Posts Tagged ‘free market’

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



Our crisis in construction reaches tipping point

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



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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Gambling with promises of jobs

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

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



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

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

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

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

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

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


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

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


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

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

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

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

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



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

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

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

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

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

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

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

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

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

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

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

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

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

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


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

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

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

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

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

Leaving labour to Market Supply & Demand

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

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

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

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

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

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

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

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

So what’s gone wrong?!

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

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

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

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

National’s “response” – an exercise in incompetence

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




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

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

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

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

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

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



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

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

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

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

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

Report Card: F for Failed

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

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

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

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

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


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

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


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

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

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



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

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


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

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

Past evidence suggests those claims should be regarded with caution.


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


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

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





Radio  NZ:  200 Chinese tradies to complete Akl hotel

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

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

Forbes:  Profile – Chan Laiwa & family

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

Panuku Development Auckland: Home Page

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

Radio NZ:  300 apartments for Auckland waterfront

Financial Times: Why US big business listens to Bernie Sanders

Treasury: 2014 Budget –  Rebuilding Christchurch

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

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

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

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

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

BCITO:  Prime Minister encourages construction apprentices

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

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

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

NZ Herald: Ralph Norris retires


NZ Herald:  Brian Gaynor – How to fix Fletcher Building

Fairfax media: Dearth of tradesmen foreseen

Other Blogs

The Standard:  Fonterra and Fletcher Building

Previous related blogposts

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

Lies, Damned lies and Statistical Lies

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

MSM catches up on Unemployment stats rort





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



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The Mendacities of Mr English – The covert agenda of high immigration

10 March 2017 1 comment





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.


…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.


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;




English’s response was predictable if not offensive.


Playing National’s Blame Game

As per  usual strategy, English defaulted to National’s strategy of Default Blame-gaming. When in trouble;

  1. Blame the previous Labour government
  2. Blame ‘welfare abuse’/Release a ‘welfare abuse’ story in the media
  3. 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;




The Blame Gaming was applied recently to National’s appalling do-nothing record on housing;




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”;




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.

As Radio NZ’s Benedict Collins reported;

Government figures show beneficiaries have failed only 466 pre-employment drug tests in the past three years.


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…


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;




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.


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.


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.


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…




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;




…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.





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


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






This blogpost was first published on The Daily Blog on 5 March 2017.



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Foot in Mouth award – Former ACT MP exposes flaw in free-market system


Foot In Mouth Award


Meet Ken Shirley;


ken shirley ACT MP


Most folk won’t remember who Ken Shirley was, prior to his current ‘gig’ as  CEO of the Road Transport Forum (RTF), representing road transport interests since July 2010.

From 1984 to 1990, Shirley was nominally a Labour Party MP. He was closely aligned with the likes of Roger Douglas, Richard Prebble, and other right-wingers who had seized control of the party during the 1980s.

From 1996 to 2005, Shirley was an ACT Party MP. As such, he was an acolyte of  the neo-liberal school of economics and a strong adherent of free market forces. Part of ACT’s policies is to scrap the minimum wage.

Indeed, to under-score ACT’s abhorrence of the minimum wage, ACT’s current leader (and sole MP), David Seymour, condemned a recent rise in minimum wage levels. On 26 February this year, Seymour was scathing;

“The new $15.25 minimum wage will hit regional employers especially hard… In Auckland, $15.25 might not sound like much, but small businesses in the regions who generally charge less will struggle to bear the cost. Hikes to the minimum wage will discourage new employment, and lead to more lay-offs and business failures.

The first employees to suffer will be young, low-skilled workers who won’t be offered a chance to prove their worth. Pulling up the jobs ladder will only add to poverty in low-income areas.

This is a wage set for the distorted Auckland economy. Why should the rest of the country have to bear the same costs?”

[Fun Fact: As a Parliamentary Under-Secretary, Seymour is currently a taxpayer-funded beneficiary on a salary of $185,098 p.a. – which equates to nearly $89 per hour. One wonders if “small businesses in the regions who generally charge less will struggle to bear the cost” of Seymour’s salary?]

