Product Review - NZ Natural Icecream

If you want anything done, generally it's a good idea to blog it.

This being the case I REALLY want NZ Natural to sort itself out on the hokey pokey icecream front.

Being supportive of New Zealand products I have gorged on NZ Natural throughout stores in Asia. Namely all the ones in Hong Kong, Bali, Thailand and Malaysia.

My favourite flavours are Boysenberry and Hokey Pokey. Especially Boysenberry as it seems so hard to get nowadays.

Anyway in Hong Kong NZ Natural has a lovely booth and product placement at Cafe Deco on the Peak where plenty of tourists go, I took some visitors up there today where we gorged on New Zealand produce on the menu and I mocked them as they attempted to order anything Argentinian or Australian. As I was paying there was no choice for them. On my recommendation they saved room for the delicious dessert selection, of which NZ Natural corners the market in flavours.

So cheers for the Boysenberry scoop on the sundae but:

WHAT HAS HAPPENED TO THE HOKEY POKEY?

Please tell me WHEN it has become acceptable to serve it without the chips of Hokey Pokey? I even quality controlled the booth much to the local staff's amusement and in the large tub of icecream I could see absolutely no Hokey Pokey chips.

Unlike Whaleoil who would now be expecting free icecream for making these valuable observations to keep your Asian market happy, I don't. I like icecream SO much that I will happily pay 2 or 3 times the price in New Zealand to get the good stuff.

So come on NZ Natural, just sort it out. Send us the good stuff.

Power To The People

I was thinking the other day that something was missing from my monthly AMEX bill.

An amount for Hong Kong Electric, the power company.

After doing a "goggle" I found this:

To ease inflationary pressure faced by households, the Government will credit a monthly electricity charge subsidy of $300 into each domestic tariff electricity account registered with the CLP Power Hong Kong Limited (CLP) and the Hongkong Electric Company Limited (HEC) on the first day of each month from September 2008 to August 2009. The subsidy can only be used for paying electricity charges. Any unused subsidy in a month can be carried forward to pay billed electricity charges under the same account. The subsidy can be used for offsetting electricity charge payment until 31 August 2014 or the close of the account (whichever is the earlier).

Do you hear the people sing Trotter?

Since September 2008 (and until August 2009) the lovely not-so-quite-democratic Hong Kong government has been PAYING $HK300 subsidy a month for my power bill, meaning even in the coldest months most, if not all of my power has been paid.

The total of HKD 3,600 represents around $NZ800 a year in savings. And as I only really run an air conditioner or heater and have gas water heating, most months my bill doesn't even reach $300.

In the meantime, NZ power companies have been overcharging you around this amount a year.

So yet another reason on top of the tax cuts, as to conclude that New Zealand governments regardless of colour, all SUCK.

Budget Winner - Securities Commission

My new good friends at the Securities Commission are big winners in the Budget.

They are getting some extra in funding to now look after crooked finance advisors.

Power said the commission would have its budget boosted to the tune of $2 million in 2009-10, $4 million in 2010-11 and $2.9 million in each of 2011-12 and 2012-13.

Given its current income of $10 million that is a 20% increase. But with increased responsibilities that may render the funding increase deceptive.

Wonder if "Plane Jane" Diplock will be increasing her $500k travel budget a commensurate amount?

Tax Cuts

Well you don't get any, but here in Hong Kong this week we have just been told that our $HK6,000 tax cut announced earlier this year has stimulused into $HK8,000.

That makes it four years running now that I have received tax cuts.

So what's happened with Bill English's budget then??

You could get a similar amount - only if you want to insulate your stupidly large New Zealand homes as Nanny State deems you all too useless to organise and pay for this yourselves. I can just see a run on insulation installers which will push the price up and make the grant a waste of everyone's time.

If you are cold do what we do in Hong Kong at winter. Go take some of your HK8,000 and buy a very large oil column or gas heater.

Things We Like - Free Speech

Trevor Mallard blogging.

It's like an energy channel for his testosterone and he's far more eloquent than that stupid monkey tame Tory Tau Henare who he smacked up.

And Brian Edwards.

Both pinko fucktards but it is hilarious watching them answer the comments.

That's what blogging is all about and what makes it SO MUCH FUN. Smarmy answers to fuckwits who think you care about what they think.

And I am sad to say that they both join the left wing of Bloggers Anonymous, a support group that's lobbying for state funding to support people who just can't stop blogging.

Who Has Got The Power?

Hay making season is over



Serve It Up Bruce
NZ (Information) Exchange
Alan Robb You Are Fired
Finding Sharp Knives in the NZX Haystack
Job Summit Head Slashes Labour Costs 25%

Over a series of posts in the past weeks I have examined some of the conflicts of interest that the NZX has in relation to its position as a regulator and a participant in the marketplace. I also looked at the failings of its self-regulating nature, in particularly the weakness of its own Conflict Management Policy in monitoring itself. Plenty of business media have had an attempt themselves at outlining the issues:

Fran O'Sullivan
Jenni McManus
Sarah McDonald
Adam Bennett
Radio NZ's Media Watch

The conclusion is that there are at the very least many issues for authorities to review, those authorities being the Minister of Commerce and more so the Securities Commission.

While there can be no doubting that NZX is building shareholder value, there is very little, if any positive, comment at all about NZX as a regulator.

Even in the most supportive of pieces.

The general consensus is that the NZX is flouting its privilege to the best of its advantage. For that it cannot be faulted in maximizing its return to shareholders from its gifted position in the marketplace and therefore specialising in making hay from a collection of other land-owners paddocks while the sun is still shining.

But it is winter and the sun shouldn't be shining.

Why would a true centre-right government go soft on a monopolistic market participating regulator? One cross-subsidising using gains earned from its "information" regulatory activity, into that of an active market participant dealing in a merchant bankesque fashion?

Minister of Commerce, Simon Power just last week came out with commentary that he doesn’t see a problem with NZX or the Securities Commission in relation to what has been going on for the past years. Well, like an increasing number of commentators and experts in Securities Law, (being Stephen Franks) I beg to differ on NZX and media are now asking a few more questions regarding a report by Morningstar Fund Research titled “Global Fund Investor Experience” that brings into play the role and effectiveness of the Securities Commission itself. Among just a few articles written thus far:

David Chaplin
Bernard Hickey
Fiona Robertson
Gareth Vaughan
Brian Gaynor

Just last week Power announced to Stock Takes Adam Bennett:

"While some rebalancing of the respective roles and responsibilities may be required from time to time due to market developments, the Government has no plans to remove NZX's regulatory responsibilities or otherwise make the Securities Commission the 'sole regulator' for the sharemarket."

I can understand and sympathise that Power is a new Minister and inherited this regulatory entanglement from a very soft-Minister in former union legal officer Lianne Dalziel, but from now on he has to be held responsible if he hides his head in the sand and does nothing but head-nods and hand shakes with the Men of the Board at NZX annual report functions on behalf of the Government as he did recently on 30th April 2009 .

Jane Diplock is the head of the Securities Commission, she is also the head of the entire worldwide securities commission’s International Organisation of Securities Commissions (IOSCO). A very senior role.

“Its member agencies represent 109 jurisdictions, including 81 from emerging markets, and regulate together more than 95% of the world's capital markets. IOSCO leads the thinking on ways to address the challenges for securities regulators amid today's capital market instability”.

According to Brian Gaynor :

Securities Commission chair Jane Diplock has made speeches in Brussels, Dubai, Milan, New York, Madrid, Manchester and Paris in the past twelve months and the Commission's travel expenditure has leapt from $140,000 to $564,000 per annum since she took up her position in September 2001.

This is quite a staggering travel spend, even for a large corporate and if you were travelling first class and staying at The Burj. In comparison, King of the Bauble Winston Peters in 2006 and 2007 spent less even with all his hangers-on. As did the last Trade and Prime Minister. There is nothing wrong with such a travel spend if it adds relevant commercial value but forgetting the dollars, it is a far more important observation as it represents that Diplock and one assumes senior officials are away a good proportion of the year from New Zealand where their primary focus should be running the New Zealand Securities Commission and lobbying for regulatory change and showing foresight where they see that it is too light-handed or insufficient.

All expenses paid international travel. As Foreign Minister, Mr Peters spent more than any other minister on overseas travel. Including accompanying officials and staff, Mr Peters' travel bill came to $460,231 in 2006 and $441,922 in 2007. Trade Minister Phil Goff and Prime Minister Helen Clark's travel bills have hovered between $220,000 and $340,000 a year.

Some shots of "Plane Jane" Diplock. She's always on one.












Highlights from the latest annual report of the Securities Commission from 2008:

- The Commission receives around $10 million in revenue per year, $6 million directly from government grants.
- Jane Diplock receives just $384,000 base salary and a $34,000 motor vehicle allowance.
- Commission members received $318,000 in time attendances in relation to work at the Commission.
- 15 employees receive more than $100,000 per annum, yet just 3 of those receive more than $200,000.
- In 2007 the travel and accommodation spend for the Commission was $477,000, rising to $564,000 in 2008.

