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NZ Post – how to lose business and alienate people

29 January 2019 3 comments

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As reported in early 2017, Kiwibank and NZ Post continue to split their business, moving their retail postal and banking services into separate facilities. According to an un-named NZ Post spokesperson;

“NZ Post and Kiwibank are two independently run businesses, which currently share premises in some areas. With the longer-term strategies of the two organisations heading in different directions, it is now an appropriate time to review co-location.”

Even as NZ Post and Kiwibank were “un-co-locating”, the spokesperson also said,

“We are committed to providing postal services across New Zealand. What we are increasingly doing across our network is looking for local businesses to partner with to help us deliver postal services.”

A further 801 outlets are already “franchised” to supermarkets, book stores, pharmacies, dairies/superettes, stationery stores, video shops, etc.

For some reason, partnering with retail outlets was a better prospect for NZ Post than with an established bank. It is unclear why partnering with a pharmacy or video store is preferable to a bank – especially a major New Zealand-owned institution such as Kiwibank.

According another NZ Post spokesperson, New Zealand Post general manager of channels, Janet Selwood, said;

“In terms of the new outlet, we certainly provide a lot of training to our new partners and then on-going support for them. It’s not just about providing stamps – it’s about providing all the services that are currently provided.”

This is not true.

Splitting Kiwibank and NZ Post was recently carried out in Wellington’s eastern suburb, Kilbirnie and CBD location in  Lambton Quay.

In the former, NZ Post has vacated it’s co-located building with Kiwibank in Bay Road, Kilbirnie, and franchised it’s operation to “Paper Plus” – situated immediately next door to the now-stand-alone Kiwibank operation;

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Kiwibank (right), with NZ Post agency at ‘Paper Plus (left)

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When this blogger went to re-register his car at the Kilbirnie NZ Post/Paper Plus agency, the response was that they no longer offered that service. I was advised to travel to the nearest provider for vehicle re-registrations at VTNZ. This was in Adelaide Rd, Newtown;

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The distance was several kilometres away.

Vehicle registration is a significant responsibility for most New Zealanders. With 4,154,891 vehicles registered in New Zealand  by 2017, reducing NZ Post’s service in this area would be a major inconvenience for many people. To compound the problem, the policy of offering the registration service does not appear to be standardised throughout NZ Post outlets.

A phone call to another agency in Upper Hutt (approximately 30km north of Wellington) confirmed that the Upper Hutt NZ Post in that town will register cars.

Curiously, Upper Hutt NZ Post is also franchised to Paper Plus – the same retail-chain in Kilbirnie that refused to offer car registration.

So much for NZ Post assuring the public that it would not be “closing or downgrading” services to any areas. Provision of services now appear to be  haphazard.

Ironically, a Kiwibank-branded ATM remains situated within the NZ Post/Paper Plus outlet;

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Apparently co-location of a machine was considered acceptable – unlike the humans associated with both businesses.

Elsewhere throughout the country, NZ Post announced late last year it would be closing the last seventynine of it’s remaining company-owned retail outlets. Petone, Stoke, Johnsonville, South Dunedin, Moray Pl, Dunedin North, Mosgiel, and Te Puke are amongst NZ Post and/or Kiwibank branches fated for closure.

For many small towns and rural communities, NZ Post and Kiwibank are the last remaining essential service left to them. Closure or down-sizing is not a blow that such communities will handle well. When the State retreats from such small communities the sense of alienation is palpable.

Perhaps one of the worst ill-thought-out de-couplings between NZ Post from Kiwibank  occurred in Lambton Quay, in Wellington’s CBD.

Until last year, the combined NZ Post/Kiwibank outlet was situated at 94 Lambton Quay.

This blogger went searching for NZ Post to purchase postage stamps. Trekking along most of Lambton Quay, the prominent Kiwibank street signage was a welcome sight;

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Until, that is, this ominous notice was sighted in the window advising NZ Post customers “From Thursday 27th September 2018, bill payments and postal services will no longer be available at Lambton Quay NZ Post & Kiwibank, only Kiwibank services will be available“.

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Several possible options for NZ Post agencies were listed. The closest one appeared to be something called “Capital Office Supplies” at 114 Lambton Quay. Which was odd, as I had just walked along that part of the street and I had seen no indication of a NZ Post anywhere in that vicinity.

I retraced my steps, until I came to this NZ Post sign. Can you see the NZ Post sign in the image below?

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The NZ Post agency/Capital Office Supplies was not located on Lambton Quay proper. That is why it was not readily visible to anyone searching for it. The NZ Post signage in the above image (located beneath street signs for “Mason’s Lane” and “Pedestrian Access to The Terrace“) is wholly inadequate.

NZ Post/Capital Office Supplies is not visible on Lambton Quay – because it does not front onto one of New Zealand’s busiest retail/commercial precincts.

NZ Post/Capital Supplies is located down this alley;

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Even on closer inspection the NZ Post agency sign is difficult to make out in the gloomy light of the narrow alley;

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It simply defies understanding that any executive working for NZ Post would have thought that this site would be an ideal location for a postal agency.

And it doesn’t end there.

Once I bought the stamps, I was directed to the nearest posting boxes. Which was located…

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… opposite to the Kiwibank back at 94 Lambton Quay.

With the amount of walking I did that afternoon, I might as well have hand-delivered the letters myself. Any notion of “customer service” appears to have been discounted.

For a SOE that is fast losing money on it’s postal services – $39 million for the year ended August 2018 – NZ Post’s policy to de-couple from a well-established, highly prominent bank usually located on prime retail land, beggars understanding. How does one generate foot-traffic down an alley-way, compared to a highly-visible street frontage outlet on Wellington “Golden Mile”?

In November last year, Prime Minister Jacinda Ardern responded to concerns that communities were losing their postal and Kiwibank services, or seeing those service downgraded;

“There are changes afoot that I have had concerns about; it is because the environment’s changing and people aren’t using those postal services in the same way. We are looking at how communities can still have banking services and postal services.

But with some of the changes we’re seeing, we do have some concern over loss of service and banking services as well.”

The Coalition government had better take notice of what is happening. This is a repeat of the late 1980s, when Rogernomics was rampaging through the country, gutting services; de-regulating imports which resulted in business closures and job losses; and a retreat by the State from communities that relied heavily on those services – or the money that was injected into local businesses.

