Monday, December 31, 2012

2012 the Year of Planet Key

2012 is all but over and our celebrity Prime Minister and his team are finding that their plans are unravelling alarmingly.

The invitation to all and sundry to come and dig, drill and frack fossil fuel from us resulted in hundreds of thousands marching (from Auckland to Invercargill) against mining in in our National Parks, a wake up call from the Rena disaster, general dismay about Pike River, some concerns flagged by the Environment Commisioner regarding fracking regulations and a huge set back with the pulling out of Petrobras.

The selling of our state assets have been stalled by ongoing legal action from Maori, Solid Energy's dropping profitability and a very popular petition to get a citizen's initiated referendum.

The cutting of funding to the state sector has seen endless debacles from short staffed departments failing to manage the implementation of new systems (Novapay being the stand out fail), the constant leaking of private information, CEOs resigning and money spent on consultants going through the roof.

The huge $12 billion investment in motorways has largely been revealed as a financial black hole as few of the roads will provide a return on their investment. Meanwhile road infrastructure in the regions have suffered cutbacks and the main road south of Queenstown (our pre-eminent tourist attraction) has seen hour long queues to cross an aging one lane bridge.

The expected boom in the construction industry will not benefit the economy as much as it should with 15% of constuction workers having left the industry over the last few years we will have to import the skills we need from overseas. This won't help unemployment here as training has fallen well short of the future demand. Obviously a good deal of the incomes earned by the imported workforce will end up going back to their home countries.

With our manufacturers struggling with our high dollar and the Government refusing to support our own workforce by outsourcing as much as possible we are rapidly losing manufacturing capacity.  Median family incomes are dropping and there is minimal activity in the domestic economy. Even our banks are Australian owned and the dividends earned from our financial activity largely shifts across the Tasman.

While most of our overseas debt was private this Government has had to borrow heavily to keep its head above water (and to finance the tax cuts). Our total international liabilities have now reached around  $150 billion, over 70% of GDP. John Pemberton's flip counter shows Government debt increasing by $85 per second based on Treasury figures.

Our Prime Minister seems oblivious to the the devastation he is creating as he himself exists on a planet of his own making, Planet Key. Rather than a world of golf courses and no toilets, Planet Key is looking increasingly like something concocted by the leader of a Banana Republic. Our Prime Minister has an over inflated sense of his own importance and surrounds himself with security more in keeping with a US president (causing a $1 million overspend). $6 million was spent on Government BMWs (with all the bells and whistles) and $2 billion a year in tax cuts has been provided to Key's wealthy mates.

While our Prime Minister pretends to be one of us with his readiness to engage with popular culture (planking, BBQs and Gangnam Style dancing) he actually prefers to spend his time hanging around Sky City, fratanising with Royalty and rubbing shoulders with Hollywood hierarchy.

Planet Key is totally man made as Key himself has no affinity with New Zealand's natural environment. His home wouldn't be out of place in Hollywood, with not even a tree or shrub indicating a New Zealand connection. Key's $3.3 million Hawaiian batch has little in common with the holiday experiences of most kiwis. With no appreciation for New Zealand's wild places it is easy to withdraw from Kyoto, see our rivers as drains for industrial farming and give up our conservation estate for open cast coal mines.

Key now seems to have little involvement in the day to day running of the country and would rather live his celebrity life style. He focuses much of his time in Parliament slagging the opposition in a non Prime Ministerial fashion and refuses to take responsibility for managing his failing cabinet. By voicing confidence in both Banks and Parata he has shown to have minimal ethics, no conscience and has no performance expectations other than making sure things are kept vaguely legal.

Planet Key only exists for a privileged few and for a growing number of New Zealanders the real world in which they live is beginning to resemble something completely different.

Happy New Year!

Thursday, December 27, 2012

Jane Clifton and the Greens in 2012.

Political commentator Jane Clifton is an enigma when it comes to her political leanings. She was married to National MP and Minister of Foreign Affairs, Murray McCully, and she has recently been seen out and about "holding hands"with Trevor Mallard. I am not one who normally spreads gossip but it is interesting to try and understand the influences on a prominent, widely published columnist and, in the case of Clifton, she is apparently comfortable associating with members from either of the two larger parties. What is intriguing in most of her writing for the Listener is the almost total absence of any reference to the Greens.

Over the entire past year of writing about politics in New Zealand I can only remember the Greens being referred to a handful of times by Clifton. While her commentary on National and Labour is obviously informed by her relationships with individuals in both parties, anything written about the Greens appears to lack substance (and she hasn't been noticed fraternizing with any Green MP of either gender). Considering the Greens are now firmly established as the third largest party in our political system and at one point this year achieved 17% in a Roy Mogan Poll  it seems bizarre that Act, New Zealand First and the Maori Party receive more attention from Clifton.

In the last two Listeners Clifton discussed who had been the most outstanding politicians for 2012 and reviewed the political year. Tau Henare's bid to become the next speaker gets a mention, so does Richard Prosser's texts describing male MP's neck ties at the beginning of each sitting day and even a throwaway line from Parekura about child poverty gets attention. The performance of any Green MP whether positive or negative is totally absent. In Clifton's overview of the New Zealand economy she managed to mention the Maori Party and Winston Peters' contributions to economic debate and somehow overlooked Russel Norman's.

