offices and governments departments can take several weeks, if not more than a month, to fulfill.
Case in point: I asked for a copy of the covering letter from Immigration NZ to NZ Herald’s journalist, Jared Savage, on 21 July this year,
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Kia ora Ms Hames/Minister Michael Woodhouse,
Thank you for providing the information I was requesting under the OIA.
I require some further items of information, which I am lodging as an OIA request;
1. The covering email/letter to Jared Savage, of the NZ Herald, pertaining to the release of David Cunliffe’s 11 April 2003 (pertaining to Donghua Liu, to Immigration NZ) letter to that reporter (or any other person(s) at the NZ Herald or any other media outlet, on or about 18 June of this year.
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It took one month (20 August) for that simple response to be filled. A copy of the letter, from Immigration NZ to Jared Savage, is presented;
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Note the date that Mr Savage lodged the OIA request: 18 June 2014.
Note the date that Immigration NZ responded, supplying a copy of the 2003 Cunliffe-Liu letter: 20 June 2014.
Two days.
Yet it took Immigration NZ a month to send the covering Immigration NZ-Savage letter to me.
One cannot escape the conclusion that some form of collusion has taken place between Immigration NZ/Minister Woodhouse and the NZ Herald. Nicky Hager has uncovered how that sort of collusion has taken place between right-wing blogger and National Party-mouthpiece, Cameron Slater and the Prime Minister’s office.
The question now is – has the same collusion been occurring between the NZ Herald and the PM’s office?
Two days for an OIA request to be completed? The Herald has some questions to answer.
To be continued: The Donghua Liu Affair: the Press Council’s decision
To be continued: The Donghua Liu Affair: OIA Responses from the PM; Deputy PM; the Immigration Minister, and next steps
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References
NZ Herald: John Armstrong: Cunliffe’s resignation may be in order
Previous related blogposts
The Donghua Liu Affair – Damn lies, dirty tricks, and a docile media
The Donghua Liu Affair threatens to unravel – PM and NZ Herald caught up in a dirty trick campaign?
The Donghua Liu Affair – the impending final act and curtain-fall in this smear-campaign
The Donghua Liu Affair: The first step to a complaint to the Press Council
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Above image acknowledgment: Francis Owen/Lurch Left Memes
This blogpost was first published on The Daily Blog on 21 August 2014
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Annette King confirmed as Labour’s candidate for Rongotai
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NZ, Wellington, 3 May – The Rongotai Branch of the NZ Labour Party has confirmed current MP, and former minister, Annette King, as Labour’s candidate for the 2014 General Election.
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Rongotai Labour Party members and invited guests, attending the electorate-selection meeting at Mornington Golf Club.
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In a speech to a packed hall at Mornington Golf Club, in the south Wellington suburb of Berhampore, Ms King was introduced by former Deputy Leader of the Labour Party and MP for Wellington Central, Grant Robertson. His opening comments drew applause and laughter from party members, supporters, and public;
“I get to sit next to Annette in Parliament which is a huge pleasure. One of the things I’ve noticed is that Annette is one of the best multi-taskers in politics. She can simultaneously complete a Soduku and eviscerate Tony Ryall, all at the same time.”
He added, “the committment that I have seen from Annette that is reflected in the twenty one years as the MP here is without peer, in politics in New Zealand, in my view.” Grant Robertson spoke of her “compassion, true heart, and Labour values”.
Robertson said “she is true to what we believe is a movement that it’s our job to lift the spirits and the prospects of every New Zealander.” Turning to Ms King, he added, “we need you in the next Labour[-led] government, we need your wisdom, and your experience… and your core values.”
He then seconded her nomination as the Labour candidate for the Rongotai electorate.
With no other nominations, Annette King’s nomination was put to the floor, and was passed unanimously by voice vote.
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Wellington Central MP, Grant Robertson, discussing issues with Labour Party rank and file members.
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A little later, I had a brief one-on-one with Grant Robertson. I asked him,
“Grant, what is your personal number one for this election?”
He replied,
“The biggest issue for me is jobs. As the Labour Party’s employment spokesperson, I go around the country and I see too many New Zealanders who don’t have work, who want to work, and we have an economy that doesn’t have jobs at the center.
We’re an economy at the moment that’s driven by the bankers and the speculators and what we need is an economy that’s driven by and for people and that will have jobs at the center. So that’s what you’ll hear me talking [about] all through the election.”
I asked Grant Robertson about Labour’s buy-local procurement policy,
“Government procurement is one of the best ways you can stimulate the economy and most of the countries in the world do it and don’t worry about the so-called committments that they’ve got under international agreements… But absolutely, a procurement policy that focuses on encouraging companies that will employ New Zealanders is vital.”
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Annette King, addressing Labour Party members with a good-natured speech.
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Following on, Annette King, addressed Labour Party members with a good-humoured speech, and reaffirmed her determination to promote Labour Party policy and ideals. Ms King said “there was work to be done” and that she “had the passion, the feeling, and the committment” to follow through. She also paid tribute to “new blood” coming through in the Labour Party,
“I do believe that a party needs new talent, we need to bring in the new and rejuvenate. And we’re doing that with members like Grant [Robertson], and Jacinda [Ardern], and David Clark, and Megan Wood, and many of those young people who are coming through showing such talent.”
Ms King also reaffirmed the need for people with institutional memory; “an experience of knowing what it’s like to be in government. What we want, at this election, is to lead the government again.”
Ms King added,
“The value of fairness to New Zealanders; ensuring that everybody is looked after in this country. Not just the privileged few we see under this government. There does need to be access to good healthcare; education for our children; and really important, the ability to have a warm, dry, affordable, home. These are some of the values of our party and so much more.”
In reference to National’s latest scandals, she said,
“We’re going to take the fight to this government, in the next few months. We’ve got twenty weeks to make sure we lead the next government and I believe that we can. What a difference a week makes in politics! Last week a few of us were down at the Newtown market… we were down there and people were walking past us, and looking at us sideways and walking on.
We’d just suffered the fallout of the Shane Jones departure from the party. Today, down at the market, we were surrounded by people. People wanted to talk about policy, to talk about the Labour Party. They wanted to join the Labour Party. In one week we have seen some really innovative policy coming out of the Labour Party, and people [were] saying ‘Hey, that is the Labour Party we know. A progressive Party that comes up with the real ideas [for] change for New Zealand’.”
There was more than an element of truth when Ms King pointed out,
“All the progressive change in this country came from the Labour Party. This government, and the National governments before, are governments of the status quo. And when you need change, you have a Labour party [government].
And what I could not bear is the thought of three more years of National, and neither could most working people in New Zealand.”
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Current MP for Rongotai, Annette King, discussing policy matters with Labour Party stalwarts.
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Annette King is one of the longest-serving MPs in Parliament, having been in office for twentyseven years – twentyone of which have been in the Island Bay/Miramar electorate alone.
In 2000, she was Minister for Health, over-seeing the re-building of the Health portfolio which had been badly under-funded by the previously National-led government. Chronic under-funding in the late 1990s was having a deleterious effect on patients requiring critical life-saving surgery. Many failed to survive the growing waiting lists under Bill English’s watch.
National’s health minister at the time – Southland MP, Bill English – tried to stem the increasing deaths by belatedly injecting extra money for surgery. It failed to address the crisis that had been building over several years of National’s cost-cutting; tax cuts (1996, 1998); and slashing of the public service sector.
One of Ms King’s first moves was a cash-injection of $1.5 billion into the health sector in December 2001. She said, at the time,
“Unashamedly, the first lot of money will go to those with the greatest need – low income, poor, sick, Maori, and Pacific [people].”
National’s health spokesperson at the time, Roger Sowry, responded with a statement which could only be described as jaw-dropping for it’s sheer hypocrisy.
With National cutting back on funding for services; increasing user-pays; two tax cuts (2009, 2010), and slashing the public service sector, it seems that – unlike the Split Enz song, history does indeed repeat.
Ms King will have her work cut out for her when a new Labour-Green government takes office after 20 September.
Below, Paul Eagle, chatting with Labour Party members;
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Shrewd strategist and local City Councillor, Paul Eagle (in red shirt), was announced as Annette King’s campaign manager.
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This blogger took a moment for a brief interview with Annette King, asked her what her priorities would be when a new Labour-Green government took office post 20 September.
I asked Annette King, “what’s really important to you?”
Ms King replied,
“The most important thing for me, and it’s the number one that runs through everything we do, and that is reducing inequalities…”
“Health inequality; housing inequality; education inequality. Inequality in New Zealand is the biggest I’ve experienced in all my years. And I mean, I wasn’t here for the Depression, I’m not that old, but inequality in our society is so great now, that we need a progessive government that’s going to address them. And then you go through the areas. If you take health inequalities; who dies earlier; who dies younger; who has less access.
And you go to low income, Maori, and Pacifica. So that’s my priority.”
Interesting – Annette King’s priorities were remarkably similar to her comments in December 2001 (see above). Grant Robertson seems to have been correct when he said that her “core values” had not changed.
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(L-R) Paul Eagle, Annette King, and Grant Robertson
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Ms King’s successful nomination was followed by a final ceremony; the awarding of a recognition to long-serving Party members for their contributions to the labour movement.
LEC Chairperson, Peter Franks, presented a gold pin, and life-membership, to Peg Collett and Reatha McInnes (not pictured), for long-term service to the NZ Labour Party;
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LEC Chairperson, Peter Franks, presenting a gold pin, and life-membership, to Peg Collett and Reatha McInnes (not pictured), for service to the NZ Labour Party.
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One hopes that people like Ms Collett and Ms McInnes are with us to see the return of this country to the social democratic values for which we were once internationally reknowned for.
We once led the way in women’s rights; anti-atomic bomb testing in the South Pacific; anti-apartheid campaigning; a nuclear-free status; and many other progressive movements for which we can be rightly proud.
The term “punching above our weight” doesn’t even begin to cover the impact that we, as a nation, have had on global affairs.
Today, as the current government would have it, our “reputation” seems fixed on making money from tourism; making money selling logs and dairy powder; and making money with the production of fantasy movies.
“Making money”…
Not quite “up there” with engendering the right of women to vote; saving the planet from atomic weapons; and supporting an entire nation to be free from apartheid.
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References
Wikipedia: Annette King
ODT/NZPA: Public Hospital ills blamed on funding
ODT: Acute heart surgery list nearly 400
The Press: Four forced off waiting list die
Sunday Star Times: Anger on heart op delay – English wants answers on cash use
The Dominion: $1.5b injection for Health
NZ Herald: Prescription fees increase
Fairfax media: 2400 more state sector jobs could go
Metrolyrics: History Never Repeats Lyrics
NZ Herald: NZ inequality at highest level
Copyright (c) Notice
All images stamped ‘fmacskasy.wordpress.com’ are freely available to be used, with following provisos,
» Use must be for non-commercial purposes.
» Where purpose of use is commercial, a donation to Child Poverty Action Group is requested.
» At all times, images must be used only in context, and not to denigrate individuals or groups.
» Acknowledgement of source is requested.
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Above image acknowledgment: Francis Owen/Lurch Left Memes
This blogpost was first published on The Daily Blog on 5 April 2014.
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Radio NZ: Focus on Politics for 21 February 2014
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– Focus on Politics –
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– Friday 21 February 2014 –
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– Brent Edwards –
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A weekly analysis of significant political issues.
Friday after 6:30pm and Saturday at 5:10pm
Disagreement about how to reduce poverty and inequality is looming as one of the big debates of election year.
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Click to listen: Focus on Politics for 21 February 2014 ( 16′ 38″ )
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Confirmed: National welcomes low-wage economy
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From the mouth of our Dear Leader, Prime Minister John Key;
“We think Kiwis deserve higher wages and lower taxes during their working lives, as well as a good retirement.” – John Key, 27 May 2007
“We will be unrelenting in our quest to lift our economic growth rate and raise wage rates.” – John Key, 29 January 2008
“We want to make New Zealand an attractive place for our children and grandchildren to live – including those who are currently living in Australia, the UK, or elsewhere. To stem that flow so we must ensure Kiwis can receive competitive after-tax wages in New Zealand.” – John Key, 6 September 2008
“I don’t want our talented young people leaving permanently for Australia, the US, Europe, or Asia, because they feel they have to go overseas to better themselves.” – John Key, 15 July 2009
“Science and innovation are important. They’re one of the keys to growing our economy, raising wages, and providing the world-class public services that Kiwi families need.” – John Key, 12 March 2010
“We will also continue our work to increase the incomes New Zealanders earn. That is a fundamental objective of our plan to build a stronger economy.” – John Key, 8 February 2011
“The driving goal of my Government is to build a more competitive and internationally-focused economy with less debt, more jobs and higher incomes.” – John Key, 21 December 2011
“We want to increase the level of earnings and the level of incomes of the average New Zealander and we think we have a quality product with which we can do that.” – John Key, 19 April 2012
Since 2007, Key has been explicit in his pronouncements; his policy is to see wages rise for New Zealanders. He has made those utterance every year.
Then, on 10 April 2011, on TVNZ’s Q+A, Guyon Espiner interviewed Bill English and we heard this extraordinary admission from the Finance Minister;
GUYON Can I talk about the real economy for people? They see the cost of living keep going up. They see wages really not- if not quite keeping pace with that, certainly not outstripping it much. I mean, you said at the weekend to the Australia New Zealand Leadership Forum that one of our advantages over Australia was that our wages were 30% cheaper. I mean, is that an advantage now?
BILL Well, it’s a way of competing, isn’t it? I mean, if we want to grow this economy, we need the capital – more capital per worker – and we’re competing for people as well.
GUYON So it’s part of our strategy to have wages 30% below Australia?BILL Well, they are, and we need to get on with competing for Australia. So if you take an area like tourism, we are competing with Australia. We’re trying to get Australians here instead of spending their tourist dollar in Australia.
GUYON But is it a good thing?
BILL Well, it is a good thing if we can attract the capital, and the fact is Australians- Australian companies should be looking at bringing activities to New Zealand because we are so much more competitive than most of the Australian economy.
GUYON So let’s get this straight – it’s a good thing for New Zealand that our wages are 30% below Australia?
BILL No, it’s not a good thing, but it is a fact. We want to close that gap up, and one way to close that gap up is to compete, just like our sports teams are doing. This weekend we’ve had rugby league, netball, basketball teams, and rugby teams out there competing with Australia. That’s lifting the standard. They’re closing up the gap.
GUYON But you said it was an advantage, Minister.
BILL Well, at the moment, if I go to Australia and talk to Australians, I want to put to them a positive case for investment in New Zealand, because while we are saving more, we’re not saving more fast enough to get the capital that we need to close the gap with Australia. So Australia already has 40 billion of investment in New Zealand. If we could attract more Australian companies, activities here, that would help us create the jobs and lift incomes.
Key responded in his typical fashion that we are all familiar with by now; he blamed the previous Labour government;
“We inherited a mess from Labour and a real recession. We have a plan.”
However, two years later, National Party backbench MP, John Hayes, wrote this on his website,
“Australian workers will get a 2.6 per cent rise to $A622.20 a week or $NZ750.50 at the prevailing exchange rate. That’s $A16.37 ($NZ19.75) an hour for Aussies’ 38-hour working week compared with $NZ13.75 an hour or $NZ550 for Kiwis’ 40-hour working week. I note that the Labour Party spokesperson on Labour issues is wringing her hands in despair at this news. I think we should celebrate because a rise in the minimum wage in Australia makes our labour force more competitive and will be helpful in attracting investment and jobs to New Zealand. About 18 months ago CHB Mayor Peter Butler and I approached Australian based food processors with the suggestion of moving across the Tasman to establish plants in New Zealand to process food produced under newly irrigated areas. We established that Australian food processors are interested to do this when our new irrigation is in place. A driver from the Australian perspective is that the New Zealand labour force is well educated, more productive and less unionised than their Australian counterparts.” – John Hayes, National MP, 5 June 2013
Bill English’s contention, that lower wages are a desirable means by which to be “so much more competitive” than Australian workers,was no mistake. It has been confirmed as covert National Party policy.
