Monday, April 11, 2016

National fails with the important stuff

The health and resilience of our economy, our people and our environment are the important stuff any government should have as overarching priorities. The National Party is approaching eight years in government and its record in these three key areas is not particularly good. Our rivers are becoming increasingly polluted, we have one of the lowest GHG reduction targets and almost 1/3 of our children live in relative poverty.

National Governments do not have any historical reputation for championing social causes or lifting environmental standards, but they survive because of the perception that they can be trusted to manage our economy.

Displaying some rational economic vision and leadership is important for our ongoing survival as a nation in an often turbulent global economy. The Great Financial Crisis came about because of loose regulations and giving too much rope to financial institutions. New Zealand came through that crisis relatively unscathed but I would have thought that the lesson to be learned from the GFC would be to avoid regulatory regimes that encourage exploitation and greed.

New Zealand has developed into one of the most accessible economies in the developed world and it is either through extreme naivety, or putting profit before being a good global citizen, that has allowed us to become one of the worlds popular havens for avoiding tax and laundering criminal funds. The National Government ignored 2013 IRD advice about closing loopholes and has even promoted the profits available in the foreign trust industry (around $24 million a year).

We also have increasing numbers of foreign investors who are able to buy New Zealand houses and farms for easy capital gain. Obviously this overseas pressure lifts the price of our houses beyond the budgets of most New Zealanders, making us the most unaffordable housing market in the world. A buoyant housing market that provides good returns for investors (foreign or otherwise) is more important than affordability for this Government. It is also concerning that investment into property is encouraged rather than into productive industries that would increase employment.

Governments should also have a role in determining and supporting broad economic priorities for the country that will generate useful (and hopefully sustainable) economic activity that will benefit the the majority of its citizens.

In 2008 the National Party came into power wanting to emulate the Australian economy. National's "Brighter Future" included increased mining (sexy coal) and oil exploration. Australia's economy had boomed through its coal exports to China and the oil industry was highly profitable. Despite the fact that climate change was a growing issue, and the shift to clean renewable energy was well underway,  the National Government opened up vast areas of our territorial waters and conservation estate for exploration. Solid Energy was encouraged to borrow and think big and oil companies were given tax breaks and subsidies to see what they could find.

The promotion of a future in fossil fuel crashed and burned. Solid Energy collapsed spectacularly owing hundreds of millions and losing hundreds of jobs. Despite tax cuts, subsidised seismic surveys and letting oil companies set their own safety rules the collapse in oil prices and fracking has made off shore drilling unprofitable.

National's generous 2009 and 2010 tax cuts hugely benefited the already rich and were supposed to encourage investment in growing employment. The fact that tax fraud costs us around $8 billion a year and most of our wealthy benefit from untaxed capital gain didn't influence the decision. Little of the tax windfall created more jobs and most was obviously spent on luxury cars and even more property. The average size of the houses we are building are the third largest in the world. The tax cuts also caused a loss of around $2 billion a year in tax income and this loss has had to be made up by demanding more in dividends from SOEs, selling state assets, reducing the investment in Kiwi Saver and cutting expenditure.

National stopped funding the Buy Kiwi Made campaign and Government procurement increasingly favoured cheaper overseas manufacturers. New Zealand has consequently lost previously successful manufacturing businesses, like Dunedin's Hillside Workshops, that employed skilled labour.

In 2011 the National Party promoted a major $11 billion investment into motorways despite no prior cost benefit analysis. Few of the motorways have proved to be cost effective since and instead there has been growing demand for investment into more efficient public transport systems, especially in Auckland.

National abandoned its previous goal of matching Australia by increasing average incomes and Bill English began promoting the advantages of a low wage economy. Over $3 billion is now being spent on the Working for Families tax credit that is necessary to compensate for the low wages that many families struggle to live on.

In 2014 the National Party campaigned with a goal of doubling the value of farm exports with a major focus on increasing dairy production. $800 million was budgeted for irrigation schemes so that dairy farmers could grow herd numbers and intensify the industry further. The advice to spend more on research and development and concentrate on adding value was ignored and growing imports of fertilizer and feed supplements supported a higher input (but more vulnerable) industry, but greater volumes of milk.

