Sex, Drugs & Electoral Rolls Part VIII: Tax The Bastards

There's an industry out there in the New Zealand economy which seems to inevitably make its cash by befouling the environment it operates in. Continuously milking those whom they almost jokingly claim to look after, and sending their pernicious poison on downstream to pollute the wider commons enjoyed and inhabited by other New Zealanders. Meanwhile, escaping substantial regulatory attention for the costs of their activity because they're so large and so integral to our economy that we dare not think even about doing without them or reining in their excesses.

Now you could be forgiven for thinking I'm talking about dairy farmers. And it's true, they bear all the hallmarks of the above characterization - by virtue of being "too big to fail" for our economy, and enjoying a positive relationship with the 'powers that be' which prevents their serious externalities of environmental pollution from being properly restrained.

But I'm not. Instead, the portion of the Kiwi dream machine I wish to draw your attention to today is none other than the Dairy Farmers' own present-day bete-noir.

The Australian-owned banking sector.

Let's get into some facts.

There are five major banks presently operating in New Zealand. Four of these are foreign - and more specifically, Australian - owned. The fifth one, as you may have guessed, is the Government-backed Kiwibank. It is undoubtedly significant that the only way a true New Zealand Bank has been able to rise to the size and scale of the 'Big Four' foreigners, is through tacit and tangible government backing and support.

Between them, the 'Big Four' (made up of ASB, ANZ, the oxymoronically named 'Bank of New Zealand', and Westpac) raked in almost five billion dollars worth of profit last year after tax. That's more than one thousand dollars for every man, woman and child presently domiciled in New Zealand. It's about the same figure as the combined total profits of all companies presently traded on the NZ Stock Exchange.

Considering our own GNP (that is to say, the actual national income of New Zealand as a nation) is a mere 58 billion or thereabouts, this effectively means these Aussie banks are making almost a tenth of what our entire nation does.

And they're doing it off our backs.

So how are they managing this? What kind of con or international best business practice are they pulling to generate a truly astounding twenty two percent return on equity.

The answer's simple in generalities, but complex in detail. (these things often are)

Basically, the 'Big Four' banks have somewhere around 87% of the New Zealand market between them. Kiwibank, while a valiant and vigorous new-entrant competitor (relatively speaking), barely cracks ten percent (with less optimistic figures having them between four and eight percent).

This wouldn't, in and of itself, be a problem (even though my ardent Nationalist proclivities would dearly love for an arm of the NZ Government to become a powerhouse majority mainstay of our financial markets) ... but the Oz banks themselves have a nasty proclivity towards what you might term anti-competitive styles of operation.

This isn't just me, a lowly magazine columnist and occasional political iconoclast saying this - world-renowned ratings agency Standard & Poors quite literally stated that the "nature of the [NZ Banking] system" is outright "oligopolistic". Other political luminaries have previously drawn attention to specific issues like the vastly inflated credit cards rate we pay compared to people over the ditch using exactly the same service, bankers' resistance to debt-mediation processes with struggling farmers, illegitimate collusion over inter-bank lending rates that produced a dividend of up to $1.5 million dollars a day while the scam was running for the banks in question, and far higher fees generally for NZ customers (a main source of Aussie bank profitability here) as compared to their Australian equivalents.

Clearly this lack of competition, regulation and oversight is providing some prime pickings for the financial institutions of New Zealand's 'rich cousins' across the Tasman - at our quite literal expense.

Kiwibank's previously been in a position to throw a competitive spanner in the works by offering cut-price rates to consumers thanks to the New Zealand Government forgoing the option to take dividends and pouring capital into its new pet financial wrangling house. Unfortunately, as you may have seen recently, NZ Post's financial position appears to be deteriorating and our present Government is somewhat spending money averse, meaning we're left high and dry when it comes to serious tools to try and influence the domestic banking market in order to get a better deal for our own people.

The closest we've had to "Government Intervention" with the banking sector recently is the vague suggestion of the Government holding personal meetings with foreign banks in order to urge them not to screw over struggling dairy farmers *too* heavily during a time of arguable economic crisis.

Despite the existence of a Treasury report which clearly states that these offshore banks are quite probably using a "lower level of [government] scrutiny surrounding fees to extract uncompetitive profits", there would appear to be no serious appetite on the part of our Government to actually take the matter in hand in a way similar to what the Reserve Bank of Australia did when confronted with an arguably equivalent situation.

As far as the relevant Minister - Epsom's perennial also-ran, Paul Goldsmith - is concerned, there's no sign of a problem worth investigating.