If the Greens did little and were entirely ineffective I could probably understand Clifton's lack of recognition, however this was certainly not the case and reference could have been made to any of the following:
  • Russel Norman was widely referred to as leader of the opposition while Shearer struggled to find his feet. Norman was regarded as very credible when talking about economics and even though much fun was had describing his idea using of quantitative easing to help our manufacturers as just "printing money", it is interesting to note that both the US and Japan are using this to boost their own economies quite successfully. The ICT paper recently launched by Norman is a sensible and practical approach to growing jobs and producing a sustainable revenue stream. 
  • Metiria Turei has been a strong critic of Paula Bennett's welfare initiatives and as both have similar backgrounds as sole parents, it is Turei who has the greater credibility with those in a similar position. Her reference to "Planet Key" in one debate turned the tables on the Prime Minister who often used the phrase to belittle Labour or the Greens. His bizarre responses to Turei's challenges were quickly ridiculed. "Zip it sweetie", has been supported by many as the quip of the year while others have remarked that Planet Key has been highly effective in emphasizing that Key is out of touch with most New Zealanders. 
  • Kevin Hague has impressed with his thoughtful and statesman like contributions to mine safety, ACC and marriage equality. He even had Judith Collins agreeing to meet with him regarding his solutions to the ACC debacles.
  • Holly Walker needed all her considerable intelligence and communication skills to promote the Lobbying Discloser Bill she inherited from Sue Kedgley and get it passed through it's first reading. It has been widely panned for its construction, but Holly's ability to promote the need for such a bill, her openness in recognising the flaws and her willingness to collaborate over changes increased her credibility as an effective politician.
  • Kennedy Graham has tirelessly challenged National's retrogressive behaviour regarding climate change. In a hard hitting and eloquent speech he criticized the Government with "ecocide" because of further weakening of the ETS, drawing complaints from National MPs. 
  • Gareth Hughes seems to be one of the most despised opposition MPs for most rightwing bloggers, and this in itself must be an indication of his effectiveness. He was the strongest voice holding the Government to account for their response to the Rena disaster and his dogged opposition to fracking saw the Commissioner for the Environment review the practice. While she didn't call for a moratorium as Gareth would have liked she did have concerns regarding the quality of regulation and oversight of the industry. Gareth also has much support from the ICT geeks who generally feel that he is the only MP who actually understands the industry. 
  • Eugenie Sage has impressed many with her knowledge of local government and her advocacy for clean water. Sage is also the only MP to take a direct interest in the proposed commercial schemes to construct a tunnel and a monorail in Fiordland. She even walked the planned route of the monorail so that she could see for herself what impact it will have on the World Heritage Park.
  • Julie Anne Genter has had both Gerry Brownlee and Bill English struggling to justify their Roads of National Significance (RONS) through her determined and informed questioning. She had Gerry Brownlee admit (with support from the Speaker) that the justification for the motorways was largely based on his view that they were a good idea. Bill English found himself struggling to explain how the taxpayer wouldn't be covering the cost of an unnecessary motorway against stiff questioning from the new MP.
  • Catherine Delahunty was nicknamed "Catherine with the Passion" by Maori teachers for her strong advocacy of both the Treaty and education.  She has also been praised by a prominent blogger on Maori politics as one of the most effective Maori MPs, despite being a Pakeha. She has been described as "a nice, well intentioned, but slightly barmy hippy"by the MSM but Maori and those working in education have greatly appreciated her passionate support.
  • Denise Roche was the first MP to speak out against the diabolical treatment by the Port of Auckland against their workers. She has been a strong advocate for unions and low waged New Zealanders. Denise also received recognition for her able support of Te Ururoa Flavell's bill to reduce the harm of Pokie machines in low socioeconomic communities. 
  • Jan Logie was the recipient of praise from Cameron Slater early in the year for helping a young woman outside of her own electorate who received attention from other politicians for political purposes but Logie was the only one who genuinely offered real support. When the inequality between the incomes of men and women has become steadily worse under this Government it has been Logie who has highlighted this in Parliament. Despite criticism from the caustic Maggie Barry, she has been a strong advocate for the largely ignored transgender community who have had no effective political champion since Georgina Beyer left five years ago. 
  • David Clendon has not had the same media attention as most other Green MPs but he has been traveling the country talking to those involved in small and medium sized businesses. Clendon's background in managing his own business has provide him with a real insight into the needs of business owners and provided considerable credibility as he promotes sustainable models. The Government's focus on corporates, overseas procurement and lack of regional support has been very challenging for smaller business owners within New Zealand. 
  • Steffan Browning is effectively explaining the threats of introducing GE crops into our country and his knowledge and understanding of the risks to New Zealand's argicultural sector because of a relaxed attitude in this regard is impressive. A speaking tour of the country was organised by Browning and supported by two Australian farmers with first hand experience of GE and the negative consequences. 
  • Mojo Mathers made the headlines early in the year as she strived to get Parliamentary support to allow her to fully engage in her role as an MP.  She clashed with the Speaker over his lack of accommodation for her need for extra staffing and won widespread sympathy. In Mathers the Greens have an MP who can truly advocate for New Zealanders with disabilities, all 660,000 of them (2006 figures). Mojo has also taken over Sue Kedgley's responsibility of food and has been prominent in advocating for proper labeling
The Greens have had no leadership controversies, no rogue MPs, or no major public gaffs that have damaged all the other parties over the past year and they have been a disciplined and focussed team. This alone should attract attention and earn praise from political commentators and for Jane Clifton to ignore the Greens entirely in her review of the year points to it being a deliberate act. Perhaps her political leanings are not such an enigma after all.

Monday, December 24, 2012

Fair Trade Not Free Trade

This National led Government, and the Labour Government before it, put great store on free trade agreements. Our most significant trade agreements would have to be our one with China and our CER with Australia. There has been great enthusiasm for both agreements but little evidence that we have really benefitted from them.

In regards to the CER a New Zealand Productivity Commission report found the the magnitude of the benefits were uncertain and any supposed benefits may have occurred without an agreement. There is always the concern that an FTA between a larger and smaller economy will always favour the former. Australia has certainly benefited from the flow of dividends from our banks (3.4 billion over the past year) and the steady stream of skilled labour. The fact that they don't pay safety net benefits for around half of the 483,400 New Zealanders living, working and paying tax in Australia must be a huge saving, especially when we provide those benefits for Australians living here.

Australia may have gained from their agreement with us but in their FTA with the US they also appear to be disadvantaged as the smaller economy. The US saw their exports to Australia almost double by 2010 while Australia has seen a decline and now their exports to the US only make up 41% of the value they import.

While our exports to China have more than doubled in from 2005-10 there is still a $2 billion imbalance. We have also suffered from our relationship with their dairy industry and the melamine scandal and are about to lose ownership of Fisher Paykel to the Chinese whiteware giant, Haier. Fisher and Paykel have already outsourced their manufacturing to Mexico (at the cost of 1000 jobs) and now their highly innovative technologists and engineers will probably leave our shores too.

There are currently huge concerns regarding the secret negotiations for the Trans Pacific Partnership Agreement. New Zealand is again one of the smaller economies in the partnership and already there are indications that we may soften Pharmac's control over pharmaceutical imports to benefit US drug companies and the potential to be sued by international corporations who do not get their way.

While free trade may allow a greater flow of goods and services between countries and mean a loosening of controls and tariffs, it is pretty clear that it also tends to favour the more powerful economy. When the US negotiates trade agreements they are largely advocating for their powerful corporates and while New Zealand is one of the most open economies in the world, the US still protects its own industries well and agriculture in particular.

Perhaps it is about time we realised that we will never be able to match the worlds largest economies in bargaining power and the might of their corporates. Rather than "free" trade we should be negotiating for "fair" trade. There will always be a need for food as the world struggles to provide for a growing population and shrinking availability of arable land. There is also an increasing demand for food that is safe and reliable and New Zealand still has a reputation for being a clean and healthy country (though not for long if we don't heed scientific warnings). We should be focussing on keeping our skilled labour in New Zealand and helping ensure our manufacturing industries can compete on a more level playing field. The Greens recently released paper on ICT is probably worth pursuing. If we produce stuff that is in high demand an FTA is probably not necessary.

There are two good articles in a recent Listener, one on ethical buying and another about Viv Cottrell, the co-founder of Trade Aid (and possibly the cause of New Zealand becoming the highest per-capita purchasers of fair trade craft). We should ensure that all our imports are really necessary and are ethically produced. I wonder how many of our Christmas presents, bought as bargains, were actually made in sweatshops (where none of the workers will have a Christmas of their own) and will probably be soon discarded as junk by the recipient? Over the past few Christmases I have largely given plants (often edible) to my family and when I am properly organised I grow them myself.

