Archive for the ‘Consumer Affairs’ Category
Today in Onehunga a community coalition to Stop Loan Sharks was launched. Throughout last year I committed to continuing this campaign no matter what happened to the ‘Credit Reform (Responsible Lending)’ Bill I had picked up from Charles Chauvel. Since the defeat of the Bill at the hands of National and ACT I have been constantly asked “why” and “what next”.
And of course the need for action has continued increasing – ever increasing prices, evidenced today by a huge increase in the CPI, and static or reducing incomes (often starting from an inadequate base!) are a recipe for disaster for many New Zealanders. New Zealanders who struggle to make ends meet, New Zealanders who need food parcels and increasing numbers of New Zealanders who end up taking out loans at excessive interest rates that they cannot realistically pay back.
Today I was joined by my colleagues Charles Chauvel, Carmel Sepuloni and Green MP David Clendon all of whom along with the rest of our fellow party members will continue to campaign on this issue within Parliament. Carmel and I will both be putting Members Bills in the ballot. Both will deal with the need for responsible lending practices and both of which (in different ways) seek to limit excessive interest rates.
We were joined by groups and individuals committed to dealing with the fringe lending sector. They included Church organisations, budgeting organisations, unions, lawyers, anti-poverty groups and credit unions. In addition to me the speakers included the Salvation Army, the NZ Federation of Family Budgeting Services, FINSEC, Charles Chauvel and the Mangere Budgeting Service. We were also addressed by a fine young man who last year, not far from where we were today, went ‘undercover’ seeking to obtain loans from a number of loan companies. He pointed out how easy it was to get money and how no real checks were undertaken. One of the interest rates he did manage to get disclosed was 24% per month.
In the course of the launch we heard of the massive increase in food parcels being supplied by organisations like the Salvation Army, the massive increase in workloads of our budgeting services and the increasing level of indebtedness of those seeking help at budgeting services. The case studies we heard included a pensioner with six loans with interest rates varying between 25% and 49% and a Samoan family of five with multiple loans with interest rates between 19% and 82%. We heard of the reality of many families (both on benefits and in work) where paying food and rent comes after the payment of high interest loans. The impact on children was stressed and how the consequences can be with them for the rest of their lives.
The Government’s response is seen as not only inadequate but also irresponsible. The delay in the review of Consumer Credit is impossible to fathom. The delay was a deliberate decision of the Government. The Ministry of Consumer Affairs website states that submissions which closed in August 2009 are still being scrutinised! It should be noted that while there are positive suggestions from that review which are languishing this doesn’t include proposals to deal with excessive interest rates.
The Community Coalition to Stop Loan Sharks will seek in this election year to keep the issues centre stage and to put pressure on all parties to identify solutions. Solutions that other countries have been far more proactive in seeking than New Zealand.
In the end this issue is about people, often people who have children, people who are poor and who are vulnerable. How we react to this issue is a measure of our sense of decency and fairness. I am absolutely clear that most New Zealanders find loan shark behaviour abhorrent and that they want the Government to take action.
As readers know Ive followed iPredict since before it launched. Interesting concept which needs a bit more development yet.
Over the last few weeks I’ve noticed some strange reactions to price changes on selected stocks and decided last night to test it out a bit.
What I’d noticed when I’d been buying stocks – especially on a Labour win in Auckland Central which on current polling is very close and certainly worth more than the 25 – 30% iPredict has been offering them at – that there appeared to be a computer generated reaction which automatically offered them for sale at a price one to two cents cheaper than the last sale.
So what is happening is that someone is deliberately selling them at less than what people are prepared to pay.
And that’s what happened twice last night.
But what was even more interesting was that I was able to marginally move one traders returns and net worth by purchasing the stocks.
You guessed it – DPF.
So what does this mean?
1. Despite portraying himself as the ultimate insider, he has very little idea about politics, and never has a good hunch.