Meanwhile, New Zealand consumers continue to be wildly overcharged and exploited; and as a result, Australian financial institutions are able to quite literally laugh all the way to the bank to the tune of five billion dollars a year.

Something must be done.

But what?

Well, given that the issue at hand is a coterie of foreign-owned banks 'earning' supernormal profits at the direct expense of ordinary New Zealanders, I should like to propose a 'super-tax' on the revenues of these offshore-owned finance houses.

Depending upon the level at which this is set, such a levy would stand to raise a very substantial amount for the nation's coffers. Perhaps even enough to plug the whole Bill English put in New Zealand's books by doling out tax cuts for the (domestically) wealthy in 2010.

But the real economic justice of such a super-tax is not simply in how much cash it can raise for the state.

No, it's in the fact that it puts money BACK into OUR economy for the explicit benefit of the people it was fleeced off and extorted from in the first place. This is what you might term a 'restoration of balance', and why I'm inclined to call it a 'social dividend'.

There are numerous and exciting uses such money could be put to, ranging from large-scale make-work schemes through to the construction of sufficient homes to help deflate our housing bubble, and many other suggestions besides.

But speculation as to usage is of arguable secondary importance to the fundamental necessity of restoring distributive justice to the situation, and ensuring that the Government doesn't sit idly by while a large and appreciable chunk of our GNP disappears offshore.

Because when it comes to looking after the interests of Kiwis banking with the foreign-owned banks ... it would appear that our present Government - somewhat ironically - has low interest.

Sex, Drugs & Electoral Rolls Part VII: Kings Arms Open For Housing Development

I've got a confession to make: I'm not absolutely 100% down with the proposed mass-intensification of housing in Auckland, and think that other avenues to secure the affordability of accommodation for the future citizens of Auckland (i.e. us) need also to be considered.

The reasons for this semi-skeptical position finally crystallized in my mind last Saturday morning, when I opened my internet/newsfeed to see news percolating that beloved (dare I say 'iconic') live music venue The Kings Arms had just been designated a Special Housing area as part of something called the Newton Cluster.

Apparently, by 2019 or thereabouts, the Kings Arms will be transformed into sixty 'affordable home' apartments.

This struck me as simultaneously both amusing and terrible, because at the same time the local young activisty types are running around claiming rather loudly that "MORE INTENSIFICATION IS GOOD! OUR GENERATION NEEDS SOMEWHERE TO LIVE!" ... rampant property developers operating in concert with both central and local government are moving in to line their pockets at the cost of Auckland's heritage and amenities. The same thing (conversion into yuppie apartments) nearly happened half a decade ago to the St James Theatre on Queen St.

Now before we go any further, let me clearly and unequivocally state that the likes of Generation Zero are absolutely correct in the second part of their contention: young Aucklanders being shut out of the housing market in seeming perpetuity is a travesty. The serious thinking going on about the detrimental costs to users of continuous urban sprawl (whereby we end up paying far more in transport costs and wasted time than we save in mortgage/rent rates for choosing to live far away in deepest darkest Papakura or wherever else in the outer-outer suburbs), is also fundamentally accurate.

But what people who've decided to cast the battle for more intensification - and the squabbles over the Unitary Plan as a whole - as some sort of great intergenerational skirmish of weltanshauung between people comfortably occupying property, and those successive generations uncomfortably renting or leasing it from them often choose to overlook, are some of the manifest issues that simply packing more and smaller housing into conveniently 'available' space throughout the inner and median suburbs might actually mean in practice.

There seems to be this enduring perception (on both sides of the debate, to be fair) that what is meant by "intensification" is tearing down the spiffy quasi-quarter-acre Mt Eden Villas of the old-money upper middle class in favour of erecting in their place flash, new and ecologically friendly townhouses.

Balderdash. That might be taking place in some areas (and good on developers if they're taking the ecologically more-sustainable route with their constructions), but from what I've seen thus far the areas selected for actually-existing 'intensification' appear to be a little different:

The proposed development on top of the present site of the Kings Arms is but the most recent example. Other developments which I've seen in my lifetime include filling in green areas like the Kelly St Reserve to construct dark, grey and clustered town-houses out of keeping with the character of the surrounding area; and the mass of tasteless, characterless, rotting-teeth constructions that cover the area of the old Sawmill down by the prison and old munitions-works just southeast of Eden Terrace. That last development, in particular, screams of everything that's traditionally thought of as wrong with new-housing developments in Auckland - being constructed with substandard materials that soon began rotting (requiring an ongoing cleanup-renovation process that's still yet to be completed), in aesthetically questionable fashion, and on apparently contaminated land due to the site's previous use as a lumber-yard drizzled with preservatives (ironic considering the lack of treated timber used in subsequent developments on the area).