But returning to Ken Shirley; as an ex-ACT member of Parliament he is still most likely an  advocate for the abolition of the minimum wage.

On 5 May, Shirley was invited to be a commentator on Radio NZ’s afternoon Panel, hosted by Jim Mora;

 “Ken Shirley of the Road Transport Forum discusses what’s behind logging truck crashes and what needs to be done.”

At one point in the discussion, a suggestion was made that low wages in the trucking industry is not attracting the most highly-skilled and experienced workers;

@ 7.50

Jim Mora: “How bad do you think, Ken, is this situation with truck driving?”

Ken Shirley: “Oh, the spate we’ve had in Northland is just unacceptable. There’s no excuse for roll-over[s]. We know we have some difficult roads in New Zealand with topography, Northland’s is particularly difficult.

But there’s an obligation on the drivers and the forestry companies who hire the drivers to make sure they drive to the conditions. That’s the obligation on all drivers, and the spate we’ve had is just unacceptable, and I think inevitably it seems it’s not mechanical failure, it is driver error.

Whether it’s speed, inattention, or fatigue.”

Jim Mora: “So, it’s a…what, is it a hiring of drivers problem, hiring the wrong drivers, or is it a keeping-costs down problem, Ken? What do you think?”

Ken Shirley: “Well, the two are related of course. We have a chronic shortage of H5 drivers in New Zealand. That’s the heavy combination driver, the truck and trailer. It’s a global problem, but it’s particularly severe in New Zealand at this time. We’ve had it for many years, but with the activity in the economy now, that we are currently having, there is a chronic shortage of drivers.

Many of our members throughout the country are just saying they simply cannot get drivers. And I guess inevitably, you can, in that situation, such a tight situation, out of desperation, you can perhaps hire someone who’s not as skilled as you would like or need, out of sheer necessity. But at the end of the day, there’s no excuse. This should not be happening. We’re taking it very seriously.

We’ve actually instigated a series of roll-over prevention seminars in conjunction with NZTA around the country. They started some six weeks back. And these are actually very good seminars. But we have to educate the drivers, the loaders, the dispatchers, the transport operators themselves, but we must not have this level of roll-over.”

Jim Mora: “Ken, is it the… what is it deep down? Is it the meager wages paid, as some people are saying? You’re just not attracting the skills to the industry?”

Ken Shirley: “Ah, no, you do, it’s, you know, you can have a driver error. But it’s, it’s… you have to have better training, better awareness, that has to be the answer.”

Jim Mora: “So, there was this work-force development strategy, wasn’t there, ah, put into place a wee while back to try and try to entice more people to become truck drivers because of that shortage. But what is the point of a work-force development strategy if we know what the problem basically is, which I’m interpreting as maybe a lack of training and a lack of procedures put in place in the industry – [garbled].”

After a further exchange between Jim More, Peter Elliot (one of the panelists), and Ken Shirley, the host returned the discussion to the matter of wage rates;

Jim Mora: “It does seem though, with the wage rates that we see talked about, that you might not be getting the optimum recruits for the job? Is that a fair criticism, or not?”

Ken Shirley: “Well we know that the skilled labour market across the economy, whether it’s a diesel mechanic, a skilled driver, all of of those industries are, are, reporting severe chronic shortages. And because they are so highly skilled, reliant on a high level of, of, of, experience, when there is a chronic shortage, there is a temptation to often, out of desperation [to] take what you can get. And, and, that’s, that’s when you start to get into issues that like we are seeing and that’s when you start introducing potential road safety problems.”

Jim Mora: “I understand, but would you solve your chronic shortage if you paid higher wage rates?”

Ken Shirley: “Well, indeed, and all the members I speak to want to, but there’s been a race to the bottom, it’s –

[panelist scoffing (?) noise]

such a fiercely competive industry…”

Shirley’s admissions are astounding.

His comments appear to be a frank admission that the free market has experienced a spectacular  failure on a key point in the Northland logging industry;  that if there is a shortage of  skilled labour, the price of that labour (heavy-truck drivers in this case) should rise – not fall – to attract skilled labour. That is a basic tenet of supply and demand in the free market system.