Obviously little was learned from the Solid Energy debacle and a glut in the global milk supply saw the bottom drop out of the dairy markets and many who had been encouraged by the Government to invest in ongoing expansion were badly caught out. We have also been left with costly environmental damage (compacted land and polluted rivers) with little income to manage it.

This National Government will go down in history as the one that increased public debt by over $50 billion and substantially increased inequality. It will be known as a Government that was plagued by conflicts of interest and growing our levels of corruption. The historical evidence will also show an inability to build a resilient and sustainable economy and an unhealthy enthusiasm to support sunset industries and 'boom and bust' economics. Rather than lead and manage the economy for the benefit of all it chose to let it be exploited by a privileged few.

This National Government can't be trusted with the important stuff.

Tuesday, April 5, 2016

NZ Tax Haven, "a quiet little achiever"

The Pulitzer Center is a collective of independent journalists dedicated to supporting investigative journalism on issues of global importance. New Zealand's Nicky Hager is a member.

The Panama Papers has exposed one international operation (there may be more) that has been shifting secret funds belonging to corrupt politicians and dodgy companies to hidden trusts in a variety of tax havens. The politicians includes Putin and the King of Saudi Arabia and some of the companies are involved in profiting from the Syrian war. Interestingly New Zealand is listed as one of the significant tax havens where 12,000 foreign trusts have found a home. We share the tax haven status with the likes of the British Virgin Islands and the Sychelles.

The details exposed through leaked documents from the Panamanian law firm Mossack Fonseca make frightening reading as possibly trillions have been hidden away to avoid tax or hide illegally gained funds. New Zealand is referred to as being "quiet little achiever" as a tax haven for criminals.

The response to this embarrassing revelation is interesting. The Government has taken the line that New Zealand was given a clean bill of health for our tax regime by the OECD in 2013 and nothing we are doing is illegal. Key explained that New Zealanders have to pay tax and we expect full disclosure of any economic activity. However, while foreign trusts have to disclose their existence they don't have to declare the real source or amount of money involved. Key promotes the fact that the management of the trusts in NZ earns our industry around $24 million a year. It appears if we can earn money through accepting foreign trusts little else matters.

New Zealand's economy is one of the most open in the world, we are ranked 2nd in the world for the ease of doing business. We allow foreigners to buy property with few restrictions and our current Government has provided tax breaks, free services and lump payments to overseas film companies, oil companies and Rio Tinto. We have it written into law that under table payments are an acceptable part of doing business overseas and have paid around $12 million on a massive bribe to a Saudi businessman so that we can further a trade deal with one of the most morally corrupt countries in the world. It appears that all is fair in war and business under a National Government.

New Zealand has amongst the fastest growing inequality in the world and is complicit in supporting corrupt businesses and individuals globally in avoiding paying tax. The economic activity and profits generated from the efforts of the world's workers are being funneled up to an elite few, who then shift their profits to off shore tax havens. There is less tax money now available to support the hospitals, schools and general infrastructure of developed nations around the world and rather than deal with the loop holes, austerity measures in government spending has become necessary. This is a global problem, but it appears that New Zealand is a major player in supporting tax avoidance and hiding the profits of illegal activity.

One of the reasons that New Zealand is such a popular tax haven is our image as a first world country and our international reputation of honesty and respectability. It appears that this tax haven revelation has exposed the rather grubby underbelly of our 'honest' little nation. We are no longer clean and green and we are no longer a nation built on honesty and integrity. The flag referendum failed so creating a banana republic will become John Key's real legacy.

Postscript: lots of evasive talk and diversionary tactics from Key today in the house including blame for the current legislation shifted to Labour and yet someone found this today that revealed that a 2011 tax change that National instigated was probably a pivotal element in creating our current situation. It also explains why there was a huge increase in foreign trusts since that time.

Tuesday, March 29, 2016

The Power of Truth: a political renaissance imminent.

The election of Trudeau and rise of Jeremy Corbyn and Bernie Sanders are challenging the domination of Neoliberalism within our Five Eyes allies. The cause of the downfall of economic liberalism is probably due to its success in shifting the world's wealth to a powerful few and alienating the middle class. The rise of socialist politics and the labour movements 100 years ago was driven by inequality and the blatant exploitation of working people and we are currently experiencing a similar scenario that is fueling another era of political change.