The Opposition National Party has been exploiting planned closures of Kiwibank and/or NZ Post outlets. Nelson MP, Nick Smith, has been prominent and vocal in actively campaigning to save the Stoke branch of Kiwibank;

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In a press release on a National Party website, Smith lamented angrily;

“My job is to hold the Government to account for its promises. This Stoke closure contradicts the Labour/NZ First Coalition agreement that commits to expanding public services in regional New Zealand. It is hypocritical of Regional Economic Development Minister Shane Jones to have decried other bank branch closures when he is the Associate Minister of State Owned Enterprises that owns NZ Post and Kiwibank. Mr. Jones’ public comments indicate he is unhappy with the decision to close in Stoke Kiwibank and PostShopwith a strong community campaign he could use his powers to have the decision reconsidered.

We call on as many people as possible to join this campaign and to save the Stoke branch of Kiwibank and PostShop. These State Owned businesses need to get to the message that they exist to serve the community that owns them.”

And perhaps, this time, Dr Smith has a valid point when he rails against a possible broken promise from the Coalition Governmen; “This Stoke closure contradicts the Labour/NZ First Coalition agreement that commits to expanding public services in regional New Zealand. It is hypocritical of Regional Economic Development Minister Shane Jones to have decried other bank branch closures when he is the Associate Minister of State Owned Enterprises that owns NZ Post and Kiwibank”.

Smith’s “inner social activist” came to the fore at a public meeting in Stoke, where he called for public opposition to NZ Post/Kiwibank’s planned closures.

“I call to all businesses in Stoke to boycott the request for agency. Do not buy the line that they are the same. The postal services you receive at an agency in another shop are not as focused on the public as you would see in a dedicated service.”

Which is deeply ironic as Dr Smith should also be reminded that it was his government that created a Deed of Amendment and Restatement with NZ Post on 12 December 2013. This Deed specifically permitted NZ Post to use “service points [agencies]  hosted in other businesses“;

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The Deed was signed by Dr Nick Smith’s colleague,  then-Minister for Communications and Information Technology, Amy Adams.

E tū Union national organiser, Joe Gallagher, pointed out the inevitable consequences of National’s actions;

“What everyone missed [at the time] is the Government allowed NZ Post to reduce the number of corporate shops they were required to have, as long as they provided service points. What you’re seeing now is all that being bled through into the system.”

I wonder if Dr Smith shared this item of information with the good people of Stoke on 23 November, last year, when he addressed a public meeting of concerned citizens? His chances for re-election in 2020 might be dented if this fact became more widely known in his own electorate.

And lastly, we come to perhaps the most ‘Monty Pythonesque‘ of  NZ Post’s current policies…

In early December last year, this blogger visited the Kilbirnie NZ Post/Paper Plus agency to post a Christmas parcel for a friend. The cost of postage came $17.00.

I had $8.00 in postage stamps which I offered to stick on the parcel, and would pay the remaining $9.00.

I was informed by the staffer behind the counter that postage stamps could not be used for parcels. They could only be used for envelopes containing letters.

It defies belief: postage stamps are no longer accepted by NZ Post to be used to send a parcel through the postal system.

Add that bizarre policy to everything described above, and the inevitable question arises: Are our political leaders waging a covert campaign to undermine and destroy NZ Post, as happened with Solid Energy under National’s watch?!

It is difficult not to come to that conclusion. In fact, I wrote to the two ministers in charge of SOEs pointing out NZ Post’s strange policies;

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from: Frank Macskasy <fmacskasy@gmail.com>
to: “Rt Hon. Winston Peters” <winston.peters@parliament.govt.nz>,
“Hon. Shane Jones” <shane.jones@parliament.govt.nz>
date: 5 Dec 2018
subject: NZ Post – customer service?

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Rt Hon. Winston Peters
Minister,
State Owned Enterprises

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Hon. Shane Jones
Associate Minister,
State Owned Enterprises
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Kia ora Mr Peters and Mr Jones,

I am writing to you regarding a curious incident yesterday at a Kilbirnie Post Shop agency.

I was posting a parcel and the overall cost came to $17.

I had postage stamps with me, so was going to place them on the parcel, and pay the balance, to make $17 in total.

I was informed by staff that postage stamps can no longer be used for parcels – only for letters.

Are you aware that postage stamps (sold by NZ Post) can no longer be used on parcels delivered by NZ Post?

It seems bizarre that NZ Post has enacted such a policy; in effect not accepting one of it’s own systems to make a delivery. It would be like a bank not accepting cash to pay for a service.

It is unclear how NZ Post’s policy serves customer’s needs. Especially as their postal numbers are falling.

I look forward to your response to this issue and whether you will instruct NZ Post to change this policy.

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Regards,
-Frank Macskasy

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I have yet to receive an answer. Perhaps the reply… is in the post?

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References

Fairfax media: Kiwibank suffers growing pains as it splits from restructured NZ Post

Fairfax media: Union says more Kiwibank branches will shut as NZ Post separates

Mediaworks/Newshub: ‘Challenging times’ – 79 New Zealand Post shops to close amid Kiwibank changes

Ministry of Transport: Annual Fleet Statistics (p57)

NZ Post: Upper Hutt Paper Plus

Scoop media: New Zealand Post to close 79 shops

Radio NZ: Kiwibank customers ‘appalled’ by branch closures

Otago Daily Times: Closure of NZ Post, Kiwibank branches confirmed

NZ Herald: Kiwibank set to close Te Puke branch, new PostShop outlet sought

Fairfax media: Call for NZ Post agency partner boycott to stop Kiwibank’s Stoke closure

National: Public Meeting to Oppose KiwiBank Closure/Postshop Downgrade

NZ Post – NZ Government: Deed of Amendment and Restatement

Fairfax media:  Union says more Kiwibank branches will shut as NZ Post separates

Additional

NZ Post: History of New Zealand Post

DPMC: Ministerial Portfolio – State Owned Enterprises

Previous related blogposts

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

A positive indicator for NZ Post…?

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All images stamped ‘fmacskasy.wordpress.com/The Daily Blog’ 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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This blogpost was first published on The Daily Blog on 22 January 2019.

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Categories: The Body Politic Tags: ,

Success for National Govt – new bank opens!