As the guru of free market economics, Milton Friedman put it;

“But when workers get higher wages and better working conditions through the free market, when they get raises by firm[s] competing with one another for the best workers, by workers competing with one another for the best jobs, those higher wages are at nobody’s expense. “

And Investopedia described a free labour market thusly;

Assuming there are a large number of employers in a region, or that workers are highly mobile geographically, the wages that a company will pay workers is dependent on the competitive market wage for a given skill set. This means that any company is a wage taker, which is simply another way of saying companies must pay competitive wages in order to obtain workers.

None of which seems to be happening in Northland at present.

To the contrary, logging companies – according to their own spokesperson, Ken Shirley – are engaged in a “a race to the bottom” with drivers’ wages.

To compound the problem, in April of this year, Shirley specifically opposed and condemned outright any attempt to increase the wages of drivers;

“The link between remuneration and road safety is highly questionable and as a recent PWC report highlights, the system will result in a net cost to the Australian economy of more than A$2 billion over 15 years.

It is therefore very concerning that the Labour Party here advocated for the same policy and campaigned on it during the last election.”

National awards and government-imposed orders are not the way to lift industry wage rates or make the industry safer. All they do is saddle the industry with inflexible and time-consuming obligations and additional costs.

Let’s not repeat Australia’s mistake in New Zealand. It has been proven that national awards burden the economy and cost jobs and I hope that Labour and other political parties here will accept that reality and ditch the concept once and for all.”

Shirley’s comments last month are in stark contrast to his public lamentations on Radio NZ.

Not only has the free market failed in one of it’s key tenets – but Shirley is actively opposed to raising wages by any means necessary, to attract skilled, experienced truck drivers.

This should serve as a clear lesson that the innate contradictions of the free market ideology – many of which are little more than articles of faith – will eventually become more and more apparent.

Shirley has inadvertently helped with the slow dismantling of the neo-liberal fantasy.


Unfortunately, knowing how the system operates  in this country,  it will takes catastrophic events with several tragic deaths, before the government acts on this growing problem.

That’s how we roll in New Zealand.

Over bodies.


Tourist dies in logging truck crash near Matamata





Wikipedia: Ken Shirley

ACT NZ: Welfare and family

ACT NZ: Minimum wage hike whacks regional employers

Parliament: Current MPs – David Seymour

Parliament: Salaries payable under section 8 of Members of Parliament

Radio NZ: The Panel with Peter Elliott and Susan Guthrie

Good Reads: Milton Friedman

Investopedia: Breaking down ‘Demand For Labor’

Scoop media: Government imposed remuneration orders have no place in NZ

NZ Herald: Tourist dies in logging truck crash near Matamata


Road Safety Remuneration Tribunal: About road safety remuneration orders




John Key says I'd like to raise wages but I can't


This blogpost was first published on The Daily Blog on 10 May 2016.



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Johnny’s Report Card – National Standards Assessment – Sunrise, Sunset, and Outlooks

9 January 2013 3 comments

To Whom It May Concern; the following Report Card detail’s Johnny’s achievements over the last four years.

The following contrasts compare four years, ranging from the end of 2008 to the end of this year, 2012.

Whilst it is acknowledged that the Global Financial Crisis impacted harshly on our society and economy, it is also fair to say that National has had the benefits of starting out with a sound economy (surpluses, low unemployment, etc)  in 2008 and four years in office to make good on it’s election promises.


Sunrise, Sunset, and Outlook for 2013



What are we manufacturing today


We need businesses producing high-value products for overseas markets and businesses using R&D to develop those products which drives other benefits, like better production processes and marketing.  Basically it’s about using innovation to drive our economy.

We have some of these companies already – the likes of Fisher and Paykel, Tait and Rakon. Our world-leading dairy industry also owes much of its success to innovation.” – Jonathan Coleman,  Associate Minister of Finance, 1 July 2011

See: EDANZ National Economic Development Forum – Speech Notes

It’s a funny old world we live in…

Sunrise Industries…


Central Auckland super brothel approved

Full story



Full story



Full story


Another liquor outlet set to open

Full story


Sex, gambling, tobacco, alcohol – the new profitable industries of the 1st century? We seem to have left out other “growth” industries, the modern sex-slave trade in women and children, and arms manufacturing.

