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

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Lying National lying john key

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On 25 February 2014, Dear Leader John Key announced to the nation that his government’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.”

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Like so many of  the Prime Minister’s promises, that “Key Committment” did not last long. Not even a year.

As Fonterra’s payout to farmers collapsed and weakening exports to China’s slowing economy began to impact on the government’s tax-take,   Bill English’s much-heralded promise of a Budget surplus sank deeper than the m.v. Rena in 2011. English promised almost exactly a year ago on 16 May 2014;

It’s a real surplus and it follows a string of improvements in deficits starting at $18 billion four years ago, this year about $2.5b and next year a surplus of $370 [million], and then bigger surpluses after that.

Barely three months after the 2014 elections, Treasury had bad news for English and the National government;

Treasury this morning delivered a body blow to the Government’s hopes of returning to surplus, saying it now expects a deficit of over half a billion dollars for the June financial year.

At this morning’s Half Year Economic and Fiscal Update, Acting Treasury Secretary Vicky Robertson said despite solid growth in the economy, the Crown’s finances would take a hit from lower than previously forecast tax take.

That had seen Treasury change its forecast operating balance before gains and losses (Obegal) for the 2014-15 year from a slim surplus of $297 million to a deficit of $572 million.

Treasury said softer outlook for economic drivers of the tax such as lower dairy prices and interest rates had seen the expected tax take for the year fall by $600 million.

In the same Herald report, English and Key  were both frantically doing their best King Canute impersonations since King Canute took a day to go to the beach;

But Finance Minister Bill English was this morning still clinging to the hope Treasury is wrong and the books will indeed be back in black this year as he and Mr Key have promised for some years.

I’m hopeful we will,” Mr Key told reporters this afternoon.

The view of the Minister of Finance is that we can still achieve that surplus. There’s a lot of different factors moving around here at the moment.

By 2 May of this year, even  National’s spin-meisters had run out of steam, and on TV3’s ‘The Nation‘, English was forced to admit that the world was indeed round and not flat; money-printing pixies did not exist; and dreams of a budget surplus were a Tory fantasy;

No, I don’t call it a failure. It is what it is, and that is for the 14/15 year, we budgeted $370 million surplus. It looks like it will be a $500 or $600 million deficit, and the surplus will be the next year. So we’re on track.”

So “the surplus will be the next year“?

The Minister had better be hoping that the Christchurch re-build; the Auckland housing boom; and renewed growth in China’s economy,  will continue to stimulate the economy. Otherwise, that “500 or $600 million deficit” will balloon into $1 billion or $2 billion or…

National’s expensive, multi-billion dollar 2009 and 2010 tax cuts may not have been such a clever move after all.

English, though, is not about to surrender. His government’s policies may be predicated on tax revenue from re-building a semi-destroyed city; an unsustainable housing boom in Auckland; and waning dairy exports – but National’s Finance Minister has other ideas up his sleeve.

In his 2 May interview on ‘The Nation‘, English committed the government not to cut spending;

Lisa Owen: Okay. Well, before on The Nation, you said that the Government would not make any cuts to reach surplus. Is that still your plan?

Bill English: That’s right. We’re not going to make any specific extra decisions now just because our tax revenue’s a percentage point – 1 percent down.

If past experience has taught us one thing about this government; if they promise you one thing, you can be sure that somewhere, in some back room; they are planning something completely different.

English has committed the government not to “make any specific extra decisions now just because our tax revenue’s a percentage point – 1 percent down”.

It’s just a shame we can’t believe a word of what he says. The cuts had begun long before English uttered his lies to Lisa Owen.

The story unfolds…

16 May 2014…

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Budget 2014 - Surplus real, says English .

National’s “economic whizz-kid” had promised the country a “$372 million surplus” – as well as “an increase to paid parental leave from 14 weeks to 18, free doctors’ visits and prescriptions for children under 13,  extra money to ease the cost of early-childhood education, eligibility for paid parental leave extended, and the existing parental tax credit to  rise“.

Labour’s social policies had been nicked by National. English basked in political glory. Sceptics were ignored. The country went to the polls four months later.

20 September 2014…

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National Party wins third term

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And then reality began to reassert itself.

16 December 2014…

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No surplus this year - Treasury

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National’s core policy; it’s raison d’être; it’s reputation amongst New Zealanders who are only vaguely politically conscious – is it’s so-called “reputation for fiscal prudence and responsible economic manager”, and it was rapidly being sucked down a flushing toilet of indebtedness. If it couldn’t deliver on it’s promise of returning the books to surplus – as Labour’s Finance Minister, Michael Cullen, had done between 2000 and 2008 – then what good was it?

English looked at his options to cut spending, and to raise money without creating headlines that shrieked “panic” or “broken promises”.

28 January 2015…

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Up to 8,000 state houses could be sold under John Key's radical plan - asset sales

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So much for Key’s assertion that “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”.

Truth and John Key parted company a long time ago. Key’s announcement that up to 8,000 State houses could be sold came only eleven months after his earlier committment to New Zealanders that no further state assets would be sold.

13 April 2015…

John Key denies there is a housing crisis in New Zealand;

No, I don’t think you can call it a crisis. What you can say though is that Auckland house prices have been rising, and rising too quickly actually.

21 April 2015…

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No free GP visits for all children - Government - broken promises - health cuts - National - under 13s

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National’s broken promise flew in the face of committments made prior to last year’s general election, as then-Health Minister, Tony Ryall said;

Free doctors’ visits and prescriptions for children aged under six will be extended to all children aged under 13 from July next year, Health Minister Tony Ryall says.

Budget 2014 is investing $90 million over three years from 1 July 2015 so primary school-aged children can go to a doctor for free, any time of the day or night, and get their prescriptions free as well, he says.

“National brought in the policy of free GP visits and prescriptions for children under six, including free after-hours visits. Thanks to our prudent management of the health budget, we are extending this policy to all children under 13.

This is what careful financial management can deliver to Kiwi families.

Interestingly, there was a very minor – but all-important word missing between two otherwise identical Facebook postings by John Key and the National Party;

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Facebook - free GP visits for all children - Government - broken promises - health cuts - John Key - under 13s

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Facebook - free GP visits for all children - Government - broken promises - health cuts - National Party - under 13s

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Note the one missing word – “all” – from Key’s Facebook statement.  Otherwise, the statement is identical to the National Party Facebook page. Someone in the National Party’s politburo obviously wasn’t keeping track of re-writing their election promises.

Green Party Health and ACC spokesperson, Kevin Hague, hit the nail on the head when he demanded;

If one in ten kids have to pay up to $38 to go to the doctor when they have an accident, then that visit is not free and that’s a broken promise. It begs the question: what other promises are the Government going to renege on this year in a bid to save a bit more money?  This shows how desperate the Government is to reach a surplus that it’s trying to pinch pennies from injured children.”

30 April 2015…

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Government offloads 2800 state houses to Auckland development company

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Attempting to justify the transfer, English announced;

Over half of the new houses will be sold to help offset construction costs, and the remainder will be retained as social housing. Our bottom line is that there will be at least as many social houses in Tāmaki as the 2800 there now.

As with previous promises, National’s assurances cannot be relied upon. Ministers will utter soothing reassurances one day – and weeks, months, or years later will find justification why they had to retract.

National ministers simply cannot be trusted to keep their word. Even if 7,500 new homes are built, there is no guarantee that “half of the new houses will be … retained as social housing“. National will find a reason to sell them.

