July 2009 E-News from Jim Anderton MP

The economic situation

Since my last E-news, we have seen a consistent rise in unemployment. As I suspected, the National Party has no plan and no meaningful ideas for creating a more job rich economy. Its approach is to stand on the sidelines and hope the economy turns the corner on its own.

Progressives have a better idea.
We support proactive partnerships between government and industry to invest in job rich, high-skill and innovative initiatives, especially in the regions of New Zealand.

We want to use the strength of government to invest in infrastructure, and skills training so that we create jobs and emerge from the tough global conditions stronger.

National got into office with promises it couldn’t keep

When you think about it - National was elected on a lot of promises it hasn’t been able to keep:
o They promised wages in New Zealand would catch up to wages in Australia; They have no plan to boost wages.
o They promised a three year program of tax cuts; we always said their promise was unaffordable.
o They told New Zealanders the previous government gave too much of the Foreshore and Seabed to Maori; Now they say we should have handed it all over.
o They claimed they would significantly reduce violent crime; They haven’t, and they have voted down any effort to reduce the availability of the one factor that is present in over sixty percent of all offences: Alcohol.
For now the National government is getting by on smiles and slogans. New Zealanders are giving them the benefit of the doubt - and that’s not surprising. We all want New Zealand to succeed.

Sooner or later, though, National will have to answer why they haven’t been able to come up with any meaningful ideas to solve the problems New Zealand faces.

Membership of the Labour Party

24.07.09 Recently I wrote to Progressive Party members to say the Progressive Party executive had decided to work closely with Labour as a coalition partner in Opposition.

Working with Labour is the best way we can keep a long term presence for Progressive ideas in the mainstream of New Zealand politics.

Our work together in Opposition has been fruitful. For example, we worked alongside our Labour colleagues on the Mt Albert by-election. This was a great success for the Opposition, and the first time since the last election that the Opposition has shown we can be more popular than the government.

Some members of the Progressive Party who have been working with Labour on campaigns have been invited to hold office in branches. Some working on campaigns want to have the same rights of membership as other campaign workers.

I discussed this with Labour’s New Zealand Council recently. In recognition, it made a decision recognising that membership of the Progressive Party is not incompatible with membership of the Labour Party.

This recognition will allow Progressive members to work cooperatively for the election of Labour candidates, who have compatible ideas and goals and to seek selection for office, or support progressive members seeking selection. It also allows those members of the Progressive Party who don’t want to join with Labour the choice to simply remain members of the Progressives.

Banks have questions to answer

21.07.09 The Labour Party, the Progressives and the Greens have announced they are holding the equivalent of a parliamentary select inquiry into bank profits.

Banks are charging interest rates that are higher than the same banks charge in Australia. I am supporting the cross-party inquiry because the banks have questions to answer about why there is a difference in the rates they charge.

Overseas-owned banks took $11.7 billion out of New Zealand last year in interest and profits. That’s more than the entire sum collected in GST revenue. The amount they have been paying themselves has increased rapidly over the last three or four years.

Interest rates charged by the overseas banks are especially affecting farmers.

Total farm debt at the moment is around $43 billion. At farm lending rates of 13-14 per cent that means our farmers have to pay $5.5-6 billion a year in interest alone to the Australian banks.

Every one per cent of interest charged represents $450 million off the bottom line of New Zealand’s farms.

The Australian banks charge interest on unsecured loans of 17.95%, compared to 16.9% charged by Kiwibank. Interest on a standard Westpac credit card is 19.45%. In Australia, the comparable interest rate charged on a standard Westpac card is 17.74%. Australia has a higher official cash rate than we do. Kiwibank is able to charge 12.9% on its standard credit cards.

An inquiry will help to establish why Aussie banks charge us more than they charge Australians.

Feds’ concern over interest rates a topic for bank inquiry

22.07.09 Contact between Federated Farmers and banks over high interest rates for farm lending is welcome, and farmers should bring their concerns to the multi-party inquiry.

Federated farmers says its economists calculate that floating rates account for about $6.6 billion of the $45 billion of rural debt and “floating” mortgage rates are higher than they could be.

