Red Alert

Archive for the ‘bank’ Category

How did the banks get away with it?

Posted by on August 31st, 2012

I am travelling to the US and UK to discuss my ideas on monetary policy with some of the best economic minds in the world, including former World Bank chief economist Joseph Stiglitz, Harvard academic Jeffrey Frankel and IMF chief economist Olivier Blanchard.

 

“Banking system is fraught with moral hazard,” says former Kiwi regulator.

“Inevitable that regulators will push retail banks to core functions

I met yesterday with David Mayhew, currently a London barrister working briefs regarding the scandalous manipulation of the Libor rates by Barclays.

David was born and raised in New Zealand before embarking upon a successful career in London. You may know him as a former member of the New Zealand Securities Commission, and he was the Commissioner for Financial Advisors.

He has fascinating insights on what has gone wrong with banking in many parts of the world.

He summed it up by saying that the authorities around the world went along with retail banks fusing with merchant banks, then gobbling up ever larger proportions of income and wealth, because they believed banks were creating value in the economy for the benefit of nations.

Events in recent years show they were not. The profits were fictitious. In the end, many of the banks managed to privatise large increases in profits and then socialise the losses which had been disguised.

He believes the current system is fraught with moral hazard, probably caused by retail banking services being subsumed by the ostensibly more profitable investment banking arms of major banks. The dominance within banks of interests loyal to the investment branch, rather than depositors, meant the fortunes of the banks were divorced from the interests of their depositors. The hazard they caused to retail depositors by investment banking practices was small beer to those who were in control of the banks.

Given that the privileges and profits enjoyed by the big banks from investment banking were allowed based upon the erroneous view that value was being added, it seems inevitable that regulators and economies will push retail banks back towards their core functions, and require them to avoid the moral hazard that bank bailouts have shown arise from highly leveraged and risky investment banking practices.

New Zealand has to date been spared the worst excesses of banking practice around the world, but the fresh look overseas at what separation there should be between retail and investment banking may translate to rules internationally that have relevance in Australasia too.

This is yet another dent in the increasingly discredited “efficient market hypothesis” which underlies National’s economic management. They say let markets rule themselves and a thousand flowers will bloom. Sell off SOEs, deregulate the RMA and all will be okay.

Yet the economies that have done the best in recent decades not only regulate where necessary but also use the power of the state in concert with private enterprise to ensure their economy thrives. The ‘voodoo economics’ derided by Mr Joyce have worked in economies which are now more successful than New Zealand.


15 December 1975: National Day!

Posted by on August 28th, 2012

15 December 1975 is a day that will continue to haunt National.

It was on that date when the newly elected, powerful and undoubtedly popular Prime Minister Robert Muldoon abolished the compulsory New Zealand Superannuation Scheme which was initiated by the previous Labour Government.

If only Muldoon and the National Government of the day hadn’t terminated the scheme it would now be worth more than $240 billion and “transformed the NZ economy into a world beater over the past 30 years.”

According to Brian Gaynor and other leading economists, Muldoon’s “dreadful” political decision instead transformed New Zealand from the potential Switzerland of the Southern Hemisphere into a low-ranking OECD economy. And it was the worst economic decision in the past 40 years.

The ripples of that decision are still being felt to this day. In fact, if the scheme wasn’t squashed then New Zealand would be much better positioned economically, would be able to own many more assets and would not incur that much Crown debt.

(more…)


BNZ innovative in stopping crime

Posted by on March 16th, 2011

North ShoreBNZ

BNZ must be congratulated on becoming the first bank in the world to fully adopt SelectDNA spray technology.

As a member of the Law and Order Committee I am constantly looking at ways in which the police, organisations and individuals are combating crime and how citizens can be kept safe.

Employees and customers are put at risk when banks are robbed and I was interested to learn what banks are doing to ensure that their workers and customers are protected.

During a tour of a new concept BNZ branch on the North Shore last week I was impressed by a number of new security initiatives implemented by BNZ, especially the SelectDNA spraying system.

BNZ National Manager of Security and Fraud Owen Loeffellechner explained to me that the system works by spraying robbers with a DNA solution as they flee the bank. The liquid will remain on the skin for up to two weeks and on clothes for up to six months. The DNA solution then glows blue under ultra-violet light. Catching the robbers red, or blue, handed!