This is further backed up by National’s recent introduction of legislation to “reform” our labour laws.
Firstly, National reintroduced youth rates, euphemistically called the “Starting Out Wage” to young workers. Taking effect on 1 May 2013, the new youth rate cut wages for 16-to-19-year-olds to 80% of the minimum wage.
National further disempowered workers and undermined their ability to negotiate by implementing the 90 Day “Trial Period”. First introduced in 2009 for small business of up to 20 employees, it was extended to all companies in 2011.
Unsurprisingly, the introduction of the 90 Day Trial Period had no appreciable effect on creating jobs,
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One of the most far-reaching aspects of National’s covert agenda to make the country’s workforce “more flexible” (translation; more exploitable) is their stated intention to remove Part 6A of the Employment Relations Act (ERA), which continues (or transfers under similar conditions and pay) the employment of low-paid employees such as caretakers, cleaners, catering workers, hospital orderlies and laundry workers, after a business is restructured or sold.
See: Part 6A – Continuity of employment if employees’ work affected by restructuring
Part 6A gives vulnerable, low-paid workers, the right to keep their jobs on the same terms of employment when transferred to the new contractor.
See: Labour law changes announced
Then-Labour Minister Kate Wilkinson had assured the public that this law-change would apply only to small and medium-sized businesses with less than 20 employees.
Which was precisely the same tactic used to implement the 90 Day Trial Period law, by degree,
“Trial employment periods for up to 90 days for workplaces with fewer than 20 employees will be available from April 2009.” – Kate Wilkinson, 11 December 2008
See: National policy – 90-day trial period to provide job opportunities
Once National’s so-called “reforms” were bedded in, they changed it, implementing the real policy they had wanted all along,
“The 90-day trial period is to be extended to enable all employers and new employees to have the chance to benefit from it.” – Kate Wilkinson, 18 July 2010
Once Part 6A is removed from the lawbooks, the lowest-paid workers in our communities will be vulnerable. A new employer will be able to re-write their contracts at whim; reduce their pay; change their conditions, or dismiss them altogether. There are many such small business and the impact on their workers could be severe (Source).
Green Party industrial-relations spokeswoman, Denise Roche, was 100% on-the nose when she described these – and other “reforms” as,
“This decision is straight from the Bill Birch era of industrial relations.”
This is indeed a return to the Employment Contracts Act – by stealth. National is too gutless to present such radical plans to the voting public at election time.
This is indeed what National MP, John Hayes was referring to when he stated,
“…A driver from the Australian perspective is that the New Zealand labour force is well educated, more productive and less unionised than their Australian counterparts.”
And if National MP (Botany) Jamie Lee-Ross gets his way with his even more extreme Bill, employers would be able to legally hire scab labour to replace striking workers .
Quite brazen in his actions, Jami-Lee Ross admitted that he had colluded with POAL (Ports of Auckland Ltd) bosses to draft his proposed strike-breaking amendment, the Employment Relations (Continuity of Labour) Amendment Bill.
On TV3′s The Nation on 22 June 2013, Ross confirmed that he had been in talks with employers during the height of the industrial dispute between the POAL and MUNZ (Maritime Union). (source)
Ross’s hatred for Unions is on public record,
“Up until recently, cool heads and rational people sitting around negotiating tables have meant that little focus has been placed on the role that unions play in society. However, with the bare-faced mockery that the Maritime Union is making of civilised negotiations New Zealanders will soon begin to question what position unions should hold in the modern Kiwi workplace.“
None, it would seem, according to Ross.
Though this radical move may be a step too far, even for the
Make no mistake, National’s secret agenda is for a low wage economy, with minimal collective protections for workers, and as much power in the hands of employers as they can digest.
National has no other means by which to create jobs.
They intend to rely solely on the “market place”, and to do that, this country’s labour must become “more competitive”.
Translation; our wages must be driven down by any and every means possible.
Just ask Messrs English and Hayes.
Postscript
21 February 2013 MEDIA STATEMENT
AUS-NZ Wage Gap Now $180, More Than A Kiwi’s Daily Pay
How To Work A Four-Day Week? Move To Australia
The wage gap with Australia is now so large that Kiwis across the ditch earn a New Zealander’s weekly pay in just four days, says Labour’s Finance spokesperson David Parker
“The median weekly wage gap with Australia has ballooned by $60 to $180 per week under John Key’s leadership, despite National’s promise to close the gap.
“In Australia the median wage is $1067, in New Zealand it’s $887, according to the latest statistics[1]. To make up the difference Kiwis need to work another full day and another hour on top of that. It’s no surprise 182,000 Kiwis have left under National.
National’s Grand Plan is a roaring success; in July 2010 the wage gap was $22.36.
This blogpost was first published on The Daily Blog on 24 December 2013.
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References
TVNZ Q+A: Bill English
TV3: Key blames Labour for his Govt’s wage gap failings
John Hayes MP for Wairarapa: From the House: 5 June 2013
ODT: Labour law changes announced
Scoop media: Balloted Bill possibly a bridge too far
Green Party: Vulnerable workers’ rights go under National
Scoop media: Union biting the hand that feeds – Jamie Lee-Ross
Scoop media: AUS-NZ Wage Gap Now $180, More Than A Kiwi’s Daily Pay
Previous related blogposts
Key’s broken promise on raising wages
Johnny’s Report Card – National Standards Assessment y/e 2012 – incomes
National MP admits collusion with bosses to set up strike-breaking law!!
Hat Tip
Paula Fern
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Solid Energy – A solid drama of facts, fibs, and fall-guys
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Cast of Charachters
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The story, thus far
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30 June 2008
Nil dividend paid to government, for year ending 30 June 2008.
Source: 2008 Annual Report
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8 November 2008
General Election
National-led government elected. John Key becomes New Zealand’s Prime Minister; Simon Power is Minister for State Owned Enterprises; Bill English becomes Minister for Finance.
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May 2009
“The Government, in its first term, looked at SOE [state owned enterprise] balance sheets and decided many of them could carry more debt… it made a decision to allow Solid Energy to take on more debt,” Mr English said.
Mr English acknowledged that in 2009 he signed a letter to Solid Energy approving a higher debt level.
Source: Solid Energy was allowed to increase debt
The letter, as follows,
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Source: CCMAU & Treasury
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Thus was set in motion a decision that would have serious consequences four years later; the near collapse of an efficient and highly profitable State Owned Enterprise.
Not only did Minister Power demand higher dividends from Solid Energy, and instructed the SOE to borrow heavily to achieve that goal, Power also demanded that Solid Energy “release all surplus capital to the shareholder as special dividends“.
In case the reader is wondering that that means, in plain english, National Ministers wanted all spare cash to be handed over to the government.
They were looting SOEs.
Accordingly, Solid Energy’s gearing ratio rose from 13.8% cent in 2009 to 41.7% by 2012. National’s demands had been met (see: Ministers pressured Solid Energy, Parliament told ).
Mission accomplished – the pillaging of Solid Energy (and other SOEs) had begun.
Note: On 26 February 2013, John Key would try to insist that Solid Energy was “out of control” and was borrowing wildly.
He would say, “the Government was worried about Solid Energy’s ambitious investment plans and rosy view of coal prices as far back as 2009 but was unable to order the company to steer a safer course.”
So not only did SOE Minister Simon Power direct Solid Energy to borrow more; pay higher dividends; and hand over all spare cash – but four years later, Key would blame the coal company for the consequences; it’s inevitable financial melt-down,
The causes of the financial crisis at Solid Energy are the usual suspects in failing businesses – too much debt, unsuccessful investments and no reserves to weather a slump in coal prices.
Prime Minister John Key’s comments yesterday indicated these problems and pointed the finger at an imprudent amount of debt and investments that have not returned any cash yet.
Key said the debt had climbed to $389 million when “typically coal companies do not have a lot of debt on their balance sheets”.
Source: State miner to return to coalface
Powers’ letter also put the lie to National ministers claiming that they were powerless to intervene in Solid Energy’s activities. As Simon Powers’ letter clearly demonstrated, Ministers were exhibiting a total hands-on control over SOE’s finances, borrowings, investments, and dividend payments.
As Key himself claimed (without evidence) on 25 February 2013,
The government blocked proposals in 2009 from its coal mining company Solid Energy for a billion dollar capital injection to allow it to become “the Petrobras of this country,” Prime Minister John Key says.
National ministers had control alright, no two ways about it.
Power might as well have been sitting in Solid Energy’s Christchurch head office, in the CEO’s chair, with his fingers in the cash register till.
.
.
30 June 2009
$59.9 million dividend paid to government, for year ending 30 June 2009.
Source: 2009 Annual Report
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30 June 2010
$54 million dividend paid to government, for year ending 30 June 2010.
Solid Energy paid a dividend of $24 million on 30 September 2009. In accordance with the company’s dividend policy, the Board is proposing a dividend of $30 million to be paid by the end of March 2010 bringing total cash dividends paid during the current financial year to $54 million.
Source: Small half year loss for Solid Energy
Source: 2010 Annual Report
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27 August 2010
Treasury Report shoots down Solid Energy National Resource Company’s expansion proposal
To: Bill English, Gerry Brownlee, Simon Power, Steven Joyce
5. In order for SEL to develop into a NRC, SEL has sought the following:
[…]
• indicative approval for total capital investment (including dividends and cash flow)
of $2-3 billion per annum with cumulative investment of $27 billion…
Source: Treasury Report: Solid Energy National Resource Company Response
Note the figure referred above: $27 billion. Two and a half years later, Key would refer to that figure.
The question is, does the statement – “SEL [Solid Energy Ltd] has sought the following: indicative approval for total capital investment (including dividends and cash flow) of $2-3 billion per annum with cumulative investment of $27 billion – actually state where the $27 billion would be sought from?
Answer: no.
And yet, by 15 March 2013, Key would insist that the Solid Energy chairman, John Palmer, sought $27 billion from the government.
See: Key says Solid Energy papers show $27b plan
John Key’s flexibility with truth is now legendary.
.
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8 September 2010
Then-SOE Minister Simon Power writes to Solid Energy – states support for developing resources –
.
Office of Simon Power
MP for Rangitikei
Minister for Justice
Minister for State Owned Enterprises
Minister of Commerce
Minister Responsibilble for vthe Law Commission
Associate Minister of Finance
Deputy Leader of the House08 SEP 2010
Mr John Palmer
Chair
Solid Energy New Zealand Ltd
PO Box 1303
CHRISTCHURCH 8140Dear Mr Palmer
National Resource Company (NRC) Proposal
I would like to thank you and your Chief Executive, Don Elder, for meeting me
on 31 August 2010 to discuss the Government’s response to the Solid Energy
Ltd (Solid Energy) NRC proposal.Ministers are encouraged by the vision of Solid Energy in developing the NRC
proposal. We also appreciate the efforts of the Solid Energy Board,
management and staff that have gone into preparing the proposal.Shareholding Ministers have carefully considered the proposal and at this stage
do not support the development of a single NRC to maximise the value of New
Zealand mineral resources.Shareholding Mnisters are, however, supportive of Solid Energy developing its
current natural resources, including lignite and unconventional gas. As
discussed with you, we expect that Solid Energy will develop resources on a
project by project basis.We also expect to be consulted on significant projects, and have the opportunity
to discuss the proposals with you. The proposals should be supported by a
business case and assessed against standard business case investment
criteria.Yours sincerely
Hon Simon Power
Minister for State Owned Enterprisescc: Don Elder, Chief Executive Officer, Solid Energy
Source: Letter from Simon Power to John Palmer (NZ Herald website)
Interesting… The Minister, Simon Power, was;
A. Supportive of Solid Energy “developing its current natural resources, including lignite and unconventional gas. As discussed with you, we expect that Solid Energy will develop resources on a project by project basis”. No reference whatsoever of the Minister directing Solid Energy not to invest “developing its current natural resources“.
B. Insisting that he be kept advised “on significant projects“. It would be interesting to know if Solid Energy advised National ministers of all projects? Including the ones that have been heavily criticised by Key, English, and Ryall.
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.
3 June 2011
Key endorses Solid Energy expansion plans
.
.
“At the moment companies like Solid Energy are growth companies and we want them to expand in areas like lignite conversion,” Mr Key said.
[…]
“We know there is lots of resource there and we know they potentially have the capability [to convert lignite to urea or diesel] and so we will see how that progresses, but the briquette plant is a good starting point.”
Source: PM backs mining south’s lignite
Key is stating with crystal clarity; “we want them to expand in areas like lignite conversion” and “…so we will see how that progresses, but the briquette plant is a good starting point“.
Which would be in stark contrast to Key’s statements nearly two years later, when on 23 February 2013, he condemns Solid Energy’s “… unsuccessful investments” and ” and pointed the finger at an imprudent amount of debt and investments that have not returned any cash yet”.
Two days later, on 25 February 2013, Keywould again condemn Solid Energy – this time specifically distancing himself from the SOE’s expansion plans,
The government blocked proposals in 2009 from its coal mining company Solid Energy for a billion dollar capital injection to allow it to become “the Petrobras of this country,” Prime Minister John Key says.
It’s hard to keep up with a Prime Minister like John Key.
You have to wonder what his views will be in three, six, or twelve months time?
Key also said at his Invercargill speech,
However, Mr Key said companies were controlled by Government regulations and so there were always environmental obligations that needed to be met.
Which, again, totally contradicts what he said on 26 February 2013,
The Government was worried about Solid Energy’s ambitious investment plans and rosy view of coal prices as far back as 2009 but was unable to order the company to steer a safer course, Prime Minister John Key says.
Stories, eh? They’re so hard to keep straight sometimes.
.
.
30 June 2011
$20 million dividend paid to government, for year ending 30 June 2011.
Source: 2011 Annual Report
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.
9 September 2011
Bill English – Don Elder – Opening new Mataura briquette plant
.
.
The Hon Bill English, MP for Clutha-Southland and Minister of Finance, today marked the official start of work at Solid Energy’s Mataura Briquette Plant, by “turning the first sod” at a small event on site with neighbours, local authorities, and other guests.The $25 million Mataura briquette plant is planned to start production by June 2012. It will produce up to 90,000 tonnes a year of low-moisture and higher-energy briquettes from about 150,000 tonnes of lignite mined from Solid Energy’s New Vale Opencast Mine and trucked to the Craig Road site. The plant will use technology developed in the USA by GTL Energy.
Source: Solid Energy starts work at Mataura Briquette Plant
Which demonstrated to anyone (if demonstration was needed) that National was in no doubt about Solid Energy’s expansionary plans.
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.
4 November 2011
Treasury Scoping study reveals Solid Energy’s financial problems to Government Ministers
Ministers were officially made aware of Solid Energy’s severe financial problems. This would not become public knowledge until two years later, on 21 February 2013.
See: Treasury Report T2011/2373: Solid Energy New Zealand Scoping Study Report
The Scoping Study is noteworthy on these points,
- The considerable number of redacted items which the reader has no way of knowing what they refer to. They could be sensitive commercial data. Or they could refer to political matters.
- In Paragraph 36, the Report states, “The scoping study also recommends that Solid Energy should have no debt at the time of IPO.”
