Fonterra has failed us all

The most worrying aspect of Fonterra’s poisoned milk scandal is the poor media reporting and shallow commentary which sees the company simply as a victim of secretive Chinese officials who covered-up the poisoning of children by milk powder from Fonterra’s 43 per cent owned San Lu company. The company is getting away with murder.

Speaking for the first time last week, Fonterra Chairman Henry van der Heyden, said the company board fully backed their managements handling of the crisis.

“We are absolutely comfortable with the actions that our management took. Our focus was on getting it (the affected product) out of the supply chain as quickly as possible.”

If only this had been the company’s focus. But it wasn’t.

Fonterra has been criticised instead for lacking understanding of the cultural context in which it was doing business and so has become badly burnt when its best efforts were overrun by local officials wanting to protect China’s food-safety reputation, more so because the Olympic Games were about to begin.

It’s true the company should have understood the environment in which it was operating and should have been wide awake to early reports in the local media of children becoming ill from milk powder. How could the company overlook a Chinese television programme on the problem which used San Lus products to illustrate the story? And with the widely reported lacing of Chinese pet food with melamine last year, leading to pet deaths in the United States, it would surely be common sense to check supplies of milk coming into the local factory.

In fact it appears from media reports that the San Lu dairy operation was aware of melamine added to its milk supply as early as three years ago. Then from March this year the company received calls from worried parents about their children becoming sick from their infant formula. This should have rung alarm bells immediately.

Fonterra can be criticised for many failings leading to the crisis but the most important criticism must be that the company stayed publicly silent for five long weeks after it became aware of the unfolding disaster.

Once the Fonterra directors on the San Lu board were told of melamine in its products on August 2 the company initially did the right thing. It informed local Chinese officials and advocated an immediate public recall of the poisoned products. When it became apparent this would not occur the Fonterra senior management then had the moral responsibility to act unilaterally. They didn’t.

Fonterra chief executive Andrew Ferrier says the company thought it better to work with local Chinese authorities for an effective recall of products rather than risk less effective action by the company attempting its own recall. This argument doesn’t hold water.

The company instead stayed silent despite knowing that poisoned products its local company had manufactured were still being bought by Chinese families and fed to infants, causing death, kidney disease and serious illness to thousands of Chinese children. In other circumstances there would be an investigation into manslaughter charges against Fonterra and San Lu officials.

If Fonterra had released a public statement in New Zealand in early August it would have broken the story in China and forced an immediate public recall of the poisoned products. It would also have caused serious embarrassment for Chinese officials with the Olympic Games about to begin and damaged Fonterra’s plans to expand in China. But it would have been the right thing to do.

There is no question here of using the benefit of hindsight to attack the silent hand wringing of Andrew Ferrier. Fonterra is owned by New Zealand dairy farmers and I can’t believe there is a single one of them who, knowing the facts which were known to Fonterra’s senior executives on August 2, would not have endorsed an immediate public statement by the company to force the recall of all San Lus poisoned milk powder.

If our dairy industry were still controlled by working farmers this disaster would not have unfolded as it has. Only the growing number of Queen Street farmers would go along with Fonterra’s silence knowing there would likely be greater financial cost in speaking out earlier.

The group of Fonterra executives responsible for this cowardly silence while babies suffered and died is the same group trying to move Fonterra from a company based on the co-operative model to a fully-privatised, money-driven model. Under their agenda, working farmers would become mere shareholders while control shifts rapidly to wealthy stock-market players who are as far from the land as Fonterra’s senior officials are from a basic understanding of ethical behaviour. Fonterra’s shameful silence has failed us all.

Capitalism rescues its biggest parasites

Capitalism is under the spotlight with the so-called sub-prime mortgage collapse which has hit at the heart of the US economy.

The bankers and brokers so devastated may be capitalism’s finest but they exhibit in abundance that most unattractive of human qualities – greed. In recent weeks Wall Street has appeared more as a gathering of cockroaches exposed to the light when the cupboard door is opened. 

I haven’t lost any sleep at the prospect of heavy financial losses for those who inhabit this arcane world of shareholdings, derivatives and hedge funds. No mere mortals, these are the high priests of capitalism who manipulate financial markets where the wealth created by those who toil for wages and salaries is traded.

For those of us not versed in the finer points of the financial markets the basic story is quite simple.

