Hard News by Russell Brown


Auckland's future: Keep calm, but think hard

I presume I wasn't the only one a bit perplexed by Bernard Orsman's story in Monday's Herald about Auckland Council "finances reach[ing] crisis point" and the council "living beyond its means" amid "a financial mess" that would necessitate a "black budget". Wouldn't official alarms have been triggered by this degree of financial chaos?

The answer is yes. And they haven't been. Yesterday, the Herald published a column by David Shand, a member of the Royal Commission on Auckland Governance and chair of  the 2007 Independent Commission of Inquiry into Local Government Rates, in which Shand notes:

The Auckland Council's latest audited financial statements (for the 2012/13 year) show an operating surplus of $246 million and total assets of $37 billion against debt of $8 billion. Either the Herald analysis is faulty or at least incomplete, the accounting standards are inappropriate (unlikely) or there is something wrong with the Auditor-General (most unlikely).

Further, the Auditor-General is required to report each year on councils which may not be financially viable. She has not referred to Auckland Council in this context.

Shand further observes that Auckland Council "is not borrowing for salaries and other recurrent expenditures, but for expenditure on capital assets and infrastructure." (As Ben Ross notes today, in showing strong operating surpluses the council is doing something central government hasn't done in a while.)

The issue lies chiefly with plans for future capital expenditure, some inherited from the old Auckland's constituent councils. These will be contained within Auckland Council's Draft Long-Term plan 2015-2025, which councillors will be discussing and receiving submissions on for the next 11 months. In the meantime, the city is not running out of money and it's irresponsible to claim it is.

Indeed, we might have been alerted by the source of the rhetoric fuelling Orsman's story: Cameron Brewer, Dick Quax and "local body financial commentator" Larry Mitchell of Warkworth, who you may not be familiar with if you don't read Kiwiblog or Whaleoil. (Note also the numpties at the Taxpayers Union last week "reacting to calls for a Crown Manager to be appointed to shepherd Auckland Council through its budget crisis". The "calls" came from former North Shore comedy mayor and current New Zealand First MP Andrew Williams talking to Leighton Smith.)

Shand continues:

It would have been helpful had the Herald given a list of some of the major capital projects being financed by debt so ratepayers can make an informed judgment on the value of this expenditure. (It would also be helpful to the debate if the council more clearly published this information.) Ratepayers can note that nearly half the capital expenditure is for transport infrastructure including new electric trains and roading projects, much of this making up for the past chronic under-investment in infrastructure by previous councils.

You don't need to be a local government nerd to know that the standout capital item on the books at the moment is the $2.4 billion City Rail Link, which promises to transform the city's rail network -- in the way the $1.7 billion Waterview Connection will improve the city's motorway network, only more so. But although the council is paying for various works around the Waterview project, no part of the project itself is having to be funded out of rates.

As Brian Rudman notes, we should have some questions about that:

As Mayor Len Brown and his councillors agonise over how they are going to fund their half of the $2.4 billion City Rail Link - to say nothing of a further $460 million for new rolling stock to run through it - one obvious question is never asked.

Why is the Government demanding that Auckland ratepayers part-fund a new rail tunnel that will immediately become part of the national rail network asset bank? Not only will the Government's rail company control the new tunnel but it will charge Aucklanders an annual access fee before we can drive the trains we had to pay for through the tunnel we helped to build.

This might not be so bad if, as Shand notes, the council didn't have such a narrow revenue base. He characterises the mayor and his council's determination on a maxium 2.5% anually rates increase as a self-inflicted wound, "a totally unrealistic target which can be met only by unacceptable cuts in services."

Shand reminds the Herald of its past use of the term "infrastructure deficit" with respect to Auckland, and in this he's on the same page as Auckland Chamber of Commerce chief executive Michael Barnett in Orsman's original story, who notes that Auckland Councils have long failed to levy rates at a level to play for their plans.

It may be that Barnett is right and there are savings, on the council payroll and elsewhere, that will free up more money for investment. It does seem the council is still with structural issues, including the way its workforce is designed, that it inherited in its creation and which it will have to confront at some point. But I suspect Shand is more right when he says this:

This will require a true partnership between Auckland Council and central government, which is not presently the case. The city needs access to revenue sources such as tolls and a regional petrol tax.

Unfortunately this Government is unwilling to provide access to such revenue sources and removed Auckland's ability to levy a regional petrol tax which was given by the previous government.

No new taxes are particularly palatable and some (poll tax, anyone?) should be off-limits. But it seems to me that the capital infrastructure for Auckland's million-and-growing can't all be funded out of rising property taxes. Anyone got any ideas?


