Time for Govt to get tough with cockroach capitalists

“We can’t regulate for stupidity or greed,” said Commerce Minister Lianne Dalziel last week as she announced a revamp of regulations for the financial sector but avoided tough regulations on loan sharking.

But she is wrong on both counts, which is why we have legislation against drink-driving and why the Securities Commission was able to extract $20 million from Michael Fay and David Richwhite last week.

Alongside the Minister of Consumer Affairs, Judith Tizard, Dalziel announced that “all financial service providers, including fringe lenders, known as loan sharks, will have to register and meet `negative assurance’ checks to confirm they have no relevant criminal convictions, are not undischarged bankrupts, and are not subject to a director/manager banning order. In addition to these checks they will have to be a member of a dispute-resolution scheme.”

These steps are headed in the right direction but on their own will make no discernible difference to loan sharks, which have become the scourge of families in low-income communities. The breadth of the problem was further revealed in The Press a week ago with revelations that loan sharks are now operating at the Christchurch Casino. Further allegations have since been made of similar practices at the Auckland casino and Green MP Sue Bradford has reported allegations that young women in debt are being required to work in brothels to pay back usurious loans.

Yes, it’s important to register these cockroach capitalists and have their backgrounds checked as suggested. It is also useful that they are required to belong to a dispute-resolution scheme. However, if the Government stops here their stated intention to “net” these loan sharks will be lost. In fact the very dispute resolution process which is presumably intended to assist people struggling to pay back loans could become nothing more than a debt collection agency for the parasites themselves.

Just how far removed the Government is from the problem was revealed last year when Judith Tizard said through her press secretary that “in New Zealand’s light-touch `buyer beware’ culture, people are responsible for the decisions they make, no matter how ill- judged”. Alongside this, Dalziel’s suggestion that people borrowing from loan sharks are stupid is deeply insulting.

At the heart of the problem is poverty, and as a former official of the Service and Food Workers’ Union, which represents low-paid workers, Dalziel should know better than most.

Government figures show that 15 per cent of families borrow for basic living costs such as the electricity bill or to pay for the groceries.

People do not borrow at 25% per month to pay their power bill because they want to, but out of a mixture of desperation and hope. Desperation because the power board is coming around to cut off the power, and hope that tomorrow things will get better. Decisions that the comfortable middle class see as stupid become part of weekly survival. Loan sharks are loving it.

So what would make a difference?

Two steps, already in place in some Australian states, would be a good start. First, the setting of maximum interest rates. This could be done by putting a ceiling on the finance rate (the finance rate is the repayment rate which includes the interest rate and set-up fees) for all borrowing.

Second, the requirement that the lender show that the borrower is able to pay back the loan.

This would avoid cases where a person borrows from several institutions and hasn’t a hope of repaying the debt.

A person earning just $400 a week can typically be making repayments to loan sharks of $200 every payday. Such a situation is not a problem for the loan shark, it is their ideal scenario.

In Britain, some loan schemes are required to carry warnings. Why not here? Banning the “name and shame” advertisements of loan defaulters run in community newspapers here is also a must. Cheap loans made available through Kiwibank alongside budgeting requirements would also help.

The Government knows how huge this problem is and it knows the groups which are targeted by unscrupulous lenders. Right now, Judith Tizard is sitting on a substantial government report on the devastating effects of loan sharking in low-income Pacific Island communities.

It’s time for her to release the report and accept the Government’s unqualified failure over eight years to protect Pacific Island families in the way that middle class families are supported by regulations under the Credit Controls and Consumer Finance Act.

A few more half-hearted regulations are not what we need. Last week, Lianne Dalziel praised the “guts and gumption” of the Securities Commission in tackling two vulture capitalists and protecting the interests of shareholders.

Let’s see some of the same courage from the minister herself to tackle the cockroach capitalists who prey with devastating effect on far more vulnerable New Zealanders.

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Principals sadly more passionate about pies than poverty

 

You would have thought the end of civilisation was on the horizon. The wailing and gnashing of teeth by school principals was audible across New Zealand last week.

The reason was the Government’s policy announcement that from June next year schools would be expected to sell only healthy food from their tuckshops, with unhealthy food being restricted to “about once per term – for example, for particular events”.

The reaction was a mixture of indignant outrage and shrill confusion. Principals said it was an example of the nanny state telling them what to do. Schools would be invaded by state food police who would pick their way through school rubbish bins.

One principal said schools had neither the ability nor the desire to inspect the food children brought to school. Don’t pick on schools, educate the parents, another complained.

Others said it would never work because children ate less than 30 per cent of their daily food intake at school. If pies were banned, children would simply buy them on the way to school or after school.

Mount Albert Grammar School’s principal, Dale Burden, was particularly petulant. “It’s a nonsense. It’s more bureaucracy, more telling schools what to do. I don’t like it,” he said.

The last time I visited Mount Albert Grammar, a Coke-vending machine took pride of place in the main corri- dor. I hope it’s gone.

The real disgrace is that the Government needed to act at all. While many schools have come a long way, too many continue to sell food which is driving the obesity epidemic and detracting from children’s learning.