I do not use the term "just" sarcastically. Given the enormity of her role as a regulator, the Chair of the Securities Commission and senior staff should be paid handsomely given a good number are lawyers or accountants . Not a third or without the share schemes of their counterpart regulators at NZX. Should the "information" profits of NZX perhaps be redirected into the regulatory activities of the Securities Commission?

While Diplock has been pressing the flesh around the world in this role since 2005, it appears that not only the NZX boys and Weldon have been raiding the chicken coup, but her own Commission is in a state of international interrogation. And now according to Morningstar the Fund industry are at it too.

The collectivity of this behaviour from regulator through to market participant makes New Zealanders obsession with throwing money at property rather than into the Capital Markets, appear the height of sanity.

So what about this Morningstar report?

Morningstar Inc is based in Chicago and is listed on the NASDAQ and has an operation in New Zealand. It employs over 2,000 employees worldwide (pre-financial crisis) and specializes in independent investment research. It has also produced a report on the state of Global Funds from an Investor perspective . In that report New Zealand rates a D- which even at Massey University is a fail.

The report at page 3 stated "the report should not be construed as grading each company's "fund industry". It aims much more broadly than that, in recognition of the fact that the mutual fund investor experience is shaped by more than the fund industry alone".

So its not just the fund managers getting a fail grade, it's the entire New Zealand industry including its regulator, the Securities Commission.

Like with the NZX, New Zealand is once again exposed internationally as failing in regulating, compliance and all important transparency.

Of more concern than just the fail to Power must be this commentary at page 71 of the report:

“Mutual Fund investors in New Zealand are adequately protected by the existence of laws. However based on feedback we have received from fund companies, we believe that the New Zealand Securities Commission is not sufficiently resourced and has not been effective in achieving industry consensus across a range of issues”.

The analyst's findings back up what my sources told me in compilation of my earlier work:

My sources at NZX state that the SC is underfunded and wished that I include that opinion here as they have sympathy towards their plight, as they do of their own Compliance staff at NZX.

Why is this the case?

I have conducted a thorough search of resources available and cannot find however a single time when Diplock has publicly reached out for more funding or expertise in her organization however. Brian Gaynor has actually asked in 2008, where on earth was Diplock on issues to do with Finance companies? He answered his own question in Saturday's Herald column with the travel spend.

Morningstar Manager, Fund Analysis Chris Douglas says while he isn’t critical of the people doing the regulation, the issue is really around the regulators lack of resources. Morningstar also rated New Zealand down on tax issues and disclosure.

What is a mutual fund?

A mutual fund is a very generic term depending on what jurisdiction you are referring to, for a product where public investors can throw in smaller amounts of their money, held by a custodian and a fund manager enters into the financial markets and invests the collective fund as they see fit within the boundaries of the law and prospectus of the fund. They are not to be confused with hedge funds where the fund managers can participate in a much wider range of riskier activity, with investors usually restricted to what is called a "sophisticated" (high net wealth or qualified) investor.

For example, Fisher Funds Management Limited at 31 December 2008 owned 7.98% of NZX, sources now have it at 9%, close to the 10% cap, making it the largest security holder of the company. NZX's performance and that of the New Zealand market itself is boosted by the presence of well-regulated funds with good reputations and an increasing amount of investors in those funds that will increase the demand for the purchasing of shares. Another example of the interdependency of the financial industry.

Mutual funds have advantages over investing yourself as there is economies of scale, liquidity and the potential for more diversification than if you threw $10,000 at one stock on the sharemarket. The downside is that a fund manager can be hopeless, the prospectus can tell porkies about what the fund is going to do, taxes and of course large chunky fees.

In my experience with funds and fund managers, some onshore and others offshore, I would imagine a cat with paint on its paws and a Twister style chart of stocks could pick stocks, trades and investments with more accuracy. I have very little faith in fund managers worldwide who flog their wares to clients of mine so forgive the cynicism. There is a snake oil salesman element to the industry. There are some very good fund managers but rather like real estate salespeople, there are some extraordinarily bad ones and lots of them.

Fund managers brand themselves, rather like celebrity chefs. Like a bad restaurant where the chef over-extends his or her talents, the fund manager with the reputation for greatness may find his or her talents are spread far too thinly as well. When you think you are eating the celebrity chefs creations you are actually devouring his apprentices while the chef is busy having his tummy rubbed on a beach in Cancun.

New Zealanders all have Kiwisaver accounts now, hence are subject to a variety of "funds" in their everyday usage. They need to educate themselves about them. In doing so, there are large obstacles, nine years of "it's not your fault, we will bail you out" government being just one of them.

The prospectuses are generally fiddled with and manipulated to the advantage of everyone with their hands in the pie, the legal language is tightly worded and often highly creative, the uneducated investor has limited protection for their stupidity. Most investors into mutual funds are making their returns purely by the accident of choosing the right one, or the right financial advisor to put them into the right fund. But then I guess of every 10 prospectuses I read I would advise the client against investing in them on 9.9 occasions and provide pages of analysis of why. Which is why I guess I am a lawyer and not a financial advisor!

New Zealand was canned at page 10 of the Morningstar Report for lack of transparency and disclosure with respect to portfolio holdings. Meaning the investor cannot easily enough see what the fund is investing into. Again, similar to a blind trust situation. This is usually fine when the fund is doing well, but hell goes to pack when the fund isn't doing well and the investor wished to know what their exposure is in a falling market.

As I have previously blogged however, average New Zealand investors are traditionally financially illiterate. Parents failing their children in this regard as money and wealth is a taboo subject in our culture. Finance Company collapses proved this recently where life savings disappeared into products that the depositors had no intention of ever understanding. New Zealand also has very ineffective anti-money laundering law and checks and balances in the banking system if the case involving Westpac this week is anything to go by.

Diplock is a stickler in her speeches made internationally that appear carefully crafted to say almost nothing, for this term “transparency”, yet let these words go noticed:

“New Zealand’s grade in the area of transparency in prospectus and shareholder reports is D-minus, and the country has the lowest score among all countries in our study.”

They single out the lack of portfolio-holdings disclosure.

“Where the regulation is lacking, the mutual funds industry does not make up for it with voluntary disclosure”.

And why would they really? They are too busy raiding the chicken coup with their mates at NZX while Diplock is in absentia.

In this absentia of travelling around the world, most disturbingly Diplock seems to have learned very little about the standards of other regulators. Else New Zealand wouldn't be collecting a "Diplock minus" in a comparative analysis of the entire industry such as this.

Are New Zealand regulatory regimes really so crash hot? If not, then the Securities Commission and NZX should be on top of making sure it is. Is it more regulation that is needed? Or better but less regulation in some areas? And more transparency and separation of conflicting duties?

So who has got the Power to fix all this?

It seems to not be Diplock, but a certain man called Simon.

Executive Summary

1. Despite obvious continual issues of conflict, Simon Power has indicated he sees very little wrong with the regulation of the NZ Capital Markets and the role of NZX and Securities Commission as regulators.
2. Morningstar gave New Zealand the lowest rating for investor experiences in the mutual funds industry in the world, a D-.
3. The report stated that the Securities Commission was underfunded and incapable of gaining industry consensus on issues. This being the case the underfunded Securities Commission is in charge of reviewing NZX. How thorough can we expect this review to be?
4. The Securities Commission travel spend for 2007 and 2008 averaged more than $500,000 per annum and was larger than either of Winston Peters, Phil Goff or Helen Clark. Not significant for necessarily the amount spent, but the time spent out of New Zealand by senior people.
5. The Securities Commission Chair has not publicly complained of a lack of funding despite receiving just $10 million in "revenue".
6. The Securities Commission Chair is paid around "one third a Weldon". With no bonus scheme.
7. Kiwisaver has meant a surge in funds in New Zealand, without a surge in investor education or transparency of these funds.
8. New Zealanders need to diversify away from their obsession of being capital-gain driven property investors, hence the financial sector needs to have a first class reputation to boost and then maintain confidence, not that of a D-.
9. New Zealanders will not do this if they continue to see funds and capital markets as hiding something and choose not to participate in them.
10. It is up to the Ministry of Commerce and Simon Power to lead a review and then implement recommended changes. Not to ignore the issues that are causing reputational embarrassment to the industry and these regulators.

How To Ruin A Football Club

Take one Mike Ashley.

Let him buy your club full of the most passionate and loyal fans in the sport.

Ruin.

Unbelievable.

Groser's Big Moment

Pushing cowpats uphill

stolen from The Stranded.

Barack Obama is about to declare war on New Zealand in a move that could poke the economy. I wonder if John Key, just a week and a half ago on his first call with Obama was warned of this incoming scud missile.....possibly not.....

The Obama Administration is bankrolling 92,000 tonnes of American dairy products, which are destined for international markets.

Tim Groser says he is disappointed the US has followed what he says is a poor example set by the European Union.

He says whether the measures are legal or not isn't the point and it sends a very negative signal to members of the World Trade Organisation.

Federated Farmers are up in arms. As they should be. They are about to get a little reality check about New Zealand's place in the world. Obviously the pinkos in the US think little countries like NZ are doing too well out of the dairy boom.

No pressure, but Groser will need all his skills and diplomacy to get out of this one.

Stuffed Kiwi

Naive

Among the UK expatriates, Kiwis are seen as a group to be honest, reliable and a tad dim when it comes to making money.

