Thursday, March 09, 2006

Sideswipe

The ongoing joke in hit movie Meet the Parents is transformed into entrepreneurial hilarity at Kmart

By Ana Samways

A reader drove from Auckland to his uncle's funeral in Te Kauwhata on Tuesday. Arriving half an hour early, he and his companions looked hopefully for a coffee shop for a quick latte and a carrot muffin, in what can best be described as a "traditional rural NZ town". "We were delighted to find a great little place called the City Cafe, which was bereft of custom at 10.30am" - which he assumed was because the locals probably had their morning smoko on the job. "I was smiling to myself about the cafe's name until I noticed all our drinks had been served with a Jaffa tucked onto the teaspoon. Did we stick out that much?"

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Responding to the outrage over $4 punnets of chips at Eden Park, another reader has a frustrating food and beverage experience. He writes: "We had planned ahead [we thought] and taken 2 x 1.5 litre plastic bottles of soft drink, only to be told at the bag check that anything over 1 litre was not allowed in. Result was we had to throw away the 3 litres that cost us $4 at Foodtown, and then buy 2 x 330ml bottles of soft drink inside for $8. Why can Eden Park not be satisfied with the entry fee and then charge a reasonable price for food/drinks, instead of ripping of the captive audience?

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As if Hollywood stars haven't suffered enough indignity at having to be red carpet product placement for the fashion industry. Now their freebies are being eyed-up by the tax man. Guests who took home goody bags from Monday's 78th Annual Academy Awards ceremony may have to pay $30,000 in taxes on their new acquisitions. The bags, which included a $7000 Victoria's Secret underwear set and a coupon for Lasik surgery, are worth approximately $100,000 each. And the IRS has declared they count as taxable income. IRS Commissioner Mark Everson quips, "We want to make sure the stars 'walk the line' when it comes to these goody bags." (Source: IMDB.com)

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Self-aware humour doesn't translate into a good soundbite for Donald Trump who says this about his 24-year-old daughter on a US talk show ... "I don't think Ivanka would [pose for Playboy], although she does have a very nice figure. I've said if Ivanka weren't my daughter, perhaps I'd be dating her." Trump's publicity guy told the Associated Press that Trump "was making fun of himself for his tendency to date younger women".

Editorial: Bush walks tightrope in South Asia

President George W. Bush is not much inclined to participate in flag-waving exercises outside the United States. It takes matters of considerable importance to pry him from the White House or his Texas ranch. Thus it would be foolish to underestimate the significance of his just-completed visit to South Asia. This was not a tour designed to boost the stocks of the US, courtesy of images of an American President trying to play cricket. It was about a policy realignment that would strain the capabilities of the most skilled of statesmen.

The tour encompassed Afghanistan, India and Pakistan, each vital to American interests but each with its own peculiar concerns in a region of great rivalry and little rapport. President Bush's daunting task was to forge a strategic alliance with India without alienating its traditional rival, Pakistan, and while chiding the Pakistanis to pursue the war on terror more diligently. Equally, he had to paint rapprochement with a previously non-aligned India in terms that did not alarm China.

Already, there have been repercussions. President Bush's gee-up seems to have been the catalyst for bickering between Pakistan and Afghanistan over the conduct of the war against al Qaeda and the Taleban. This is hardly conducive, since the security situation in Afghanistan is deteriorating quickly. In the face of a resurgent Taleban, President Hamid Karzai's power is increasingly centred on Kabul. A more effective prosecution of the war and, ultimately, the survival of his Government demand co-operation between Afghanistan and Pakistan, not quarrelling over areas of responsibility.

The focus of President Bush's trip, however, was a deal to share nuclear technology with India. At a time of huge concern about Iran's nuclear ambitions, this gives India access to banned technologies without its having signed the Nuclear Non-Proliferation Treaty. Washington, again showing scant regard for international strictures, deems it worthy of a special exemption while seeking to force Tehran, a treaty signatory, to work within the accepted nuclear framework.

More important than such niceties to the Bush Administration is its determination to make India its strategic ally in Asia, and a counterweight to China's burgeoning power. As well as the pact to provide American technology for India's civilian nuclear programme, the US is developing military and trade relations with Delhi. China, which can hardly be accused of demonstrating aggressive tendencies in South Asia, has, so far, not reacted. But it can hardly fail to be unsettled.