2. He doesn’t know what to do with the intel he has.
3. He is not currently trying to make money but to move the market, on his on behalf or as an agent for his employers (National Party rather than taxpayer who fund most of his income) to support certain political perceptions.
4. All of the above.
I have learnt today that the Food Safety Authority in collaboration with the meat Industry are about to conduct a trial on a new system of meat inspection at freezing works without the assistance of Meat Inspectors.
It is an interesting contradiction and my fear is that industry self regulation is the object of the exercise. Such ideals have proven all too often to be disastrous from international experience. At a time when the meat industry is under extreme pressure at every level from farmer to marketplace the risk is that inadequate inspection leading to any form of contaminated export meat would cripple our meat exports and reputation as a quality food producing nation.
Apparently no details have been made available to the meat inspectors so the assumption is that chain workers will carry out assessment of the health of the carcasses and the Vets will sign off the consignments for export. If you presume no skill is necessary to be a meat inspector we might be ok. But as I know to get the inspections spot on takes training, skill and experience. One mistake identified by our trading buyers and we are doomed.
The question is, does the risk justify the cost savings if any over time?? It is also ironic that in Select Committee today the Food Safety Authority was trying to convince us of the importance of robust systems for food safety under the new Food Bill.
There will be a few hard Questions for them at the next meeting !!!
The Hon John Boscawen is taking his first piece of legislation through the House. It’s the Committee stage and third reading of the MotorVehicle Sales Amendment Bill, being considered under urgency.
The last stage of this Bill was under urgency too. Hmmm A couple of months ago. Very urgent!
I used that last speech to muse about the importance of making a car purchase. In particular my first car. He was a 1948 Morris 10, named Maurice and cost $125. it sparked a flurry of reminisecences from MPs and other commenters on their first cars.
We await with interest hearing what John Boscawen’s first car was.
Today in the House, I questioned the new Minister of Consumer Affairs on his past record.
A quirk of Parliamentary procedure is that during Question Time, a Minister is not response for comments that they have made as an MP.
In the case of Mr Boscawen, his comments as a ACT MP run countercurrent to the position of his new colleagues in cabinet.
I guess that Minister Boscawen and Mr Boscawen should meet some time and figure out who is ‘right’ on the costs of climate change.
“Kicking the Tyres” is the John Key/Steven Joyce/Crosby Textor phrase du jour. Anything the government is doing from mining to MMP to asset sales to student loans gets the ‘tyre kicking’ into action.
Its funny when I was growing up a ‘tyre kicker’ was someone who had no idea about a car or how it worked, so they kicked the tyres in a pointless and desperate attempt to look like they knew what they were doing. Sounds about right. Of course for the Nats its about making sure that they dont do anything to risk a scrap of popularity or offend anyone.
But I have also noticed a related tactic- feigned empathy. This is where you show concern for someone’s plight or give them an encouraging word, and then do precisely nothing to help them. This might sound harsh, and I am sure National MPs have genuine concern, but if you are not prepared to do anything concrete, then for me it amounts to feigned empathy.
Last night we saw this at its worst with the response to Carol Beaumont’s Bill to curb loan sharks. Speaker after speaker from the Nats got up and told us how much they felt for people who fell victim to out of control debt, but they were not prepared to actually do something about it, by voting the Bill through to Select Committee. No real reasons were given (they are reviewing the law so we should all wait and see seemed to be the main argument). It was shameful politicing to stop Carol and Labour being seen to ‘win” something. Privately a number of National MPs are embarrased by the approach.
When it comes to the economy , if we combine John Key being “relaxed” about everything with ‘Kicking the Tyres’ it means the country has no economic plan, no step change, no “aspiration”. Is tyre kicking the extent of John Key’s “ambition for New Zealand.”? It has gone on long enough. Its time for the government to stop kicking the tyres and actually put some petrol in the car.