For a period after the great depression Labour Governments dominated and Roosevelt's New Deal created new hope. Savage's "applied Christianity" in New Zealand was a much needed shift to a more equitable sharing of New Zealand's resources. Good housing, fair pay and well resourced public education and health systems were seen as essential to building our social capital and lifting many families out of poverty.

Sadly the relatively egalitarian societies of the 1950's have been eroded over the last 60 years as the philosophy of free markets, deregulated financial systems and individualism have slowly taken hold again. The balance of power that was finally achieved between working people and employers has been eroded too and now only 20% of New Zealand workers are unionised and very few in the private sector. Income insecurity through greater casualisation and the growth of the working poor are the result of the industrial imbalance as successive governments (from both the left and the right) have been increasingly influenced by business interests. It became generally accepted, politically, that people exist to support the economy rather than the other way around as it surely should be.

For neoliberal governments to retain power, while increasing inequality, they have had to spend increasing amounts on PR and rely on the support and growing impotence of the Fourth Estate. To ensure that the true extent of increasing poverty and environmental degradation doesn't become widely known, pop culture and terrorism have provided useful distractions. The National Party have survived Nicky Hager's thorough exposés (The Hollow Men and Dirty Politics) largely because of National's skillful use of Crosby Textor strategies and the main stream media's reluctance to invest in further investigative journalism. Successful independent investigative journalists are generally attacked and discredited if they challenge the status quo. National also relies on influencing the main stream commentary of any damning exposé to diminish the impact as the general population is unlikely to read the originals (the 20-30,000 copies of Dirty Politics sold represents a small % of the voting public).

Jeremy Corbyn and Bernie Sanders have been successful despite the mainstream media largely dismissing them. Jeremy Corbyn's support as the leader of UK's Labour Party should no longer be in question, he won the leadership contest by a substantial margin (almost 60% of first preference votes) and is ahead of Cameron in leadership polls. However, constant media reports about his 'extreme' politics and the ongoing personal attacks have dogged his leadership. Even the BBC is being petitioned for biased reporting.

I have just returned from the UK where I witnessed first hand the reaction to the Conservative Government's cut to disability benefits. When the wealthiest in the UK have never had it better, the austerity measures directed at the most vulnerable are now being seen as cruel and unjustifiable. Like New Zealand food banks are becoming essential (largely unnecessary in the UK before 2004) for the survival of many families as wages and benefits no longer cover living costs and Corbyn's advocacy for the struggling is becoming harder to dismiss.

Bernie Sanders has run a strong campaign in the Democratic Presidential Primaries through principled messaging and refusing corporate support. Sanders, like Corbyn, has gained traction through the consistency and basic morality of his messages. Living wages, social justice and a clean environment should not be expensive luxuries that are unaffordable and are increasingly viewed as fair and essential for a secure future for ordinary people. US voters are seeing the evidence of what a low tax, small government approach does to essential services and infrastructure as third world conditions become commonplace for many. Arianna Huffington's Third World America is a revelation as the 1% suck the operational wealth out of the country.

Slick Crosby Textor PR and flag debates are beginning to wear thin in New Zealand as more and more New Zealanders wonder about our government's real priorities and increasing numbers of ordinary New Zealanders are experiencing economic hardship and suffering the results of a housing shortage and dairy crash. There is less tolerance for Ministry blowouts and management pay rises when many families struggle financially.

As Corbyn and Sanders have demonstrated, the popular shift of the political centre to the right has probably ended and it is time to return to earlier policies that support a fairer distribution of resources and wealth. Sander's claim that he is a "democratic socialist" would have meant instant death as a candidate even two years ago, but no longer. Taxing the rich more and actually expanding government (social services can't be delivered effectively without people) is again being acceptable as a rational approach. These ideas are no longer a political anathema as they once were because the trickle down never occurred and better government services haven't resulted from constant cuts.

