50c an hour is not going to help the people that need it most – people like the Bradley family who were profiled in the Herald this week, where dad is having to work three jobs just to feed the family. And even so, the parents are having to go without food some days just to feed the kids.

What we need in this country is a living wage – one which pays enough for families to be able to feed and clothe their children, pay the rent or mortgage, pay the power, phone and doctor’s bills, and not slide into debt when something unexpected happens.

The Government will tell you that increasing the minimum wage to a decent level will cost jobs. Indeed, last year John Key claimed that increasing it to $15 an hour would cost 6000 jobs. This has not been shown to be true – in fact the NZ Council of Trade Unions has done an extensive literature review which indicates there is no clear evidence, either internationally or in New Zealand, of a causal relationship between moderate increases in the minimum wage and employment or unemployment levels. But, despite the evidence not supporting John Key’s claim, Minister Wilkinson is still banging on about the fictional 6000 job losses.

What we do know is that hundreds of thousands of New Zealanders are experiencing poverty and hardship on a daily basis – and on this basis 50c simply doesn’t cut it.

The Green Party wants to see an increase in the minimum wage, first to $15 an hour and eventually to two thirds of the average wage. This will help both reduce inequality and poverty and reduce the reliance of many low-income New Zealanders on taxpayer-funded financial support.

We need to lift wages across the board. We need a Government that will actually care about families struggling to get by in New Zealand.

I also expect that the Government’s excuse for consigning workers to live on a wage that is completely inadequate to support their families will be the same as it has been over the last three years – a claim that increasing the minimum wage to a liveable level will cost jobs.  Last year, John Key claimed increasing it to $15 an hour would cost 6000 jobs. That claim appears to be an exaggeration of Department of Labour advice.  The Department  provided no methodology for its calculations, but suggested that a minimum wage increase to $15 an hour could slow job growth by between 4100 and 5890 jobs.

I find the purported Government concern about a decline in job growth completely hypocritical, given the number of jobs the Government is itself shedding in the state sector.

What’s more, John Key failed to mention that Government also had advice from Treasury that countered that from the Department of Labour – advice that suggested increasing the minimum wage would most probably not cost any jobs at all.

(It) has not been true in the past, so without new evidence the balance of probabilities is that a higher minimum wage does not generally lead to higher unemployment.

I’m with Treasury on this one.  There has been extensive research into the employment impacts of increases in the minimum wage over the past thirty years, starting with the landmark 1992 paper by US economists David Card and Alan Krueger. The NZ Council of Trade Unions’ submission to the current minimum wage review contains a literature review of that research (Appendix 1, pages 56-73).  What is clear is that things are much more complex than John Key asserts. There is no clear evidence, either internationally or in New Zealand, of a causal relationship between moderate increases in the minimum wage and employment or unemployment levels, and this has become increasingly evident over the last 30 years.

Increasing the minimum wage, first to $15 an hour and eventually to two thirds of the average wage, will help both reduce inequality and poverty and reduce the reliance of many low-income New Zealanders on taxpayer-funded financial support. It’s time for Government to listen to the Green Party on this issue, rather than submitters like Federated Farmers and the NZ Retailers’ Association who lobby for low minimum wages out of their own members’ self-interest.

• The big winners are Steven Joyce and Hekia Parata, moving up 10 and 13 places respectively in the Cabinet ranking. Parata replaces Anne Tolley as Minister of Education.

• Paula Bennett’s reward for losing the Waitakere electorate is a promotion of 7 places. She keeps her role as Minister of Beneficiary Bashing.

• Tolley drops 5 places in the ranking and is given Police and Corrections as a reward for her sterling efforts in Education.

• We have a new Colossus of Roads, with Gerry Brownlee taking over from Joyce as Minister of Transport.

• Phil Heatley takes over from Brownlee as Minister for Drilling and Digging.

• Environment Minister Nick Smith drops 4 places and Conservation Minister Kate Wilkinson languishes at a lowly No. 17 in the rankings. I guess that reflects the importance with which National views those portfolios.

• Judith Collins gets the job of handing ACC claimants over to be crushed by private insurers.

