John Minto: A simple question from a taxpayer

By John Minto
from Frontline

The Christchurch earthquake has (quite rightly) knocked several important issues from the front pages and off the TV news. Now that the worst appears to be over, it's time to revisit those issues - the most pressing of which is the biggest corporate bailout in New Zealand history.

There are many questions demanding answers after taxpayers forked out $1.7 billion to buy debt-laden South Canterbury Finance. For example, last week I was sent information suggesting one individual bought $17 million in SCF bonds at 20 per cent of their face value as the company, in its dying days, desperately tried to raise funds to stay afloat. It seems this money was invested in the names of various entities rather than in one person's name and because SCF went into receivership the government deposit guarantee scheme means this individual will be paid out at the full 100 per cent value of the bonds. A bit of arithmetic shows a payout at $85 million - or $68 million profit, courtesy of taxpayers, after just a few weeks.

My question to Finance Minister Bill English is simple. Is this just water cooler gossip or is it true?

John Minto: Key teaches class-quake lessons

By John Minto
from Frontline

It took three days but it was a welcome announcement from Prime Minister John Key that the government will meet some wage costs for Christchurch workers in small businesses (less than 20 employees) who are unable to work because of the earthquake.

Key's payment plan expects to help around 10,000 workers meaning an initial cost of $15 million. It sounds a lot but it's a piddle in the pool compared to the eye-popping sums we are likely to hear before the end of the week when the government announces its first comprehensive rebuilding plans.

The government will provide $350 a week for the next four weeks and John Key hopes employers will top up the pay to each worker's usual rate when they are unable to work. In general terms (and yes there will be exceptions) companies are more easily able to withstand the financial shock of four weeks without work than are families which struggle to make ends meet in our chronic low-pay economy.

John Minto: Back to the future for National

By John Minto
from Frontline

The changes to employment law outlined by Prime Minister John Key yesterday are the most significant attack on workers’ rights since National’s last big assault via the 1991 Employment Contracts Act.

From a softly-softly approach to industrial relations John Key has taken off the gloves to deliver a barrage of bare-knuckled blows against workers on the job and their rights to organise together.

John Minto: Cut pay for politicians

by John Minto
Frontline on Stuff


“Top politicians should take a pay cut” says the headline for an article reporting on a Massey University survey which probed New Zealanders attitudes to social inequity – and it’s hard to disagree.

The research team headed by Professor Phil Gendall found that half the people surveyed thought Cabinet ministers were paid around $175,000 a year but deserved around $135,000. Those in households earning under $40,000 thought they earned $160,000 but deserved $100,000 while those in households earning over $100,000 or more thought ministers earned $170,000 but deserved $150,000.

In fact our Cabinet ministers are paid $245,000 base salary with plenty of freebies on top. This puts them earning over $100,000 more than people across a broad income range believe they are worth.

John Minto:Drop GST – we need a financial transactions tax

By John Minto Stuff / Frontline It’s time to drop our goods and services tax and adopt a financial transactions tax. This was not an option proposed by the 13 comfortable men on the Government’s Tax Advisory Group but it’s an idea whose time has come. We all know GST disproportionately hurts those on low and middle incomes who work hard, live week to week and spend most of their income. An FTT, on the other hand, would impact most heavily on the likes of currency speculators and similar financial wheelers and dealers who gamble with wealth created by others. It’s an idea which is growing in popularity among developed countries in the northern hemisphere, with British Prime Minister Gordon Brown leading the charge. He hopes to progress the idea at the coming G20 meeting and a grassroots movement has begun to take shape to push the idea. The driving force in Europe has been the financial crisis whereby taxpayers spent thousands of billions bailing out their financial sectors. It’s not surprising that punishing corporate greed has been one driver popularising FTT in the north and there’s no reason New Zealand should be left behind. Some form of FTT already has support from the Alliance, the Maori Party and the Greens as well as support from some exporters. Two weeks ago the managing director of Sanford, Eric Barratt, told the company’s AGM the Government should start taxing those who speculate in New Zealand currency. He put it bluntly: “It is high time New Zealand as a country started earning some income from these currency traders that costs shareholders in Sanford and other trading companies many millions of dollars each year. “A tax on non-trade-related currency transactions could not only earn significant income for the Government it could also result in our exchange rate moving closer to its realistic value and thereby add significant value to the wealth of New Zealanders.” Barratt’s idea of a tax on currency transactions (without penalising trade in goods) is usually referred to as a Tobin tax. The Alliance, on the other hand, supports a broader financial transactions tax which would be simpler to administer and which would tax all financial transactions at a very low rate. In a media release last week Alliance Party spokesperson Victor Billot says the party supports such a tax on all withdrawals or purchases at a rate of just two cents per $100. He rightly says this would have no impact on ordinary people (2c or 3c on the grocery bill) but would raise large sums from financial transactions such as those associated with speculation on our dollar. It’s important to realise our dollar is consistently among the 10 most traded currencies in the world and each year it is swapped at volumes which dwarf our annual GDP. (Prime Minister John Key made his millions speculating against the value of currencies such as our dollar - I’m waiting for a reporter to ask him where he thinks his millions actually originated!) Exporters would benefit because speculative trade keeps the value of our dollar artificially high, which means less income from what we sell overseas. An FTT would lower the value of the dollar, increase returns from exports and increase the price of imports. Each of these brings value to our economy. There are those who say FTT will not be really effective unless it is applied internationally but such objections are red herrings from vested interests. FTT is not a panacea but its benefits would include: reducing the artificially high value of our dollar; helping exporters and local producers; taxing the parasitic activity of the unproductive financial sector as well as enabling a dramatic reduction in the iniquitous GST. FTT is a tax whose time has come.