- In Paragraph 46, fourth item, the Report states, “Indentified that the company’s free cash flow has been reinvested in the business, particularly the Renewable Energy and New Developments. As a result dividend payments to the government have been funded by increasing debt.”
In two sentences, Treasury has just confirmed what all the evidence has pointed to; “dividend payments to the government have been funded by increasing debt“.
The very same increased debt demanded by SOE Minister Simon Powers in his letter in May 2009.
.
.
17 February 2012
Bill English – Asset Sales – Proceeds “just a guess”
Finance Minister Bill English is attracting political flak over suggestions that some figures in yesterday’s budget policy statement for the proceeds of share floats of state-owned enterprises were “a guess”.
The Government has long estimated that the sale of up to 49 per cent of five SOEs would collect between $5 billion and $7 billion.
[…]Mr English said the Treasury “had to pick a number” so they picked the mid-point of the range.
“If we did get $6 billion, that would be a gain of sale [of $800 million] which is just a product of the accounting.
“I just want to emphasise that it is not our best guess; it’s just a guess. It’s just to put some numbers in that look like they might be roughly right for forecasting purposes.
Source: English admits his SOE figures just a guess
Well. Now we know why it was “just a guess”.
Because by now, the Treasury scoping study on Solid Energy had revealed to National Ministers that the SOE’s finances were a mess. There was no way English could’ve responded to journalist’s queries without either telling the truth – or outright lying (which they do anyway, but he would’ve been caught out on this particular ‘porky’).
.
.
18 May 2012
Subsidy on bio-diesel canned – Biodiesel New Zealand – Price increase for bio-diesel
National removed it’s subsidy on bio-diesel – which Solid Energy was producing through one of it’s subsidiaries, as part of it’s expansion plans.
Biodiesel prices in Queenstown are likely to rise after a Government subsidy to develop production of the fuel was scrapped.
The subsidy, worth 42.5 cents a litre, was introduced by the National-led Government in 2008, but was not renewed in this year’s Budget.
The Queenstown Biodiesel Consortium has more than 20 companies running more than 70 commercial vehicles on the fuel.
The consortium’s provider, Allied Petroleum, is supplied by Biodiesel New Zealand, a Solid Energy subsidiary that makes the fuel out of canola seed and used cooking oil, in Christchurch.
Source: Biodiesel loses subsidy, prices to rise
This thoroughly undermined Solid Energy’s business projections for income and profits, as they could no longer rely on the subsidy to produce bio-diesel on a viable basis.
So not only were National ministers stripping Solid Energy of it’s cash reserves and demanding higher and higher dividends – they were now tying it’s hands and undermining potentially profitable ventures.
A year later, on 22 February 2013, English (as well as Key and Ryall) would be blaming Solid Energy’s financial collapse on, “… a drop in world coal prices, and spen[ding] too much investigating other sources of energy”.
It would be safe to say that undermining a company’s commercial venture, by moving the goal posts half-way through, and changing rules, is also not particularly helpful.
.
23 June 2012
Solid Energy Chairperson, John Palmer resigns
John Palmer is quitting as chairman of state-owned Solid Energy because at the age of 65 he is unwilling to stay on and see it through to partial privatisation.
Mr Palmer, who is also chairman of Air New Zealand, took up a strong public position in calling for the partial privatisation of state-owned companies and he welcomed the government’s plan to sell down stakes in electricity companies and Solid Energy.
Source: Solid Energy chairman quits over asset sales
Palmer resigned some 18 months before his contract was due to expire. The question, as always, is,
Was he pushed?
Or did he jump?
Writing on 16 March 2013, Tracey Watkins suggested a Great Big Shove helped Mr Palmer on his merry way,
There is, of course, nothing unusual about SOE chairmen and chief executives being subjected to a lengthy interrogation. But it is rare for committees to offer a platform to SOE bosses who have been manoeuvred out of their jobs by the Government.
See: Solid questions still remain unanswered
I tend to agree with her. This has all the makings of a politically-inspired, fall-quietly-on-your-sword, exit.
.
SOE Minister, Tony Ryall comments on Palmer’s resignation – Acknowledges company’s developments
State Owned Enterprises Minister Tony Ryall announced Mr Palmer’s departure from Solid Energy on Friday.
“While it is disappointing to lose such a senior director, I wish to recognise Mr Palmer’s commitment to the company since his appointment in 2006, and the developments the company has made under his leadership,” Mr Ryall said.
Source: IBID
Two months later, Bill English would be announcing that Solid Energy had “…some fairly substantial issues” and would not be saleable.
Another six months after that, and the sh*t would be hitting the Big Fan. “Fortuitously”, Palmer would have been long-gone by the time English announced that Solid Energy was insolvent and $389 million in debt.
Palmer would return, however on 14 March 2013, for an encore performance before the Commerce Select Committee, to answer some hard questions.
.
.
30 June 2012
$ 30 million dividend paid to government, for year ending 30 June 2012.
Source: 2012 Annual Report
Note that two months before English announced that “Solid Energy faced “a number of commercial issues” and was “rethinking its business”, National ministers were still taking dividends from Solid Energy.
Did English, Ryall, and Key not read the 2012 Annual Report which listed Solid Energy posting a Net Profit after Taxation (NPAT) of a $40.2 million loss – on Page 2, under bold headlines, “FINANCIAL PERFORMANCE“???
Even though he maintains that “we wouldn’t be planning to float it any time soon”, they were still taking money out of what would prove to be a financially stricken company. This alone indicated that English and Ryall were being financially irresponsible in their role as Ministerial shareholders. As such, Key was either ignorant of what was happening under his nose, or was irresponsible in not taking action.
Perhaps his adopted affectation as a “typical, non-political kiwi-bloke” who didn’t get his hands dirty with politics; grinned and shrugged off problems; and left matters to his sub-ordinates – had become a dangerous vulnerability for him? (See Tim Selwyn’s blogpost on John Key’s political/management style: Rudderless Within The Great Game)
Either way, 30 June 2012 is an important date. This is when National Ministers should’ve known that something was seriously amiss.
.
.
21 August 2012
English announces “issues” with Solid Energy
In August 2012, Bill English announced that Solid Energy had “…some fairly substantial issues” and was not ready for sale.
Solid Energy “certainly isn’t” in shape for a partial sell-down, Finance Minister Bill English says.
English today said Solid Energy faced “a number of commercial issues” and was “rethinking its business”.
“We would only take any of these companies to the market if they are in good shape for investment and Solid Energy right now certainly isn’t. It’s got some fairly substantial issues that they have signalled. Whether it ends up being able to be floated would depend on whether they can get in suitable shape for public investors,” English said.
“We wouldn’t be planning to float it any time soon.
[…]
English said Solid Energy needed to be in “considerably better shape than it is now” before it could be floated.”
Source: English: Solid Energy not ready for sale
Perhaps National Ministers should have keep their fingers out of Solid Energy’s petty cash box?
.
.
9 September 2012
Coalminers redundancies – $200 million revenue shortfall – first mention of a ‘bailout’
Steven Joyce says Government capital for Solid Energy has not been ruled out.
The minister met with the company’s group manager of coal on Friday to discuss the situation. Mr Joyce says he has not promised a bailout, but if Solid Energy has a good business plan there may be funding options.
“Ministers get approached by state-owned enterprises to invest capital at different times. The thing that they would be interested in would be what’s the reason for doing it and what’s the opportunity.
“There’s a number of things that are up in the air with Solid Energy’s business plan at the moment that they need to work through with the new chair.”
Source: No decision on Spring Creek workers – Solid Energy
If National bailed out Solid Energy, they would – in effect – simply be returning the dividends and spare cash that Simon Powers demanded way back in May 2009.
It would not be “new” money. It would be giving back what was looted from Solid Energy’s coffers, as National desperately tried to balance the government’s books, and return to surplus by 2014/15.
This entire sad, incompetant, wasteful, exercise has provided no benefit to anyone. National Ministers have ended up looking inept, manipulative, deceitful, and grasping. All for what?
The sole outcome has been to damage the reputations of businessmen who were hired for their business acumen (and who had been successful in their own fields), and destroy the name of Solid Energy.
In a bizarre twist, by sending Solid Energy into near-bankruptcy, National successfully delayed the partial privatisation of that SOE. Something that asset-sale opponants would welcome with delight.
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.
21 February 2013
Solid Energy in crisis – debt revealed to the public
The depth of Solid Energy’s financial woes have been laid bare with the Government confirming the company is in talks with bankers over its debt levels.
[…]
State-owned Enterprises Minister Tony Ryall said a number of factors had weighed against the company, in particular world coal prices dropping by 40 per cent.
“It is facing very serious financial challenges,” Ryall said.
Ryall declined to say whether Don Elder received a payout on his departure as chief executive on February 4.
Solid Energy’s debt stands at $389 million and its interim result, which is due shortly, will show additional losses.
Earlier this week Prime Minister John Key said it was very unlikely Solid Energy would be sold in the near future.
Source: Solid Energy in debt crisis talks
Time to duck – the poo has hit the fan.
Watch Ministers scurry for cover; invent fictitious tales; and blame anyone/anything they can think of. John Key’s fingers will be moving at supersonic speeds, pointing at others, to apportion blame.
.
.
22 February 2013
English blames Solid Energy management, bonuses, coal price fall, and expansion projects
Mr English said Solid Energy’s woes have two primary causes: it failed to predict – and adjust to – a drop in world coal prices, and spent too much investigating other sources of energy.
“Four or five years ago they set out on a big programme of expenditure on alternative energy, including researching into lignite down south to coal gasification and other research-based speculation, and that hasn’t turned out the way they thought.”
Source: No more bonuses at Solid Energy – English
And yet, English and former SOE Minister, Simon Power had actively encouraged Solid Energy to expand. (see comments 8 September 2010 and 3 June 2011)
But if there was a cause for Solid Energy’s financial woes, a $389 million debt most certainly accounted for most of it.
Even the most profitable, efficient, well-managed company will collapse if it is over-geared (borrowed too much) and too much capital is extracted in dividends (as well as tax).
Therefore, when English blames Solid Energy’s problems on “world coal prices, and spen[ding] too much investigating other sources of energy”; and when Key and Ryall blame Labour; massive debt; bonuses; mis-management; etc – the facts show otherwise.
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23 February 2013
Key blames too much debt and unsuccessful investments
The causes of the financial crisis at Solid Energy are the usual suspects in failing businesses – too much debt, unsuccessful investments and no reserves to weather a slump in coal prices.
Prime Minister John Key’s comments yesterday indicated these problems and pointed the finger at an imprudent amount of debt and investments that have not returned any cash yet.
Key said the debt had climbed to $389 million when “typically coal companies do not have a lot of debt on their balance sheets”.
Which is supreme irony – as nineteen days later, a letter will emerge showing that the former SOE minister, Simon Power, instructed Solid Energy to borrow heavily and pay huge dividends to the National government. National was intent on using Solid Energy as a ‘cash cow’.
Source: State miner to return to coalface
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.
25 February 2013
Prime Minister discloses Treasury scoping study of Solid Energy
The PM was asked when the government first became aware Solid Energy was accruing big debts, given that such businesses were not normally expected to take on large amounts of debt.
He replied that the government had undertaken a “scoping study” when they were preparing the formulation of the Mixed Ownership Model and that their examination of Solid Energy’s accounts at that time indicated a degree of poor investment, over-valuation of the expected price of coal–which neither the industry nor government agreed with—and related financial problems stemming from this.
Source: PM Press Conference Dominated by Solid Energy Debacle
.
Key claims Solid Energy wanted $1 billion cash injection
The government blocked proposals in 2009 from its coal mining company Solid Energy for a billion dollar capital injection to allow it to become “the Petrobras of this country,” Prime Minister John Key says.
Source: Govt blocked grandiose Solid Energy plans in 2009
Key’s claim is later rejected by ex-Chairman, John Palmer.
Documents released by Key – in an attempt to back up his claims – wound up shooting the Prime Minister in his foot. The documents do not show that Solid Energy (or it’s CEO or Board) asked National ministers for anything. The documents show only that the government was informed that Solid Energy would have to borrow from somewhere.
As usual, Key had been bending facts to suit himself. (And he thought no one would notice?!?!)
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.
26 February 2013
Ryall confirms Treasury scoping study
Tony Ryall confirmed that the scoping study was carried out in “late 2011″,
Hon TONY RYALL: The member can repeat whatever he likes. The simple fact of the matter is when Ministers became aware of the issues raised in the scoping study at the end of 2011 we took the appropriate steps to address the issues that were raised. As the member knows, the company now has a new chair and new board, and we are currently dealing with the banks to resolve those issues.
Source: Parliament Hansards – State-owned Enterprises—Commercial Expertise
Despite that Treasury scoping study on 4 November 2011, National was still extracting dividends from Solid Energy, right up to 30 June 2012 ($ 30 million).
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Key blames Labour
He said his support for the project in 2011 came four months before a scoping study revealed the true state of Solid Energy’s financial woes, and the former Labour government needed to take some responsibility for the situation.
“They can’t wash their hands that from 2003 on they were intimately involved when they purchased the land for lignite,” Key said.
Source: Govt forced to defend handling of Solid Energy
2003?
How far back does this man want to go in history as he tries to deflect responsibility for his government’s incompetance? It seems strange, but one gets the distinct feeling that John Key never learned how to take personal responsibility as a child.
Continually blaming others is not the mark of a mature individual. After a while, the public begins to notice.
.
Key blames Solid Energy’s expansion plans
Mr Key says his Government was cautious about Solid Energy’s expansion and said it could “take some baby steps”.
Really? Key’s government was “cautious”?
Funny, that’s not how it looked on 8 September 2010, when then-SOE Minister, Simon Power, endorsed Solid Energy’s expansion plans in a letter, stating,
“Shareholding Mnisters are, however, supportive of Solid Energy developing its
current natural resources, including lignite and unconventional gas. As
discussed with you, we expect that Solid Energy will develop resources on a
project by project basis.“
Or on 3 June 2011, when John Key supported Solid Energy’s expansion, when he gave a speech in Invercargill,
“At the moment companies like Solid Energy are growth companies and we want them to expand in areas like lignite conversion.
We know there is lots of resource there and we know they potentially have the capability [to convert lignite to urea or diesel] and so we will see how that progresses, but the briquette plant is a good starting point.”
Or on 9 September 2011, when,
The Hon Bill English, MP for Clutha-Southland and Minister of Finance, today marked the official start of work at Solid Energy’s Mataura Briquette Plant, by “turning the first sod” at a small event on site with neighbours, local authorities, and other guests.
.
Key blames inability to control Solid Energy
The Government was worried about Solid Energy’s ambitious investment plans and rosy view of coal prices as far back as 2009 but was unable to order the company to steer a safer course, Prime Minister John Key says.
[…]
But after getting advice on the company’s plan, Mr Key said his Government rejected it, “but of course under the SOE Act the company had the right to draw down debt and make investments and could do that without reference to the shareholder”.
Source: Govt worried about Solid Energy in 2009
Two things jump out about that statement,
A. If National ministers were so “worried about Solid Energy’s ambitious investment plans ” – why did they not change the Board of Directors? Or issue a new Ministerial Directive?
After all, Simon Power did just that in a letter dated 8 September 2010 (see above), when he issued an instruction to Solid Energy’s Chairman, John Palmer, not to proceed with a specific expansion plan,
Shareholding Ministers have carefully considered the proposal and at this stage
do not support the development of a single NRC to maximise the value of New
Zealand mineral resources.
B. Why did Tony Ryall acknowledge “Mr Palmer’s commitment to the company since his appointment in 2006, and the developments the company has made under his leadership” on 23 June 2012, when John Palmer stood down as Solid Energy’s chairperson – if “Government was worried about Solid Energy’s ambitious investment plans and rosy view of coal prices as far back as 2009…“?