Nicolas Down, you FAIL.

But when the money dried up and his company hired Russian estate agents to offer added inducements - entertaining potential buyers with prostitutes - then Down objected. So his bosses gave him one month's notice.

Down, his wife and two children arrived home in December, after emptying out their Dubai apartment and leaving the car at the airport. He did, at least, mail the keys back to his former employer.

This is the dumbest man in the expatriate universe. We are in the middle of a recession, the UAE is one of the most volatile markets for everything in the world. What was he thinking?

They weren't asking him to bend over and rear the client! Merely arrange hookers for others or even just work in a company that did business the UAE way - with Russian hookers. It's a bit precious to object, even as a female I am asked to hook men up with native working women of Wan Chai. Who cares? It's how business is done. Get over it.

I don't know if this man ever went to a bar in Dubai, but you have to step over Russian hookers to get even a water.

Cultural China

The Chinese are very different to us in many ways. One of the things I like about their culture is that they are very logical and don't fuck about with pleasantries when there is no need.

Here is a story that highlights such attitudes common in China, especially the Mainland.

Assisted suicide

Lai Jiansheng was detained by police for pushing a man named Chen off the bridge in Guangzhou city that has been the site of 12 suicide attempts since the beginning of April

I pushed him off because jumpers like Chen are very selfish. Their actions violate a lot of public interests," the paper quoted Lai as saying.

Lai, upset with the traffic delay, broke through the police cordon on the bridge, walked up to Chen and shook his hand before pushing him off the bridge, it said.

Chen was threatening to commit suicide because of a 2 million yuan ($377,600) debt he incurred over a failed construction project, the paper said.

Tabloid Journalism At Its Best

Sometimes it's the little things that screw public opinion.

Just when you think public support is with runaway fugitive Leo Gao:

Ms Aim had heard through friends that Young had gone to Auckland and was now in the South Island with her mother.

She said given his dire financial situation it was "understandable" Gao skipped the country. "I hope they never catch him. I'm on Team Leo, I'm afraid."

The Herald's reporting tabloid team discover

He left his dog Sam tied up and undiscovered for a week.

"Shoot the scum" will be the cry now.

Stride's Behind

A kind reader sent me this

Nick Stride 21 May 09

Publish at Scribd or explore others: Humor Creative Writing nick stride nzx

I was going to start on this, but thought better of it. I feel sorry for The Independent. It's a cute little paper. Media Monitors has their circulation at 3,736. More of you read this post within the first day than read The Independent.

He is a little late to the party really. I have already covered all of Stride's issues in my posts. Including the ultimate missing of the point "rural publishing has never been regulated, by NZX or anyone else". Besides that, he doesn't actually disagree with the me over the material matters of funding, conflicts involving a regulator starving its regulatory functions, for the commercial ones.

And I am off this afternoon to get an almost full body wax.

That's more than enough pain for one day.

Bob Jones Appreciation Corner

Noelle McCarthy is very hard to wrestle the "talking stick" from on the best of occasion, however filling in for Jim Mora this Friday afternoon, she finally met her match in the final minutes of Part 1 of The Panel.



Listen to this for some Bob Jones' gems on the Entrepreneurs Summit.

"No committee has ever devised anything"
"Show pony nonsense stuff"
"Who are these people? Managers of Insurance companies?........{Noelle- Rodney Wayne....Seeby Woodhouse.....}..never heard of them.........."
"Individuals do things....good ideas only ever come from individuals"
"Give it a go Bro'...cliche nonsense..."
"If 100 people gathering had great things going for it we would be doing it all the time"
"Free travel.....you are Irish for god's sake...an Irishman thought it up first...that horrible bugger Ryan (Air)"
"Possum trapping....nothing innovative...it is age old...."
"{length of time of the summit} Is it one day or two? Doesn't matter it's a life time..."
"Nothing good has ever come from a committee"
"If you want the benefits of a market economy, understand an all important characteristic namely is volatility, up and down...it's wonderful we are having a recession good things happen from a recession"
"I love recessions, we swing into action...we sat there doing nothing through the boom....looking after our assets....waiting for the inevitable recession"
"Volatility is wonderful, it's terrific".

SOMEBODY - give that man his own show....again.

Go The Chiefs

Good on ya!!!

Random Impertinent Questions

Bonnie and Chongy

Something is really not right here with the coverage this case is getting.

The couple, who ran Rotorua's BP Barnetts service station on Old Taupo Road, are Leo Gao and Australian girlfriend Cara Young.

They are understood to have applied to Westpac Bank for a $10,000 overdraft and mistakenly had $10 million paid into their account.

10. Is Westpac still the Government's bank?

9. Human error? Or part of Westpac's "hire a cheap monkey" policy to replace more expensive New Zealand trained staff?

8. Walked into a bank and asked for a hundred thousand in cash as a withdrawal lately?

7. And the $10,000 currency limit through the scanner at customs? How's that working?

6. A European woman running off with a Chinese man? Suspicious enough for you!

5. How do you get even $6 million out of your bank account and into a form where you can skip the country? Please tell me as I'm in the offshore industry, would LOVE to know!

4. Isn't the withdrawal of even $1 million, or a series of smaller repetitive transactions termed a "suspicious transaction" in Westpac's monitoring software and therefore requiring second tier authorisation under anti-money laundering legislation?

3. And can't Westpac just reverse or freeze the transaction if it did go to another bank account?

2. What is your daily ATM limit again?

1. So how are New Zealand's anti-money laundering laws working again?

Someone Hates Shoaib

Shoaib ruled out of 20/20 with genital warts

This is Shoaib Akhtar. In Cricket circles he's a cheat and a chucker at 160 k's an hour. He's been banned for using performance enhancing substances, smoking the weed and violating curfew.

All his crimes have now been paid in full for as his OWN PAKISTANI CRICKET BOARD has announced.....

That he has genital warts.

Batsmen wounded at his hand will be raising a glass tonight in the humour of it all.

ARCHIVE TIME - It's About Time - To Decommission The Families Commission

A reader suggested I pull apart the Families Commission to show Christine Rankin just what needs to happen. I recalled having already done this. I recalled correctly.

So I ask, for the millions per year this Commission costs the NZ taxpayer - what has it achieved since 2007? That's the issue that National should be looking at. Not appointing new suckers to the suck-u-bus.


FROM ARCHIVES 29th August 2007


It's About Time - Towards a Parental Leave Policy that Gives New Zealand Families Real Choice



The Commissioners

Have a look at the wondrous display of private sector talent with this lot (sarcasm). All perfect PC token appointments based on race, gender and years of woofter public sector uselessness. Not a great deal of experience having to balance a budget from, or responding to, non-government interventionalist demand and supply in a free market here.

Dr Rajen Prasad (Chief Commissioner) has a wide range of experience working with families as a practitioner and Associate Professor, and is a former Race Relations Conciliator. He is originally from the Pacific.

Sharron Cole (Deputy Chief Commissioner) has a long history of community service and participation. Her strengths include advocacy, practical bioethics and close ongoing involvement with families.

Sandra Alofivae is a senior family law practitioner in Auckland. She has worked closely with Pacific families and has been actively involved in the community and voluntary sector. Sandra is of Samoan descent.

David Smyth was a Deputy Commissioner in the State Services Commission. He has broad experience in governance and management in the state services, and in social policy development in the health, housing and justice sectors.

Lyn Campbell has broad experience in community development with a focus on advocacy for families. She has worked extensively in senior management in education and local government.

Mason Durie is a psychiatrist with interests in community and family mental health. He has extensive experience in Māori health and is currently Professor of Māori Development and Research at Massey University.

The Legislation

The Families Commission Act 2003 is easily one of the waffliest tree hugging pieces of legislation on the books that deserves not only ceremonial burning but slow torture by rope and kicking before its timely death. We can thank Peter Dunne (from the United Purple Party) and his holding to ransom of the Labour Government for it's creation. It costs from figures I can obtain, "$28.5m over four years with annual funding of $9.3m from 2006/07 onwards". A quick look at it's website shows it is prolific in its report writing, however most reports seem to be written precisely the same way. Someone is minting this rort for sure. The most important cost with the Commission however, is the cost of their recommended policies which could run into billions with crazy ideas.

When an Act does not actually define such integral words used in it’s title such “family” in the definition section then you know it’s especially useless as it’s going to be a giant piece of nauseous waffle. Try incorporating section 10 for size where the definition is attempted:

Diversity of New Zealand families

(1)In the exercise and performance of its powers and functions, the Commission must have regard to the kinds, structures, and diversity of families.

(2)In this section, family includes a group of people related by marriage, [civil union,] blood, or adoption, an extended family, 2 or more persons living together as a family, and a whanau or other culturally recognised family group.

(3)However, persons are not members of a family for the purposes of this section solely because they have as their common objective or 1 of their common objectives the achievement of some outcome of a community, domestic, professional, recreational, social, vocational, or other nature (for example, the commission of offences against any enactment, whether to obtain valuable consideration or not).

(4)Subsection (3) is for the avoidance of doubt.