A recent Green Party survey of 50 schools found 84 per cent sold pies, hotdogs, hotbites or sausage rolls, while 24% did not sell rolls or sandwiches.

The Obesity Action Coalition says it’s a cop-out for schools to teach healthy eating at 11.30am and then an hour later have children line up at the tuckshop for fatty sausage rolls, chocolate bars and fizzy drinks. Who could disagree with that?

The unseemly cacophony created by principals continued for two days and defies rational explanation. Almost to a person, they were off the point and inarticulate. It was a shameful display of arrogance from those who purport to know better than common sense.

For some it could be worry about losing money on a lucrative contract with a tuckshop proprietor, but for most it seems that they simply resent any interference in “their right” to run “their school” as they see fit. It was a bad dose of Tomorrow’s Schools-itis.

These principals of state and state-integrated schools need to be reminded that they are public servants. We expect them to be educational leaders in their communities, and we expect sensible, considered contributions to public debate from them. We expect them to be focused on ways to improve our children’s learning, particularly for those in the long tail of underachievement which drags through our low-income communities.

It will be a great day for our children when principals express less passion about pies and more passion about poverty.

But the issues around children, education and food need to be taken up by the Government outside the school gates as well.

Last year, a Ministry of Health food survey showed that families spend more on sweets each week than on fresh fruit, with a total of $124 million now spent each year advertising sweets, chocolate, fizzy drinks, fast foods and eating out compared to just $6.2 million advertising fruit and vegetables.

Ten times more is spent advertising fast foods than advertising fresh produce.

I have previously suggested three steps the Government could take alongside a ban on unhealthy food sales at schools, and yes, it involves a hands-on Government and regulations with real bite. Remove GST on fresh fruit and vegetables, ban the advertising of fast foods and fizzy drink on television before 8.30pm, and introduce a 10% tax on fast foods.

The first would make fresh fruit and vegetables more accessible for families on low incomes, while the other two would put the brakes on the fast-food chains, which are the real drivers of the obesity epidemic.

Meanwhile, we should applaud 23-year-old Tracey Vickers, of Northland, who took exception to a poster of three bikini-clad women “riding” a hamburger at Whangarei’s Burger King. Tracey took the poster down and has been charged with wilful damage.

“I just don’t believe that sex should be used to sell a product it has no relation to,” said Tracey. She is right. If the Government took effective steps against such advertising, we would have healthier children and happier schools. It’s a pity that our school principals don’t have a bit of Tracey’s initiative.

Stifling the oxygen of democracy

It came as no real surprise when it was revealed two weeks ago that spies had been hired to infiltrate the Save Happy Valley protest group by a company working for state-owned corporate Solid Energy.

Private investigators Thompson and Clark had approached a 25-year-old Canterbury University student to infiltrate the group and provide regular reports on their plans and activities.

He was paid $400 a month to attend weekly meetings and extra when he went on protests with the group.

Another 21-year-old student had been engaged to infiltrate Wellington Animal Rights Network, which protests about vivisection and cruelty to animals, and peace group Peace Action Wellington.

For Solid Energy and the Government, it seemed to be one of those situations which is only a problem if you get caught out. And they were. The Canterbury student confessed after being confronted with the evidence of his spying and the company was caught red-handed, so to speak.

It was also revealed that Thompson and Clark had accessed the internal email communications within the protest group and from there the email correspondence of groups and individuals.

There was a brief bout of publicity and a vigorous defence of their actions from the company. On the one hand, Solid Energy chief executive Don Elder said, “We will not discuss any details of our security arrangements, as this would prejudice and disadvantage our ability to carry out our commercial activities”, but then went on to vigorously defend the spying.

“We stand behind Thompson and Clark Investigations Ltd and their work for us.”

Elder then derided the protest group, claiming “their pathetically contrived outrage is totally without any legal, moral or ethical justification”. What a pile of pompous rot.

State-owned Enterprises Minister Trevor Mallard said he was not impressed and would be speaking to Solid Energy chairman John Palmer.

As a result, it seems likely Thompson and Clark will lose their spy contract and no further direct infiltration will be pursued by the company in the meantime. But where does this leave the rest of us? Should we be concerned?

Yes. The democratic rights we do have, limited though they are, are always at threat from governments and corporations.

These rights have been heavily constrained by the reliance of our major political parties, Labour and National, on donations from large companies to run their election campaigns. Cake stalls just don’t do it any more.

Inevitably the policies wanted by these corporate donors surface in party manifestos, which effectively stifles debate on alternatives.

It is, therefore, more important than ever for alternative ideas from protest groups to be heard and debated. So often they are the unbiased commentators in a democracy, unlike corporates and governments which have profits to make and axes to grind.

Protest groups raise important and uncomfortable issues that those in power would prefer to ignore.

And why do they do it? In general, protests aim to put forward alternative ideas, challenge conventional thinking and promote positive change.

“If people are not breaking the law, then they have nothing to fear from spying” is one predictable response. But this is a thoughtless comment.