The SelectDNA system will be rolled out to all BNZ branches across the country, making BNZ the first bank in the world to fully adopt the policy.

The bank has taken a comprehensive approach to tackle bank robberies which Mr Loeffellechner said is a crime against “people and the community”. He assured me that BNZ views the safety of customers and staff as paramount and they will take every possible measure to prevent robberies.

Since 2006, bank robberies have more than doubled, with 2009/10 recording the highest level of robbery, extortion and related offences on banks since 1994/95.

This is a worrying trend. However I commend BNZ on rolling out the SelectDNA spraying system throughout all their branches. I’m sure this system will be critical in reducing the amount of bank robberies committed throughout the country.

I welcome feedback, ideas or suggestions on how banks can improve their security and ensure the safety of customers and staff. Do you think legislative means are needed to ensure a high industry standard?


Bank of England boss criticises banks.

Posted by on March 7th, 2011

Merv King the Governor of the Bank of England is a pretty extreme example of what I consider a crude monetarist. But in this interview with The Telegraph he points the finger at bankers. With good reason.

Now, the Governor is off on why all this has a moral dimension: “The more I’ve thought about how labour markets work, the more I’ve realised that there are hardly any jobs whose tasks you can describe exactly. Nowadays, most jobs have the property that employees can choose to do them well or badly, so employers need to think about the long-term welfare of the staff not just pay today.” It follows that moral attitude is vital. Industry often understands this well. Nissan in Sunderland asks all its workers for ideas to raise productivity, and, says Mr King, it benefits.

The Governor makes a point of visiting manufacturing and service industries all over the country. Such firms pay far lower rewards than financial services but have “an incredibly successful record. They care deeply about their workforce, about their customers and, above all, are proud of their products”. With the banks, it’s different: “There isn’t that sense of longer-term relationships [hence the demise of the local bank manager]. There’s a different attitude towards customers. Small and medium firms really notice this: they miss the people they know.”

He also thinks that there is “too much weight put on the importance and value of takeovers”. They make short-run profits but “it doesn’t make sense to destroy a company with a reputation”. Since the Big Bang in the late 1980s, Mr King goes on, too many in financial services have thought “if it’s possible to make money out of gullible or unsuspecting customers, particularly institutional customers, that is perfectly acceptable”. Good businesses “keep a clear vision of who their customers are, and are run by people who don’t think they should simply maximise profits next week”. But in the past 25 years, banks have increasingly “taken bets with other people’s money”.

That is bad enough, but it gets much worse “if the rules of the game are that they get bailed out if it all goes wrong”. In this weird atmosphere, banks eventually stopped trusting one another. “Financial services don’t like the word ‘casino’, but instruments were created and traded only within the financial community. It was a zero sum game. No one knew which ones were winners when the crisis hit. Everyone became a suspect. Hence, no one would provide liquidity to any of those institutions.”

So what that does that mean for us. Heads the overseas owners of banks win and our balance of payments suffers and tails New Zealand businesses, individuals and the taxpayer cover their losses. And our balance of payments suffer.

Hat tip Lloyd Morrison


In God’s own country

Posted by on January 31st, 2011

Last Sunday, the Sunday Star Times surprised and delighted by leading, no less, with a story about a survey showing people are increasingly concerned at the growing gap between rich and poor in this country, God’s Own which once prided itself on being egalitarian. http://www.stuff.co.nz/sunday-star-times/news/4571307/Wealth-gap-divides-nation

Yesterday it followed up with a major feature  http://www.stuff.co.nz/sunday-star-times/features/4594815/Mind-the-income-gap providing more detail, including a graph from the book The Spirit Level which shows NZ was 18th out of OECD 23 nations in terms of the gap between the richest and poorest 20%.

At Labour’s excellent Summer School over the weekend, Otago University academic David Craig reproduced GINI data which suggested in fact we are now the most unequal society. (He’s sending it and I will post up the link.)

Yesterday’s SST article quotes Brit Tory leader David Cameron as saying of The Spirit Level that it showed that “among the richest countries, it’s the more unequal ones that do worse according to almost every quality of life indicator…”

“We all know, in our hearts, that as long as there is deep poverty living systematically side by side with great riches, we all remain the poorer for it.”