The same is true of Pakistan, which, like India, fell foul of the international community when it tested nuclear weapons eight years ago. It has been granted no comparable acquittal by Washington. The reason, ostensibly, is that it is still tarred by the role of its top atomic scientist in a nuclear proliferation scandal. But, quite clearly, India's rapidly expanding economy makes it the obvious candidate for an alliance aimed at containing China. Pakistan remains important in the war on terror, but much of its special relationship with the US has been ceded to India.

Managing the rivalries and nuances of South Asia would require a statesman of Bismarck-like proportion. President Bush may struggle even to persuade a sceptical Congress to ratify his deal with India. Defeat there would doubtless cheer the hundreds of thousands who protested vociferously against his visit in both India and Pakistan. But the die is cast in terms of a US policy realignment in South Asia. The outcome of that will reverberate around the region, and the world, for years to come.

Garth George: Praise be for helping hand of faith-based organisations

An exciting thing is happening in the delivery of social services in New Zealand, and if it takes root and flourishes it will change the face of the care given to such needy groups as people with mental problems and wayward youth.

It seems that the Government is losing its dislike of faith-based organisations which are ready and willing to contribute to the alleviation of the suffering inherent in floundering state health and welfare systems.

So far it seems - and if I'm wrong let me know - that this development is confined to Christchurch.

But it is only to be hoped that it spreads throughout the rest of the country and that faith-based groups begin to play a greater "official" part in providing care for those in desperate need.

That can only be good, mainly because faith-based groups recognise that there is a spiritual dimension to such disabilities as alcoholism, drug addiction, gambling, mental suffering and out-of-control children and youth.

They know that human beings are three-dimensional - body, mind and spirit - and that any attempt to treat just the body and mind is generally doomed to fail.

So they unashamedly introduce the spiritual dimension to the care and/or treatment they provide.

On top of that, these faith-based groups are managed and staffed by people who themselves have faith and for whom the outworking of that faith is to do what they can to help others, often without thought for themselves.

They are not in it for the money or for career advancement; they are not watching their backs or trying to climb or jump over those higher up the tree.

They are simply devoted to doing what their Lord commanded them to do - "to heal the broken-hearted ... to set at liberty them that are bruised".

So let's look at a couple of examples.

Back in 1989 a community worker with Spreydon Baptist Church promoted the idea of providing accommodation and rehabilitation for young people with mental illness - a supportive place to stay as part of a process to help people move independently into the community.

He and a handful of like-minded people prayed and researched resources for about a year before setting up the first house.

Today, Stepping Stone Trust, as it came to be known, is one of the biggest non-government providers of social services in Christchurch.

It continues to be part of the community ministries of Spreydon Baptist and in the past 12 months has experienced dramatic growth.

The trust has 120 staff - a 50 per cent increase over the previous year - and a Government-supplied budget of $4.5 million.

It operates 11 houses and nine flats providing 73 beds - a 60 per cent increase over the previous year - and works with 250 clients at any one time.

It provides 24-hour rehabilitation and has a diverse range of services to help people at various stages, whether just discharged from hospital or living independently but needing support.

Though it began with a focus on young people, it also works with adults and has been moving to assist the elderly.

About 50 of the staff are clinically trained, including nurses, social workers and occupational therapists; 40 have relevant degrees or diplomas and the rest are support workers.

Says director Glenn Dodson in an interview with the independent and non-denominational Christian newspaper Challenge Weekly: "Health officials are giving greater recognition to the impact of spiritual issues in people's lives, to the role of families in treating mental health, a lot broader view of what people's needs are, rather than just looking at mental health in isolation, which has often been the case up to now. We have a team to do this.

"We have kept a strong spiritual base. Staff pray together, we recognise the spirituality in each person who comes for care. We are upfront with the Government and the local district health board that we are a Christian service.

"The Ministry of Health seems to have greater expectation that organisations have to engage the spiritual. Official recognition of Maori spirituality has helped us in this regard. There has been a philosophical shift at policy level, encouraging us to be proactive in this area.

"I want," says Mr Dodson, "to take the best of the medical world and the best of the Christian world and bring them together to make something new."

Amen to that.

Not far away, the Christchurch branch of the nationwide parachurch OAC Ministries is involved in taking problem children on five-day camps, usually 70 or 80 at a time. Children are being referred to the camps by school principals, social workers and Child Youth and Family.

