Tuesday, February 21, 2006

Sideswipe

It appears there is now a direct road route to paradise on the killer highway at Maramarua, complete with a double passing lane

By Ana Samways

Sally Masters of Torbay would like to send a message to the six men in the car on Toroa St, Torbay, on Sunday at 7pm. "It was very impressive driving, screaming down the road, clipping the roundabout and then completely losing control, spinning almost 360 degrees, mounting the pavement and the grass area before slamming into the tree. All the neighbours started rushing to help, but you just slammed in reverse, stopped the car, the passengers jumped out, punched a victory salute in the air and you all drove off laughing. But what you didn't realise was that two minutes later a young boy came innocently cycling past that very spot. Had he been two minutes earlier, it wouldn't have been quite so funny would it!"

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New advice from the Welsh Assembly: Cutting the kissing scene out of Romeo and Juliet. The advice, which could soon be extended to the rest of the UK, says love scenes between pupils should "stop at a peck on the cheek to protect youngsters from abuse". It goes on: "Drama teachers must cut or adapt plays if they have to in order to protect children and young people. They should not rely on arguments about the artistic integrity of the text."

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No sooner does Julie Christie sell Touchdown Productions to the Dutch ... A homeless tramp will be given a taste of the high life in a new reality TV show called Pimp My Life, based on MTV's Pimp My Ride. The programme-makers struggled to sell the idea: "We want to make this programme because we want to give a future to extremely poor people. First the presenter will let him taste the advantages of luxury. They drive him around in a limousine, get him new clothes, take him to dinner in fancy restaurants and book him a room in a fine hotel. Then he has a week to find himself a job and an apartment. He will get help from a lot of organisations and proper training. After that week the tramp must do it on his own."

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A high school student in Illinois has been disciplined after "doodling" in his own notebook. His drawing features the initials "D. L. K." which, school officials told his mother, "could" mean "Disciples Latin King" - the Latin Kings and the Latin Disciples are two rival gangs. His mother says he's not a member of any gang. But under the school's zero tolerance rules about gang activity, the school board voted unanimously to expel Derek Leon Kelly from any state-funded school for the rest of the school year. (Source: www.thisistrue.com)

Editorial: P marchers right to seek action

Just occasionally, a community minded individual with a rare determination produces a special sort of initiative. Such is the case with Marie Cotter, a 57-year-old grandmother who last December became acquainted with the devastation being wrought by methamphetamine use while working as a budgeter for a social services organisation in Pukekohe. The outcome of her unease was the idea of a march to Parliament. With remarkably short notice, it left Victoria Park in Auckland yesterday morning and is due to reach Wellington on Thursday.

There are two strands to Ms Cotter's Fight Against P march. The first is to draw public attention to the curse that is P (pure methamphetamine). It could, in fact, be argued to what degree that awareness needs to be enhanced. In the manner of an epidemic, P has spread to most parts of the country over the past few years. Few people can be unaware of the way in which the highly addictive drug has permeated schools and workplaces, towns and cities, all the time making no distinction on the basis of ethnic grouping or socio-economic standing.

Few, also, cannot fail to appreciate the way in which P can drive users to psychotic violence, against themselves or others. It has been implicated in several high-profile crimes, including the triple slaying at the Panmure RSA by William Bell, and the murder of Coral-Ellen Burrows by her step-father, Steven Williams, at Featherston in 2003. Additionally, there have been well-publicised cases of users committing armed robberies or turning to prostitution to feed an addiction that can cost $3000 a week.

What cannot be argued, however, is the validity of the march's second strand. Greater recognition of the problem and improved and more specialised resourcing has helped the police make an increasing number of methamphetamine lab busts. But far too little is being done to help those addicted to P, or to dissuade people of all ages, but especially the young, from using the stimulant. This was the problem originally brought to Ms Cotter's attention. "A woman came to me, crying her eyes out because she'd been knocking on all the services' door asking for help for her family members who were suffering from the effects of P ... and she couldn't get help."

Remedying this situation is the key ambition of the march, which will conclude with primary schoolchildren, many from homes wrecked by P, presenting MPs with advice on the formulation of a government response designed to stamp out the drug while assisting its victims. This includes more treatment programmes, compulsory drug education in schools, a dedicated anonymous call centre to provide information and help, more rehabilitation programmes in prisons, and tougher penalties for drug dealers.