Political change in New Zealand won't be led by media revelations of Government incompetence but by ordinary people seeing what is actually happening within their own families, those around them and to their immediate environment. John Key and his Government have been clever in their slow dismantling of state housing and privitising social services, much has occurred under the radar and hidden by constant distractions. However hospital waiting lists grow, the housing shortage reaches a crisis point, our prisons are bursting through a population growth and our education system is seen as increasingly inequitable.

There has been a lot of pressure in the past for the Green Party to focus on being an environmental party only and to leave social policy to the Labour Party. To some the Green's lack of success (our votes have actually increased every election since 2005) is due to poor messaging during election campaigns that hasn't attracted more conservative voters (environmental causes have support across the political spectrum). My own belief is that the political foundations of the Green Party (and Values before) are based on the conservative notion that we live on a finite planet and operating in a sustainable way is essential to our survival. However, we have a holistic approach to politics and also believe in social fairness, sound decision making (based on evidence and democratic processes) and nonviolence. Our philosophies and policies are very similar to those of Corbyn and Sanders and yet it took over thirty years of promoting the same thing before they were widely accepted. With patience the Greens should expect the same recognition.

Labour lost its way when it abandoned its socialist roots for neoliberal economics. It began the process of liberalising New Zealand's economy and shifting core services to the private sector. Helen Clark's government did not reverse many of the hardline changes to labour laws and benefit cuts brought by the previous National one. Labour has contributed to the current environmental and social crises and struggles against Key's claims that National has done more recently in these areas than Labour did in it's last term.

In New Zealand politics the only party to stay true to its policies and principles over the last 25 years is the Green Party. Act's attempt to be more green than the Greens is a joke, Winston is consistent in his pursuit of his own political survival, leaping on to anything that may provide populist attention from immigration to the Treaty. Like Corbyn and Sanders the Green Party's credibility comes from its principles and consistency. The truth is generally revealed eventually and when National is properly exposed for its mismanagement then voters will look for a trustworthy option to implement the necessary change. New Zealand's third largest party (Trudeau's Liberal Party was a distant third before the Canadian election) is poised and ready to lead the renaissance of social democracy with an environmental edge.

Wednesday, March 9, 2016

What would really happen to Farming under a Green Government?

During the campaign in 2014 I attended a Southland Federated Farmers meeting in Invercargill and John Key happened to pop in and give an impromptu speech. Interestingly he had more to say about the Green Party than anything else. He told those present in blatant terms what he believed would happen to farming if the Greens got into Government and Russel Norman ever became the Finance Minister. He described slashed farm profits, stock being run off farms and unreasonable environmental regulations. More farmers heard about the Greens agriculture and economic policies from Key than from the Greens ourselves.

An older woman in a rural community told me bluntly that I shouldn't even try to campaign in her community because "farmers don't like the Greens". The billboards that I put up on my own property in the same community barely lasted a week before they were ripped off and completely removed apart from the little bits of corflute that remained connected to the screws (although I must add that our vote did double at the local polling booth, 4 votes to 8 votes).

The Greens didn't get into Government in 2014 and yet the very scenarios that Key predicted would happen under the Greens have happened anyway, slashed profits and many farmers desperately reducing stock numbers.