Update: Jan Logie has just pointed out that another feature is Women’s Affairs being allocated to a Minister outside Cabinet. Again a reflection of the importance with which National views that portfolio. Disability Issues is outside Cabinet too.

Earlier this year I went on an extensive tour of the country, consulting with communities about welfare reform.  My full report on the tour is here.

They took me on a trip around the coastline, with the safety officer and team leaders to check for oil and debris. There were lots of stranded containers and timber piled up on unreachable rocks. But, for the time being at least, on the surface it was pretty clean.

Under the surface is a very different story.

Under the surface kina are blackened and dead. Crayfish are found smothered in oil and dead. Under the surface, the fish and shellfish are polluted and cannot be eaten.

Under the surface of this disaster are the families who eat everyday from the ocean but cannot anymore.

John Key talks of compensation for business, tourism and the fishing industry, and rightly so. Peoples’ livelihoods are in peril and financial support is needed. That is the right thing to do.

But what about those hundreds of families on low incomes who supplement their meagre incomes with the bounty of the sea? There are hundreds of families on minimum wages or benefits or superannuation who cannot afford seafood, so they get it straight out of the ocean—as is their birthright.

That is how the ocean is used by coastal communities every day in this country: as a daily source of fresh healthy food.

So, who will compensate their food budgets?

Does John Key understand that his failure to take the warnings seriously means that families have lost a food source on which they and their kids depend?

No, he clearly does not. His glib comment that this will be all ‘over by Christmas’ underlines his shallowness.

The shellfish could take many months to recover back to a healthy, safe state. They are filter feeders and there will have to be rigorous on-going testing of shellfish beds all along the coast and on every island and reef. The cost to the fish stocks is unknown, as is the impact on the phytoplankton at the beginning of the food chain. It could be months before the shellfish can be declared safe to eat. That means months without this food for those who rely on it.

On Motiti, throughout the day, the clean-up crews were well feed and cared for. That is the way of manakitanga and for coastal peoples, kuia and kaumatua, seafood is a source of pride and richness.

John Key has an irresponsibly shallow understanding of the consequences of his failure.

While happily fronting a weekly slot on TVNZ’s Breakfast programme, and on Radio Sports, and a one hour special on Radio Live, he has refused virtually all requests for interviews on Radio New Zealand.

He has declined 174 requests for interviews on Morning Report and has been interviewed on Checkpoint only five times this year. He has also turned down a request to appear on an election debate on Radio New Zealand.

This begs the question, what is going on here? Does the Prime Minister have an aversion to public service radio and a bias in favour of commercial radio? Or is it just that he wants to avoid in-depth news interviews in favour of soft lifestyle interviews.

Certainly his government has shown unrestrained hostility to Radio New Zealand. It has frozen its budget indefinitely, and Radio New Zealand is limping along, with its funding contracting every year (thanks to inflation), having to sell off its grand pianos to survive.

On the other hand, the Government has treated commercial radio generously, and given a $45 million bail out to Mediaworks.

But the Prime Minister’s bias in favour of commercial radio, and against public service radio, raises other troubling questions of accountability. The fourth estate has an important role in holding governments to account. But if the Prime Minister turns down over a hundred requests for interviews from our public service radio station, which is listened to by hundreds of thousands of New Zealanders every morning, how is the government to be held properly to account?

West Papua is a beautiful resource rich country where the USA owned mine Freeport McMahan Mine has open cast the sacred mountains and supplied royalties to  Indonesia which that country is reluctant to forgo. The forests of West Papua are being systemically destroyed to support the illegal timber trade, palm oil plantations and rice growing. This is destroying the culture and the land of the West Papuan forest people. Meanwhile Indonesia has “transplanted” many Indonesians to West Papua.

The Pacific Island Forum has been a weak neighbour to this occupied state and only Vanuatu has shown any real support. However today outside the Forum we made a dramatic protest featuring a caged Papuan citizen with his mouth taped up. This bamboo cage represented the imprisonment, torture and abuse of a silenced people. The people from the Indonesian Human Rights committee and Pax Christi have been staunch allies of the Papuan struggle for freedom and the Green Party was proud to stand with them and our Papuan friends who have come to make their stand here and now.