Friday, December 21, 2012

New Zealand's Christmas Wish List

Dear Santa

Our Government has failed to deliver these presents over the past year and, as a last resort, we thought we would include them in our Christmas wish list. The chances of having them being delivered by yourself, down our chimneys, seems much more likely than any other way we can think of (barring a snap election and the installation of a Green/Labour Government).

  • Jobs, about 300,000 so that everyone who wants to be fully employed, can be, and maybe some of the  477,000 or so who have gone to Australia can return.  
  • Clean Rivers, it would be great if families could enjoy a swim in their local river or creek again over the Summer break.
  • A Living Wage, 40% of our children who live in poverty have a working parent. The median family income has dropped over the last few years and an increase in family incomes would be a great present.
  • A Low Carbon Future, it would be wonderful to gift our children with a real future that doesn't include catastrophic climate change. A carbon tax and rejoining Kyoto would be a great start. 
  • Good Public Transport, the Government want to spend $12 billion on unnecessary roads and yet the demand is growing for public transport. Reopening the Hillside Workshops would help with number one on our list as well as building our rail capacity. 
  • A New Minister for Education, the current one is just pretending to know the job and it is beginning to show. Our education system has dropped to number 9 internationally, so let's get someone else in the job to restore us into the top 4!
  • Homes, around 90,000 are needed in auckland alone. It would be great to have high quality houses for those on low incomes rather than the barely livable ones available for renting. 
  • A Lower NZ Dollar, let's get our economy going again and our manufacturers humming! 
  • Saving the Maui Dolphins (we have only 55 left), with so many of our native species near extinction saving these unique animals would be a wonderfully symbolic start to wider campaign of conservation.
  • Keeping Our Assets, it would be a brilliant present to New Zealand to know that we still have possession of all our assets and that the family jewels aren't being sold off to pay for this Christmas. 
We will leave you a glass of milk as it is the one thing that seems to be in plentiful supply. 

We are looking forward to Christmas day and the possibility of receiving at least one of the above.

Kind regards

The People of New Zealand 

Wednesday, December 19, 2012

Ombudsman Exposes Dishonesty and Poor Process.

Ombudsman David McGee was so concerned by the reported difficulties for schools and communities to access information regarding Christchurch school closures, that he initiated his own inquiry. His report revealed that the Ministry of Education had deliberately withheld information that was necessary to support a proper consultation process and had advised that the Christchurch City Council should lie on its behalf. McGee is one of many appointed authorities who have openly questioning the processes being employed by this Government, and its departments and ministries, to support their policies. As the author of Parliamentary Practice in New Zealand, which is the authoritative guide to parliamentary procedure (in its third edition), his opinion carries considerable weight.

David McGee's investigation addressed three specific matters:
  1. That the Ministry advised the Christchurch City Council to refuse a request for official information on the basis that the information was not held by the Council when the Ministry knew that it was held. 
  2. That the Ministry advised a requester to withdraw a request for official information suggesting that if he did so he would receive the information sooner.
  3. That a number of requests of official information were refused, at least in part, on the basis the the information concerned would eventually be made public in any case.
The Ombudsman's views on each matter were rather damning of the Ministry's behaviour:
  1. The Ministry's responses were wrong. An inappropriate suggestion was made in the original response and in its subsequent responses the Ministry failed to correct or address that fact in a meaningful manner.
  2. The Ministry was wrong to advise two principals to withdraw their official information requests in order that they may receive a better response.
  3. The Ministry's statement that some information would be released after the consultation process was not made to discourage OIA requests generally, but to explain its refusal to release information in response to requests that had already been made. Section 18(d) allows requests to be refused on the basis that the information will soon be publicly available. Nonetheless, the Ministry's response highlights an issue that has featured throughout the consultation process: the perception that inadequate information was released proactively at the start of the consultation process, and that attempts by affected parties to remedy the issue via the OIA have been frustrated by delays and questionable refusals.
In his interview on Nine to Noon this morning David McGee expressed particular concern about the consultation process that was being used to progress the school closures and mergers within Christchurch. While the Ministry is legally compelled to consult with boards of trustees, he suggested that the excluding the wider community in the process may not be a good idea. McGee also explained his concerns about a consultation process where those being consulted have information vital to any meaningful submission withheld or unnecessarily delayed. 

In light of what has already occurred (including the inaccurate data used to shape the draft plan) NZEI is quite right in calling for an apology from the Ministry to the people of Christchurch and for the consultation to be restarted.  This would be a wonderful Christmas present for the beleaguered school communities and their school staff, many of whom do not even know if they will be paid over the Christmas period due to the Novapay debacle.


Perhaps this report was the last nail in the coffin, but the Secretary for Education, Lesley Longstone handed in her resignation today. She struggled in the role due to her lack of understanding of the history and culture of our education system and she wasn't helped by having to work with a non-communicative Education Minister. Surely it is the Minister who really needs to go after one of the most shocking performances in the position in education history (even beating the infamous Merv Wellington).    

Tuesday, December 18, 2012

Greens Embrace Our Economy's Real Future!

Under this National led Government the only things that have really grown are Government debt, unemployment, pollution and the value of our dollar. Their major initiatives to turn the economy around  have been to mine coal, encourage oil exploration, sell state assets and to build motorways. The price of coal has plummet, Petrobras has pulled out of further oil exploration, the asset sales have met wide opposition and the motorways are failing cost benefit analysis.

The Green Party's Memorandum of Understanding with the Government meant the adoption of the Green's home insulation scheme which has been one of the the most successful initiatives of the past four years. Over 230,000 homes have been insulated, around 2,000 jobs have been created and the savings in energy and health costs have been considerable. While National tries to promote the view that the Greens are against progress and creating real jobs, reality tells a different story.

The Green Party has just released an ICT discussion paper, with proposals that could potentially rescue our stagnating economy if they were fully realised. Last year the ICT industry contributed around 6.2% of our GDP, employed 43,000 people and paying hourly wages 28% higher than the national average. The sector is seven times bigger than mining and employs five times as many people. Over the past 10 years or so the ICT exports have increased around 120% and earn about $20 billion.

New Zealand already has some amazing ICT success stories like Sam Morgan's Trade Me and more recently Guy Horrocks. New Zealanders have competed with the best in the digital world and have come out winners. While we have had success, we do have significant barriers to even greater success  and this Government is creating many of them through inaction and ignorance:
  • We only have one fibre optic connecting us with the rest of the world. This leaves us very vulnerable if that connection is lost and the lack of competition means that there is a monopoly of provision and little incentive to provide competitive pricing. 
  • The Government actively looks overseas for software providers, ignoring our local ICT industry.  
  • While we do produce some talented people with great ICT skills, many leave New Zealand for greater opportunities overseas. 
  • As a primary teacher I applauded the provision of ultra fast broadband to all schools but cost of accessing it is prohibitive to many and the tools to exploit it are not equitably available across our schools.
  • It also appalls me that our curriculum, in the primary sector especially, has been effectively narrowed to literacy and numeracy with the introduction of National Standards and the sacking of our Science and Technology advisors. Surely it is science and technology that will provide the foundation to a strong ICT industry?
  • The knowledge base for ICT in this Government is also rather limited and this was especially evident during the debate on the Copyright (Infringing File Sharing Amendment Bill. The speech from Gareth Hughes was widely praised by the ICT Industry, while the one from National MP Katrina Shanks got lots of attention for other reasons.
The Greens proposals of investing in another cable, introducing smarter government procurement, education, clustering and patent reform will be a real shot in the arm for the ICT sector. Not only will these boost our economy but will do so in a way that doesn't pollute our rivers or leave great holes in the ground. 