A broad-based, coordinated reaction involving such features is undoubtedly required if the P scourge is to be defeated. No one single response will stop the trade. The police have an important role to play, but so, too, in the longer term does education. As Ms Cotter suggests, additional resourcing will be needed to deliver a message that, in time, will eradicate demand for the drug.

More than enough damage has already been done. The marchers' laying of wreaths on the steps of Parliament in memory of the lives lost to P will provide graphic evidence of that. Now is the time for the Government to realise its response has lacked reach, resolve and coordination. If the Fight Against P march convinces it of that, we will all owe a debt to Marie Cotter.

Peter Nowak: Lies and damn lies, look who's talking

The knives have come out in the battle of broadband, and embattled Telecom is seeing a few allies come to its aid. There's no doubt the company needs them, but as the old adage goes, with friends like these, who needs enemies?

One such ally, Macquarie Research Equities, may actually be hurting Telecom's cause. The stock brokerage last week issued an embarrassing report titled "Lies and damn lies" that took shots at the media, labelling coverage of Telecom as "factually incorrect", "misleading" and "biased".

The brokerage hadn't taken Telecom's negative press seriously before, but now - with the Prime Minister sounding off on the country's poor broadband situation - "the risks have risen".

"The media attack on Telecom seems to be having the political impact desired by Telecom's competitors," the report says.

It's not the trite line taken by Macquarie that's embarrassing for the brokerage, it's the report's suggestion that all is well in New Zealand broadband. And even more worrying, for investors at least, is the suggestion that all is well with Telecom's stock.

Neither of these claims has the slightest grounding in reality.

New Zealand's broadband woes are well documented. We're 22nd out of 30 in OECD uptake, and that's that. Slow speeds, high prices, data limits and access problems have all contributed to Kiwis' low interest in broadband.

But those problems are just window dressing. The real point is that New Zealand will continue to wallow as long as one company is allowed to control speeds and pricing, and thus the entire market.

That's not just the sentiment of Telecom's rivals such as TelstraClear or ihug, it's what everyone - from the big tech firms to economists to small businesses to home users - is saying.

But according to Macquarie, "apart from a couple of issues (upload speeds and business DSL pricing), NZ in fact compares well to both its closest neighbour Australia and to other similar countries".

The average Kiwi consumer, Macquarie says, "is better off than their Australian counterpart, despite popular claims to the contrary".

The comparison with Australia is absurd. It was only a year ago that Australia ranked just as poorly as New Zealand in the OECD uptake statistics, at 21st place.

The country is in the midst of unbundling incumbent Telstra's network to allow rivals access, and with stronger wholesale regulations than we enjoy, it has since managed to improve its situation somewhat, moving to 17th place.

But make no mistake - Australia is still as big a loser in the global broadband stakes as New Zealand. And with Telstra playing wholesale hardball as of late, it wouldn't be at all surprising to see the country take a step backward in uptake rankings over the next little while.

Macquarie's report doesn't make any comparisons with other countries, basically because it can't.

New Zealand's speeds and prices are laughable when matched to any of the top 10 countries, so comparing ourselves with Australia is not exactly aiming high.

This is especially true if you compare stock performance. While Telecom's stock has dropped 15 per cent over the past year, Telstra has plummeted 23 per cent, making it one of the worst-performing telco stocks in the world. Given that Telstra is so ingrained in Australia's broadband situation, is this really a company whose lead we want to be following?

But the brokerage is somehow confident the New Zealand Government will come to its senses, see there really isn't anything wrong with broadband here, and leave regulation alone. Macquarie is thus still bullish on Telecom's stock, with a 12-month price target of $6.40.

However, with the company's stock trading in the $5.50 range, that's an overly optimistic forecast, especially when non-regulatory issues are taken into account - something the report conveniently omits entirely.

Incumbent telco stocks are dropping worldwide - Deutsche Telekom is down 16 per cent over the past year, France Telecom 20 per cent, Spain's Telefonica 15 per cent and Bell Canada 7 per cent. Those are just a few examples.

That's primarily because their traditional revenues are on the decline thanks to lower-cost internet-based calling - a fact Telecom itself has acknowledged. The big telcos are still trying to figure out how to transform their businesses in the face of new and disruptive technologies, and most are struggling to do so.

