Challenges facing New Zealand in the 2020’s


As we enter the 2020’s with bush fire smoke descending on New Zealand from our Australian neighbours and the world watches U.S.-Iranian relations deteriorate further (more on that tomorrow), it is important to note our own considerable challenges. They cover a broad smorgasbord of issues that without significant action in the near future, have the potential to cause significant grief in years and decades to come. I briefly look at what I consider to be the major challenges here:

CONSTITUTION: Whilst our current framework gives New Zealand flexibility that an entrenched constitution such as that of the United States does not, the latter has some features that we should consider adding. The framework which consists of seven significant Acts of Parliament includes the Bill of Rights Act 1990, the Human Rights Act 1986 and the Constitution Act

There have been challenges in Parliament in recent years to the framework that need to be addressed before one renders it useless. They include incidents where Parliament has voted to remove a Commissioner without doing due diligence; legislation passed that directly undermines the legal right in the Human Rights Act 1986 to peaceful assembly . Such steps are not only highly improper, they pass into grey areas of New Zealand law and potentially set a dangerous precedent.

ECONOMY: Since 2016 the economy of New Zealand has been stuttering along, partially caused by global uncertainty as the situation in the Middle East continues to deteriorate; uncertainty over Britain and Brexit and the U.S.-Chinese trade war. But we cannot blame it all on international concerns.

Long standing concerns about the lack of diversity in the economy and a lack of emphasis in terms of investment in science research and technology still exist. New Zealand will not become one of the higher wage earning nations in the west until they are.

EDUCATION: Whilst this Government is on the right track having another look at Tomorrow’s Schools, I am concerned that the students are missing some very basic teaching in the rush to embrace digital technology. Many students struggle to show mathematical working on paper; construct basic sentences and that not enough is being done to embrace books. Whether the Minister will address this remains to be seen.

The tertiary education sector also faces a number of challenges. They include the sector reforms announced by Chris Hipkins, who has embarked on what I consider to be an overly radical reform whereby all of the institutions are merged into a mega institute. The push back is understandable, though some of the smaller institutes that are vulnerable to failure should be closed before they implode.

ENVIRONMENT: Since Labour came to office there has been a welcome escalation in the war on waste. To the Government’s credit it has banned plastic bags, announced a phase out of fossil fuels and acknowledged that water quality is a major issue. This is one somewhat brighter area despite the many and considerable challenges facing the natural environment.

But the Government must step up the tempo. The review of the Resource Management Act, whilst a good idea is in danger of just adding to the confused 800 page beast it already is. It needs to announce how it is going to tackle the phase out of fossil fuels in conjunction with economic and social leaders, and the war on waste is really only just beginning.

FOREIGN POLICY: New Zealand foreign policy is largely correct in my book, with four significant exceptions. Two are super powers competing for our attention and support. The third is the willingness to continue to put New Zealand first by taking a third way as opposed to a Chinese way or an American way.

It is the fourth that should concern us the most as we need to do more to help our Pasifika neighbours. The Samoan medical emergency caused by measles has shown it does not have the ability to cope with this all on its own. They also need to be reassured that New Zealand takes their environmental concerns seriously and will push them at the United Nations.

POVERTY: This is really a combination of social, background, medical and education factors working (or not working) together. Neither National or Labour have really tried to acknowledge this. Nor have they tried to address the neoliberal economic model that favours a small select group of people and ignores the rest. Trickle down economics is a myth perpetuated to make people believe that market economics work for all. They do not and poverty is a significant consequence of it.

 

Alternatives to road transport dip out – again – in National transport document


National is proposing to remove fuel taxes if it is elected to office in 2020. And then effectively reinstate them as road user charges. Which to the ordinary New Zealander on the road means one thing only: we still pay for it – just under another name.

National spokesperson for Transport, Chris Bishop announced the new proposal in National’s newly released transport discussion document.

In fairness, Mr Bishop may have a point about fairness of payment methods. A less efficient vehicle might use more fuel per kilometre than a newer vehicle, especially if it is a hybrid, which is designed for low petrol use or an electric car. His solution to introduce road user charges intend to ensure that the kilometres a vehicle drives will determine how much in the way of road user charges a driver has to pay.

How will the road user charges be administered. My father owns a 1995 Toyota Surf that runs on diesel. He has to pay new charges every 10,000 kilometres. Is that an appropriate frequency in terms of kilometres travelled to pay new charges? How would this be administered to petroleum driven cars and after how many thousands of kilometres would new charges have to be paid for?