Dotcom: Further news of the unlikely

On the face of it, Prime Minister John Key's consistent claim that he had never heard of Kim Dotcom until the eve of the extraordinary armed raid on the Dotcom mansion on January 20 2012 seems unlikely and absurd.

How could he not have known of the flamboyant, controversial German occupying a huge property in his electorate? If three of his senior ministers and even his own electorate office staff were familiar with Dotcom and his issues, how could he not be?

But there has never been any evidence to prove otherwise.

"It doesn't exist," journalist David Fisher affirmed to the room at the last Wintec Press Club lunch. "I know. I've looked."

Fisher's New Zealand Herald story today does not provide that proof. But it adds information that makes it seem even more unlikely that the Prime Minister was innocent of all such knowledge:

Documents declassified and released through the Official Information Act show the Security Intelligence Service tried to block Kim Dotcom's residency application but dropped their objection 90 minutes after being told there was "political pressure" to let the tycoon into New Zealand.

And further:

The Herald has made multiple Official Information Act requests since Dotcom was arrested in January 2012 on FBI charges of criminal copyright violation, in an attempt to discover why he was given residency. The requests have never produced the SIS information - until a request in May accompanied by a privacy waiver from Dotcom.

The "political pressure" claim was made in October 2010 after the SIS blocked Dotcom's residency application when it learned of the FBI's criminal investigation into his Megaupload empire.

On October 22 that year, one SIS agent wrote to another saying: "INZ [Immigration NZ] has phoned me to advise that the INZ CEO [Nigel Bickle] is questioning why this case is on hold. Apparently there is some 'political pressure' to process this case."

The agent noted the need for the "CEO" to be briefed on the Dotcom case. The SIS director at the time was Dr Warren Tucker, who reports directly to Prime Minister John Key.

Laila Harre, the leader of the Dotcom-banrkolled Internet Party, responded to Herald in intriguing fashion.

"It should never have got that far," said Internet Party leader Laila Harre. "If the minister had been advised of the FBI investigation it would be extraordinary if the minister would not have blocked the ongoing residency process."

Well, quite. Why would Dotcom have been granted residency in light of a criminal investigation by the FBI, even if the crime in question was an adventurous take on secondary copyright infringement?

Harre has responded as she did because the new revelations lend some credence to one of Dotcom's key claims about his case: that he was granted residency by the New Zealand government, in breach of our procedures, so that he could be offered up on a plate to the Americans when they were ready to grab him.

Harre has now expanded on that response with a press statement:

The Internet Party says revelations of political pressure being brought to bear on immigration authorities dealing with Kim Dotcom’s residency application have moved beyond the personal to the constitutional.

The release to the New Zealand Herald of declassified emails between Security Intelligence Service agents raises the spectre of decisions being made that are inconsistent with New Zealand law, and at the behest of a foreign power, says Internet Party leader Laila Harré.

“These emails add to the already existing speculation that our immigration laws and procedures came second to the demands of another country’s government in this case.”

She believes that if the Immigration Service had followed normal procedure, the residency application by Kim Dotcom would not have landed on the Minister’s desk. It would have been frozen because of the FBI investigation into Mr Dotcom.

Dotcom's lawyers are now demanding to know -- with considerable justification -- why the newly-discovered emails were not released to them.

I doubt we're going to get the Prime Ministerial explanation that Labour's Grant Robertson is demanding this morning. But it does appear that this strange and remarkable story has legs yet.


It was 30 years ago today

Thirty years ago today, New Zealand pivoted. On July 14, 1984, the fourth Labour government was elected and things would never be the same again.

I remember voting that morning. I was living in a barely-converted warehouse in Fort Street and we all trooped up the road to the Auckland Town Hall to play our part in the change. I voted Labour and spoiled my liquor ballot in protest at the law on cannabis.

I remember the elation afterwards, for months. New Zealand had been a dull, mean country in which to be young, one dominated by a demagogue Prime Minister who grasped every lever he could. To be young here was to be desperately embarrassed by Rob Muldoon, who had contrived a mad economy and led us into international odium and domestic rebellion by encouraging the tour three years before by the South African rugby team.

People who had fled talked eagerly of coming back. The new Prime Minister, David Lange, defied powerful interests in defending our anti-nuclear stance in his magnificent address to the Oxford Union.