Interestingly, the exceptions to the rule seem to be the ones taking proactive measures. British Telecom, which voluntarily agreed to separate its wholesale and retail arms, has seen its stock resist the trend and remain flat over the past year. US telcos have generally seen their stocks improve, largely due to recent merger activity.

Add this global trend to a possible downturn in the New Zealand economy and a worsening dollar, and it's very hard to be bullish on Telecom's stock.

The Government's decision on regulation will ultimately come down to Telecom's stock concerns versus the public good. Given the realities, for Macquarie to accuse the media of being misleading seems pretty foolish. The brokerage should be very careful of who it's accusing of lies and damn lies.

Colleen Brown: Blighted by graffiti and prostitution

Imagine if, when you opened your business, you had to clean away a mixture of used condoms, faeces, urine, broken bottles, vomit and sanitary refuse.

Imagine if every day you had to hose down the back entrance to your business so employees could enter the building.

Imagine if when you came to work prostitutes were still actively engaged in business transactions in the carpark.

Imagine if some of those prostitutes were still in their school uniforms when they practised their profession mid-afternoon after school.

Imagine if when you had a tea break, abusive foul language floated through the window and into the staff kitchen.

Imagine if when your staff worked late at night they were accosted and abused.

Imagine that every window of your shop is pitted with graffiti etchings.

For several businesses in Manukau this is reality. These things might not happen daily but they are frequent.

While the business premises are well-presented, clean and attractive, the owners have to remain vigilant that the area remains that way. For some it is a constant crusade.

As the Manukau City Council's chair of strategic directions I recently spent some hours talking to local business people about the effects of graffiti and prostitution on their firms. Not one I spoke to had an issue with prostitution. They all had an issue with it taking place in public places throughout the day. They all had concerns about the underage prostitutes. Everyone had concerns about graffiti.

Graffiti and prostitution. It seems that the two problems are inter-connected in certain parts of the business sector.

The graffiti battle scars are most obvious when you look closely at the large glass panes fronting the shops. Every window on one block was defaced with etchings into the glass.

One manager told me that occasionally the etchings are so deep it almost pierces the glass, creating a hazard. Large parts of the frontage had to be replaced. The cost to companies runs into thousands of dollars.

For small proprietors, the insurance costs are formidable and a daunting barrier to overcome so they can remain operating profitably.

Every business I went to had a story to tell. One small cafe's immigrant owners were astonished that this property abuse was tolerated. Every pane of glass on their frontage was scratched. Inside, the cafe was immaculate.

Manukau City Council spends more than $1.5 million of ratepayers' money annually trying to rid the city of the graffiti scourge. Every day the city is covered with teams painting out the offending tags.

Residents have also taken up the struggle to eradicate graffiti. Just the other day I saw Bill, a retired neighbour, sanding graffiti from the power pole outside his property. Others regularly paint over the tags in their neighbourhood, particularly on fences.

Another resident photographs every tag she sees on her journey to work and sends them to the police and the Manukau Beautification Trust for recording and culprit apprehension purposes.

It is because of the deep repugnance for the actions of a few on the property of many that Manukau has decided to draw a line in the sand and say enough.

It is because of the disgust business owners and employees have with the practices of prostitutes in public places and the effects of those behaviours on firms that this city is demanding change.

This city has two local bills it wants passed into legislation.

The first local bill focusing on graffiti regulates the sale of spray paint in our city. We want it to be an offence for retailers to sell spray paint to minors and we want such products secured in all retail outlets.

Our city wants it to be an offence for anyone to carry a graffiti implement with the intention of using it whether it is a public or private place.

The second local bill makes it an offence to solicit for prostitution in a public place. It gives the police powers to require information be supplied and to arrest offenders.

This city is making a stand and testing the understanding of central government politicians.

We know that other cities, not only in the Auckland region, face the same challenges. Local government politicians will be watching our progress intently. And they will be watching the responses of the politicians who will decide whether these bills become law.

Manukau City is fighting back and we want our residents to support these bills by making submissions to central government so our collective voice is heard and listened to. We live here. We all know our rates could be put to better purposes.

* Colleen Brown of Manurewa is a member of the Manukau City Council.

Anna Maxwell: Alcohol sales pitch reaches an ever younger age group

BKA ad agency head Terry King attempted to convince us (NZ Herald, February 10) that not a single extra bottle of booze has been sold as a result of the advertising of alcohol.