Cameron is doing more than mouthing the words. Last year he appointed former Observer editor and long-time campaigner on equality and a ‘stakeholder’ society, Will Hutton, to head a pay equity review. (I am currently reading Hutton’s latest book Them and Us but more on that at another time.)

So you might think there is the chance for a reasoned debate here in NZ, if not Government pick-up?  Accompanying the SST feature yesterday was commentary from both CTU economist Bill Rosenberg (agreeing) and Roger Kerr, director of the Business Roundtable.

I can’t find an e-version of Kerr’s comments (although the BRT website carries this  http://www.policyexchange.org.uk/assets/Beware_False_Prophets_Jul_10.pdf but he starts by saying: “Other things being equal, I prefer less inequality in incomes and wealth rather than more…”

Kerr then goes on the pan the book and story and dismisses the idea of better equity by saying:  “Equalising incomes, was, of course the socialist goal…”  No one is talking about equalizing incomes, that’s stupid and out of line even with a Tory Prime Minister. What we are talking about is a more equitable society, where the gap between rich and poor is reduced because otherwise everyone suffers.

It is simply obscene, for example, for the Westpac  chief executive in this country to be commanding a salary of $5m+ a year as we struggle out/through a recession for which banks have to take some responsibility. Banker JP Morgan had a rule that his executives should not earn more than 20 times that of his lowest paid employee. Westpac call centre people earn around $45,000 a year. That would take their CEO to around $1m.

That’s the sort of ceiling in place for state sector chief executives. Even then you have to ask why some SOE CEOs are earning twice + what the Prime Minster earns.

John Key is unlikely to follow the line taken by David Cameron. He is more likely to support Roger Kerr’s defence of the growing pay inequity gap and argues opposition is the politics of envy; that we should simply stop redistributing wealth (as if no redistribution has happened) and look at growing the economic pie.

No argument with that if the growth is sustainable but there’s no evidence provided that this is enhanced by paying someone 50 or 100 times what their workers earn.

Moreover, The Spirit Level graph of inequality appears to suggest that more equitable societies are more stable. Spain at tenth on the list of most equitable is the first truly troubled economy to be listed. The USA is second most unequal, just ahead of Portugal.

Neither our economic stability, nor our growing equality gap now perhaps the worst in the western world will be helped by tax cuts heavily favouring top earners. And another dose of state asset sales pushing up power prices won’t close the gaps either.


S&P: National on negative watch (part II)

Posted by on November 23rd, 2010

Part one of this post showed that S&P placed NZ on negative watch because of the savings gap, the huge (mainly private) net international debt and our under-diversified export profile (and consequent vulnerability).  It all adds up to lenders perceiving potentially greater risks and seeking compensation through higher interest rates.

How did the Government react to the news?  Did it front the issues and explain its “plan”?  Not in your life.

Alex Tarrant at interest.co.nz did a great job of covering John Key’s rather bizarre, meandering post-Cabinet press conference here.  Interest.co.nz’s coverage if the political debate is here.

Mr Key manages to contradict himself three ways in two paragraphs:

“Nothing has changed from our point of view, in fact if anything, our position looks stronger from our point of view (really?)…

We accept that we’ve had to take the earthquake on our balance sheet, accept tax revenues have been a bit weaker this year than we had anticipated…(corporate was 22.4% below 2010 forecasts, gst 15.8% below!)”

So… nothing has changed, we are stronger, but we are weaker.  Classic.   He must have been eyeballing three different journos and guessing they wanted three different answers, so why not try to please all of them at once?

The coup de grace is his attempt to pass it all off as Ireland’s fault.  True, the Irish are in a bit of a bog, but lets assume S & P can tell the difference between the land of the long white cloud and the emerald isle. 

Back in the real world, one thing is for sure, S&P won’t be amused if Messrs Key and English try to talk their way out rather than addressing the fundamental issues: how about trying to grow savings, diversify and lift exports, and reduce private international debt?  Who knows, they could even turn it into a plan?


S&P: National on negative watch (part I)

Posted by on November 23rd, 2010

National’s counter-spin on yesterday’s placement by Standard and Poor’s of New Zealand’s sovereign credit rating on negative watch shows increasing desperation, the latest of a torrent of bad economic news.  I comment in two parts: the announcement and the counter-spin.