The question farmers should be asking now, leading into the next election, should be: What would have really happened to farming if the Greens had got into Government?
  1. Research and Development spending would have risen considerably and many farmers would have been able to take advantage of the tax credits for their own efforts to become more efficient and sustainable. There would have been Government support for developing innovative ideas to add value to what we produce so that our economy wasn't so dependent on commodity markets. Fonterra was reluctant to spend too much on R&D because it limited the immediate returns to its farmer shareholders.  The extra $1 billion investment in R&D that the Greens proposed would have made a substantial difference to providing some alternatives for farmers now.
  2. Many within the industry criticised the Green Party's support for organics and any shift in that direction would have saved many farmers now. Fonterra short sightedly reduced it's support for organics and has now been forced to do an about turn as the international price for organic milk powder is now almost five times that of conventional milk powder. Under a Green Government we would have had many more farmers still receiving good prices for their milk and shifting to organic practices would have also reduced negative environmental impacts.
  3. 75% of our exports markets put a high value on our green credentials and the key point of difference for our dairy industry in global markets was its pasture base. Greater intensification and a focus on quantity over quality has meant that the industry shifted to a higher cost model that relied more on imported feed and fertilizer. $2 million tonnes of palm kernel (PKE) was imported last year from a source that is hugely environmentally damaging. The phosphate we import comes largely from the Western Sahara and we are one of the few countries that ignore the political ramifications of purchasing an illegally obtained resource. Not only does the phosphate come from a dodgy source, but its high cadmium content is slowly poisoning our soil. Under a Green Government we wouldn't have damaged our green credibility to this extent and dairy farming would have shifted to more sustainable practices. One of the reasons for the current financial pain is that the higher levels of externally sourced inputs (feed, fertilizer) has reduced the ability to absorb lower prices.
  4. Biodiversity is important to the Green Party and this makes economic sense as well. By supporting mixed farming models and encouraging biodiversity actually spreads risk and would enable farmers to more easily shift to more profitable areas. Our opposition to the introduction of GE to New Zealand agriculture is partly because most GE developments in agriculture supports herbicide and pesticide tolerant crops which leads to the destruction of biodiversity and the support of industrial style farming. The high use of pesticides and herbicides has health risks and also contributes to the destruction of useful species like bees that other industries are dependent on. While there are clearly medical and other potential benefits from GE research its use in agriculture has yet to produce benefits for New Zealand and our access to GE free markets is currently much more valuable. We would lose many of those markets if GE organisms were released into our farming environments.    
  5. The Green Party's tax proposals, including a carbon tax, actually would have given SME's (including farms) more business certainty around taxation and encouraged greater investment into low carbon alternatives. Farmers would have been rewarded for sustainable practices and our economy as a whole would have been in a much stronger position to meet our Paris commitments. In reality the impact of fluctuating commodity prices would have greater effects on profitability than a carbon tax and the Green Party had planned to have a reduced carbon tax for farmers anyway. 
  6. Farming is a far more sophisticated industry than ever before and greater investment in ICT would have had benefits for farmers as well. John Hart is high on the Green Party list and his farming and ICT background would have introduced useful knowledge into parliament. There are fewer MPs with farming backgrounds and the Green Party has many candidates that have business and farming experience. If the Greens had been in Government that expertise could have influenced all manner of legislation that would have had positive impacts on the farming industry. 
  7. The Green Party has questioned the National Party's population based funding systems that have a negative impact on sparsely populated rural communities. Considering the value that our agricultural sector adds to our export income and domestic economy it doesn't make sense that the funding for rural roads has been reduced and the health services in rural communities have been cut. With the high level of suicides amongst farmers the cuts to mental health support does not make sense. We desperately need to retain experienced farmers within the industry and we have lost too many good people through lack of investment into caring for our more isolated communities. 
  8. Our current education system is focused on literacy and numeracy and is less responsive to recognising and developing individual skills and talents. It is a pity that our advisors for science and technology have been sacked and the support for hands on practical learning has been reduced. The farming industry desperately needs a larger pool of local workers and farmers who have an interest and passion for the industry. We need our urban students to be exposed to working with plants and animals at a young age and understand the importance of producing food so that agriculture is seen a valuable and attractive vocational option. The Green Party's support of school gardens and Enviro Schools has real value for the future of farming in New Zealand. 
  9. Fiscally responsible, evidence based policies are important to the Green Party and in the last election our policies were independently analysed for fiscal accuracy by Infometrics. This year Metiria Turei promoted the widely supported idea that Treasury should have the ability to independently cost all parties' policies so that voters can more easily compare the fiscal realities of their proposals. It is clear that this Government has not applied robust cost/benefit assessments to many of its major projects. The evidence of the Green Party's economic credibility is in its own fiscal management. We raised more money for the 2014 election campaign than Labour and manage to have a high impact in campaigns with modest expenditure. For the last two campaigns we have stuck to strict budgets and had minimal debt at the end without relying on large corporate donations. 
National deserted it's rural farming base many years ago, there are very few in National's cabinet who have any connection to farming and yet rural communities continue to support the party against all evidence. Todd Barclay was a 23 year old ex tobacco company employee when he replaced the experienced Bill English in the Clutha Southland Electorate. His obvious inexperience and angry outbursts at campaign meetings did not reduce voter support for the National candidate and his performance since has been concerning. The fact that National put up such an inexperienced candidate in a safe National seat was also an indication of how much it takes the rural vote for granted. 