Mr King's take on the issue is a preview of what we're likely to get from industry groups in the upcoming Government-led review of the regulation of alcohol marketing.

It was more than a little depressing. Mr King used the same tired and simplistic arguments that so many of his advertising and alcohol industry colleagues have used to defend their freedom to market alcohol with relatively unimpeded creativity.

We're talking big here. In 2004 Pernod Ricard, the world's biggest producer of wine and spirits - and owner of a large chunk of New Zealand's wine industry - spent more than $1 billion on advertising and promotion.

When faced with a potential increase in restrictions, advertising and alcohol industry representatives everywhere react similarly. They are adamant, as is Mr King, that alcohol marketing is designed merely to reinforce brand identity and maintain market share rather than encourage greater levels of consumption. This is because, in marketing-speak, it is a mature market; that is, there is little incentive to try to increase overall sales.

Analysts such as United States marketing specialist Jean Kilbourne know that advertising has three main purposes: to help potential customers choose among competing brands; to increase sales among existing customers; and to recruit new customers, especially among emerging markets in the developing world.

Debate concerning the level of restriction on alcohol advertising has tended to be caught up in whether it can be shown that alcohol advertising lifts a population's overall consumption. Studies - some funded by the industry - attempting to show a link are methodologically doubtful and Mr King is right in saying that they have shown small and inconsistent results.

Another problem is that the crude consumption levels they measure are averages that tell us nothing about the impact of alcohol advertising on particular segments of the population.

A decline in per capita consumption masks harmful drinking patterns in some sectors, particularly youth, where the trend is to drink more alcohol, more often.

Our heaviest drinkers are 18 to 19 year olds. There are many reasons for this. But the increase in amounts drunk by young people corresponds with a surge in marketing in youth environments such as in surfing magazines and music and other cultural events, where branding is tailored to appeal to particular youth sub-cultures.

Not only are alcohol marketers certain where the profits lie, but where the recruitment pool for a lifetime of drinking is.

Studies into the effects of alcohol advertising on individual attitudes and behaviours reinforce what is intuitive to most parents, that even if ads are not directly targeted at underage people, constant exposure to marketing which presents drinking as a cool, glamorous, exciting activity helps ensure children have positive associations and expectations about alcohol, long before they start to drink.

Several US studies demonstrate a clear link between exposure to different forms of alcohol advertising and drinking among adolescents. They reinforce conclusions of an international WHO-sponsored review of effective alcohol policy: advertising is at least reinforcing drinking and instilling pro-drinking attitudes among young people.

But this research lags behind marketing trends, which have moved beyond the ads on television, radio and billboards that most of these studies are based on.

Often alcohol marketing is a complex and innovative mix of competitions, sponsorships and promotions. It appears where young people congregate and makes good use of the internet and texting. Parents and other adults not keyed into youth environments are seldom aware of it.

Internationally there may be growing recognition of the need for governments to curtail alcohol promotion, but industry lobbying and influence is a huge barrier to the reassertion of regulation. Their position is simple: more regulation doesn't work, the individual drinker (or parent) bears responsibility for any problems, it is simply a matter of learning responsible drinking habits. And they demand a place at the policy table to ensure minimum regulation.

This is to the great frustration of public health groups, which base much of their work on the recognition of the power of environmental influences in determining healthy choices.

Alcohol consumption ranks third of all leading risk factors for disease in the developed world, responsible for a far greater amount of overall harm to health and well-being than illegal drugs in New Zealand.

Alcohol is a legal product and legitimately advertised, industry groups tell us.

However, it is also a regulated and controlled product.

Here's something to ponder: if illegal drugs were advertised, how many would argue that advertising did not increase their use, but merely shift the balance of market share between a selection of drugs?

* Anna Maxwell is a public health adviser at Alcohol Healthwatch.

Eye on China: US to lose big in any Chinese economic rejig

By Dan Slater

With interest rates reportedly close to peaking in the United States and the new Fed chairman Ben Bernanke suggesting Americans have little fear of a house price collapse, all would appear to bode well for this year.

China's effect on the global economy worries me, however. Its rise in status to be the fourth-largest economy in the world after the 20 per cent GDP revision early this year rattled me. When China bolted past the United Kingdom, for long the standard bearer of Anglo-Saxon economic dynamism in Europe, it was a shock.