C. How can Key state that “the Government was … unable to order the company to steer a safer course” – when legislation states otherwise? As the Crown Ownership Monitoring Unit (COMU) states,
Most SOEs are subject to ministerial direction in relation to the content of certain aspects of the company’s Statement of Corporate Intent and the level of dividend payable to the Crown. Shareholding Ministers may remove board members by shareholder resolution under the Companies Act 1993. Under the Companies Act 1993, an alternative process may be followed if allowed by the company’s constitution.
Source: COMU: State-Owned Enterprises
As stated above, then-SOE Minister Simon Power did just that: issued a Ministerial Directive.
Of course, “steering the company to a safer course” should have included reducing National Minister’s demands for hefty dividends.
That might have helped.
Either Key is grossly ignorant about SOEs and their ministerial oversight – or once again he’s deliberately misleading the public to suit himself.
.
Key Blames Solid Energy
At that point, the company approached his Government seeking a capital injection “in the order of about a billion dollars to turn this company into the [Brazilian state-owned energy company] Petrobras equivalent in New Zealand”, Mr Key said.
Source: IBID
As a 27 August 2010 Treasury report – released on 15 March 2013 – showed, Key’s claim that Solid Energy approached the government for “a billion dollars to turn this company into the [Brazilian state-owned energy company] Petrobras ” would prove to be false.
As ex Chairman John Palmer was to tell the Select Committee on 14 March,
“Were we talking to the Government about the possibility of capital and receiving that from the Crown? The answer is no.”
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.
14 March 2013
Former chairman John Palmer and CEO, Don Elder appear before Commerce Select Committee
Now we start to hear the “other side” of the story – and much of it conflicts with what we’ve been hearing from English, Key, and Ryall.
.
National confirms big dividends paid out
For the first time it is publicly acknowledged – Solid Energy has been used as a cash cow by National, to extract big dividends from 2009 onward,
The government concedes the pressure it put on Solid Energy to increase its debt is partly to blame for the company’s financial failures.
The state-owned coal mining company owes $389 million in debt, and is negotiating a rescue package with Treasury and banks.
Government documents reveal that in May 2009, then-State Owned Enterprises Minister Simon Power wrote to Solid Energy’s then-chair, John Palmer, saying he was disappointed its profitability and dividends were forecast to drop over the next three years.
At the same time, the government wanted the company to increase its gearing (debt to equity) levels to 40 per cent and its dividends to 65 per cent of operating cash flow.
A ministerial briefing paper shows Solid Energy’s gearing level in March 2009 was 10 per cent, and was forecast to reach 27 per cent in June 2010, while its dividend was 50 per cent.
Parliamentary Library figures show Solid Energy’s gearing leapt from 9.4 per cent in June 2008 to 34.4 per cent in 2010, dropping back to 29.6 per cent in 2011 and jumping again to 41.7 per cent in 2012 as coal prices began to slump.
Finance Minister Bill English admits the government pressure was perhaps too strong.
Source: Govt pressure on Solid Energy revealed
National had to come clean, as ex-CEO Don Elder appeared before the Commerce Select Committee to explain what went horribly wrong at Solid Energy. National’s ministers knew that the truth was coming out, and had to pre-empt any public disclosures of massive borrowings and payments of dividends,
Mr English says there was a pushback against the debt increase from Solid Energy, which he expected Mr Palmer and former chief executive Don Elder to explain when they fronted a select committee later on Thursday.
Labour leader David Shearer says the documents show ministers had a greater degree of involvement in Solid Energy’s failure than they were publicly letting on.
Source: IBID
“Push back against debt“? By now we all understand that English is lying his arse off to Heaven and back. There was no push back.
The only “push” was to increase dividend payments and gearing up to 40%.
The only reason politicians tell such howling lies is because they do not expect people to remember all the facts; to connect the dots; or for an under-resourced media to tell the whole story as a continuous narrative. Politicians expect people to forget; not hear all the facts; or become confused with too much non-contextual facts and testimony from the main players.
That’s how they get away with it; we’re not paying close enough attention.
.
Don Elder appears before Commerce Select Committee – Confirmation of Govt wanting Solid Energy to increase debt – endorsed expansion
Firstly, former Solid Energy chairman, John Palmer, publicly confirmed that the National Government,
- wanted Solid Energy to borrow more, and pay higher dividends to government coffers,
- endorsed Solid Energy’s expansion plans
Labour’s finance spokesman David Parker asked whether the company was in any doubt that the Government wanted them to expand production, increase debt and dividends.
Palmer said it was “self evident” that increased gearing meant increased debt.
The Government was supportive of plans to expand, including into lignite.
Palmer’s comments contradicted Bill English’s comments on 22 February 2013 and John Key’s comments reported on 23 February, 2013, where both politicians lambasted Solid Energy for high debt and expansion plans.
According to Palmer, neither English nor Key were worried about Solid Energy’s expansion programme.
Next,
Palmer said that in late 2011 or early 2012, when it was clear what was going to happen, he spoke to minister Tony Ryall about a $200m revenue hole (twice the annual profits), which would have a dramatic effect on the balance sheet.
Which ties in with Bill English’s announcement on 21 August 2012, that Solid Energy had “some fairly substantial issues… We wouldn’t be planning to float it any time soon”.
Now we know what he was referring to: Solid Energy was broke. He knew it then, but did not disclose the full nature of Solid Energy’s status until forced by officials.
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Ex-CEO rejects Key’s assertion of Solid Energy requesting a $1 billion cash injection
“Were we talking to the Government about the possibility of capital and receiving that from the Crown? The answer is no,” Mr Palmer said.
“A specific $1 billion capital injection, I’m reasonably sure we did not ask for it in exactly those terms.”
However he said the company did have discussions with the Crown about potential large investment in lignite processing but it was also talking to potential overseas partners, “because it made no sense to us to think that Crown as the sole shareholder should finance that”.
He also said the company discussed with the Crown a national resource strategy that would have required large investment.
“My recollection is there was no dollars attached to that proposal.”
Source: Solid Energy opposed Government’s debt plan
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Curious case of politicians and executives receiving identical media-coaching
Meanwhile, National’s taxpayer funded media-staff had been busy coaching politicians and company executives;
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Don Elder – Blame, “Perfect Storm”
“This was the perfect storm.”
Source: Palmer: Elder deserves applause
Tony Ryall – “Perfect Storm” – blames downturn in coal prices – blames wrong investments
“State owned enterprises minister Tony Ryall blames the distressed financial state of Solid Energy on a “perfect storm” of events.
Mr Ryall says a wrong choice of investments, along with a worldwide collapse in coal prices, led to the coal mining company’s current state.”
“A wrong choice in investments, together with the most significant collapse in world coal prices in 2012 led to a perfect storm. The perfect storm has created the situation this company is currently in,” Mr Ryall says.
Source: Ryall blames ‘perfect storm’ for Solid Energy’s crisis
Bill English – “Perfect Storm”
On TVNZ’s Q+A, on 17 March, English refers – not once, but twice! – to the “perfect storm”,
“That’s right. Look, in retrospect, they would have been better off with lower levels of debt, but as I think Don Elder and John Palmer said at the Select Committee, the board is there to make the decisions about what the actual levels of debt are. Bear in mind, in 2011 their debt had peaked and was declining, and then they got hit by the perfect storm in 2012.”
And a moment later, again,
“…And in 2011 their debt levels were actually declining from that, and then they got hit by the perfect storm…”
Source: TVNZ Q+A
Lotsa ‘stormy weather’ around? I thought we were experiencing a drought.
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15 March 2013
Palmer says Solid Energy did not want to take on high level of debt suggested by the Treasury
Prime Minister John Key is facing claims he misled the public after former Solid Energy chairman John Palmer said the company resisted Government pressure to take on more debt – the very thing the Prime Minister said caused the company’s problems.
[…]
Appearing the day after Labour revealed former State-Owned Enterprises Minister Simon Power told the company to take on more debt and pay higher dividends, Mr Palmer said the company opposed that request.
The debt levels or gearing suggested by Mr Power and Treasury officials were higher than “we thought was an appropriate level of gearing given the nature of the industry we were involved in”, Mr Palmer said.
Source: Key under fire over Solid Energy claims
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Key claims Solid Energy wanted $27 billion
Prime Minister John Key this morning released documents detailing Solid Energy’s ambitious expansion plans which would have required capital investment of $2-3 billion a year until 2021 or a total of up to $27 billion.
Key released the papers in response to Labour’s claims he misled the public about Solid Energy approaching his Government about a $1 billion investment to become the “Petrobras” of New Zealand, a request he says his Government turned down.
[…]
Key this morning said the documents showed the proposal “absolutely required, as Treasury pointed out, somewhere between two and three billion dollars of Government money”.
Source: Key says Solid Energy papers show $27b plan
Remember the Treasury report, dated 27 August 2010, referred above? Key is saying that the Solid Energy proposals would have required “between two and three billion dollars of Government money”.
Yet the 27 August 2010 Treasury report said nothing of the sort. Solid Energy could have obtained that money from the same commercial sources it was already borrowing from.
And don’t forget, Solid Energy had already been borrowing significant amounts – pushing it’s ‘gearing‘ (debt to equity ratio) up:
Solid Energy’s gearing ratio [borrowings] was 13.8 per cent in 2009, but that rose to 34.4 per cent in 2010 and 41.7 per cent last year.
Source: Ministers pressured Solid Energy, Parliament told
To this day, Key continues to mis-represent the truth.
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Key – Solid Energy wanted foreign investment and shareholders
“Key this morning said the documents showed the proposal “absolutely required, as Treasury pointed out, somewhere between two and three billion dollars of Government money”.
He said Palmer proposed selling a stake in Solid Energy to an offshore cornerstone investor “and that would involve taking more than 10 per cent of the company and not putting mums and dads first.”.
“I made it quite clear to him that we had campaigned on a mixed ownership model which didn’t involve someone having more than 10 per cent in the company”.
Solid Energy’s proposal “didn’t involve a situation where kiwi mums and dads would be first and so the only way to get that money was through the Government.”
Source: Key says Solid Energy papers show $27b plan
Now this is yet another contradiction from Key. First he tells us that Solid Energy executives wanted $1 billion (or was it $27 billion?) from Government.
But in the next breath – on the same day – he say Solid Energy wanted foreign investors/shareholders to buy 10% stakes in the SOE.
So which was it Dear Leader?! Government funding? Foreign investors/shareholders? Pixies at the bottom of the garden?
One can only conclude that former CEO, John Palmer, was correct, when he rejected any assertions that Solid Energy was looking to borrow money from government,
“I cannot recall that we have ever asked him explicitly for $1 billion dollars.”
Source: Key Must Front Up With $1 Billion Evidence
It was also interesting to note that Key derided Solid Energy’s plans for 10% foreign investors/shareholders blocks by stating that it contravened National’s policy of putting “kiwi mums and dads would be first“.
Which contradicts a statement that John Key made in a speech in 2005, on 4 March, where a private partner was something that National would welcome,
“In respect of Solid Energy, if an opportunity arose to introduce a private sector partner, we would consider that seriously.”
Source: John Key Speech: State Sector Under National
And how does Key reconcile that with other Public Private Partnerships (PPPs) such as Wiri Prison,
Corrections Minister Anne Tolley says a contract has been signed allowing the SecureFuture consortium to design, finance, build, operate and maintain the new 960-bed public-private partnership (PPP) prison at Wiri, South Auckland.
The new prison will deliver value for taxpayers and support the Government in reaching the target of a 25 per cent reduction in reoffending by 2017.
The 25 year contract is worth approximately $840 million, which is 17 per cent less than if the prison was procured through conventional means, representing a $170 million saving for taxpayers.
Fletcher Construction will build the new facility which will be operated by Serco and maintained by Spotless Facility Services. Construction will begin soon, with the prison set to open in 2015.
“The PPP will allow Corrections to draw on the experience and expertise of SecureFuture’s international partners,” says Mrs Tolley.
Source: Beehive – Contract signed for new PPP prison at Wiri
How many “mums and dads” invested in Wiri Prison?
There are many more PPPs of this nature where “mums and dads” have nil investments, and instead are the sole preserve of corporate investors – many from offshore.
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Palmer denies Solid Energy wanted to borrow $1 billion from government
“Were we talking to the Government about the possibility of capital and receiving that from the Crown? The answer is no,” Mr Palmer said.
“A specific $1 billion capital injection, I’m reasonably sure we did not ask for it in exactly those terms.”
Source: IBID
Palmer is correct. According to the 27 August 2010 Treasury Report (referred to above), Solid Energy did not ask Government for that money. The money could have been borrowed from any source – just as Solid Energy had already been doing.
This was also confirmed by a spokesperson for Bill English,
“We told them all to improve their performance and that, if they wanted to expand, they had to pay for it off their own balance sheet, rather than asking the cash-strapped taxpayers for money.”
Source: Ministers pressured Solid Energy, Parliament told
So it has becoming apparent that our Dear Leader Key is attempting to re-write recent history to suit his own agenda by shifting the blame elsewhere…
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Key attempts to spin Assumption into “Fact”
“I think it is pretty self explanatory that when you come to the Government with such a very large proposal, we’re the 100% owner, that’s what’s required.”
Source: Details of Solid Energy’s expansion bid released
So let’s get this straight…
(i) Solid Energy management presented an expansion plan to National Ministers
(ii) The plan includes figures for said-expansion.
(iii) National Ministers had been encouraging of Solid Energy’s expansion plans (see comments 8 September 2010 and 3 June 2011)
(iv) There was no mention made of where borrowings would be made from – though up till now, Solid Energy had borrowed from private sources, and not the Crown. (See comments 27 August 2010)
(v) And from all that, the Prime Minister suggested that “ it is pretty self explanatory that when you come to the Government with such a very large proposal ” that Solid Energy expected finance from the Crown?
I have one question: how on Earth did Key manage to amass a personal wealth of $50-$55 million when he makes up such fancifuul “leaps of logic”?!?!
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And the cover-up starts?
The head of the committee that grilled Solid Energy’s former bosses says he is unconvinced a full inquiry is needed.
Opposition MPs are pressuring for a full inquiry into the collapse of the state-owned coalminer, which is now reliant on government support to manage its $389 million debt pile.
Commerce select committee chairman Jonathan Young allowed yesterday’s appearance by former Solid Energy chairman John Palmer and former chief executive Don Elder to run for an hour longer than was originally expected.
Young, the National MP for New Plymouth, said this morning that he believed the committee now had “a very clear picture” of what had happened to Solid Energy, which was hit by falling coal prices, a strong New Zealand dollar and poor investment decisions.
In recent days it has emerged that the Government leaned on the company to take on more debt, after it warned it may pay less dividends.
Young said that “in hindsight we can look back and see if they didn’t have debt they would be in a better situation”.
Despite this, Young said he was yet to be convinced that a full select committee inquiry was needed into the collapse, saying there were “multiple levels of inquiry” already under way, with the company talking to its financiers, and the Government “looking at all of the issues”.
He told TV3′s Firstline: “I am personally yet to be convinced that we are going to uncover anything new or different that wouldn’t be uncovered” anyway.
Source: Solid Energy probe call rejected
“…the National MP for New Plymouth, said this morning that he believed the committee now had “a very clear picture” of what had happened to Solid Energy…”
That statement boggles the mind; drops the jaw to the ground; and is so, so, wrong on many levels. But wholly expected from a National member of Parliament; chairing a Select Committee; stacked with five National MPs out of nine committee members (see: Commerce Select Committee members); supposedly ‘investigating’ wrong-doing/ineptitude by National ministers.