In an interview with Challenge Weekly, OAC's director Marty Scheib opines that the problem of having few places to which to refer problem children is causing social workers and other officials to rethink their reservations about Christian ministries.

Although it was acceptance with stipulations, he said, the important thing was that the camps worked.

"Agencies see that and put up with the Christian side of it because to a degree it is working."

OAC had surprisingly few discipline problems at the camps, although it took children from the more difficult end of the spectrum, and included in its formula for success were structure, fun, keeping the kids well fed - and prayer.

"We never underestimate the importance of prayer ... We send out a list of kids' first names to as many prayer people as possible and we certainly notice the difference as a result," said Mr Scheib.

Now, how's all that for good news?

* Garth George is editor of Challenge Weekly

Linda Herrick: Bully-boy bosses abound

Tonight's Inside New Zealand: The Real Office on TV3 contains no real revelations for anyone who has worked in one, but managers should watch it anyway. Apparently, most people only work at 80 per cent of their capacity and there's nothing that can be done to raise their discretionary effort unless they want to.

An expert advises that the best way to motivate your workers is to show a positive attitude towards your employer who may be a psychopath, the doco scarily reveals.

A statement of fact, she says, is that bullies addicted to control usually get to the top - enter scenes of shouting men who grind reports into the floor and walk around hitting workers' heads with big plastic pencils.

The workers in The Real Office seem so cowed they take it but I know exactly what would happen if someone tried that in our real office.

The producers plant an actor called Jeremy to play the office idiot. He doesn't do any work, has a cellphone ring like a screeching chimp, and wanders around peering at his co-workers' emails. He wouldn't last five minutes in our office either.

The end motto is, "We have to be happy to work hard", but the girls in the new season of America's Next Top Model, which starts on TV3 tomorrow, see an alternative route out of their ordinary lives.

It's a brutal, hugely entertaining formula in which the 36 young women selected fly into Los Angeles and park up in the Beverly Hilton where they are expected to put in their own form of discretionary effort.

That involves a whole lot of bitching and whining about each other as they suss out the competition. They must undergo interrogation by the judges J. Alexander, Jay Manuel and the terrifying Tyra Banks, whom they want to emulate.

An immediate standout, for all the wrong reasons, is an irritating Texan called Nicole who is obsessed with Chapstick. She is the equivalent of the office idiot, self-obsessed, spoiled, not too bright. The other girls don't like her one little bit but she doesn't care.

Although the show is formulaic it's a fascinating study of human behaviour as the girls go one-on-one with Tyra, some of them simply sweet, like the Dairy Queen gal who has never met a celeb in her life, to the silly little thing - Nicole, as I recall - who throws herself on to her knees and swears she'll do anything, ANYTHING, to win.

"No, no, no," admonishes J. or Jay. "Never say that."

Some of them have awful life stories, like Caryn, who never knew her father and whose mother is a junkie. There's a cunning little minx who raves about the evils of materialism and how she, by being America's Next Top Model, will do her bit for the United Nations.

Tyra has her pegged. "What was the last thing you did in the way of community service?" she asks. Lip chewing silence is the response.

The girls are quickly culled to 20 by the cruellest method: they must do a fashion show and find out who's in or out by running down a corridor into the dressing room to see if the clothes have their name and photo on them. Tears all round.

By the end of tomorrow's show, they are again culled, down to 13. "I'm the jam. I don't understand why anyone wouldn't want to butter their bread with me," philosophises one.

What an unconventional mix the judges go for this time. As for the ones who don't make it, they will have to face reality - that most of us can only aspire to working in an office.

Linda Herrick: Bully-boy bosses abound

Tonight's Inside New Zealand: The Real Office on TV3 contains no real revelations for anyone who has worked in one, but managers should watch it anyway. Apparently, most people only work at 80 per cent of their capacity and there's nothing that can be done to raise their discretionary effort unless they want to.

An expert advises that the best way to motivate your workers is to show a positive attitude towards your employer who may be a psychopath, the doco scarily reveals.

A statement of fact, she says, is that bullies addicted to control usually get to the top - enter scenes of shouting men who grind reports into the floor and walk around hitting workers' heads with big plastic pencils.

The workers in The Real Office seem so cowed they take it but I know exactly what would happen if someone tried that in our real office.