And then, it started to hurt. The intractable demagogue turned out to have been supplanted by some equally intractable zealots. We experienced mass unemployment for the first time in decades. We began running up social deficits that remain unredeemed. And in 1987, the business dreams of fools and knaves fell apart. 

I was gone by then, off for five years to London, and the implosion of the Labour government seemed distant and unreal in those pre-internet days. I'm not really sorry that era doesn't form part of my politics.

I arrived home in 1991, with a life partner and a baby, to a bleak recession and Ruth Richardson. A friend told me it was, perversely, an exciting time: with so much laid waste and slim prospects for employment, we were freed to just do what we wanted.

My friend wasn't entirely wrong: I did things in the early 90s that became the foundation of what I do now. But I did them in a country that was never the same, for better and worse, after that Saturday in 1984.


Going solar?

The recent Guardian story declaring that "solar has won" over coal as a means of generating electricity for big cities may or may not overstated the case, but it certainly signalled a welcome and hugely beneficial trend. Developments in Japan and India bring similarly welcome news.

The news was also well-timed for our household because it comes as we're considering solar water heating (not photovoltaic generation) as an option. We've received a quote from Nova Energy of $7360 for two panels, to be paid off at $123 a month as part of our electricity bill with Nova over five years.

In theory, even while we're paying off the panels, our bill will be slightly lower than it is now. Which wouldn't be hard: this is a house with four adults, some of whom are hard to dissuade from taking long showers (face it -- you'd rather have your young men taking showers than not). Three of us are home nearly all day, using computers. We run two PVRs. We have an efficient wood fire and we've invested in good insulation (if you can afford it, take the government subsidy -- it makes a big difference), but bedrooms and the breakfast kitchen still need heating with electricity sometimes.

Is this a good deal? Is it viable to wait instead for photovoltaic panels? How will things have changed by the time we've paid off the investment in five years? I'm interested in your thoughts.


A wretched editorial

As Toby Manhire pointed out in his Herald column on Friday, the decision to speak up of 22 year-old Tania Billingsley, the alleged victim of an assault with intent to rape that sparked a diplomatic scandal, drew foaming outrage from the usual blog-commenting suspects. But who would have guessed that they would all be trumped by an allegedly respectable newspaper.

Yesterday's Sunday Star Times editorial doesn't appear to be online (although there is a picture here), which is perhaps prudent, because it is a horrible piece of work.

We need only get as far as the second paragraph to establish that in the Star Times' view the real villain of the piece is the victim. She is, after all:

a 22 year-old self-confessed "activist"

I'm not sure what that the quotation marks around "activist" are meant to signify, but the implication of "self-confessed" is pretty clear: it's the 22 year-old woman who has a case to answer here.

The claim is driven home a couple of paragraphs later:

The interview, which was more of a confessional since no hard questions were asked of Billingsley -- such as whether she had any political affiliations, given her strong criticisms of the Natuonal Government in election season -- must have come perilously the close to breaching the law of sub judice around the diplomat's case.

Well, lord forbid any mere slip of a girl should criticise the goverment and its ministers over their handling of a matter of direct importance to her. The nerve!

Actually, Billingsley can talk to who she wants, when she wants. The idea that she should be forbidden to to do what half the country has been doing for the past week -- criticise the performance of the Foreign Minister and Prime Minister -- is absurd. But apparently she should withold any thoughts on whether Murray McCully bungled the matter because an inquiry "will determine that in due course". Of course, because journalists always do that.

The facts of the case itself were not traversed in the 3rd Degree programme that featured her interview. There have been any number of high-profile news stories that have run far closer to the line of sub judice.

The editorial moves on to bitch about 3rd Degree's "sympathetic portrayal" of Billingsley -- apparently, it is only proper to be unsympathetic to sexual assault victims.

There's yet more blathering about how terribly unfair all this for the government, before the editorial declares that while Billingsley is "entitled to her views" ...

... the time for her to speak out publicly on this case was after any trial was concluded, not before.

I presume she's meant to feel properly put in her place.

The irony is, of course, that had the Star Times and not Paula Penfold secured an interview with Billingsley, the paper would have been all over it. It would have been yesterday's lead story.

But it actually gets worse. I was told by Penfold yesterday that that Fairfax, the publisher of the Sunday Star Times, was "chasing" Billingsley for an interview -- and, indeed, Fairfax reporter Kim Knight eventually did get an interview. It's there in the Sunday Star Times, where she explains her decision to go public, which is an obvious follow-up angle. But the story doesn't put her in the dock the way the editorial does.

In the end this wretched editorial looks not only patronising and tendentious, but hypocritical too.