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National-Party-Holds-Conference-Wellington-sJ7OyG8uc6Yl

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In 2002, the Labour-Alliance Coalition gave us a new bank;

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Kiwibank_Logo_Wide

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This year, National’s policies (or lack of) delivered us this new bank;

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New foodbank opens in New Lynn - Radio NZ - Generation Ignite - John Campbell

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Nothing quite spells “success”  like a new Food Bank opening in a community near you.

Listen to John Campbell interviewing Jo Noema on her foodbank project, “Generation Ignite“. Truly a remarkable New Zealander.

Generous people like Jo are the reason that disadvantaged, impoverished families are able to survive. They are doing what well-paid, well-resourced National Ministers are tasked to  do, but are failing miserably.

When John Key promised us a “Brighter Future”, I don’t think this  is quite  what we were anticipating.

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References

Radio NZ: New foodbank opens in New Lynn

Additional

Facebook: Generation Ignite

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Dear Leader John Key sitting on his hands - Tremain

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This blogpost was first published on The Daily Blog on11 June 2016.

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The Mendacities of Mr Key # 17: The sale of Kiwibank eight years in the planning?

11 April 2016 8 comments

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we will give you honest government - yeah right

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National Makes Good on 2008 Threat to Sell Kiwibank

NZ Post’s, announcement on 6 April that it intends to sell-down  45% of it’s subsidiary, Kiwibank, appears to make good on Bill English’s inadvertent threat in August 2008 that Kiwibank would “eventually be sold”.

English was secretly recorded by an un-named person during a 2008 National Party Conference, and encouraged to talk freely on the prospect of selling Kiwibank;

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English - I didn't choose my words well - NZ Herald - Kiwibank sale

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English subsequently complained; “I did not choose my words well“.

However, it now appears that English expressed his words honestly,  disclosing a secret agenda to sell Kiwibank to someone he believed was a loyal National Party apparatchik.

Another secret recording, this time from National MP Lockwood Smith, also hinted at a secret agenda held by National;

“There’s some bloody dead fish you have to swallow, to get into government to do the kinds of things you want to do. Once we have gained the confidence of the people, we’ve got more chance of doing more things.

We may be able to do some things we believe we need to do, perhaps go through a discussion document process. You wouldn’t be able to do them straight off.”

With the 2008 General Election only three months away, and with a new, untested Leader of the National Party (John Key) facing a seasoned, popular Prime Minister, the secret recordings forced National’s hierarchy to take rapid steps to “kill” the story.

Both English and Key issued public statements  resiling from any intention to sell Kiwibank;

It’s not my view. It’s not my private view. I simply used loose language – I made a statement I shouldn’t have.” – Bill English

We would never make a change to that decision without a mandate.” – John Key

Again in 2008, Key resiled from any sale of Kiwibank;

“I’m ruling out selling Kiwibank at any point in the future.”

And again in 2010,

“National would not sell Kiwibank at any stage, ever. We have ruled it out.”

Making a Promise

On 25 February 2014, our esteemed Dear Leader, John Key, announced to the nation that National’s asset sales programme was over;

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“Just as we did before the last election we’re making our position on share sales clear to New Zealanders before we go to the polls later this year. We’ve achieved what we wanted with the share offers in energy companies and Air NZ. We’re now returning to a business-as-usual approach when it comes to [state-owned enterprises]. The truth is there aren’t a lot of other assets that would fit in the category where they would be either appealing to take to the market or of a size that would warrant a further programme, or they sit in the category that they are very large like Transpower but are monopoly assets so aren’t suited.”

Just as we did before the last election we’re making our position on share sales clear to New Zealanders before we go to the polls later this year. We’ve achieved what we wanted with the share offers in energy companies and Air NZ. We’re now returning to a business-as-usual approach when it comes to [state-owned enterprises]. The truth is there aren’t a lot of other assets that would fit in the category where they would be either appealing to take to the market or of a size that would warrant a further programme, or they sit in the category that they are very large like Transpower but are monopoly assets so aren’t suited.”

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Two years and nearly two months later, and Key’s promise- like so many other committments he has made – appears to have been watered-down to permit a de-facto partial-sale.

The intended purchasers would be two other SOEs,  NZ Superannuation Funds (25%) and ACC Funds (20%);

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NZ Post to sell 45 per cent of Kiwibank for $495m cash injection

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Breaking the Promise

Even as NZ Post’s Directors were announcing the partial sale of their subsidiary, Kiwibank,  Finance Minister Bill English was engaged in some well-rehearsed damage-control.

No doubt with considerable prompting by Party strategists and media-minders, English reassured the public that National would not allow the people’s bank to end up in private ownership, as the former Postbank did February 1989 when it was sold to the ANZ Bank.

English promised;

“Kiwibank will remain 100 per cent government-owned – that is a bottom-line. To ensure this occurs, the proposal includes a right of first refusal for the Government over any future sale of shares – which we would exercise.”

To be blunt, National cannot be trusted to keep it’s word.

Key knew in advance!

Despite  Key’s  committment to end asset sales on  25 February 2014, it appears from Michael Cullen’s own statements that our esteemed Dear Leader was already aware at around the same time, that a partial asset-sale was being planned by NZ Post.

During a video-taped press-briefing by Fairfax media, Cullen admitted that he and Key had discussed the partial-sale of Kiwibank that year (2013/14).

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So Brian [Roche] and I after discussion, and [I] think I remember correctly, I had a brief discussion with the Post Board, went to see the Prime Minister, to see whether there would be a kind of visceral reaction from the government, as our ultimate share holder, to that happening. That was not the case. Mr Key indicated he was very comfortable with that prospect and on that basis therefore we began to proceed...”

So when Key made his public promise on 25 February, 2014, that National’s asset sales programme was over – he was making that committment whilst knowing full well that the partial sale of Kiwibank was already underway.

Broken promises and secret agendas – this story has it all.

Who Pays? Loyal Kiwibank customers do!

There is a hidden cost to the partial-sale of  Kiwibank.

As David Hargreaves from Interest.co.nz reported;

The move could see Kiwibank’s credit rating slip by one notch from the current A+ to A as NZ Post will likely not guarantee Kiwibank’s future obligations once the deal proceeds.