The traditional loyalty to National as a responsible economic manager and farmer's friend needs some serious re-evaluation from rural communities. National ran a smart campaign in 2014 but governance should be more than slick PR. Policies and track records are actually important and the Green Party deserves more serious consideration if farming in New Zealand is to have a real future. 

Monday, March 7, 2016

New Zealand's Austerity Through Stealth

The National Government have made much of the fact that the $50+ billion it has borrowed was to maintain benefits and services after the GFC and to fund the rebuild of Christchurch. We have not been subjected to the level of austerity measures that the Greeks have suffered, however despite the constant claims from Bill English that funding is not being cut to essential services the reality is quite different.

First of all the GFC had a minimal impact on New Zealand (probably less than the $17 billion hole left by the dairy crisis). While Gerry Brownlee talks about the $16.5 billion Government contribution to Christchurch's recovery, one analysis of actual spending estimates its contribution so far is as low as $2 billion. Much has been promised but little delivered.

It seems that much of the borrowing was needed to fill the hole in revenue from the Government's tax cuts (around $2 billion a year) and over $3 billion a year is needed to cover the increasing costs of subsidising inadequate wages (Working for Families). Superannuation is essentially a Universal Basic Income for all those over 65 and because this demographic is growing rapidly, so is the cost to cover it. Currently superannuation uses up 16% of crown revenue and by 2031 it will cost over $20 billion to finance. The Government also made its $12.3 billion Roads of National Significance its biggest policy investment (despite many of the motorways not passing proper cost/benefit analysis).

In an effort to balance the books, and cover the above, a reduction in spending was required across the board. There were some dramatic cuts in areas where the Government felt they could get away with it like the $400 million wiped from Early Childhood Education and the $62.7 million cut from DoC. However Solid Energy's $400,000 million collapse sucked much of the savings made by reducing the support to our children and our conservation estate.

To hide its austerity measures the Government starting cutting budgets with the claim that they were improving frontline services by demanding better use of less money. The $25 million cut from the Ministry of Education had the opposite effect when frontline Special Education staff numbers have been reduced.

The Government is underfunding agencies and services all over the place through arbitrary funding caps and increases that still do not account for the real costs. There are numerous examples of this happening to NGOs and to state services that are causing real hardship, suffering and often the loss of a service completely. Some examples:

  • Christchurch lost its only Rape Crisis Centre, not because it wasn't fulfilling a useful role, but because demand was so high that it became insolvent. The Government then decided that if it couldn't manage on a minimal budget it shouldn't exist at all.
  • Relationships Aotearoa was expected to take on extra work (that was once the responsibility of the Government) but on reduced funding. When the organisation couldn't get the inadequate funding recognised it decided that rather than incur even greater losses, it would just close its doors.
  • The Independent Police Conduct Authority is currently struggling to manage its workload within the current budget and more than 90% of complaints are being thrown back to the police to investigate themselves. It is concerning that essential independent scrutiny is not being applied as much as it should when the number of complaints are increasing. Despite the Auditor General advising that a boost in funding is needed, Amy Adams responded with "the authority needs to plan effectively to meet increasing demand using the funding available".
  • Mental Health services in Christchurch have had their funding cut to a level below the national average despite the greater demands on their services. What is even more appalling is that it had an increase in demand after the closure of Relationships Aotearoa, then it too was forced to operate on a reduced budget. Many of those working in mental health are on minimal wages and are suffering from their own health issues because of work pressures.
  • Despite the Government claiming there have been substantial increases in health funding the increases clearly are not accounting for our increasing population and greater demands from growing numbers of elderly and those with Type 2 diabetes etc. DHBs are also now being expected to cut their budgets further and although surgery numbers have increased it is clear that many hospitals are now operating below capacity, thousands are known to have missed out on elective surgery and enormous hidden waiting lists may exist. 
  • The Government has deferred $1.2 billion of state house maintenance and has not invested in new building but has expected Housing New Zealand to use rental incomes to pay the crown a dividend each year (118 million for 2015). Consequently thousands of families are forced to remain on long waiting lists and live in conditions that have resulted in deaths. 
New Zealand has been experiencing considerable austerity measures ever since National first came to power in 2008. It has helped fund tax cuts to the rich, it has supported the growth of a cheap labour force that has subsidised the substantial profits of supermarkets and rest homes and it has enabled the Government to balance its budget despite multiple disasters of its own making (Novopay, Solid Energy and now the Health Ministry and MBIE have had financial blowouts). 