The producers plant an actor called Jeremy to play the office idiot. He doesn't do any work, has a cellphone ring like a screeching chimp, and wanders around peering at his co-workers' emails. He wouldn't last five minutes in our office either.

The end motto is, "We have to be happy to work hard", but the girls in the new season of America's Next Top Model, which starts on TV3 tomorrow, see an alternative route out of their ordinary lives.

It's a brutal, hugely entertaining formula in which the 36 young women selected fly into Los Angeles and park up in the Beverly Hilton where they are expected to put in their own form of discretionary effort.

That involves a whole lot of bitching and whining about each other as they suss out the competition. They must undergo interrogation by the judges J. Alexander, Jay Manuel and the terrifying Tyra Banks, whom they want to emulate.

An immediate standout, for all the wrong reasons, is an irritating Texan called Nicole who is obsessed with Chapstick. She is the equivalent of the office idiot, self-obsessed, spoiled, not too bright. The other girls don't like her one little bit but she doesn't care.

Although the show is formulaic it's a fascinating study of human behaviour as the girls go one-on-one with Tyra, some of them simply sweet, like the Dairy Queen gal who has never met a celeb in her life, to the silly little thing - Nicole, as I recall - who throws herself on to her knees and swears she'll do anything, ANYTHING, to win.

"No, no, no," admonishes J. or Jay. "Never say that."

Some of them have awful life stories, like Caryn, who never knew her father and whose mother is a junkie. There's a cunning little minx who raves about the evils of materialism and how she, by being America's Next Top Model, will do her bit for the United Nations.

Tyra has her pegged. "What was the last thing you did in the way of community service?" she asks. Lip chewing silence is the response.

The girls are quickly culled to 20 by the cruellest method: they must do a fashion show and find out who's in or out by running down a corridor into the dressing room to see if the clothes have their name and photo on them. Tears all round.

By the end of tomorrow's show, they are again culled, down to 13. "I'm the jam. I don't understand why anyone wouldn't want to butter their bread with me," philosophises one.

What an unconventional mix the judges go for this time. As for the ones who don't make it, they will have to face reality - that most of us can only aspire to working in an office.

Venu Menon: Bush leaves Pakistan in the cold

President George W. Bush's visit to Pakistan last week may have weakened and demoralised President Pervez Musharraf in pursuing the US-led war on terror.

The American President's low-key stopover in Islamabad was little more than a spot check to see how General Musharraf was getting on with the job of hunting down Taleban and al Qaeda militants operating from Pakistani territory.

Given the doubts cast lately about the general's sincerity in cracking down on militants, notably by Afghanistan President Hamid Karzai, Bush's pat on the back for Musharraf lacked real conviction and his visit did little for the Pakistani leader.

General Musharraf had two key requests. First, he wanted President Bush to adopt an even-handed approach to signing nuclear agreements. Second, he sought US intervention to settle Pakistan's dispute with India over Kashmir. President Bush rejected both requests.

The US President invoked Pakistan's shoddy track record on nonproliferation to deny it equal treatment with India. Pakistan's top nuclear scientist, A. Q. Khan, had been selling nuclear weapons technology to other countries.

President Bush's stand on Kashmir was that the dispute should be settled through dialogue between the parties concerned.

But President Bush's alibi for favouring India with a nuclear deal he could not offer Pakistan has not won support for General Musharraf. It is clearly not an argument the Pakistani President can use to silence the opposition parties who denounced President Bush's visit as a disaster for Pakistan.

The nuclear pact clinched in Delhi could cloud US-Pakistan relations. President Bush broke the golden rule of staying equidistant from the two nuclear rivals on the subcontinent.

But signs of a shift in US policy in the region were already there. US Secretary of State Condoleezza Rice said in Delhi: "There was a time when Americans had a problem mentioning India without Pakistan and mentioning Pakistan without India. That's not the way it should be."

However, the Bush Administration's desire to break out of the notion of a hyphenated relationship between India and Pakistan could damage General Musharraf, a key ally in the war on terror.

President Bush was going along with the current wisdom in Washington that India, as an emerging economic power, would be a counter-weight to China.

But by granting India access to nuclear technology and denying that access to Pakistan, President Bush may end up weakening General Musharraf and strengthening the radical Islamists out to destabilise him.

The Pakistani President, who has deftly juggled US strategic interests in the midst of an increasingly volatile domestic context, has suddenly lost his drawcard. His credibility as America's frontline ally in the war on terror is now in question.