I also used my MP status to walk into the opening of the Forum and while John Key spoke of the “pacific family” I held up a small banner which said “Pacific Island Forum remembers the Papuan whanau”. This attracted some international media attention especially from the Australians who’s Government has been as useless as ours has in supporting a peaceful dialogue between the independent leaders of West Papua and the Indonesian Government.

Our friends from West Papua have a deep patience and a great determination that a peace process is the way forward.  Even though their people are currently dying at the hands of the military as Pacific Island Forum rolls on. Therefore we are all hoping that the words of Bank Ki-moon spoke today will lead to action. He said “We will do all we can to ensure that the people of West Papua’s human rights will be respected”. He said that West Papua should be included  in the list of Pacific countries seeking  decolonisation.

So what will the United Nations and our Government do?   The Green Party will be watching and we will be asking!

Did the Prime Minister say he was going to work with the business and community sectors to create jobs at a living wage for the 27 percent of young people with no jobs?

No. But he did promise to privatise the management of youth benefits for profit via a food stamps system and require sole parents to be in training.

This is a great opportunity for private providers to get into what could be called “the human misery industry.”

Organisations will have power over young people’s benefits and will supposedly provide them with magical solutions – but with funding linked to how many people they move off the benefit, there will be perverse incentives to move young people into inappropriate placements so that organisations can make a profit.

This has all made me think about the contrasting tone and approach towards youth unemployment in a small rural centre called Otorohanga.

There, Mayor Dale Williams is actually serious about the need for youth to get jobs and become part of the working community.

Dale and a team of committed people from across the community work with high schools to help place school leavers in appropriate job opportunities, and help the young people stay in a community where they are valued.

He is far more optimistic than we are about the Government calling for outcomes from agencies who will be working for a cash bonus, because he comes from a community that works together.

This morning, I was inspired to hear a young woman who was formerly on the Independent Youth Benefit speak on Radio New Zealand’s Nine to Noon show.

Felicity Perry spoke about treating young people like adults so they can become competent at managing their lives.

She has very legitimate fears that agencies will simply place young people in any kind of training or work to get the cash bonus, even if the placement is totally inappropriate. Judging by what I have learned from my welfare tour of both islands, “tick the box” placement is already the norm at Work and Income.

John Key said young sole parents would be required to be in work or training. Because bringing up children isn’t work, is it? Seems like child-rearing is work if you’ve got a husband supporting you, but not if you need state support.

I’d love it if all for young parents had access to Teen Parent Units, but I’m concerned if this policy means separating mothers from their young babies. This could cause serious harm to maternal bonding and breastfeeding outcomes.

A better policy change would be to restore the Training Incentive Allowance to support young parents to study at University. That’s how Paula Bennett got her degree, but she has kicked the ladder out behind her.

In his speech, John Key asked if the numbers on young people without jobs was what the architects of the welfare state had in mind.

We need to remind him that the welfare state was built on three principles: state housing, full employment, and fair benefits for people who needed them. His Government has shown no interest in any of these principles and has now committed to scapegoating instead of job creation.

It’s getting more like David Cameron’s UK Government by the day.

1. Make Working for Families work for every low-income family

Children have the same needs, whether their parents are in paid work or not. Working for Families helps low-income families make ends meet, but it doesn’t provide the same help to kids whose parents receive a benefit. We’d extend Working for Families to provide an extra $60 per week for 140,000 of the poorest households in New Zealand.

2. Provide better study support for sole parents and beneficiaries

Kids do better when their parents have access to education. There used to be support for sole parents to study at university, and it worked: parents moved off the benefit six months earlier and went into higher paying jobs. We’d reinstate and extend this support to help 10,000 people get a higher education and take better care of their kids.

3. Raise the minimum wage to help working parents

275,000 people work for minimum wage, and many of them take care of dependent children. It’s almost impossible to make ends meet on such low wages. We’d raise the minimum wage to $15 immediately to help working parents provide the basics for their kids. This is worth about $60 more per week for someone working full time on the minimum wage.