Austerity is not the path to a stronger economy or a better future. As Greece has discovered it just increases poverty, especially for children, and reduces the ability of local industry to respond to the global economy and new markets. In short austerity leads to a downward spiral. 

Wednesday, March 2, 2016

Warrant of Fitness for Rentals Unnecessary

The car equivalent of many rental homes.

The rental and secondhand car industry wish to have the same support as landlords do for rental housing. President of the New Zealand Car Rentals and Sales Association (NZCRSA), Mr Dryvu Updawall, spoke about the inconsistencies between the two industries.

"We have to ensure that our cars are properly warranted and fit for purpose before we can rent or sell them and yet landlords can rent any old dump," complained Mr Updawall. "People live in houses for extended periods but the time spent in our cars is often brief. The chance of an incident or illness from our cars, if they are roughly alright, is actually fairly limited compared to the effects on heath from living in a badly maintained house."

Mr Updawall explained the importance of a profitable rental car industry and the value in providing cheap cars to poor people. "If only we could provide some old tired bangers that still basically function so that many more poor people will be able to afford transport." He believed that excessive costs of making sure all cars were roadworthy and safe was just limiting the availability of cars and made it unprofitable for the industry.

"A Transport Supplement, similar to the Accommodation Supplement would also ensure more people could afford market rates".

Updawall was also concerned at the unfair treatment by the media.

"People complain and make a fuss when they don't like what is written on our well maintained rental cars and yet a house can be covered in nasty graffiti and it rarely generates comment. If our cars were responsible for 18 deaths a year and caused thousands of children to go to hospital then our industry will be placed under huge media and political pressure."

"All landlords have to do is have a smoke alarm and some insulation and even functioning doors and windows are optional. We would like to be able to rent similar cars, as long as they have brakes, seat belts and at least one door that opens, they should be alright to go."

"Standards for cars are now ridiculously high. Landlords are still allowed rent out hundred year old uninsulated wooden villas with coal ranges and single glazed windows and yet if I tried to rent a functioning forty year old car with wind up windows and drum brakes I would be forced out of business. The hypocrisy is unbelievable."

Housing Minister Nick Smith was approached for comment after attending a Sky City meeting of the Protection of Rental Investments and Capital Society (PRICS), where he tried to sell the legal requirement to have one smoke alarm in every rental house. There was concern that the new legislation will only reduce profitability and increase rents.

"Any cost you impose actually goes on to rents," Smith explained, "that will impact on the very families we are supposed to be helping."


Monday, February 29, 2016

Farming Children for Profit

Due to various national roles I have, and the fact I live in Invercargill, I spend many hours flying. The negative factor is my carbon footprint, but the positive is that I have great conversations with people sitting beside me who often have interesting jobs and life experiences. It expands my world view and enables me to find out more from people who have first hand experiences of areas that I am not directly connected with.

I have just returned from the South Island Green Party policy conference in Nelson and on different legs of my journey I sat with two people who worked in the early childhood education (ECE) sector. One was a teacher nearing retirement and the other worked as an Early Intervention teacher and our conversations revealed some worrying trends.

The woman involved with early intervention spoke about the growing cohort of children heading through the system with delayed language development. The reason for this is that many young parents do not engage their children in necessary conversations due to distractions of technology and hectic lives (her observation). Many under fives spend forty hours or more in private centres that are under-staffed and a large percentage of staff are not qualified. She described the proliferation of private centres that she referred to has "plastic" and inadequate. They had tiny outside play areas and plastic play equipment that were under constant competition because of the limited play options.  She also expressed frustration at the number of children who needed her support but couldn't receive it because of a lack of funding and the bureaucratic barriers involved in accessing it.