When a financial institution’s credit rating is reduced, it means (generally) that they become a greater risk of lending money to them.  According to Investpedia;

“…While a borrower will strive to have the highest possible credit rating since it has a major impact on interest rates charged by lenders, the rating agencies must take a balanced and objective view of the borrower’s financial situation and capacity to service/repay the debt.

A credit rating not only determines whether or not a borrower will be approved for a loan, but also the interest rate at which the loan will need to be repaid.

… and a high interest rate is much more difficult to pay back.”

It is entirely likely that when a credit down-grade occurs (as happened to New Zealand under National in September 2011), the cost of borrowing funds will increase for the bank.

Which is precisely what Hargreaves reported;

Standard & Poor’s has indicated that following the announcement of the proposed transaction, Kiwibank’s long term issuer credit rating (A+) will be placed on credit watch negative pending the proposed termination of the standing guarantee provided by NZ Post. Should the guarantee be terminated, Standard & Poor’s has indicated it will result in a one notch downgrade to Kiwibank’s long term issuer credit rating (from A+ to A). 

That cost will either have to be absorbed, reducing their profit margins and making it easier for Key and English to justify full privatisation – or will be passed on to the banks customers.

English will most likely not permit Kiwibank’s profit to fall as that would mean lower dividends paid into government coffers.

Which leaves Kiwibank’s Mum & Dad customers  to foot the bill for the partial-sale.

The Agenda #1

The sale to ACC and NZ Super Fund is a clever ploy. On the face of it, Kiwibank remains in wholly State ownership, albeit shifting it’s shareholders around, from one SOE (NZ Post) to three (NZ Post, ACC, NZ Super Fund).A kind of multi-million dollar Musical Chairs.

At the same time,  this would allow a healthy dividend payment (an amount  yet to be disclosed) to be paid to the government. As Cullen said on 6 April;

“The proceeds would allow New Zealand Post to invest in its core parcels, packages and letters business and pay down debt. It is anticipated that a special dividend would also be paid to the Crown…”

This was confirmed a day later by Bill English speaking with Guyon Espiner, on Radio NZ’s Morning Report;

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Guyon Espiner: “Ok, let’s look at what happens to the $495 million that NZ Post gets from this sale. I understand it doesn’t go to generate any extra capital for Kiwibank, it goes to NZpost to pay down debt and invest in it’s parcel and mail business, right?”

Bill English: “That’s right, and then if there’s, subject to negotiations there may be special dividend passed back to this [inaudible] government.”

English said any dividend payable to the government would “likely be several hundred million“. This would prove a godsend to English who otherwise would be struggling to create another Budget surplus in his May budget.

The Agenda #2

National has not only increased it’s revenue, thereby alleviating a major headache for Bill English, but they have pulled the rug out from under the Greens who, three days earlier, had been calling for increased $100 million investment in Kiwibank. As Greens co-leader James Shaw stated in a recent policy announcement;

“Our plan will help Kiwibank lead a change in New Zealand banking, by giving it a clear public purpose that requires it to drive competition to generate better interest rates for New Zealanders.

We’ll help Kiwibank to grow faster by injecting $100 million of capital into the bank and let it retain more of its profits.

Strengthening Kiwibank so it can create competition in the banking sector is the smartest way to ensure all banks pass on the best interest rates to Kiwis.”

The Agenda #3

A deeply cynical person might suspect that after the defeat of John Key’s pet vanity-project  (the recent flag referendum debacle) that National has decided to exact revenge against the many Labour and Green voters who voted to retain the current flag,  by partial privatisation of a favourite state owned enterprise.

Does such  cynicism border on paranoia? In an era of Dirty Politics; tax-havens with trillions hidden away; and increasingly corruption of state leaders, officials, organisations, and institutions –  the demarcation between healthy scepticism and paranoid fantasies blur, merge, and are tomorrow’s headlines waiting to be made public.

Labour’s Response?

Labour and the Green Party both responded to Cullen’s announcement. As Stacy Kirk wrote for Fairfax Media on 6 April;

The response of opposition parties has been mixed, with the Greens calling it a step down the path of privatisation. 

Labour leader Andrew Little said it was important Kiwibank stayed in public ownership.

“And this does that, there are some good conditions around it,” he said. 

“This provides a way to get extra capital from these sovereign wealth funds, and hopefully for NZ Post to use the funds that they raise from the sale, to put more capital into Kiwibank. 

Meanwhile, Labour Party state-owned enterprise spokesman David Parker said Cullen should be congratulated on the idea. 

“Michael Cullen should be congratulated for securing a route to expand KiwiBank and keep it in public ownership, given the refusal of National to provide more capital for NZ Post or KiwiBank.

“Michael Cullen’s solution only works to ensure the bank will remain in public ownership if National promises that if ACC or the Super Fund sells its shares, then the government of the day would exercise its first right of refusal and buy them back.” 

Labour’s response has not only been weak and naive – but it also appears that David Parker is not “up to speed” with the terms of the sale. It is extraordinary that both Labour’s SOE Spokesperson, David Parker,  and Labour’s Leader, Andrew Little, believe that;

“This provides a way to get extra capital from these sovereign wealth funds… to put more capital into Kiwibank” and that “Michael Cullen should be congratulated for securing a route to expand KiwiBank”.

Nothing of the sort will happen.

Both Cullen and Bill English have been crystal-clear and surprisingly honest in stating that;

  1. “The proceeds would allow New Zealand Post to invest in its core parcels, packages and letters business and pay down debt.” “
  2.  “It is anticipated that a special dividend would also be paid to the Crown.”
  3.  Kiwibank will get nothing.

So where Parker and Little get their cozy ideas about “putting more capital into Kiwibank” is unclear.

Instead,  Green Party co-leader, James Shaw, seemed more cognisant to National’s real agenda;

“The fact is the Government forced Kiwibank’s hand and today’s announcement will make it easier than it was before to move Kiwibank into private ownership.”

Labour needs to get it’s act together on this issue.

The future of the people’s bank depends on it.

As for the mainstream media, it is high time they became aware of the many promises made by both Key and English – and their subsequent breaking. Otherwise, they too are failing the public.

National, in the meantime, has carried out the  perfect bank “heist”.

It only took eight years to accomplish.