4. Make sure rental properties are warm and healthy for kids

375,000 kids live in cold, damp houses which make them sick. Most of these houses are rental properties. We’d create minimum performance standards for rental properties which would ensure warm, healthy, homes for thousands of children.

John Key poured cold water on the Greens’ Working for Families and minimum wage proposals:

“The way the system was designed by Michael Cullen under the previous Labour Government was … to ensure there was a real incentive to work. We wouldn’t want to undercut that.” He also indicated any swift move to a $15 an hour minimum wage was unlikely because it could threaten jobs.

Key is wrong on both counts.

Someone working 40 hours a week on the minimum wage at tax code M would have a take-home pay of $501.61 under the Greens’ proposal.  Compare that with the couple rate of unemployment benefit ($335.66) or single parent rate of DPB ($330.70) and it’s easy to see that the minimum wage increase alone provides a considerable financial advantage in moving off benefit into employment.  Even given the additional $60 a week that beneficiary families would receive from WFF under the Greens’ package, they would be more than $100 a week better off if they were to move into employment.

The financial incentive to move off benefit into work is actually stronger under the Greens’ proposal than under National’s (and Labour’s) current discriminatory WFF approach which provides the least assistance to the children who most need it.  The difference is that the Greens provide the incentive by increasing wages at the lower end of the scale, rather than by providing a lower level of support to children of beneficiaries.

Key is on no stronger ground when he says increasing the minimum wage could cost jobs.  The majority of minimum wage workers work for large corporations – mainly in the hospitality, fast food and retail industries.  Studies such as this one show that large corporations do not respond to increases in the minimum wage by slashing jobs.  Their more likely response will be to improve productivity (which to some extent flows from a better paid workforce anyway) and/or to increase prices slightly.

Few small and medium sized employers hire minimum wage workers.  However, the Greens acknowledge that a significant increase in the minimum wage may have adverse employment effects on employment levels in such businesses that do.  For that reason, the Greens’ proposal includes a $20 million a year targeted subsidy to assist SMEs through the transition.   John Key seems to have conveniently ignored that.



However, there are still a lot of unanswered questions. The journalist who blew the story, Southland Times editor Fred Tulett, insists that his sources, including Israeli Ambassador, Chemi Tzur, were talking about the dead young Israeli Ofer Mizrahi having more than one passport in his possession – that is, on top of Mizrahi’s Israeli passport which his three friends apparently had.

The government will have to come forward with more information otherwise doubt will remain in the public mind.

It is surprising that the Intelligence and Security Committee in Parliament was not apprised of this operation. What is it told if not about a major operation like this?

There is a reluctance to say or do anything that embarrasses the Israeli government, particularly as the current National government has adopted a stronger pro-Israeli foreign policy stance than Labour. It would be good if there was more public scrutiny of this. This is something that the Foreign Affairs, Defence and Trade Select Committee (of which I am a member) could look at.

I have been asked by the media whether the SIS investigation into whether Mossad agents have been operating here means that the SIS has a useful role to play. I have answered that it would probably be more useful having one agency, the Police, with the capacity to fully investigate such potential threats to our security. The problem with having a second agency, the SIS, is that it is less accountable to the public, with Prime Ministers using “national security” as a reason for keeping everything under wraps. There is the problem with a case like this that our SIS will not want to probe too far, for fear of upsetting its US partner agencies, which have close links with Mossad.

Mr Key has told the Seafood Industry Council conference in Wellington a more flexible labour market is better for both employers and workers.

He was reluctant to spell out what other changes National might make to employment law, refusing to say whether they include further restrictions on collective bargaining.

But he says that while the changes will be good for both employers and workers, trade unions won’t be happy.

My pick is that National is set to dust off this little gem turd from its 2008 pre-election proposals on employment relations, despite a post-election assurance to the NZ Council of Trade Unions that the Government would not proceed with it:

Restore workers’ rights to bargain collectively without having to belong to a union.

