Sunday, 29 May 2011

Labour & the Minimum Wage

The most striking aspect of the Budget was not what it contained, but what it ignored. Government debt is not our most pressing problem (when overseas, Key boasts about our relatively low level of government debt). The low level of Government debt when Labour left office was largely due to Michael Cullen's paying down of government debt during the 2000’s. Our financial problem is based on the mountain of debt being accumulated by households and the private sector. The latest Budget obsessively focused on keeping government debt well below 30%, while the portion of debt that really puts our credit rating at risk (and within the same basket case status as Greece) is left to sail on regardless. There was nothing in the budget to promote growth, there was no vision for the future.

I will be discussing over the next few weeks the steps that Labour will put in place to assist with growing our economy and providing people with a better future. Today I will focus on Labour’s policy to increase the minimum wage.

Under a Labour government the minimum wage will go up to $15 an hour. That’s $600 a week – a real improvement on the current $520, and might just be enough to pay for the 20% increase in food costs since September. Its not huge, but then we all know we are in difficult times. Even that small increase has infuriated the National government and Business NZ. Their predictions of doom suggest that the increase will bring business to its knees.

Sorry – business is on its knees, and in a region like the Wairarapa, where there are an alarming number of people on the minimum wage, the increased dollars will provide a much needed boost to the local economy. In the end the beneficiaries of this increase will be businesses, particularly in those local retail and service areas where low paid people spend their money. The increase will not be spent on luxury goods or investments or imports or foreign travel, but in the supermarket, the chemists, the doctor, school trips; all on the basic necessities. Every dollar of that minimum wage increase will be fed back into the local economy.

Businesses are the wealth generator of any community, but many of them are dependent upon a customer base that has the dollars to spend. An increase in those dollars makes the world go round. It’s a modest increase, but when added to Labour’s promise of $100 a week tax free and a 15% reduction in the cost of fresh fruit and vegetables, this is a policy that will provide a vital stimulus to the Wairarapa.

I intend to represent the Wairarapa in parliament, and I have to recognise that according to the Dept of Statistics, the Wairarapa electorate is the lowest paid electorate in the country. On that basis alone, a $15 an hour minimum wage is vital for the wellbeing of our communities. It is a tragedy that Bill English’s budget, concentrated almost entirely upon cost cutting and missed the opportunity to set policies to stimulate economic growth. The English plan is to push us further away from recovery. The big problem is that the government is borrowing $2.5 billion a year to give tax cuts to just the top ten percent of earners.

Back in 2007 the Department of Labour funded a study on the effect of two increases in the youth minimum wage. The increases then were extreme, raising the youth wage by 41% and 69%. That study showed that there was no reduction in the number of young people employed, even though Business NZ had warned (as they do today) that every 10% increase in the minimum wage would mean a 4% drop in employment. That prediction was shown to be completely wrong.

So it is worth looking at what actually happens in the workplace when there is a pay increase, and I know this from my years in small business in the region. First of all there is a recognition that the worker is actually valued. That recognition is usually responded to by increased commitment to the job. That is the nature of pay rates. Pay is actually about recognition. Being paid at $13 an hour is statement about your worth. Not a good basis for a productive workforce.

Secondly, the increase is a universal one – so an employer who pays the minimum wage will know that competitors who also pay the minimum wage will not gain an advantage. The increase is not disadvantaging either in terms of competition. Increasing the minimum wage should not just be seen as a cost increase but within the context of the boost it will give to the broader economy. Even Don Braid, managing director of Mainfreight and hardly what one would regard as core Labour support agrees, when he said, “New Zealand’s lower wages compared with Australia are not an advantage and the minimum wage should be increased, not reduced.” (TVNZ News 29 April 2011)

So what better way to boost a local economy than to ensure a nationwide increase in pay for the lowest paid layer of our community. It will have a significant impact on the local economy and a huge impact on low paid families.

Sunday, 22 May 2011


I was talking with an Auckland based broker last week: word is that John Key if re-elected would like to quit New Zealand in the second year of his second term and go on to the board of a multi national like BP in London and wash his hands of New Zealand. Has anyone heard anything similar (it gives him enough time to flog off our assets off to his rich mates)? Key has said he would bugger off if he doesn't win anyway, so he has no deep seated loyalty to New Zealand.

