Archive | March, 2013

Matt McCarten: Big tick for new TV debate show

26 Mar

By Matt McCarten

I was a ring-in for a full dress rehearsal last week for TV3’s new debate showThe Vote. It goes live this Wednesday.

The original concept was devised over a beer between Duncan Garner and Guyon Espiner. Its format is two teams of debaters going head-to-head in front of a live audience. The practice debate was over whether partial asset sales should go ahead.

The audience was polled on the subject at the start and end of the show. They decide the winning team.

Labour finance man David Parker and I were naturally on the anti team captained by Espiner. Garner’s team was former National Party president Michelle Boag and irrepressible right-winger Matthew Hooton. The referee was former TVNZ political editor Linda Clark.

At the show’s start the audience poll had a fairly even three-way split between support, opposition and undecided.

I was always confident that we would win the debate by exposing the reality that the sale of our power companies is all about transferring half of a cash cow, which we all currently own, to the wealthier 10 per cent of the population. It’s effectively a scheme in which a minority of this generation steals the heritage of our grandchildren that was paid for by our grandparents.

The best the opposing team could offer in its opening salvo was the Government’s nonsensical official line that the sale would bring in the money they need to invest in schools and hospitals.

Anyone who knows even basic maths knows that’s a stretch. Our power companies returned $360 million in dividends to the taxpayer last year. Over the past five years the average return has been 18.5 per cent. And the Government can borrow money at less than 4 per cent interest.

In my response, I raised the well-used analogy that if you wanted to build a garage on your house, would you sell your rental property that returned you 18.5 per cent to pay for it? Or would you take out a 4 per cent loan? No-brainer, really.

Our opponents followed up by spouting silliness that the asset sales would create jobs, prices would come down and John Key had a mandate anyway.

Espiner and Parker took them apart. Could the other team name a single asset sale that created a job that we may have missed? Apparently not.

Parker explained patiently that private electricity retailers already charged on average 5 per cent higher than their state-owned competitors – about $200 annually per household. Did the other team have an example of prices that have come down after privatisation? Silence.

We then pointed out that if the Prime Minister believed he had a mandate, why didn’t he hold up the sales until the opposition’s referendum was held? Splutter.

Our opponents retreated to their final refuge. Boag beamed that patriotic mum and dad investors got an opportunity to make a little passive income while keeping ownership in Kiwi hands.

Hmmm. That’s what her party said about Contact Energy, when they sold it in 1999. Today, 80 per cent of Contact is owned by 1 per cent of shareholders. Five of the seven directors are not New Zealanders. Truth hurts.

The final poll vote was 88 per cent to 12 – to our team. Audience members told me they learned more at the debate than anywhere else.

I hope senior politicians front these panels. Imagine Key, Banks and Dunne v Shearer, Peters and Norman.

TV3 should patent the format. It’s a winner.

Herald on Sunday

Workers News to 17/3/13

19 Mar


Small rise in Minimum Wage doesn’t address needs of low paid

Bill to cut youth wages slammed by campaigners

Unite Union’s SupersizeMyPay campaign in 2005-6 helped get rid of youth rates. National wants to bring them back

98% Of Submissions Against Youth Rates Ignored

Government doing the minimum on minimum wage


‘Every man for himself’ as ship sank

Matt McCarten: Living wage a moral entitlement

New Zealand seems long way from fair day’s pay

The last piece of the Hobbit story

Solidarity needed: Stop increases to migrant seasonal workers health insurance

NZ Actors Equity welcomes latest document release

Hobbit sunshine welcome

School staff tell MPs: No more Novopain

The Silence is Killing Them by CTU President Helen Kelly: The NZ Forestry Sector is completely unmonitored – It is one of our most dangerous industries and no one seems to know what is going on. From my perspective it appears within officialdom and the Forest Owners themselves, no one really cares.

Message to NZ Post must get through

Asset sales petition arrives at Parliament

NZEI: Every child deserves the Best Start – campaign launch

UN urges New Zealand to reduce Racism in criminal justice

Racial Discrimination: UN Committee recommendations on NZ

Debbie Hager: Celebration? It’s a national day of shame


Low pay, longer hours and less social mobility – welcome to 21st century NZ capitalism

Greens: Manufactured exports plunge, jobs go as Nats fail to act

Matt McCarten: Poor foot bill for asset gluttons

Miners’ woes make asset sales harder

Pike River Mine entrance

Crony capitalism costs

How to get rid of smart and honest employers by Gareth Morgan and Susan Guthrie

Latest unemployment statistics directly contradict government claims

Academic slams report PM used to claim $3.5 billion gains to NZ from TPPA

We Are Being Ripped Off | 500 Words Column: Alastair Thompson

Doctors and Nurses warn Prime Minister over trade talks

Bryan Gould: Lack of competition our downfall

Wayne Cartwright: Asset sale is ‘strategic blunder’