First the announcement’s overview:

  • “We perceive New Zealand’s projected widening external imbalances and the country’s weakened fiscal flexibility as increasing risk to the sovereign.
  • New Zealand’s vulnerability to external shocks, stemming from its open and relatively undiversified economy, also raises risks to the country’s economic recovery and credit quality.”

The S&P Report’s rationale makes the drivers even clearer:

  • widening external imbalances
  • weakened fiscal position
  • under-diversified economy
  • high external liabilities
  • a return to high current account deficits averaging 5.9% of GDP over the next three years.
  • and crucially, that “net external liabilities … predominantly reflect dependance by households on foreign capital to fund consumption and property investments”

In other words: New Zealand does not save enough, it has too much private debt, and that debt was used to fund the wrong things (property speculation not real business investment).  New Zealand’s exports are under-diversified and New Zealand will continue structural bleeding on our external accounts after the immediate recession.

The logical repsonse to these problems should be;

  • strong action to close the savings deficit (if possible by building good household saving behaviour)
  • diversify and increase exports (presumably moving beyond a narrow range of bulk commodities)
  • managing the fiscal position to encourage sustainable growth, employment and healthy tax revenues without blowing the fiscal deficit.
  • ensuring monetary policy supports the direction of reform rather than acting against it.

It obviously should NOT include:

  • borrowing more for tax cuts to upper income earners that neither create powerful stimulus nor correct the underlying imbalances
  • reinforcing exisitng bulk commodity exports while reducing investment in innovation and R&D to divesify and add value to the export base
  • cutting back Kiwisaver; cancelling prefunding for the NZ Super Fund; and taking two years to set up a Savings Working Group (and even then proscribing a range of strong policy options)
  • pretending monetary settings are ideal when exporters face extreme currency volatility

Bill English and John Key declared S&P lifting their previous negative outlook as a” verdict’ on Budget 2009.

They should be straight-up enough to accept that S&P has now reversed its verdict.

After 18 months of National Government policies National can have only itself to blame.

In part II of this post we’ll check whther their rhetoric matches this reality.


Currency intervention: Two clips

Posted by on November 11th, 2010

As the Kiwi dollar rises past 80c US and  70c TWI to unsustainable levels, the debate about currency intervention will become white hot.  Our manufacturing exporters are being killed out there.   Here is John Walley (MEA CEO) from TV1 Breakfast this morning.

Labour is calling for the Govt to get off its butt and use its armies of bureaucrats to get thinking about options.  It is not OK to cry “TINA” – ‘there is no alternative’.  There has to be, or manufacturing is finished in New Zealand and farmers are in for a rude shock when the commodity price spike ends.  

In this interview on TV1 Business (at the bleary hour of 6.10 this morning!) I advocate for tactical currency intervention by the Reserve Bank to knock the top off the spike, and monetary reform to help chart a manageable adjustment path.  That must be done alongside a clear stratagy for domestic industry adjustment – investment in the jobs of tomorrow and transitional assistance for displaced workers.   I wouldn’t usually post one of my own clips, but as no-one watched it and at that hour and as TV1 called it a stinging attack, RA viewers might find it interesting…


Systemic Market Failure?

Posted by on September 22nd, 2010

When this country is in recession and Kiwi families are doing it bloody tough, I cannot bear to stand by and see rich and powerful private interests – whom I will not name at this point and this post is not about SCF – rorting the rules and using their clubs and networks to finesse processes.

It makes Godzone look like “the coldest banana republic in the world”.

For goodness sake interests associated with the Natural Dairy Crafar farms bid (potentially with Nat links) reportedly gave $200,000 to the National Party while the Natural Dairy application was still before the OIO and while National has a ministerial policy review underway. 

National should IMMEDIATELY reject that bid – otherwise what is left to separate this from complete corruption?  Brown envelopes?  Is David Garrett really the only sick or crooked puppy on the Govt benches? 

Was it OK for the OIO-overseeing Minister of Finance to lease his (trust’s) house to the govt for a staggering ministerial rent, or accept hours of free TV for his “Plain English” ads?  Isn’t it time we Kiwis stood up and demanded that the tories do sweat the small stuff like the rest of us?  Isn’t it time John key held SOMEONE to account for SOMETHING rather than smile, wave and make excuses?