The West is uneasy in accepting Pakistan as a "major non-Nato ally", a status bestowed by President Bush for General Musharraf's contribution.

US-Pakistan relations may be moving away from an era of coddling a military dictatorship in Pakistan that is unable to consistently deliver in the war on terror. General Musharraf may come under increasing pressure to restore democracy to Pakistan, a key demand of the West.

A token measure towards democratisation came in the form of a controversial referendum in April 2002, where voters agreed to extend the general's rule for five years. This was followed by general elections in October.

But the National Assembly was deadlocked for months because the opposition refused to recognise the constitutional changes General Musharraf had pushed through.

In December 2003, as part of a deal with hardline Islamic groups to break the deadlock in Parliament, General Musharraf agreed to step down as Army chief by January 2005.

The pledge remains unfulfilled.

General Musharraf's low rating on democracy may come back to haunt him if he fails to deliver in the war on terror.

During his meeting with President Bush in Islamabad last week, General Musharraf was at pains to discredit allegations raised against him by President Karzai of Afghanistan. President Karzai accused General Musharraf of soft pedalling on the crackdown on militant activity in Pakistani territory that was spilling into Afghanistan.

Afghan officials have repeatedly accused Pakistani authorities of turning a blind eye to Taleban training camps operating inside Pakistan and cross-border infiltration by militants was an issue President Bush raised with General Musharraf.

Pakistan deploys around 80,000 troops in North Waziristan, where a protracted stand-off with al Qaeda and Taleban fighters is being keenly watched by the US as a test of General Musharraf's commitment to fight terrorism.

President Bush's refusal to heed General Musharraf's request for US intervention on Kashmir comes at a time when Pakistan's relations with India are on the mend. Both countries have been making friendly noises lately, however Kashmir remains a stumbling block. Pakistan and India have fought two wars in the past over Kashmir. Pakistan lays claim to the territory on the grounds that its population is predominantly Muslim. India sees Kashmir as non-negotiable.

Pakistan wants the US to intervene. India wants no third party intervention.

By publicly rebuffing General Musharraf's request for US intervention on Kashmir, President Bush will be seen to be tilting in favour of India.

Brian Fallow: Be prepared for cold showers

There are a couple of things I must remember to do next week: Have the chimney swept and a load of firewood delivered.

We have just had the strongest signal yet that we could be facing electricity shortages again this winter, for the third time in six years.

While the Electricity Commission and generators Genesis and Meridian trade contradictory words about the level of risk, Comalco, the largest consumer of all, has acted.

It has already stopped buying electricity on the spot market, necessitating a cut of about 5 per cent in output from the Tiwai Point aluminium smelter.

And it has just announced it will be cutting its power demand by another 6 per cent because of what its managing director, Tom Campbell, calls the "scary" levels of the hydro lakes.

Actions speak louder than words and this action is louder than most because Comalco does this at a time when the world price of aluminium is the highest it has been for many years and the exchange rate is at last moving in exporters' favour. An 11 per cent cut in production will cost it $2 million a week in revenues, Campbell says, and it will not be compensated by supplier Meridian.

"If we don't start conserving water now there is a risk of much more serious things happening in the winter. The time has come to have the same sort of energy-saving strategy as there was in 2001 and 2003."

Like Genesis chief executive Murray Jackson and Meridian chief executive Keith Turner, Campbell wants to see the 150MW reserve generator at Whirinaki cranked up and offering electricity to the market.

"The risk of having a serious crisis in the winter depends on whether it rains heavily between now and then, but the chances are already high enough," Campbell says.

"We ought to be trying to conserve water in the hydro lakes. The only way to do that is to start up Whirinaki because, unlike previous years, there is no spare thermal capacity. They are running full tack."

Storage in Lakes Tekapo and Pukaki, the main hydro lakes in the vital Waitaki catchment, was only 55 per cent of average for this time of year, Turner told MPs on the commerce select committee last week.

Water levels in those lakes are slightly below where they were at the same stage in 1992, when there was a power crisis, and they have been below 1991/92 levels for most of the past five months.

And levels of those lakes are significantly lower than in the more recent crisis years of 2001 and 2003.

Nationally, the picture is a bit better with storage sitting at about 70 per cent of normal for this time of year.

But the trend over the past couple of months has been downward when it should be upward.

