The power of money speaking

May 1, 2013

This is a follow-up to last week’s post about the NZ Labour and Green parties’ joint announcement of their policy proposing to restructure New Zealand’s electricity industry by putting a state agency between the generators and their retail arms to provide a fair price for power.

The reaction has been interesting and enlightening. The National government’s initial political reaction, which most commentators agree was hysterical, offered dire warnings of communism and references to North Korea, Albania and so on. They were clearly caught off guard and reacted by swinging out at dragons.

Over the week or so, as the dust settled, the National party moved back into a slightly more measured counter-attack, setting up their side of a big debate ahead. Sadly (you’d think they would have learned by now), Labour and the Greens seemed to be sitting on their hands during that time, with leaders overseas and no obvious plan on how to build on their first body blow. Where is that killer instinct? They needed to keep building their argument in the face of the big counter-punching going on.

That was all rather predictable on both sides. But what interested me far more was the ferocity of the response to the Labour-Green policy by a large section (though, interestingly, not all) of big business, and in particular the investment community. This reminded me of a saying that became popular after the movie about Deep Throat and Watergate – “Follow the money”. You want to understand a business viewpoint? Then see where the money goes and how it flows.

The most serious critics have been the stock brokers, financial advisors and representatives of shareholders, who gravely warned us that investors would be less likely to buy shares of the power companies being privatised, so the price will come down.

So why will shares of Mighty River Power be worth less? Follow the money! The extra money that shareholders would be getting under the unregulated NZ electricity so-called market can come from one place only – the consumers, most of whom cannot afford shares. No matter how much some argue that we are paying a fair price for electricity now, based on the spot market price where the highest cost supplier sets the wholesale price, it can clearly not be true, because the free market advocates are telling us that shareholders will get a lower dividend or investment outcome without the free market operating.

To me this proves that the privatisation of essential public services is, at least in part, a way of allowing well-off mums and dads to financially gain at the expense of struggling mums and dads. In a fair market, the profits of power companies would be used only to pay their expenses and invest in future work, with nothing extra siphoned off pay private shareholders who are simply acting as stock market speculators looking for the easiest way to make near-guaranteed big profits. But ours is not a fair market; it’s a market geared for making extra, unjustifiable profits because there is no way of providing real competition between the players.

Under the Labour/Green plan, the money players could gamble their money elsewhere and the price consumers pay for their electricity can more truly reflect its actual cost.

But, cry the share market players and investment community, if people see New Zealand is “nationalising” part of the electricity market, investors will put their money elsewhere and our capital markets will start to wither. Hmmm …. as others have noted, the rate of growth of the NZSE 50 index has more than doubled since the Labour policy was announced. I can’t say for certain how closely the two are related, but following the money there suggests it is not particularly rational to fear a fleeing of capital.

So we have moved on to the next right-wing argument – that a lower price for Mighty River shares will mean reduced income to the government from the sale of this and other (state-owned power company) family jewels. It’s being called economic sabotage, or even treason! Again, follow the money. To get the most money from the buyers of Mighty River, we need to have it and other power companies making the most possible profit, and the easiest and best to do that is by charging all consumers way above cost for something they have little ability to avoid.

So in order for us all to benefit from the higher income from the power company sale, we all have to pay more for our power anyway! The money the government (ie, us) receives comes from the extra money we spend on power? Not quite. It’s not a zero-sum roundabout, because as that money revolves, a slice of it is removed regularly to pay dividends to shareholders, many of whom will take the money overseas.

This potential for easy money if current policy prevails explains most easily the ferocity of fire from the big financial guns, and their support from the National government.


Labour’s power plan may be game changer

April 22, 2013

I may be wrong but . . . I think Labour (with the Greens) may well have hit the jackpot with their policy decision to restructure New Zealand’s electricity industry.

In the past I have praised Labour over some of its more courageous policy changes, such as a capital gains tax. For some years there has been a desperate need in New Zealand politics for the two major parties to give us some real points of difference, a genuine right vs left decision rather than Tweedledum and Tweedledee – two versions of pretty much the same.

Some Labour policies of the past I haven’t agreed with, such as taking GST off food. But that’s fine – at least it was, in its own small way, offering a difference. Nevertheless, they’ve been struggling to show a clear ideological difference from National for many years. Labour has remained wedded to the there-is-no-alternative, free-market philosophy for too long, even where that philosophy is seen as unsuitable by all but the business zealots.