Note that this stellar performance is not based on purchasing power parity, which takes into account lower prices in China and artificially boosts the size of GDP to compensate, but in absolute terms.

It's not surprising the US is afraid of China, but it may be playing its cards in completely the wrong way.

The US has been accusing China for years of undermining the American manufacturing base through keeping the yuan artificially low. This basically boosts Chinese exports and wipes out domestic US companies.

The US has called long and hard for Chinese currency reform, allowing the yuan to appreciate by 20 per cent or more, which should permit a reduction in the trade deficit. But a reduction in China's trade surplus (of which the US component comprises a full 25 per cent) will reduce China's ability to export capital.

That could mean a good deal less capital to fuel the US deficits.

The Americans certainly have cause for complaint that the Chinese are manipulating the currency, but the cure could be far more catastrophic than the existing situation.

Recall that the game works like this: the Chinese (and other Asian exporting countries) depress their currencies relative to the US dollar by selling the former and buying the latter. That's important for keeping the prices of Chinese exports low and, hence, boosting the contribution of exports to growth. Indeed, exports contributed half of Chinese growth in 2005, according to the International Monetary Fund.

In a country where the Government's very existence depends on providing jobs for the vast population, the importance of the export sector would appear to be huge.

The resulting trade surplus has permitted enormous flows of capital into US treasuries and stocks, enabling President George Bush to fight the Iraq war and ordinary Americans to binge on real estate.

Cheap capital has enabled the US to post growth rates just as astonishing as China's, given America is already the largest economy in the world. In return, the Chinese have assured their export markets by keeping prices low.

But Chinese efforts to reform their economy could undermine the cozy status quo. And the biggest likely loser could be the US.

The Chinese Government is taking heed of warnings that GDP growth driven by pouring money into industrial capacity is not the best long-term bet. This kind of investment, known as fixed asset investment (FAI), has contributed up to half of China's GDP growth in recent years. Investment in FAI is linked to exports, because domestic manufacturers with overcapacity have switched to exporting to fully utilise capacity.

This could be changing. The new agenda in China is about how to boost domestic consumption. Increasing consumption would generate GDP growth and permit a slackening off of increasingly wasteful and environmentally damaging investments in the industrial sector and, hence, a decrease in exports. A decrease in exports, reducing the US$200 billion ($299 billion) trade deficit with China, would be politically, as well as economically, advantageous, at least until the US realised that the American trade deficit was precisely what was funding Chinese capital flows. Prioritising consumption would also encourage moves for a stronger yuan, since it would make importers of foreign goods cheaper.

Another indicator of slowing exports in the future is the fact that Chinese state-owned companies have been instructed to pay dividends. Previously, they dumped their earnings with the banks, adding to the excess liquidity funding over-capacity.

This will, ultimately, raise the cost of capital for Chinese manufacturers and reduce prospects in the export markets. That will also make it less important for the Chinese Government to push down the value of its currency through investments in US securities.

If increasingly wealthy individual consumers start unlocking their savings and contributing to GDP growth through consumption, then the contribution of exports to GDP will be further undermined. Using its US$800 billion forex reserves to keep the US dollar high relative to the yuan will become less important and forex reserves will, in any case, begin to decline as export earnings decrease. The domestic market will become a relatively far more powerful factor in growth, just as in the US and Japan.

The formula is simple: Reducing exports and increasing consumption will reduce the capital available (obtained through trade surpluses) for China to fund the US's huge deficits. Thus would the US be hoist by its own petard.

The obvious question is where this will leave the US. What will US asset prices do when they stop being underpinned by Chinese flows into the US stock and bond markets?

The obvious answer is that when the cheap money slows, asset values (house prices but also stocks) will tumble, with a potentially catastrophic follow-on effect on the rest of the US economy. It would also make expensive wars of the kind loved by Bush and his cronies harder to fund.

There are plenty of reasons this disaster scenario won't be fulfilled. Japan still keeps its currency undervalued through buying up US T-bonds and has signally failed to change its costive population into free-spending Americans.

But the point remains that China's size makes many unpleasant options more likely. That's why I was rattled by the increase in the size of the Chinese economy announced by the Government. China is starting to fulfil its potential and that growing power could rewrite the global balance of power much sooner than we think.

* Each week the Business Herald's columnists track the latest developments in the world's two emerging economic superpowers. This week, Beijing-based journalist Dan Slater gives his view.