The US sub-prime mortgage fiasco resulted from banks and brokers lending big sums of money to low-income families wanting to purchase their own homes. No problems so far. However this was an untapped market promising big returns for investors and as it gathered pace practices developed which preyed on the vulnerabilities of these families. The houses being purchased were frequently over-valued. One insider has reported that half were 10% overvalued, another quarter were up to 20% over and the rest were “so overvalued they defied all logic”.

People were frequently loaned 95% of the value of the property so when they signed the mortgage papers they immediately lost the equity they used for their deposit. They were duped by the brokers, the banks and the agencies who approved the deals and who realised many of these families wouldn’t have a hope of paying the mortgage. This rapidly became a professional loan shark operation on a gigantic scale.

Once they were signed the mortgages were on-sold in complex but very profitable arrangements which over time enmeshed all the major US banks, financial institutions and insurance companies.

Despite many of these families being at high risk of defaulting, the deals were so lucrative for banks and brokers that a parasitic feeding frenzy took off whereby the lending became more and more risky, corners were cut and the whole ugly edifice started to teeter.

It began to topple last year when families started to default on impossible mortgage repayments. As default rates increased the problem became a crisis with major institutions failing.

Until quite recently pundits were talking of a market “correction” taking place. In fact it’s the financial equivalent of a bloodbath.

But despite the media reporting, the real crisis is not the collapse of banks or insurance companies. They deserve to lose the shirts off their backs. Instead it’s the 2.5 million US families who will be forced from their homes this year. Many have already simply walked out and posted the keys back to the bank. They have lost their life savings used to put the deposit on the house and to pay what become unsustainable mortgage payments. Petrol and food price increases added to problems in meeting mortgage repayments. These families are being stripped bare. They are the victims of corporate greed.

US President George Bush’s answer is to provide up to one trillion (one thousand billion) dollars to bailout the banks by purchasing their bad debts. In a dramatic celebration of one of the seven deadly sins, the greater the greed the greater the bailout.

It was a interesting twist to note a report on a Christian website calling for Christians to pray for the bankers because while they may be rotten, even Jesus loved the rotten. Even so it’s a pity they didn’t add a thought to pray for those who have suffered from the bankers’ sins.

Imagine for a moment if this trillion dollars were given to support the victims of this corporate fiasco rather than the perpetrators. George Bush’s trillion dollars represents the equivalent of nearly half a million dollars per family tossed onto the street. Helping these people out would never have crossed his mind.

New Zealand has had this same experience many times but on a smaller scale. While the government would never bailout a small local business which fails, nor the investors in Blue Chip or Bridgecorp, it did not hesitate with the billion dollar rescue of the Bank of New Zealand in the 1980s. 

You have to be very big, very wealthy, very irresponsible and very greedy before you can expect a government bailout. 

With his trillion dollar handout George Bush has reminded us once more that when it comes to the biggest parasites, capitalism looks after its own.

National plans seduction of Maori Party

It’s tempting to think we have a robust democracy with regular elections involving different political parties putting up a range of policies to be discussed and debated before we, the people, make our choices. A government is thus elected (or cobbled together as we do under proportional representation) and these polices are enacted.

This is a fantasy of course. Where are the policy differences between the main parties? (Or for a start – where are the policies?) Ask anyone to find a substantive policy difference between National and Labour and most will struggle.

Most of these differences are slight rather than significant. Both parties will however dance on pinheads as they seek to emphasise and exaggerate the shades of grey between them. It will be an election high on hyperbole but poor on policy. It will be loved by those who can tell the difference between Coke and Pepsi but those looking for differences such as between tea and coffee will be disappointed.

If parties campaigned on the policies they believe in rather than what they announce it would be a more honest process. Instead National have been swallowing dead fish, to use Lockwood Smith’s words. They have been adopting policies they neither believe in nor support in order to make themselves more attractive to voters. Meanwhile Labour haven’t put up any new policy at all.

What will be more interesting is the policy mix we can expect from negotiations after the election.

The latest opinion poll puts National on 53% and Labour 35%. This eighteen point difference is likely to narrow to 10 or less as National releases policy and the rhetoric heats up. Smaller parties get more media oxygen during a campaign so their share of the vote will increase. It’s possible National, Rodney Hide and Peter Dunne may have enough seats to govern but this is unlikely. Similarly Labour and the Greens will not have the number to form a coalition so the king-making party is most likely to be the Maori Party.

