Bill Dalton

I was tempted to talk about Winston Peters again this morning but I decided that if people hadn’t seen through this dreadful individual by now, they never would.

Instead I thought I would tell you about my council duties for the last week.  Dave Pipe and I are the Napier City Council members of the judging team for the Hawkes Bay Regional Environmental Awards.  The team is made up of two councillors from the Regional Council, two from Hastings District and the two of us from Napier.

And what has amazed me is the number of people who are dedicated to improving our environment.  And some of the things they are doing are really very simple yet are having a significant effect on our environment.

There are some things that are notoriously difficult to deal with.  Used tyres is an obvious one – there is no easy way to dispose of tyres.  We can toss them into the landfill but that creates huge problems.  One they fill the landfill up very quickly and two they take years to break down.

One option is to export them but what happens to them then.  I understand that China and other Asian countries import tyres from all over the world and burn them as fuel.

So whilst we are keeping our immediate environment clean, the global environment is being polluted at an alarming rate.  Having old tyres used in such a way is not acceptable and the fact that it is happening out of our sight doesn’t make it any better.

Whilst the judging process takes up an enormous amount of time, it is a really worthwhile process.  It is great to see traditionally dirty industries working so hard to clean up their discharges.  It is satisfying to see what in the past, we would have called waste, being recycled into valuable products.  And it is great to see simple recycling stations appearing in workplaces throughout the district.

The other interesting thing I’ve discovered is that often these environmentally sound practices are not at a cost to the business involved, but in fact result in more efficient work spaces, greater productivity and therefore improved profits.

We’ve got a long way to go but I’m heartened by the progress we have made in recent years towards a cleaner and healthier environment.

I am often asked the question – what has caused the meltdown in the Finance Company Sector in New Zealand – and the answer is simple. It’s greed.

It all began in the USA with the sub-prime crisis. Greedy lenders lending far too much to poor borrowers. Greedy borrowers borrowing far more than they could hope to repay. So the dramas began in the banking and mortgage sector in the States and the effects spread throughout the world.

In New Zealand we had greedy owners and directors of finance companies who raised money from the public and then lent it to developers – many of whom were related parties – in an appallingly cavalier manner.

And of course we had greedy financial planners who poured millions of dollars of client’s money into these disreputable, bound to fail finance companies. Bridgecorp didn’t have any trouble raising funds from some advisers when they were offering two and three times normal brokerage. I would have thought such ridiculous levels of brokerage would have rung alarm bells.

So greed created an environment which resulted in these poorly run finance companies failing.

The problem we now face is that the investing public has decided that all finance companies are poison and that of course is not true.

Companies like South Canterbury Finance have been around since 1926 and they have been an essential part of commerce – financing plant and equipment, property, aircraft, vehicles and participating in New Zealand’s growth.

The sad part of the meltdown in the Finance Company Sector apart of course from the thousands of individual loss stories, is that now, even very good companies are suffering.

Companies like Strategic Finance, that has one of the best teams of personnel in the country, have suffered due to the lack of confidence in the sector. Because of the failure of other companies re-investment rates that were around 70% have dropped to 10% and that is unsustainable.

But Strategic highlights the difference between them and the shonky lot like Bridgecorp and Blue Chip. No hiding the Porsche or other assets from the investors for Strategic. The management team have put up $22m of their own funds and is negotiating a restructure plan that will see all investors protected for both income and capital.

Frankly I’m not sorry to see the Petricevics of this world biting the dust. I’m just sad that he and his cohorts have hurt so many people and damaged a good sound industry.

Related Links

Somerset Smith Partner’s disclosure-statement. (PDF 1.1mb)

There is no doubt that the 2008 election campaign is going to be a grubby one – the dirty tricks have started already.

Labour is desperate to stay in power and they are not that stupid that they can’t understand polls.

National is equally desperate to gain what they see as their rightful place, the treasury benches. After nine years on the sidelines, they believe their time has come.

In the past, I have often commented that Labour and National struggle to find differences between them. They are both in the centre of the political spectrum, one leaning to the left and one to the right. Since the Greens split from Labour and ACT split from National, we have been left with a solid political chunk in the middle split between National and Labour.

However this election there appears to be a clear philosophical difference developing. Labour has, under Michael Cullen, run an amazingly conservative ship. They have tried to do all their infrastructure spending out of current income which frankly has resulted in the quality of our infrastructure declining and our taxes being held unnecessarily high.