Like hell it's a kiwi bank

by John Minto
from stuff.co.nz
12 November 2009

The other night when I went out to get an ice-cream at a local dairy I was gobsmacked to be confronted with a wall of huge yellow advertising posters with heavy black lettering – “We’ve been a KIWI BANK since 1847” with the ASB logo at the bottom. What a brazen lie – like hell it’s a kiwi bank.

Back in the 1980s when it was a respected trustee bank, owned by its New Zealand account holders and serving their interests, it could legitimately make the claim. But in 1989 it was privatised and like our other big three banks – ANZ National, BNZ and Westpac – it’s owned by Australians.

And with the shift to private shareholder ownership the ASB’s first priority has changed to delivering dividends to its shareholders rather than service to its customers. No wonder the big four banks score so lowly in customer satisfaction surveys. The only thing keeping them going is the huge hassle and extra expense involved in changing banks. Without customer inertia these banks would be run out of town.

It’s no surprise to find yesterda'ys release of the multi-party Parliamentary Banking Inquiry’s report confirms the big banks did not pass on the full effect of reductions in the Official Cash Rate to New Zealanders in recent times. More billions into the banker’s coffers.

They have all been guilty of various customer and taxpayer rorts and have acted more like a cartel than competing businesses.

It’s not just the exorbitant fees and unjustified charges for all sorts of normal customer services but they have actively targeted their customers to go further into debt and have put a lot of pressure on bank employees to sell more debt to indebted customers.

They openly mocked Finance Minister Michael Cullen’s attempts to reduce lending for investment properties and will continue to undermine any government initiative which gets in the way of increasing their profits.

In most years these banks have taken $2 billion in profit across the ditch and we wonder why our current account deficit is so high.

And then there are the tax evasion cases where the High Court has found the banks guilty of screwing taxpayers through structured financial transactions which have been described as a sham to avoid tax.

The ASB owes us $280 million while the others (Westpac $961 million, ANZ National $562 million, BNZ $661 million) are even worse. It’s an appalling abuse - together these banks owe $500 in unpaid tax for every person living in New Zealand.

With such well-deserved bad publicity the banks are going on a charm offensive. As well as the ASB bank’s attempt to resurrect a nostalgic kiwi connection from its arrogant abuse of customers and taxpayers, the misnamed BNZ announced last week it was “Closed – for good” If only.

Most of the bank staff were out doing work in the community for a day to show what a good corporate citizen the bank is. The BNZ PR machine was working well because our local suburban newspaper (and I’m sure this was repeated throughout the country) had a story showing bank staff working hard clearing land for a garden for the families of cancer sufferers here in Auckland.

“Banks just genuinely believe that we need to be part of the community” said BNZ head of external communications Diana Maxwell.

She says the BNZ accepts there has been a loss of customer trust in the big banks “and we need to work hard to rebuild that trust”. They could start by paying back the $661 million they owe and apologising for their bad behaviour.

The latest charm offensive is just company spin. Former BNZ boss and now chief executive of BNZ parent bank, the National Australia Bank says the current hostility towards the major Australian banks is not tenable for viable businesses.

That’s the reason for the charm offensive – nothing to do with any genuine belief about needing to be part of the community.

Our economy has lots of parasites feeding on the wealth created by others. The ASB and its Aussie mates are the biggest bludgers.

I’m pleased these banks are having a harder time and I hope their spending of millions to buy kiwi goodwill is a failure.

John Minto: Politicians fiddle while climate collapses

From Stuff 15/09/2009 National and the the Maori Party traded their way closer to environmental catastrophe yesterday with a deal agreed to amend the Emissions Trading Scheme passed in the last term of the Labour government. It’s a deal with no winners and the environment, which in the end means all of us, the big loser. The previous Labour proposals had too little regard for the environment but this one has even less. Politicians are by the nature of their employment short-term thinkers. The three-year electoral cycle dominates decision-making. For National it’s simply delivering the review of the ETS which Act demanded as part of its election agreement, while future generations will regard the Maori Party role as simply trading opportunities for future generations for temporary baubles as in some of the land transactions of the past. There is simply no mechanism for climate change to be prevented under capitalism. For its very survival capitalism depends on growth. It’s like a pyramid selling scheme where confidence in the system relies on the belief we can always move forward with more and more consumers into an infinite future. Each individual is encouraged to believe we need a bigger cake rather than sharing the cake more evenly. Growth is the mantra of the marketeers while the environment is crying out -- enough! Many would say, and I include myself here, that capitalism has been going head to head with humanity for the past 300 years. Now climate change is where capitalism goes head to head with the life-support systems of the planet itself. I read recently a quote to the effect that asking capitalism to voluntarily stop growing is like asking a person to voluntarily stop breathing. The capitalist response to climate change has predictably been to create a market for carbon -- a so-called “cap and trade” arrangement whereby the levels of carbon would be capped and permits to pollute traded in a market. It’s one of those schemes which sounds plausible on paper but which will be quite impossible to work globally. It would set in concrete the injustices faced by developing countries that have seen their resources exploited to drive up living standards elsewhere in the world while delivering so little local benefit. It allows the worst polluters to purchase the right to keep polluting. There's an old proverb among the indigenous Indian population of North America which says a tribe would look seven generations into the past and seven into the future before major decisions related to the environment were made. Those people were in tune with their world. Maori in New Zealand were not here long enough to reach such a profoundly sustainable view of this land and its resources and Pakeha arriving here saw only resources to exploit. The combined efforts of National and the Maori Party have created an agreement with less than a generation in foresight. New Zealand is taking to Copenhagen the equivalent of a damp piece of paper to fight a bushfire.