Let’s see… what part of that is wrong? A government investigating itself and coming up with a verdict of nothing-to-see-here-folks-move-along-please? How is Young’s assertion that the Government was “looking at all of the issues” supposed to reassure us?! By what measure of common notions of justice is a Government “looking at all of the issues” supposed to be a non-partisan, transparent, and objective investigation into this issue?
It would be like directors of failed companies (many of whom are either in jail or waiting to be tried in Court or sentenced) investigating their own actions and coming up with the same comments as Young made,
“In hindsight we can look back and see if they didn’t have debt they would be in a better situation…”
Directors are “looking at all of the issues”.
“We are personally yet to be convinced that we are going to uncover anything new or different that wouldn’t be uncovered”
Yeah, right, Mr Young. You can stop putting lipstick on that pig.
Listening to the main players – especially John Key, Bill English, and Tony Ryall – there are too many conflicting statements to believe that an Inquiry is not needed. National ministers are simply unable to get their stories straight and have contradicted each other (and themselves) on numerous occassions.
Young asserts that the committee now had “a very clear picture” of what had happened.
Bollocks.
The only thing even remotely “clear” about all this is that remains remain to be asked – and answered.
As Tracey Watkins wrote on 16 March 2013,
“But something clearly went seriously wrong if those talks were not enough to stop the collapse of an SOE on an unprecedented scale.
Beneath the flurry of claims and counter claims that is the question which has still not been properly answered.”
See: Solid questions still remain unanswered
Indeed.
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17 March 2013
Bill English – TVNZ Q+A
The following is a transcript from Corin Dann interviewing Finance Minister (and half shareholder in Solid Energy) on 17 March 2013,
CORIN
All right, if we could move on to Solid Energy. Can you give us an update on where things are at with the banks? When will we know whether the government is going to have to bail out Solid Energy?
BILL
Well, that will be some months yet. There’s discussions going on with the banks now about stabilising Solid Energy. Some of the information around its cash flows is a bit more positive than we might have expected. But we will get a period of two to three months through to the end of June where we can look at all the options for recovering value for the taxpayer in the first place and, secondly, to decide whether there is an on-going viable business in the middle of this-
CORIN
Are you saying it’s making a bit more money than you thought now and that it might be able to get itself out of trouble?
BILL
Well, I wouldn’t go that far. All I’m saying is the cash flow numbers are just a bit more positive than we expected. I mean, if you look back, Solid Energy made some very substantial investments in some of its mines. Some of those worked out, such as in Stockton; some of them didn’t, such as in Spring Creek. But where they have invested, they’ve got capacity for production and for value, and if coal prices are at some kind of reasonable level, then there is a business there.
“All I’m saying is the cash flow numbers are just a bit more positive than we expected. ” – In which case, Mr English, keep your sticky hands of that cash.
I sincerely hope that if National Ministers attempt to gouge SOEs again, that Board Directors resign on masse and publicly disclose political attempts at such interference.
The public is entitled to be reassured that politicians will not use SOEs as “cash cows” simply to balance their books. Especially after two unaffordable tax cuts – a glorified ‘lolly scramble’ – left a gaping hole in government accounts.
CORIN
Do you want the banks to take some of the heat on this?
BILL
Yes, I think that’s really important. They’ve lent money, and as lenders, they take risks. And if they lend to a company that’s affected by a very sharp downturn in coal prices and then loss of a quarter of their export sales, they’ve got the same risks as banks who leant to resource companies all around the world that have got in trouble.
CORIN
You can see the irony in that, though, because you told them to borrow more.
BILL
Well, and you were talking about it as a revelation. We did a press conference back in 2009 about the need for our SOEs to take on-
And it took Labour to advise the public, Mr English. Bill English, Key, and Ryall were more than happy to keep that 2009 letter from Simon Power under wraps.
That was part of National’s ‘spin’ that the massive borrowings and debt were a ‘creature’ of Don Elder’s and John Palmer’s making. But as Corin Dann pointed out;
CORIN
But you know that timing is everything with these things, and that was a revelation coming at this time, given your government had tried to distance itself from this issue. You even blamed Labour for it, for what they said in 2007.
BILL
No, I don’t agree with that. In 2009, the government was facing a decade of deficits because of the Labour Party and the recession. And we quite reasonably said that our taxpayer-owned companies should contribute more cash to the coffers. That’s the point of owning them. And Solid Energy had paid barely- had paid almost no dividends for the previous five or six years, and they had very low levels of debt compared to their asset value. So, look, in retrospect-
Here we go again; more blame-gaming,
“ In 2009, the government was facing a decade of deficits because of the Labour Party and the recession.“
English blames the recession?
In which case why did National Ministers extract 163.9 million in dividends from Solid Energy, during the worst recession since the 1920s/30s?
Is this what National calls “prudent fiscal management”?
Notice also that English lied by blaming “ a decade of deficits because of the Labour Party” – even though Cullen was posting surpluses from 2002-08 Labour-led period?! And paid down sovereign debt from 33.4% of GDP to 17.4% GDP? (See previous blofpost: Bill English – do you remember Colin Morrison?)
This is symptomatic of a National-led government that is desperate to avoid all responsibility.
CORIN
But there was a good reason for that, wasn’t there? Because they were a coal company.
BILL
That’s right. Look, in retrospect, they would have been better off with lower levels of debt, but as I think Don Elder and John Palmer said at the Select Committee, the board is there to make the decisions about what the actual levels of debt are. Bear in mind, in 2011 their debt had peaked and was declining, and then they got hit by the perfect storm in 2012.
“Look, in retrospect, they would have been better off with lower levels of debt“… “In retrospect“?!?! Little wonder that Solid Energy’s board and management resisted National’s demands for higher and higher dividends (as English concedes in his next statement).
That statement – ”Look, in retrospect, they would have been better off with lower levels of debt“ – totally destroys the argument put forward by Key, English, and Ryall that Solid Energy’s debt and subsequent crisis was of it’s own making.
Quite simply, National was desperate for cash to pay for the 2009 and 2010 taxcuts, and were prepared to bleed SOEs dry to get it’s hand on their money. Even if those SOEs had to borrow to do it.
This is ministerial incompetance at best – or outright economic sabotage at worst. (No wonder ACT and Libertarians maintain that politicians can’t run businesses. Correction: National politicians can’t run businesses.)
CORIN
But you were telling all SOEs to raise their debt to a 40% gearing, and Solid Energy told you they were not comfortable with that, and there was a good reason: because they were a volatile coal company. Surely that was too much pressure you were applying to them.
BILL
Well, clearly not, because their debt peaked at under 35%, which was the level the board set, which was lower than what the government was expecting. And in 2011 their debt levels were actually declining from that, and then they got hit by the perfect storm. So, yes, would they have been better off with no debt? Yes, just like lots of businesses and households would be better off with no debt. Then they got hit by these circumstances which may well have put the company into trouble even if it had no debt.
Yes Mr English, Solid Energy did get hit by “a perfect storm”. A storm largely made up of rapacious politicians.
It appears that by not gearing up to the full 40% demanded by National, that Don Elder and John Palmer may have done their best to prevent the collapse of Solid Energy.
CORIN
The issue also, of course, has been around their investments. Now, your government must take some responsibility, surely, for the oversight of what they were investing in. You were the one down in Southland turning the first sod with the lignite plant. You knew what they were up to.
BILL
Well, and it’s yet to be seen just whether that particular investment has on-going potential or not. Clearly, some of them don’t. Some of them may do. That’s what’ll happen over the next two to three months. But what you’ve got to keep in mind here is that under the SOE model, politicians are not there to run the companies. We do not make the investment decisions. The boards make the investment decisions, and the weakness in the model is that there’s no market scrutiny of those board decisions, and that is why the partial sell-down of the electricity companies will help with the monitoring and the performance of those companies.
“But what you’ve got to keep in mind here is that under the SOE model, politicians are not there to run the companies. We do not make the investment decisions. ” – Really, Mr English? And yet Simon Power felt he had the ministerial authority to write to Solid Energy demanding higher dividends.
In reality, under the State-Owned Enterprises Act 1986, shareholding Ministers can and do issue directives to SOE Boards. So English is being disingenuous when he tries to indicate that Ministers are powerless. They are not powerless,
13. Powers of shareholding Ministers in respect of new State enterprises
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(1) Notwithstanding any other provision of this Act or the rules of any company,—
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(a) the shareholding Ministers may from time to time, by written notice to the board, direct the board of a company named in Schedule 2 to include in, or omit from, a statement of corporate intent for that company any provision or provisions of a kind referred to in paragraphs (a) to (h) of section 14(2); and
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(b) the shareholding Ministers may, by written notice to the board, determine the amount of dividend payable by any company named in Schedule 2 in respect of any financial year or years,—
and any board to whom such a notice is given shall comply with the notice.
(2) Before giving any notice under this section, the shareholding Ministers shall—
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(a) have regard to Part 1; and
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(b) consult the board concerned as to the matters to be referred to in the notice.
(3) Within 12 sitting days after a notice is given to a board pursuant to this section, the responsible Minister for the company concerned shall lay a copy of the notice before the House of Representatives.
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Source: State-Owned Enterprises Act 1986 – Section 13
They have the power.
It’s the responsibility for their stuff-ups that seems to elude them.
CORIN
And are you confident there will be much better decision-making, that these MOM companies, in general, are going to have better board making decisions?
BILL
I think mixed-ownership companies will, but there’s a real challenge for government with the lessons from Solid Energy. When you look ahead, the companies that the government will own all have their challenges – NZ Post with the shrinking postal market, TVNZ and the digital media environment, a coal company if there is still a coal company. And we are going to have to change the way we work with these companies to ensure that we don’t lose taxpayers’ money. Because the taxpayers’ money in these companies doesn’t come out of the sky; it comes from the PAYE and the GST paid by NZ households. And we have a strong responsibility for the stewardship of that money.
Source: TVNZ Q+A
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22 March 2013
The NZ Herald reported that “seven years’ worth of documents about Solid Energy have been released by Treasury… It has been released after a number of Official Information Act request centred around how much the Government knew about the financial troubles the state owned coal miner was in“.
Source: Big Solid Energy document dump from Treasury
[Note: This blogger has viewed only a fraction of documents. There’s no telling what other revelations and incriminating evidence is contained therein. Perhaps something to be re-visited on a quiet, wintry evening?]
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25 March 2013
Papers confirm Govt pressure on Solid Energy
A week after English’s attempt to ‘spin’ the collapse of Solid Energy and blame everyone under the sun, Radio NZ reported,
Official papers confirm the Government put pressure on Solid Energy to increase its debt and then appeared later to criticise it for borrowing too heavily as it got into difficulty.
The state-owned coal company is in debt to the tune of $390 million.
The papers released on Friday also show that despite strongly disagreeing with the company’s business plan, the Government left it late to act.
In 2009 the then State-Owned Enterprises Minister, Simon Power, wrote to Solid Energy chair John Palmer recommending the company raise its gearing ratio – a measure of debt – to 40%.
By June 2012, when it was clear the company was in trouble, the ratio had risen to 37% and, according to the Treasury, Solid Energy had taken on significant debt.
It was only at that point, after arguing with the company for three to four years about its business plan, that the Government decided to make changes.
Source: Papers confirm Govt pressure on Solid Energy
By this time, public attention and media focus had waned. There were other issues and problems to deal with, and National ministers could breath a sigh of relief. They were “off the hook”.
Let us recall that Treasury’s scoping report, released on 4 November 2011, confirmed everyone’s suspicions that National had cash-stripped Solid Energy;
”…dividend payments to the government have been funded by increasing debt“.
Source: Treasury Report T2011/2373: Solid Energy New Zealand Scoping Study Report
The ‘up-shot’ of all this?
- A billion dollar state own enterprise had been milked as a “cash cow” and left to collapse.
- English, Ryall, Key, et al – off the hook.
- There would be no ministerial accountability; no resignations; no one held to account.
And for good measure,
- Blame Labour for everything.
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8 May 2013
Bill English preps public for Solid Energy’s write-off?
In a Radio NZ story (see: English questions viability of Solid Energy), Bill English contradicted his earlier assertion that Solid Energy would not be allowed into receivership,
“We’re not going to keep propping up businesses where we don’t think there’s a long term future. Where we think there there is, we put strong support in. So Kiwirail would be a good example.Where the government’s already invested around a billion in them in the last 3 or 4 years and they will… all of their,um, surpluses will be reinvested in the business, probably for the next decade. So the taxpayer won’t take anything out of them. But there may be… it’s possible that there’s other businesses, as has been revealed say in the Solid Energy case where their particular mix may not be viable so we have to look at whether they can be restructured or whether in the long run there’s a viable proposition there. But at the moment Solid Energy is the only business where that’s in question.”
Listen RNZ interview: Bill English on Morning Report
By questioning the viability of Solid Energy, English is preparing the public for the day when National announces the demise of the company.
Having gutted it of cash and forced it to borrow millions for unsustainable dividends, National is now ready to administer the coup de grâce to finish it off. (If the Nats could eliminate all witnesses to their bare-faced thieving, I bet you they’d be considering it…)
Meanwhile, a week later…
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14 May 2013
$1 billion for KiwiRail
Radio NZ revealed that KiwiRail was receiving government funding to keep operating,
Overall the Government has committed about $1 billion to the effort, and Finance Minister Bill English has said the Government is unlikely to take a dividend for the next decade so KiwiRail can reinvest any profits in the rail service.
Source: Solid Energy problems pose risk for KiwiRail
See also: Beehive.govt.nz: Next steps in KiwiRail’s Turnaround Plan
How is it that Solid Energy, a once viable company – earning millions in revenue from overseas exports of coal (admittedly not a very environmentally-friendly product) – may be allowed to go into receivership?
Meanwhile, National is quite happy to keep investing in KiwiRail, which has never generated a profit in modern times. (Though admittedly, KiwiRail is an environmentally-friendly transport enterprise with a positive future, as we pass the oil peak.)
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A message to businesspeople:
National Ministers are attempting to sheet blame for Solid Energy’s financial crisis to it’s former Chairperson, John Palmer, and CEO, Don Elder.
Key, English, and Ryall have resorted to mis-presentation of facts; omission of facts; exageration; and in some instances, outright lies.
This should serve as a clear warning to businesspeople. Think carefully before accepting managerial or Board positions during a National-led government.
Because if things go wrong – even if caused by political interference – then they will have no hesitation to smear your reputation. They will hang you out to dry, whether you are at fault or not.
A message to Voters:
National has a reputation as “prudent fiscal managers”.
For the life of me, I cannot understand how they have earned that reputation.
To allow a billion dollar SOE to crash and burn; run into the ground; and now facing bankruptcy suggests to me that Key, English, Ryall, Brownlee, Joyce, Collins could not run a corner Dairy without getting into financial trouble.
I don’t think these clowns could run a sausage sizzle without losing money by the end of the day.
Perhaps, as a test, those voters who are disbelieving should keep voting National? Let’s see what other SOE will collapse on their watch, eh?
What the hell. After all, it’s only our property. And tax dollars.
This blogpost was first published on The Daily Blog on 17 May 2013.