This starts to make sense when you see the lack of long terms vision for economic growth under the Key administration. It really is just spin and a desperate attempt to keep New Zealand in a delayed nose dive holding pattern. I am advised that when he was asked a couple of weeks ago (at a breakfast function) as to what he was going to do regarding the long term unaffordability of national superannuation - he said he was going to do nothing as it would not be a problem for ten years. This is both irresponsible but also revealing as it shows a man who only has a short term horizon as to his leadership.

Wednesday, 18 May 2011

Rating Agencies Opinions For Hire

"Inside Job" explains how unreliable the rating agencies are, especially Standard & Poor's & Moody's. They, among others, gave Triple A ratings to companies that were unworthy - while being paid by those companies. They not only made millions through scribbling suspect ratings, but helped cripple the global economy & fuel the recession.

Moody's confirmed the Irish State's AAA rating shortly before the cover came off and it was revealed to be a basket case. Why Was Lehman Brothers Rated 'A'? In 2008 though, Standard & Poor's justified its own financial crash blindness in its paper Why Was Lehman Brothers Rated A? Their answer was to blame the market and the public. Their ratings, claims Standard & Poor's, are far too sophisticated to merely reflect the whims of prevailing market sentiment.

An insightful editorial from Ponte Al Dia concisely expresses the problem: "In 1974 the impartial judge and ‘fundamental credit analysis’ guru, began “charging issuers for corporate ratings”, albeit a common and legal practice, but the boundaries between the objective evaluator and its clients began to blur, as attested by the case of the Enron debacle and its complicit auditor Arthur Andersen."

Now, they are warning our Government about our debt yet the US Government enjoys a AAA rating and increasingly the US dollar is no longer the currency of choice. The US dollar is a default currency – there are no other options. The US debt's 'AAA' rating is the highest issued by Standard & Poor's. However, that the US debt rating has been put on negative watch is no surprise. Statistically, the US economy is almost at par with basket case Third World economies of yesteryear, except that the US can issue debt which investors must buy by default. (No other debt market is as deep as the US bond market.) To my knowledge governments don't pay to be rated, it may be useful to find out who is paying - in which case we'll then be able to see the organ grinder and not the monkey!


Sunday, 15 May 2011


PROPOSED fines of up to $10,000 for freedom campers have been welcomed by motor-camping advocates.
Environment Minister Nick Smith unveiled the new freedom camping legislation yesterday and said a bill would be introduced into Parliament this month.
Under the proposed new law, councils will be able to designate areas as camping areas, prohibited places, and sites where camping is restricted to self-contained motorhomes. The Conservation Department will be able to make similar rulings.
Automatic fines of $200 will be given to people camping illegally and court-imposed fines of up to $10,000 will punish those caught dumping sewage.
Dominion Post, 16 May 2011

AH Reed a member of a once famous New Zealand Publishing family once wrote a book when he was 98 entitled "The Happy Wanderer" about his journeys on foot across NZ. This was a celebration of what we would now call "freedom camping" and of seeing our country while on foot and interacting with the people he met. This freedom to roam is something we should think about before we rush to criminalise it.

This walking about and camping in the open air is something our forebears took for granted and we now wish to make it a criminal offence. If the concern is about human waste etc then the answer is to supply proper toilet facilities. Roaming and camping in public spaces is one of the best ways to experience nature and see and encounter people. It causes me dismay to see us legislating our freedoms away slice by slice or precedent by precedent.

GK Chesterton's final verse from The Horrible History of Jones seems apt:
An author in the Isle of Wight
Observed with unconcealed delight
A land of just and old renown
Where Freedom slowly broadened down
From Precedent to Precedent.
And this, I think, was what he meant.

Friday, 13 May 2011

Community Is Where An MP Belongs

Now that Rodney Hide has released the Cabinet Paper “Smarter Government - Stronger Communities” it’s time for the consultation to begin. That means real consultation in a way that stimulates public debate – not just calling for submissions from powerful interests. My fear is that like the Auckland “Super-City” and so many other changes currently forced on New Zealand , “consultation” means telling people what you are going to do and then doing it.

I’m pleased to see that the paper is about both stronger communities and smarter government (although I would obviously disagree with Rodney’s view of smarter government). Also “stronger communities” can also mean a lot of things.

I’ve found over the years, and particularly through walking the streets of the Wairarapa towns, that where you belong becomes part of your identity. I am intending to represent the Wairarapa electorate in parliament, but a massive chunk of this electorate declares (sometimes in quite strong language) that it does not belong in the Wairarapa. The further north I go, the stronger the opinion, so that Waipukurau and Waipawa people declare that they belong to Central Hawkes Bay, sometimes to the extent that they feel disenfranchised by being drawn into the Wairarapa electorate. That attitude could soften if there was greater contact with the MP for the electorate, whoever it is.