Last week Internal Affairs Minister Nathan Guy announced a tightly focused review of the Films, Videos, and Publications Classification Act 1993 to reduce the cost burden on industry. I think this makes a lot of sense. A few months ago I spoke to someone working in the industry and was surprised to learn how crazy and outdated some of the regulations in this area are.
For example, if you’re importing a bunch of DVDs, you have to manually place a classification label on them, even if the classification label has already been printed on the packaging. Removing this compliance cost could save film and video game importers up to $2.4 million a year.
It’s important to note that while the review will look at timeframes around classification, with many feeling it takes too long, the classifications themselves are not up for review. Overall, this review looks like a pretty sensible thing to do. I’m interested in any comments…
Years ago I more or less stopped judging competitions in the electorate. Mainly no win politically.
The three year old who throws a tantrum because her sand saucer didn’t win, how much looking is necessary/appropriate with the young women in the beauty contest and the increased blood pressure that made me look like a ginga when one winked at me, or the eleven mothers who know that their baby is better looking than the one I chose.
But I relented for today and agreed to judge a tiramisu challenge. Prepared by riding bike and meeting constituents.
And what a contrast. One pretty much classic. Beautiful, classy and lots of it.
The other an unsubtle attempt to intoxicate. Variety of liquor and very strong expresso.
Went for the second and offered to judge again next year.
Sure beats cheese rolls.
Just over two months ago I launched my campaign to stop loan sharks. In one weeks’ time, Wednesday 26 May, the First Reading of the Bill that is part of this campaign – The Credit Reforms (Responsible Lending) – will take place. Currently I believe I have support from five parties. Unfortunately this will not be sufficient. I need your help to urge National to vote for the Bill to go to Select Committee.
Here’s why I think you should support the Bill and work to get National to support it.
The Bill is a genuine effort to deal with aspects of a truly harmful industry, an industry that causes damage to many low income families who struggle to make ends meet. Extremely high interest rates, some in three or four figure percentages, and irresponsible lending put families at risk. At risk of a never ending cycle of high interest borrowing and much needed money going to lenders rather than on things that families actually need. The tales of human tragedy I have heard over the last two months are truly terrible. We need to do something.
I have spoken to hundreds of people including many from the agencies that deal with the people who are in terrible financial trouble because of loan sharks. Every Budgeting Service I have met with tells me the majority of people they see are hooked into high interest rate loans. One in Mangere told me that everyone they see is in this position. No-one denies the problem and everyone I have spoken to wants something done.
There is an opportunity here for Parliament to show leadership, for all parties to support this Bill to a Select Committee so it can be properly scrutinised, so that the public can make submissions and share their experiences and so that we can look at what is being done in other countries. Interest rate caps for example are widespread internationally but you would not know this if you listened to the Minister of Consumer Affairs or indeed some National MPs who assert that interest rate caps won’t work. Some are saying the Government is already working in the area of consumer credit. There is some truth in that statement as there is a Review of the Credit Contracts and Consumer Finance Act which is proceeding at a glacial pace (sadly) There were some very good suggestions made in the Discussion Paper and in the 59 responses to it. Suggestions in the area of disclosure of loan terms and security for loans are a couple of examples. I have said to the responsible Minister, Heather Roy, that the review is weakest in the area of ‘fringe lending’ and that my Bill alongside any proposals the Government may (finally) make could be considered together at a Select Committee. Many people have made specific suggestions to me that would really add to the possible range of ways we can address this problem.
And then of course there is at least one National MP who is saying my Bill doesn’t go far enough without concrete suggestions for anything else. I have been explicit that the Bill is not the whole answer. How can it be when there are a range of issues that surround the loan shark industry eg inadequate income levels, difficulties for some in accessing credit on a fair basis, poor enforcement of current protections and of course shocking financial literacy and understanding of consumer rights. There are a range of additional things that could and should be done. I would welcome any suggestions for strengthening my Bill or dealing with related issues.