Maori Party MPs have recently been talking up the possibility of going with National. It’s partly to ensure they aren’t taken for granted by Labour but it’s also to test the water with their own supporters.

The conventional wisdom is they would be foolish to support National when the big majority of Maori Party voters give their party vote to Labour. So for the Maori Party to avoid being seen to betray its supporters there would have to be some big carrots and National could well oblige.

Through the late 1990s National delivered significant devolution of funding to Maori organisations for such things as the provision of primary health care and educational initiatives. This was in the first MMP government with New Zealand First having made significant inroads into the Maori vote.

National would delight in the opportunity to devolve more social services in this way as a mechanism to reduce spending levels over time as well as lessen central government responsibility for the social mess our politicians have created. Both these objectives can be met by more bulk funding of services to community organisations. 

For Maori it would be sold as a step closer to tino rangatiratanga where Maori organisations are given significant resources and make decisions for themselves without interference from government. For National it would involve the opportunity for devolution and diminution of state provision of social services.

In this way the Maori Party could give National just the circuit breaker it needs to make up for having to swallow all those dead fish. Through the Maori Party they could develop radical funding mechanisms for the delivery of social policy which would give the impression of empowerment but the substance of locking in existing social inequalities.

As a policy goal devolution to community level is an important long-term objective. Empowering families and communities has been left out of political thinking for a long time. Most recently we have seen the powerlessness of communities as politicians have refused to devolve power to allow communities to force the closure of pokie venues, liquor outlets or any manner of other activities which prey on the poor and vulnerable.

This not what National has in mind however. Their objective will be to keep community hands off the levers of power while devolving responsibilities through provision of minimalist funding. They espouse the freedom for businesses to operate rather than the freedom of communities to object.

It will be a substantial package National offers the Maori Party in return for a confidence and supply agreement but if accepted it will be a poisoned chalice with the Maori Party providing political cover for more of the 1990s.

Give us funds for the job

I chaired a public meeting on education in the Manurewa electorate last week. This is the community which has been the focus of media attention with several high-profile killings this year, giving it unwanted negative publicity. With this background the meeting was called to put education in Manurewa in the spotlight with local political party candidates invited to discuss education in the suburb.

Forty-two people from the local community came along on a rainy night to hear six local candidates, no fewer than four of whom were either on a local school boards of trustees or had previously served on boards. Among the audience were local principals, teachers, parents and community workers.

Each of the candidates was asked to comment on issues affecting education in Manurewa including: the chronic shortage of early childhood education services in the area; the well-known long tail of educational underachievement in Manurewa (and low-income areas generally); the high cost of tertiary education; the decision by Auckland University to restrict entry to all its courses next year in such a way that will disproportionately penalise students from low-income areas and on-going serious problems for special education services.

Four of these issues relate to the failure to deliver quality education services while the remaining issue, the long tail of underachievement, is one of the outcomes. Could there possibly be a connection between this failure to deliver by the Government and the underachievement, social alienation and crime which follows? And should we not realise that underpinning the educational issues is the realisation that the long tail of underachievement is in fact the long tail of poverty resulting from Labour and National policies these past two decades in particular?

It was a largely rhetorical question for most of the audience but not for the local MP George Hawkins. He saw many positive things happening in education in Manurewa and this is undoubtedly correct. School principals and parents attested to the great job done in schools where the social problems of the community are brought into the classrooms every day.

Mention was also made of eight scholarship passes at one of the local high schools last year. This is a cause for celebration but why should the community be asked just to celebrate the exceptions and ignore the rule which is that underachievement dominates the wider area of South Auckland?

Hawkins tried hard to explain that poverty wasn’t at the core of the problem. It was a factor he acknowledged but he said that without detailed research we would never know for sure. In the meantime alcohol is his big focus and while it’s important it is once more just a symptom of the problem.

Unfortunately, that was as far as it went with George. Yes, it would be nice to have more money for this and that in education but it was largely business as usual for the Government. This former minister of police, having shed his collective Cabinet responsibilities, will not become an active backbench critic of the failures of his party.

For the National candidate it was also largely business as usual. National has become comfortable following on Labour’s coat-tails for a long while now as the country drifts further to the Right.

What of the minor parties?

The ACT candidate was typically a vouchers man. The funding would follow the child, was his oft-repeated theme for the evening. The answer to most questions about resourcing, class sizes and the like was met with comments such as: “No, we wouldn’t, we’d leave it up to the school and the school will respond to signals from parents making choices in the local educational marketplace.”