"The trend line is worrying," says commission chairman Roy Hemmingway. "We have had only three or four weeks of good rain, around Christmas time, and we need another period like that to put things in good shape. But I think there is a ways to go before we could say we have got a real problem on our hands."

While lake levels are below average, they are still in the commission's comfort zone, based on its modelling of demand and its analysis of inflows during the past 72 years.

"In simple terms if from here we had an inflow identical to the worst on record, the worst drought on record, we would still get through the winter, according to our analysis," Hemmingway says.

Turner said historically the inflows to the Waitaki catchment came from the spring to the end of March. "We are not at the end of March yet. The forecasts are not particularly encouraging that we will get a lot of rain. But I don't believe we should put the country through a major savings programme just yet," he told the MPs.

"It's not something I would want to plan on but, over the past five years, there has been a significant winter inflow into the Waitaki catchment, contrary to the normal experience, contrary to 70 years of data. Is this a climate change phenomenon? I don't know. Is it permanent or temporary? I don't know. But if we got it again this winter there would be no problem."

The commission was set up after the industry was unable to agree on a self-governing regulatory model.

It is only 2 years old and was not around at the time of the last electricity crisis.

After that crisis, the Government decided to commission reserve generation capacity, for emergency use only, and ring-fenced from the normal operations of the wholesale electricity market.

The Whirinaki plant is designed to run on distillate, essentially diesel, a fuel so expensive it might be cheaper to shovel bank notes into its boiler.

The cost of building it is borne by electricity consumers through a levy and is spread over 10 years. It costs us $22 million a year to have it sitting there not generating.

The commission puts the short-run marginal cost of running Whirinaki, essentially the cost of fuel, at between $170 and $180 a MWh.

It went through a formal process to determine a security of supply policy and then to decide at what price and how electricity from Whirinaki should be offered to the market.

Either the spot price has to hit $200 a MWh - roughly three times its normal level - or hydro storage has to drop to the commission's "minzone".

The minzone is derived by asking a model based on hydrological records of the past 72 years this question: If all the gas and coal-fired generation is running, what is the minimum level of hydro storage we need to ensure we don't run out of water if the inflows are no better than the lowest on record?

But how sure can we be that the future will be like the past?

And can we be sure none of the big thermal generators will fall over?

Waiting until we hit the minzone, Jackson told the MPs, was akin to waiting until you hit an iceberg before taking action.

Hemmingway said, with some asperity, that when the rules were being drawn up none of the industry submissions argued that the minzone was being set too low or that Whirinaki should be run at its short-run marginal cost or that there should be a conservation campaign as soon as we hit the minzone.

Certainly, when the policy of levy-funded reserve generation was set, the industry was adamant that the trigger for its being used be set way above the market's normal price range.

That is because no future investor in generation would want to have to compete with a plant whose capital cost is automatically recouped from all consumers and which only has to cover its operating costs.

So there is a risk of chilling further investment if rules are changed now.

But that will not cut much ice with consumers and voters if they end up taking cold showers this winter.

Bryan Leyland: Co-ordination key to avoid power shortage

At a power conference last week, two chiefs of state-owned enterprises made it clear that the risk of an electricity shortage is quite high. But the Electricity Commission believes that the risk is not high - so far.

This assessment seems to be based on a computer program used to analyse the risk. There are a number of reasons for believing that this is not an accurate model of the real world.

With the Centre For Advanced Engineering, I worked on regular forecasts of electricity supply and demand from 1992 onwards. This background leads me to believe that there is about a 10 per cent chance that the situation will not get much worse than it is now - but only if we get heavy rain in the South Island very soon.

I suspect there is a 20 per cent chance that we will have a shortage similar to 2001 or 2003, and something like a 5 per cent chance that it will be similar to 1992.

The hydro storage is now the same as it was at this time in 1992, the year of the big shortage. The main difference between now and 1992 is that we no longer have large reserves of Maui gas to burn - and even if we did, we do not have much spare capacity in the power stations that could burn it.

As industries are already backing off production, some would say that we are experiencing a shortage right now, thus damaging our economy and business confidence.

As a delegate at the conference pointed out, the cost of having additional capacity is small compared with the cost of a shortage. But the cost to the economy is not factored into the calculations of how much reserve energy we need. It should be.