None of these excuses that I am hearing that some National MPs are trotting out are reasons to vote against my Bill. In the community people are asking me questions like – how could National vote against sending this to a Select Committee? Will they do so just because you are a Labour MP? Well let’s see next week but please try to encourage National to do the right thing, I am certainly continuing to do so.
The more I have heard in the last two months the more passionately I feel that we must regulate this industry as well as continuing to seek solutions to the wider set of issues surrounding it. I committed at the launch of the campaign that irrespective of the outcome of the vote on the Credit Reforms (Responsible Lending) this campaign will continue. The support for the campaign is wide ranging from Churches, Community Law Centres, Budgeting Services, Pacifica and Maori organisations, Unions, Citizens Advice Bureaus, student groups, Women’s organisations, Local government politicians, lawyers and decent concerned citizens including some National Party voters and people who have personally been hurt by this industry. My resolve on this matter has only strengthened over the last two months. If you want to help you can act now and join in with the ongoing campaign. If you want more information go to www.stoploansharks.co.nz
Food prices have been topical this week.
On Tuesday I raised the issue of rising food prices during question time. When the Minister of Consumer Affairs, Heather Roy was previously asked about how Kiwi families could combat rising food prices, her advice was to “shop around”. The Finance Minister, Bill English confirmed her advice but failed to address the real point of my question which is that Kiwi families can’t shop around increases in GST which will further increase food prices.
The next day there was an interesting article in the Herald about the relationship between a food supplier and one of the two major supermarket chains in New Zealand. Irrespective of the particular case covered in the article there were some interesting questions of more general application:
- Given the dominance of the two supermarket chains and the pressure they can exert how can food suppliers obtain a fair return?
- If prices paid to supplier are ‘screwed down’ who benefits – are prices reduced for consumers or are the profits of the supermarket chains increased?
- To what degree is there anti competitive behaviour in our supermarket industry? It was interesting to see the reference to legal advice about cartel behaviour being sought by the the National Distribution Union
I will be following both Mr Rai’s complaint to the Commerce Commission and any actions by the NDU with interest. Consumers are very reliant on supermarket companies for something that is fundamental – food. We need to have scrutiny on whether these powerful companies and their behaviour to consumers and suppliers.
And then there is the question of how those who work in the food industry are treated.
Gerry Brownlee has decided not to specify a standard for smart meters, denying householders the opportunity to get a little more control over the cost of their electricity. The technology on offer is quite exciting, and it’s a real shame the new meters electricity companies are fitting won’t make use of it. The meters being installed don’t have a HAN (home area network) chip, so they won’t be able to communicate with other in-home appliances to allow consumers to take advantage of using power when electricity is cheaper.
Brownlee’s decision is good news for the electricity companies, who now have ministerial backing in their quest to deny households the opportunity to save money on their power bills. It’s a shame he didn’t listen to the advice of the Parliamentary Commissioner for the Environment, who recommended last year that he specify a standard, as many overseas jurisdictions have done. Brownlee is defending his decision by saying that the ripple control system for hot water heaters is an adequate substitute. As my colleague Charles Chauvel has stated “In technology terms, that’s a bit like saying you don’t want an iPod because you still have a perfectly good collection of 78s”.
However, he has got one thing right in that he has agreed to regulate some of the basic data exchange protocols. That will ensure that consumers will be able to make use of new meter technology even if they switch retailers. As an example, I’m currently with Meridian but my meter was installed by Genesis. Meridian read my meter every 2nd month, but if I was with Genesis they would do an electronic reading monthly so I’d never need to worry about ‘estimate’ readings. Hopefully the new rules will ensure that Meridian will be able to use the meters electronic capability, even though they didn’t install it themselves.