Editorial: Disregard for the rules is alarming

Bernard Hickey: Wise warning from the past

Two Fingered Salutes By Chris Trotter

The might and power of those in control

Oram: A naked power grab


Allan Freeth: The sad business of child poverty

Future of NZ depends on the well being of every child

Poverty Watch 21

Benefit fraud legislation ‘may increase domestic violence’

Queue outside foodbank


Viral Video Shows the Extent of U.S. Wealth Inequality


“I am convinced Socialism is the only answer and I urge all comrades to take this struggle to a victorious conclusion. Only this will free us from the chains of bigotry and exploitation.” Malala Yousafzai, young victim of terror attack in Pakistan

“The important thing is not to stop questioning.” – Albert Einstein

“No problem can be solved by the same consciousness that created it. We need to see the world anew.” – Albert Einstein

Those who have the privilege to know, have the duty to act.” Albert Einstein

“Hated by the entrenched classes, Hugo Chavez will live forever in history. My friend, rest finally in a peace long earned.” – Oliver Stone


Richard Wolff Discusses the Failure of Capitalism with Bill Moyers

Income Inequality May Take Toll on Growth

Don’t think class war from above is real? Check out productivity and wage growth since 1973


Hugo Chavez on climate change and capitalism

Too much power in too few hands: Food giants take over the industry

Reduced Work Hours as a Means of Slowing Climate Change

Pandora’s Lunchbox: Pulling Back the Curtain on How Processed Food Took Over the American Meal


Salt Sugar Fat: NY Times Reporter Michael Moss on How the Food Giants Hooked America on Junk Food


Israel: Where Soccer Fans Boo Their Own Players When They Score

Why Major League Baseball Owners Will Cheer the Death of Hugo Chavez

Wealth Inequality in America

17 Mar

Infographics on the distribution of wealth in America, highlighting both the inequality and the difference between our perception of inequality and the actual numbers. The reality is often not what we think it is.

Matt McCarten: Some more equal than others

12 Mar

If Longstone was incompetent or insubordinate, taxpayers shouldn't pay out anything. If she just up and left, why do contracts allow a payout? Photo / NZ Herald
If Longstone was incompetent or insubordinate, taxpayers shouldn’t pay out anything. If she just up and left, why do contracts allow a payout? Photo / NZ Herald

By Matt McCarten Email Matt

5:30 AM
Sunday Mar 10, 2013

Workers continue to be divided into two classes. A comment from our Prime Minister from South America about another issue involving his hapless education minister, and the debacle at Solid Energy, drives this truism home.

About 99 per cent of the workforce is expected to do their job well. If a worker doesn’t perform, they get a couple of warnings to lift their game. If there’s no change, they’re down the road.

Normally, the employee will get between a week and a month’s pay, if their boss doesn’t want them to work out their notice. Apart from any unused holiday pay, that’s it.

Assuming an employer acts in good faith and follows a fair process, there’s not much a sacked worker can do.

And then there’s another group of workers, where none of this applies. I use the word "worker" loosely.

Education Minister Hekia Parata and her chief executive, education secretary Lesley Longstone, who had been in the job for just 13 months, parted ways. A taxpayer cheque was written out for $425,000. That’s equal to $8,000 extra payment for each week Longstone actually worked.

Every worker would be wishing they could get that sort of deal.

John Key casually dismissed any concerns, claiming Longstone didn’t get anything extra that wasn’t in her employment agreement. As if that’s a satisfactory response.

It has been alleged that Parata had a "strained relationship" with Longstone. So did she walk or was she pushed? If she was incompetent or insubordinate, taxpayers shouldn’t be paying out anything. If she just gave up and left, why do contracts allow a payout? The other scenario is that Longstone was sacked unfairly and therefore entitled to compensation. In that case, the taxpayer deserves an explanation from Parata.

Would any business owner be happy to pay out hundreds of thousands of dollars to a worker with barely a year’s service?

It seems that accountability, which this government demands of others, does not apply to them.

This also explains the surreal story about Don Elder, the former chief executive of Solid Energy. He gets paid more than $1 million a year. When he and his board ran the company into near bankruptcy, the Government as shareholder claimed they were kept in the dark. They merely replaced the chair and told us it was all okay now. In the private sector, as Sir Doug Graham found out, directors who get it wrong can get put in the criminal dock.

Under this government though, Dr Elder gets kept on full pay supposedly working from home. Hundreds of his employees, meanwhile, get the sack. Those workers, of course, don’t get the severance package that our government and their entities reserve for those at the top.

However, the Government says we may have to tip tens of millions of dollars of tax money to save the company. No sale for Solid Energy it seems.