English further stated;

The Government owns one in 16 houses in Auckland and we need to do a better job with them for the sake of tenants and aspiring homeowners, as well as for the neighbourhoods they live in and the wider city…

…This transfer of ownership of HNZC properties and the responsibility for tenancy management to TRC will enable faster construction of warm, dry and safe houses that better meet people’s needs.”

His comments are a repetition of National’s spin that NZ Housing properties are ‘badly run down and in dire need of maintenance’;

Finance Minister Bill English has confirmed the Government will need to spend $1.5 billion upgrading state houses as they are sold to social housing providers.

Mr English conceded many state houses were not up to standard and had not been properly maintained.

He said the cost of deferred maintenance had risen to $1.5 billion and that the matter had been raised during discussions with social agencies considering buying state houses.

“They’ve highlighted that. So part of the benefit of the process we’re going through is that these agencies are going to apply a very tight scrutiny to the state of the houses that maybe they might be looking at buying.”

Mr English blamed the former Labour-led Government, saying it had focused more on building new state houses than on maintaining existing homes.

English’s apportioning of blame to the previous Labour government is disingenuous.

The sole reason why Housing NZ has not been able to maintain it’s properties is that it has had to pay dividends from income (rent paid by low-income/beneficiary tenants) to successive governments. According to National’s Building and Housing Minister, Dr Nick Smith;

The average dividend under the 5 years so far of this Government has been $88 million. The dividend this year [2014] is $90 million…

Fairfax reported Nick Smith as stating;

Smith said the dividend had been been fairly consistent in the past several years – $71m in 2010, $68m in 2011, $77m in 2012 and $90m in 2013.

Four years worth of dividends – $306 million – were paid to the government’s Consolidated Fund. No wonder Housing NZ is unable to maintain it’s properties.

National was brutal in it’s expectations of huge windfalls from Housing NZ;

The letters reveal that on six occasions ministers asked for dividends to be hiked, or paid faster. In March 2010, Maurice Williamson wrote: “I expect . . . a significantly higher annual return to the Crown.”

Phil Heatley, when he was housing minister, asked that in 2011-12 and 2012-13 the dividend be $45m higher than that forecast in the 2011 Budget. Later he revised expectations upwards, to $251m over three years.

In July last year, Smith said “dividend levels should be significant enough to represent a challenge”.

These demands from National ministers were placed on a government department charged with housing the poorest and most vulnerable in our society. Williamson, Heatley, and Smith were content to bleed Housing NZ and let tenants live in cold, damp, miserable conditions.

Williamson, Heatley, and Smith – National’s 21st century slumlords.

As with Solid Energy, National exploited government departments and SOEs such as ACC, as “cash cows”, with which to balance their books to return to Budget surplus. (see: Solid Energy – A solid drama of facts, fibs, and fall-guys )

It is also worthy to note that National Ministers are employing spin when it comes to state house  sales. English and other ministers use the term “transfer” and not sale.

On 6 May, Bill English stated that  houses would not be sold “unless tenants get better services and taxpayers get fair and reasonable value“.

On TVNZ’s Q+A on 10 May, Minister for Social Housing, Paula Bennett, admitted that her government was selling state housing;

@ 2.13

Corin Dann: “But the point is, they are going to get these houses, they’re going to be sold these houses, aren’t they? You say transfer but it’s a sale of houses at a discount, right?

Paula Bennett: “Well, I’m sure it’ll be less than the market value, yes.

These are sales, not a transfer. “Transfer” implies a change of ownership without cost or exchange of money. There is Big Money involved in state house sales.

[Incorrect information deleted. – FM]

6 May 2015…

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 Invercargill and Tauranga chosen for first state house sales

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The Great Sell-off of Housing continues under National – with the government disposing of all state housing in Tauranga and Invercargill. Radio NZ reported;

The Government has announced it will begin selling off up to 1600 state houses in Tauranga and Invercargill to social housing groups.

There are 370 state houses in Invercargill and 1250 in Tauranga and it’s understood all of them could be sold if buyers come forward.

Only vetted and registered community housing providers will be able to buy them and, depending on their negotiations with the Government, they may not have to pay the market price.

There is nothing to stop private developers from acquiring state houses through back-door means, as this report on a landlords website explained;

The state houses will only be available for sale to registered Community Housing Providers (CHPs).

However, Housing NZ Minister Bill English said that registered CHPs can partner with other organisations to acquire and develop social housing.

Any transfer of houses will not affect the rent tenants pay or their eligibility for subsidised housing, and properties transferred as social houses will also have to stay as social housing unless the Government agrees otherwise.  In both Tauranga and Invercargill, Housing New Zealand owns a significant number of houses so there is potential for more than one organisation to acquire houses for community ownership.

This means there could be scope for private investors to get involved in the provision of social housing – either by becoming a registered CHP or by partnering with a registered CHP.

Speaking on TVNZ’s Q+A on 10 May, Minister for Social Housing, Paula Bennett confirmed that private investors could “partner” with Community Housing Providers to purchase state houses; re-develop the properties; and sell new residences at a profit.

On 6 May, English assured the public;

Any transfer of houses will not affect the rent tenants pay or their eligibility for subsidised housing, and properties transferred as social houses will also have to stay as social housing unless the Government agrees otherwise.”

Of course National will agree. This is a wholesale sell-off of state housing. Why wouldn’t they agree to new owners on-selling these properties for a profit? Otherwise new owners would be stuck with old, dilapidated properties, requiring expensive repairs, and soon getting into deep debt.

This is privatisation, by stealth,  through the back-door, using intermediaries. This is a whole new level of government subterfuge.

It also exposes John Key’s assurance – that state assert sales have ended – as a lie.

Conclusion

Finance Minister Bill English is desperately scrabbling for every dollar he can claw back. Miserly does not even begin to aptly describe this government’s actions.

It seems that the tax cuts of 2009 and 2010 are being paid for by paperboys and girls; sick children; welfare beneficiaries; and Housing NZ tenants.

It remains to be seen what further cuts in social spending Bill English has planned. His reassurances on 2 May 2015 – that there would be no cuts to social spending – are to be treated with the same contempt as other promises, assurances, and committments that have been made, and broken, by John Key, Bill English, et al.

Governments are at their worst and most dangerous, when desperate. And this is a desperate government.

Addendum1

Karol, writing for The Standard, has more on this issue. See: “Key Govt asset stripping state housing‘.

Addendum2

Registered community housing provider, Habitat for Humanity Invercargill-branch  chairman, Stephen Falconer, is an enthusiastic cheerleader for National’s covert privatisation programme. He told the Otago Daily Times on 7 May;

We’re a private organisation, essentially, and we think that private enterprise can actually do a better job than Government on most things.

Because private enterprise has done such a stirling job thus far in meeting demand for housing in Auckland, Christchurch, and elsewhere?

It is disappointing that an ostensibly community organisation like Habitat for Humanity has bought into the government narrative, complete with parroting neo-liberal cliches that “private enterprise can actually do a better job than Government“.

If it were true that “private enterprise can actually do a better job than Government“, then why does Habitat for Humanity exist?