Recently they tried to break clear with a new social housing policy, suggesting a different way of state funding and providing lots of houses at the lower end of the market. Many said then that it was a game-changer, but I had my doubts. It seemed inadequately fashioned as a complete and mature policy, too easy to pick apart with just a few numbers and scenarios. But at least it was an attempt to provide an alternative policy to the free-market orthodoxy.

But this time I think Labour has given birth to a winner. Instead of power generators selling their electricity mainly to themselves (their retail arms) at whatever profit they think will satisfy their shareholders, who then sell it to consumers, Labour wants to set up a state-controlled buying agency as middle-man, setting the price that generators can charge and thereby cutting out the middle player and maintaining acceptable profits, much as the lines companies and Pharmac do.

Estimates suggest a saving to consumers of around $300 – $450 a year, which for many struggling people is significant. This saving would come at the expense of the power company shareholders (some of them being our retirement funds). A sort of Robin Hood policy.

While the fine details remain to be dissected, if Labour can keep the message simple, and do its economic homework thoroughly (or at least a lot better than it did for affordable housing), then it has everything going for it. Why?

Because of the Max Bradford factor. He was the National politician in the 1990s who deregulated the electricity market and allowed it to split into generators, retailers and lines companies, and then allowed the generators to also be retailers. And he did it accompanied by bland assurances that the resulting competition would surely keep prices down.

I have friends on both sides of the political spectrum, and certainly many to the right of my leftish inclination. And I cannot recall having ever heard one of them, or even any friends of friends, who hasn’t been scornful of the so-called efficient electricity market whenever it is mentioned. Everyone – even the market’s advocates – agrees that power prices just took off from then on. Free marketers keep saying that it takes time and all will work as ideologically planned when the market is tweaked appropriately and matures. But they ran out of time some years ago, and now it’s more a matter of ‘the market’s fine because I say it is, and if I keep saying it then people will stop questioning it’.

And ordinary people, including all those acquaintances of mine, will say that even if a return to state planning of power supply may not be perfect, at least there will be some control over the businesses that at present just keep putting their prices up in a kind of cartel environment – where the price of a unit of electricity is the price tendered by the most expensive generator.

If Labour can keep to message, and the Greens maintain their sensible support (what an impressive spokesman and thinker their leader Russel Norman is gradually becoming, but that’s another story), the majority of people in the middle political ground will say that this new approach is worth a try, because Max Bradford has run out of time and brownie points.

All Labour and the Greens need is another perhaps three to five percentage points in voter support and they’ll become the government. And I think this is just the sort of defining policy difference to achieve that.

 


Obama’s insightful view of the Boston killings

April 21, 2013

I was impressed by the message and the way US President Obama spoke to the media and his nation after the Boston Marathon killings, and especially after the identity of the perpetrators was known.

So often now (and probably over the centuries) world leaders have taken such opportunities to drive the voting population to greater anger and self-righteous blaming, beating of chests and thoughts of vengeful posses. Thankfully Obama didn’t succumb to this kind of response.

The bulk of the speeches he made which I saw on TV talked mainly about remaining strong, not letting the terrorist win by becoming fearful, and calmly but firmly promising to bring the culprits to justice. The way in which he made these statements reinforced the need to not panic but remain calm and faithful.

But it was the next bit that struck me. He added that as a society America needed to ask why it was that the two killers had been driven to it. As immigrants they had been living in the US for several years and were involved in some sports and other activities, yet had spoken of not having any friends at all and apparently no understanding of or sympathy for the American culture of consumerism and (to them) vacuous moral standards.

Of course, as yet we don’t know if these two young men had some justification for feeling that way, or were fundamentally and fatally flawed humans themselves. But whenever people do bad things while living within a society or community, whether in America or in a New Zealand town, the community around them needs not only to apply fair justice but also to ask why the community was not supporting them but rather alienating them. We tend to prefer to say it’s their problem (and something for the government to fix), not ours, and keep our distance.

While on the subject of the Boston tragedy, I heard another instance of news media using irrelevant facts to cast seeds of religious intolerance. Just the one, and I think it was on NZ National radio, when the newsreader said the men were immigrants from Chechnya (correct fact), which was predominantly a Moslem country (correct fact). But why include that second fact, apart from to prompt listeners to think – ‘ah yes, probably another radical Islamist terrorist’. It’s much like reporting that a gunman was “from America, which is largely a Christian country”, suggesting all Christians have a proclivity to shoot people.