National, on the other hand seems to be embracing the inter-generational funding philosophy, very typical of the way many local bodies are funded.

Basically inter-generational funding works along the same lines as you and I did when we bought our houses.

We didn’t try to pay for our houses out of current income. We acknowledged that our house was going to provide shelter for the next 50 years so we spread the cost over a number of years – even though that action incurred an interest cost.

National is suggesting a similar plan. The infrastructure that New Zealand is crying out for to allow us to get sustainable growth into the economy, is going to serve us for many years to come. Therefore it is unfair to current taxpayers to ask them to pick up the total cost, just as it is fair to ask future generations to contribute to this infrastructure.

No doubt we will hear emotional rhetoric about irresponsible borrowing – remember Muldoon talking about “Bill borrow and hope Rowling”. But sensible borrowing by governments is no different than a businessman borrowing to expand his business or you and I borrowing to buy a home.

In France, when a person is accused of wrong-doing they are deemed to be guilty until they can prove their innocence.

In New Zealand, the same person would be regarded as being innocent until the accuser could prove the guilt.  That is – everywhere in New Zealand other then at the Inland Revenue Department – they work on French law.

So, on that basis it could be said that Winston Peters is innocent – no-one has yet proven his guilt.  But, surely there have been enough questions raised in and by the media – questions about the Glenn donation, the Vela donations and the Jones donation, that to fail to give reasonable explanations is in effect obstructing the path to the truth.  If there is nothing to hide give us the facts.

Peters’ failure to even attempt to explain these matters and his insistence on arrogantly attacking any questioners is totally unacceptable behaviour from a person who draws his income from the public purse.

Surely the blue rinse set in Tauranga is not going to inflict this fellow on us again in November.

And speaking of unacceptable behaviour – the Labour Government, realising they are about to bite the dust, are flat out appointing all their cronies to cushy boards and public bodies.

They need to get these appointments made no later than 3 months out from an election so the process is in overdrive.

Last week alone they appointed 43 people to soft, publicly funded jobs.  They have appointed 140 in the last five weeks.

People like Mike Williams, President of the Labour Party has picked up a directorship of the New Zealand Transport Agency, his fifth such appointment.

I suppose the rumoured $140,000 plus per year he receives from these appointments, fees paid by you and I the humble taxpayers, ensures that the New Zealand Labour Party can save on any presidential stipend.

It really is open season on jobs for the boys – and girls – and you and I will be keeping these people in the manner to which they have become accustomed.

Doesn’t it make you feel good to be such a benefactor?

Yeah right.

Related links

Murry McCully’s newsletter - A Tsunami of Cronies? 25/8/08

Isn’t it strange how cult leaders always like to adorn their weird groups with a respectable main-stream purpose.

The Reverend Moon claimed his brainwashing cult was a religion.  Jones claimed his cult was a new and successful style of living until the Jonestown massacre.

Recently we have had an offshoot of the mormon religion led by Warren Jeffs who claimed he was doing gods work until it was realised he and all his grubby old mates were producing children from young girls.

Winston Peters simply calls his cult a political party.  MMP has enabled the likes of Jim Anderton to call himself a political party and therefore receive large dollops of dough from you and I the humble tax-payers and to me – that is bad enough.  But I certainly draw the line at a system that allows someone like Winston Peters to benefit from the government coffers as he does.

His so called political party is a joke.  As the leader of this cult in 2005 he blathered to all and sundry that he was not interest in the “baubles of office.”  Immediately after the election, when he saw he was in a position to bargain, all that went out the window.

Not only did he grab a ministerial post, with all its “baubles of office”, but he only took on the easy part of the job.

No Minister of Foreign Affairs and Trade for Peters, he just took on foreign affairs.  Clearly there was too much work in the trade part of the portfolio because that was put in the excellent hands of Phil Goff.  Not even Aunty Helen would trust Winston in that important area.

And now Winston Peters asks us to believe he never knew that $100,000 had been dumped in to his legal fees account.  I don’t know about you, but I find that absolutely impossible to believe.

By his own admission, Peters is not a wealthy man.  You can’t tell me, that any man of modest means who has racked up huge legal fees on a fruitless mission to heal a bruised ego, would not know when someone dumped one hundred grand into the kitty.  And if, in the very slightest chance that your solicitor did receive the money and not tell you, wouldn’t you sack him forthwith.