It was surprising that, despite looking down the barrel of the third shortage in six years, many of the speakers and delegates still believe that "the market is working". If it is, it is certainly not working for NZ Inc.

In the past two years power prices have increased rapidly and there is no reason to expect that they will return to a reasonable level in the near future.

As former Contact Energy chief executive Steve Barrett wrote: "Generation companies have to strike a balance between not bringing a plant on too early and pushing electricity prices down, and not having a shortage that will trigger government intervention."

In the longer term, the conference highlighted the fact that we have no idea where the power we need is coming from. Although we were shown a list of proposed stations we had no indication of how big they were and when they might - if ever - be built. It did not give me much confidence.

Onshore gas exploration in Taranaki has failed to find anything of the size we need. Contact chief executive David Hunt pointed out that even if we found a large offshore gas field tomorrow we don't have enough time to get the gas ashore before shortages begin to bite.

Two speakers pointed out that there were large reserves of low-cost energy in the lower South Island. Keith Turner of Meridian talked of hydro power and wind power and Don Elder of Solid Energy talked of huge reserves of lignite.

Another delegate told me that his firm held large lignite reserves in Southland and that several companies were drilling for offshore gas/oil off Canterbury and Otago and to the west of Stewart Island.

The major energy sources we have available to us are geothermal (maybe 1500MW), South Island hydro (1000MW+), wind (about 1000MW, equivalent to 400MW of geothermal), South Island coal (enough for hundreds of years), domestic gas (if we can find it), nuclear power north of Auckland (2000-4000MW), imported compressed natural gas or, worst of all, imported liquified natural gas.

To minimise the high risk of shortages and high, ever increasing electricity prices the Government should immediately instruct the Electricity Commission and Transpower to investigate the South Island resources and a new 2000MW DC link all the way to Auckland.

This needs to be done quickly because a major benefit of the new DC link is that it defers the need for the 400kV system for many years.

If large-scale generation in the South Island and a DC link turn out to be a good long-term option with no significant downside, then the Electricity Commission should announce that a DC link will be built and invite competitive proposals for building and operating South Island power stations.

If they did this, I am sure that they would be deluged with offers.

If no action is taken we may well finish up building the 400kV line into Auckland from the south and then importing LNG into Marsden and building power stations that would make the 400kV line redundant.

The worst aspect of the LNG option is that it locks us into overseas energy prices and escalating power prices.

New Zealand has ample indigenous energy resources and our economy needs the competitive advantage that they will provide.

It is hard to avoid the conclusion that when we reformed the electricity industry we threw out the baby with the bathwater.

While there is no doubt that it was right to end the Electricity Department's and Ministry of Works' monopoly on building and operating power stations and transmission lines, it was not necessary to choose an electricity market structure that does not co-ordinate generation and transmission or provide enough reserve capacity, and induces generators to maximise profits by keeping us on the edge of a shortage.

Better options were available, but the decision-makers seemed to believe that if they called their proposed system a "market" it would behave like a real market. It is like calling a frog a bird and expecting it to fly.

* Bryan Leyland, of Auckland, is an electricity industry consultant.

Talkback: Buyer as centre of consumerism

By Vincent Heeringa

It's competitive as hell out there, and United States researchers tell us the cost of reaching consumers has skyrocketed.

One piece of research suggests that 50 years ago, 75 per cent of a product's final cost was in manufacturing and 25 per cent in marketing. Now it's 50/50.

The phenomenal rise of online trading portals such as Amazon, Trade Me, SmileCity, Ferrit and now Hateshopping.co.nz is based on finding faster and cheaper ways to link buyers and sellers.

Alan Mitchell, a UK marketing writer, believes these are just the beginning of a revolution that is fast putting the consumer in the driving seat. Mitchell predicts the emergence of buying agents that will broker deals on behalf of individuals - a sort of butler for the masses.

He calls them reverse marketing services because the marketing is done not by the seller ("hey kids") but by the buyer ("find me a new toy").

Mitchell calls the overall trend "buyer-centricity".

An expression of Mitchell's new world is Pureprofile, launched in September last year.

Pureprofile gives individuals an anonymous online shop window to display their "goods wanted". Sellers who engage an individual in a conversation about a product or service pay the individual for the privilege.

Pureprofile calls itself the first "reverse search engine" and its rapid uptake suggests it may work.

Or it may not. Trade Me tried a version of this two years ago. Trade Me founder Sam Morgan said it was an unmitigated failure because the global supply chain was optimised around suppliers not buyers.