Identifying with a district isn’t just habit, it’s not even a matter of the name of the district. People have a real sense of community and belonging and to tamper with that can lead to unstable communities – communities without a focus and without a centre. People define their community in terms of its centre, the local sports teams, the high school their kids go to, the community centre, clubs like Rotary and Lions and the local police presence. We know who is “us” and who is “them” and that’s not unhealthy .

I strongly support the construction of the new community facility in Carterton. Last Tuesday I had the privilege of being shown around the Events Centre and was impressed with its design and multitude of uses. It will strengthen the heart of the Carterton community. It will be a truly intergenerational facility containing the restored library, which will be the oldest functioning library in the country, married successfully into rooms for Plunket, Scouts, meeting facilities and a concert venue.

It is regrettable the current MP signed a petition against its construction, which did not stop him from turning up to have his photograph taken when the first sod was turned. Pity when he was offered the opportunity to say a few words he declared, ‘‘It was wonderful to be back in ‘‘Greytown’’. I love Greytown but it is a few miles down the road.

“Stronger communities” may well mean supporting what is there, rather than setting up the divisive and expensive government structure that Aucklanders are now stuck with.

It is inevitable that there should be ways for local bodies within the electorate to make savings through economies of scale, as they are doing, and that might mean further developing the approach to sharing facilities. Further it could mean mergers once ratepayers see the benefits that may result. The overriding standard, however, must be the survival of the distinctive character, cohesion, and spirit of each community.

The fear most strongly expressed by people in our electorate is being consumed by Wellington. In this case size does matter and there is already a growing concern that a merger with Hutt and Wellington is part of Rodney’s “Smarter Government” proposal. After all he was, until recent interesting events, the head of a party which has as its primary standard “Less Government”. Ratepayers beware.

My main concern, however, is that it must be the people of the Wairarapa who decide the outcome not some political appointees in Wellington. More important still, it must be the people who shape any proposal. I will fight hard to ensure that the Wairarapa retains its independence. The last thing we need is to be swallowed up in some Wellington “super-city”. Let the discussion begin.

Wednesday, 4 May 2011


What does it take to drive people to label someone as dishonest, prosecute him or her, sack them and put in someone new?

In the case of a cleaner at a school a few years ago it was a couple of ballpoint pens and the fact he nicked some stationary – that was enough.

What if you brought down the entire global economy, turned a large number of homeowners into paupers, wiped out pension savings, threw millions of people out of work — and as an afterthought, destabilized a number of the world's most developed countries? And then what if you ended up even richer than you started out? Well, so far, it seems that isn't enough.

The film Inside Job, is about these people. Inside Job is a documentary that quizzes some major perpetrators of the global financial crisis. It doesn’t pull punches it says that these individuals were crooks who got away with their crime. Worse than that not only are the people who caused the economic crisis not being prosecuted. They are still getting rich, and richer and a lot of them actually remain running the businesses that still influence the global economy.

From around 1950 until the early 1970s there was a period of unprecedented egalitarian economic growth. It was also a period of some limited but real form of benefits for the population. As growth went up social indicators went up, as you'd expect. Many economists called it the golden age of modern capitalism — they should call it state capitalism because government spending was a major engine of growth and development (dams, roads and government buildings).

In the mid 1970s that changed - restrictions on finance were dismantled, finance was freed, speculation boomed, huge amounts of capital started going into speculation against currencies and other paper manipulations. The power of the economy shifted to the financial institutions, away from manufacturing.

So what went wrong? In a nutshell that cause of the global financial crisis was a bit like the boy in the old story “The Emperor’s New Clothes”. One shout of disbelief and the illusion began to crumble. In this case it was the beginning of doubt in the never-ending increase in the value of property.

The cause of the financial system's meltdown is not hard to grasp. The decades-long supremacy of "free trade" resulted in capital being unmoored from national economies and freed to move around the world with few limitations (under the imperative of government not "intervening" in markets). Unconstrained by borders and investment rules, those dollars, yen, euros and what have you roamed the planet seeking a better rate of return.

From the 1980s real estate was the can't-miss investment, and as enormously overvalued housing bubbles sprang up, notably in the United States, Wall Street's financial whizzes started offering newer and more "creative" investment vehicles, bundling mortgages and selling them off to investors from around the globe. That was driven by an era of relentless deregulation, both at home and abroad.