 

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References

Fairfax Media: NZ Post to sell 45 per cent of Kiwibank for $495m cash injection

NZ Herald: English – I didn’t choose my words well

TV3 News: National hit by more secret recordings

Fairfax Media: Facebook Video – NZ Post to sell 45 per cent of Kiwibank for $495m cash injection

NZ Herald: PM pledges not to sell Kiwibank after all

Faifax Media: Key – Why I should be the PM

Otago Daily Times: Key not ruling out Kiwibank sale in future

NZ Herald: PM – no more SOEs to sell after Genesis

Fairfax Media: Key ‘no GST rise’ video emerges

NZ Treasury: Income from State Asset Sales as at May 2014

Interest.co.nz: NZ Super Fund and ACC proposed as new minority shareholders in Kiwibank

Investopedia: Credit Rating

NZ Herald: S&P cuts NZ credit rating

Radio NZ: Bill English – Kiwibank will stay 100 percent New Zealand-owned

Green Party: Greens will repurpose Kiwibank and save Kiwis hundreds of millions

Additional

Fairfax media: Kiwibank tape catches English

Scoop Media:  Bill English Talks On KiwiBank Being Sold (audio)

Other bloggers

No Right Turn: Plunder

The Daily Blog: KiwiBank another privatisation by stealth – Robbing Fred to bribe Dagg to pay John

The Dim Post: A fascinating precedent

The Standard: Kiwibank sale to NZ Super, ACC privatisation by stealth

Previous related blogposts

Westpac, Peter Dunne, & Edward Snowden

The Mendacities of Mr Key # 12: No More Asset Sales (Kind of)

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the sale of kiwibank - nz herald cartoon - john key

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This blogpost was first published on The Daily Blog on 11 April 2016.

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National, The Economy, and coming Speed Wobbles

1 March 2014 4 comments

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The Nationalmobile

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For a while, the news seemed dire for the Left, and impressively positive for National;

  • A recent Fairfax Media-Ipsos poll put National on 49.4%  versus  31.8% and 10% respectively for  Labour and the Greens.
  • The latest Roy Morgan Poll had National at 48%, compared to 30% and 12% for Labour and the Greens respectively.
  • Annual average economic growth  was 2.6% to September 2013.
  • The Household Labour Force Survey for the December 2013 Quarter showed a drop in unemployment, from 6.2% to 6%.
  • Dairy prices (and thusly export reciepts) continued to rise.
  • The trade deficit continued to slowly improve.
  • And there was just enough ambiguity around recent child poverty statistics to allow National, and its drooling sycophants,  to claim that it was no longer a  growing problem (it was simply a constant problem).

However, is everything as it really seems? Is the news all rosy and are we rushing head-first toward the “promised land“, the much heralded, Neo-liberal Nirvana?

Or, are dark clouds beginning to appear on the horizon?

New Zealand’s economic recovery is predicated mostly on the Christchurch re-build, and piggy-backing on the global economic situation picking up. As Treasury reported in 2012;

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.

As predicted,  the ASB/Main Report Regional Economic Scoreboard recently revealed that Canterbury had over-taken Auckland as the country’s main center for economic growth.

Meanwhile, the same report outlines that Auckland’s “growth” is predicated on rising house prices. Economic “growth” based on property speculation is not growth – it is a bubble waiting to burst.

The other causal factor for our recovery is international. The IMF reported only last month;

Global activity strengthened during the second half of 2013, as anticipated in the October 2013 World Economic Outlook (WEO). Activity is expected to improve further in 2014–15, largely on account of recovery in the advanced economies. Global growth is now projected to be slightly higher in 2014, at around 3.7 percent, rising to 3.9 percent in 2015, a broadly unchanged outlook from the October 2013 WEO. But downward revisions to growth forecasts in some economies highlight continued fragilities, and downside risks remain...

Being  mostly an exporter of commodities (meat, dairy products, unprocessed timber, etc), New Zealand cannot but help ride the wave of an upturn in the global economy as increasing economic activity creates a demand for our products.

Any economic recovery, as such, has little to do with the incumbent government – just as the incumbent governments in 2008 and 2009 had little to do with the  GFC and resulting recession (though National’s tax cuts in 2009 and 2010 were irresponsible in the extreme, reliant as they were on heavy borrowings from overseas). We are simply “riding the economic wave”.

As the global up-turn generates growth in New Zealand’s economy, paradoxically that leaves us vulnerable to new, negative, economic factors;

1. The Reserve Bank has indicated that  it will begin to increase the OCR (Official Cash Rate) this year.

Most economists  are expecting the OCR to rise a quarter of a percentage point on March 13. As Bernard Hickey reported in Interest.co.nz;

Wheeler said in early December he expected to raise the OCR by 2.25% by early 2016, which would lift variable mortgage rates to around 8% by then. The bank forecast interest rate rises of around 1% this year and a similar amount next year.

2. An increase in the OCR will inevitably flow through to mortgage rates, increasing repayments.

As mortgaged home owners pay more in repayments, this will impact on discretionary spending; reducing consumer activity, and flow through to lower business turn-over.

Even the fear-threat of higher mortgage interest rates may already be pushing home owners to lock-in fixed mortgages. Kiwibank for example, currently has a Fixed Five year rate at 6.9%. ANZ has a five year rate at 7.2%. Expect these rates to rise after March.

If home owners are already fixing their mortgages at these higher rates, this may explain the fall in consumer confidence, as the Herald wrote on 20 February,

New Zealand consumer confidence fell from its highest level in seven years this month, while remaining elevated, amid a pickup in inflation expectations and the prospect of interest rate increases.

It may also explain, in part, this curious anomaly which recently featured in the news cycle,

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Govt deficit bigger than expected as tax trickles in

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The Herald report goes on to state,

The smaller tax take was across the board, with GST 2.3 per cent below forecast at $7.5 billion, source deductions for personal income tax 1.2 per cent below forecast at $11.71 billion, and total corporate tax 4.9 per cent below expectations at $3.56 billion.

Treasury officials said some of the lower GST take was due to earthquake related refunds, and that the shortfall in Pay As You Earn might be short-lived. The corporate tax take shortfall was smaller than in the previous month…

  • A drop in GST would be utterly predictable if consumer spending was falling.
  • Personal income tax would be falling if employers were cutting back on part-time work available. Which indeed seems to be the case, according to the latest Household Labour Force Survey (HLFS) Poll on unemployment,

Over the year, the total number of under-employed people increased by 27,200 to 122,600. As a result, the under-employment rate increased 1.0 percentage points to 5.3 percent.