So as broad and diverse as the definition of “families” is in section 10(1) and (2) to include basically any politically correct and ethnic grouping known to man, including de-factos, gays and great great uncles twice removed, it does not include naughty people who create social disorder like gangs, flatmates or the Commission anti-Christ – single people households. Then a redundant section 10(4) reads, and if you are too stupid to not understand this we will once again remind you of this.

Our rights as single people households according to the Families Commission fall below that of couples living in sin as defactos and homosexuals. Charming.

The Single Person and Choice

If it’s not already a smack in the face that we have to pay as single people for OPC (Other People’s Children) and then sit near them on planes and in cafes screaming their snotty little lungs out, then try this on for size:

Scenario 1: I am single, I have no annual leave left, I decide that I am sick of working in the office for a bit and rather like Trevor Mallard, decide that the Rugby World Cup is on, so I want to be paid to take 14 weeks off work to travel the world with friends on sabbatical(a choice). I inform my Boss of this reasonable request. Boss is allowed to chuck a mental and laugh me out of the room.

Scenario 2: I am single, I have a one night stand (a choice), get knocked up and all of a sudden am pregnant with a baby due and I decide to have the child (again a choice). I need 14 weeks off paid to have the baby (a choice). I inform my Boss of this request. Boss has to by law, give me the time off.

In the second example, I almost go back to work after 14 weeks then decide I am not that keen on working so want another 38 weeks off of unpaid leave (a choice). During that time I cannot be replaced permanently and I am employed in a profession where you cannot easily fill temporary replacements.

In a country so scared on making judgments about choices for people with children – ie. we could not possibly state that the choice of having 7 children when you can’t afford it is even a choice, let alone irresponsible; a value judgment is placed on the single person’s choice in scenario 1 or circumstances that they are single, but not those in relationships or with children. Single people are not treated as a “family” even though they are taxed as a “household” without benefits.

Who pays?

The net result of this paid leave policy is the same. The employer is the one who gets hit twice and the hardest as the tax burden is shared. The burden is particularly bad for a small company when the employee is a key one.

The cost for the employer is not only the absence, but more importantly having to fill the vacancy while the absentee is away (which may almost be impossible) and then re-introducing the absentee back into the job after that time. In the meantime other employees have to cover, train and manage the new staff member.

Child birth affects everyone in a company. When the baby is ceremonially brought to work to show off to colleagues you can hear the collective groans once they leave from over-worked colleagues as Mum is bright and happy and proud to display what you have in effect worked extra hours for.

How Much?

The problem with the incentivisation of this policy is highlighted on the IRD website:

Paid parental leave payments equal your normal pay (before tax) if you're an employee, or your average weekly earnings if you're self-employed, up to a current maximum of $391.28 a week before tax. If you're self-employed and make a loss or earn less than the minimum wage, for at least 10 hours work a week, the payment is $112.50 per week before tax (this is equivalent to 10 hours per week at the current minimum wage rate).

You can receive paid parental leave for a maximum of 14 weeks. You can transfer your paid parental leave to your spouse or partner, as long as they also qualify for paid parental leave from their employer or self-employment.

The payments will be treated as income, just like your normal salary and wages or self-employed income. Paid parental leave payments have tax and student loan deductions taken out (at whatever rate applies to you). It will not have earners' levy deducted from it.

Even as a graduate in 1999 I earned more than $391.28 a week before tax. In my very first job out of University at age just turned 23 I was paid close to double that. I would be surprised if most graduates, eight years later in 2007 were not paid even more right down to part-time student jobs.

The economic deadweight loss is large as the government collects tax to pay for this silly policy to give some of it back to parents to turn around and tax them again on it. Nonsensical.

Now the “Families Commission” are calling for 13 months paid parental leave. And to increase the $391 to $550. It's like Peter Dunne is playing a sick joke on us all. It's time to stop laughing.

"However we recommend that by 2015 parents are provided with a total of 13 months paid leave, including a month's paid leave for fathers."

So in theory Pops can jet off to the Rugby World Cup for a month if there is a caregiver for the child in any instance.

Engineering Parents - Who Should We Pay To Have Children?

The core problem of this United Future led social engineering is that the very people who are excited or in the slightest bit influenced to have children by receiving the equivalent of $20,000 or even $28,000 a year for that time they are not working, are the VERY PEOPLE WHO SHOULD NOT BE BREEDING IN THE FIRST INSTANCE. There are already enough incentives for smelly Green and Labour voting low-income working for families bludgers to breed. They have proved very capable of taking advantage of such to the point of having a definitive expertise in the area.

This policy, if it has to exist at all, should be about encouraging middle class, double income, well educated young couples (more likely to be National and ACT voters) to breed and then return to the workforce as soon as they can. Particularly intelligent WOMEN, as it’s proven bright women produce bright children regardless of what a drop-kick the father is. This policy does anything but. Not one couple I know is jumping up and down saying how fabulous this benefit is that they are having children because of it.

They are having children because like our parents, they want to and are at the time in their lives when they can manage the extra expense already of having children. It’s as natural as the act of child birth itself. They save to have children for a few years, forgo overseas trips if need be and excessive consumption. They have the baby and take a certain amount of pride in the fact they did it all themselves. If anyone helps them it is the grandparents, both financially and in terms of physical support. That’s the point of grandparents and they like doing it. They have no intention of adding the taxpayer into their extended family. They do not care about the existence of the Families Commission and the racially and gender bias selections on it in acting as advocates for them.

Why on earth give money in diluted form to encourage people to do what they are going to do anyway? Have children.

The female knows that having a year off to have a child will stagnate her professional career up as she will fall behind in the latest developments in her area of expertise and intellectually end up semi-retarded speaking baby all day. That’s why she will return to work as soon as she can and why men don’t stay home with babies if they can at all help it. It’s not about $391 or $550 a week, it’s about her future career and earnings and that means a tax cut forever is preferable to a handout for a period to breed.

The Private Sector Were Doing It Anyway

At my first job, working for PricewaterhouseCoopers before the introduction of State enforced minimum paid parental leave, PwC gave it anyway to suitably senior staff on full pay. A few of the female staff took the option up, but not a great number. It was part of the private contract with employees that a professional firm has and to my knowledge at the time other large firms had similar policies already in place as a result of a demand for that clause in the contract within the industry. That is the whole point, why parental leave by stealth against employers? Companies who have the sort of women who this governmental policy was originally (or should have been) designed to attract to breeding already had similar policies.

And don’t even think about increasing the $391 or $550 a week to her actual pay. It would dent the Budget considerably if all late 20, 30 and even early 40 something professional women that this policy should be targeting were paid for 13 whole MONTHS to stay home with their child. A small country like New Zealand could not afford it without considerable tax increases. And she won’t accept the offer in any instance as once again, if 14 weeks sets her career back, think about what 13 whole months will do for her promotion chances and future earnings? Regardless of the rhetoric and law, taking that entire time off does count against you in any career that is not a warm, fluffy one that the abovenamed six token appointees have all belonged to – family law, teaching or public service.

Overseas Examples

In the report there are tables full of overseas examples to prove that New Zealand is not as generous as hideously taxed countries in Europe and the scum that is France. Interesting that the two least generous countries below New Zealand were our sensible cousins (who sit on a wealth of minerals) Australia and the world's richest first world country, USA. No Asian countries were used of course as the concept of paid parental leave here is plain laughable as we have what are termed "domestic servants" to remove any excuse a woman has of not being able to work should she actually want to. It's very first world.

Who Drives Demand For Workers?

Like anything, this is not driven by government or even “evil white heterosexual middle class men in suits” who are traditionally employers but by clients, customers and business. Clients want you to be around as much as possible so they can get the job done, regardless of whether you are male or female. They are not happy when women or men take large amounts of time off for anything. They will use someone else at your firm or another firm. Clients don’t care that you have a baby if it interferes with providing them a service they will not make an allowance for it, they will find someone else that can do the job. Alas, none of the Commission staff will understand the whole "client" driven approach to business. How on earth could they?

Contracting Out Possibility

From a female perspective if the Government were actually crazy enough to introduce 13 months paid parental leave, the first thing I would do on applying for a job is to actually contract out of taking such leave, surely such disruption to an employer is worth a certain sign on bonus or cut of salary? Employers should attempt to do the same as after the time limit is passed for female's qualifying for the entitlement there is a huge contingent liability there. I have taken employment (overseas of course) in the past on a handshake and informal basis that I was to under no circumstances get pregnant or else the job would not have been offered to me. That's what happens when craziness reigns, the market sorts it out in other ways most likely to the detriment of those who the craziness is meant to help as I was always going to be offered the job ahead of a married woman who signaled an intent to have children.

Everyone Get Their Hands Out

This is precisely the problem you have when Government’s run massive surpluses and why tax cuts for workers is the only answer. Every crazy welfare, QUANGO and lobby group puts their hand out when the money goes around. Now the weirdo Sally’s are back into spouting their usual rubbish.

More money down a bottomless pit.

Single Person's Commission

If we must listen to this mad Families Commission, chosen precisely for their gender and racial tokenism then it surely must be time to start up a taxpayer funded Single Person’s Commission to look after our rights that should be entrenched in the Bill of Rights, that being not to have to pay for the excessive whims of inconsiderate bludging wankers who can’t look after themselves and their families and worse still every three years go vote themselves an income or subsidy at the Polls to fund their choices.