Addendum3

Social Housing Minister Paula Bennett is interviewed by Corin Dann on TVNZ’s Q+A. Along with Bill English’s admissions, her comments are a disturbing indication where National is going with state housing.  See:  Govt social housing target 3000 homes

 

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References

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

John Key: My key commitments to you

NBR: Weak dairy prices prompt analysts to pull back Fonterra forecast payout for next season

The Independent: How China’s slowing GDP growth could drag down the global economy

TV3 News: National Party wins third term

NZ Herald: No surplus this year – Treasury

Fairfax media: Budget 2014 – Surplus real, says English

TV3: The Nation – Bill English

Fairfax media: Budget 2014 – Surplus real, says English

TV1 News: Up to 8,000 state houses could be sold under John Key’s radical plan

Radio NZ: Key denies Auckland housing crisis

NZ Herald:  No free GP visits for all children – Government

National Party: Free doctors’ visits, prescriptions for under 13s

Facebook: John Key

Facebook: National Party

Scoop media: Govt breaks free doctors visit promise to kids

Fairfax media: Government offloads 2800 state houses to Auckland development company

Radio NZ: Govt to spend $1.5b fixing up state houses

Parliament: Hansards – Questions for Oral Answer — Questions to Ministers – 8 May 2014

Fairfax media: Nats milking Housing NZ – Labour

Fairfax media: Not much in the cupboard for English to dine on

NZ Herald: State houses in Tauranga and Invercargill to go on the market

TVNZ Q+A: Govt social housing target 3000 homes

Landlords – For Kiwi Property Investors: State houses to go on sale in Tauranga & Invercargill

NZ Herald: Budget 2012 – ‘Paper boy tax’ on small earnings stuns Labour

Fairfax media: Invercargill and Tauranga chosen for first state house sales

Radio NZ: Tauranga, Invercargill state houses to be sold

Otago Daily Times: Invercargill among first state house transfer sites

Previous Related Blogposts

Can we do it? Bloody oath we can!

Budget 2013: State Housing and the War on Poor

Budget 2013: State Housing and the War on Poor

National recycles Housing Policy and produces good manure!

Our growing housing problem

National Housing propaganda – McGehan Close Revisited

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

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

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

“It’s fundamentally a fairness issue”- Peter Dunne

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

The Mendacities of Mr Key #11: Sorry, Prime Minister, what ‘mandate’ were you referring to?!

Other blogs

Polity: Housing horrors

The Jackal: Nationals housing failure

The Standard: Key Govt asset stripping state housing

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I will never turn my back on the poor

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This blogpost was first published on The Daily Blog on 10 May 2015.

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New Poll adds to Len Brown’s problems

9 April 2015 1 comment

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goff - auckland council - brown

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A recent poll has added to Auckland mayor, Len Brown’s problems. Horizon Research recently  revealed that the incumbent, Len Brown, has a serious challenger in the form of current Labour MP, Phil Goff;

Former Labour leader and cabinet minister Phil Goff is a clear front runner in results of a poll on who would receive most current and potential support if they were to run for the Auckland Mayoralty in 2016.

A Horizon Research poll of Auckland Council area residents conducted between 19 and 26 March 2015 finds Mr Goff, the MP for Mt Roskill, has 20% support of all respondents if he were to become a Mayoral candidate.

Former Mayor John Banks has 8% support.

Current Mayor Len Brown has 5%.

Runners-up in the poll were CEO for Auckland Chamber of Commerce, Michael Barnett, at 5%; National MP for Pakuranga, Maurice Williamson at 6%;  current right-wing councillor Cameron Brewer at 5%; and Deputy Mayor Penny Hulse, at 4%.

The poll follows an unscientific NZ Herald on-line survey  reported on 18 March, where 5,000 respondents cast their preferences. Again, Phil Goff was the  preferred candidate;

Phil Goff – 26%

John Banks – 22%

Michael Barnett – 15%

Maurice Williamson – 14%

Penny Hulse – 13%

Len  Brown – 5%

John Palino – 5%

One year ago, on 20 March 2014, the Herald published a more scientific survey which also gave bad news for any future Len Brown mayoral-candidacy.

The results were again less than encouraging for Brown;

Only 22.7 per cent of the people questioned in this month’s poll said they would vote for Mr Brown in the 2016 elections; 57.7 per cent said they would not. The other 20 per cent said they did not know or did not vote in local body elections.

Interestingly, the beneficiary of any anti-Brown voter-sentiment would appear to be another “left-leaning” candidate (Goff), and not his previous electoral rival, John Banks.

Despite his initial conviction, for filing a false electoral return for his failed 2010 mayoral  campaign, being quashed by the Court of Appeal in 2014, public perception of Banks’ lack of judgement may weigh against him for any political come-back. The ex-National MP; ex-ACT MP; and ex-Mayor is seen as too “accident”-prone to be considered a viable alternative to Len Brown.

Banks’ re-trial – set for 6 July this year – is by no means a guarantee that he will be found Not Guilty this time around.

Other right contenders are Maurice Williamson and John Palino – the latter implicated in  dirty dealings with a well-known right-wing blogger who ‘outed’ Brown’s affair with Auckland woman, Bevan Chuang;

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luigi_wewege_bevan_chuang_and_john_palino_ODT

L-R: Luigi Wewege, Bevan Chuang, and John Palino

 

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Luige Wewege was closely connected with Palino’s mayoral campaign team. He was, in turn, ‘outed’ by Kiwiblogger, David Farrar, as a liar when Wewege denied in public that he himself had had a close relationship with Ms Chuang.

Wewege and Palino have burnt their political bridges in this country.

Auckland city councillor, Cameron Brewer, has also expressed a willingness to stand on a right-wing ticket. But aside from looking like a minor character who inhabits the comic-book store in the US sitcom, ‘Big Bang Theory‘, it is hard to see what he has going for him. As with Banks, Brown, and Williamson, contenders for a mayoralty require a strong, out-going personality. ‘Nuff said.

Which leaves Maurice Williamson as the most likely  right-wing adversary for a Goff tilt at the Auckland mayoralty.

Despite receiving only 14% support in the unscientific 18 March poll, support for Williamson cannot be under-estimated. His famous “Big Gay Rainbow” speech in Parliament on 17 April 2013  alone must have cemented Williamson as an inspirational beacon of hope for the LGBT community in Auckland.

With a decent campaign team and predictably plentiful donations of cash  from the business sector, Williamson could yet prove a strong adversary for Phil Goff.

One thing is for certain, as the Horizon Poll pointed out, Len Brown’s political career appears to be over;

“Indications are that 65% of ratepayers would not consider voting for Mr Brown if he were to be a candidate.”

It would be interesting to know who commissioned the poll-questioning regarding Auckland’s mayoralty.

The real question for the Left is, would a Phil Goff mayoralty be any better?

If Goff issued any statement on the dispute, I have yet to find it.

It is that silence which I find troubling. And it is not often that I am troubled by a politician’s silence.

 

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References

Horizon Poll:  Brown down, Goff front runner in Mayoralty poll

NZ Herald: Auckland Mayor Len Brown loses backing of top campaign team

NZ Herald: Thumbs down for Len Brown – poll

Fairfax media:  John Banks retrial set for July 6

Fairfax media: The mayor, the love rat and nudity

Kiwiblog: Not in a relationship!

TV3 News: Wewege denies relationship with Chuang

NZ Herald: Cameron Brewer hints at bid as Phil Goff eyes mayoralty

TVNZ News: Williamson’s ‘big, gay rainbow’ speech makes world headlines

Fairfax media: Phil Goff – rebel with applause

NZ Herald: Wharfies supported after ‘disturbing’ lock-out notice

NZ Herald: Port admits leaking worker’s details – union

Other related blogposts

Workers lose their jobs – Day of Shame!