He spoke fondly of the Swedish system which he grossly misrepresented. If New Zealand followed the Swedish system, as ACT says we should, then not a single private school in New Zealand would receive a cent from the government. To receive government funding in Sweden private schools must not charge additional fees and cannot pick and choose between students who wish to enrol.

The most interesting and thoughtful contributions came from the local candidates for the Greens, United Future and New Zealand First. Each person was deeply involved in the community and in education and a committee of these three could make a huge contribution to local education if their drive and ideas were given some space.

For example, they all recognised the pressing need for a review of Tomorrow’s Schools while National and Labour thought things were going pretty well and just a bit of refinement might be necessary.

On issues like truancy, underachievement and early childhood education these parties were the most passionate and creative in their thinking. They emphasised local solutions to local problems but with the resources necessary to do the job properly.

Why is this too much to ask for?

Deploying tasers in NZ an extremely bad idea

What was Police Commissioner Howard Broad up to last week?

On Wednesday afternoon Minister of Police Annette King made a statement to Parliament saying Police Commissioner Howard Broad had decided to arm police with tasers but he wanted MP approval before confirming the decision.

It was, we were told, an unprecedented move in what the Government believed was an operational decision for the police alone to make. It looked like Commissioner Broad was seeking some kind of democratic input on a controversial issue.

It’s not the way the police normally go about things. When they announced the taser trial it was just that, a decision made without prior consultation. They weren’t interested in input from the public or politicians.

After such a bold break with tradition one might have thought the commissioner would seek some input from MPs, invite submissions and even hold a few meetings to discuss concerns perhaps.

But none of this happened. By 9.44am the next morning, less than 20 hours after his expressed desire to consult with MPs, Howard Broad had made his decision final.

In a bizarre statement he said that because nothing new had emerged from the debate in Parliament (not that there was a debate of any substance) the previous day he saw no need to delay finalisation of his decision further. No meetings, no letters, no consultation, just a passing ear to a parliamentary squabble and he has had enough to make up his mind. There can be no pretence this was anything other than a sham.

Consulting MPs would have been a safe bet in any case because most would be too afraid to speak out for fear of seeming soft on law and order in the lead-up to an election. Rather than consultation Broad wanted some political cover for what is a very unpopular decision across many community groups. It represents another move along the path to policing by force rather than policing by consent.

This is the inevitable path followed by police who are increasingly outside the democratic oversight and control of the community. The world has plenty of examples where police are a law unto themselves.

For just a minute there it looked like Broad recognised this danger and was prepared to engage with MPs, at least, even if consulting the great unwashed populace was a bridge too far.

Left out of media reporting has been the fact that less than a week before Howard made his announcement the police finally released, after a long battle, fuller information about the police taser trial and the incidents where they were deployed. Previously the police had provided only sketchy details of these incidents but even based on this scant information it became clear the original guidelines were repeatedly breached during the trial.

After a complaint to the Ombudsman’s office, the Chief Ombudsman Beverley Wakem reported “Many of the summaries are extremely brief, and have the overall effect of sanitising the original reports”. No surprises here. She advised the police they should release the information. They finally did so 10 days ago but not in a way which allowed any public discussion before Commissioner Broad made his final decision.

The simple truth is the police don’t want public scrutiny, despite Howard Broad’s attempt to imply otherwise. They don’t want public discussion of their self-justified actions and they do their best to stifle uncomfortable information from being released. The most important culture change needed for the police is for them to embrace democratic oversight and accountability of their policies, decisions and actions. We are far from it.

The decision to deploy tasers is bad for New Zealand. After more than 300 deaths in North America (including at least five last month and eight in July) the first taser death here will most likely be someone who is poor, mentally ill and Maori. The profile of deaths in the US follows the usual socio-economic pattern overlayed with race and as Maori Party leader Tariana Turia pointed out, the disproportionate use of tasers against poor African-Americans in the US will be repeated here.

A police officer in the US has just pleaded to a charge of manslaughter after a 21-year-old African-American man died after being shocked with a taser nine times while handcuffed and in police custody.

The recent incident in Whakatane where a young Maori man was pepper-sprayed repeatedly in the police cells by several officers acting together will be repeated but this time with a taser.

The only place for a taser here in New Zealand is as an alternative to the use of arms by the armed offenders squad.