Oh. Wait. Maybe not,


Govt funds still invested in cluster bomb makers

Full story


Oh well, National and it’s  free-market fellow-travellers will be delirious with joy. If there’s a buck to be made from vices and weapons, they’ll be happy as a pig in mud.

Now if only they can find the price of a soul, and a market for it…

And the Sun sets on…


Sounds silenced by $20m debt

Full story


Borders, Whitcoulls under administration

Full story


Real Groovy Wellington to close

Full story


Closing chapter for fine arts bookshop

Full story


Bookstore another victim of public sector cuts

Full story


Marbecks music shop closes down

Full story



Basically it’s about using innovation to drive our economy. We have some of these companies already – the likes of Fisher and Paykel, Tait and Rakon. Jonathan Coleman,  Associate Minister of Finance, 1 July 2011


Rakon cuts full-year profit guidance



F&P confirms job losses

Full story

Warning as Haier wins all

Full story


Oh well, one (Tait) out of three still seems a ‘goer’. How long for, I wonder?

Meanwhile, how are our export and related sectors doing?


Job losses blamed on high NZ dollar - more forecast

Full story


And the stats back up the ODT story above,


New Zealand in Profile_2012_economy

Source: New Zealand in Profile: 2012 – Economy


Not too good it seems.  The red-highlighted sectors all declined from 2006 to 2011.

National’s “hands off” doctrine, in deference of the ‘Invisible Hand of the Market’, is certainly achieving one result; giving advantage to our exporting competitors from other nations. The Nats seem resigned (hellbent?) to more job losses; more exporters going under; more skilled tradespeople leaving for Australia; and a further decline ineconomic growth,


Job losses inevitable in declining industries, say ministers

Full story


What the hell!? The export sector is a “declining industry“?!?!

When even National’s allies – the Manufacturers and Exporters Association – are calling for government intervention about the high New Zealand dollar, it really drives home the seriousness of the crisis. An economic crisis that this time had it’s origins on Molesworth Street – not Wall Street.

For National to persist in it’s “hands off”  and obedience to Free Market dogma will have nasty consequences for our economy.

For 2013, expect,

  • unemployment to rise
  • the export sector to worsen
  • growth to remain low, under 1%
  • an early election this coming year, as Dunne and the Maori Party desert the National-led coalition.

It’s easy to predict – we’ve seen it all before.

Previous related blogposts

New Zealand’s OTHER secret shame

New Zealand’s OTHER secret shame – *Update*

NZ’s 21st Century Growth Industries – Drugs, Gambling, & Prostitution

Drugs & Gambling – NZ’s 21st Century Growth Industries?


outlook for 2013



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The Benign Neglect of the Free Market

25 September 2012 3 comments



Nuplex joins a long line of other industries, manufacturers, retailers, government departments, SOEs, etc, who plan to shed jobs,


Full story


The announcement of redundancies adds to a shocking list of job losses this year alone,

What sets Nuplex’s announcement apart from others was this extraordinary statement from New Zealand Manufacturers and Exporters Association president, Brian Willoughby,

New Zealand Manufacturers and Exporters Association president Brian Willoughby said Nuplex’s decision would have come after all other options were exhausted. “Nuplex would have been working really hard to be as effective as it could, like the other companies that have announced these closures and layoffs. This is the end game – they can’t make it work.”

He said the Government, and past governments, clearly understood the reasons why manufacturers and exporters were facing such challenges.

“They have all operated with benign neglect and let it get to this,” said Willoughby. “There are so many buttons that could be pushed.”

He said the Reserve Bank could lower interest rates, which would help keep the New Zealand dollar’s strength in check.”

See: Ibid

Benign neglect“, Willoughby calls it.

Another term is the free market in full operation.

Were it not for the fact that thousands of New Zealanders are losing their jobs on a weekly basis, pushing up the unemployment rate, I would find Willoughby’s remarks laughable.

Businessmen and women are quick off the mark to demand less State interference and more market de-regulation to suit their vision of a pure free market.