That would take us back to the dark days of the hated Employment Contracts Act, under which employers could effectively set up “bosses unions” or “employee associations” to “represent” some of the more vulnerable workers in the workplace, impose an employer-friendly and worker unfriendly agreement on the employee association, and then tell the union, under threat of locking their members out, that their only choice is to accept the same rough deal.

The Greens want to promote higher wages by strengthening the ability of unions to bargain, including bargaining for multi-employer collective agreements and discouraging the passing on of union negotiated conditions to non-unionised employees.  National are clearly seeking to move in the opposite direction – lowering wages by undermining the ability of unions to bargain effectively.

[Winston] Peters last night vigorously denied claims made on TV One that the meal, at Kermadec Restaurant in Auckland’s Viaduct Basin and paid for by co-owner Peter Simunovich, might imply “corruption”.

“Do you think I’d compromise my career for a meal of fish?” he said.

But Mr Peters is at least expected to face an investigation by Parliament’s privileges committee, which oversees the behaviour of MPs.

The National Party says it will lodge a complaint against him.

The chairman of the scampi inquiry, National MP David Carter, said he would ask the privileges committee to speak to Mr Peters and Mr Simunovich to clear up the controversy.

“I think the allegations are serious. If in any way he was collecting favours, it’s close to corruption,” he told the Herald. “At the very least it’s stupid. (my emphasis)”

Yet when Russel Norman revealed nine Cabinet Ministers and numerous Ministerial staff, including some of David Carter’s, have accepted corporate hospitality from Westpac – including box seats at the Rugby 7s, dinner at the White House restaurant, and tickets to rock concerts – while Westpac’s Government banking contract has been under review, PM John Key responds:

There is nothing wrong with ministers accepting hospitality from the Government’s banker Westpac, and it won’t have any bearing on the decision that will follow a competitive tender process for the contract, Prime Minister John Key says.

So what’s changed between 2004 and now?  Oh, that’s right, the Nats are in Government now.

I think it’s a great read and I encourage you to send your own letter to John Key urging for greater climate action from New Zealand.

Rt Hon John Key
Prime Minister of New Zealand
Parliament Buildings
Wellington

 

Dear Prime Minister Key,

Encouraged by youth of New Zealand, especially members of the organization 350.org, I write this open letter to inform you of recent advances in understanding of climate change, consequences for young people and nature, and implications for government policies.

I recognize that New Zealanders, blessed with a land of rare beauty, are deeply concerned about threats to their environment. Also New Zealand contributes relatively little to carbon emissions that drive climate change. Per capita fossil fuel emissions from New Zealand are just over 2 tons of carbon per year, while in my country fossil fuel carbon emissions are about 5 tons per person.

However, we are all on the same boat. New Zealand youth, future generations, and all species in your country will be affected by global climate change, as will people and species in all nations.

New Zealand’s actions affecting climate change are important. Your leadership in helping the public understand the facts and the merits of actions to ameliorate climate change will be important, as will New Zealand’s voice in support of effective international actions.

The fact is that we, the older generation, are on the verge of handing young people a dynamically changing climate out of their control, with major consequences for humanity and nature. A path to a healthy, natural, prosperous future is still possible, but not if business-as-usual continues.

The state of Earth’s climate is summarized in the attached paper [The Case for Young People and Nature: A Path to a Healthy, Natural, Prosperous Future, which can be found here],whose authorship includes leading world scientists in relevant fields. The bottom line is that Earth is out of energy balance, more energy coming in than going out. Thus more climate change is “in the pipeline”.

Failure to address emissions of carbon dioxide, the main cause of human-made climate change, will produce increased regional climate extremes, as seen in Australia during the past few years. But young people, quite appropriately, are concerned especially that continued emissions will drive the climate system past tipping points with irreversible consequences during their lifetimes.

Shifting of climate zones accompanying business-as-usual emissions are expected to commit at least 20 percent of the species on our planet to extermination – possibly 40 percent or more. Extermination of species would be irreversible, leaving a more desolate planet for young people. They will also have large effects on New Zealand’s principal export industry, agriculture.

