Thursday, October 1, 2015

Fonterra's Inflated Salaries Unsustainable and Immoral

Theo Spierings has requested a salary freeze after receiving a $770,000 increase. He obviously did not turn down this windfall at the time and his request for a freeze does not include performance bonuses. Spierings' increase was based on his performance over the time of the botulism scare when Fonterra pleaded guilty to charges of poor risk management and delayed notification brought by the Ministry for Primary industries.

I can imagine the feelings of many dairy farmers who have been encouraged to increase stock numbers and production and invest in the infrastructure and inputs to support them, only to find their income slashed through a saturated commodity market. They must shoulder the risks and suffer income uncertainty while those managing their company continue to earn their million dollar plus salaries despite not protecting the company from market fluctuations. 17 of Fonterra's staff earn over $1 million and only those in the lower management positions will be likely to lose their jobs as the company cuts costs. It takes over $30 million a year to pay the salaries for the top 20 Fonterra staff. The Prime Minister's salary is $428,000 a year but over 100 Fonterra staff earn more than him. Over 300 Fonterra staff earn more than medical specialists and surgeons.

Fonterra's highest earners

·       $100,000 - $200,000: 3482 staff
·       $200,001 - $300,000: 402 staff
·       $300,001 - $400,000: 138 staff
·       $400,001 - $500,000: 66 staff
·       $500,001 - $600,000: 29 staff
·       $600,001 - $700,000: 13 staff
·       $700,001 - $800,000: 15 staff
·       $800,001 - $900,000: 6 staff
·       $900,001 - $1 million: 8 staff
·       $1 million - $2 million: 13 staff
·       $2 million - $3 million: 2 staff
·       $3 million - $4 million: 1 staff
·       $4 million - $5 million: 1 staff

Dairy farm workers must be wondering why they work amongst the longest hours (12-14 hour days), and often below the minimum wage, when the industry can afford to support thousands of exceedingly well paid managers. The accident and death rate in the farming industry is the highest in New Zealand and the risks of working at grass roots level is obviously much greater than in a Fonterra office. 

The culture of ever spiraling increases for CEOs appears to be a world phenomenon that New Zealand has also bought into. When almost 50% of ordinary workers got no increases to their pay over the past year CEOs averaged 10% increases. Spierings' increase alone was around 25 times the median wage in New Zealand. Eleven New Zealand CEOs now earn more than $2 million a year, the most to ever do so.

I find it immoral when many high paid CEOs lead companies and industries that are obviously profitable yet their frontline workers are forced to accept minimum wages and poor working conditions. The CEO for Ryman Health Care (owners of many of New Zealand's rest homes) had a $100,000 increase last year and now earns more than double John Key's salary, however rest home workers are having to take legal action to have their discriminatory conditions recognised. Kevin Hickman is the founder of the Ryman Healthcare and his personal wealth increased by $10 million to $360 million last year.

I have written a number of previous posts on the same theme of CEO salaries over the years and the trend of paying more and more to management and less to frontline workers seems to be continuing. As before I would like to promote the idea that a CEOs salary could be directly tied to the incomes of the employees beneath them. If a CEO could earn no more than 10-12 times the lowest wage earner in the company it would ensure that all would benefit from the increased productivity that they collectively produce.

Wednesday, September 30, 2015

Venture Southland's Future Threatened

Venture Southland is a unique organisation in New Zealand. As a regional development hub jointly supported by the Invercargill City Council, the Southland District Council, the Gore District Council and Environment Southland it has grown in capability and effectiveness over the years. Most regions have organisations that promote the economic activity that already exist but Venture Southland has gone well beyond that concept. It has developed into a highly effective think tank that has completed a detailed assessment of the regions resources and is actively looking at future proofing the Southland economy based on sustainable development.

The Southland Energy Strategy published in 2011 is superior than anything I have seen produced in New Zealand and the current National Government has nothing as comprehensive. While the rapid growth of dairying has had a hugely negative impact on Southland's fresh water systems and the potential closure of the Tiwai Smelter threatens the local economy, Venture Southland has been working tirelessly to develop alternative and more sustainable industries and manage the worst effects of existing ones.