Friday, December 14, 2012

New Zealand Shamed By Collins' Actions

Judith Collins' treatment of Canadian Justice Ian Binnie and his report is disgraceful and is seriously damaging to our international reputation. Her claim that the report is seriously flawed does not hold up to scrutiny and is purely a matter of opinion.

Binnie himself had no issue with our Justice Minister disagreeing with his report but her reaction to the findings in the report was highly out of order and lacked fairness. The fact that Collins was publicly critical of the Binnie Report and had employed Robert Fisher to review it without approaching Binnie about her concerns or questioning him about his interpretation of his mandate was patently unfair. Collins had already met with Binnie and questioned elements of fact which were readily included in amendments, it was clear at that time that she had not questioned his interpretation of his mandate, this only came later. Collins has deliberately and calculatedly discredited an internationally regarded jurist who had produced some recommendations that she didn't like. According to Gordon Campbell Robert Fisher is the legal equivalent of the doctors employed to ensure ACC claims are discredited.

The Binnie Report is a very thorough report and while Binnie may have expanded on his original mandate, it did seem to be in keeping with the intent and be in the interests of fairness. Binnie's describes his interpretation of his mandate as:
  1. In short, my mandate is to express an opinion about whether or not:
    1. (i)  David Bain is factually innocent of the five killings and, if so,
    2. (ii)  Whether the circumstances of his conviction were so extraordinary as to warrant an ex gratia payment of compensation by the New Zealand government.
  2. It is important to emphasize, as the Minister’s letter makes clear, that my role is to provide a recommendation not a decision. The question of David Bain’s compensation rests firmly in the hands of the Cabinet.
In carrying out his research and investigation Binnie sought wide advice to ensure he had all the evidence available from both sides of the case and that he had advice on interpretations of New Zealand law. He also questioned David Bain extensively as the only surviving member of his family and, although he was also the one accused by the crown, his evidence and responses were crucial to any thorough review.

Fisher's report questions Binnie's mandate:
  1. (b)  Binnie J went beyond his mandate. He did not have authority to express any conclusion on the question whether there were extraordinary circumstances such that compensation would be in the interests of justice. Nor was he invited to make any recommendation as to whether compensation should be paid. Those errors have been compounded by the publicity given to conclusions on matters which ought to have been for Cabinet alone to decide.
Binnie was very clear that it was Cabinet that would make the final decision and that his report only provided a recommendation, which seems thoroughly reasonable and I struggle to see the purpose of having such a report without including any recommendations. I also found another one of Fisher's conclusions bizarre:
  1. (f)  Binnie J criticised named individuals without giving them adequate opportunity to respond. As it presently stands, the Binnie Report is vulnerable to judicial review by the named individuals. Steps should be taken to remedy that situation. 
The fact that these same individuals had already been criticised in past trials and already would have had opportunities to respond was not mentioned and Collins seemed to have ignored those very same rights in relation to Binnie himself.

In Fisher's opinion Binnie should have only focused on the likelihood of innocence based on the evidence and should have not questioned the manner in which that evidence was collected or the quality of the investigation. If one is to look at whether compensation is owed by the state I would have thought that in fairness to David Bain the quality of his conviction and his treatment by the state should also be considered.

Fisher also question the way that Binnie evaluated each piece of evidence individually rather than looking at the quantity of evidence. This approach would be unfair to Bain and supportive of the crown as that was the method used to convict him in the first place. The quality of individual pieces of evidence is important because if they don't stack up individually then their collective importance can be questioned. When taken collectively there is a danger that they may be given more weight then they deserve because then individual elements will acquire validity only because of the existence of the others. The bloody footprints found around the house were obviously left by the murderer, yet much of the other evidence was circumstantial, so that proving that the foot prints belonged to David was crucial. The fact that there was serious doubt that they could have been made by David made the other evidence weaker. In many prosecutions, including that of Ewan Macdonald, the quantity of evidence is used in an attempt gain a conviction when few of the items actually held up to individual scrutiny. In this case the diving boot prints provided the most crucial evidence as they were the only link to MacDonald's presence at the scene, when they didn't fit the rest of the case fell apart.

Binnie responded in detail to Fisher's report in a "confidential" email and he was obviously working under pressure of time as the public criticisms of him were flying thick and fast. The fact that his email contained typos was used to discredit the content. An emailed response can hardly be regarded in the same light as a published report and it was a low tactic to question Binnie's competence and the value of his response because the caps lock was sometimes accidentally left on and the odd letter missed.

It was bad enough having respected scientist Mike Joy discredited because he dared speak publicly about the true state of our environment, but to treat a respected authority from another country so badly for presenting something in good faith, but contrary to the Government's agenda, is appalling and embarrassing. Our international credibility is slipping by the day.

Update 18/12/12

I don't always support Bob Jones' views but I think in this case he sums things up fairly well.

Thursday, December 13, 2012

Appropriate Decision Making Lacking

One of the four principles our Green Party charter is "Apropriate Decision Making" and this is recognised in how we operate throughout our membership structures and at caucus level. When I first became involved with the party I did find the use of consensus decision making on major remits ponderous and protracted at times, however, after many years of being involved in the process, I totally support it.

I have been involved in many different organisations at a governance level and have seen how decisions that are based on limited consultation and are rammed through by a quick vote and a narrow majority generally have negative consequences. Even those that use a 75% majority vote for major decisions often end up with the 25% feeling disgruntled and the decision having to be revisited at a later point. A consensus decision doesn't have to mean 100% agreement but it does mean that those who disagree are prepared to recognise they are in a minority and will support consensus. Decisions made in this way, though time consuming, are hugely useful in maintaining unity and stability, and probably save time and energy in the long run.

For this National led Government such a process would be a total anathema. For them, democracy (for what its worth) ends after the election and then once in the seats of Government they appear to develop a sense of position and entitlement that does not require any further engagement with the voting public. Consultation or evidence based decisions are rarely used unless there is unavoidable necessity (like consulting iwi regarding Section 9 and the asset sales).

The past four years have seen numerous examples of where blind ideology has dominated decisions and an unhealthy haste has been used with disastrous consequences. We have seen the ACC debacle, the Mfat chaos, privacy breeches and systems failures because of poor consultation, short staffing and fast tracked processes. Much legislation has been passed under urgency with limited use of select committees and total the disregard of submissions.