A media release I would love to see from Len Brown

Lies, Boards, and Aucklandports

Lies, Boards, and Aucklandports (#Rua)

10 March – Today was a True Labour Day!

Ratbags, Rightwingers, and other assorted Rogues!

I have seen one future, and it is bleak

National MP admits collusion with bosses to set up strike-breaking law!!

Other blogs

Evening Report: Why Len Brown Should Stand Down and Why Phil Goff Should Stand for the Auckland Mayoralty

Kiwiblog: Mayor Goff?

The Daily Blog: 5 reasons why Goff will run for Auckland Mayor

The Standard: Len Brown’s future

The Standard: Len Brown is toast

Your NZ: Brown eased out, Goff lining up

 

 


 

len brown - john banks - i'm glad i'm not that guy

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This blogpost was first published on The Daily Blog on 4 April 2015.

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Three Questions to Key, Williamson, Coleman, et al…

22 April 2012 7 comments

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National released this media statement on Scoop.co.nz yesterday, when they announced their intention to proceed with the sale of the Crafar farms to Shanghai Pengxin,

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Ministers approve Crafar farms bid

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Friday, 20 April 2012, 11:22 am
Press Release: New Zealand Government

Hon Maurice Williamson
Minister for Land Information

Hon Dr Jonathan Coleman
Associate Minister of Finance

20 April 2012
Media Statement

Ministers approve Crafar farms bid

Land Information Minister Maurice Williamson and Associate Finance Minister Jonathan Coleman have approved the new recommendation of the Overseas Investment Office (OIO) to grant consent to Milk New Zealand Holding Limited to acquire the 16 Crafar farms

“New Zealand has a transparent set of laws and regulations around overseas investment,” Mr Williamson says.

“Those rules recognise the benefits that appropriate overseas investment can bring, while providing a range of safeguards to protect New Zealanders’ interests. They are applied evenly to all applications, regardless of where they are from.

“We have sought to apply the law in accordance with the provisions of the Overseas Investment Act and the guidance of the High Court.

“We have carefully considered the OIO’s new recommendation. The OIO sought advice from Crown Law and independent legal advice from David Goddard QC. The Ministers also sought advice and clarification from Mr Goddard.

“We are satisfied that on even the most conservative approach this application meets the criteria set out in the Act and is consistent with the High Court’s judgment.”

Dr Coleman said the consent came with stringent conditions.

“These 27 conditions have been imposed to ensure Milk New Zealand’s investment delivers substantial and identifiable benefits to New Zealand,” Dr Coleman says.

The conditions require Milk New Zealand to invest $16 million into the farms and to protect and enhance heritage sites

“The combined effect of the benefits being delivered to New Zealand as a result of this transaction is substantial.”

A copy of the OIO’s new recommendation is at: http://www.linz.govt.nz/sites/default/files/docs/overseas-investment/oio-recommendation-crafar-farms-20120420.pdf

A copy of the OIO’s decision summary is at: http://www.linz.govt.nz/sites/default/files/docs/overseas-investment/decision-summary-201110035.pdf

ENDS

Source

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Jonathan Coleman says that, ” The combined effect of the benefits being delivered to New Zealand as a result of this transaction is substantial. 

Maurice Williamson sez, ” Those rules recognise the benefits that appropriate overseas investment can bring…

And Our Dear Leader, John Key, smiles, waves, and said,

Ministers could have overturned that decision, but there were no reasons to do so. The OIO correctly interpreted the legislation, and had they turned it down simply on the basis of being Chinese, it would not only be unlawful but unacceptable and would have been overturned in the courts.” – Source

The questions I have for John Key, Maurice Williamson, Jonathan Coleman, et al in  National are;

  1. What possible benefit is there to  New Zealand when the Crafar farms owe a massive $216 million to predominantly Dutch and Australian  banks; the sale to Shanghai Pengxin is for $210 million; and the purchasers intend to invest only an addition $14 million in the 16 farms – $875,000 per farm? The proceeds for the sale of the Crafar farms will not stay in New Zealand – they will flow back to Australia.
  2. How can the sale of a revenue-earning asset (eg, farms) to overseas investors be ‘beneficial’ to New Zealand when the profits from those assets will flow overseas, to offshore bank accounts. Profits will  not be spent nor further re-invested in this country.
  3. Considering that New Zealand is a world leader in dairy production, what does Shanghai Pengxin – a company specialising in property development (the sixth largest in China; Appendix 5, para 42) and not dairying – have to offer us that the alternative New Zealand consortium, led by Michael Fay, and other local dairy farmers could not? Is this, effectively a vote of No Confidence in local farmers?

Several politicians have made several comments that the new Chinese owners will bring ‘new skills and innovation’ to our dairying industry.

This blogger finds that rather hard to believe. All of a sudden, New Zealanders are incapable of developing their own farms?

But perhaps the issues we should be most concerned out is a loss of revenue from those farms, as profits are repatriated overseas.

Michael Fay estimates we could lose $15 million per annum once the farms are producing milk for export,

Sir Michael says at the forecast payout of $6.35 a share, the new owners would earn $30 million a year, half of which will go to state-owned enterprise Landcorp for farming the land.

“This transaction with Shanghai Pengxin is a very, very bad investment for New Zealand. It doesn’t stack up on any economic basis,” said Sir Michael.

“It’s hard to see that half of it going overseas constitutes an economic benefit to this country. It’s a cost, it’s hard to define it as an investment”. ” – Source

And Bernard Hickey wrote about our loss of income as we sold more and more assets into overseas ownership, steadily worsening our current account deficit,

For decades we have spent more than we earned as a nation and funded the difference by borrowing foreign money through our banks, or directly in the form of companies borrowing offshore or the government borrowing from foreign funds and banks. If we couldn’t borrow the money, we would sell assets, be it companies, land or state assets.

We’ve been kidding ourselves for decades that, like the L’Oreal ad, we were worth it. We have run chronically high current account deficits for most of the last 30 years. We believed, and have been encouraged by our leaders, bankers, and asset buyers, that New Zealand could afford it and we deserved it.

But in our bones we knew we couldn’t, and it’s great to see Justice Miller at the High Court now tell us in this decision it has to stop, even if the government can’t or won’t do it. His ruling that any foreign buyer has to prove a bigger benefit to the nation than a local buyer sets a very high threshold.

It effectively says that any buyer has to invest an awful lot more, create a lot more jobs and pledge to reinvest dividends here, otherwise there is an inevitable drain on the nation.

In the last decade we have reached the limit of how much we could borrow and sell. For any chronic overspender, there is a point where they can’t borrow any more because they can’t afford the interest payments and they don’t have anything left to sell. Just before that moment comes, they accelerate their asset sales and borrowing to pay the interest on the previously borrowed money and to pay the dividends on the previously sold assets…

… The government itself has been the heaviest borrower through the bond markets. It doesn’t matter who we have borrowed it off, but again China is the biggest creditor through its sovereign wealth fund. Our state owned enterprises have also been borrowing heavily overseas and the government is about to start selling the jewels in the crown, at least some of which will go offshore.

The irony is that this frenzy of last minute borrowing and asset selling accelerates the process of making our economy unsustainable, because it pushes up our economy currency and hampers our ability to export our way out of this mess.

Just in case you question the logic, here’s the chart showing how New Zealand’s Gross National Income per capita, which is what we get to keep after we have paid the interest and the dividends, has been falling since 2003.”