Here is a list of some of their achievements and ongoing work:
  • The Awarua Rocket Tracking Station has connected the region into international space programmes and has brought in $1 million dollars of investment and scientific expertise. 
  • Venture Southland gained Government support for its strategy to convert coal and lignite boilers and heating systems to ones using wood waste. This involved ensuring long term supply (at least 2050) and providing the technical knowledge to help with the transition. The Invercargill swimming pool, local businesses and many schools have made the shift already. 
  • Oat milk has been identified as a highly marketable commodity and Southland has one of the best environments in the world for growing oats. Given those who are lactose intolerant in the world and who want dairy alternatives, potential for this product is huge and the environmental impact of the industry will be less than dairy. 
  • Venture Southland identified the extent of methane emissions from dairy ponds around the region and, rather than allowing these to add to our greenhouse gas emissions and climate change, is looking at capturing the gas as an energy source for farms. 
  • The difficulties of managing the environmental impacts of farming and its importance to the local economy is a difficult one, but the Lean Project looks at improving the profitability of businesses through more sustainable practices. 
  • Venture Southland is also has a leadership role in supporting community groups, tourism and cultural activities (arts and busking festivals etc).
Despite the fact that Venture Southland has been so successful and is well regarded outside the region, many within Southland are unaware of its importance and effectiveness. VS devotes all its energies into promoting others and does little to promote itself. Consequently many have questioned the amount of ratepayers money is going to the 34 Venture staff and their activities. 

The Southland District Council clearly have little understanding of the value of the organisation they helped create and fund and are proposing to withdraw a community development team from VS and set up their own independent one. This could create a dangerous precedent because if other councils decide to do similar it will seriously reduce the capability and effectiveness of VS and we will lose something that is the envy of many other regions. 

When one compares the value that taxpayers get from the extravagant palace that houses the Ministry of Business, Innovation and Employment compared to the tiny team working out of the humble Art Deco building in Spey Street, Invercargill, it is clear that there is no competition. The MBIE has delivered little for regional development and Southland is used getting on with the job of showing the rest of the country what is possible with foresight, good planning and using local talent. 

I hope my letter to the Southland Times today will encourage more to come out in support of Venture Southland and appreciate the value we get from our amazing local team:

I was concerned to read on the front page of the Southland Times (September 29) that the Southland District Council is considering withdrawing a community development team from Venture Southland.

Venture Southland is probably the most effective economic and community development hubs in the country. I often organise visiting MPs to meet with the Venture team to see what is possible when a region’s councils pool resources to support regional development. All have been highly impressed and there has been interest in replicating the Venture model across the country. The West Coast in particular would benefit from a similar organisation.

One of the advantages of Venture Southland is the collegial culture and crosspollination that occurs when those leading economic, community and cultural activities learn from each other. The success of Venture’s many projects can often be attributed to the collective knowledge of Southland communities and the relationships that have been established within the organisation and across the region.

The removal of even one element from the Venture Southland team is likely to reduce the effectiveness of the organisation as a whole. I would have thought there would be more value in building even more capacity in the existing team than removing them completely and expecting them to operate successfully in an independent and isolated environment.

I hope that the Southland District Council will recognize the advantages of the current model in their deliberations and look towards adding value rather than dismantling what is actually working well.

Yours sincerely...

Monday, September 28, 2015

National's Response to CYFs Report: Stop 'em breeding!

After the release of the Modernising Child Youth and Family Expert Panel: Inerim Report  (actually one in a line of many on the failings of the department) the Government had to acknowledge the damning content. Initially Social Development Minister Anne Tolley claimed that it wasn't more money that was needed to improve the service, but this position has softened. Tolley has publicly accepted the views from the expert panel that a complete overhaul of CYFs operations is necessary and this has been welcomed by the Children's Commissioner.

Despite making the right noises I do not trust Anne Tolley and her Government to actually do the right thing by our vulnerable children. As someone who has worked in education for over 35 years I am aware that the rhetoric very rarely matches the reality when it comes to National Governments. When Anne Tolley was the Minister of Education she kept talking about addressing the needs of New Zealand's high priority learners (mainly Maori and Pasifika children) and the current Minister, Hekia Parata, has continued the theme.

National Standards in Education and Charter Schools were supposedly introduced to support priority learners and resources were to be targeted for those identified with the greatest need. What has actually happened has been the opposite and I have already listed the multiple attacks on the public school system by this Government and the sucking of special needs funding to wealthy private schools.

It is clear that this National Government has no real interest in doing anything substantial in addressing the huge inequalities that now exist in our society and does not see meeting the needs of our most vulnerable as the role of government. National is selling off more state houses then those it is building and at the same time extracting dividends from Housing New Zealand that should be used for much needed maintenance.  It is also actively shifting the responsibility of social services to the private sector and NGOs no matter what their past record (SERCO). Relationships Aotearoa was the ultimate casualty of National's philosophy of divesting responsibility, cutting funding then washing its hands of the resulting debacle.