Less wages equals less spent in the economy and less PAYE and GST collected by the government.

  • This would also account for the drop in corporate tax take falling by  4.9%.

The effect of the Reserve Bank’s decision to begin raising interest rates will be to dampen economic activity and consumer demand. This will be bad news for National.

3. An increase in the OCR will inevitably also mean a higher dollar, as currency speculators rush to buy the Kiwi. Whilst this may be good for importers – it is not so good for exporters. If we cannot pay our way in the world through exports, that will worsen our Balance of Trade; in turn risking our international credit rating; which in turn can  impact negatively on the cost of borrowing from off-shore (the lower our credit-rating, the higher interest we pay to borrow, as we are considered a higher lending risk).

This, too, will affect what we pay for our mortgages and capital for business investment.

4. As economic activity and consumer demand falls, expect businesses not to hire more staff and for fresh  redundancies to add to the unemployment rate. Unemployment will either stay steady later this year, or even increase.

Less people employed or a reduction on work hours for part-time employees will also result in a lower tax take.

5. As interest rates rise, in tandem with the Reserve Bank’s policy on restricting low-home deposits, expect home ownership to fall even further. This will increase demand for rentals, which, in turn will push up rents. Higher rents will also dampen consumer spending.

6. As the global economy picks up and demand for oil increases, expect petrol prices to increase. This will have a flow-through effect within our local economy; higher fuel prices will lead to higher prices for consumer goods and services. This, in turn, will force the Reserve Bank to ratchet up interest rates (the OCR) even further.

7. As businesses face ongoing pressures (described above), there will be continuing  pressure to dampen down wage increases (except for a minority of job skills, in the Christchurch area). For many businesses, the choice they offer their staff will be stark; pay rise or redundancies?

8. Expect one or more credit rating agencies (Fitch, Moodies, Standard and Poors) to put New Zealand on a negative credit watch.

9. According to a recent (21 February) Roy Morgan poll, 42%  of respondents still considered the economy their main priority of concern. 21% considered social issues as their main concern.This should serve as a stark warning to National that people will “vote with their hip wallets or purses” and if a significant number of voters believe that they are not benefitting from any supposed economic recovery, they will be grumpy voters that walk into the ballot booth.

Interestingly, the “Economy” category also included the social issue of “Poverty / The gap between the rich and the poor”.  16% believed that “Poverty / The gap between the rich and the poor”was a major factor within the economic situation – a significant sub-set of the 42%.

Add that 16% to the 21% considering social issues to be the number one priority, and we see the number of respondents in this category increasing to 37%. That is core Labour/Green/Mana territory.

10. National has predicated its reputation as a “prudent fiscal manager”  on returning the government’s books to surplus by 2014/15. As Bill English stated just late last year,

“We remain on track to surplus in 2014/15, although it will still be a challenge to actually reach surplus in that financial year.”

Should National fail in that single-minded obsession, the public will not take kindly to any excuses from Key, English, et al. Not when tax payer’s money has been sprayed around with largesse by way of corporate welfarism. Throwing millions at Rio Tinto, Warner Bros, China Southern Airlines, Canterbury Finance, etc, will be hard to justify when National has to borrow further to balance the books.

On top of which is the $61 billion dollar Elephant in the room; the government debt racked up by National since taking office in 2008. As Brian Fallow wrote in the Herald in 2011,

The concern about government debt is not so much about its level, but the pace at which it is increasing. In June 2008 net government debt was $10 billion, or 5.6 per cent of GDP, and gross debt $31 billon, or 17.2 per cent of GDP.

Since 2008, New Zealand’s sovereign debt has increased six-fold – made worse in part by two ill-conceived and ultimately unaffordable tax cuts.  Those tax cuts were, in essence, electoral bribes made by John Key to win the 2008 general election. (Labour’s paying down of massive debts it had inherited from National in the 1990s, plus posting nine consecutive surpluses, had come around to bite Cullen on his bum. Taxpayers were demanding “a slice the action” by way of tax cuts.)

That debt will eventually have to be repaid. Especially if, as some believe, another global financial shock is possible – even inevitable. With a $60 billion dollar debt hanging over our heads, we are not well-placed to weather another global economic shock. In fact, coupled with private debt, New Zealand is badly exposed in this area (as the OECD stated, in the quote below).

So the “good news” currently hitting the headlines is not so “good” after all, and many of the positive indicators have a nasty ‘sting in the tail’. As the OECD  recently reported,

The New Zealand economy is beginning to gain some momentum, with post‑earthquake reconstruction, business investment and household spending gathering pace.Risks to growth remain, however, stemming from high private debt levels, weak foreign demand, large external imbalances, volatile terms of trade, a severe drought and an exchange rate that appears overvalued. The main structural challenge will be to create the conditions that encourage resources to shift towards more sustainable sources of prosperity. Incomes per head are well below the OECD average, and productivity growth has been sluggish for a long time. Lifting living standards sustainably and equitably will require structural reforms to improve productivity performance and the quality of human capital.

As the election campaign heats up, expect the following;

  1. Greater media scrutiny on National’s track record,
  2. The public to become more disenchanted with Key’s governance as economic indicators worsen and impact on their wallets and purses,
  3. National (and its sycophantic supporters) continue to blame welfare beneficiaries; the previous Labour government; the GFC and resulting recession; and other “external factors” for their lack-lustre performance,
  4. Key and various business  figures to become more strident in their attacks on Labour and the Greens,
  5. A dirty election campaign , including a well-known extremist right-wing blogger releasing personal information on political opponants, which will backfire badly on National,
  6. National to fall in the polls; NZ First will cross the 5% threshold; and Labour/Greens/Mana to form the next government, with Peters either sitting on the cross benches, or taking on a ministerial portfolio outside Cabinet.

So it’s not the Left that should be worried.

National is on shakier ground than many realise.

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References

Fairfax Media: National on wave of optimism – poll

Roy Morgan: National (48%) increases lead over Labour/ Greens (42%) – biggest lead for National since July 2013

NZ Herald: Economic growth hits 4-year high

Statistics NZ: Household Labour Force Survey: December 2013 quarter

Fairfax Media: Dairy prices squash trade deficit

NZ Herald: NZ’s trade deficit remains despite better terms

Fairfax Media: Inequality: Is it growing or not?