Education that has been under siege more than most, with almost continuous change being forced on a sector which was probably the least deserving of such attention. The way decisions have been made regarding education have seen a huge shift from the collaborative, evidence based approach teachers have got used to, to one that is dictatorial and ideologically driven. When National first took power our education system was ranked in the top four internationally but a recent international assessment has seen us drop to eighth.

If we look at the major changes that have been forced onto our education system, or attempted to, over the last four years we can see total disregard for good process.

National Standards
  • Claimed that 2008 election provided a mandate although no detail was provided to voters on what the Standards would look like.
  • Refused to trial the Standards as requested by the profession and they were legislated and implemented before they were fully developed.
  • The profession was blocked from having input in shaping the Standards themselves and were only consulted on the manner of implementation.
  • Professional development was poor at best and there were constant changes and adjustments during the first two years.
  • All advisors (science, techonology etc) were sacked except for those supporting the Standards.
  • The first information sent to parents was printed by the National Party, not the Ministry of Education.
  • Schools, principles and academics who raised concerns were dismissed as having political motives even though all 750 principals attending a professional conference voted no confidence in the Standards. 
  • Schools who refused to set targets based on the Standards were threatened with commissioners replacing boards.
  • Principals who voiced concerns were personally threatened with "random" audits. 
  • League tables were allowed to be published after initial assurances that they wouldn't be and despite the "ropey" nature of the data.
Funding Cuts to Early Childhood education 
  • $400 million cut from early childhood budget.
  • Government lowers target of 100% trained Early Childhood teachers to 80% and centres are no longer funded for qualified staff over the 80% thresh hold.
  • Government claims untrained teachers are as good as qualified ones and ignores advice from the Science advisor, Sir Peter Gluckman regarding the importance of early education.
  • New Zealand spending on the early childhood sector lower than OECD average of 1% of GDP (New Zealand spends .6%, just over half).
Ministry of Education funding cuts and leadership change
  • $25 million cut from Ministry funding "to improve frontline services".
  • New staff appointed appear to have a background in government service (bureaucracy) rather than education.
  • Frontline Special Education staff find reduced staffing and increased workloads.
  • New National Secretary for Education appointed from the UK with a background in implementing Charter Schools (Free Schools) and this strangely predated the Act agreement. 
  • Ministry of Education rated as one of the most poorly performing ministries by the Prime Minister's Office, State Services Commission and the Treasury.  
Charter Schools
  • Charter schools not mentioned by National nor by Act during the 2011 election campaign (despite the prior appointment of Lesley Longstone).
  • Charter Schools strangely appear as part of the Act/National coalition agreement and John Banks appears to lack detail when questioned about them in initial interviews.
  • John Key doesn't even try to justify the system and claims it was just part of the Act deal. That major change can be dictated by a Party that gets only 1% of the vote is a concern.
  • Non registered teachers will be allowed to teach in Charter Schools and they do not have to follow the National Curriculum. Destiny Church shows interest.
  • Act stalwart, Katherine Isaacs, is chosen to lead the implementation. 
  • The first detailed assessment of Charter Schools by Stanford University revealed that on average Charter Schools performed the same or worse than public schools.

Increasing Class Sizes
  • Hekia Parata decided to increase teacher student ratios to support better student outcomes. 
  • They reasoned that if the lower performing teachers were to leave the system we would have less teachers but a higher quality (and they would save on teacher salaries). 
  • The policy was imbedded in the budget and not promoted and it was soon obvious that the implementation had not been well considered when it was revealed that intermediates would lose their technology teachers.
  • Protests around the country and from parents as well as the teaching profession, forced a backdown.
  • It was obvious that the true reason for the class size increase was fiscal rather than educational when Key stated that the $43 million that would have been saved from teachers' salaries would have to be found elsewhere
Christchurch Schooling Plan
  • Education Minister and Ministry produce a schooling plan for Christchurch based on limited consultation and data that was highly inaccurate. It appears that fiscal considerations drove the process and much of the data was shaped to support the plan.
  • It was suggested that Schools and communities couldn't be involved in formulating the initial plan because they wouldn't be objective. 
  • Schools with rolls of 150 or less were immediately targeted for closure and 'mega' primary schools of around 600 pupils were supported.
  • Greater consultation allowed after mass protests, but only two months provided at the busiest time of the school year. 
  • The Government  claims it wants to provide greater educational choice but plan provides substantially less choice.
Closing of Residential schools
  • The Government decides to close a number of residential schools in favour of mainstreaming the disabled and behaviorally difficult children that attended them.
  • While there are some good arguments in doing this, the "wrap around services" that are being claimed will provide the support for these children are seriously underfunded. Many of the children mainstreamed will find instead of specialised support every day they may only have the same kind of individualised support a few hours a week. 
  • The decision to close Salisbury School in Neslon for girls with high needs has been deemed unlawful by the High Court because the Minister had not given proper weighting to the potential risks of putting adolescent girls with intellectual and emotional disabilities into a co-educational environment. 
  • The fact that the Minister has not appealed the decision demonstrates the lack of justification for the original decision.
  • The Labour Government signed up to Novapay as a replacement for the Datacom system that was used to manage the wages and salaries of the education sector. A change was probably needed and as the sector has got great complexities, with a range of employment agreements and different kinds of jobs, the transfer to a new system was always going to be a complex process. 
  • Again fiscal considerations dominated the decision to launch the new system. There had been numerous delays and having to pay both Datacom and Novapay for a longer period than planned  was creating pressure on the budget. Despite ample evidence that the system wasn't ready the Ministry decided to launch it anyway and the resulting debacle has meant hours of time and stress for schools and well over 10,000 errors. 
  • The initial attempt to lay blame on schools for not being able to operate the online systems was quickly dismissed as pay after pay revealed even more systemic problems. 
  • The intention to save money by launching the Novapay before it was ready in the hope that initial teething problems would be quickly resolved has not worked in practice. Schools should be entitled to receive financial compensation for the huge staffing hours accrued in trying to fix problems for their staff and had also having to shift their focus from meeting the educational needs of their students. Many schools and boards found their school budgets compromised while having to cover non payments for staff members.
  • Relieving teachers were particularly affected because they often worked with a number of schools and had no way of having their lack of pay compensated to cover financial commitments. 
Budget Priorities

While the Government claims they are investing millions more in education, simple analysis shows that there have been cuts to areas that will actually lift student achievement while much spending is going into areas that has no direct relationship to teaching and learning. It is teachers, specialists and support staff that will make a real difference and yet the money available for remuneration is being continually squeezed and we have increased spending on the following:
  • Fixing the leaking school buildings that were built when the industry was deregulated under an earlier National Government is costing $1.5 billion.
  • The National Standards are costing around $60 million to implement.
  • The provision of ultra fast broad band to schools has not factored the cost for schools to use it. High decile schools have children supplied with ipads or laptops while lower decile schools can't afford the charges nor have the tools to use it.
  • The $30 million Novapay system is costing huge amounts of time and money to mitigate the failures.
Imagine if the same $2+ billion had been spent on directly supporting our most vulnerable children.