Anne Tolley followed her media advisors and Crosby Textor well, she has looked directly at the camera with eyes full of apparent concern and compassion while explaining that vulnerable children deserve better and substantial change is planned for CYFs. It is highly unlikely that anything substantial will actually happen. I can guarantee that CYFs caseloads will remain high, foster families will continue to lack support and vulnerable children under state care will continue to be treated badly.

It actually appears that what this Government is actually planning to do is something I thought would be a step too far, even for them. Those abused and abandoned by the state are also going to have their right to have children removed too. I guess there is a certain economic logic in reducing welfare spending by stopping those on benefits from breeding and, with increasing immigration, we no longer need a locally produced, cheap workforce.

Wednesday, September 23, 2015

National's Top Ten Dumb Ideas

  1. Not Measuring Child Poverty: After 7 years in Government, National still refuses to measure child poverty so that it can identify and address the issues and track progress. Children living in substandard environments and suffering poor health and educational achievement not only costs a lot every year to mitigate  but will severely limit our economic capacity in the future. Inequality has also limited economic growth, according to an OECD reportCost to the country, $70 billion ($10 billion a year estimate)
  2. Low GHG Emissions target: Since being in Government, National has weakened the ETSsubsidised carbon credits to polluters and we have seen our emissions increase by 13% in the last 7 years. A low target will expose the country to huge costs both economic and environmentalCost to the country, up to $52 billion
  3. Farm Intensification: The Government's goal was to double farm production, rather than adding value or establishing sustainable markets. This has had a huge environmental cost and the focus on exporting milk powder exposed us to volatile commodity markets. The collapse in milk prices has hit the economy badly and left Fonterra struggling to increase higher value income streams like organics.  Cost to the country, estimated around $13 billion.
  4. Tax Cuts: The gift of tax cuts to the rich cut government revenue and rather than adding stimulation to the economy and growing jobs the money was spent on luxury items and property. It also increased inequality and shifted more of the country's wealth to a few. Cost to the country, around $10 billion (about $1.5 billion a year of lost revenue).
  5. Housing New Zealand Dividends: In an effort to balance the books after the loss of revenue caused by their tax cuts, National had to suck funds from departments and SOE's despite the impacts on their core business. National's lack of interest in Housing New Zealand's ability to maintain its houses on reduced funding has resulted in some well publicised deaths and illness directly related to this failure. Bill English has admitted an expensive catch up is needed but also wants to sell houses to get rid of some of the responsibility. Cost to the Country, $1.5 billion (this doesn't include the related health costs)
  6. Sexy Coal: Encouraging Solid Energy to emulate Australia's success in exporting coal to China was too late and disastrously expensive. Cost to the country, well over $600 million.
  7. Bribery instead of Diplomacy: The three obvious examples of this were the Government's bribe to Rio Tinto to help progress the share sales of Meridian Energy ($30 Million); the bribe to buy the favour of a Saudi businessman to get a trade deal ($11.5 million), the bribe to Warner Bros to capture their business support in New Zealand ($60 million). There are probably many more but these are the most prominent. Cost to the country, loss of dignity and $101.5 million
  8. Implementing Novopay: Rushing into the implementation of a system riddled with flaws was a result of cutting funding to the Ministry of Education and poor ministerial oversight. This has impacted negatively on those working in the education sector and caused years of ongoing problemsCost to the country, $100 million+
  9. Changing the Flag: A new flag may indeed be something that should be addressed at some time, but when we currently have a housing and child poverty crisis, this is nothing more than a John Key "vanity project". Even National insiders have questioned the flawed and expensive process. Cost to the country, $26 million
  10. Charter Schools: This has been an expensive experiment with at least three times what is spent per student in state schools being lavished on the 370 students in Charter Schools. One of the schools has failed to deliver a safe environment even with expensive support. Despite the failure the Government has decided to open more schools and continue the debacle. Cost to the country, around $20 million
Total negative costs from this list alone: $147,347,000,000 (almost $150 billion)

Obviously this list is not comprehensive and its accuracy is debatable, but it does point to poor governance and shocking economic management. I didn't even mention current thinking, like the plan to allow builders to sign off their own work. National Governments never learn from their past mistakes and the fact they are even thinking of such a move is extraordinary considering the $11.3 billion cost of deregulating the building industry in 1991 and the current problems in Christchurch. Ideology continues to blind National Ministers from the reality of the world around them.  Their thinking and actions cost all of us dearly as there is less money to invest in the things that build resilience and sustainability: health, education, welfare and the environment.