Good Appointments

National are coming out with some good appointments to replace the Labour lackeys.

The latest to the NZ Trade and Enterprise Board.

Charles Finny is an outstanding addition to the Board bringing with it all his skills and diplomacy.

And to spice it up a bit - the antithesis of Charles, they have added an incredibly successful and talented woman to the Board, and she's not a school teacher or Union representative. And I would imagine knows how to use an underarm shaver. Hallelujah, a revelation in appointees. She can sink piss, generate ideas and knows how to make money. That's the kind of woman we need to keep the likes of Finny on their toes. This picture is just outstanding.

The Pity Post - For Journalists

It may surprise many of you but I feel nothing but pity if you are serious about being a journalist or freelancer in New Zealand.

My own venture into paid contribution for Fairfax's Dominion Post began on March 2nd 2006 and ended on April 16th 2009 (officially May 1st). Three years and one month, coinciding almost perfectly with the last time the long-serving editor closed his office door.

In a massive stretch I outlasted Damian Christie's year as a Herald columnist. I recall Damian in one of his blog posts on Cracker stating a year was a long run. I have met plenty of other newspaper columnists under the age of 40 who seemed to last just weeks only to get axed for writing precisely how they were paid to write....like under 40 year olds. Yet I stretched on for what seemed like an eternity in newspaper column world for a "youff". Politicians, indeed possibly some of Christine Rankin's marriages have lasted a shorter stretch than my column. I think I survived five features editors for the Life section I wrote for until the last one, no doubt to the infinite joy of all the muffin eaters in the office - sacked me.

In doing so I have learned the following:

1. It would be really (like reeeeeally) nice if your column is to be canned that you are informed BEFORE submitting your next column. From where I am from it's called good manners, and professionalism especially when you are dealing with a contributor who has never missed a deadline or come close to it in three years.

2. It would also be reeeeeally nice if the payment system was such that you were sent your purchase orders on time so you could send an invoice on time so you could get paid on time. Not so much a problem for myself but I imagine if this was your primary source of income, you'd be screwed waiting for Fairfax's system to decide that you deserve your stipend for the month.

3. There are some really nice, talented people who work at newspapers. Thank you Stefan, Julie and Tim. And then there are some complete and utter c**ts. ..... Usually and most surprisingly the editor is the nicest person.

4. In three years I have managed to get to know many journalists and plenty of them are fabulous people as well as all being excellent drinking company. All in New Zealand that I have met are underpaid in relation to their skills and intellect and most seem to have lost the will to live having endured cutbacks, staff and management reshuffles. Some now work in Parliament.

5. Plenty of journalists are despairing with the trivial nonsense they are made to report on. But have mortgages and children so lie back and "think of England".

So what did I think of my own column?

Well it was trivial entertaining nonsense really but no more so than the other features in the section like fashion or recipes. Happily I will never look back and cringe as I tried to take trivial mumsy topics and at least make them amusing if not enlightening. I started off bagging bludgy born-to-rule, stay-at-home Khandallah mumsy types until there was no more material, so had to morph the column to centering about my travels and then re-invent it again to a more politically bent Wellington issues column.

Why did I do it?

For the first few months it was a novelty but after that totally for the money.

It may surprise you that the column was the best paying, easiest gig I have ever had in my life. The column took approximately 20 minutes to write and I was paid a flat rate $NZ300 ("two Moet's") for it. While most freelancers worry about being paid per word, I am a lawyer so I view everything as a six minute unit. So that's $NZ900 ("six Moet's") an hour, for an eight hour day extrapolated that would be $1,872,000 a year - or more than " two Weldon's".

Justifying it as such I felt pretty pleased about my pay-rate so I couldn't understand how miserable other freelancers were when they tried to prize out of me how much I was paid for my column. Some went shades of white. But then when I stripped it back I realised these were people who took an entire day to churn out 600 words. I was astonished at the lack of productivity, but this appeared a norm. So I usually exercised my unit measurements and bought them "half a column" of Moet to drink with me to compensate. That's where most of my column money went actually. Consoling print media as I learned more about their plight.

Even more educational I guess there is this dichotomy. I can churn out more thoughtful and intricate analysis like this, or this, or even this but all the market appears to reward is payment for complete and utter bum fluff. I got the feeling staff journalists are in a similar holding pattern.

That is evident I guess in so far that there are plenty of intelligent women under the age of 40 working in journalism and the media but name one other than the NBR's Sarah McDonald who is actually allowed to write about anything vaguely intelligible? And I guess that's only because she works for a bloke's paper and thus doesn't suffer from having to work for an older sour woman. Old sour women are littered in management and senior positions now in media and in my opinion have ruined print and possibly radio and TV as well. Old cool ones only please.

Noelle McCarthy is nowhere near as ditzy as that column that she has to write. She's faking it. Deborah Hill Cone is more than capable of rattling out 3,000 words on meatier business issues she has to bum fluff over in 5-600 in the Herald. She's faking it as well. Bridget Saunders hated writing that tripe in the Sunday Star Times, it was killing her soul as she's not a nasty person and I was happy that she quit. She was faking it as she's one of the sweetest people you will meet. I don't know Pork Chop well enough to say for certainty but I have never met a person quite as hideous as her Sunday character pictured at the top corner of the page, so for continued humanity's sake lets hope she's faking it as well.

I was only faking by omission of course as I was never allowed in my brief to write anything of any intelligible value beyond tomorrow's fish n chips. All those thoughts I had in my column managed to be squeezed into a genuine 100% me. I guess in real life I am about 1/1,000,000th more socially acceptable than "Cactus Kate" really is. Or I'd never be allowed in to most of the venues I frequent.

It seems like the only women allowed to write to their own character in newspapers for extended periods are the bloody old ones who have been around for years in the industry: The Coddington's, the Woodham's, the McLeod's, Linley Boniface, Wendyl Nissen - and lets face it the majority of their columns revolve around (grand) babies (in Dita de Boni's case), their husbands, middle-class housewife hell, ex-husbands or how wonderful they used to be. The mumsyness of all is so over-done that I don't even think my 64 year old MOC (mother of Cactus) can relate to their tale of woes and now armchair view of the world. Although FOC (father of Cactus) still has the hots for Kerre Woodham. While I do read them all, I skip to the next when they start the mumsy crusade. Women seem to also be over-represented in writing about earth shattering topics as food, nutrition and fashion.

How bad is it?

Take the Herald on Sunday on Sunday - front page: one car crash, a cancer scare, a rich man's leaky home, two sex scandals. Inside Carolyne Meng-Yee in not one but two shake-downs of the private lives involving dead people. Well done Carolyne. You are the best.

The Sunday Star Times on Sunday - front page: bad boy semi-naked swimmer, debt soars for old people (who cares...about time), extremist pen gun sellers, recession busters and how to "stay in love for life". Inside, well if you are going to go tabloid at least make it vaguely interesting. Rosemary hold up the p***y on the columnist ticket as she has done for years. Carmel Fisher has a series in the Business section but she's a ring-in. She's not a "columnist" by profession, this is out and out advertising for her business, of which as a Fund Manager would be currently rather dire. Jenny Ruth is and has been around for years. She remains an exception to the "intelligent" rule.

Cate Brett came very close to ruining the Sunday Star Times during her tenure. Mitchell Murphy, the Aussie replacement is not achieving much better but he has yet to properly revamp the paper since he took over. Lets hope he does as right now it is categorical crap. And not in a tabloid "we mean to be unadulterated crap on purpose" way that Herald on Sunday is proudly achieving plummeting to new lows every week. Sunday Star Times is crap because it actually is TRYING to be a meaningful paper as its sister paper Sunday News is the tabloid. Like a poorly performing classic car, SST needs to be stripped right back and rebuilt.

Why would I care? Well I do as like I love watching good television, I love picking up a paper. I always buy the papers when I am in New Zealand because you have to, in order to support better journalism. A piss-poor media means politicians and businesspeople can get away with more dodgy stuff. A strong robust media is crucial for society and most importantly fighting corruption. I do believe in that. Crusading journalists are excellent.

Neglecting to pay for what you are reading, is a sure fire way to kill well-reasoned opinion, comment and reporting. When I can sit in Hong Kong and read all the papers as I could in New Zealand, for free as can New Zealanders then you know that business model is rooted. Simple. Any claim a paper once had to its material has gone the moment they stick it on the internet. But one started the trend and now they have all decided they need to be on-line. Murdoch is right, they must start charging. People are now freeloading and advertisers cannot afford to cover it. Lower advertising revenue means that the subsidy of readership is effectively over.

Lawyers don't stick their legal opinions online and give them away for free, so why are newspaper publishers putting whole papers online? Why would I as a rational consumer read a column in a paper when I can read it on the internet for free? Or pay $US39.95 a year and get unlimited downloads off pressdisplay.com? As long as the subscriptions are reasonably priced and I am not paying for something others can get for free, I have no issue with paying for online content if the money goes to better journalism.