The Fendalton and Queen St methods are different from the Crafar one but they are even more dangerous and subversive: very polite circles of influence in the clubs and boardrooms - with massive flows of funds through anonymous trusts that violate the intent of the Electoral Finance Act.  Prestigious law firms and lobbyists.  This is up with the worst sort of influence peddling  I saw in Washington D.C. -  One dollar one vote:  permanent plutocracy unless we fight back.

Beyond political donations, look at the ability of the rich and powerful to get their way while the poor and middle struggle: $2 billion a year of tax avoidance through LAQCs and trusts that National in government has refused to touch.  Half the top 100 welathiest NZers are still not on the top tax rate!

This post is not about SCF, but researching that issue has opened my eyes to the complexity of the company and accounting structures in daily use around the markets.   One prominent international investment broker told me he tells his clients never to invest in NZ other than through an ASIC-regulated (Australian) vehicle, because our market is a wild west.

Well what is the point of getting our savings rate up (and asking hard working families to go without consumtion) if the investment vehicles we need to get the money to our struggling firms are being milked and siphoned by fees and sweet deals to the cronies in the markets?  Why would any sane Kiwi sweat 80 hours a week to build a real business here?  Where will our kids choose to live?

We are talking the need for a full scale root and branch reform.  For example, is the Trustee model not a fiction?  Issuers want tame trustees; trustees want clients.  How do you prevent a race to the bottom?  I will wager now the FMA Bill will not do the job.  We have BIG problems here folks. 

It might have been cool to point the finger at Labour when the champers was flowing during the bubble hype days; but corporate influence peddling is about as attractive as a bucket of sick in the middle of a recession.

There is a real risk of systemic market failure in the NZ financial markets.     They remind me of telecommunications markets in the 1990s – time for a big cleanup.

It is not right and not fair on the silent majority who play by the rules and who are getting absolutely screwed. 

It will only get worse until we have a Govt with the guts to stand up to it.   The smiling millionaire from Bankers Trust is hardly likely to do that!


SCF: What Kiwis Think

Posted by on September 15th, 2010

Kiwis are asking a lot of serious questions about about the SCF debacle. 

Down South, Cantabrians think their favourite financier was royally shafted by an at best uncaring or incompetent, and at worst cunniving and self-interested Government.

Elsewhere around Godzone, Kiwis are gobsmacked by the scale of the mess, how it could have been left to fester for so long, and the huge bill that they have been left to pick up.  

All are left wondering how come “moral hazard” means hard up uninsured home owners cannot be covered, but senior debt holders in SCF can be paid out millions of interest, fees and profits.  They want to know just who gained and who lost, how and how much.

For goodness sake the Government even widened the payout retrospectively to include non-residents and non-citizens!  Kiwis want to know for whom, and at what cost, and why?

Make no mistake, this is the biggest bailout in NZ corporate history.  It dwarfs, for example, Treaty settlements that were agonized over for years.

Others have contacted me to ask how come Hubbard was treated (they perceive) more harshly than other finance company heads that appear more self-interested.

Kiwis are fair minded.  They want to know this kind of catastrophe can never happen again.  They want reassurance their hard earned taxes have not been wasted through either incompetence or competing agendas. 

As they are now paying the bill, they are entitled to real answers.


Kiwibank CEO resigns

Posted by on May 26th, 2010

Bill English has got more explaining to do now than when John Key rang to tear strips off him after his gaffe on selling KiwiBank last Friday.

English was clearly guilty of saying what he really thought when there were no cameras in the room (sounds like an earlier National Party conference remark.)  Unfortunately there were print journos taking notes.  Ooops.

This morning Kiwbank’s highly regarded CEO Sam knowles announced his resignation.

We do not know why yet.

It may be coincidence that just days after the MOF says he wants to flog off the Bank, which has grown amazingly well within NZ Post Group and is now a significant competitive force in the market, its excellent CEO resigns.

It may be coincidence that John Key was apparently furious with English after Friday’s loose lips blew a hole in the Govt’s post budget spin, and spent much of the last two days in damage control.   The issue has reportedly widened the gap between the Beehive’s 9th (PM) and 7th (MOF) floors.

This is a gathering storm.

The economics of retaining KiwiBank in public hands are overwhelming.