We also have the $50 billion extra in Government debt that National has added with borrowing over the past 7 years.

Monday, September 21, 2015

Sarah Dowie Misrepresents Housing Record

National MP Sarah Dowie continues to feed misinformation to the people in her Invercargill electorate. In a letter to the Southland Times (Sept 17) she brags about the money currently being spent on State Housing, claiming: "Last year the Government spent $398 million on maintenance and upgrades, which is 40 per cent more than the highest year under Labour." Dowie tries to justify the sucking of over $100 million a year in dividends from the struggling housing provider then later on claims: "This Government has tidied up the appalling state Housing New Zealand was in."

Letters from Gordon Davis and myself set the record straight today and I shifted the blame back on the National Party.

My letter:

Sarah Dowie's Government has been in power for seven years and the availability of good quality, low cost and social housing has never been worse. There are thousands of families on Housing New Zealand’s urgent waiting lists, and at least 1 in every 120 New Zealanders are homeless according to the Salvation Army.

Ms Dowie’s Government was well informed by a report from the Department of Building and Housing in 2010 about the true state of housing in New Zealand and it chose not to act on that knowledge for many years.

Bill English has admitted that under his Government’s watch, state houses have been poorly maintained and $1.5 billion will be needed to bring them up to standard. Forcing HNZ to pay an annual dividend back to the Government coffers seems criminal in the light of this knowledge. The Government has effectively become the biggest slum landlord in the country, wringing profit from the most vulnerable.

Ms Dowie claimed that her Government spent more on maintenance in a single year than Labour, but neglects to explain that this represented a desperate catch up after many years of under-spending. She also conveniently avoids sharing the fact that Labour was focussed on building more houses.

Rather than bragging about the money currently being spent on housing, as she did in her letter (September 17) Ms Dowie should be apologising for the deaths and illness caused through housing neglect in the years before and the severe shortage of warm healthy homes now. 

I hope she will also stand up for the people of her electorate and oppose the sale of Invercargill’s state housing.

Yours sincerely...

Tuesday, September 15, 2015

National Continues to Punish Young and Struggling Families.

43% of wage earners got no pay increase over the past year and only 10% of salaries and wage rates in the private sector increased over the last quarter. At the same time rents have increased by 6.3%, electricity charges have increased by 3.8% and fruit and vegetable prices increased by 7%. I have difficulty understanding how Bill English can claim that there has been a growth in real wages when the reality for many low income households is an even greater shortfall between their income and living costs. It is even harder for many families to find enough money to pay the rent, feed their children healthy food and heat their homes.

The number of working families seeking support from foodbanks is continually increasing (21% increase in one Hamilton foodbank) and the number of babies and children presenting at hospitals for illnesses related to inadequate housing is also growing.

By allowing market forces to drive wage increases, the Government is not protecting our most vulnerable workers. English blames the lack of wage increases on immigration, when there is an abundance of people looking for work then the value of their labour drops (unless the Government makes a stand on the minimum wage or a living wage). New Zealand's unemployment rate is predicted to go over 6% again and our underemployment rate is also of huge concern (currently over 103,000 people are underemployed).

This Government continues to argue that the best way to lift people out of poverty is work and yet despite more people of working age being employed than ever before, poverty grows. Many young parents find themselves in more financial difficulty when in work because any increase in income is lost to transport costs and childcare.

With the downturn in dairy prices it is clear that communities that relied on supporting the dairy industry will suffer. Despite the growth of dairy in Southland, the export income generated benefited few ordinary workers and Invercargill gained a Decile 1 school for the first time after the 2013 census. The median income in the city was below the national median in 2014 (less than $28,000) and already families are feeling greater pressure and local retailers are struggling even more since the dairy slump.

Even those at the forefront of supporting those in need are being forced to work on minimum wages as the Government devolves the responsibility to underfunded NGOs and Relationships Aotearoa was forced to close its doors because it couldn't remain viable. Invercargill MP Sarah Dowie has been promoting harsher penalties for family violence while totally ignoring many of the factors that contribute to it and underfunding those who are trying to address the causes. Despite Invercargill having a large percentage of poor quality housing the Government has decided to sell off all the city's state houses. It is beginning to seem as though our struggling families are finding it difficult enough but the Government is determined to punish them further.

New Zealand should be a great place to bring up children, but for up to 50% of young families daily life is a struggle and for far too many of our children, poverty and violence is their reality. By 2017, National's neglect of vulnerable families will have spanned almost a decade and the consequences of that will have negative economic and social effects for many more decades after. We are seeing a repeat of the 90s all over again when a large percentage of New Zealand families were forced into poverty because of austerity measures that mainly affected those on the lowest incomes.