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*
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References
Solid Energy: Annual Reports Index
Crown Ownership Monitoring Unit – SOE Disclosures
Treasury: SOE/Solid Energy Disclosures
Previous related blogposts
That was Then, This is Now #18 (24 Feb 2013)
National caught out over Solid Energy – changes story on coal prices, debt, and other matters (13 March 2013)
Additional links (to replace dead links)
Click to access solid-energy-annual-report-2008.pdf
Click to access solid-energy-annual-report-2009.pdf
Click to access solid-energy-annual-report-2010.pdf
Click to access solid-energy-annual-report-2011.pdf
Click to access solid-energy-annual-report-2012.pdf
Click to access solid-energy-annual-report-2013.pdf
Acknowledgement and appreciation to “BLiP”
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= fs =
12 June – Issues of Interest
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Nigel Latta on National Standards
On Facebook, child psychologist and TV host, Nigel Latta, had this to say about the recent National Standards “results”;
The latest national standards ‘results’ being reported in the media are utter nonsense. Pure and simple. Even if we ignore the large inconsistencies between the way that the ‘standards’ are measured (and we can’t because the inconsistencies make comparisons all but impossible), and the fact that it assumes all children of a given age are maturing at the same rate (which they don’t), and we ignore the impact of little things like child poverty (which some politicians like to do much to their shame), it’s still impossible to say anything at all about a change in the numbers when you only have two data points.
They can’t say that a difference of 1.2-2% on the various measures between last year and this year is an ‘improvement’, because we simply don’t know.
If you had assessed all of those very same children again the day after they were assessed for these numbers, in the exact same conditions with the exact same measures, then you would also get a different number. That’s because in the real world we have this little thing called statistical variation–things never work out exactly the same. To make any meaningful statements about ‘improvements’ you need meaningful measures (which national standards aren’t anyway) over several different data points (i.e. over several years).
I wish the media would get that very simple, but very important point. Politicians will spin it as a gain, but it isn’t. It’s simply meaningless statistical ‘noise’.
The government went with national standards because they thought voters would like it, not because it’s the best thing for making progress on education. If we really wanted to lift our ‘national standards’ then, perhaps as a beginning, we’d take more care of the large numbers of our kids living in poverty.
When they produce their ‘rankings’ of schools I’m pretty sure it’s going to show a trend whereby higher decile schools meet/exceed the ‘standards’ much more than lower decile schools. I wonder why that might be? And who do we blame for that? Teachers?
Don’t be sucked in by all this political positioning. My advice is to ignore the national standards tables because they don’t mean anything. There’s a reason teachers were so opposed to the way these ‘national standards’ are being used… fundamentally because it’s nonsense!
Nigel Latta, Facebook, 12 June 2013
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100% Pure brand busted!
New Zealand’s distance from it’s major trading partners (except Australia) has always been a major impediment to our trading. Our point-of-difference has been the quality of our food products, and has made them desirable commodities on that basis. Branding ourselves as “100% Pure” and “Clean and Green” were marketing tools that created a multi-billion dollar export industry.
But that is coming to an end.
We are not “100% Pure” and nor are we “Clean and Green”. Anything but.
National has paid lip service to being green.
Pollution has been allowed to increase.
It’s focus on “reforming” the RMA to allow for exploitation mof sensitive environmental areas; more and more chemicals ion our farms; allowing dangerous deep sea drilling of our coastline; mining in Conservation lands; and ditching our committment to the Kyoto Protocol – have not gone unnoticed by our trading partners.
And those trading partners are starting to react accordingly,
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Acknowledgment: Radio NZ – Sri Lanka demands DCD testing on NZ milk powder
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An over-reaction?
Not when National has appointed a board to over-see a resource consent application to allow an increase of nitrogen pollution in the Tukituki River by a staggering 250% !
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Acknowledgment: Radio NZ – Nitrate proposal seen as death knell for river
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This will not doubt be ratchetted back to “only” 50% or 100%, and National will claim that they are “listening” to public concerns. It’s an old political trick when a deeply unpopular policy is put forward. Make a number unfeasibly large; then offer a lower number, and claim that government has listened to the public. In reality it was the lower number all along that was the preferred option.
National has consistently undermined environmental protections in this country, as well as knee-capped DoC by sacking staff and under-funding it’s operations.
We are now starting to pay the price of right-wing policies that pursue business and profit ahead of preserving our environment.
What National and it’s one-eyed supporters don’t seem to comprehend is that business and profits are dependendent on our clean and green environment. Mess up the environment and expect to lose customers and profits.
Just ask the Sri Lankans.
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User-pays healthcare?
For those neo-liberals and naive National supporters who advocate replacing our socialised healthcare system with privatised healthcare insurance, I present the reality,
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Acknowledgment: NZ Herald – NZ private health insurance uptake hits 6-yr low
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Private health-privider, Wakefield chairman Alan Isaac said,
“The total number of New Zealanders with private health insurance (is) decreasing.”
Acknowledgment: IBID
Well, no wonder!
Even as private healthcare companies like Wakefield are complaining about losing customers, they are hiking premiums and still making a 27% increase in full-year earnings. Twentyseven percent! Compare that to other investments, and you begin to realise that these companies aren’t doing too bad.
That’s 27% that could have been re-invested in healthcare – but is instead going into the pockets of shareholders.
What would happen, I wonder, if New Zealand’s healthcare system was fully privatised and went totally “free market”, as ACT policy demands?
This OECD chart suggests the result, if we were ever foolish enough to go down that road,
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Source: OECD – Total health expenditure per capita, public and private, 2007
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At 7,290, the United States spends nearly three times as much on healthcare as we do. Their private/public health costs are vastly greater than the entire public/private expenditure we have here in New Zealand with our “socialised” system.
And ACT wants to emulate our American cuzzies?!
The only thing the USA has demonstrated is that a privatised healthcare system will result in a massive blow-out in costs and rapacious profits for shareholders.
The argument from the neo-liberal Right is that private enterprise is “more efficient” and better for consumers. This is absolute bollocks.
If anything, private health insurance is highly ineffective at delivering universal healthcare for it’s clients,
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Acknowledgment: Fairfax Media – Ongoing jumps in health insurance costs
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As has been observed by others in the past, private health insurance is relatively cheap when you are young, healthy, and make few demands for medical intervention.
But with old age; increased infirmity; and heightened vulnerabilty comes increased premium payments for policy-holders. Just when they most require increased medical services.
This is the fatal flaw in private medical insurance; those who most require it, will pay the highest premiums. And pay, and pay, and pay…
Just ask the Americans.
See also: NZ Herald – Jack Tame: Sickness is too expensive in the land of the free
Other blogs: Canadian and U.S. healthcare – a debate
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Some good news at last…
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It has been a stain on our reputation that despite our anti-nuclear legislation, our Superannuation Fund was still investing in overseas companies engaged in producing atomic bombs and cluster munitions. This was a problem (I refuse to call it an “issue”) that I highlighted in December, last year.
Previous related blogposts: New Zealand’s OTHER secret shame
Previous related blogposts: New Zealand’s OTHER secret shame – *Update*
The Superannuation Fund has done the right thing by no longer continuing to invest in Babcock & Wilcox, Fluor Corporation, Huntington Ingalls Industries, Jacobs Engineering Group, Serco Group and URS Corporation;
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Acknowledgment: Fairfax Media – Super Fund sells nuclear investments
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The other weapons we are no longer investing in is the manufacture of cluster-munitions. These vile things are the weapons-of-choice for vicious dictators and other repressive regimes which they use against their civilian population.
They have been used in Syria, against unarmed civilians. Children have been killed by these monstrous devices. (see: Syrian children ‘killed by cluster bombs’)
Cluster munitions have been outlawed by nearly 100 nations which signed a treaty to ban cluster bombs. In 2009, to their credit, the current National-led government passed legislation banning these obscene weapons from our country. This included the possession, retaining, stockpiling, assistance, encouragement, or even inducement to deal with them.
NZ Parliament: Cluster Munitions Prohibition Act 2009 (17 Dec 2009)
It would take a ruthless person to discount this human suffering and advocate for our continued investment in their manufacture.
The Superannuation Fund was effectively breaking the law with it’s investments in General Dynamics, L-3 Communications, Raytheon, and the Goodrich Corp.
It’s good to see that our fingers are no longer bloodied by such investments.
As for right-wingers who dismiss investment in atomic bombs or cluster munition – go play with a cluster bomb. Come back to me after it’s detonated in your hands. Then we’ll talk.
Just ask the Syrians.
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The bucks stops with me over there, somewhere…
I guess it was inevitable, really…
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Acknowledgment: Radio NZ – Deputy Secretary resigns over Novopay
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Did we really, really expect any one of the three Ministers who signed off on Novopay to put their hand up and admit responsibility?!
No less than three ministers signed off on Novopay, to allow it to “go live”;
- Education Minisrer Hekia Parata
- Associate Education Minister Craig Foss
- Finance Minister Bill English
Because doesn’t it strike people as indicative that Minister for Everything, aka, Mr Fixit, Steven Joyce was appointed Minister in charge of Novopay – thereby taking responsibility for this ongoing balls-up away from Parata?! (see: ODT – Joyce to take on handling of Novopay)
Despite the so-call “ministerial inquiry”, Joyce had a very interesting point to make on 31 January;
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Acknowledgement – Radio NZ – Government sticking with Novopay for now
“Steven Joyce revealed that Education Minister Hekia Parata, Finance Minister Bill English and former education minister Craig Foss approved the use of Novopay despite being told that it had bugs.”
So… how can Joyce’s statement be reconciled with his statement, five months later,
“Reporting to Ministers was inconsistent, unduly optimistic and sometimes misrepresented the situation.”
Source: Beehive.govt.nz: Ministerial Inquiry report into Novopay released
Either Ministers were “told that it had bugs” or reporting was “unduly optimistic and sometimes misrepresented the situation“. Which is it?!
By the way, the Ministerial Inquiry was undertaken by Maarten Wevers and Chairman of Deloitte New Zealand Murray Jack.
Mr Weavers was former head of the Department of the Prime Minister (John Key) and Cabinet.
Connect the dots.
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Other blogposts: Gordon Campbell on the latest Novopay revelations
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Budget 2013: Child poverty, food in schools, and National’s response
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Maria and the children of the poor – “Metropolis” (1927)
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There is a problem with National’s response to child poverty and meals in schools…
First, to re-cap, there was no announcement made in the Budget on 16 May regarding meals in schools,
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Acknowledgment: Fairfax Media – Key tight-lipped on food in schools
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Finance Minister Bill English was adamant that any announcement would be weeks away,
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Acknowledgment: NewstalkZB – Budget 2013: No food in schools programme
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Interestingly, whilst National is luke-warm on the idea of feeding hungry children in our schools, they have little hesitation in throwing our tax-dollars at private, profit-making businesses such as Charter Schools. What next – state subsidies for farmers to produce fatty sheep meat and a butter mountain?
National – the self-professed champion of the free market – throwing taxpayer’s money at private enterprises?
Regarding food in schools, Bill English had this to say about the subject on Maori TV’s Native Affairs last night (20 May),
Mihingarangi Forbes prefaced the interview by reminding viewers of a statement made by John Key with he was leader of the Opposition in 2007,
MIHINGARANGI FORBES: ” [John Key]… from the Opposition benches, promised, a Food In Schools programme. Back then he said he wouldn’t wait because “kiwi kids deserved better (see: National launches its Food in Schools programme). So earlier today I asked Bill English why, after six years, thousands of kids still wait.”
BILL ENGLISH: “[…] but I think we should keep it in perspective. In the budget there was a wide ranges of measures that are going to have a positive impact on the complicated problem of children and families who suffer from persistant disadvantage.”
MIHINGARANGI FORBES: “Can I ask, do you personally support, believe that central government should be providing food for children?”
BILL ENGLISH: “I think we have to deal with the reality that children turn up to school unable to eat, we believe that it’s parent’s respons-, unable to learn.We believe it’s parent’s responsibility to feed their children. And I think we would find that where children are turning up hungry, there’s probably any number of other issues in the life of that family that are difficult and need resolving. But we need these kids to learn, we can’t punish them for the circumstances that they’re born into or living in and so that’s why we support feeding them so they can learn.”
When asked when National would implement a plan, Mihingarangi reminded English that Key had stated that it was just a “couple of sleeps away”, he responded,
BILL ENGLISH: “Well, look, I think you should just wait for the announcements in a couple of weeks.”
Acknowledgment: Maori TV – Native Affairs (20 May 2013)
So what is the problem with National’s response to child poverty and meals in school that I referred to above?
Firstly the Nats appear to having some kind of internal crisis on this issue – leading to Bill English delaying any announcement for two weeks after the Budget was released. (Some have suggested that there is a ‘power struggle’ going on behind the scenes in Cabinet? It has been suggested that an announcement was going to be made on Budget Day – but was pulled at the last minute.)
But the real problem of any food-in-schools programme?
National has not budgetted for it.
The Mana Party “Feed the Kids” Bill is estimated to cost $100 million to implement (see: Mana Party – Fact Sheet). Any plan from National – unless it is half-hearted and watered down – will also require considerable resourcing.
Where is National’s Budget allocation for implementing any meaningful food in schools programme?
There does not appear to be any.
As National continues to dither and delay on this problem (I refuse to call it an “issue”), there is a feeling of growing dread within me that National ministers are going to deliver the biggest cop-out to the country since… whenever.
No food, no money, no solutions.
Message to John Key & Bill English
Prove me wrong.
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References
Mana Party: A MANA Analysis of the 2013 Budget: Increasing Poverty, Not Reducing Poverty
Scoop: National launches its Food in Schools programme ()
Radio NZ: Labour criticises ‘funny money assumptions’ on surplus (20 May 2013)
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A Clear Warning to Investors in SOEs…
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The recent financial crisis and near-collapse of Solid Energy – one of the five, state owned enterprises planned for partial-privatisation – should serve as a warning for those investor-vultures circling to buy shares in any of the SOEs.
In fact, recent history regarding Air New Zealand, Kiwiwail, and (non-privatised) BNZ in 1991, are indicators that privatisation of state assets is not a guaranteed roadmap to wealth,
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It is noteworthy that one of the cause of Air New Zealand’s collapse was it’s foolhardy buy-out of Australian airline, Ansett,
First, the decision by Air New Zealand to pay dividends and second, the decision to buy the second half of Ansett. Both moves turned out to be considerably more beneficial to the interests of Brierleys than those of Air New Zealand.
Take the Ansett purchase. In early 1999, Cushing announced that Air New Zealand was vetoing Singapore Airline’s bid to buy News Corp’s 50% of Ansett Holdings (Air New Zealand had held the other 50% of Ansett since September 1996). Instead, it decided to pay News Corp $A580 million and get 100% control.
It’s most likely true that Air New Zealand paid too much for the stake and that directors had too little information about Ansett’s financial and engineering state. These are well-aired opinions, but are secondary to the main question that should be asked: Why did Air New Zealand buy the second half of Ansett at all? It’s not just that it was hopelessly out of its depth buying an airline twice its size. It’s just hard to see any benefits – to Air New Zealand, that is.
Source: IBID
On top of that were big dividend demands from one of Air Zealand’s major shareholders, Brierley’s,
The at times cash-strapped investment company held between 30% and 47% of shares over the period so, based on the total dividend of $765 million, Brierley reaped an estimated $250 million to $380 million from the airline. And Air New Zealand’s decision to buy the second half of Ansett, cutting Singapore Airlines out of the deal, contributed to Brierleys being able to do its own deal with Singapore.
In April last year, two months after Air New Zealand bought Ansett, Brierleys sold Singapore Airlines all its Air New Zealand “B” shares for $285 million, or $3 a share. It was arguably the last exit option for Brierleys from these shares, and, apart from a spike at the end of last year, Air New Zealand shares have largely tracked downwards ever since – they were trading around 30 cents as Unlimited went to press.
Source: IBID
In other words, Air New Zealand had over-extended in unwise investments (as has Solid Energy), and was bled dry by rapacious demands for dividends (as did Faye Richwhite in NZ Rail in the early 1990s).