It matters little that the Happy Valley group carried out civil-disobedience protests which broke the law.

By doing so, they expect to face arrest rather than have their democratic rights undermined.

In more ways than one, Solid Energy is engaged in a filthy business. It mines and exports coal. In the climate-changing world of the 21st century, this will be seen as the last shake of the dinosaur’s tail. Coal produces more toxic pollution than almost all energy sources and adds more carbon to the already-overloaded carbon cycle in the biosphere. It is a big contributor to global warming.

The Save Happy Valley protest group is doing an important service to New Zealand in challenging government policies and Solid Energy’s practices, which include the direct environmental destruction that takes place along the way.

On the other hand, the spying and infiltration carried out by Solid Energy undermines the freedom to dissent, and it is this freedom that is an integral part of a functioning democracy. Dissent provides oxygen for democracy.

If evidence emerged of a Chinese government corporation infiltrating the movement for democracy in China to report on its activities and undermine its campaigns, New Zealanders would be quick to condemn it. For the same reason, we should condemn Solid Energy’s undermining of dissent and demand the resignation of its chief executive.

It is Solid Energy and Elder who are ethically challenged and morally bereft, while the Government’s whimpering reaction shows that democracy is always more fragile than we think.

Profit motive behind death in Mangere

It would be compounding the tragedy in Mangere last week if the issue came to be seen as a mistake by an individual person.

The government will be hoping for this outcome as will Mercury Energy. The last thing they want are people questioning why essential services such as electricity, water or telephones are provided by profit-making corporates rather than as public services for the common good.

For the sake of the Muliaga family it is important the various investigations go ahead but for the sake of all of us it’s important we identify the underlying cause of the problem. Investigations often just provide a smokescreen or give time for community outrage to subside but here we need to stay focused and not allow the real culprits to slip from sight.

Because no matter what details emerge it should be very clear that the quest for profit in a state-owned company has come before the basic humanitarianism New Zealanders once took for granted.

Folole Muliaga’s death was a tragedy waiting to happen that was never going to occur in Remuera or Fendalton but almost certainly would occur eventually in Mangere – the lowest income electorate in the country.

Research conducted by the Ministry of Consumer Affairs and released in March 2005 revealed one in six kiwi families had borrowed money within the previous year for day to day living expenses such as paying the power bill or buying groceries. If one in six is the average then in Mangere the figure would be far higher – perhaps up to 80% of families regularly borrowing to get by.

Remember too that the number of Pacific Island families suffering severe hardship increased from 16% in 2000 to 30% by 2004. Paying an electricity bill is a big deal.

So why should this essential service be provided on a not-for-profit basis?

Because under a business model the focus shifts from providing the service to everyone at an affordable price to the demands of shareholders. They “own” the business and the board and senior management are employed as their agents to run it on their behalf. There is little room for morality or ethics. “The social responsibility of business is to increase its profits”, said economist, and darling of the Business Roundtable, Milton Friedman. What a wonderful sense of assurance this is for greedy shareholders. Families are reduced from citizens to merely a source of income and profit.

This is why a struggling family had its power cut off despite being just $168.40 in arrears and despite paying $61.90 on May 2 and $45 on May 18. The family were doing their best but the shareholder – the government in this case – had already set an agenda requiring profits from the electricity supply. What flowed from there were policies and procedures to meet this overriding objective. The financial analysts at Mercury would have calculated the best value for the shareholder was early disconnections of families in arrears. Never mind the consequences for the family. It should not be the hapless contractor in the firing line but government policy which demands profit from an essential service.

It’s sickening to see the National Party try to get political mileage from the issue. It was a National-led government which created the artificial, profit-focused market for electricity in the 1990s. They set up competition at three levels involving electricity producers, lines companies and retailers. A mad grab for our community assets ensued resulting in the maze of companies, some private some public, where the shareholders interests have overridden the interests of citizens.

It was pure lunacy. Far from reducing the cost of electricity the opposite has occurred. Prices have soared by 50% and more since Labour came to power in 1999. And the supply itself has worsened as companies have underinvested in maintenance and production in favour of the dividend demands of shareholders. Aucklanders know this only too well after the summer blackouts of the CBD a few years back. Shareholders always come first.

The policy is overseen by our Minister of State-Owned Enterprises, Trevor Mallard, who has been the main government cheerleader for these profit-driven policies for essential services.

The death in Mangere was not a single unfortunate mistake by an individual as the government would like us to believe. It was a dramatic failure in the delivery of an essential service to a kiwi family. If there was accountability within the government and pigs could fly then Trevor Mallard would resign.

The irony is that the very Pacific Island families who so loyally support Labour are the very ones who have suffered the most from the free-market policies and corporate capitalism pursued by the Labour-led government.

Families like the Muliaga’s are cannon-fodder for Labour’s economic policies.

Just two weeks ago the Prime Minister opened a revamped Labour Party office in the Mangere electorate and spoke boldly of the local community being Labour’s community.

She’s right. Mangere continues to support the government and Labour continues to deliver unrelenting hardship to these most vulnerable of New Zealanders.