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Source

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Quite simply, the more we borrow from overseas; the more income-generating assets we sell to overseas investors – the more money we end up losing on every deal. The profits that used to stay in NZ to be re-invested, are now flowing out to other countries; other peoples’ bank accounts. Leaving us poorer and poorer year after year.

Selling farms after selling most of our profitable State Owned Enterprises will make things worse.

It’s also hard to see how any potential New Zealand purchaser can compete with the incredible wealth and access to funds, that nations such as China possess. Indeed, the Overseas Investment commission made this very point in Appendix 5, para 19/a when it stated,

“… 19. The purchase price for the farms is NZD $[redacted] m, plus payment for the stock, estimated to be NZD $[redacted] m. The Applicant is willing to pay this price because:

a) it has access to relatively low cost capital;”

We are in dire straights when an offshore investor can outbid a New Zealander because they have access to cheap funds to which we do not.

This is not a level playing field. The deck is now stacked firmly against us.

The deal with Shanghai Pengxin calls for further investments,

  • The Applicant must invest the higher of NZD $14m or the value agreed between the Applicant and Landcorp in
    clause 4.4 of the draft Property Management Agreement (see attachment “1”) on investment for development
    purposes on the Investment.” (ref Appendix 1, para 6)
  • The Applicant must establish an on-farm training facility for dairy farm workers in accordance with clause 5(c) of the draft Property Management Agreement (see attachment “1”). The Applicant must contribute a minimum of NZD $[redacted] m towards the capital cost of establishing this facility. (ref Appendix 1, para 7) We don’t know the value of this “training facility – the OIO has blanked out that information.)
  • The Applicant must give two scholarships of not less than NZD $5,000 each year to students of the on-farm training facility. The first two scholarships are to be awarded by 31 December 2013.” (ref Appendix 1, para 8)

Aside from some walking tracks and other contractual obligations (which we recently discovered are not followed up by anyone from the Overseas Investment Commission – so we cannot be certain that the OIO’s Conditions of Consent are followed through by Shanghai Pengxin, nor any other foreign investor) – what does New Zealand gain, financially, from this deal?

Let’s re-cap:

  1. Sale price of $210 million – goes to foreign-owned banks in Australia and Netherlands. Benefit to NZ: nil
  2. Profits from export of milk from the 16 Crafar Farms – mostly remitted to China. Benefit to NZ: nil/negative ($15 million p.a. loss in overseas income)
  3. Additional investment required in farms – $14 million*. Benefit to NZ: nil. $14 million gain – wiped out after one year of profits ($15 million) remitted back to Shanghai Pengxin, in China
  4. Scholarships for two students, @ $5,000 per-person. Benefit to NZ: $10,000 p.a.

And that, folks, seems to be it: $10,000 per year.

In return, the new foreign owner gets,

  • $15 million p.a. in profits
  • 15 million Fonterra shares
  • dairy products exported to China (along with profits made)

Now, unless this blogger’s arithmetic is seriously out-of-kilter, it’s hard to see how Jonathan Coleman’s comment holds true that,

The combined effect of the benefits being delivered to New Zealand as a result of this transaction is substantial. 

What, precisely, are those ‘benefits’?!?  Because none are apparent to this blogger.

Some further matters that warrant comment:

Point 1.

Mr Key says that,

Ministers could have overturned that decision, but there were no reasons to do so. The OIO correctly interpreted the legislation, and had they turned it down simply on the basis of being Chinese, it would not only be unlawful but unacceptable and would have been overturned in the courts.” – Source

Let’s deal with that straight away.

It’s bullshit.

In 2002, when American millionaire, John Griffin purchased historically-significant Young Nick’s Head on the East Coast,  there was considerable anger and opposition from many locals, and throughout New Zealand.  Such was opposition that a hikoi to Parliament ended up with 200 people protesting on the grounds,

Around noon on Monday 5 August a group of about 200 protestors arrived at parliament grounds, Wellington. Many of them had been on the hikoi (march) from Young Nick’s Head, Gisborne, which left 11 days earlier. Most of the hikoi participants were from the Ngai Tamanuhiri iwi, who were dispossessed of the land around Young Nick’s Head in the 19th century.

The protest group asked to see finance minister Michael Cullen, who is to decide on Friday 9 August whether to allow the sale of Young Nick’s Head to the US millionaire John Griffen. Mr Cullen was not available, nor the prime minister Helen Clark. The Speaker of the House, Jonathan Hunt, told the protestors they could not stay on the grounds overnight, and were not to erect any tent or other structure. (The precedent was the tent embassy in parliament grounds after the Hikoi of Hope in 1999, which maintained a presence for four months before being broken up with arrests).   ” – Source

When Shania Twain purchased 25,000 hectares off South Island high-country near Wanaka, in 2004, there was considerable anger and resentment,

”  The contentious issue of foreign ownership of New Zealand land is flaring again following a government decision to allow Canadian singer Shania Twain to buy nearly 25,000 hectares (62,000 acres) of picturesque mountain farmland.

Foreign ownership of New Zealand land stirs high passions among the nation’s usually phlegmatic citizens.

Farmers in this primarily agricultural country argue wealthy offshore investors are pushing land prices far beyond their potential worth as productive property, while other New Zealanders argue their birthright is being sold to the highest bidder…

… Anti-foreign ownership groups estimate that between 6 and 7 percent of commercially viable New Zealand land is now owned by offshore interests.” – Source

New Zealanders have always opposed land sales. Ever since Pakeha colonisers came to this country and said to Maori, “Have we got a deal for you!!”, there has always been a scepticism toward the sale of land to foreigners. That feeling exists regardless of nationality, ethnicity, skin colour, etc.

In fact, John Campbell took Key to task on this very issue when the Prime Minister tried to play the “racism card” on his show, on 20 April,

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John Campbell Prime Minister interview Crafar Farms Sky City Casino

Source

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KEY:  “… let’s say you just want to say ‘no’ because they’re Chinese-”

CAMPBELL:  ” I don’t think anyone- Wait a second. I think that’s underhanded and disingenuous. I don’t think anyone is saying ‘no’ [because they’re Chinese]. I think people are talking about 8,000 hectares of prime dairy country and it’s foreign ownership not Chinese ownership.”

Despite Campbell making that point succinctly, Key carried on with the same theme – as no doubt he had been instructed by his media advisors, to stick to a couple of core-points.

It suits John Key – as it did with Maurice Williamson – to attempt to paint opposition to the Crafar Farm sales to Shanghai Pengxin as “racism” or “xenophobia”.

No one likes to be called racist (except for for right wing extremists – but they’re deranged anyway), and to have that accusation thrown at the public is National’s shameful attempt to portray opposition to the Crafar sale as ‘irrational’.

Somewhere up on the Ninth Floor of the Beehive; in the Prime Minister’s department; John Key’s media advisors are busily spinning this line to deflect criticism from their Boss.

These paid merchants of mendacity are clever buggers; university educated – and taxpayer funded. We pay to have them teach politicians how to spin bullshit to us.

Not a nice thought, is it?

Whether Key’s spin doctors and media advisors  will be successful re-defining the debate is another matter entirely. They have their work cut out for them, going by polling by Fairfax and NZ Herald,

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Good luck in trying to dismiss two-thirds or three quarters of the public on this issue, Mr Key. As they say in business; the customer is always right.

Point 2.