Sea level rise is a second irreversible consequence of global warming. Some sea level rise is now inevitable, but with phase down of fossil fuel use it may be kept to a level measured in a few tens of centimeters. Business-as-usual is expected to cause sea level rise exceeding a meter this century and to set ice sheet disintegration in motion guaranteeing multi-meter sea level rise.

Prompt actions are needed to avoid these large effects. Phase-out of coal emissions by 2030 is the principal requirement. Also unconventional fossil fuels, such as tar sands, must be left in the ground. These conditions, plus improved agricultural practices and reforestation of lands that are not effective for food production, could stabilize the climate.

I have had the opportunity while in your country to meet your science adviser, Sir Peter Gluckman, and your climate change ministers, Hon Nick Smith and Hon Tim Groser, and discussed these issues with them. If I can be of any help with the science of climate change I am very willing to assist your government. Implications for New Zealand are clear.

First, New Zealand should leave the massive deposits of lignite coal in the ground, instead developing its natural bounty of renewable energies and energy efficiency. If, instead, development of such coal resources proceeds, New Zealand’s portion of resulting species extermination estimated by biological experts would be well over 1000 species. Most New Zealanders, I suspect, would not want to make such ‘contributions’ to global change.

Second, New Zealand should lend its voice to the cause of moving the global community onto a path leading to a healthy, natural, prosperous future. That path requires a flat rising carbon fee collected from fossil fuel companies domestically, with the funds distributed uniformly to citizens, thus moving the world toward the carbon-free energies of the future.

Prime Minister Key, the youth of New Zealand are asking you to consider their concerns and exercise your leadership on behalf of their future, indeed on behalf of humankind and nature.

 

With all best wishes,

 

James E. Hansen,
Adjunct Professor
Columbia University Earth Institute

 

Cc Sir Peter Gluckman
Hon Nick Smith
Hon Tim Groser

Key maintains Department of Labour advice supports his claim.  So I had a look at the advice, contained in the Department’s 2010 Minimum Wage Review (PDF, 2MB).

At page 15, I found that the Department of Labour calculated that increasing the minimum wage to $15 an hour could result in a “potential loss in job growth” of 4,280 – 5,710 jobs.  That’s very different from putting 6000 people out of work.  A potential loss in job growth can occur without a solitary person being put out of work. It all depends on the wider economic policy settings.

Furthermore, the Department fails to show the methodology it used to arrive at its figures, merely citing “Source – Department of Labour calculations”.  For all we know, and Key presumably knows, the Department could have used the same sort of maths as Harold Camping to arrive at its conclusions.

As the NZ Council of Trade Unions pointed out, citing supportive studies, in its submission (PDF, 58 kB) to the Minimum Wage Review:

…any analysis in a New Zealand context needs to draw on the more recent analysis of the behaviour of the labour market. What this has shown is that it is unlikely that an increase in the minimum wage would have an impact on employment.

And does anyone apart from me find Key’s faux concern for some low paid jobs that may potentially be created a wee bit hypocritical in the context of his government directly presiding over the loss of 2000 real jobs in the public sector over the past two years, with the promise of many more job losses from the latest round of Budget cuts?

But last Saturday, John Key himself got in on the act, commandeering an Air Force Iriquois chopper to fly him to a photo opportunity at the V8s in Hamilton, and then back in time for a cocktail party at the Royal Auckland Golf Club.

As Green Co-Leader Metiria says:

Mr Key could have solved his traffic problems by taking the train. Unfortunately his Government refuses to fund a Hamilton to Auckland line.

Thanks to National (and Labour before them), there are no commuter trains between Hamilton and Auckland, hence the traffic problems Key anticipated.

Apparently, John Key had a couple of months’ notice of the potential traffic problem.  For the cost of the helicopter, Key could probably have given Kiwirail a ring and arranged a charter deal to transport not only him, but a couple of hundred Auckland petrol heads who, thanks to National’s  social and economic policies couldn’t otherwise afford the trip, to Hamilton for the V8s and back.  He could have been their idol.

But that is not the way National Party politicians’ brains work.