NZ Treasury: Recent Economic Performance and Outlook

Fairfax media: Canterbury overtakes Auckland in economic survey

IMF: World Economic Outlook (WEO) Update

Reserve Bank:  Price stability promotes a sustainable expansion

Interest.co.nz:  Bernard Hickey looks at what the Reserve Bank’s OCR decision means for mortgage rates and house prices

NZ Herald: Consumer confidence slips as rates increase looms

NZ Herald:  Govt deficit bigger than expected as tax trickles in

Statistics NZ:  Unemployment December 2013 Quarter

Roy Morgan: Economic Issues down but still easily the most important problems facing New Zealand (42%) and facing the World (36%) according to New Zealanders

NBR:  Govt sees wider deficit in 2014 on ACC levy cut, lower SOE profits

Fairfax media:  Public debt climbs by $27m a day

NZ Herald: Govt debt – it’s the trend that’s the worry

NZ Herald: Cullen – Tax cuts but strict conditions

OECD: Economic Survey of New Zealand 2013

Previous related blogposts

TV3 Polling and some crystal-ball gazing

Other blogposts

The Daily Blog: Latest Roy Morgan Poll shows the Labour funk

The Daily Blog: Canaries In A Coal Mine: Has The Daily Blog Poll anticipated Labour’s Collapse?

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The Cost of Living

Above image acknowledgment: Francis Owen

This blogpost was first published on The Daily Blog on 23 February 2014.

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Westpac, Peter Dunne, & Edward Snowden…

23 June 2013 7 comments

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Edward Snowden Charged With Espionage Over NSA Leaks

Acknowledgement: Huffington Post –  Edward Snowden Charged With Espionage Over NSA Leaks

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Are we  witnessing the first green buds of the Earth Spring?  All over the world, the winds of change are blowing harder and harder.

The Arab Spring was first, and people rose up against dictators in Algeria, Egypt, and Libya. In Syria, a similar popular uprising  turned into a bloody sectarian war, claiming nearly a hundred thousand lives. Dictator Assad will not give up power easily.

In the West, the Occupation movement flowered for a brief moment, but has become dormant again… for a while.

In Turkey and Brazil, people have come out onto the streets to oppose their  governments. Even democratically elected governments are feeling the brunt of popular discontent.

In the US, even as a once great symbol of freedom devolves into a police surveillance state, individuals are risking personal safety and rebelling.

Bradley Manning and Edward Snowden are two such men.

Manning was arrested in May 2010, and is currently facing a military trial (and we know how that will turn out).

Now, Edward Snowden is the latest whistleblower to be charged by an American system that is becoming more and more despotic.

When a government fears it’s own people, it is well past it’s Use By date.

Bradley and Snowden: history books will be kinder to them than the politicians who persecuted them.

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Dunne hasn't made up mind about GCSB bill

Acknowledgement: Radio NZ –  Dunne hasn’t made up mind about GCSB bill

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Edward Snowden made public information that revealed that US intelligence agencies were spying on citizens in countries around the world. He revealed that no one’s privacy  was safe.

Meanwhile, here in New Zealand, the National led government is rushing a Bill through Parliament that would permit the GCSB to do precisely that; spy on New Zealanders.

We have moved from a nation that barely tolerated the State from prying into our lives – to one that is surveilling us; storing vast quantities of data on us; and now wants more power to spy on us.

There is barely a murmur in response.

Even the Right Wing – the political spectrum that is  (supposedly) the most intolerant and suspicious of  the growth of  State power – seems to be practically comatose. Though in reality that may be because National is proposing the law-change, and not Labour. If it were a Labour government…

Peter Dunne, fresh from  resigning his ministerial portfolios for allegely leaking the Kitteridge Report (or, more accurately, breaking an embargo, since it was one week away from being released anyway), has yesterday  announced that he might not support National’s  Government Communications Security Bureau and Related Legislation Amendment Bill.

Whilst I’m not about to look a gift-moa in the mouth and happily support Dunne on this – it does raise a few questions.

Questions like… why?!?! Up till now he has been  the obedient lap-cat of the National Party, so why all of a sudden has the Coiffured One grown a pair, and practically thrown his lot in with the Snowdens and Mannings of this world?

Martyn Bradbury on The Daily Blog has been speculating on Dunne’s motivations in his part of the GCSB Affair in a series called The Dunne & Vance Theory.

Whatever is going on – I hope Dunne votes against the Bill. We don’t need to empower our spy agencies any more than they are already. We need to remember that the State is our servant – not the other way around.

We don’t need to be constantly surveilled, in case one of us happens to nick a pen or spray-paints ‘Key Sucks’ on the footpaths outside Parliament.

Up until the 21st century, the State pursued crooks after they committed wrong-doing. Now, the State seems intent on watching us all – in case someone, somewhere, is naughty.

Isn’t that… Big Brother?

I support Dunne on this dire issue. It is time to call a halt to the rise of the Surveillance State.

Dunne may well be the man to do it.

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Govt move to tender banking gets Green approval

Acknowledgement: Radio NZ – Govt move to tender banking gets Green approval

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I’ve always wondered…

Why have successive governments (Labour as well as National)  used Australian-owned Westpac Bank to hold government accounts – known as the ‘Master Banking Contract’?   The Master Banking Contract has been held by  Westpac for 23 years despite never  being tendered out.  It covers all government departments (except  Crown entities and  SOEs).

According to Alex Tarrant,

  • In the late 1980s, Treasury undertook an open tender to select one bank to provide the Crown’s domestic banking services. Westpac was selected to provide these services and a deed entered into in January 1989.
  • A new master agreement was signed in November 2004 and, since 2005, the Crown has negotiated ongoing contractual price reductions for contract services.
  • The contract covers only the core banking services associated with operating Government departments’ bank accounts for processing domestic receipt and payment transaction banking business in New Zealand.
  • An increasing array of banking services have developed over time that are not covered by the master banking agreement with Westpac. Banking services that are not covered by the contract are regularly tendered by the departments concerned.
  • The contract applies only to Government departments, not Crown Entities or SOEs.
  • The Treasury regularly consults with key departments over pricing and service levels relating to the contract, including the possibility of conducting a future tender of the Crown’s banking arrangements.
  • The contract has not been re-tendered to date because the costs of doing so outweigh the expected benefits given the complexity of arrangements with departments and the price reductions negotiated under the existing contract.  Departments do, however, tender for a range of supplementary banking services not covered by the master banking agreement with Westpac.
  • The fee arrangements between the Crown and Westpac are commercially sensitive and are not made public.