Ministers could have overturned that decision, but there were no reasons to do so. The OIO correctly interpreted the legislation, and had they turned it down simply on the basis of being Chinese, it would not only be unlawful but unacceptable and would have been overturned in the courts.” – John Key, 27 January 2012

This is the second line that Key’s spin-doctors have advised him and other Ministers to push: that the law allows these sales to proceed and MPs hands are tied.

Except… when it suits John Key, he is more than willing to trade off the law for other considerations,

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Source

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In return for a new $350 million convention centre, John Key simply has to change the gambling laws.

Just as John Key changed employment laws in October 2010, to suit Warner Bros, in the making of “The Hobbit” movies,

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Source

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Funny ole world, in’it?

John Key sticks to the “letter of the law” like a fly to dog poo.  But when it suits him and his cronies, he can be… flexible.

What you are witnessing, my fellow New Zealanders, is what is colloquially known as “Crony Capitalism“.

Is this really how we want our country to be governed?

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* Note: the original OIO condition of a once-only $14 million investment has been increased with the latest OIO review, to $16 million. This blogger replies with a “whoopty-bloody-doo“; it makes little difference in the long term.

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*

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References

The OIO Decision:  Decision required under the Overseas Investment Act 2005: Milk New Zealand
Holding Limited

Additional

No checks on foreign buyers of Kiwi land

NZ to lose ‘millions a year’ from Crafar sale

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= fs =

In a matter of days… not nine months?!

16 February 2012 2 comments

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The Crafar Saga;  a time-line on the sale process,

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5 October 2009: Crafar Farms placed into receivership, owing $216 million to creditors.

22 December 2010: Government  blocks  bid by Natural Dairy to buy the 16 Crafar farms on ‘good character’ grounds.

27 January 2011: KordaMentha accepts offer from Shanghai Pengxin International Group Ltd to buy Crafar Farms.

13 April 2011: Shanghai Pengxin lodges application with the Overseas Investment Office (OIO) to buy the Crafar farms.

26 September 2011: Crafar farms receiver KordaMentha  rejects a conditional NZ$171.5 million offer for 16 central North Island dairy farms from a group led by controversial former merchant banker Michael Fay.

26 November 2011: Parliamentary Election

27 January 2012: Government ministers approve Shanghai Pengxin’s application to purchase 16 Crafar farms.

15 February 2012: High Court over-rules  Government’s decision consenting to Shanghai Pengxin’s application to purchase

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The OIO spent nine months assessing the Pengxin bid, which is reported to have valued the farms at $210 million, some $40 million higher than the bid by a consortium of New Zealand bidders led by merchant banker Michael Fay.” – Source

We don’t have a clear timeframe for this process but expect to receive the resubmitted recommendation report from the Overseas Investment Office in a matter of days, not weeks.” –  Mr Williamson, Ibid

Interesting…

It  took nine months for the OIO (Overseas Investment Office) to report their decision to Ministers Williamson and Coleman, for their rubber stamp approval…

But Minister Williamson now reckons it will only a matter of days to receive the resubmitted recommendation report from the Overseas Investment Office?!?!

… and this is the government that swears, hand-on-heart, that the extraordinary delay (applications normally take 50 – 70 days to process – not nine months) in processing and approving the Crafar purchase by Shanghai Pengxin, had nothing to do with the November election?!?!

The only thing worse than lying politicians?

Politicians who don’t lie very convincingly.

What a shabby, shonkey, shameful  government we elected last year.

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Kiwis, Cows, and Canadian singers…

31 January 2012 9 comments

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A little bit of recent history first…

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As the dust settles over the sale of the Crafar Farms to Shanghai Pengxin, it may be worth looking at some aspects of how this government handled the sale, and it’s aftermath…

For starters, a time-line on the sale process,

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5 October 2009: Crafar Farms placed into receivership, owing $216 million to creditors.

22 December 2010: Government  blocks  bid by Natural Dairy to buy the 16 Crafar farms on ‘good character’ grounds.

27 January 2011: KordaMentha accepts offer from Shanghai Pengxin International Group Ltd to buy Crafar Farms.

13 April 2011: Shanghai Pengxin lodges application with the Overseas Investment Office (OIO) to buy the Crafar farms.

26 September 2011: Crafar farms receiver KordaMentha  rejects a conditional NZ$171.5 million offer for 16 central North Island dairy farms from a group led by controversial former merchant banker Michael Fay.

27 January 2012: Government ministers approve Shanghai Pengxin’s application to purchase 16 Crafar farms.

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The first matter that arises is the length of time from Shanghai Pengxin’s initial application (13 April 2011), to consent being issued by relevant Ministers: over nine months.

(Strangely, 13 April 2011 was a Sunday. Is it usual for government offices to be open in the weekend?)

The OIO (Overseas Investment Office) sets time limits for itself to process application,

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Estimated decision times

There is no statutory timeframe within which an application for consent must be decided. However applications generally fall into one of three categories according to complexity with category 3 being the most complex. These categories provide a guide for how long it may take for a decision to be made:

  • Category 1 applications, where the OIO aims to make decisions within 30 working days from the date of registration. Examples include: (a) applications for consent to purchase significant business assets,
    (b) “sensitive land” decisions delegated to the OIO by Ministers that don’t fall into the categories below,
    (c) variations to existing consents.
  • Category 2 applications where the OIO aims to make decisions within 50 working days from the date of registration.  Examples include: (a) “sensitive land” applications for consent requiring Ministerial consideration e.g. the purchase non-urban land greater than five hectares in size, where it includes or adjoins other sensitive land, such as conservation land, reserves etc
    (b) applications for exemptions,
    (c) applications where the overseas person is intending to reside in New Zealand indefinitely.
  • Category 3 applications, where the OIO aims to make decisions within 70 working days from the date of the registration.  Examples include: (a) applications to acquire an interest in fishing quota,
    (b) applications that involve special land being land that includes foreshore or the bed of a river or lake,
    (c) where the applicant intends to establish a purchasing programme such as a series of land acquisitions in a specific area for a specific project,
    (d) applications in respect of which a third party submission has been received by the Ministers or the OIO,
    (e) applications where the Ministers or the OIO have decided that consultation with third parties is appropriate in considering whether or not to grant consent.

Note that these targets apply to high quality, well prepared and analysed applications, and excludes the time where the OIO is waiting for the applicant to provide further information and the time for Ministers to consider and make decisions on relevant applications. 

Source

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Even if the Crafar farm sale had been considered as a “Category 3”  application – there is considerable difference between 70 working days (deadline around 17 June 2011) –  and nine months.

A cynic might suggest that  Ministerial approval was delayed because of last years’ election. There is considerable public opposition to farm land sales to non-New Zealanders and this would have had a profound impact on National’s electoral support.

I would go so far as to say that National would have lost another couple of percentage points (minimum) in Party Votes – and therefore lost the election itself.

It is therefore National’s “good luck” that the decision to approve the sale to Shanghai Pengxin came two months after the General Election.

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A lot of Racist Angst or Righteous Anger?

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The first media reports that Ministerial consent had been granted for the Shanghai Pengxin appeared around 11am on the morning of January 27.

At 11.23am, Interest.co.nz published a web story, headed, “Govt Ministers rubber stamp Overseas Investment Office approval of Shanghai Pengxin’s Crafar farms bid” .

At 11.28am, TVNZ’s website reports, “Turning down Crafar sale ‘unlawful’ – Key” .

Ten minutes later, and Scoop.co.nz, reported, “Sale of Crafar farms to Pengxin is approved”.

At 2.22pm, TVNZ’s story appeared, “Fay group fights Crafar farms sale to Chinese”.