How does this relate to the upcoming partial-sale of Mighty River Power?
Recent revelations that Mighty River Power has shaky investments on Chile, should cause potential investors to pause for thought,
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According to the TV3 story above, “Mighty River Power has spent $250 million at the geothermal plant in southern Chile, but has just written off $89 million as the investments struggle“.
To which Key responded casually,
“There is always risk.”
Dear Leader seems somewhat blase about investors’ risks? Of course he is. It’s not his money.
The Crown Ownership Monitoring Unit (COMU) reported,
Impairments
During the period, the Company recognised $91.4 million of impairments principally reflecting its investment in the GeoGlobal Partners I Fund (GGE Fund), and its greenfield explorations for potential developments in Chile and Germany.
This impairment followed higher than expected costs at the Tolhuaca project in Chile due to the worst winter in 40 years adversely affecting drilling performance and only one of the two wells having proven production capacity. The value of GGE’s investment at Weiheim in Germany, has been impacted by increased costs due to required changes in the drilling location following the 3D seismic surveys and delays from environmental court challenges which have been resolved post balance date.
The GGE Fund had not raised capital from other investors by the end of the 2012 and Mighty River Power made the decision not to invest further capital into the existing structure. Overall, the impairment charge of $88.9 million for the German and Tolhuaca assets and the management company of GGE LLC leaves a residual book value of $91.8 million.
Source: Mighty River Power LtdResults for Announcement to the Market
On top of Mighty River Power’s dodgy investment in Chile, New Zealand is now experiencing what is being called the worst drought in seven decades (see: North Island’s worst drought in 70 years). As Climate scientist Jim Salinger said about New Zealand’s current weather patterns continuing, and becoming similar to the Mediterranean,
“What it means is that if it just doesn’t rain for at least four months of the year, it means you have to bring in your water from elsewhere.”
Source: IBID
As all investors should bear in mind; most of our power generation is generated from hydro stations. Mighty River Power, especially, derives most of its electricity from eight hydro-electric stations on the Waikato River.
Mighty River Power CEO, Doug Heffernan has given a clear warning,
“Following the lower than average inflows into the Waikato catchment during the last quarter [to December 31], Mighty River ended the half year at just 69 per cent of historical average [hydro storage].”
And Equity analyst Phillip Anderson of Devon Funds stated,
“The same period last year they got really strong inflows, and this is the exact opposite . . .
In the second half of this reporting year they’re going to have to buy a lot more electricity to feed their customers, either on the spot market at a lot higher cost or use their [Southdown] gas plant.
We expect the second half of this year is going to be a lot tougher for them, they should get their margins squeezed if that all plays out.”
Source: Parched Waikato could hit Mighty River Power
The equation is blindingly simple,
Less rain = less water = less electricity generation
The question that begs to be asked is; where does the risk of investing in SOEs fall – private investors, or the State?
The answer I submit to the reader is, that like Air New Zealand, it will be private investors who bear the brunt of all risk. The State will simply pick up the pieces, buying up shares at bargain basement prices, should anything go wrong.
Electricity generators like Mighty River Power will simply never be allowed to fail. Had the Labour government in 2001 allowed Air New Zealand to collapse, the fall-out to the rest of the reconomy would have been too horrendous to contemplate, and flow-on effects to other businesses (eg; exporters and tourism) and the economy would have been worse than any bail-out.
But any bailout will involve a massive loss for investors, as their share-value plummets. Again, Air New Zealand was an example to us all.
As the impact of climate change creates more uncertainly for our state power companies, investors need to think carefully before committing one single dollar toward buying shares,
“Do I really want to bear all the risk?”
Those who lost out on their investments in Air New Zealand in the 1990s will probably answer,
“No.”
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References
The Air New Zealand crash (1 November 2001)
A history of bailouts (7 April 2011)
Foreigners important for SOE sell-downs: Treasury (30 June 2011)
No law stopping foreign investors (16 Dec 2011)
Parched Waikato could hit Mighty River Power (22 Feb 2013)
Mighty River Power shares float mid-May (4 March 2013)
Taking the plunge in Mighty River (9 March 2013)
Key struggles to push Chilean investments (9 March 2013)
North Island’s worst drought in 70 years (10 March 2013)
Other blogs
Seemorerocks: An Appeal for a New Zealand Risk Assessment
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Dear Leader Key blames everyone else for Solid Energy’s financial crisis (Part Rua)
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Acknowledgement
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Continued from: Dear Leader Key blames everyone else for Solid Energy’s financial crisis
Opposition Party members of the Commerce Select Committee are demanding that ex-CEO, Don Elder appear before the Select Committee to answer questions what went wrong at Solid Energy.
With unanswered questions about Solid Energy’s financial crisis; a murky history leading up to current events; big bonuses paid out as the company’s accounts were sinking into the red; and revelations that Don Elder is still recieving his $1.3 million annual salary – whilst working from home “serving out his notice” – pressure is mounting on National.
Solid Energy went from a multi-billion dollar company to being heavily indebited to $389 million.
How did this happen?
Did ministerial shareholders Bill English and Tony Ryall not notice?
Were they not receiving reports from Solid Energy’s Board of Directors?
Were no rumours or conversations floating around?
How does one keep a secret like that in a small country like New Zealand? (In which case should Solid Energy take over our country’s security, from the GCSB and SIS?)
Why were we paying Don Elder for ($1.3 million p.a., plus bonuses no doubt) if not to be held to account?
On 8 March, Key was reported as saying,
“If he wants to go [to the Select Committee hearings] and they want him to go he is not going to get any opposition from my office.”
And SOE Minister chipped in with this,
“It’s a matter for the Commerce Select Committee, Solid Energy and Dr Elder whether or not Dr Elder attends, but I don’t have a problem either way.”
Good. Because the public – who own Solid Energy – deserve answers. Thus far all we’ve had is the usual finger-pointing by National, with childishly pathetic attempts to blame Labour for Solid Energy’s woes. As if Labour was still in government and the 2008 and 2011 general elections never happened.
This statement from Key, on 26 February 2013, simply doesn’t wash,
“They [Labour] can’t wash their hands of the fact that from 2003 on, they were intimately involved with the plans that that company had.
The argument that somehow we would have gone in, in 2009 when the company was performing well, its results were good, the valuation of the company was going up, and just gone and sacked the board on day one is a bit fanciful.
Maybe we should have re-tested those [Labour-approved] initiatives but actually we gave [Labour] the benefit of the doubt that they might get one thing right.”
“2003”?
That was ten years ago! What has National been doing in the meantime?
As far back as September 2011, the Nats were abundantly aware that Solid Energy was embarking on expansion plans,
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Solid Energy starts work at Mataura Briquette Plant
Friday, 9 September 2011, 2:57 pm
Press Release: Solid Energy NZ9 September 2011
Solid Energy marks the start of work at its Mataura Briquette Plant
The Hon Bill English, MP for Clutha-Southland and Minister of Finance, today marked the official start of work at Solid Energy’s Mataura Briquette Plant, by “turning the first sod” at a small event on site with neighbours, local authorities, and other guests.
The $25 million Mataura briquette plant is planned to start production by June 2012. It will produce up to 90,000 tonnes a year of low-moisture and higher-energy briquettes from about 150,000 tonnes of lignite mined from Solid Energy’s New Vale Opencast Mine and trucked to the Craig Road site. The plant will use technology developed in the USA by GTL Energy.
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Here’s the photographic evidence, from National’s own ‘Flickr’ account, same date, 9 September 2011 – that’s Finance Minister Bill English, “turning the first sod of earth” for Solid Energy’s Mataura Briquette Plant in Southland. That plant was part of their expansion plans,
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Only three months earlier, in June 2011, Key himself was supporting Solid Energy’s explansion plans,
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Note Key’s comment in the above article in the National Business Review (hardly a leftist rag),
“At the moment companies like Solid Energy are growth companies and we want them to expand in areas like lignite conversion.”
So for Dear Leader to blame Labour is not only disingenuous – it is cowardly.
It shows the entire country that the man who is supposedly or Prime Minister hasn’t got the balls to take it on the chin and admit that he and his Party f****d up. Big time.
Even the editorial from the Dominion Post said, with unconcealed exasperation on 2 March 2013,
There are always excuses when a company starts to fail. John Key’s explanation for the trouble at Solid Energy, however – he blamed the Labour government – was pitiful.
It was Trevor Mallard’s fault, apparently, for encouraging SOEs to spread their wings and fly. That was in 2007 or 2008.
This won’t do, and not just because Mr Key’s Government has been in power for more than four years. His argument also contradicts itself. A Labour government was seemingly omnipotent and could have its way with the state-owned coal company. But National had no such power.
The Government certainly said no when Solid Energy asked for a billion dollars to turn itself into a super-company along the lines of Petrobras, the Brazilian giant. Mr Key says it had grave doubts about the company’s expansion plans. His political opponents point out that he and Bill English had publicly backed Solid Energy’s big plans for lignite conversion and briquetting.
This blogger welcomes Don Elder fronting up to the Commerce Select Committee. However, that is simply not sufficient. In the interests of full justice, the following should occur,
- John Key should front up and answer questions as well,
- Bill English should front up and answer questions,
- Tony Ryall should front up and answer questions,
- All documentation should be made available to the Committee,
- The Chairperson of the Select Committee – National MP Jonathan Young, should stand aside and be replaced by a non-partisan senior judge or Queen’s Counsel,
- If necessary, if the Committee is unable to answer questions, a full Royal Commission in Inquiry should be held.
National prides itself on being the party of ‘personal responsibility‘. It is no such thing. It is the party of personal advantage and not much more.
Thus far all we’ve had are evasiveness and pathetic attempts to blame others. We’re also seeing more of the same from our Prime Minister; bullshit.
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Previous related blogposts
National under attack – defaults to Deflection #2
Dear Leader Key blames everyone else for Solid Energy’s financial crisis
Taking responsibility, National-style
References
NZ National Party: Solid Energy chief executive, Don Elder and Hon Bill English at Mataura (9 Sept 2011)
Scoop.co.nz: Solid Energy starts work at Mataura Briquette Plant (9 Sept 2011)
NBR: Key supports Solid Energy’s lignite plans (3 June 2011)
TV3: Govt, Labour squabble over Solid Energy (26 Feb 2013)
Dominion Post: Editorial: Solid Energy excuses fuel anger (2 March 2013)
TVNZ: Pressure grows on Don Elder to front over Solid Energy (8 March 2013)
Fairfax media: Minister, PM fine for Elder to appear for grilling (8 March 2013)
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Dear Leader Key blames everyone else for Solid Energy’s financial crisis
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Continued from: That was Then, This is Now #18 (Solid Energy)
A bit of very recent history,
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Solid Energy starts work at Mataura Briquette Plant
Friday, 9 September 2011, 2:57 pm
Press Release: Solid Energy NZ9 September 2011
Solid Energy marks the start of work at its Mataura Briquette Plant
The Hon Bill English, MP for Clutha-Southland and Minister of Finance, today marked the official start of work at Solid Energy’s Mataura Briquette Plant, by “turning the first sod” at a small event on site with neighbours, local authorities, and other guests.
The $25 million Mataura briquette plant is planned to start production by June 2012. It will produce up to 90,000 tonnes a year of low-moisture and higher-energy briquettes from about 150,000 tonnes of lignite mined from Solid Energy’s New Vale Opencast Mine and trucked to the Craig Road site. The plant will use technology developed in the USA by GTL Energy.
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Eighteen months later, on 19 February, the SOE Shareholders Bill English and Tony Ryall, made this shock announcement to the public (see: Statement on Solid Energy).
The media were quick to report the crisis,
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National’s response?
Default to Deflection #1 (see previous blogpost: National under attack – defaults to Deflection #2 )
As described in my previous blogpost (see: Taking responsibility, National-style), National does not do Taking Responsibility very well. Their automatic instinct is to blame someone else – anyone – for problems of their making,
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And true-to-form, National and Dear Leader are once again playing the Blame Game over Solid Energy’s woes,
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“They can’t wash their hands of the fact that from 2003 on, they were intimately involved with the plans that that company had,” sez Key?!
Really? 2003 ???
Why stop at 2003?
Personally, if I was John Key, I’d be asking serious questions on Labour’s role in the sinking of the Titanic. The Cuban Missile Crisis. And don’t forget the 2007/08 Global Financial Meltdown – that has Labour’s fingerprints all over it, surely???
Getting serious again…
National is supposedly Very Big on responsibility issues. Their website is constantly referring to responsibility,
“The National Party is built on age-tested principles that reflect what is best about New Zealand. We are a party of enterprise; a party of personal freedom and individual responsibility; a party of family; an inclusive party; a party of ambition.” – John Key, 27 May 2007
“We also need to remember the enduring principles on which the National Party is based – individual responsibility, support for families and communities, and a belief that the State can’t and shouldn’t do everything.” – John Key, 30 January 2007
It seems that their constant refusals to accept responsibility is also one of those things that “the State can’t and shouldn’t do”, according to Dear Leader.
A few questions spring to mind,
- How far back will Key go to blame others for his failures?
- How many terms in office will National have to win, before blaming Labour or Uncle Tom Cobbly is no longer tenable?
- If John Key and his cronies are unable to ‘man-up’ and take a hit for any one of their balls-ups, and constantly feel the need to sheet responsibility back to Labour – then why is National in government? Why not just resign and put Labour back in office? After all, what would be the difference?
We wouldn’t accept finger-pointing and blame-gaming from our children (or, at least I hope we wouldn’t). So why is the public and media letting Key get away with it?
I look forward to National’s next major cock-up.
Who will they blame next? Australia?
Meanwhile, back to 9 September 2011…
Doesn’t Bill seem a happy chappy in this photo-op?
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Bill English, poses with ex-Solid Energy CEO, Don Elder, as the ‘first sod is turned’ at a new Briquette Plant in Mataura, Southland.
The same plant that was “Labour’s fault”.
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Bill English – do you remember Colin Morrison?
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A message to the Hon. Bill English;
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From the NZ Herald on 27 January, uttered by Bill English,
“…On top of that, Labour still hasn’t apologised for their wasteful policies the last time they got their hands on the economy.”
See: IBID
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Firstly, let’s review recent history in decidely more accurate terms,
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The IMF (International Monetary Fund) chart above shows that from 2000 to 2008, the Labour government paid down debt, from 33.4% in 2000 to 17.4% in 2008 (a near-halving of our sovereign debt) to when National took the reigns of government.
Some will even recall that Labour Finance Minister, Michael Cullen, posted several surpluses during his tenure as Finance Minister,
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$2,300,000,000: Dr Cullen’s finest hour (29 May 2002)
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Cullen prepares to trumpet high surplus (21 Feb 2003)
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Cullen Unwilling To Share Fiscal Surplus Through Tax Cuts (18 Oct 2004)
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Hide attacks Cullen for hiding huge surplus (16 March 2005)
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Record surplus, but Cullen ‘won’t know about tax cuts until December’ (11 Oct 2006)
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Cullen confirms huge surplus (10 Oct 2007)
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Cullen quick to emphasise volatility after surplus hit (19 Feb 2008)
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Just as well that Cullen resisted strident calls for massive tax cuts. Instead, perhaps being the wisest man in the decade, realised that common sense demanded that we pay down our sovereign debt, rather than splurge out on an almighty cash-lolly scramble.
Had Cullen yielded to calls for tax cuts instead of addressing our debt, our current sovereign debt would probably be approaching Greece’s.
But Bill English and other National/ACT sycophants don’t want us to know this. It makes Labour look good. And that’s the last thing they want.