Peter’s solicitor admitted on TV that if the large donation had not been received, then Peters was liable for the shortfall in fees.  Does that mean Peters had a pecuniary interest in the donation?  And for that solicitor to appear on TV and suggest that he acted in a way that he had been taught in the 1980’s – well its’ just laughable.  Doesn’t he realise there have been substantial changes in MP’s disclosure rules since then.

Frankly, even those poor sycophantic souls who have continued to support the Winston Peters cult, must now see the error their ways.

Several times a day I have the same question put to me. Is it time to climb back into the share market? And frankly there is no yes/no answer.

When share markets are high, we often suggest that investors take a profit. That doesn’t mean you sell all your good stocks that have done well. It means that selling a few off the top locks in some profit – reduces the average cost of the remaining shares you hold in that company and better protects you if there should be a downturn. It may be that it makes sense to take a profit on a certain stock on several occasions.

When stocks are well down – like right now - investors seem to think they have to either stay right away or climb back into the market in a big way. They are ignoring the very sensible process of dollar cost averaging.

Dollar cost averaging happens when an investor decides how much he or she wants to invest in a certain company, then moves towards that goal with a series of purchases.

Say for example XYZ Ltd was currently trading at $5 – an all time low. An investor may decide to buy say 3,000 shares. In these uncertain times it makes sense to buy say 1,000 shares right now and two parcels of 1,000 at later dates.

In that way – if the price continues to fall the investor has the opportunity to average their price down and if the price moves upwards they have bought one third of their proposed holding at the bottom of the market.

So it’s not a case of all in or all out – it’s a case of taking a sensible approach.

Right now the financial market place is the most difficult I have known in 30 years in the industry. But difficulty means volatility and volatility means opportunity.

In the secondary fixed interest market there are securities in good companies trading on yields up to 20% - such is the lack of confidence in that sector.

The share market has fallen right across the board and yet some of those companies are performing well and have good prospects.

As one commentator so aptly put it – Buying last year was like buying in the days before Christmas, buying today is like buying in the Boxing Day sales.

Related Links

Somerset Smith Partner’s disclosure-statement. (PDF 1.1mb)

There are still some in our community who believe that Marineland should not close its doors to the public when the last dolphin dies.

The fact that two of our councillors voted against the closure simply beggars belief.

What do these people want the Marineland staff to do?  Sell tickets to the public – usher them in to the grandstand – make an announcement that the government prohibits us from capturing, breeding or importing dolphins so there ain’t no dolphins – thank them for coming – and wish them a happy day.

You can’t sell tickets to a show when your headline act is no longer with the show.  You don’t sell tickets to the movies and ask the patrons to look at a blank screen.

There is no option, when the last dolphin dies we do not have a viable entertainment spectacle therefore we must close our doors to the public.  It’s that bloody simple.

What we should be concentrating our energies on is “where do we go from here?”

The marine zoo and hospital has always been a very important part of Marineland and I would like to see that retained.  However that will never be viable on its own – we need a new headline act.  We need a new act that will draw in the punters and please, no-one suggest dolphins – that is a dead duck.

The facilities at Marineland need a huge facelift and that is going to require a great deal of money.  To justify that expenditure we need to have a business model that shows we can increase patronage dramatically.

That means we need a stunning headline act.  Someone out there must have an idea or an image in their mind of an act or a demonstration or a spectacle that would be unique in New Zealand and attract people to Napier the way the dolphins used to.

I am strongly of the opinion that the infrastructure in place at Marineland is too valuable to loose but we can only retain it and build and develop on it, if we can find a new attraction.

So Marineland must close when the last dolphin dies.  Not to do so would be defying logic.

What we need is your ideas to enable us to plan the re-birth.

I still can not believe – or I don’t want to believe the information that John Key brought to our attention this week.

Key claims that bureaucracy is gobbling up huge amounts of the government’s contribution to sport in this country. He claims that Sparc, the government’s sports funding agency, spends a third of its budget on administration. We are told that Sparc employs 86 full-time staff, 47 of them on over $100,000 per year and 14 of those on over $150,000 per year. And despite this army of highly paid and therefore one would hope highly skilled employees – they plan to spend $5.5 million on their website this year.

Frankly I find this outrageous. Surely the government allocates funds to Sparc with the intention of improving the health and well-being of all New Zealanders. Surely the government allocates funds to Sparc to foster sport in such a way that champions are produced. People we can all be proud of.