The worst thing for New Zealand journalists and freelancers is that they can't just move overseas like every other New Zealander can when they are dissatisfied with their profession. The rest of the world appears to be just as bad at present for staff cutbacks. And a journalist or freelancer appeal to a New Zealand audience will not necessarily be transferable worldwide. So if you are now in your twenties or thirties and actually want to make a career from journalism, you appear rather screwed. This possibly reflects in the drop-out rate from young trainee to senior journalist. There appears either not much talent left between the 20 and 40 year olds, or these younger journos aren't getting a fair go in the promotion stakes.

Anyway the most important thing I imagine about successful sane freelancing is keeping a sense of humour insofar that you are a ring-in to fill space between the large corporates ever-diminishing orders for advertisements. Here is one such moment.

I never actually read my column in print unless I was in New Zealand at the time, but the last Thursday I was normally in, replacing the inches between the advertisements was Dr Neil Rosenthal with an "intimacy" column headed:

"We don't have sex anymore and are getting divorced".

Instead of telling the woman that her husband has been having sex right through their marriage - just not with her (as would of a Cactus Kate column in a meaningful and educational way), he prattled on for hundreds of words telling her what every woman munching on calorific muffins who reads the Life section wishes to hear - that it's not her fault.

Touché.

Random Impertinent Questions

10. Has Busted Blonde stopped her course of Prozac?
9. Will Phil Kitchin get a payrise on his return from the UK? Or the sack for actually producing quality material?
8. You think Melissa Lee's little comment about South Aucklanders was bad, ask the average Chinese living in Asian countries what they really think of those with a darker skin?
7. Would Bruce Sheppard be more effective if he wore an Armani suit and shaved?
6. When are newspaper owners going to dig deep and pay journos properly for quality material?
5. What's nicer in August? Milan, Venice or a train trip around the Swiss Alps?
4. So now we've established Mark Weldon is just exploiting his role to perfection, can we start on Simon Power's neglect of his? I think so.
3. Is Simon Power on Mark Weldon's "Deadwood" list?
2. Anyone want a league player to date their daughter?
1. Christine Rankin anti-family? Nonsense. She believes in the family so much that she's had four of them.

Another One Down

Well not you Gooner.

Now you shall pay.

Shame we didn't have a double or nothing.

First Casualty of the Qantas Awards

And this just in.......

"Peter Bromhead receiving a lifetime achievement award (Print Industry Award for Outstanding Achievement) at the Qantases the same day he was dumped from his Sunday Star Times job pretty much sums up the state of the media industry in NZ right now".

Say it ain't so.

A valid question I guess is how many other award winners will still have jobs or contracts by the end of the year?

It All Happens In The Kitchin

Yay to Phil Kitchin

Looks like some sanity reigned and Phil Kitchin had a dominant night at the Qantas media awards winning best Senior reporter, an award for his fabulous (perhaps election deciding) reports on NZ First funding and best website report.

But someone has to say the following about these Awards, so who better than I?

Scanning down the list you have to say that the blog section is nothing but nonsense...

Blog
Winner: www.stuff.co.nz/life-style/blogs/moatas-blog-idle – Moata Tamaira, Stuff
Finalists: www.stuff.co.nz/dominion-post/entertainment/blogs/greer-2-0 – Greer McDonald, The Dominon Post; www.stuff.co.nz/sport/blogs/hand-of-god – Adam Brown, The Dominion Post.

You are joking? Kiwiblog (now a primary source of information for the very people who are winning awards at this event), Whaleoil (a primary source of excellent political scandal) or even Public Address (a primary source for the promotion of Russell Brown, bless him) weren't rated higher than a daft very average adult student librarian who won a competition to write for free on the Stuff site and a girl going through the averageness of a 20 something female who is paid by the Dominion Post to write absolute inane rubbish to a target audience with an average IQ of 12? At least Joanna Hunkin from the Herald had some analysis and soul to her adventures when she was made to do the dumb bimbo act....

No offence to Moata or Greer, who I am sure are very noice people with very noice futures ahead of them in their chosen field of averageness, but if they didn't have a nationwide platform of being promoted on a major media site then no one would know they exist. At least the likes of Kiwiblog, Whaleoil and Public Address (indeed pretty much all the blogs that my readers look at) are self-made.

Columnist

Overall Winner: Helen Brown, Next
Finalists: John Armstrong, Weekend Herald; Paul Holmes, Herald on Sunday; Finlay MacDonald, Sunday Star-Times.

Again, another - are you serious? If frumpy middle aged busy-body women are deciding these awards and content for these publications then yes, Helen Brown should win but this was an election year and surely the likes of the Matthew Hooton - Chris Trotter combo, Bill Ralston et al should have featured? Hell I would have backed Kerre Woodham or (cough, splutter) Deborah Coddington over Helen Brown if you wish to be subjected to severely dishwater dull mumsy rubbish about being a middle-aged New Zealand female with sprogs and middle-class guilt and anguish.

And how about this one

Story of the Year

Winner: Waikato Times, Tamahere Icepak coolstore fire.
Finalists: The New Zealand Herald, Emails refuel row over political cash; NZ Listener, Lodges of last resort.

Oh yes in a year of the Beijing Olympics, a full scale economic crisis, finance companies falling over, business and political fraud all around us and a GENERAL ELECTION, the one story that stands out was the coverage of the bloody Tamahere Icepak fire. Please!

Makes you wonder with the collective small spread of talent in New Zealand that they don't just all huddle in a room and decide whose turn it is this year to win a Qantas award as one person can't win it too many years in a row.

Then get on with the purpose of the night which is to get hammered on the free piss and nail as many members of the opposite sex (or same sex if you are that way inclined) and make it home in one piece.

Serve it Up Bruce

More in my series.....

After an onslaught of self-induced and selective good news PR the past fortnight the NZX has come out in their usual bovver boy "attack is the best form of defence" manner and fired at Bruce Sheppard.



You see, unlike NZX, Bruce Sheppard actually does a bit of work (in his own time) crunching numbers that really a Regulator should be aware of if properly overseeing the market. Only NZX as we all can see is too busy with their commercial operation to bother even knowing the definition of "conflict of interest", let alone worry about the Regulatory function. All the Regulatory staff are possibly having too much fun coming in each morning motivated by their increased share prices from the two year 80% loans they were given by the company.

Many companies do not disclose the terms of their loans, known as covenants, but Mr Sheppard warned yesterday that three weeks of research revealed nine companies were probably in breach of bank covenants in 2008 and a further 11 close to being in breach.

The bovver boys of NZX and fund industry are now coming after Sheppard.

The fact he's not willing to disclose the companies he's written to indicates they haven't done a great deal of work anyway,'' said a domestic equities manager for one of the country's leading fund managers.

"To say he's gone through 47 companies in three weeks is a huge ask because it takes a whole team of analysts around the country longer to do that. He does have a valid point, they don't disclose covenants."

Sheppard has a list of listed companies that the NZX is meant to be regulating that have breached banking covenants.

Whale Oil has looked at this issue with respect to Kordia, an SOE. They were openly breaching theirs as outlined in this blunt piece of analysis. But they were honest enough to disclose it.

The Chartered Secretaries have come out this week and added their weight behind the call to split the commercial and regulatory function of NZX.

Professional body Chartered Secretaries believes the NZX's role as both regulator and a participant in the exchange is a conflict of interest.

Chief executive Grant Diggle says the NZX has measures in place which supposedly separate its activities, but it is not enough.

"People in the market need to know for for sure that the regulator is the regulator is the regulator and that a market participant is a market participant and never the twain shall meet."

Mr Diggle says the situation is much like having a referee who is allowed to play the game.

I would go further and say the situation currently is like the NZX are refereeing, playing, managing, controlling the salary cap, the television rights and making the actual rules up.

And we know the only organisation in the world powerful enough to possibly do this is the Indian Premier League (IPL).

So Bruce..........just serve it up. Pass the information to the Regulator and make them serve it up....

When you are ready.

Update: - Seems Bruce isn't quite ready and instead serves it back to NZX

Surely earning a place on the CEO's Deadwood list.

Beating the Aussies At Something Worthwhile

Finally, New Zealand beats Australia at being RICH



Mr Hart's net worth was calculated at US$4.7 billion ($8.1 billion), well clear of Mr Packer who reclaimed the title of richest Australian with a net worth of US$3.1b, the magazine reported in its May issue.

Mr Hart was well clear on Forbes Asia's New Zealand rich list, with Dubai-based brothers Christopher and Richard Chandler equal second with net worth of US$1b apiece.

Lynette Erceg, the widow of Independent Liquor founder Michael Erceg, was next on US$630m while Moscow-based Stephen Jennings (co-founder of brokerage and bank Renaissance Capital), rounded out the New Zealand top-five on US$500m.

Isn't it funny how bloggers will congratulate politicians for farting in the right direction, throwing $50 million of your money at the Snail trail, get wound up over bulldozing some horrible looking houses in a part of Auckland no one should aspire to live in or any other useless project around but they don't care when it comes to things that really matter?

No one today picked this up.

Like 4 of the top 5 New Zealanders on the list (one being so by marrying well so that doesn't count as having done anything vaguely commendable), Hart didn't make the bulk of this fortune by sitting on his arse in New Zealand.