The family depicted living in their car at the top of this post had no other option while they waited for a house to become available. The offer of one night in a motel was turned down because the mother did not want to build false hopes in her children. The criteria for accessing a state house appears to be so strict currently that a family almost needs to be in a similar, degrading situation to get support. 

Monday, September 14, 2015

The Corbyn Shockwave Hits Powerful Forces

Jeremy Corbyn will probably be pinching himself for some time to check whether he is dreaming or not. His sudden rise to the leadership of the UK Labour Party has probably surprised himself as much as those in the hierarchy of the party who had just included him in the race to try and make their own favourite seem more electable. Corbyn's strong socialist principles were deemed too exrtreme to ever be taken seriously and were supposed to encourage support for yet another moderate "Tory Lite" leader. Instead Corbyn's pure and principled messages struck a chord to Labour members and many young people who had become disillusioned with politics.

Jeremy Corban's rise to power created shockwaves that have rattled through the power base of the powerful and influential in the United States, the United Kingdom and his own Party. Over almost four decades the strong relationship that has been forged between politicians and corporate interests has caused neoliberal thinking to be embedded into the political mainstream.

The idea that people must serve the economy rather than the economy serving the people has resulted in growing inequality. The profits generated by working people have shifted upwards rather than shared and workers have become mere commodities helping drive the economic machine. Unions, regulations and taxes have been seen as impediments to economic growth and spending on Government services and welfare have become luxuries that need to be continually questioned. When the Great Financial Crisis occurred the perpetrators were bailed out (major banks and financial institutions were deemed too big to fail) and austerity measures were put in place so that ordinary people again bore the costs of neoliberal greed.

Socialism and a fair deal for working people had been the foundation of the UK Labour party (as it was in New Zealand) but the solid left politics of Michael Foot and Tony Benn were deemed too toxic to be electable during the 80s. Tony Blair shifted the party to the right and became the sort of leader that corporate interests could do business with.  Blair's fondness for military action was also like no other Labour leader and he led Britain into battle five times (more than any other British prime minister) and he was also a strong supporter of Israel. Blair's relationship with US Republican President George W Bush was a warm one and his honesty around joining the war in Iraq has been questioned, as has the legality.

Corbyn's views threaten so many powerful interests: banks, corporate tax evaders, Israel, oil companies etc. and those with political careers supported by them. The Labour Party hierarchy and ex-leaders did what they could to limit Corbyn's growing popularity. Tony Blair made a last minute desperate plea to dissuade people from voting for him and Gordon Brown did the same. Peter Mandelson even tried to convince the other leadership candidates that they should all withdraw from the race so they that they could suspend the election (Lord Mandelson currently owns a business providing management advice to corporates). Even the BBC attempted to railroad his campaign with a clearly biased Panorama documentary. However it became clear that to all that to shut down the election would only feed his support even more and Corbyn swept in with an overwhelming majority of almost 60% of the first preference votes.

The attacks on Corbyn are not going to stop after his election and many of the same accusations and charges made during the campaign are going to be repeated by the conservative media in both the UK and the US. Corbyn is portrayed as a friend of terrorists and a supporter of extremist views and yet almost all his strong and principled stands have been shown, with the passage of time to be correct (here is a list of fifteen). I especially enjoyed Corbyn's story about his arrest outside South Africa House after protesting against the the country's apartheid regime. He was charged for behaviour offensive to a foreign diplomatic mission and when it went to trial Corbyn was exonerated and paid compensation (which he then passed on the the ANC and the anti-apartheid movement).

I can see external trouble ahead for Corbyn through his strong opposition to Israel's treatment of Palestinians. As with his olive branch approach to Gerry Adams, he greeted Hamas and Hezbollah and referred to them as friends in welcoming them to talks. Such an approach will not please Israel and Corbyn's support for diplomatic solutions rather than violent ones in the Middle East does not fit with the US's black and white approach to allies and their expectations of their Five Eyes club members.

Jeremy Corbyn is no messiah (as his initials suggest), he just is a highly principled, hard working socialist politician whose dedication to politics has seen the seen the end of two marriages. There is the possibility that unless he can rally a strong team around him, the hope that he has generated in the grass roots and growing membership may crumble under the intense pressure, both inside and out. He is not experienced in leading a team and has spent most of his career fighting his battles with minimum support. He has already upset some women in the party for having males dominate leading roles in the shadow cabinet (despite increasing female numbers substantially overall) and the centrists in his Party are plotting.