And this appeared on TV3’s website at 4.02pm, “Parties slam Crafar farm sale to Chinese”.

There were other stories on this issue – but these carried the gist was what the media was reporting. It was undoubtedly the lead story of the day.

Media reporting on this issue was prominent and widely discussed. The nationality of the purchasers was mentioned – but mostly only  in passing.

Criticism, of which there was plenty,   rested on two major points,

  1. Loss of profits overseas,
  2. Loss of sovereignty, and the dominance of our FTA with China over local decision-making.

Both are critical issues that have a real bearing on our country’s future.

With regards to Point #1 – profits lost overseas – Green Party Agriculture spokesperson Steffan Browning said,

As food prices rise globally, selling off our productive land − such as the Crafar farms − to overseas bidders is economic folly. Foreign ownership of the Crafar farms means that the profits will flow overseas, adding further to our current account deficit. In the 12 months to September 2011, $15.2 billion flowed out of NZ to overseas owners of NZ companies and debt.” – Source

This is an issue of considerable weight, considering that New Zealand’s credit rating was downgraded last year by two credit-ratings agencies.

Anything that increases the outflow of profits from New Zealand worsens our current account.

The question then becomes – why allow it to happen if we can avoid it? Especially since we will end up paying for offshore investors’ profits, by way of increased interest rates.  Our current account deficit matters – especially when it impacts on businesses and home owners via  the interest they pay on their loans.

With regards to Point #2.  John Key stated,

And had they turned it down on the basis simply of being Chinese on their desk it would have been not only be unlawful but unacceptable.” – Source

And in the NZ Herald,

Mr Key also pointed to the Free Trade Agreement with China negotiated by the former Labour Government that contained a clause known as the Most Favoured Nation status.

That meant Chinese investment in New Zealand could not be treated differently to any other country.” – Source

So if it is true that China (or any other nation for that matter) has a “Most Favoured Nation” status, and that they are able to compete with local New Zealanders for land, businesses, contracts, etc, then I think we have a problem.

For one thing, it seemingly makes Parliament and elections an irrelevancy if we cannot restrict purchases of our assets to New Zealanders only..

Secondly, no New Zealander can hope to compete with rich overseas investors, should they have a mind to bid for an asset. Michael Fay is one of New Zealand’s richest men – and his consortium was outbid by Shanghai Pengxin by (reportedly) $30 million.

But most importantly, FTA’s are not democratic institutions. No New Zealander voter for it. Very few had a hand in agreeing to it.  Yet our FTA with China appears to take pre-eminence over Parliament?

That is a dangerous position for New Zealand to be in. Especially when we possess natural resources that other nations may covet. Our naivete may yet be our down fall.

Up until 7pm on Friday, the debate had been framed – for the most part – in economic and nationalistic terms.

Then, Maurice Williamson (Minister for Land Information/ Overseas Investment Office) and Cedric Allan (spokesman for Shanghai Pengxin) were both interviewed on TV1’s “Close Up“, that night,

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[click on image]

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Williamson succeeded in re-framing the debate over the Crafar deal. From economic and national sovereignty, he turned it into a race-based debate.

Williamson said,

“…New Zealanders were happy for Shania Twain to own 23,000 hectares or whatever.” – Williamson, 6.04

Actually, that’s just not true. Minister Williamson has either forgotten, or is fibbing,

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Full Story

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Williamson continued,

When the Americans, a huge number of Americans,  were buying it [land], not mutter. Not a murmur. Not a whisper from all of your opponants out there. But as soon as the word ‘Chinese’  was mentioned, we were opposed to it. And I have to say  that is bordering more on racism than it is on xenophobia.”  – Williamson, 6.11

The charge is repeated by agri-journalist, Richard Rennie,

We’re talking tens of thousands of hectares bought by the Italians, the Germans, even the Brits and Americans. And yet we haven’t heard a murmur from anyone in New Zealand about that.” – Source

Again, none of it is true,

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“… I didn’t hear this level of protest when huge tracts of land was being sold under the Labour government…  ” – Williamson, 6.30

Then Williamson contradicted his 6.04 statement,

Well of course the public don’t like any of our land being sold to foreigners and I understand that...” – Williamson, 8.56

Maurice Williamson had been well-prepped by his media advisors. Instead of being drawn into a debate over economics, he had succeeded in reframing the issue as one of racism. And most liberal minded New Zealanders would think twice before uttering a criticism that might be construed as racist. (Those in our society who are already racist wouldn’t care a hoot and would probably vote ACT or National anyway. They are not Williamson’s intended audience.)

This is where the racism/xenophobia meme started: Friday evening, on “Close Up“, by Maurice Williamson.

Even when  we finally got to the nub of the truth, about China’s actual long-term goals, the real point by now had been lost amidst Williamson’s echoing cries of  ‘racism!’.

For the record, Shanghai Pengxin representative, Cedric Allan said,

China is looking for energy, it’s looking for water, it’s looking primarily for food…” – 7.22, Allan

Of course it is.  And the OIO decision had nicely  set in concrete China’s very long-term goals of securing food-supplies for the future,

The conditions

…Milk New Zealand must use reasonable endeavours to assist Landcorp to extend its business to, and market its products, in China” – Source

Pengxin announced in April 2011 after launching its bid for the farms that it planned to increase milk production from the Crafar farms by 10% and wanted to capture a bigger share of the Chinese market with branded, dairy-based consumer products. It said it planned to spend more than NZ$200 million to buy and upgrade the farms. It then planned to invest a further NZ$100 million on marketing cheeses, ice creams and baby formula for the Chinese market.” – Ibid

Is there anything wrong with increasing dairy exports to China?

Normally, no.  Fonterra has been developing and building our exports to the Chinese market for the past decade. With revenues of nearly $20 billion in 2010, it is one of our major industries and export earner.

But, as mentioned before, any export-revenue to China by Shanghai Pengxin-owned  farms will not come to New Zealand. They will end up in offshore bank accounts, and will be of little benefit to New Zealanders. In fact, most of the profits will vanish off-shore just as the dairy products will.

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And topped off with some rich irony.

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The Right have been leading the charge to support the Shanghai Pengxin deal, and accusing detractors of naked racism…

Meanwhile, the Left has countered with (credible) concerns about loss of export income…

The Right are not usually renowned for sympathatic understanding of racism against ethnic groups. They are usually more relaxed with “trashing the treaty”, mixed with a bit of Maori bashing, as  their usual ‘sporting activity’. After all, the right wing party ACT was adamant that Maori were not going to get tangata whenua-based seats on the Auckland Super Council.

The Left, on the other hand are not usually in a position where they find themselves arguing on behalf of economic benefits; current accounts; export earnings; and sound commercial practices. What next – Socialist International on the Board of Goldman Sachs? (Actually, they might not do a half-bad job, to be honest… )

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But the final verdict?

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Lies with the voting public.

Somehow, I doubt if the public are terribly reassured by Key’s pronouncement on this matter,

If we saw a significant buy-up of New Zealand farms, then the Government’s response would likely be to further toughen the regulations or the Overseas Investment Act, but at this point, we’re not really seeing that.” – Source

When John Campbell asked Dear Leader what constituted “a significant buy-up of New Zealand farms” (7.47) – Key was left floundering. He couldn’t name a figure. He could only waffle about vague trends. However, by the time a “trend” is established, how much of a mess will we have created for ourselves?

How much is too much?

And will our elected representatives have the wit to know when to say, “No more”?