I had a similar conversation with the teacher who described understaffing in private centres, the artficial nature of the limited outside space (artificial turf) and the hours that many children spend in these centres. She described one child who was dropped off at 7 am and picked up 11 hours later at 6pm every working day. Many children apparently do not even have proper holidays and it wasn't unusual for children to rarely have a week off to spend extended time with their families. She had one child in her own centre who had severely delayed in development (under CYFs care) and the amount of paperwork and advocacy needed to get early intervention was problematic and by the time they got some support the child shifted to another foster home and left the centre. The transient nature of many struggling children is a problem in the primary system too as families chase jobs and affordable accommodation. In her private centre they had three qualified staff and two who weren't.

Care and eduction were once seen as essential roles of the state in a civil society. Introducing a profit motive to welfare and education generally has a negative impact on the vocational and ethical drivers that generally motivate most of those who work in these sectors. For-profit centres make more money if their wage bill can be reduced and their staffing numbers kept at a minimum. This Government cut funding to the early childhood sector by a whopping $400 million when they first took office and still underfunds the sector. Under Labour there was a goal of having centres work towards 100% qualified staff but a cap of 80% has since been put in place and those over 80% have experienced funding cuts. While Ministers talk about an increase in funding since the initial cut, it has no contextual base when you don't include the increasing numbers of children in early childhood facilities.

The participation levels of ECE in New Zealand are the third highest in the OECD with the average weekly hours of attendance for children under five increasing from around 13 hours to 21 hours over the last fifteen years. Many children will be spending considerably longer hours than 21 (given the earlier examples). The Government has promoted the view that mothers should be in employment as soon as possible and beneficiary parents are legally required to have their children attend ECE once a child is three. There is research demonstrating that children who have experienced ECE are better equipped to learn when they start primary school. However this is dependent on the quality of the education provided and good results could probably be achieved through just a few hours a week.

A recent survey of 600 early childhood teachers revealed that 25% wouldn't want their own child to attend the centre where they worked, citing limited facilities and no time for teachers to develop close relationships with the children. According to an Education Review Office (ERO) report last year: "Just over half of the ECE services reviewed had a responsive curriculum that supported infants and toddlers to become confident and competent communicators and explorers." That means almost half of those visited did not have a responsive curriculum that met the needs of children in their care, this is hugely worrying when we are talking about tens of thousands of children being subjected to care that is not meeting their developmental needs.

The social status given to people who support the most vulnerable in our society also dictates the quality of those attracted to jobs where there are constraints on incomes. Many of those who work in vital roles in education and care are paid the lowest wages and have the worst job security (especially teacher aids). Most are women.

Under a National Government the status of parenting has been seriously downgraded and we have seen education, social housing and elderly care become greenfield opportunities for private profit. Our top All Blacks have been advised that retirement homes are considered secure investments and private early childhood centres and home based care are popping up in every neighbourhood. This Government even subsidies corporate providers of ECE to set up operations in low decile communities despite the fact that those they support are clearly exploiting the system and tax payer money for their own profit. 

We have the second worst levels of child welfare in the OECD (29th out of 30) and concerning levels of child poverty and yet the main response from this government has been to get parents into work. Most are working now and we have low unemployment compared to most OECD countries and one of the highest percentages of working mothers (the number of sole mothers in the workforce has increased by almost 12% over the past ten years). However, at least 25% of our children have been living in relative poverty for the last 7 years with many of these children not having their basic daily needs met in terms of safe homes, regular healthy meals and appropriate clothing. If we have dramatically increased the workforce participation with no change to the levels of child poverty, then clearly employment isn't the main solution. Forcing parents into low paid jobs and adding child care costs to their financial problems is not really helping children or struggling families, it is just feeding the the growing ECE industry.

It appears that we are replicating what we have done to the dairy industry with our children. We have increased the numbers within the ECE industry by promoting quantity, not quality. We have not focused on adding value so that the end product is not something that will provide a good return. We have also ignored the external effects on what we are doing that will have costly implications later. It may be a little callous to refer to children as commodities, but it seems like our world now operates through the language of economics rather than the humanities.