Go New Zealand expats. And good on Graham Hart.

A tow-truck driver who has never set foot in a University. Proving education isn't the key necessarily to anything.

Blackberry Killer

I've been MIA a few days as I thought I wrote enough Sunday for the week. And truth is I have been feeling like death warmed up with the "not the bloody swine" flu.

As I was lying in bed thinking about what craziness I had to get up to the next day I realised probably why I have been feeling like death warmed up, very warmed up, drenched in sweat. Every night for a fortnight have been woken up by phone calls in the middle of the night, a victim of time zone madness where when I go to sleep, others get to work and need things done. I possibly do more work prone in bed than I do in the office during the day.

I can now predict almost to the minute when bad news is going to light up the Blackberry and hit me with something else, subconsciously I wake up. I stay awake, the Melatonin not working, watching as all sufferers from the Blackberry syndrome do.....the red light.

Then it happened. A sign I needed help. This morning I woke up at 3.35am to a phone call, I slumbered and finally went back to sleep and I woke up with a huge pain in my neck, shooting pains. I reached for the every present Nurofen's by the bedside. But they would be no help.

I had literally slept on the Blackberry.

Blackberry Anonymous here we come.

The NZ (Information) Exchange

Information and Trust

Information is all around us in various forms. Every day we rely on information provided from other people, friends, shop keepers and television to make informed rational decisions. We have to sift through sometimes masses of false or untimely information, subjective information and bald-faced lies.

We trust providers differently when we receive information. From implicit trust that say a Doctor has, right through to the trust we should place in a twitter posting.

In any market the flow of information between participants is pivotal to creating a "level playing field" as close to that in a free market as we can get. The stockmarket relies so much on the flow of information that it is structural to the market. Know something you shouldn't from your position and act on it and you are committing "insider trading" with suitably harsh penalties. The essence of any market is this fair and equal access to information.

So is proprietary information and its dissemination in the market, the role of a Regulator or is it to be on-sold for a profit and thus a Commercial function? Or is it simply too fuzzy and therefore a combination of both and a conflict of the Regulatory and Commercial function?

The answer to this question should be the answer to the question: Is NZX, a market regulator and market participant, unacceptably conflicted in the provision of providing information and its foray into converting that proprietary information obtained from having a privileged position as a Regulator?

Stock Take's Adam Bennett this week covered the issue where without much commentary he abruptly concluded:

But hold on, since when did NZX become a regulator of the rural publishing market?

NZX subsidiary, Newsroom's Editor Peter Fowler didn't understand it either when he stated:

But Mr Fowler says he can’t see any conflict in NZX owning media outlets. “They’re separate businesses,” he says, comparing it to Fairfax’s ownership of TradeMe.

Then was pulled up in the comments section reminded Fairfax isn't a regulator, and retracted his comment:

Quite right. I made the mistake of thinking aloud (sp) to a reporter. Perhaps a better analogy is comparing it to the Government's ownership of National Radio.

To which his failure to acknowledge this none too subtle distinction was corrected and replaced with it was like the MED (the radio station licensing regulator) directly owning and controlling National Radio, which it doesn't.

Obviously the conflict issue creates more questions than it answers. That in itself prima facie should lead to the conclusion that something smells wrong to begin with.

The conflict and regulatory issues about dissemination from such a trusted source of information are not one just in the rural publishing market, it is a far broader ranging conflict of any Regulator that is disseminating information it has gained from a position of regulatory dominance as fact and with a much greater authority to a wider market that it is a participant of, and has ultimate influence over.

NZX and Information Quality

Because of "continuous disclosure" rules in the market in accordance with legislation, listed companies must supply to NZX on an immediate basis any matter that may have an affect on its price. There is then a 20 minute delay until this proprietary information is published. In the meantime subscribers to the fee paying service have access first. Twenty minutes is of course a long time in a stock market. Fortunes can be lost or made. Educated, but always poorly dressed market agitator Bruce Sheppard of the NZ Shareholders Association has accused NZX of "insider trading" with respect to this matter and got this rather limp response.

NZX under its listing rules, therefore a regulatory function, is gaining all this proprietary market information for nothing, packaging it and disseminating it for profit. Not a bad racket is it? Nothing wrong (save gouging fee hikes in this service) with this however it is a regulatory function as a processor of information from and to the markets. Rather like the Companies Office charges a small fee for documents archived or not available online. They get the information in the first place solely in their role in the process of incorporating New Zealand companies.

The issue with this information is that it is from the most trusted source that you can obtain in the market - the Regulator. Other parties may use this information but this changes the type of information from source to the second hand.

It is the next step into subjective and editorial publishing and disseminating information where the haze gets thicker as the information is no longer just factual, or second or third hand but it is being used to create opinion to make profit for another part of the Regulator's business. This is where NZX's strategic plan intends to grow its business into and what has sparked complaints of late from other players in the publication industry. Described to:

"give NZX exposure into the rural sector (aka farmers) that to date we haven't really been able to achieve with our existing agricultural acquisitions".

"The combination of our corporate-focused information products (focused predominantly on data) and CPL's farmer-focused news and information products (focused primarily on editorials) will enable us to corner the market as the provider of agri information, news and media on NZ agri sector for farmers and corporates alike," the Cross memo said

NZX are using the guise of a possible futures and commodities market as its front for the purchase but the golden goose is listing Fonterra. Everyone knows that and the elephant is no longer in the room, this view is no longer just cynicism. NZX is a Regulator with the highest quality trusted information on listed companies that there is. They are taking the trust gained by virtue of their Regulatory position and placing it in the commercial marketplace again using their position as Regulator to expand their commercial business. They bought up farming publications that are trusted by farmers for their information facilitation prospects and appointed the Fonterra Chairman to their Board. In other words, the information contained in the farming publications to farmers is the equivalent in trust terms of getting information from someone of the standing of say a veterinarian or their family Doctor.

NZX is the Working Style suit disguised in a haybale, that is cheekily now trying to find its way to the farmers front door without getting shot at.

Conflicts of Interest

NZX in its own documentation acknowledges it has a conflicts of interest in the New Zealand marketplace. Several documents have been produced and I want to focus on one titled "NZX Conflict Management Policy dated 20 January 2008" because it is pertinent to not only the Country-Wide debate but also to the direction and focus of NZX's recent first quarter profit result that I have covered last week with the expansion of NZX's "information" business that has seen an increase in profit on March quarter of a massive 39% from $2.8 million to $3.9 million. The "information" business accounts for 45% of NZX's operating revenue.

This 16 page document purports to cover potential conflicts and the framework in place for resolving those conflicts. Only it doesn't really, it just acknowledges there are conflicts and then provides a convoluted process full of more conflict to deal with the original conflict. Like the following examples:

CEO And Control

1. Mark Weldon (CEO) is responsible jointly with the Head of Supervision (HOS), for the regulatory and solely for the commercial running of NZX as CEO, delegated from the Board of which the CEO sits. This HOS isn't an independent role as at Attachment 1(3.2) the CEO can recommend to the Board to sack or hire that person.

Elaine Campbell resigned from this role back in April 2008 and since her departure the position has been held by numerous personnel, Simon McArley for one. It now looks like the position is still open on Trademe and in Australia on Hays site for $A170,000 starting salary for working hours I don't even wish to think about. This seems far too low to attract the sort of academics and experience in the Securities and Regulatory area for the calibre candidate they need to even look like attempts are being made to reign in the current rampant and potentially very rampant CEO. At that price the lawyer simply won't be smart enough. And yes, that's a compliment to Weldon, he's far too clever and experienced in his position now to let a paltry $A170,000 in-house lawyer get in his way. It is like Le Bron James shooting hoops with Obama. The Head of Supervision should be the second highest paid person behind the CEO. Their position should command that level of prestige in the organisation.

At IV(3) they "provide(s) a mechanism to ensure the independence of the HOS and that no undue commercial pressures are brought to bear on her (sp) or her team". Where?

At Attachment 4(3.1) if the HOS doesn't agree with a decision then "the CEO/Board Member may overrule the decision of the HOS after discussion and support the original decision of the relevant staff member". So the HOS can actually be overridden again on direction to the CEO by another staff member.

In reality the HOS is a paid employee of NZX and Mark Weldon is simply his/her Boss. It is the equivalent in the offshore world stating the firm's Compliance Officer is an independent position. They are not. While they have reporting obligations to the Regulator, every Compliance Officer I know who has reported their CEO has mysteriously disappeared soon after to now be hold up in a hell-hole such as Jersey or Guernsey Authorities where regulation has snuffed their industry into submission.

The difference being here is that NZX is the Regulator. The standard must be higher and the process more transparent. At NZX Regulatory staff were given interest free loans to buy shares in NZX, which is quite astonishing as having practical experience in the psychological effect of staff share schemes everyone from the receptionist to the tea lady sits all day wondering how much they are going to be worth until they can cash out all desperately trying to work reporting figures to up the share price as much as they can.

Compliance Staff Incentives

2. In a notice dated May 2008, selective staff were given 80% loans to buy a total of 766,000 shares at $7.16 a share, interest free for two years. Included in the list were:

Elaine Campbell, and the two acting heads of supervision currently Cassandra Crowley and Garth Stanish. Three staff we know have REGULATORY positions. This adds even further the allegation that the regulatory and commercial staff split is anything but a fiction.