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The Law

Overseas Investment Act 2005

Section 16

Section 17

Section 18

The OIO Decision

Decision required under the Overseas Investment Act 2005: Milk New Zealand
Holding Limited

Previous Blog entries

The road to poverty?

The Great NZ Sell-Off Continues

How to lose $5.3 billion dollars without any effort at all

The second colonisation of New Zealand

The Crafar Farms – Why the delay from the OIO?

Farms, politicians, and emails

Competing against the Chinese Government…

Is this man a complete fool?

As predicted

Land Sales – a Sorry Saga of Sheer Stupidity

Mum & Dad investors?

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Trade Unionist to the rescue!

13 September 2011 3 comments

Well, this is a new one for the books.  From our “You Wouldn’t Believe It”  Files, we have this story…

Background: a report was published in today’s edition of the  “Sydney Morning Herald” that alleged that one of three NZ government ministers had behaved offensively during the recent Italy vs Wallabies RWC game. The report stated, in part,

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“…”He booed and abused the Wallabies all game,” Jeeves said. ”He was yelling out, ‘f—ing cheats’ and other offensive remarks, and then when the Wallabies started to get on top, he suddenly left.” Naturally the ARU representatives and their partners in the box were gobsmacked. One asked an Auckland government official: ”Who is this bloke? His behaviour is right over the top.” The local suit replied: ”Sorry. I can’t do much about it. He’s a government minister.” The contingent now refer to him as the New Zealand Minister for Bad Manners…”  Source

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Prime Minister, John Key was not happy, and made inquiries. The three ministers concerned; Wayne Mapp, Maurice Williamson; and Jonathan Coleman, were all interviewed by the media – and all appeared uncomfortable at the allegations.

Things were not looking good for any of the three National Ministers. They knew only too well that their boss, John Key, would not hesitate to sack anyone who mis-behaved in such a fashion.

Enter a Knight in Shining Armour; trade unionist Robert Reid,  General secretary of the National Distribution Union. Mr Reid was present in the VIP area, and confirmed that whilst Maurice Williamson “was boisterous [that] it certainly was not offensive behaviour”. Mr Reid went on to defend Mr Williamson as not behaving offensively and not swearing,

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A story rich in irony; a right wing, anti-Union Minister; belonging to a centre-right, National/Act government – “saved” by a trade unionist coming to his defence.

Something that Maurice Williamson might ponder next time his colleagues in National consider legislation that might impact of workers’ rights?

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Peter Thomas Mahon, QC (1923 – 1986)

5 September 2011 8 comments

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“Peter Thomas Mahon was a New Zealand High Court Judge, best known for his Commission of Inquiry into the crash of Air New Zealand Flight 901 (“Mount Erebus disaster”). His son, Sam Mahon is a well-known artist.

Mahon began his legal career with the Raymond, Donnelly & Co. He was mentored by Sir Arthur Donnelly. Mahon was junior counsel for the prosecution in the Parker-Hulme murder case in 1954.

After the crash of Air New Zealand Flight 901 with loss of all aboard on 28 November 1979, an accident report was released by the chief inspector of air accidents, Ron Chippindale, which cited pilot error as the chief cause of the accident. Public demand led to the formation of a Royal Commission of Inquiry into the accident, consisting solely of Mahon. He produced his report on 27 April 1981, which cleared the crew of blame for the disaster and found that the major cause was the reprogramming of the aircraft’s navigation computer without the crew being notified. Mahon controversially claimed that Air New Zealand executives engaged in a conspiracy to whitewash the inquiry, covering up evidence and lying to investigators, famously accusing them of “an orchestrated litany of lies”. His book, Verdict on Erebus, an account of his inquiry, won the New Zealand Book Awards prize for non fiction in 1985.

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Mahon retired from the High Court bench in 1982.

In 1983 the Judicial Committee of the Privy Council held that Mahon had acted in excess of his jurisdiction and in breach of natural justice by going on to make findings of a conspiracy by Air New Zealand to cover up the errors of the ground staff.

In 1985 Mahon was appointed as Commissioner of Inquiry into the 1984 Queen Street riot. In the same year he published “Dear Sam”, a collection of his letters to his children.

In 2008, Mahon was posthumously awarded the Jim Collins Memorial Award by the New Zealand Airline Pilots Association for exceptional contributions to air safety, “in forever changing the general approach used in transport accidents investigations world wide.”” – Source
“Justice Peter Mahon accused Air New Zealand of an “orchestrated litany of lies” in his finding on the cause of the crash of the DC10 aircraft on Mt Erebus on November 29, 1979, which killed all 257 passengers and crew.

In his report released in 1981 he said DC10 pilot Jim Collins was not told of a last-minute change to the flight path co-ordinates, and neither he, First Officer Greg Cassin, nor the flight engineers, made any error which contributed to the disaster during a sight-seeing flight.

Air NZ challenged Justice Mahon’s accusation of a “predetermined plan of deception” and the Court of Appeal overturned the finding, saying the judge had exceeded his terms of reference.

Justice Mahon resigned, and died in 1986 but his comments echoed around the world.

Now the New Zealand Airline Pilots Association (ALPA) said it would posthumously present Justice Mahon with the Jim Collins Memorial Award for exceptional contributions to air safety.

“It is for his sterling work, in forever changing the general approach used in transport accidents investigations world wide,” said ALPA executive director Rick Mirkin. ” – Source

“The one-man commission, the late Justice Peter Mahon, was slammed by Muldoon who refused to table his 1981 report which accused Air New Zealand witnesses of participating in an “orchestrated litany of lies” on the witness stand…

… Justice Mahon found a navigation computer had been incorrectly changed so the plane was programmed to fly into the mountain, and that Air New Zealand witnesses had lied to cover up other mistakes that pointed blame at the carrier.

Muldoon responded with venom – the findings were potentially fatal to the Government-owned carrier – while Air New Zealand prepared an appeal against the lying accusations in court.” – Source

“… Successive governments refused, year after year, to officially recognise Justice Mahon’s accident report which overturned the assertions, made by the Chief Inspector of Air Accidents Ron Chippindale, that the pilots were culpable. With unassailable logic, Mahon proved him wrong. Justice Mahon’s report was eventually tabled in Parliament and became an official document in mid 1999, thanks to the efforts of Hon Maurice Williamson.

“That report absolutely clears the pilots of any blame. Yet confusion about what caused the accident remains in the minds of New Zealanders. It was to the advantage of many men in government, in Civil Aviation and in the airline that this confusion reigned for so long… ”

When the plane crashed, Captain Jim Collins left behind a wife and four young daughters. As well as examining the technical arguments around the cause of the crash, the book looks at the intensely personal impact the tragedy had on them…

Speaking on behalf of the family, Kathryn Carter, who was 15 at the time of the crash, says, “Our father and his co-pilot, Greg Cassin, were cleared of all blame by the Royal Commission. We want that to be understood and accepted by Parliament once and for all, and for it to be accurately recorded for New Zealand’s history.”” – Source

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Justice Peter Mahon. He arrived at the truth surrounding the Erebus Crash in 1979 – but it was an Inconvenient Truth, and it upset many powerful people in high places. The highest, it might be said, was the authoritarian Prime Minister of the day, Robert Muldoon.

Armed with nothing but his integrity and the truth he had uncovered, Justice Mahon stood against them all. I believe he will be remembered as one of New Zealand’s finest, most heroic people.

R.I.P. Peter Mahon, for you were an Honourable Man.

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