Acknowledgement: Interest.co.nz – Government considers future of Westpac’s key 21 year-old banking deal

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Here are two further points to consider,

  1. Last year Westpac NZ  reported   $707 million in after-tax profit  –  a 22 %  increase from 2011. (See: Westpac profit rises 22pc to $707m )
  2. In October 2009, the IRD won a lawsuit against Westpac which had been  taken to Court for tax avoidance. Not only did Westpace lose, but it ended up owing $961 million in back taxes and accrued interest. (See: Westpac loses massive tax case on all counts)

So, Mr Key or Mr English – just remind us again why the NZ Government still has a Master Contract for State banking, with a convicted tax avoider, that actively conspired to scam the tax-payer for nearly one billion dollars?!

How is that being a Good Corporate Citizen?

Perhaps we should just let the Russian Mafia tender for our banking services – the result would be the same.

So not only is Westpace making huge profits – $707 in 2012 alone – but they’re screwing us by not paying their share of tax, as the law demands.

Have I left anything out?

Screw the tender process.

Just give the Master Contract to Kiwi Bank. The benefits would be obvious to all but the most strident, dogmatic  right winger;

  1. No more tax avoidance – the Crown-appointed Board  (with Ministerial over-sight) would see to that,
  2. Kiwibank would make bigger profits and therefore pay a bigger dividend to the government,
  3. All profits remain in New Zealand and not shipped of overseas (to Australia in Westpac’s case)
  4. Less profits remitted overseas will help of balance of payments

Win/win/win/win.

I’m just gobsmacked that no politician – whether Labour or National – has ever seen the blindingly obvious nature of this commercial cock-up.

And strangely enough, it’s left-wing parties – Mana and the Greens – thay have to point this out to the more capitalist-minded Nats?!

Though the reasons why the Nats have stayed ‘sweet’ with Westpac seem to be less than commercially sensible and more to do with a good night out…

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Greens say govt must tender master banking contract with Westpac after Ministers reveal corporate hospitality accepted from the bank

Acknowledgement: Interest.co.nz – Greens say govt must tender master banking contract with Westpac after Ministers reveal corporate hospitality accepted from the bank

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Just to remind folks: New Zealand is the “least corrupt nation” on Earth. And government ministers are not corrupt, nor easily bought off by corporate parasites.

I can’t say otherwise.

Otherwise I’d be sued for telling the truth.

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Government Communications Security Bureau and Related Legislation Amendment Bill. – See more at: http://thedailyblog.co.nz/2013/06/21/surveillance-laws-strikebreaking-subversive-groups/#sthash.ky4ZiKiZ.dpuf

Dunne’s Dumb Deal?

5 December 2011 3 comments

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Full Story

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What Mr Dunne gets:

– No sale of KiwiBank or Radio New Zealand.
– Statutory limits will be introduced on the sale of public asset to no more than 49 per cent of shareholding to private interests and limits would be put on the extent of single entity ownership.
– A ban on guided helicopter hunting on conservation land will be introduced to Parliament.
– The budgets of both Radio New Zealand and Television New Zealand will be maintained.
– The Families Commission will be revamped.
– There will be public consultation on Mr Dunne’s Flexi-Super policy.
– Guaranteed access to rivers, lakes, forests and coastline.
– An agreement to reintroduce Mr Dunne’s income sharing legislation which failed to win enough support in the last Parliament.
– Free health-checks for over 65-year-olds would also be investigated.

Whoa…! Back up that coalition-pony, sonny boy!

No sale of KiwiBank or Radio New Zealand?!?!

Since when did National advocate or campaign on the privatisation of Kiwibank or Radio New Zealand?

In fact, John Key made it a campaign promise that Kiwibank was not up for sale, and that the only state assets on the block were Genesis Power, Meridian, Might River Power, Solid Energy, and Air New Zealand. No mention whatsoever of Radio NZ or Kiwibank.

What’s going on here?

Either Peter Dunne is telling fibs and creating a false “victory” – or else National had a secret agenda of further asset asales!?

Someone is misleading the public.

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+++ Updates +++

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Full Story

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The above article starts out positive and seemingly Dunne has succeeded in saving TVNZ7 from disappearing and being replaced by a shopping channel…

Until one reads this in the same piece,

I would have preferred to have got a much more explicit agreement regarding the future of TVNZ 7 but the National Party wouldn’t go there.”

And Dunne  then adds,

TVNZ keeps saying it needs to run as a commercial body, and it obviously makes its own decisions, but I think it needs to recognise there is a significant chunk of the population that prefers the approach TVNZ 7 takes and would be very disappointed if that channel was to close.

So he really hasn’t “saved TVNZ7” at all. In fact, Dunne admitted as much this morning (Dec 6) on Radio NZ, when he said on “Morning Report“,

” …I wanted to get an absolute committment  to the retention of TVNZ7. We weren’t able to get that. The government wasn’t prepared to make that, uh, concession…”

Ok, so let’s sum this up,

  • Dunne get’s a promise from National that neither Kiwibank nor Radio NZ will be sold.
  • But National never suggested selling Kiwibank or Radio NZ in the first place.
  • So what kind of “victory” is it to get a committment on something that the Nats weren’t intending to do anyway?
  • Dunne then negotiates to get an absolute committment to save TVNZ7.
  • And fails.

Have I missed anything?

Moving right along…

“Free health-checks for over 65-year-olds” – ???

Great. More rip-offs from my generation, the Baby Boomers. Everyone else has to pay for health checks – but all of a sudden we get freebies?

Yet again Baby Boomers – being a sizeable bloc of voters – gain tax-payer funded social services whilst everyone else has user-pays.

No doubt these “free health checks” will be funded from that sale of state assets. Once again Baby Boomers are ripping off future generations for our own selfish benefit.

The word obscene comes to mind.

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Email  Peter Dunne to let him know what you think about asset sales:

p.dunne@ministers.govt.nz

ohariu.mp@parliament.govt.nz

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