Chris Trotter attempted to portray the Green Party as naive in a recent post Appointment With Reality when stating: "Greens really do believe that that the way they arrive at major decisions is every bit as important as the decisions they make." It is fairly obvious to me that both Labour and National suffer from the same kind of arrogance when disregarding the fact that the journey to a decision is actually important and the power to make that decision shouldn't be taken lightly.

New Zealand's education system may have actually ended up leading the world if we approached decisions very differently:
  • Use professional evidence and research (we have lots in the old Ministry's BES documents) to guide change rather than political and ideological whim.
  • Fully collaborate with the profession. No change can be properly implemented unless the profession feel that the change is justified. Changing the law and using threats and bullying tactics will not support enthusiastic engagement with change.
  • Build professional capacity and skill by enhancing the status of teaching rather than continually blaming the profession for under achievement and all of society's ills. Even the best education system can't rectify the damage caused through inequities in family income and poverty.
  • Model education systems ranked above us not below us. Finland is generally regarded as the most success education system and yet we are ignoring what has proved successful there and adopting systems from the UK and the US that in 2010 were ranked 11th and 17th respectively (when we were 4th). 
  • Employ the best people to lead education who are informed and innovative and focussed on teaching and learning and do not just support political agendas. The Minister of Education also needs to receive sound advice from an independent Secretary of Education in the tradition of Clarence Beeby.  
  • Recognise the successful elements of our education system, like our current curriculum, needed much investment in time and goodwill to be properly realised. 
  • Understand that education is an investment, not a cost. Properly prioritised spending in education provides long term economic value and penny pinching in early childhood education, for example, will mean struggling children will need even more expensive support as their unattended needs become more complex and ingrained. 
  • Place the learner and communities at the centre of decisions not short-term Teasury driven demands.
What concerns me most is that after six years of a National led Government the education culture in New Zealand will be so altered and corrupted by poor process it will take us another six years to rebuild and get back to where we were. While the sacking of Hekia Parata is probably justified, given her shocking performance, it is a change in Government that we really need. 

Monday, December 10, 2012

Eric Roy and His Hand Basket

The National MP for Invercargill, Eric Roy, publishes a little opinion piece in the Southland Express (a weekly community newspaper) every week. This week he has written in support of National's economic management under the title "We're Getting There". Eric has manipulated data and provided a rather dishonest summary of National's progress. I have reprinted his comments and included my analysis in blue:

WE'RE GETTING THERE ("hell" and "hand baskets" come to mind)

"The last household income survey has been released and shows the average annual household income from wages and salaries increased from $77,843 to $82,029 to the end of June  - a 5.4% increase."

Averages distort the reality when it comes to wages, median incomes give a more accurate picture of what most people are experiencing. The median household income has actually dropped over the same period so that most households are worse off. The rise in the average is because the rich have seen their incomes increase substantially (a 20% increase in wealth last year). While the average household income may have risen to $82,029 the median is only $62, 853 (around $20,000 less) and half of all households would earn less than that. Maori and Pasifika families have suffered the largest drops in income. Maori families have actually lost $40 a week in their household income over the last four years and Pasifika families have lost a crippling $65 over the same period. The median weekly family income for Pasifika families is $390 (only 20,280 a year) and when you realize that half of the families earn less that that you will begin to understand why poverty exists in New Zealand. National's economic management has only benefited the top two quintiles of incomes while the bottom three have experienced an erosion of income. 

"The survey also shows an average household with a mortgage is paying $20 a week less than a year ago."

For those few who are able to afford a mortgage this is good news but for a growing number of New Zealanders home ownership is not an option. Our housing is amongst the most expensive in the world (more expensive than new York or Los Angeles) and we have rapidly dropping rates of home ownership. The quality of our housing overall is said to be 50 years behind Scandinavia and we have about $11 billion worth of repairs needed on leaking homes that were built in the deregulated 90s. 40% of Pasifika people live in overcrowded houses and 23% of Maori, while only 4% of europeans suffer from crowded conditions. According to the Department of Building and Housing, Auckland will have a housing shortage of 90,000 dwellings in the next 19 years if nothing more is done. 

"National has been rebalancing the economy so that it can again be competitive."

If we look at what this rebalancing means in reality we need to see where the Government has shifted its focus. It has placed a high priority on the Roads of National Significance ($12 billion) when few have shown to pass basic cost benefit analysis. It has tried to sell off our State Assets, which will result in decreased government revenue over time. This Government has invested much money into encouraging overseas investment in extracting our oil, gas and coal, however Petrobras has lost interest in our oil reserves because they're uneconomic and the price of coal has dropped as other countries shift to renewable sources of energy. This Government has decided to renege on most of their environmental obligations and reporting to encourage more intensive farming and yet the costs of mitigating the drop in water quality are soaring ($144 million for lake Rotorua alone) and the damage to our 100% Pure brand could have a huge impact on our export markets. The Government's refusal to control speculation and over investment in our currency has seen our dollar become over valued by up to 25% and is killing off our manufacturing businesses. While National is certainly rebalancing our economy, it definitely isn't helping our competitiveness.

"At the same time we have managed the economy through the worst of the global financial crisis, the recession, and the Canterbury earthquakes."

Other countries have also had to suffer through a recession and natural disasters (the US, Japan and Australia have suffered flooding, tsunamis and tornados). The Government has tried to justify our increasing rates of unemployment, our growing levels of poverty and the decline in manufacturing by claiming there are other countries worse off than us. We actually have the second highest current account deficit in the OECD (worse than Greece) and a trade deficit this last October that was $500 million up from the previous year. While we don't have the highest unemployment statistics in the OECD we have one of the fastest growing. Large profits are being achieved by banks and many large companies within New Zealand, but because they are largely overseas owned the dividends are heading off shore and are not being reinvested in New Zealand.  Even the Government's procurement policies favour options off shore rather than investing in our local industries and ensuring the money remains in our own economy. Our Government borrowing has increased dramatically since 2008.

"As you can see, our economic development agenda is already starting to deliver results and National will continue to build on this."

The only growth this government has delivered is in areas where it is least wanted. We may be getting getting there Mr Roy, but I don't like the destination nor the mode of transport.  

Saturday, December 8, 2012

The Southland Economic Debate

Like many regions the Southland economy is suffering. Our largest employer, the Tiwai Smelter,  is cutting staff and threatening closure, many of our meat works are also down sizing and there is a real possibility that we could lose up to 4,000 jobs. Local CTU convenor Anna Huffstutler decided that because the Government was taking a hands off, "the market will decide" approach to our impending crisis that something needed to be done. She organised a debate* and invited political parties, the Invercargill Mayor, Tim Shadbolt, and the CTU National Secretary, Peter Conway. By doing this Anna hoped to bring the issues into the public domain and force those who are in positions of power to present some solutions and possibly get some commitments for action.