After 2008, as National gave away tax revenue on the form of two unaffordable tax cuts in 2009 and 2010, debt skyrocketed from 17.4% to 37% of GDP.
Now, if one was to use the same mis-information as Bill English, John Key, et al, I could shout from the roof-tops that the rise in debt was due wholly to National’s mis-management of the government books.
The reality, of course, is that the 2007/08 Global Finance Crisis – as well as National’s incompetance in giving away tax cuts we could ill afford – both had a part to play in our increased borrowing.
Secondy, let’s deal with English’s claim,
“…On top of that, Labour still hasn’t apologised for their wasteful policies the last time they got their hands on the economy.”
Budget expenditures from the early 1990s to 2012 reveal an interesting story,
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The early 1990s (characterised by Finance Minister, Ruth Richardson) was one of massive cuts to health, welfare, sale of State houses, and other social services. The same can be said of the late 1990s, where de-regulation; so-called “reforms“; cuts to state services; and increasing User Pays led to growing poverty and the widening income gap.
Eventually, those cuts to state services had dire consequences. For example, the health sector was particularly badly hit,
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Claim many burned out by health sector reforms – (21 Dec 1996)
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More health changes tipped – (8 March 1997)
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Must pay for ‘wants’ – (19 July 1997)
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Cuts to hospital services expected – (8 Aug 1997)
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‘Serious flaws’ in Govt’s health funding formula – (31 Jan 1998)
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GP hits out at health reforms – (3 Feb 1998)
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Funding for Dunedin Eye Clinic Slashed – (26 Feb 1998)
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Shipley, Bolger sorry for deaths of patients – (3 April 1998)
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Health cuts spell doom for services – (30 April 1998)
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Hospitals now owe $1.3 billion – (4 June 1998)
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Staff shortages could hit patient care, say nurses – (4 May 1999)
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Public hospital ills blamed on funding – (20 Aug 1999)
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Health spending rates poorly – (24 Aug 1999)
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The Health “reforms”, along with chronic under-funding, had their inevitable consequences,
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Death The Northland Way (15 Oct 1997)
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Died waiting for by-pass (6 April 1998)
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Rau Williams and Colin Morrison – both with entirely different lives; living at opposite ends of the country; one Maori, the other Pakeha – both suffered the same fate. They died because government cutbacks on spending (see red square in above chart) had reduced the Health budget, and as media reports above show – were impacting harshly on our society.
These two men – and perhaps others who died quietly, shunning the glare of publicity – died on Bill English’s watch. As Minister responsible for Crown Health Enterprises and later Minister of Health, English could not shift responsibility to anyone else.
At one point, English was forced to concede that the Health system and funding mechanism was “flawed”,
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English may review waiting list funding (11 April 1998)
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English agrees system flawed (19 May 1998)
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Tragically, Mr English’s “Road to Damascus” experience was too late for Mr Williams and Mr Morrison and their families.
Is it me, or does it seem that everything National touches turns into one, big, steaming cow-patty?
Finally, by 1999 the country had had enough. On 27 November, the country went to the polls and National and their coalition ally, NZ First, were roundly defeated.
The incoming Labour-Alliance government was faced with a crippled health sector (amongst other state services that had been cut back) that had been impoverished and was struggling to perform it’s most basic core services,
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Cancer patients face string over staff shortage – (9 June 2001)
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Maternity crisis set to get worse – (6 July 2001)
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Despair at lack of young doctors – (11 Nov 2001)
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Local cancer patients die waiting for radiotherapy – (17 Nov 2001)
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A crisis that could only be remedied by a hands-on government prepared to make appropriate funding decisions,
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Waiting lists for elective surgery cut – (24 April 2000)
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Health Minister will end user-pays wards – (9 July 2000)
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More money promised to fund GPs, health clinics – (17 Nov 2001)
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$1.5b injection for health – (9 Dec 2001)
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Upshot of this, Mr English?
Any increase in funding of state services was necessary. After savage cuts, National created a situation where our healthcare system was unequivocally unsafe.
In fact, it had become lethal. People were dying for lack of appropriate medical intervention.
That was the legacy of the National Government, 1989 – 1999.
So before Mr English or any of his cronies complain that Labour spent more than National did – damn right they did. And the increased health funding under Labour probably saved an unknown number of lives.
Tell us, Mr English, do you remember Colin Morrison and Rau Williams?
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Addendum 1
By the way, Mr English, with reference to your criticism of the Green Party regarding job creation,
“And to make it worse, at the same time their coalition partners the Greens are up in Auckland busy working out how to stop everything they don’t like – which includes everything to do with growth and jobs.”
There’s no need to point the finger at the Greens and blame them for lack of growth and jobs. The inept National Party are quite efficient at stifling the economy and creating rising unemployment,
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See: Unemployment rate lifts to 6.7pc
See: 8000 more jobless as rate hits 6.8pc
See: Unemployment up to 7.3pc – a 13 year high
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See: Economy may be going backwards
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No need to invoke the Green Party (who aren’t even part of the National-led coalition) – it seems National is quite adept at grinding the economy into the ground.
Credit where it’s due, Mr English, credit where it’s due.
Addendum 2
The Bolger-led National cut taxation-revenue by implementing two tax cuts, in 1996 and 1997. (see: Reserve Bank – New Zealand’s remarkable reforms)
Why does this sound more and more familiar?!
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References
Reserve Bank: Reserve Bank – New Zealand’s remarkable reforms (4 June 1996)
OECD: Economic Surveys: New Zealand 1996
Treasury: Briefing to Incoming Government 1996 (12 Oct 1996)
NZ Herald: McCully: Jobs backtrack no surprise
Dominion Post: Key hands-on in MFat restructuring
NZ Herald: Defence Force plan to cut costs a failure – Auditor-General
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Did we just hear Steven Joyce sh*t all over his colleagues?!?!
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Acknowledgment: Radio NZ – Government sticking with Novopay – for now
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Steven Joyce,
“Steven Joyce revealed that Education Minister Hekia Parata, Finance Minister Bill English and former education minister Craig Foss approved the use of Novopay despite being told that it had bugs.”
See: IBID
In colloquial terms, that is what is known as ‘dropping someone in it’ – “it” being brown, smelly, and heading for waste-treament ponds.
Is there a civil war going on within National, comprising two factions with one led by technocrat Steven Joyce and the other by neo-liberal Bill English?
Or is there something even more disquieting going on within National’s ranks.
Joyce added,
“There was definitely knowledge there were bugs at the outset of going live. But the advice of all involved was that the thing should proceed. I doubt they’d give the same advice today.”
Noticeably, when queried by media, all three Ministers had similar responses – obviously coached by the same tax-payer funded Party spin-doctors and media-minders,
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See: Mr Fix-It has Novopay plan
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Hekia Parata
“I think hindsight’s a wonderful thing....”
Bill English
“In hindsight....”
And the tongue-tied Craig Foss,
“Well in hindsight… is a benefit of hindsight...”
See: IBID
You can always tell when a politician has been coached; they use the same words and phrases over and over again. Spin doctors/media-minders develop a mantra, and their clients are expected to learn and parrot it, by rote. It takes a skilful journalist/interviewer to peel away the carefully-crafted coaching and get to the truth.
This indicates that Parata, English, and Foss had been pre-warned of Joyce’s press conference and admission of the three Minister’s actions.
So is this some sort of carefully managed internecine warfare?
Or a very subtle, clever strategy to neutralise possible Opposition disclosures in Parliament?
Joyce’s statements that there will be on-going problems with Novopay could be seen as an attempt to minimise future media reports on Novopay errors.After all, if National admits that there will be ongoing problems – does that make it news when it happens?
Whichever is the case, this is Steven Joyce at his most cunning, and the Opposition will need to be on their toes. As will the media, if they are not to be out-manouvered by National’s “Mr Fix It”.
“Mr Fix It” does not apply to sorting out computerised pay systems. “Mr Fix It” fixes political messes.
This certainly qualifies as the Mother of all Messes.
Addendum
As is common with National, Joyce attempted to shift blame onto advisors/bureacrats/Uncle Tom Cobbly, when he stated,
“There was definitely knowledge there were bugs at the outset of going live. But the advice of all involved was that the thing should proceed…”
My bet is that we will never, ever see this “advice”.
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= fs =
Finally – mainstream media is catching up…
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In an extraordinary development, TV3 launched a full scale criticism of National’s failure to meet it’s Budget Day promise, last year, to create 170,000 new jobs.
Bill English at first tried to dismiss the horrendous rise in unemployment (7.3%, from the previous 6.8%) as,
“You could call it a blip. There are slow patches but we are on track for 2 to 3% growth.”
But he was eventually pressured to admit,
“In the past two years, [there are] 26,000 people in new jobs, but in the last quarter no new jobs – which is why we want to crack on. We are behind the 170,000 track.”
Which is as close as we will ever get to a National politician conceding that they and their neo-liberal, free market, hands-off, approach has failed.
Every other country on this planet is actively engaged in proactive management of their economies and social policies. Only New Zealand – ‘governed’ (and I use that term loosely) by a Party that is slavishly pursuing a thirty year old dogma – is standing back as our economy goes down the proverbial toilet and will end up flushed out somewhere in the Cook Straight.
The economic realities;
- Unemployment: up from 6.8% six months ago, to 7.3%
- Export sector: in crisis as our over-valued dollar makes selling our products overseas barely worthwhile, losing profits and ending up with staff redundancies
- A critical housing shortage
- A growing poverty-wealth gap
- and thousands more New Zealanders heading overseas
This is in stark contrast to John Key’s vision of the ‘Bright New Future’ that he promised us last year, and the many fine-sounding speeches he made before that in 2008 and since. Unfortunately the rhetoric doesn’t match National’s deeds or results – not by a long shot.
Faced with trenchant criticisms from all direction, English lamely replied,
“We think we have the balance about right.”
God help us.
TV3’s handling of the story left the viewer in no doubt that National was being hauled over the coals. And with a critical analysis not seen for a long time during Dear Leader’s reign.
The steep rise in unemployment was the final signal that National has had an Epic Fail, and from now on it is “gloves off ” by the mainstream media.
As BERL’s economist, Ganesh Nana said bluntly,
“You have a seven in front of unemployment, you have a five in front of dairy forecast payout, a zero in front of inflation and export growth – how many warning signs do you need on the dashboard until you do something different?
Without changes to our policy settings, the short term picture is not pretty, with our models projecting even further rises in jobless numbers.”
Only a year ago, centre-left bloggers had come to this same conclusion when, after the last election, it quickly became apparent to the likes of Tumeke!, The Jackal, The Standard, Bowalley Road, Waitakere News , The Dim Post, et al, that National was reliant on a failed neo-liberal agenda to ‘govern’.
National was not going to govern with pragmatic common sense – it was going to govern from an ideological stance, and nothing was going to change it’s direction.
Since last year’s election, New Zealand has been at undeclared war with it’s own “government”, as unpopular policy after unpopular policy was dumped on us. Coupled to Key’s unhealthy, blind support for the corrupt Member for Epsom; the lies that followed from both men; and this was a “government” we were losing faith in.
TV3’s Duncan Garner simply repeated what bloggers and other commentators have been saying for the past year,
“ Key says now is not the time to change course. But economists are all largely saying the economy has gone into a fragile state.
[…]A change of course is urgently required if New Zealand is to avoid yet another damaging recession.
The Government was shell-shocked by yesterday’s numbers, but it’s praying with its fingers crossed that things come right.
It’s risky. The expensive tax cuts from three years ago have had little impact.
Christchurch needs to be rebuilt fast and Auckland has alarmingly softened, although its house prices haven’t.
That’s seriously concerning, especially when your second largest city is in rubble.
Forget gay red shirts, comments about ‘batsh*t’ and what Key knew or didn’t know about Dotcom.
This blows all that away in terms of importance. This is fundamental. This is the serious stuff.
It’s people’s lives, their jobs, their mortgages, their families, their hopes, their dreams and their security.
It’s the economy, stupid. It wins and loses elections.
The Prime Minister’s sole focus needs to be the economy.
If he can’t turn this around or halt the slide – National will likely lose the Treasury benches in 2014.”
See: Opinion: Is our economy collapsing?
“Is our economy collapsing” askes Duncan Garner? The answer, Duncan, is yes; it is. You just needed to pay closer attention to what the rest of us were saying all along.
As for John Key – I suspect he’ll be avoiding other media from now on, and not just Radio New Zealand.
Dear Leader’s bunker awaits, as critics close in on him and his harried Party.
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Dear Leader, GCSB, and Kiwis in Wonderland…
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As the Dotcom-GCSB Affair drifts further into ‘The Twilight Zone‘ (or Wonderland), we learn the latest anouncement that Secretary of Cabinet, Rebecca Kitteridge, will be seconded to the GCSB to oversee a review of the Bureau.
The NZ Herald reports,
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The Herald lists Ms Kitteridge’s responsibilities to include:
- Review the systems, processes and capabilities underpinning the GCSB’s collection and reporting,
- Build capability and provide assurance to the GCSB director that the compliance framework has been reviewed, improved and is fit for purpose.
- She will establish new, specific approval processes for activity in support of police and other law enforcement agencies.
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Meanwhile, NZ First Leader, Winston Peters, managed to extract this gem from Dear Leader during Question Time in Parliament,
Government Communications Security Bureau—Briefings Since November 2008
3. Rt Hon WINSTON PETERS (Leader—NZ First) to the Prime Minister: How many times has he been formally briefed by the Government Communications Security Bureau, by year, since November 2008?
Rt Hon JOHN KEY (Prime Minister) : My diary indicates that I have been formally briefed by the Government Communications Security Bureau the following number of times, by year, since 2008: twice in 2008, 15 times in 2009, 11 times in 2010, 10 times in 2011, and 15 times in 2012.
Source: Parliamentary Hansards, 25 September 2012
Key’s response is extraordinary for two reasons,
- He gave a serious answer and not the flippant, juvenile wise-cracks he normally indulges in (which, we, the taxpayer, have to pay for as he wastes Parliamentary time)
- The answer he gave revealed that Key had met with the Government Communications Security Bureau (GCSB) fifteen times this year alone – and the subject of GCSB surveillance on Kim Dotcom – possibly one of the most colourful, controversial, and contentious people in the country – was never raised once?!?!
John Key. Met. With. The. GCSB. Fifteen. times.
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It is worthy to note that Ms Kitteridge’s three areas of responsibilities,
- Review the systems, processes and capabilities underpinning the GCSB’s collection and reporting,
- Build capability and provide assurance to the GCSB director that the compliance framework has been reviewed, improved and is fit for purpose.
- She will establish new, specific approval processes for activity in support of police and other law enforcement agencies.
… and nowhere is it written that she should ask the question on all our minds: how can the Prime Minister – the one man who has oversight over the SIS and GCSB – not have discussed Kim Dotcom with either of the Security Agencies?
There can be only two possibilities;
#1.
Key lied – and the matter of Dotcom was discussed.
#2.
The GCSB deliberately witheld this matter from the Minister in charge of the GCSB.
Either way,
Why are there no resignations/sackings?
Why is Ms Kitteridge not charged with finding out the truth of this issue?
Why is John Key refusing a full inquiry on this issue?
Why did Bill English sign off on a warrant to suppress the GCSB’s wrongdoing?
Who lied?
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Sources
Parliamentary Hansards, 25 September 2012 (25 Sept 2012)
Inspector-General’s report released by PM (27 Sept 2012)
Dotcom case: GCSB review ordered (1 Oct 2012)
Cabinet Secretary to head review of spy agency (1 Oct 2012)
Other Blogs
5AA Australia: Across The Ditch With Sean Perry & Selwyn Manning – The Illegal GCSB Spying Scandal
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