The issue demonstrates with crystal clarity that the Govt has not got a strategic clue about our long term financial future.  We MUST have a stake in our financial system.  It is only some 7% of the market but it is crucial to assist the competitive dynamics and local capital formation.

Just how much pressure was put on Key, by whom?  On English in the last week?  On Knowles?  Over what period?

One thing is clear – the Govt has enraged 700,000 plus loyal cutomers of KiwiBank who CHOSE to belong.  My email is running white hot.

The Govt now has serious governance questions to deal with amidst the resignation of a stellar CEO.

Watch this space.


English – Assets for sale next term – Kiwibank first on block

Posted by on May 22nd, 2010

Well, at least its out there now – http://tinyurl.com/2c3b273 - Bill English has signalled that assets will be sold if the Nats win another term. First on the block – Kiwibank. 

At Labour’s banking inquiry earlier this year, an analyst said that the introduction of Kiwibank had saved New Zealanders about a $1,000,000,000 in interest payments due to competitive pressure it had bought to the market.

Selling Kiwibank (and other assets) would be a disaster for the country – and is certainly something Labour would never ever contemplate. 

The true Nat agenda (as if we didn’t know) is at least not so secret anymore…


American Banksters

Posted by on April 26th, 2010

were_coming_0 With the current scandal surrounding Goldman Sachs and  a push for tough financial reform currently winding its way through the US Congress, there’s a lot more to come on the mess created by the financial sector in the recession.

Americans haven’t forgotten the fallout from the impact of Wall Street greed. The numbers are eye-watering. The financial sector took $4.7 trillion in taxpayer dollars over the past year, and the bank-driven economic crisis cost American families $11 trillion in wealth – nearly 18% of their net worth.

The crisis isn’t over, but banks are already back to their old ways – setting aside $74.4 billion for bonuses in the first half of 2009 alone.

They continue to hit their costumers with huge fees. Americans paid more than $38 billion in overdraft fees alone in 2009 (that’s $125 for every man, woman, and child in the US).

And big banks are again breaking their own new rules on executive pay, offering “forgiveable loans” to bankers who need a little extra cash.

So, this coming week a coalition of major community organisations, unions, and religious groups are launching a campaign to challenge the economic and political influence of these mega-banks, beginning with a series of protests in San Francisco, Kansas City, Charlotte, Chicago, New York, and Washington, D.C.

The coalition’s short-term goal is to push Congress to enact strong consumer protection regulations on the financial industry. Their intermediate goal is to pressure banks to stop the epidemic of foreclosures and renegotiate mortgages so owners can keep their homes. Their long-term goal is to limit the banking industry’s political clout and its economic influence.

Coalition members believe banking should be reorganised so it invests in good jobs, affordable housing, and environmentally-friendly businesses.  Can’t help but agree.

There’s a raft of resources and information on the web about the “Wall Street vs Main Street” battle still being waged in the USA.   I like this site in particular.


Does Keynes have any influence on the Government?

Posted by on January 15th, 2010

That’s a question thrown to me recently at a cottage meeting in Auckland. Some said yes. Some said no, citing its cuts-everywhere-but-not-tax Budget in May. I don’t know. Nor did I understand the question fully.

John Maynard Keynes, as described in Wikipedia, was a British economist whose ideas have been a central influence on modern macroeconomics, both in theory and practice. He advocated that government intervention through fiscal and monetary measures is warranted to ensure economic growth and stability.

It is good to learn that our Reserve Bank is tightening its rules on the issue of core funding ratio (CFR) and encouraging our banks to compete much harder for term deposits.

In recent years, New Zealand banks have had an unusually high proportion of offshore debt maturing within one year. The failure of Lehman Brothers in September 2008 and similar stories of the troubled British bank Northern Rock highlighted the intrinsic problems, such as the vulnerability of any banking system in that situation to a severe global liquidity shock.

As Bernard Hickey noted in the NZ Herald  http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10618147 that if financial markets froze, ”our banks would not be able to roll over their debt.”

The Reserve Bank has therefore set the 75% minimum CFR as “a challenging but achievable” target for our banks, to ensure a higher proportion of stable funding and a reduced reliance on short-term offshore funding.

(more…)


UK version of Kiwibank proposed

Posted by on December 2nd, 2009

The UK government has announced plans to turn the post office into a people’s bank. What a damn good idea! I bet Don Brash wouldn’t think so.