Three parliamentary parties, Labour, Greens and the Progressives are holding an inquiry on the topic and I want banks to front up and answer farmers’ concerns.

Banks need to explain why their interest rates haven’t come down as fast as the Reserve Bank has been bringing down the official cash rate that banks pay the Reserve Bank for their deposits. Not even the Governor of the Reserve bank can understand why they are not reducing their rates.

Farmers are the backbone of the economy, and the pressure high interest rates are causing farmers is pressure on New Zealand’s entire economic development.

‘Expert’ slams Interest Rates Inquiry

22.07.09 Massey University Centre for Banking Studies director, David Tripe, reflecting on the banking inquiry announced by Labour, the Progressives and the Greens, has said it should not be taken seriously and the banks are being treated as scapegoats. He goes on to say that “blaming banks is a sport that has been under way for a long time. You blame the banks for all sorts of things but who cares about facts. Banks are big and anonymous; they appear to have lots of money, so why not blame them if something is wrong?”

Is this the same David Tripe who was a constant and vociferous critic of Kiwibank saying it would never work! He is at least quiet on that front these days.

Hollow promises

21.07.09 The ‘Rural News’ has picked up on the proposal “to cut 60 frontline biosecurity staff from already overstretched border security contingent – the axe is ultimately in (Minister David) Carter’s hands… When in opposition the (National) party repeatedly harangued then Minister Jim Anderton for neglecting the biosecurity portfolio as successive costly incursions side-stepped New Zealand’s beleaguered border defences. “

Quotes from National in opposition read:
June 6, 2006: “National takes issue with Anderton’s ‘confidence’. Says: National: “Our borders are vulnerable; The Minister needs to fix it and fix it now.”

February 21 2007: National disputes Anderton’s claims we have “the best biosecurity system in the world”, arguing instead that we are actually losing the battle against organisms entering New Zealand.

November 4, 2008: National claims if it were in Government it “would introduce a range of measures to ensure pest incursions did not threaten New Zealand’s competitive agricultural advantage. There’s no doubt we need stronger border controls and National will make changes to do that.”

And finally:
April 7, 2009: From Minister Carter – “I’m the Minister responsible so it’s up to me to be providing that leadership. I’ve spoken to the people at MAF responsible for biosecurity and they have accepted things need to change.”

July 7 2009: MAF announces moves to disestablish 60 border security positions.

Treasury claims about privatisation boosting productivity

21.07.09 Treasury’s claim that privatisation boosts productivity is an old song that Treasury should be embarrassed about.

Treasury made the exact same claim about the privatisation of rail. It could not have been more wrong. The privatisation of rail was a disaster on any reasonable measure.

In parliament last week, I tabled Treasury’s 1999 report “the privatisation of New Zealand Rail.”

In the report, produced when Bill English was finance minister, Treasury claimed, “welfare increased from the privatisation of rail. This reflects the remarkable improvement in productivity that took place.”

Treasury has long made a habit of calling for the same medicine regardless of the facts. When the facts showed Treasury’s advice about privatising rail was hopelessly wrong, they made up a case that said it was great anyway! You can’t beat this for poor quality advice. If Treasury was a doctor, the patient would be dead.

In an ironic twist on Treasury’s call for other government departments to contract out more work, the discredited rail report was produced under contract for Treasury.

Fitch warning a wake up on bank profits

17.07.09 Warnings of a credit downgrade because of our current account deficit are a wake up call about the sums we are paying foreign banks in interest and profit to fund the deficit.

The Fitch rating agency warns that New Zealand has a fifty-fifty chance of a credit downgrade because the current account is very high. Unless it halves, we will be downgraded, and households, farmers and businesses will have to pay higher interest rates.

As I have been saying for a long time, the external deficit is already costing New Zealand too much.

We sent $11.7 billion in interest and profit to overseas-owned banks last year, more than the government collected in GST revenue. Farmers alone are paying interest of around six billion dollars in farm debt.

Interest rates charged here by the Australian-owned banks are higher than the same banks charge in Australia. Their margins are also higher.