Prior to this, the Mt Eden Borough Council (which just goes to show how long we've been playing around with suburban intensification - that institution was around some generations ago before eventually being superseded) had itself experimented with implanting 'sausage-block' flats on various locations throughout its demesne. The results, as you can see today, are wildly overpriced granny-flats regularly fetching towards or northwards of a million dollars apiece (so not exactly 'affordable'), and simultaneous slums almost surprisingly in the same block. (As a point of interest, pretty much the first time I'd ever set foot in one of those developments was also the first time I'd ever met a 'proper' drug dealer - who promptly decided he wanted to stab my friend, thus souring our commercial relationship and causing us to want to get the hell out of there pronto. It's a story for another time, but I mention it as prima facie evidence of the sort of effect badly done apartment-intensification can bring with it)

In any case, while it's patently easy to dismiss much of the opposition to intensification "coming soon to a neighbourhood near you" as being NIMBY - 'Not In My Back Yard'-ism writ large ... it does of course behoove me to point out that one's property requires a Back Yard before it's possible to actually object to what does or does not go up therein. Many of the proposed forms of 'affordable' accommodation (such as the aforementioned sixty apartments going up at the Kings Arms) sort-of neglect outright to include anything so much as resembling a back yard, unless you count a window planter-box or balcony succulent pot-plant - which causes clear questions in my mind as to whether they're actually suitable for the young families they're supposedly being marketed at. This is particularly the case given the diminishing access to community green-space which appears to be a fellow hallmark of greater suburban intensification.

So from where I'm sitting, the question is obviously raised: if intensification is a questionably effective partial-solution to the issues at hand which often causes associated problems in its own right ... what else can we be doing to help address the dual issues of housing affordability and availability in Auckland?

One of the most obvious avenues to consider is attacking the problem at its roots. Much has been made of building more houses (or, more precisely, rezoning to eventually at some point in the future allow private property developers to build more apartments and townhouses) - and yet if we take a look at relevant figures from 2014-2015 showing migration inflows to Auckland of approximately fifty thousand people matched with housing construction of a mere five and a half thousand ... there is clearly a bit of a gap in the analysis going on here. However you choose to phrase it, it's difficult to see how we can just keep building houses in perpetuity for new arrivals - whether foreign or domestic in origin.

Further, the impact of chiefly foreign speculation through huge and expansive capital inflows cannot be ignored. Pretty much everybody agrees that the immense financial returns to be had from playing Auckland's property-bubble have lured thousands of investors to place their cash in our market ... further exacerbating housing prices as part of an exceedingly vicious, barbed spiral.

Merely building more houses does not solve these problems, and it seems that decisive action by Central Government will be required to corral the forces behind each issue, both individually and as they interlink.

The creative energies of a generation of young activists may potentially be better put to use attempting to lobby for these changes to take place, rather than engaging in pointless rhetorical shouting matches with extant property-holders and old people.

This will also involve, hopefully at least, less sacrificing of the amenities we, as young people, enjoy on the altar of questionable urban development.

Sex, Drugs & Electoral Rolls Part VI: Thirty Xanatos Pileup

One of the great and regrettable truths of politics is that some of the more significant events are frequently less the result of broad-spanning democratic consultation than they are close-knit cabal and conspiracy. And, as everybody knows, we are hard-wired to hate cabals and conspiracy ... particularly if we're not part of the cabal and/or conspiracy in question.

However, in a country - and a politisphere - as small as New Zealand's, the trouble is that even the relatively smaller cabals (to say nothing of the conspiracies) almost invariably find themselves rubbing up against one another, if not outright intersecting. If philosophy is searching in a dark room for a black cat that possibly isn't there, then the serious business of politics is arguably dancing around a smoke-filled back-room, while semi-inevitably forming a conga-line with several other interested parties so you don't keep on running into each other and treading on everyone else's feet.

The best example for this that I can think of in recent days is the apparently inexorable migration of one Shane Jones from his sunning-spots in the mid-Pacific back to NZ national politics - and into the indefatigable company of New Zealand First.

As W.B. Yeats once wrote: "And what rough beast, its hour come round at last,/Slouches towards Bethlehem to be born?"

So what is a "Thirty Xanatos Pileup", and why is this one. Well, the term was coined by the excellent TvTropes website, and refers to a confusing intersecting confluence of several different conspiratorial efforts, with unpredictable and potentially disastrous results - like a several-car pileup on a motorway, but with elaborate plans in the style of Gargoyles villain David Xanatos in the place of automobiles.