Interestingly Invercargill's National MP Eric Roy could only make a day that didn't suit the other invitees and so Anna approached Clutha Southland MP Bill English, but he also was unavailable (as was Steven Joyce). It appeared that National couldn't get one of their 59 MPs to represent their Party at this important debate. Russel Norman couldn't attend because his second child was due, so co-leader Metiria Turei put up her hand to ensure a Green presence. Winston represented his party and Clayton Cosgrove attended for Labour as their spokesperson for commerce and trade (and replacing the initial representative, David Cunliffe).

National's reluctance to front up was reported in the local media which resulted in criticisms of the organisation of the event from Eric Roy who also complained about the lack of flexibility to work around his Stewart Island hunting trip. It would have been a better debate if National had fronted up because all those who did attend largely sang from the same song book (apart from Tim Shadbolt who promoted his latest idea of drilling tunnels through mountains to irrigate farmland and was accused of tunnel vision by a quick witted Peter Conway).

What was revealed in National's absence was that there was a great deal of unity amongst the parties that would potentially form the next government. Judging by the response from the 100 or so people in the audience (large by Invercagill standards) there was a good deal of support for the answers provided.

As a brief summary the following points were made and I haven't attributed them to any particular party as there seemed to be a general consensus (and at one point Shadbolt himself noted that if people wanted positive action then they should vote for the parties present):
  • Asset sales had to stop and Meridan and the Manapouri Power station shouldn't end up in foreign  ownership.
  • Rio Tinto was manipulating the situation to serve its own ends and selling off Manapouri wouldn't help.
  • The high dollar was the main cause of our struggling manufacturing and all parties agreed that the Reserve Bank Act needed to take into account a range of factors when managing our currency. 
  • There needed to be a far greater investment in research and development to make sure we were at the cutting edge of technology and to add value to our exports.
  • There needed to be greater investment in training and up skilling workers and the unemployed. 
  • Southland has a resilient and innovative community with many success stories like the Southern Institute of Technology's zero fees scheme and the SBS bank. We just needed a little more support from our government. 
  • All agreed that the dominance of the Australian Banks in New Zealand was unhelpful and the billions of profit being dragged across the Tasman would be better remaining in the country and supporting our economy. 
  • Most referred to the BERL Report which claimed there was much potential in industries other than dairy if research and capital were engaged. Southland's timber, manufacturing, horticulture and education sectors were all under-realised. 
  • Southland produces 11% of export revenue from 2% of the population but our share of the tax take wasn't being reflected in government spending. 
  • We need to invest in jobs and higher wages, there is value in supporting a strong local economy as well as exports.
  • We need to explore more economic possibilities not just oil, coal and dairy. A silica smelter made sense due the potential spin offs in renewable energy and electronics, it was worth exploring further.
  • We need a plan and this Government has none.
What was abundantly clear to those who witnessed the debate was that the attempts from the Right to promote the view that any coalition of the left wouldn't last had little substance. While Winston Peters lacked the depth and detail in his answers that others provided there was still considerable agreement between them and an especially common view that proactive governance was desperately needed. I had the impression that if there was to be an election the following day, Eric Roy would be lucky to hold his seat. 

Metiria explaining the Greens' plan to create jobs

*My son designed the poster, which later was subjected to some creative additions from a local National supporting blogger.

Thursday, December 6, 2012

Christchurch Teachers Support Illegal Strike!

While the last four years have been difficult for most teachers under this National led Government it has been considerably worse for Christchurch. We all had to manage the implementation of the untested National Standards under the threats of sacking boards and principals if there was non compliance. We have all been concerned by the refusals from Ministers Tolley and Parata to properly consult with the profession or collaborate over educational change. We have all suffered from having a Secretary of Education leading the Ministry who obviously has no understanding of the New Zealand system. We all survived the proposed mass sacking of teachers to support the Government's idea that larger classes produce better outcomes for children. We have struggled with understanding why we should introduce systems like Charter Schools into New Zealand and we have all suffered from the poorly managed introduction of the Novapay system that resulted in over 8,000 errors and has wasted untold hours of staff time.

Christchurch teachers have suffered all of those things on top of also having to manage the enormous disruption of major earthquakes and stressed communities. For this Government to use the situation in Christchurch to push through a neo-liberable business model of education reform is callous in the extreme. The initial plan recommended 39 closures and mergers and obviously rejected the viability of any school with less than 150 pupils while favoring mega schools of around 600 pupils. The data used to support the plan was highly inaccurate and consultation was minimal. It was obvious that the plan was driven by fiscal considerations only and using data that was shaped to support the agenda. Community and educational considerations did not really feature.

Due to a huge public outcry and the fact that Minister Parata could not convincingly explain how any form of consultation had occurred, schools were given an opportunity to make submissions in the last two months of the year. To the Minister this may have seemed reasonable (although possibly a deliberate tactic), but for teachers and schools it meant an added workload at the busiest time of the school year while also dealing with the nonsense caused by Novapay.

A Christchurch Principal was interviewed on Nine to Noon regarding the very detailed and well consulted submission that his school had managed to produce over the past two months. His school had done what the Ministry should have, it had consulted well with the community and presented a fully costed plan for a school rebuild (that actually came to half the price of the Ministry's estimate). This Principal had acted very professionally, as his school had been identified for closure he had prepared staff and parents for that possibility. He had supported many of his staff into new jobs and enrollments for the following year had halved. While he hoped that the submission would be enough to save the school the Principal was realistic and had ensured that in the event of a possible closure it would effect as few people as possible. However his efforts had obviously come at a cost because when asked what he himself would do if the school did close he said he would look for a quiet job like working in a cafe. Although he was probably joking I know that the schooling changes that occurred in Invercargill saw a number of stressed principals leave the profession and losing good educational leaders unnecessarily because of poor process isn't good for teaching.

Christchurch teachers and support staff met yesterday and their lack of faith in the Minister and little confidence in the process was overwhelmingly obvious. For only the third time in the 130 year history of the New Zealand Educational Institute there has been a decision to take strike action, and it will be an illegal one. Such is their belief that this Government will ignore all their submissions (as it has done with all the others over the last four years), the strike is timed for the day after the Minister's announcement of the final plan.

Despite attempts to make it seem as if any action is driven by teachers supporting their own interests the reality is that the profession is far more interested in saving our schools from bad change and protecting the interests of the children in our care. Larger classes aren't good for kids, putting untrained teachers in front of classes is irresponsible and a five year old having to attend a mega school of over 600 pupils is not a comfortable thought.