I am sure Sparc was never set-up to produce a large number of highly paid semi-civil servants who no doubt bolster the numbers on the Wellington cocktail party circuit.

The minister who allowed this to happen should be sacked although - in the interest of costs – we can probably wait until November when that will happen anyway.

But it does raise in my mind the so-called regional sports park.

I say so-called because it is clearly a Hastings District Council initiative – if it was truly regional, others would have been consulted in the region.

For instance – and I accept that this project has been underway since 2004 – I have never been asked if I think a velodrome is a greater asset than a swimming pool, or if gym-sports were more important then badminton.

It is my view that the opportunity to build this park has been lost. We are now into a severe downturn in the economy and corporate backing is going to be extremely hard to obtain.

But if Hastings do manage to complete this ambitious project, they are going to have to be very careful that the planned administrative offices are not full of overpaid bureaucrats eating from the hands of real sports people.

I have always said that my generation is the lucky generation.  Lucky because we haven’t known war or depression – both very strong influences in our parents’ lives.

But I’m beginning to re-think this “lucky” tag.  The communities our parents lived in, from my observation, seemed to be much nicer communities.  Murders were so infrequent they made headline news for days.  Certainly they didn’t have to cope with communities that contained the insidious gangs we now have to put up with.

We used to think that these appalling gangs, financed and fuelled by P, were confined to the big cities – largely South Auckland.  Now right here in Hawkes Bay we have them gate crashing parties and chopping and bashing people up with machetes and iron bars.  What is our society becoming and where to from here?

I’m sure our parents didn’t have to cope with the topsy turvy situation we find our financial sector in today.

Over the last couple of years we have seen a number of pretty rumpty financial companies fall over and I’m sure that poorly run companies have always collapsed.

But now with the so-called benefit of instant communications, we are starting to see sound, well run companies striking difficulties.  The problem is confidence or more specifically the lack of it.

Under the new continuous disclosure rules – finance companies have to report regularly the state of their finances.  Now you might think that’s a good idea but it can cause problems.

Most companies, at some stage, go through difficulties and in most cases trade through them and regain their strength.  When they have to tell the world they are having difficulties, even small problems seem huge in the eyes of an already nervous investing public.

So often small problems, become big problems because investors know information that in the past they would not have, and naturally take a conservative view.

The problem we have in New Zealand at the moment is a crisis of confidence.

The one thing my parents didn’t have in their day was a Governor of the Reserve Bank who could give some leadership.

In my view that is one thing that hasn’t changed.

The word crisis is so over-used these days that it has almost lost its meaning, but frankly the law and order situation in this country is a crisis in the true sense of the word.

In fact in some areas of the country – South Auckland for example – it appears that law and order as we know it has completely broken down.

And the question is why.  My view is that we are pumping huge resources into the ambulance at the bottom of the cliff, where we should be stopping those that are likely to fall over that cliff.

We – the humble taxpayers – spend a fortune on legal aid – why don’t we spend that money on preventing crime.

Why don’t we have a fair and reasonable review of the New Zealand Police.  The New Zealand Police force is seriously under resourced.  We hear all this garbage about increasing police numbers by 1000 but lets look at the facts.

For years, when the police have asked for better pay they have been fobbed off with extra perks.  Now when a police officer leaves the college in Porirua, he or she starts with 7 weeks holiday per year.  They then get toil – time off in lieu – which can add up to several more weeks leave per year.  Many officers struggle to take the time off they are owed.

The truth is that most police officers don’t necessarily want that much time off.  They would prefer to have more standard leave provisions and to be paid a decent wage.

The government has lost the plot.  Take the wider public service for instance.  The government, concerned that they are failing to retain valuable civil servants, have announced they are going to give them an extra weeks leave.

How does that help?

How does a civil servant, including the police officer, pay for the inflated price of petrol or cheese with an extra weeks leave.  What they want is a wage that allows them to continue to serve their country.

And this propensity to grant extra leave rather then extra money, compounds the problem of the lack of service from civil servants – particularly the police.

It sounds wonderful to hear that we have an extra 1000 police to protect us. The truth is that inexperience is replacing experience and a substantial proportion of them are on leave anyway.

Until we sort out the resourcing of our police force the situation in South Auckland will get worse and spread throughout the country.