Both National and Labour governments  have been happy to comply, reducing company tax rates, as well as personal marginal tax rates for high income earners.

In the last four years, company tax rates have been slashed from 33% to 28%.

See: IRD – For businesses and employers

Industrial labour “reforms” have included the 90 Day “trial rate” to allow employers to take on more staff more easily (and still unemployment is rising?!) since 1 Aprl last year.

See: Ministry of Business, Innovation and Employment – 90 Day Trial Period

And FTA deals are being planned all over the place.

If National was any more “business friendly”, politicians would be literally climbing into bed and sleeping with business people. (No inferences made.)

And business sector groups are now whinging that past governments  ” have all operated with benign neglect “?!

Ungrateful buggers.

As if Brian Willoughby’s whining wasn’t enough, Catherine Beard, executive director of Manufacturing NZ, made this stomach-churning complaint,

She said measures the Government could take to address the strong dollar included reducing debt, to take the pressure off interest rates, and putting an end to “poor quality spending” such as Working for Families and student loans.

See: The axe falls: Industry boss blames cuts on Govt

Yeah. Why should families raising kids  and young people starting out in life get all the breaks, huh?

I look forward to Ms Beard advocating  an end to namby-pamby laws protecting workers’ conditions so that children can have real choices in life.

Like whether to work in sweat shops or clean the insides of chimneys.

Choice is important.



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When a failure of neo-liberal policy is pointed out to a right winger…


… they will always default to one of three positions;

1. Blame the previous government
2. Blame the welfare state and/or beneficiaries
3. Blame the global recession (but not for an increase in welfare beneficiaries – that’s a “lifestyle” choice”)

Pick a public on-line messageboard at random. Look at the postings on  political discussion-threads. Note the response from right wingers and neo-liberals.

When confronted by a failure of the ‘free market’, the neo-liberal and/or right winger will always respond with one of the three  options above.

Rule #1 of the Right Wing mentality: never accept responsibility. (That’s only for  welfare beneficiaries and the poor.)

It’s all they have to explain the failure of their ideology.




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A little trick borrowed from the former Soviet bloc…


Full Story


In the late 1970s, I had the opportunity to visit my parent’s homeland, behind the Iron Curtain. It was possibly the most educative experience of my life, and I had an opportunity to witness, first hand,  an economic and social system that was quite alien to me.

Some of the lessons I learnt…

  1. Extreme economic policies – whether marxist-leninist or neo-liberal – don’t work, and will ultimately fail. Neither cater for human needs, individually or socially.
  2. It’s true what they say about centralised planning and the public transport system; it was incredibly cheap, efficient, and very user-friendly.
  3. Alway take extra jeans with you to sell on the black market.
  4. Do not mess with the local police. Ever.
  5. Unemployment doesn’t exist in a socialist country – though they have three or four people doing the job of one. That’s the trade-off; unemployment or over-staffing. Which do you prefer? (At least with over-staffing, there were few idle hands for mischief-making and you didn’t have to waste money on unemployment benefits.)
  6. New Zealand was actually more egalitarian (or socialist or whatever you want to call it) in the 1970s, under Norman Kirk and Robert Muldoon – than an actual Soviet Bloc country. Weird – but that’s how it felt.
  7. There was no such thing as inflation. Oh no – they just changed the labels. So Brand X of coffee at 100 forints would disappear off the shelf, to be replaced with Brand Y, at 110 forints. Or a lower weight. That was marxist/leninism’s version of capitalism’s “creative accountancy”.

And it appears that, judging by recent media reports, New Zealand businesses have caught on to Item #7. Instead of raising prices, simply reduce the content.

The only thing is… it didn’t work very well for the Soviet Bloc, and their economies  eventually all but collapsed by the late 1980s, or early 1990s.

Just a thought for us smug Westerners. Reducing content and/or brand-name replacement is only a temporary sticky-plaster and hides fundamental problems with the economy.

As if the lessons of the global banking crisis and resultant recession wasn’t enough of a clue for the West…?

Ok, who’s up for a 150 135 gr bar of Cadbury?



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