Meanwhile, international bodies like the WTO and the IMF were pressuring the governments of all countries to drop their controls on the flow of cash and goods. Government after government capitulated to the free market orthodoxy.

Without fear of a regulatory backlash, the banks pushed their new investments hard, and investors gobbled them up with glee. You had sleazy brokers pushing bad investments on gullible retirees. One executive at Morgan Stanley's mortgage unit as saying, "It was unbelievable. We almost couldn't produce enough to keep the appetite of the investors happy. More people wanted bonds than we could actually produce."

In the end, investors were basically buying up paper that had only a distant relationship with anything concrete. The link that had long existed between homeowners and lenders was broken, and debt -- in this case debt tied to housing, but also commercial and consumer debt -- became a hot investment vehicle.

Convinced that the market would continue to grow indefinitely -- or maybe that they'd get bailed out if things headed south -- investors leveraged their assets further and further, in effect buying on the margin – in the hope that it wouldn’t crash – not yet.

Yet these loans -- many of which were taken on investment properties by people expecting a nice, quick turnover -- started to go belly-up, a panic ensued. As the rot spread, banks started going down and investors essentially began a stampede on an already weakened financial sector. It was the modern-day equivalent of a bank run, but on a global scale.

That posed a risk to the mammoth and wholly unregulated market in insurance on bad loans that had grown up around these new kinds of investments. The market in what are known as "credit default swaps" is of unknown size, but it's estimated to be worth as much as $60 trillion, most of it essentially paper backed by too little in the way of hard assets.

Here in New Zealand we have been comparatively sheltered from the financial storm, but its waves have hit our shores. The bailout of South Canterbury Finance, tax cuts for the rich paid for by borrowing, the rise in GST, employment law reforms, the insidious chipping away at welfare, talk of raising the age of super, and cuts in public sector services and jobs are all signs that in fact our Government is acting out a shadow play paralleling the international chaos.

Our own Prime Minister made his fortune while working at Merrill Lynch. He knows how to make money out of moving money. He has seen and worked for the shiny suits who do the corporate raids – but he does not know how to create jobs. Don Brash is the same. They are both disciples of the free market and want to privatize everything. The theory behind this is that the State is inefficient and chokes innovation. Whereas the invisible hand of the market brings discipline and controls unattainable by the State. I have a friend who heard the Prime Minister at a breakfast meeting in Auckland in early April. He said that he knows most Kiwis are opposed

I want you to look at the film and focus on these issues – the values that motivated the main players in this documentary are you could argue the same ones that motivate those that want to privatize New Zealand. I hope this film will help you realize the dangers of what the National/ACT Government is inflicting on our people and hopefully you’ll want to be part of a strong, organised resistance to the whole ‘privatise the profits, socialize the losses’ agenda.

Tuesday, 3 May 2011

A ‘super city’ really is the last thing needed in this region

Rodney Hide may be gone after the November election but his plan to force other councils to follow the Auckland ‘‘Super City’’ experiment lives on.

If National and ACT get a second term I am worried that a review of local government could see Wairarapa communities such as Masterton, Carterton, Greytown, Featherston and Martinborough, and even coastal settlements like Castlepoint, Riversdale Beach and Ngawi controlled by a large, Wellington-dominated super-city council.

With ex-National leader Don Brash leading ACT any hope of the Wairarapa retaining a strong independent local identity under a KeyBrash regime is probably history. It would be naive to believe that the forced amalgamation of rural and urban councils into the Auckland ‘‘Super-City’’ is a ‘‘unique oneoff’’. It was the first step in a master plan for the whole country.
And we should note that if ACT disappears from the political scene, which is equally likely, then ACT’s amalgamation policies could live on through National as a willing partner to ACT’s amalgamation plans.

Rodney Hide delivered his plan as a minister in the National government. Look at the Government’s record on local government. There was much talk about Aucklanders being allowed to speak with one voice and the ‘‘local’’ being put back into ‘‘local government’’. But local voices were drowned through the consultation process and the local voice was reduced to toothless community boards. Some 75 per cent of property, formerly owned by ratepayers, is now placed under the control of hand-picked, unelected corporate boards. Even now in Auckland we can see the beginnings of the private ownership by the wealthy few of Auckland’s water infrastructure.