A friend who owns an executive recruitment company says agencies are paid big money to find senior executives. The higher the remuneration packages, the bigger the cut everyone gets. Successful applicants feed more work to the agency and so the merry-go-round goes on.

Shareholders are told director fees and senior executive salaries must meet the market to retain skills. As we can tell from Solid Energy, and many other examples, this is all fiction.

George Orwell explains it best: Some animals are more equal than others.

Debate on this article is now closed.

By Matt McCarten Email Matt

Herald on Sunday

Matt McCarten: Living wage a moral entitlement

9 Mar

Lower paid workers are constantly fighting for a better standard of living. Photo / Natalie SladeLower paid workers are constantly fighting for a better standard of living. Photo / Natalie Slade

By Matt McCarten Email Matt
5:30 AM Sunday Feb 17, 2013

For three decades now, right-wing ideologues have claimed our free-market economic system brings prosperity to all.

Rodney Hide’s mentors preached that massive tax cuts for the rich and the removal of pesky regulations would prompt their extra wealth to flow down to the rest of us.

This week the Living Wage movement – made up of 130 community groups, churches and trade unions – released figures showing that since we adopted this model many of our citizens have fallen off a cliff.

We are now ranked 23rd worst out of 30 OECD countries for income inequality. Around 270,000 New Zealand children are living in poverty, creating a permanent future under-class.

Before we start blaming the victims, the Living Wage organisers reveal that four out of 10 poor children are in families where at least one parent is in full-time work or self-employed.

Wages moved a measly 2 per cent in 2010. In the same year, our 150 richest New Zealanders expanded their wealth by a whopping 20 per cent. Our top 1 per cent now have more wealth than the bottom 60 per cent put together.

The Living Wage movement called for employers to pay at least $18.40 an hour as the minimum their workers require for the basic necessities of life. That’s $4.90 more than the current minimum wage.

When I entered the workforce in 1980, a Kiwi worker was paid the same as an Australian for a similar job. Now our average wage is 20 per cent less in real terms. Interestingly, our minimum wage of $13.50 is 30 per cent less. Australia’s minimum, in our money, is $20.35. Even adjusting for their living costs, it’s $16.28 – $110 more a week for a full-time worker.

No wonder our best and brightest are fleeing across the ditch.

Successive governments have given various excuses why Australia has boomed and we have gone backwards. All of it is bogus.

The difference is Australia has “awards” that set all workers’ wages and conditions. If a corporation or an individual sets up a business they know the price of labour they’ll have to pay.

The Living Wage movement is calling for publicly funded institutions to start the ball rolling by paying decent wages. Overseas examples show that this has worked: by setting a higher “market rate” it has forced private businesses to follow to keep their good workers.

And no, there is no evidence that jobs are lost.

I prefer the Australian system as it helps all workers. But the Living Wage campaign is a good start.

By Matt McCarten Email Matt

Herald on Sunday

Matt McCarten: Poor foot bill for asset gluttons

9 Mar

The Government is going ahead with asset sales, despite opposition. Photo / Jason Dorday
The Government is going ahead with asset sales, despite opposition. Photo / Jason Dorday

By Matt McCarten Email Matt
5:30 AM Sunday Mar 3, 2013

This week, the Government confirmed it really is going to flog off our family silver. The asset sales programme was on hold while the Maori Council went to court and gave stopping the sale a good shot.

Alas, the judges gave the auctioneers the green light.

Opposition parties say they have reached the required threshold to hold a referendum on the asset sales.

The Greens are sure 390,000 people have signed the petition, but irrespective we know New Zealanders overwhelmingly oppose the idea of the richest 10 per cent of the population buying something the rest of us already own.

John Key daren’t wait for a referendum. His Cabinet rubber-stamps asset sales tomorrow.

New Zealanders were traumatised when our best public assets were hocked off under the reign of neo-liberals in the 1980s and 90s.

Before everything went, the masses revolted and ringleaders were dumped and exiled themselves into the Act Party.

How fitting that their annual coven was held last weekend in a rich man’s land of concrete, paid for out of the proceeds of past asset sales.

The heart of the asset criminal beats eternal. So with a softer, smoother salesman as Prime Minister, they’ll take half now. They’ll get the rest later.

Gluttons aren’t capable of stopping until they get the whole cake. The mom and pop investors, if they actually exist, can fight over the crumbs.

However, just when you think it’s a grab and no give, the Government generously announced on Wednesday that the minimum wage will move 25c an hour in April. Full-time workers get an extra $8 a week after tax.

I’m not sure where this figure fits into John Key’s public commitment that he has a cunning plan to catch up with Australian wages real soon.