But the basic fundamental National Party paranoia about “tax”, “taxes” and “taxation” and the desperation to redress need to find replacement funding to cover what would be lost from scrapping the “tax” is at the heart of the subject – if you believe Stuff. What Stuff ignore though is perhaps not so much the fact that National is playing games with the type of funding mechanism that they use to fund roading, as it is that railways, the merchant marine and public transport once again seem to dip out in the discussion document. Perhaps – which would be legitimate for a discussion document, they are credibly asking what the funding priorities should be in these areas, in which case credit to them. But if after an election they win National choose to let these areas slip and slide away, it will be to New Zealand’s detriment.

National also appear to be playing a game of two islands. The North Island comes up in terms of funding announcements, but the South Island often dips out. Neither Christchurch, nor Dunedin seem to rate mentions in terms of funding or what National thinks it might do – or not do. There are several things that could be done, not least:

  • Making Otira tunnel safe for all trains to transit through again without the risk of coal dust causing an explosion and/or fire.
  • Using the South Island Main Trunk Line more for freight, especially through the Kaikoura area where some trucks are simply not made for those roads
  • Introduce a Lyttelton to Wellington/Lyttleton to Port Chalmers ferry service that could take freight and passengers if railways are not efficient enough

This is not to say National’s discussion document is a waste of time. I welcome it and I hope that constructive discussion is generated by it – even if I don’t want a National Party victory.

Dealing with N.I.M.B.Y.ism in New Zealand


N.I.M.B.Y.ism officially has two different categories of people who use the term:

  1. The business and industrial sector in times of exasperation in attempting to classify the people who are opposed to a development in their neighbourhood
  2. The local community activists who perhaps for reasons of social conscience or a general concern about the likely environmental impacts likely to be caused by a proposed project such as a waste-to-energy plant

However I imagine there to be more than just these two groups, and I describe later in this article other types of N.I.M.B.Y.ists. I also wonder how accurate these classifications are – yes business and industry might be exasperated with opposition to a major project that has aesthetically, environmentally and socially displeasing characteristics, but it is what is driving that opposition that we should be looking at.

In New Zealand the Resource Management Act requires that applicants of a proposed activity seek approval from the neighbouring property owners. A large dam creating a reservoir and generating power is obviously going to affect numerous land owners, need numerous resource consents. The consents will also need in depth Assessments of Environmental Effects filled out, engineering reports into the suitability of the land on which the dam will be built and so forth. There will be recreationalist’s concerned about the impact on fishing and boating; environmentalists will be concerned about the trapping of sediment behind the dam and the flooding of a valley when the lake fills up; communities will be affected in that property prices might change and the character of communities nearby will be altered. No one can blame them for opposing something like this in their backyard.

At the other end  of the scale construction of a three bedroom house will most likely only need one resource consent – maybe two if its fence is non compliant with the local plan. A house being built is significantly less likely to attract the attention of local activists. It will probably relative unobtrusive. The scale of the earthworks and environmental effects will be able to be summarised in a few pages as well as the mitigatory measures that will be taken.

Sometimes the people who fall in the N.I.M.B.Y. classifications have credible points. Maybe the project is not suited to its proposed location. Maybe the communities and the environment really will suffer. These N.I.M.B.Y.ists might not be so much opposed to the activity as they just recognize that the proposal is poorly thought out.

But there are some who will probably protest for the sake of protesting. These are what I call dead end N.I.M.B.Y.ists. These are not necessarily the ones that engage with the intention of helping a cause or because they see some significant injustice. In the same way one makes no progress going down a dead end street, one should not expect to make progress in dealing with a dead end N.I.M.B.Y.ist. They are there to shut down a proposed activity or project at any cost. No amount of reasoning, no number of fact or truths will persuade them that ones proposed activity is somehow beneficial.

If one thinks about the various aspects of a major infrastructure project like a wind turbine installation, it is possible that a fourth group exists. One might call these the environmental/ecological N.I.M.B.Y.ists. They generally approve of the type of project, but because certain bird life live near the wind turbines it is not appropriate there. The problem then becomes a questions of where is appropriate.

But is it possible that there are business or industrial N.I.M.B.Y.ists? These could be those who object to activities, that they perceive as not being business friendly, such as the conservation estate.

So, what is a N.I.M.B.Y. to you?

Short term pain but long term gain with Reserve Bank announcement


On Thursday Reserve Bank Governor Alan Orr revealed what might be the biggest decisions in decades. Governor Orr, in an attempt to strengthen the banking sectors ability to handle a major financial meltdown, announced plans to make banks hold more of their profits relative to the amount of lending that they do.