It’s a real shame Gerry Brownlee hasn’t used his 3 and a half months deliberating on the issue (the Electricity Commission presented their recommendations to him in early December) to make a more gutsy call. As usual he’s sticking with his head in the sand, stacking up more problems that will have to be dealt with in the future rather than showing leadership today. In the meantime consumers miss out on an opportunity to save money on their power bills. So much for National being the party of choice…
Yesterday at Mangere I launched my Stop Loan Sharks campaign. Along with Sua William Sio, Len Brown Mayor of Manukau (and prospective Mayor of Auckland), Darryl Evans Mangere Budgeting and Family Support Services and Andrew Shann a long time campaigner against loan sharks (not pictured) I described elements of this exploitative practice and possible solutions.
I have been impressed by the level of support and interest in the lead up to the launch and in the 24 hours since. The issue is well understood to be a significant problem within low income, Maori and Pacific communities but even so people are shocked by the details.
One story I told yesterday was of a Tongan family who needed $3,200.00 to repair their car. This family has 5 children under the age of 13. Husband works as a Store man at an airport based company and the wife is a stay at home mother. His total take home pay is $598.00 per week. They took out a loan with a company in Otahuhu and put up their car (valued at $4,500 as well as two cultural mats which had been in their family for over 80 years. The loan was for $3,500.00, interest charged was 55%over 24 months, which meant they had to repay $1,925.00 in interest or in total: $5,425.00. They defaulted on the payment in the 3rd month when default payments were established. Some 9 months later this family have had the car repossessed by this company and they also had to pay for the towage and storage of the vehicle. At today’s date they owe just under $9,800.00 and the case is still not resolved. The family want their mats returned but the company refuse until such time the debt is paid off in full. They have no car and still owe almost $10,000.
This is not an isolated story. Hard economic times are good news for loan sharks. For many New Zealanders struggling to make ends meet loan sharks end up being their only alternative. There are a range of issues that make this the case – people struggling on completely inadequate incomes – low wages or benefits; people unable to get credit from mainstream banks; ease of credit from some providers coupled with low levels of financial literacy. Whatever the reason people end up paying obscene interest rates and in a far worse financial position than they started.
I want to acknowledge the work of community law centres, budgeting services and Citizens Advice Bureau who seek to help people struggling to make ends meet, unfortunately usually when they have become trapped in a spiralling cycle of debt. Their work is extroadinary especially when the real limits of their resourcing is considered.
The Stop Loan Sharks campaign aims to shine the light on this unacceptable situation and build support for action. I will be encouraging people to share their stories and putting the heat on the Government to do something concrete to end this exploitation. The campaign includes building support for my members bill the ‘Credit Reforms (Responsible Lending) Bill. Initially submitted by Charles Chauvel , who remains along with Andrew Shann a keen advocate for legal reform in this area, the Bill will have its First Reading at the end of April.
The Bill allows for maximum interest rates to be set; a power that doesn’t currently exist in New Zealand law. It also requires the lender to reasonably believe the borrower will be able to repay the loan and limits the ability of loan sharks to recover more than they initially lent in the event of a default. Finally, it allows registered pawnbrokers to charge administration fees, thereby removing the need for higher interest rates.
The capping of interest rates, despite what the Minister of Consumer Affairs says, is not radical or unusual – many countries have such provisions eg Australia, Japan and Canada for example. Barrack Obama is currently in the process of capping interest rates in the USA.
I believe this Bill should be supported by all parties to Select Committee to be thoroughly scrutinised and debated. It is a genuine attempt to deal with a real problem. I will be seeking the support of politicians across the House although Heather Roy has already rejected the Bill on ACT’s behalf.
Whatever happens to the Bill I intend to continue campaigning on this issue. Next week a website www.stoploansharks.co.nz goes live. It wll provide you with ideas and updates on how to help stop loan sharks.
How safe is the food we eat? I’ve related my Dad’s story of twigging 50 years ago to why his Canadian-resident mate’s sex drive had shrivelled; it was due to the estrogen being pumped into battery-raised chickens. Until last year, I would have thought that such practices were a thing of the distant past. But as a member of the Primary Production Committee, I got to ask some questions mid-year of the NZ Food Safety Authority.