PEC formula for economic growth

Posted by on October 19th, 2009

Selwyn Pellett has a list that is worth debating:

  • Stop giving PAYE deductions to property speculators (ring fence losses as Australia does)
  • Bring in Capital Gains Tax (CGT) on everything other than the family home (as Australia does)
  • At introduction of CGT exempt all current investment so that CGT is not retrospective (as Australia did)
  • Capital Gains Tax only applies on the difference between inflation and the realised value (as Australia does)
  • Progressively introduce compulsory superannuation (as Australia did)
  • Increased contributions in times of pending inflation and reduced contributions during recessionary periods (as Singapore does)
  • Adopt a managed dollar as part of our monetary policy, against a basket of our trading partners that ensures both price stability as well as protecting our tradable economy (as Singapore does)
  • Recapitalise Kiwi Bank to take market share and hard wire its behaviour to the needs of the RBNZ thus reducing the negative impacts of the big four Australian Banks on our economy
  • When we have addressed the current distortions then we should consider promoting ‘winning behaviours’ through the tax system (as Australia does)

English docs the A-G will consider I – pay the money here.

Posted by on September 27th, 2009

I intend to provide links to a series of the English housing documents. On their own the don’t amount to knock out victories but they sure build a picture. The first  shows that the trust was not arms length from English in that he was instructing Ministerial Services on mattters as detailed as to which account to pay money. More tomorrow.


Banking Inquiry progress

Posted by on September 4th, 2009

Oral hearings concluded at the multi-party Banking Inquiry yesterday after a range of worthwhile submissions from organisations and individuals. Submissions presented orally included KiwiBank, Federated Farmers, Finsec, the Productive Economic Council and others on Wednesday, and the Manufacturers and Exporters Association, Council of Trade Unions, the Family Centre of Anglican Social Services and the Mangere Budgeting and Family Support Services on Thursday, along with some submissions from members of the public.

The Inquiry certainly gathered momentum. There were 48 submissions received or expected, 15 oral presentations to the Inquiry and around 40 press articles, TV clips and a wide range of radio coverage.

Judging by the emails coming in we have succeeded in our short term goal of presenting the Inquiry as a serious and balanced effort to get to the heart of a complex set of issues on behalf of ordinary Kiwis who are being disadvantaged.

While some media at first questioned the non-Select Committee process, none have been able to dispute the range or substantive nature of the submissions received. Between these submissions, Members’ questions and the work of our excellent research team we have the basis for an excellent report to come.

Most submissions will be posted on the website and you can read yesterday’s press release and a brief summary of key oral submissions here.

Research by the Inquiry team is ongoing and a final report is expected to be available in late October.

Stop press: ASB Bank has just announced a cut to its short term varial interest rate which is of course purely coincidental.


Banking Inquiry preparation gathers pace

Posted by on August 24th, 2009

You’ll be seeing a bit more of the Banking Inquiry over the next few weeks.

Check out www.bankinquiry.org.nz for some new material you might find interesting: Jim, Russel and I explaining the whys and wherefores, an FAQ page and a page with logistical details. Ads will be running this week as a reminder call for submissions, which close on 31 August.

It’s certainly not too late to have your say, either directly via the website, or by writing to us at: The Parliamentary Banking Inquiry, Room 3.046, Parliament House, Wellington (freepost).

Look forward to hearing from you.

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Filed under: bank, finance

Banking inquiry progressing

Posted by on August 24th, 2009

The Banking Inquiry kicks off in the first week of September, and we recently announced a top line up of experts to assist it.

  • Prof John Quiggin is a distinguished Professor of economics, twice awarded the prestigious Australian Research Council Fellowship, and is a high profile commentator on banking issues in Australia
  • Prof Tim Hazledine is Head of the Department of Economics, University of Auckland, a senior economist with strong experience in competition economics
  • Mr David Preston is an economist, who has formerly served at the New Zealand Treasury and the International Monetary Fund and is now an independent consultant to government and international organisations around the Pacific region

More detail is regularly being added to the Inquiry website www.bankinquiry.org.nz. You can download a background paper, FAQs or make a submission online.

National may not want the truth to be told in public. Our goal is to get all the facts on the table in a responsible manner, with top experts analysing a congent report.