And while co-ordinated comeback efforts for has-been politicians are virtually a dime-a-dozen heading into election years (witness, for instance, the many and various political reincarnations of John Banks - or, for that matter, Laila Harre's stint as Internet Party leader) ... there's something altogether more convoluted and cloak-and-dagger about this latest effort at what we're tentatively calling the Game of Jones.

For starters, there's the sheer number (and boggling diversity) of players involved.

This isn't just a Shane Jones operation. Nor is it even, really, a New Zealand First (i.e. Winston) And Shane Jones operation. Instead, by my crude count there's at least four different parties/factions pushing a Jones comeback-  enlisting all manner of freelancers, mercenaries, Party Insiders, and assorted other agents for the purpose of making things happen. Two of the groups involved even approached me for help in various capacities, which was bemusing.

First up, there's the non-Winston NZ First people. A certain Parliamentary Services staffer with whom I've had a number of amusing run-ins called Api Dawson has been pushing a Jones-Into-NZF bandwagon not quite singlehandedly since about 2012. It was about then that mention started appearing in mainstream media outlets such as the National Business Review of a potential Jones defection from Labour to NZF, and we have reason to believe that subsequent mentions of Jones by figures such as TV3's Patrick Gower as a potential future Leadership successor for NZF have also been his handiwork. The reasons why the ostensibly Ron Mark-linked Dawson might have been dabbling with such an agenda can only be guessed at - but would presumably be linked rather closely to his desire to 'graduate' to Ministerial Services. You need to have a Minister for that to happen, and as we'll see in a minute, it appears a number of people have made the calculation that Jones represents the best shot at somebody from NZF elevating themselves into Cabinet in the near-to-mid future.

This brings us to the next group - the National people. As you may recall, Jones was extracted out of Labour about this time two years ago in the run-up to the 2014 Election by National creating for him a bespoke sinecure job on perma-vacation around the Pacific. National therefore believes with some justification that Jones is not only pliable - but potentially outright buyable into the bargain. It has, after all, happened before.

So how does this relate to New Zealand First? Simple. National really, really want to keep being in government. They know damn well that their own support reached a high-water mark at the 2014 Election, and that they'll need ever greater shares of votes and seats for their support parties if they are to keep on governing post-2017. Unfortunately for them, neither of ACT nor United Future show any serious signs of being able to bring in a second MP, while the Maori Party will be under increased threat in their Waiariki lifeline next time around.

So where are they going to go? Well the obvious answer is New Zealand First. This possibility must have sounded strategically tantalizing to National's brains-trust for a number of reasons. First, they know Labour and the Greens require NZF support in order to form a Government - by co-opting NZF, they deny the Opposition the numbers they require. Second, they know that a coalition or confidence and supply arrangement with National would kill NZF's electoral appeal in the medium-to-long term. They don't like us - not really - so a chance to benefit directly from our lingering misfortune must have seemed lascivious.

Of course, in order to convert their most vituperative Opposition party into a pliant Nat satrapy, National needs a man on the inside. They're cagey about working with Winston, and my sources inside National suggest that they've all but written off working with Ron Mark (he's too combative in the House and keeps annoyingly holding them to account) ... which leaves their man Jones - the man they've already conclusively demonstrated will, when they say "Jump" ask "How far across the aisle/Pacific?"

All of this makes the final faction worthy of note pushing Jones all the more inexplicable: the Unions. Not only was a certain union operative responsible for dissemination the narrative of "Jones is the logical pick to succeed Winston" into the media in the first place about a year ago, but I'm also given to understand that Labour and The Greens have also been approached about a potential electoral pact that would see each of them stand their candidates in Whangarei aside in order to allow Shane Jones a clear run at National's Shane Reti. With ten thousand votes between them, plus three thousand NZF candidate votes up for grabs - it almost begins to make cracking Reti's 20,000 vote return and thirteen thousand vote majority seem plausible.

So basically, if you've been following so far ... there are concurrent plots by National, a Union, at least one NZF cabal, and a few other people on top of that (whom I don't have space to mention) to bring Shane Jones back to Parliament as an NZ First notary. Never mind that all of their strategic interests are, ultimately, diametrically opposed. For the moment, they've all aligned behind one man. To get such a broad coalition of disparate forces pushing in one direction, you either have to be a preternaturally gifted statesman, or pulling one hell of a con/snowjob. And, to be fair, there's often precious little difference between these two states.

In any case, the quote from the Legacy of Kain series springs to mind: "What game is this, where every player on the board claims the same pawn?"

Although I guess Jones is actually more of a Bishop. They sidle, move diagonally, and as Terry Pratchett noted, "that's why they often turn up where the kings don't expect them to be."