Information provided to the committee told us that NZFSA was doing some studies about the use of antibiotics in factory-raised chickens. (Large amounts of antibiotics are required when chickens are stacked three and four a time into cages with an A4 size of space.) The NZFSA officials said that the studies they had done were not “conclusive” about whether the antibiotics used have any impact on human health. So what, I asked, where they doing to provide some assurance to us as New Zealanders who eat dozens of kgs of chicken per capita every year. The NZFSA’s anwer was that it was doing some more studies!
Forgive the pun, but isn’t this rather putting the egg before the chicken? Should we be eating chicken fed antibiotics if it is inconclusive that this will not do us any harm? I didn’t ask the question of NZFSA about whether estrogen is still fed to chickens here. Others might know?
I plan to follow it up, most especially since my good buddy Moana Mackey’s post about the guy in Louisiana who developed breasts and lost facial hair because he was eating chicken necks. The supposition is that because these include thyroid glands, this might be where estrogen is concentrated. I know from reading The Omnivore’s Dilemma that estrogen is fed to beef cattle in the US. This and the use of corn on feedlots has seen the average age of cattle at slaughter in the US reduce from perhaps 4 years a century ago to 14-16 months. Chickens, be they US or NZ, are raised in a matter of weeks. Yes, it does provide cheap food but it seems to me that animial welfare and human welfare are both short of what they deserve.
Recently I challenged the Minister of Consumer Affairs about her inadequate response to rising food prices facing hard working New Zealanders who are already struggling.
In the House a couple of weeks ago I rose to speak in support in a initiative by National backbencher Amy Adams with her Fair Trading (Soliciting on Behalf of Charities) Amendment Bill. This Bill is positive for our charitable sector and for those of us who donate to charities. It will provide for disclosure of the proportion of the money raised by professional third party collectors is retained by those organisations. The actions of some in retaining up to 70% of donations undermines confidence of the public in our charitable sector.
This Bill is consistent with good consumer rights principles like transparency and informed choice. It is good seeing someone looking at improving our consumer legislation. Sadly the Minister despite her ‘one door one law’ rhetoric doesn’t seem to be really thinking about the reality facing our consumers.
As Labour’s Consumer Affairs spokesperson I believe there are a number of areas requiring attention:
- Improving consumer knowledge and protection, especially given the consequences of bad decisions and ‘rip offs’ are more significant in tough economic times
- Recognising the needs of vulnerable consumers like the poor, those with low literacy, the elderly and the young; and improving services and information targeted to them including access to advocacy
- Targeting exploitation like loan sharks and truck shops who specifically and systematically target vulnerable consumers
- Updating consumer law to take account of changing relationships eg online selling
- Recognising greater consumer awareness and the desire from more consumers for ethical and environmentally sustainable products; and the associated use of consumer power
I will be campaigning around a number of these areas over the next few months starting with the targeting of loan sharks as a consequence of picking up the Credit Reforms (Responsible Lending) Bill previously in the name of Charles Chauvel. I will also continue to push the Minister for government action on behalf of consumers.
I love Christmas and the giving of gifts but I know that many will be getting further into debt at this time of the year. Some of that debt will be at extortionate rates. One example I have seen is an annualised rate of 416%. The people being caught up in these rip offs are the poorest New Zealanders. The same people being targeted by truck shops as recently revealed by the Manukau Budgeting and Family Support Services here.
These rips offs have huge negative effects on families. I want to acknowledge the work of our budgeting services and Citizens Advice Bureaux who with limited resources work tireless to provide information on rights and to pick up the pieces of people who are in dire circumstances. They do a fantastic job.
A harder line must be taken to stop loan sharks and others who seek to exploit those who are poor and vulnerable. I will be challenging the Government to take action.