Hat Tip: The Standard, for the graphic.

They reveal that within two months of entering the DGS, South Canterbury Finance breached its Deed of Guarantee by lending almost $90 million to its parent company, Allan Hubbard’s Southbury Group Limited, without Treasury approval.  SCF explained that misdemeanour away as an “oversight”.

Then in April 2009 Treasury reprimanded SCF for failing to file a section 37A certificate under the Securities Act to extend its prospectus in the allowable timeframe.  Another “oversight”.

Treasury brought in corporate recovery specialists KordaMentha to report to it on SCF.  Preliminary findings reported by KordaMentha in August 2009 included:

• Credit policy is not always complied with, to varying degrees.
• Inappropriate level of analysis of borrowers at origination.
• Lack of covenants and regular monitoring will prevent company from identifying at risk files and taking action to mitigate its position.
• Lack of independent valuation evidence, either at origination or subsequently, is inappropriate.
• No existing risk grading framework, which makes analysis of the loan book (especially for provisioning) extremely difficult.
• Lack of exit strategies when writing loans compromises liquidity. In many cases there are no realistic exit strategies, particularly for business loans.
• Directors and other related parties appear to have been involved in loan management and lending decisions outside the credit chain although we understand this is being addressed.
• Loans have been managed directly by Allan Hubbard, including the Southbury loan [to his own company].

KordaMentha’s final report to Treasury on SCF in September 2009 reached much the same conclusions.

All this, despite SCF’s Deed of Guarantee requiring that:

During the guarantee period (12th October 2008 for two years) the principal debtor shall ensure its business and operations (and the business and operation of its subsidiaries) are conducted in a proper, businesslike, efficient and prudent manner. (my emphasis)

Which poses the question of why wasn’t SCF booted out of the Deposit Guarantee Scheme, given that its business practices were demonstrably so sloppy that it was clearly in breach of its Deed of Guarantee requirements to conduct its operations in a proper, businesslike, efficient, and prudent manner?

The taxpayer has to fork out $1.1 billion (and we’re still counting) to companies and individuals who knowingly made high risk investments in SCF.  And the rest of us are going to suffer for that, come the Budget next month.

The buck has to stop somewhere, and in this case it should stop at Karori’s Dipton’s most prominent resident, Finance Minister Bill English.  The Treasury documents show he was kept up with the play throughout the whole sorry debacle.  Allan Hubbard even asks Treasury to thank English and John Key for their support at one stage.

Why, upon becoming aware that the sheer incompetence of SCF’s business practices would place them in breach of their Deed of Guarantee, did English allow their guarantee to be continued?

But for the entire time I’ve been Prime Minister I’ve had the Treasury in my office, week after week, month after month,  telling me South Canterbury Finance was going bankrupt.

Okay, John Key and Bill English may have a case to be forgiven for the first sign-off of South Canterbury Finance into the Retail Deposit Guarantee scheme – it was the day they took office as Ministers.  They would have been so excited about the enhancement of their political careers that perhaps the details may have passed them by.

But the guarantee was renewed on December 11 2009, updated on All Fools’ Day 2010, and amended on June 17th 2010, all signed off on behalf of Bill English.

Contrast that with the premature phase-out of the Christchurch earthquake business subsidy. As Canterbury Chamber of Commerce Chief Executive Peter Townsend said:

My concern is we’ve got 60,000 people which is more than a quarter of our total workforce (on that wage subsidy). If you turn this off too quickly it could have a marked adverse effect.

So unthinking Government support continues, despite several opportunities to review it, to largely wealthy investors in SCF who were stung by bad commercial decisions by their company’s Chief Executive that had been flagged, and the Government had known about, for many months.

But the Government support for businesses and workers affected by an unforeseen  natural disaster gets promptly turned off, leaving business owners facing bankruptcy and workers unemployed.

However you look at them, John Key’s  Government’s priorities in Canterbury have to be crap?

This Friday is April Fools’ Day. It also will mark six months since the National-led Government increased GST to 15%, despite John Key’s pre-election promise. How’s the increase affecting your wallet?