The changes in Auckland mean all water and wastewater functions are now managed by Watercare Services Ltd and all transport functions ( except, for the timebeing, motorways) are managed by Auckland Transport. Several other large council-controlled organisations also manage regional facilities, economic development, property development, the waterfront and investments. It is now apparent that amalgamation is accompanied by its hidden agenda – the plan to sell off publicly-owned local government assets.

New Zealand has an appalling experience of privatisation. The sale of New Zealand Rail and Air New Zealand went so pear-shaped that the state had to buy them back. Air New Zealand is again being prepared for sale and, given recent experience, will have to be bought back again at great public expense unless we can stop it.

The sale of Telecom stands out as a failure in terms of developing our telecommunications system. And let us not forget the handing over of our banking system to the Australian banks. The Auckland Super City is a failure that destroys local representation, dilutes democracy and delivers ratepayers’ assets into the hands of the wealthy. Why should the people of the Wairarapa believe this master plan for local government will be any different here?

The disappearance of local bodies must contribute to a loss of identity, especially with youth. It will damage our independence, our sense of identity and opportunities for us to stand up, make a difference, and be proud of it. The more disempowered people feel, the more neighbourliness dies and street crime increases.

In reality the voice of the Wairarapa would be lost in any super city. I’m committed to fighting hard to retain Wairarapa’s independence and voice and standing up against the Government’s proposal to make our wonderful region part of a super city that will destroy our uniqueness, not to mention Wairarapa’s voice.

Monday, 2 May 2011

National's Link Of Tough on Crime Policies With Drop In Reported Crime Shown To Be False

Tauranga MP Simon Bridges is appreciative of police work in the Bay of Plenty that has seen the region’s crime rate drop 2.2 per cent per head of population in 2010. “National is committed to taking action on violent crime and making our local communities safer,” says Simon.... “We’ve introduced tough new legislation and given police new tools to deal with crime. “It’s great to see National’s commitment and the hard work of our police making such a positive difference in the Bay of Plenty. ....
“I’d like to commend district commander Superintendent Glenn Dunbier and his staff for their dedication and hard work in keeping our community safe,” says Simon. ... “While we’re pleased to see a drop in recorded crime, our crime rate is still too high.
“National will continue to work with police to bring criminals to justice, address the drivers of crime, and send a clear signal that crime won’t be tolerated.
Posted at 8:38am Saturday 02nd Apr, 2011 "SunLive"

This is an example of National spin where they claim that their "tough on law and order campaign", has led to a lowering of the reported crimes stats. Police Minister Judith "Crusher" Collins advanced the same logic in her piece towards the end of the May edition of "Corrections" the monthly magazine published by the Department of the same name. I am sorry but this is just absolute rubbish.

What has been happening is that since around September 2010 there has been a change in charging policy directed to be followed by all Police Districts across New Zealand from Police National HQ. Also alongside this there has been a greater use of representative charges (i.e one charge representing a "batch" of similar offending). So the use of "alternative resolution" to charging for minor offences has accounted for a reduction in crime stats. The use of discretion is a good thing, but it should not be seen as a result of NACT crime policy. Interesting while reported crime may be down the prison population is up.

Under the pre-charge warning process offenders are still held to account for their actions through arrest, processing at a police station and police recording their warning for future reference.

When an arrest is made a senior officer will consider whether there is sufficient evidence to sustain a charge in court and whether it is in the public interest to take the charge through the court process.

When it is deemed not to be in the public interest to put the person through the court system they will be formally warned.

The process is available for minor offending only and more than 75 percent of offending will be victimless crime.

According to Police policy documents a pre-charge warning can only be considered when the following criteria are met:

The offender must be 17 years or over.

The offence must carry 6 months imprisonment or less.

Victim considerations must be taken into account but the issuing of a formal warning is not contingent on the victim being agreeable.

Reparation considerations must be taken into account but the issuing of a formal warning is not contingent on reparation being made.

Criminal history or previous formal warnings must be taken into consideration but do not exclude a prisoner from receiving a second or subsequent formal warning.

Family violence offending is excluded.

Possession of methamphetamine offence is excluded.

So the reality is very different from the spin. Reported crime is down because fewer people are being charged because Police are quite properly doing something they have had the power to do for decades yet have often failed to do in the past - exercise their prosecutorial discretion. Also there has been a greater use of representative charges. This is a good thing, but it is patently dishonest to claim that a harsher sentencing regime is leading to the drop in the crime statistics.