Wednesday, December 5, 2012

New Zealand is a High Growth Nation

New Zealand can easily claim to be a high growth country and there are a number of areas where are leading the world. For much of this growth we can thank the National led Government because it has largely occurred under their watch:

  • We have growing unemployment, it has more than doubled since January 2008.
  • The level of Government borrowing has more than tripled.
  • Our levels of child poverty have grown alarmingly. In 2006 1/6 of our children lived in poverty (In households earning less than 60% of the median household income) and it is now said to be 1/4 and 50% of all children experience poverty at some time in their childhood.
  • We have a huge growth in spending on consultants, over ten times over the past ten years. 
2007-08 $1,968,000
2008-09 $2,037,000
2009-10 $5,542,000
2010-11 $4,674, 000
2011-12 $14,445,000
                2012-13 $21,927,000 (budget)
  • The demand for housing has grown substantially (see page 22 of linked report) and around 400,000 will be needed over the next 20 years. There is great demand for good low cost housing.
  •  The growth of intensive farming in NZ has seen a parallel growth in water pollution and now 90% of our lowland rivers are regarded as unsafe for swimming. More of our lakes and estuaries are close to flipping from an overload of nutrients and sediments. 
  • There has been an alarming growth in the salaries for CEOs, many have increased between 25 and 45%.
  • The incomes of our wealthiest New Zealanders have grown over 20%, helped in part by the tax cuts they were given that are costing us around $2 billion a year in lost revenue.  
  • The numbers of people migrating and leaving for Australia is increasing to the highest levels ever, an average of 1000 a week and a record 54,000 over the past year.
  • We have one of the biggest increases in income inequity in the OECD and much of it has has occurred over the last four years. 
  • The value of the New Zealand dollar compared to the US dollar has grown strongly over the last three years.  

With so much growth in so many areas one would think the Government would be celebrating, but there seems to be more enthusiasm to keep things quiet. 

Tuesday, December 4, 2012

The Reserve Bank's Indecent Relationship

The takeovers of our local banks by Australian ones was part of the neoliberal agenda in the 1980s and the view that the size of the bank ensured sustainability and security. The BNZ has been bailed out twice in its history (1894 and 1990) and was eventually sold to the National Australia Bank Group in 1992. The community owned Trust Banks were amalgamated in the late 80's and early 90's into Trust Bank New Zealand Limited which was then subject to a takeover by Westpac in 1996 (so ending around 130 years of community banking). PostBank once provided banking in most rural areas until over 600 branches were closed in 1988. By the mid 90's the shift to larger, Australian based banks for most of New Zealand's Banking was largely achieved.

The change in our banking culture has been accompanied by a change in the way that banks operate, in earlier times banks were largely seen as providing a service and supporting economic and business activity and according the Encyclopedia of New Zealand profit margins were conservative:

"In New Zealand bank profits are earned from four main sources–interest on advances, margins between buying and selling rates of exchange, charges for inland exchange and other services, and interest on investments. That these are relatively modest is evident from the annual accounts of the Bank of New Zealand. In its financial year 1963–64, this bank's disclosed profit of £748,375 was equivalent to just under 6.5 per cent on total shareholders' funds."

This philosophy has undergone substantial change and banks now operate with a profit driven approach as any other business and their main objective is returning strong dividends. Charges are determined not by what is reasonable to cover costs but pushed ever upwards to whatever the market tolerates. Internationally banks now dominate the corporate world and our largest New Zealand banks drag billions in profit back to their Australian owners.

The myth that smaller locally owned banks can't survive doesn't hold up in reality. Two particular banks has proven what can be achieved with prudent management and self belief. The Southland Building Society had decided to follow the trend to merge with an Australian bank when a group of local Invercargill businessmen and accountants objected (with strong local support) and stopped the process. With the support of a Green MP (the late Rod Donald) the SBS established its independence and has now grown into the largest New Zealand owned building society with bank status and almost $2 billion in assets.

Kiwi Bank was established as a coalition deal between Alliance and Labour and Jim Anderton claimed that there was strong opposition to the concept and concerns about it's viability and yet it is now our fifth largest bank (based on total assets). With around 300 new signups a day Kiwi Bank is offering a serious challenge to the big four.

The New Zealand Government uses Westpac for all its banking and the Greens have been pushing for a gradual shift to Kiwi Bank. This idea has been opposed due to the probable resistance from Westpac itself and the normal concerns around challenging the status quo. When the Government recently had to take legal action against Westpac for tax avoidance of over $1 billion it seems rational that shifting to a local bank will ensure any banking profits remain within New Zealand.

The Reserve Bank's favouring of Australian banks has been revealed by Russel Norman and their indecent relationship has been challenged in the following press release:

Reserve Bank must regulate banks not be their champion

Reserve Bank Governor Graeme Wheeler misled Parliament at his first appearance at the Finance and Expenditure Select Committee when he told the members that bank profits were “about average or below” most other OECD economies, the Green Party said today.
Data now obtained from the Reserve Bank by the Green Party under the Official Information Act shows that New Zealand banks’ pre-tax returns on assets from 2009-2011 make them the fifth most profitable banks in the OECD, with only Iceland, the Czech Republic, Singapore, and Australian banks more profitable.
“The Governor was wrong to tell Parliament that our foreign-owned banks are only making average, or below average profits,” said Green Party Co-leader Dr Russel Norman.
“The Reserve Bank’s own bank profitability data ranks our big four Australian banks as the fifth most profitable in the OECD.
“Our new Governor’s complacency about bank profitability is concerning. His job is to regulate our banks, not be their champion.”
Earlier in the year, the independent Bank for International Settlements found that Australasia's big four banks were the most profitable in the developed world for 2010 and 2011. In 2011, Australian banks made a pre-tax return of 1.19 percent on assets compared with a global average of 0.36 percent.
“The Governor’s mistake demonstrates one of the limitations of having one person solely responsible for the decisions of the Reserve Bank,” said Dr Norman.
“Boards make better decisions than individuals and are less prone to capture by the industry they regulate. This is why no other OECD country vests this much power in one person.
“The simple fix is to make the Reserve Bank Board accountable for significant Reserve Bank decisions – like setting the Official Cash Rate – and ensure the Board includes representatives from the wider economy, like the export and manufacturing sectors.
“The excessive profitability of our Australian-owned banking sector is to the detriment of other sectors in the economy, like manufacturing and agriculture, and affects anyone on a personal level that has a mortgage, credit card, or has savings in a bank.
“If we care about creating jobs and maintaining our incomes, we can’t afford to have a complacent bank regulator that looks at excessive bank profits and then looks away.”
Reserve Bank profitability data released under the OIA:


Following Russel Norman's claim that that the new Reserve Bank Governor was misleading Parliament by stating that the Australian banks were making average to below average profits, Graeme Wheeler explained that he had been using different data. What gives credence to Russel's view is that even I was aware of the huge profits that were being achieved by the banks and their high performance internationally. Wheeler was either trying to misrepresent the reality to continue the current banking sham or his competency should be in question.

It is also interesting to note that Kiwibank made an impressive profit surge of 276% and as it had declared that profit, will probably be paying tax on that. The fact that the Kiwibank has lower bank charges than the Aussie banks and still made a profit well above the others indicates that the other banks may have managed to minimise their real returns and reduced their tax bills considerably. Admittedly I am no economist but I would like to have this explained and preferably by our Governor.