Splitting Regulatory and Commercial Function

3. At IV(5.1) the policy states "supervisory employees operate separately from the operational and commercial side of the business and their decision-making and information is quarantined in accordance with restrictions....."

I have already explained that it isn't quarantined as NZX's market regulatory function of collecting information is now creeping and crept over into commercial activity of publishing and disseminating the information in other forms to influence areas of the market it is focusing on.

Added to this as "quarantine" is such a strong word in this context, if the regulatory and commercial side of NZX is so separate then it shouldn't be difficult for a strong Minister to simply split the functions. To separate the conflict and make the functions transparent. The NZX annual reporting however does not show us the breakdown in expenses or revenue from the separate Regulatory and Commercial functions. We cannot see how many employees work in each unit, or their experience and how much revenue being generated is being re-invested in the regulatory function to strengthen it. That is, at III(4) how successful has NZX been to ensure avoidance of "resource allocation is skewed away from supervisory activity in favour of revenue generating activity?".

The CEO An "invited attendee"

4. The CEO does not sit on the two standing committees of the Board, the Audit and Risk Committee and the Remuneration and Risk Committee, yet the 2008 Accounts disclose that he attended "a number of meetings as an invited attendee". The committees only had a maximum of 8 and 2 meetings respectively. So how many did he attend? And why?

CEO not always bound by Regulatory Code of Conduct

5. Attachment 2(5) states that "That the CEO is bound by the Regulatory Code of Conduct insofar as this is practicable". In other words there is wiggle room for the CEO to not actually have to comply with the entire section headed. Why?

Remember this is the CEO who has an option based on earnings performance to own more than the 6.51% he already owns of the Regulator, in the 2008 accounts, the CEO was the 3rd highest shareholder behind Fisher Funds and ING. His only financial incentive (and it is a large one) is to grow the commercial side and defend and use his regulatory position to do that.

Who "watches" the Regulator?

Enter Jane Diplock, who is Head of the Securities Commission.



The Securities Commission (SC) reviews NZX's regulatory activities - sort of. It does not review NZX's commercial activity. In 2005, Diplock and Weldon's relationship hit the lowest public point. Diplock has questioned conflicts before. Then suddenly she backed off because Diplock personally has the game to match Weldon, but there are claims that the Commission doesn't.

Perhaps it was because Diplock's role went international as Chairman of IOSCO (International Organization of Securities Commissions) from 2005. IOSCO's members regulated 90% of the world's capital markets. Since 2005 of course the New Zealand regulatory system (or lack of it) for finance companies has exploded into very negative headlines.

Mai Chen is a member of the SC and if let loose would be a marvellous irritant especially in a downturn in work in her area in Wellington. Her over enthusiasm wears thin on me but she has the academics and jousting skills required to deal with these conflict issues that are at law very challenging as the lines being run are so thin that there are delicate arguments for every permutation of the law, regulation, policy and codes. My sources at NZX state that the SC is underfunded and wished that I include that opinion here as they have sympathy towards their plight, as they do of their own Compliance staff at NZX.

The SC explains their role:

The Commission is responsible for advising the Minister of Commerce on an exchange's conduct rules. Currently, NZX is the only registered exchange in New Zealand. The Commission and the NZX are co-regulators of the exchange's markets. Their roles are set out in a memorandum of understanding. In brief, the NZX is the front-line regulator concerned that market participants comply with the conduct rules, and the Commission is the statutory regulator which investigates any suspected breach of the law.

During the first week of May, Diplock spoke to a seminar titled "Regulation of New Zealand Capital Markets" in Auckland.

With the recent controversy surrounding the proposed Country-Wide sale, the functions of NZX as a Regulator and a commercial operation have never been more topical. Diplock made some relevant comments to the debate with respect to capital markets.

"Much of the harm in the financial sector has come from loss of confidence in markets and intermediaries driven by conduct issues such as conflicts of interest, malpractice, and unethical behaviour."

"Restoring confidence in capital markets requires enhanced securities regulation and supervision in a coordinated fashion at the global level, and independent, strengthened, and well-funded regulators for implementation at the domestic level."

What Diplock is talking about here is that the recent collapses in products leading to the "credit crunch" and trillion dollar bailouts has led to a demand for more transparency and regulation to restore reputation and integrity of financial systems. This in a time where NZX is pressing on with development of more products and markets.

So what would Diplock think of the NZX's ventures into publishing, given it has a regulatory function of information collection and dissemination and now it has spread its tentacles?

It is quite likely Diplock in her current globally stretched state would simply sit on the fence and state that the new NZX venture has a commercial element and therefore is outside the scope of her regulatory review. Ignoring that the NZX's own limp conflict management policy is blurred in terms of dealing with the new situation. A conflict management policy with little apparent independence but at IV(6.1.1) with a committee called Special Division of NZX Discipline . This division however seems dependent ironically on NZX for funding so how can it ever be viewed to be independent? The complaint however must relate to NZX’s compliance with the NZSX Listing Rules, this warning is specifically stated on the complaint form. Again the Country-Wide example or NZX's expansion from regulatory to commercial purpose doesn't seem to fit under this scheme either.

The only way that NZX will be subject to any review is if Diplock uses her powers to look into the regulatory aspect of "information" and decide that the right to use this information does not stretch over to commercial aspects as proposed here - to get right into the publishing business through third party publications.

Chinese Walls

"Chinese walls" where firms are split into separate divisions but operating under the same umbrella, is a delightful concept whose time, like that of banking secrecy and offshore confidentiality guarantees, is all but over. With the collapse of banks and corporates failing who were deemed "too large to fail" in the subprime crisis, there is now a new trend and drive towards transparent business functions. This on top of the Sarbanes-Oxley regulations and the break-up of several major accounting firms that again were "too large to fail".

NZX is not so much an example of an effective Chinese wall, but it is becoming more like the Berlin Wall, where its CEO appears to have taken a bulldozer to the wall and be freely moving himself between East and West, Regulator and market participant. Uncontrolled and unfetted to carry as much between the wall as long as his shareholders are happy.

If there is to be a "Chinese wall" between NZX and its publishers then the CEO will have to change his attitude from last week

Herald: "Would the exchange protect the editorial integrity of its publications?"

Weldon: "The answer to that is, without question, yes. There is, I have to say, a fair degree of disappointment from myself and internally that we've got this person Alan Robb whom we now pay who apparently has issues with presuming what our level of integrity about editorial is."

Politicised Role



The CEO of NZX now not only has a Regulatory and Commercial function but he is the obvious right-hand ear of John Key and the National Government as their primary business reform advisor. He not only attended but Chaired the Jobs Summit and also sits on a potentially very influential Tax Working Group. Under Labour he had a soft Minister in Lianne Dalziel and fill-in Pete Hodgson and Dr Cullen gifting him Kiwisaver. No offence to Simon Power, but he's a small town lawyer who practised in Palmerston North for a few years and never left the country before becoming an MP. He's no threat to Weldon's plans.

While I have no issue with Weldon's potential or ability for rampant evil as a businessman, I see added issues with his ever bulging politicised role outside that of the capital markets when he is primarily meant to be in the first instance a market Regulator. This function should be removed from his control and that of the NZX Commercial division. For someone acting as a Regulator his profile is just too large and his hands are in too many pies. He also does not have the required neutrality to be a Regulator and judging by how thinly he is spreading NZX over its Regulatory function, not much interest in that side of the business.

I am not the first commentator to bring up the issues of conflicting roles and confusion from NZX as a Regulator participating the way they have been in the marketplace, and until the roles are split I won't be the last.

But in any industry where you are trying to make a buck, taking on your Regulator is a one way ticket to a very hard life. Insiders I speak to are terrified to be found out with respect to criticising NZX or the way it is regulated. With good reason I can add. If the NZX was my Regulator I simply would not be writing this piece. An angry bully-boy Regulator will destroy your business.

With the direction that NZX is clearly heading, it is now time to completely split off the function of Regulator away from the commercial operation of NZX.

Executive Summary

1. NZX is privy because of their Regulatory position to information that makes them a trusted source.
2. NZX charges for dissemination of this information to the marketplace and generates 45% of its operating revenue in this fashion.
3. NZX is spreading its Regulatory role of a trusted source collector and disseminator of this information into commercial publications it is planning to purchase.
4. NZX has had no permanent Head of Supervision for a year and it is arguable that this person is truly independent anyway.
5. NZX claims that its Supervisory and Commercial operations are "quarantined".
6. NZX Supervisory staff have been financed into an employee share scheme. The NZX CEO is according to the latest accounts, the third largest shareholder in the company and has a sole financial incentive to increase the earnings per share to receive more shareholding.
7. The Securities Commission has previously raised issues of conflict with respect to NZX.
8. The Securities Commission is over stretched and under resourced, more so due to recent finance company issues.
9. The Securities Commission has called internationally for "independent, strengthened, and well-funded regulators for implementation at the domestic level" due to recent subprime crisis issues.
10. The NZX CEO has a new politicised role and is seen by political advisors as having large influence on John Key.