Fortunately the radio station dropped that bit from all subsequent reports that I heard.

 


Key’s mana slips another cog

April 4, 2013

I may be wrong but …. in some ways the current controversy about our prime minister’s involvement in the appointment of New Zealand’s top spy is pretty ho-hum.

For a start, I’m not convinced that our spy service does anything really significant, so I couldn’t care much who runs it. Perhaps I should. Perhaps they are doing things unknown to me that enhance my way of life. But I doubt it.

And I’m not overly worried about the PM’s rather relaxed attitude to proper process. Doing things the right way in the higher echelons of government is highly preferable, but I’m not getting too worked up by the odd short cut. I’ve taken enough of them myself when it seems unimportant.

But what I am annoyed about is John Key’s indifference to the concept of honesty, and his flippant and sometimes jokey dismissal of challenges to his loose version of the truth. It’s happened so often now that you can read it easily in his body language when challenged on TV.

I first saw it well before the 2008 election when he was leader of the opposition, when confronted by a TV reporter about his knowledge of a visiting shady mover and shaker. I remember seeing Key deny he had anything to do with or meeting that person and knew nothing of it, only for the reporter to come back with clear evidence to the contrary. I watched as Key paused for a moment (thinking, ‘OK, caught now, how do I get out of this’), eyes flicker to the sides for a brief second (still thinking of the best response), skin colour slightly and a sheen of invisible perspiration (‘ok, here goes, hope being blunt works’) and then straight out accepted that he had in fact met the man very recently.

So you can see it easily now whenever confronted about events which he claims he cannot remember – the slight colouration of facial skin, the sliding of the gaze to the side and then back to the challenger, the forced grin and the quick and usually strained comment altering what he’d just said. This is usually accompanied by some sort of shrug, the continued pained grin, and the gaze switching to someone else as if to say, ‘end of subject’.

Any prime minister that I’m going to respect has to be considerably more direct and honest than this man.


Big tick for online census process

March 6, 2013

I’m usually among those critical of online forms, particularly those offered on government websites, but I’m happy to offer a bouquet to the people in the Statistics Department for their online census forms, which I dutifully filled out yesterday.

The questions were easy to answer and the appearance of the form on my computer was easy to read. But the thing I really, really, really liked about it was the way it interacted with my responses.

One of the things I’ve always hated about most larger survey and application forms (including the old income tax ones) which I’ve always filled out on paper has been when the next question you answer depends on how you answered the current question. Things like “If you ticked ‘No’, jump on to Question 24; otherwise continue.”

So often in these cases my weary mind stumbles around working out which questions to skip and where the next relevant one is.

A simple translation of this census form onto a website form could easily have produced the same irritating challenge, but instead the form designers used the cleverness of computer programming to improve the process. Those readers who filed their answers online will know what I mean.

Whenever the next question to answer depended on the previous one, the programme simply removed all the irrelevant questions from the screen so you always simply went on to the next (correct) one presented without having to worry about whether or not you’re at the right place.

So a big tick to those programmers, and may this be a lead to other website programmers working on big questionnaire and applications forms to use the same technique.

Mighty river

While I’m at it, my quick take on the NZ government going ahead with market sale of half of the publicly-owned Mighty River power generator.

Will I be able to buy shares? Yes, being a prudent retiree who has saved some extra cash for retirement, there is some I could take from the bank to invest.

Will I do it? No way. I already own a share of Mighty River and have been receiving a dividend from it – in the form of a reduction in my personal tax – for years.

Once Mighty River dividends that have been helping to pay for government services are halved and the resulting sale income has been spent, tax income will need to come from somewhere else or services will need to be cut. Simple as that. So I’m not spending money to buy what I used to own and was (half) sold without my permission.


Israel has now lost whatever sympathy I had for them

December 5, 2012

Boy, the Israeli government sure know how to lose the support or empathy of everyone other than their own blindly arrogant support team!

Yesterday’s news that they are punitively withholding tax income owed to the Palestinian authorities, and will build more settlements near Jerusalem that will split the West Bank in two, was for me the last straw in my years-long attempts to feel some sympathy for Israelis.

This in response for them not getting their own way at the United Nations, where Palestine has successfully (and rightfully in my opinion) gained some formal recognition as a state.