Yes there is pain. But as the saying goes, you cannot have gain without the pain. So, putting that in context here are the pains (and later I will mention the gains):

  • Substantial increases in mortgage rates – possibly up to $300-400 a week if you believe A.N.Z.
  • Lending to farmers has decreased significantly on the double digit figures of a few years ago, but with an average mortgage sitting at $3.833 million for farms of all types, even a minor change would hurt
  • The total hit to banks may cost around $20 billion

No one I am sure wants New Zealand to have a spasm of collapsing financial institutions like we did in the Global Financial Crisis where 32 separate institutions imploded, wiping out billions of dollars in bank deposits and taxpayer monies. And we certainly don’t want the non-accountability that went with several of the imploding institutions where the people in charge were found to have properties worth several million dollars and living the societal high life made from ill gotten gains. The massive bangs of Fannie May, the Lehman Bros and Freddie Mac going under might not have been felt in New Zealand but anyone following the news would have certainly noticed.

And I do not think New Zealand society is prepared to be radical like Iceland, which which decided to jail its bad bankers and was the first E.U. nation to have a growing economy again post G.F.C.

However I believe that the short term pain will in the longer term be off set by gain. New Zealanders will have more confidence in the banking sector that when financial strife attacks, the banks will be able to cope. The ghosts of the 2007-2009 Global Financial Crisis will be consigned to the history books. Whereas other countries are having or have had painful reconciliation’s with their banking sectors, New Zealand and Australia did quite well – we had none of the following:

  • Britain and Ireland went through painful austerity periods
  • The United States had to introduce the Frank and Dodd legislation to prevent a repeat of 2007-09, which various Republicans have promised to repeal
  • Greece, France, Spain and other E.U. nations suffered considerable internal strife over domestic fiscal policy

And the gains that I mentioned?

  • Implosions such as South Canterbury Finance, which took out $1.6 billion of deposits, long term investments and other monies will be less likely – the little man who lost his entire savings overnight in the 2007-09 crisis has less to fear
  • Banks credit ratings will hopefully be more secure
  • Small banks such as T.S.B., S.B.S. and Co-operative Bank will potentially gain customers
  • Ultimately there will be more confidence that money will be better in a bank than under the pillow

That is the theory. The reality going forward is quite possibly different in a country without a flash record of understanding the need for a robust banking framework. The possibility that voters will vote for a party that promises to kick the can down the road for another few years is there. So is the possibility that parties beholden to the banks will vote to undermine, or worse still, completely dial the progress back to where we are today.

New Zealand’s $1.4 billion money laundering problem


New Zealand has long been viewed as a soft spot for money laundering, high end fraud, among other crimes. Across the last few years numerous examples of money laundering activity in New Zealand or linked to New Zealand businesses have appeared

  • In 2016 an expert said that New Zealand banks were missing large numbers of suspicious monetary transactions
  • Also in 2016 the so called Panama papers showed how a steady flow of foreign cash into New Zealand became a flood as its holders sought to avoid it being taxed in the proper jurisdictions
  • The same year John Shewan’s report found 12,000 foreign trusts existed in New Zealand – a number that plummeted to 3,000 within a year suggesting many were used for money laundering or other improper monetary purposes
  • In August 2019 $9 million was seized in an anti-money laundering sting in Auckland
  • Just a few days ago the Chief Executive Officer of Westpac resigned after allegations that Westpac failed to pick up 23 million individual breaches including payments to Philippine based child exploiters

Now it has emerged that New Zealand has a N.Z.$1.4 billion money laundering problem. This estimate does not include the domestic cheats who do not pay due taxes to Inland Revenue Department. Globally it is part of what the International Monetary Fund believes to be a $6.5 trillion problem.

New Zealand needs to crack down hard on money laundering. As the resignation of Mr Hartzer shows, money laundering can be linked to some extremely dark criminal activities including child exploitation. A significant part of the crack down would need to ensure a long term budget increase for the police unit investigating financial crime. There would also need to be a revisit of the amendments made to the Anti Money Laundering and Countering Financing of Terrorism Act 2009.

The Government seems to be rising to the challenge. It has made changes that took effect in January for real estate agents. In August changes for the racing industry and businesses with high value products regarding the need to comply with the A.M.L.C.F.T. Act took effect. In 2018 the obligations for businesses providing trust services, lawyers, conveyances and accountants were changed.

But there is more that can be done. I believe that tightening the sentencing regime for those convicted of money laundering, conspiracy to participate in money laundering and providing support for those involved in it can be tightened up. Whereas many of the people who commit offences against the human body are disturbed, come from messed up backgrounds or may simply not have had a loving family to show them right from wrong, organized crime is quite different. The victims of money laundering – although individual victims certainly exist – are whole communities, businesses and in the worst cases the reputation of entire nations.

Whereas the impacts of rape, murder and so forth – certainly not trying to put any of these crimes down in terms of their gravity – on the individual, the family and their lives are well documented, how well do people know about the absolute worst of white collar crime? How well do we know what we as a society, as a nation and as a people are missing out on by not tackling money laundering and the people who engage in this kind of activity?

I fear the answer is not very well at all.