What's certain is that the cost of traditional marketing shows no signs of falling, and there's a fantastic opportunity for any agent who can better bridge the gap between buyer and seller.

That might be something as brutal and anonymous as Trade Me.

It might be as left field as Telecom utilising its enormous reach into our daily life to create a Pureprofile equivalent - an extension of Ferrit maybe.

It might be a retailer like the Warehouse getting smart with its customer databases and acting as a genuine buyer's club.

As I see it, the winners will be those agents who behave the most like a good butler: trusted, loved and damned convenient.

* Vincent Heeringa is one of the founders of Idealog magazine and can be emailed using the link below.

Michael Richardson: March of the grey army

The headline figures of China's progress remain as impressive as ever. Just the other day, the country's top statistician declared that the economy expanded by almost 10 per cent last year and is on course for continued rapid growth.

In December, China said that its economy was more than one sixth larger than previously stated after a nationwide census revealed vibrant activity in its service sector that had previously been under-reported.

As a result, the Chinese economy surpassed France and possibly Britain last year to become the world's fourth biggest, after the United States, Japan and Germany.

This is good news for China and the rest of Asia and for New Zealand's booming trade with China. But a faultline is emerging.

In January 2005, the Government officially hailed the 1.3 billionth member of the Chinese population and the success of its one-child policy. Since then, there has been a spate of warnings from inside and outside the country about the challenge of paying for a rapidly ageing population.

This is on a scale far larger than for most countries. It must also be met from an economic base far weaker than for the world's richest societies in Japan, Western Europe and North America where the "greying" phenomenon is most advanced.

The strict controls limiting most families to a single child that China has imposed since 1980 have helped to spur a big rise in average incomes and alleviate the demand on scarce arable land, water and other natural resources. However, China's fertility rate has dropped to a level among the lowest in the world.

Meanwhile, the proportion of China's elderly is growing faster than in any other big country because of the one-child policy and longer life spans as living standards have improved.

In a study for the World Economic Forum's Global Competitiveness Report for 2005-2006, Nicholas Eberstadt, a demographer and political economist at the American Enterprise Institute in Washington, notes that between 2005 and 2025 about two-thirds of China's population growth will be in the 65-plus age group - a cohort likely to double in size to roughly 200 million people.

Chinese demographers, using 60 as the starting point for old age, say that the number of senior citizens reached 130 million last year, about 10 per cent of China's total population.

They forecast that by 2015 the number of Chinese above the age of 60 will exceed 200 million and reach 280 million by 2025.

Will China's growth be hobbled? Goldman Sachs, a US investment bank and financial services company, thinks not.

It concluded that two important factors would offset any negative effect on the economy: improvements in workforce productivity and the release of surplus labour from the agricultural sector as young people from the countryside stream into the cities in search of a better life.

"Yes, China will become old," the report says. "But by that time we believe China will be much richer and will have reached developed-country status."

Meanwhile, who will pay for the healthcare, pensions and other welfare costs of the growing grey army? The old state-funded system in China is under severe strain.

Between 1993 and 2003 the number of people with no medical insurance rose from 900 million to 1 billion, about 80 per cent of the population, according to official figures. And as in neighbouring Japan, the Government is having to take the savings of this generation of workers to help pay the pensions of retirees.

Eberstadt says the existing state pension system in China covers less than 20 per cent of the workforce and has unfunded liabilities exceeding its GDP.

The one-child policy has been relaxed in some big cities. Wang Feng, a specialist on social and demographic change in China at the University of California, argues that it is time to extend the phase-out countrywide.

Otherwise, he says, the proportion of elderly with inadequate Government and family support will rise to crisis levels, as will the disproportionately high number of males in the population. Because of gender-selective abortion, China has about 120 boys born for every 100 girls.

The Government said last year that it would criminalise sex-selective abortions by 2010. It has also been experimenting with pension reform in three northeastern provinces by providing incentives for individuals to save for their old age and safeguards to ensure that the money is preserved and not siphoned off to pay the pensions of present retirees.

If the scheme works it may be expanded nationwide this year as China's leaders try to get to grips with the country's increasingly serious social problems.

* Michael Richardson, a former Asia editor of the International Herald Tribune, is a visiting senior research fellow at the Institute of South East Asian Studies in Singapore.