Now that the Maori Council has done its bit trying to hold up asset sales, the Maori Party, in a rare display of independence, stepped up to condemn the sale and the 25c pittance for poor workers.

They boasted militantly that the minimum wage had to rise to a whopping $16 an hour now.

On the basis of the Maori Party’s new staunchness, here’s good advice to them on how to survive at the next election. Withdraw from the coalition unless the Government agrees to a $16 minimum wage, and unless asset sales are put on hold until the referendum is held.

Assuming the Maori Party are just kidding, as I think they are, I’m left giving advice instead to you, the poor worker. When you get your $8 extra in your pay packet, don’t spend it all on a coffee date.

You’ll need it when your power bill rises so the new owners can make a quick profit on their power shares. After all, when the greedy get needy someone has to pay. Why not the poor?

Debate on this article is now closed.

By Matt McCarten Email Matt

Herald on Sunday

Question 22: The liberalisation of financial markets in the 1980s was also meant to make the raising of capital for business easier and cheaper. What was the result?

4 Mar

The raising of capital was made easier and cheaper – but the small investors who handed over their life savings to the new financial speculators were wiped out twice – in 1987 and again in 2006.

The first round of liberalisation resulted in a financial boom and collapse in the period 1984-87. This saw tens of thousands of small investors lose their life savings. Financial companies were exposed as little more than Ponzi schemes using new borrowings to repay old debt and claming false profits. Amazingly nothing was done to regulate this market until we had the experience repeated with the wave of financial company collapses that began in 2006. This has led to billions of dollars being wiped out in value. Again small savers who invested their life savings with the best and brightest of the financial world have been wiped out. The fund owners and managers have been largely protected with few prosecutions and their own fortunes protected behind the ubiquitous family trusts.

New Zealand Herald columnist Brian Gaynor summed up the experience in a March 6 article:

Investors were presented with positive financial accounts, consistent with our accounting standards, which encouraged them to invest in finance companies that were only able to repay investors if they attracted new borrowings when borrowers defaulted.

The Companies Office, Securities Commission, accounting profession and independent directors were asleep at the wheel as many investors lost a major percentage of their life savings.

Owners of these finance companies, particularly Mark Hotchin and Eric Watson, are still issuing woefully inadequate investment statements and prospectuses as they continue to borrow money from the public.

Why are these businessmen still able to raise money from the public without fully disclosing their involvement in failed companies?

Ponzi schemes are an investment proposition whereby the promoters announce unrealistic returns and repay loans, or interest on these loans, from contributions made by new investors.

Many of our property-related finance companies involved interest on loans being capitalised and this interest was only received by the finance company when loan principals were repaid.

Take, for example, a finance company with $500 million of interest capitalised loans to property developers and $500 million of debenture borrowings from the public at an average interest rate of 8.5 per cent a year.

This finance company has to pay annual interest of $42.5 million on these debentures yet it may receive no interest on its property development loans unless they are repaid, which is often not the case.

Thus, in this simple example, the finance company would have an annual cash deficit of $42.5 million and interest on debentures, plus any redemptions, could only be paid out of funds contributed by new investors.

This large cash deficit was concealed by accounting policies that allowed companies to accrue, or take into account, interest over the duration of a loan rather than when interest was paid. Thus finance companies would show that they had received interest when they hadn’t and reported a profit even though they had a substantial cash deficit from operating activities.

To make matters worse, dividends were then declared out of these non-cash profits and paid out of newly acquired debenture funds.

Thus the interest on debentures, the repayment of debentures and the dividends paid to the owners of these finance companies were all sourced from new debenture money.

This result, while unintended, has the same effect as a Ponzi scheme, and Ponzi schemes are quickly shut down by most competent regulators around the world.

In addition, it appears that a number of owners of finance companies sold properties to developers at vastly inflated prices and these purchases were 100 per cent funded by a finance company owned by the vendors.

In other words, investors in property-related finance companies were like lambs to the slaughter. They didn’t have a chance, particularly when the property development market collapsed and most developers couldn’t repay their loans or the capitalised interest on these loans.

The Listener reported April 3 that “According to a tally kept by business journalist Bernard Hickey….48 finance companies with a total of $6 billion in investor funds have failed since the first, National Finance, went under in May 2006. Judging by the estimated returns from receiverships and moratoria, he estimates $3 billion of that money will never be recovered by investors.

“Hickey thinks 100,000 people have been directly affected by the finance company scandal – ‘people who have lost money, or whose parents have lost money’.” As one observer commented to the listener: “Ma and pa investors have been skinned alive.”

It reminds me of the joke “the best way to rob a bank is to own one”. Except in this case the people robbed were small investors and their life savings – often retired with no way of recovering from the disaster.

(Part of a series of extracts from “Exposing Right Wing Lies” by Mike Treen, Unite National Director)

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