We are sending that money to the overseas-owned banks because they are financing the current account deficit. When house prices rose, New Zealanders borrowed against the capital, bought new plasma TVs, but didn’t increase our capacity to earn more.

Now the bill is starting to come in.

Current account deficits have a history of reversing themselves sharply, with very sudden falls in consumption. That amounts to a poor outlook when the government is already hoping the recession will end by itself.

Unfortunately the government doesn’t have any economic plans to reduce the current account deficit and it doesn’t even recognise the levels of profits going to overseas-owned banks are a problem.

Rogernomics was meant to end the current account deficit problem for ever. It failed abysmally.

How to reduce prison populations

17.07.09 There are too many people in prison and the Chief Justice is right to raise the issue.

But the only viable way to reduce prison overcrowding is to reduce the level of crime by targeting drugs and alcohol. Longer prison sentences are not making much difference.

The Chief Justice’s comments are the latest of a flurry this year looking at the justice system: Pita Sharples wants to build special Maori prisons for Maori offenders. The government wants to build prisons out of shipping containers. The next step will be putting containers on a container ship and shipping them offshore.

All of these ideas are looking at the wrong end of the problem. Early intervention works best and costs less.

If you intervene early, you don’t have as many victims, and you don’t need to worry about locking people up or letting them out.

Three out of five offences are committed while the offender is under the influence of alcohol. If you want to cut crime, you can’t go past that figure.

The government made big promises about significantly cutting serious offending. It won’t keep that promise, because it won’t do anything about the most common factor in criminal offending.

Reducing the abuse of alcohol is a tough issue to fix. Until it is fixed, crime rates will remain high, more prisons will be built in local neighbourhoods, we will pay higher taxes to build them, they will continue to be overcrowded and they will continue to fail.

All talk and no jobs

15.07.09 National is talking big about agriculture, but it’s running up a surrender flag with no new ideas.

John Key billed a recent speech as a major statement on the economy, but he had no new ideas while unemployment is increasing.

Unemployment in a region like Gisborne increased from 3.8% in 2006 to 7.8% in March this year and it will be inevitably higher now. Yet while unemployment is rising quickly in regional New Zealand, National has no ministry or policy for regional development or industry development. They never did and they don’t have now.

National imposed a massive tax increase on research and development and it cancelled a two-billion dollar partnership between the government and private sector to invest in primary sector innovation.

While John Key talks about the economic performance of agriculture, he has no idea about why our farms, businesses and homeowners are paying much higher interest rates than Australians, when the same banks are doing the lending. John Key is all talk and no jobs.

Complaints over secret agreements with water in Auckland

13.07.09 An attempt to hold negotiations over Auckland’s water services in secret might be a breach of the law.

I am going to the Ombudsman and Auditor-General with complaints over a ‘confidentiality agreement’ Watercare has tried to make Auckland councils sign. The agreement would stop councils from disclosing any details about the transfer of water businesses to Watercare.

The agreement appears to be an attempt to thwart the law around official information - in particular the Local Government Official Information and Meetings Act 1987. It provides the only grounds councils can use to restrict disclosure of information. It also provides for redress through the Ombudsman.

The ‘confidentiality agreement’ has the whiff of darkness about it.

There should be nothing in the transfer of the water business of councils that can’t be dealt with through the official information statutes. The important protection for the public is that officials can’t use our money without being accountable to the public. If there are public interest grounds for withholding information, then those grounds are subject to simple review by the Ombudsman.

Therefore the attempt to override the statute with a secrecy deal appears to be sinister.

You can’t use public money for unlawful purposes. Thwarting an Act of parliament is unlawful. Any public money used to write this agreement or negotiate it will have to be paid back. Any lawyers involved should be thinking about refunding their fees.

What we are seeing repeatedly from the national government and its henchmen in Auckland is a highly undemocratic tendency towards taxation without representation.

First, the public’s right to vote on Auckland was blocked by Act of parliament, passed under urgency. Now the public’s right to know what is happening to our assets is being blocked.

ENDS

© Scoop Media