This sort of petulant, macho behaviour finally proves for all to see – that the government of Israel and its far-right fundamentalist supporters have no intention of treating Palestine as anything other than a state to be subjugated and, next, destroyed. Not necessarily by bombs, but by incrementally slow strangulation and oppressive psychological torture.

With every escalation of fighting such as the recent events in Gaza, I have tried to at least see the Israeli side, even if I struggled to make sense of their deliberate escalation of hostilities. I think that time is now past. All I see now, following the arrogant display of revenge yesterday, is a bully state which knows it has infinitely more powerful weaponry, and a grip on US policy, and is using that to psychologically batter and squeeze Palestine into submission on its 100% own terms.

This brief article offers no great new insight into the situation, and I’m sure no-one in power will read it so it will have no effect. I’m just using it to state that for me the debate about the rights and wrongs of Israel’s policy is over. Pretty much whatever the Palestinian people do now to resist the humiliation and oppression imposed on them by their arrogant occupiers is okay by me.

 


Marae visit a wake-up for me

November 28, 2012

Another long break since my last article, and for the same reason as mentioned in a previous one in July – a busy period concentrating on my work building the Vision Motueka group.

One of the group’s most important jobs, we believe, is active engagement with a wide cross-section of the Motueka community, gaining their buy-in and involvement in the various projects we are establishing. The most interesting such engagement so far occurred last week when six of us met with seven leaders of local Maori iwi (tribe) entities, in a hui (workshop/seminar) organised and hosted by them at Te Awhine Marae (their local spiritual and administrative headquarters).

Our main goal was to seek ways in with the predominantly European (pakeha) Vision Motueka group can engage in our visioning work with the significant number of Maori people in and around Motueka, and particularly with their Marae-based leaders.

We were also gauging each other’s goals and intentions regarding the building of a stronger, healthier and more sustainable town, and particularly with regard to Vision Motueka’s proposal to design a community and tourist hub in town. (But that’s another story.)

Pre-settlers, several Maori iwi held guardianship of all the land in and around Motueka and occupied the place of the current township, living in a close relationship with the land. European settlers in the mid-19th Century purchased land and settled, living in co-existence with Maori but also taking more land than had originally been agreed, setting up grievances which underlie an uneasy partnership to this day.

We Europeans have our ways of meeting and decision making, and Maori have theirs. And often the two groups don’t quite talk at a common level. Maori don’t often like to attend committee meetings and other political activities, but rather have broader meetings (hui) where opinions are broadly sought and debated and decisions made by consensus.

Our meeting last week was very rewarding for us pakeha, and we felt that the Maori leaders also felt fully accepted and, more important, respected by us. We came away with both groups happy to keep dialogue going around what we each see as important for the future of the town, a key part of which is respect for Maori aspirations – to be seen as rightful guardians of their remaining lands along with their own economic security and aspirations.

But there was one small ‘moment’ in the meeting which had a huge impact on me, and which is the point of this article. One of the Maori leaders, an astute woman named Rima, talked of the ways in which they sadly see pakeha tiring of talk about the Treaty of Waitangi as a general principle behind negotiation between the indigenous Maori and Westminster-style government (local and national).

She said it’s easy to dismiss treaty issues as a constant irritation between the two cultures, but it’s not really the Treaty that’s at issue here and now. What we should be focusing on is the recorded, historic fact that particular people, families and tribes that live in this local area of Motueka have had rights stripped from them and are ignored or denigrated when they argue for getting at least some of them back, or argue for a greater say in the future of the town.

In other words, the Treaty is not just a New Zealand issue argued across the country about people ‘somewhere else’. It actually comes down to people living beside us and with us, in our own town, our acquaintances and colleagues, who are part of families which are being bypassed in decision-making today, despite the historic facts of their being cheated on.

Barney Thomas, one of the influential and, dare I say, charismatic leaders at this meeting, gave as one example Maori land being taken long ago for public amenities such as schools, and then when those amenities are no longer required the general (pakeha) public complain when Maori say, ‘ok, can your return our land now?’

It was this simple shifting of the ‘treaty’ focus from being a nationwide issue, to understanding and learning the history of the area in which I live and the people I’m now getting to know, which made such a huge impression on me. Looking through that lens, I can better appreciate how important it is to respect Maori cultural ambitions as being at least as valid and important as my own culture.


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