Thursday, March 30, 2006

Sideswipe

By Ana Samways

The Australian "Where the bloody hell are you?" campaign was a little ripper and stirred up a shed load of controversy. Britain was iffy, Canada banned it and it could not be translated into Japanese. It even inspired a parody which changed the jingle to "Where the f ... hell are you?" and used some not-so-pleasant images of Australian life (the parody was viewed about 30,000 times on youtube.com and is well worth a look). Unfortunately, this didn't prevent Tourism Coromandel being a sheep.

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Putting the Games in perspective: Colin Moore reports that the Calgary Herald had a very small piece in its Sports Monday section headlined "Canada closes with 86 medals". "I had to read the section twice to find it. Like who cares about the Commonwealth Games. Certainly not Canadians - and they got 86 medals."

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Crime wavelet: The Timaru police notebook for Tuesday, printed in the local paper: "A Ranui Ave letterbox was damaged."

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A reader writes: "Yesterday morning two senior lady collectors for Child Cancer's fight the monster appeal week campaign set up digs outside the ASB Titirangi, as they had done for years. They had barely started rattling their donation buckets when a staff member asked them if they had permission to be in front of the bank. Gobsmacked, the collectors said it was arranged by the collection organiser. He returned saying that they didn't have permission, and could they move along. He then picked up one end of the table and insisted they move along a bit."

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A pig of an ad: Don't you hate teaser ad campaigns? That's when those with too much money splurge on ads without saying who they are. Okay, it sometimes works; like the "Party at Kelly Browne's" billboards from yonks ago. But the BNZ's onslaught of piggy banks seems just an over-indulgent branding exercise.

Editorial: NZ business like branch of Australia

Another month and another significant listed New Zealand company seems about to fall into Australian hands. This time the takeover target is rubbish disposal firm Waste Management; in February it was Contact Energy. Whatever the merits of these developments for the companies involved, the consequences are regrettable for New Zealand. More and more, its business sector is coming to resemble a branch office of Australia. And more and more, the stock market has the depth of a children's paddling pool.

It should not be happening this way. A long spell of economic buoyancy should have provided the platform for an improved level of public capital-raising and a raft of new listings. A more innovative stock exchange, marshalled by chief executive Mark Weldon, and a higher level of investor protection should also have helped. Instead, the main feature of the past few years has been a swathe of major delistings, thanks to takeovers, sometimes at relatively cheap prices, or privatisations.

To a large degree, New Zealanders can blame themselves. Our unhealthy obsession with residential property denies funding to companies seeking to expand. Rather than acquiring, they become targets for acquisition. Both the stock exchange and the cause of economic growth have paid a price for this inefficient allocation of capital.

Contrast that with Australia, where compulsory superannuation, in particular, provides a funding pool to underpin the expansion of companies, into New Zealand and elsewhere. The consequences are not always benign. The exercise of control from Sydney or Melbourne may mean a loss of jobs here because of the performance of the whole group, not necessarily the operations in New Zealand. Or an Australian company may have rather less interest in sponsoring events here than in its own backyard.

The Government has reacted slowly. The Kiwisaver scheme is a tentative step in the right direction, but even parts of it are tied to home ownership. The stock exchange, for its part, would dearly love to see the concept of a shareholding democracy take flight. This would see mum-and-dad investors owning stakes in fully or partly privatised utility companies. The oversubscription for energy network company Vector last year demonstrated an appetite for strong shareholding opportunities. And that this is a viable means of weaning investment away from housing, and providing the basis for company expansion.

But the shareholding democracy framework remains frail. It is likely, unfortunately, to remain so, given the controversy aroused by such shareholding offers. Furthermore, it should be noted that Contact, one of its shining successes, is now, itself, subject to a takeover offer from Australia. If this is successful, Contact's mum-and-dad investors will find themselves part of a riskier undertaking than that for which they signed up.

Given that the savings culture envisioned by the architects of the Kiwisaver scheme will not happen overnight, there is no reason to suggest the encroachment from Australia is about to ease. Australian companies do need to be careful, however. If their New Zealand operations are seen to be inefficient or indifferent to customers, they open a door. The Government-owned Kiwibank has benefited from a perception that Australian-owned banks charge high fees. In other sectors, there will surely be opportunities for private investors.

Many such endeavours will, of course, seek the backing of New Zealanders' capital. For the sake of economic growth, they must receive it. If the tide sweeping over the country from Australia is to ebb, our investment habits will have to change substantially.

Garth George: Forced to take the dog out for an exercise in futility

It's only in the past year or so that I've had much to do with dogs. But all my life there's been a cat round the house and there still is.

I like cats. I like their independence and the way they look after themselves, their indifference to attention or affection, the way they mark out their territory and defend it, their obsession with their own comfort and the fact that as long as someone feeds them regularly - and it doesn't matter who - they seem perfectly happy.

I had a bit to do with dogs as a child and young man because my parents had a lot of farming friends and they always had dogs about the place.

Later, as a young journalist on the farm beat, I attended a lot of A&P shows and dog trials. If there is any animal more intelligent than a Southland sheepdog, I've yet to encounter it.

But these were not dogs you walked up to and patted on the head (which you should never do) or scratched behind the ear. It wasn't so much that they were unfriendly but that they were invariably one-man dogs and anyone else who spoke to them was ignored.

In any case, for years I avoided getting a dog as a pet.

Housedogs are different. They require a personal commitment which goes beyond just the physical - an emotional response that I wasn't sure I was prepared to give.

And they have to be exercised and played with and bathed and brushed and generally made a fuss of.

But the time came when I ran out of excuses and, after much searching of the internet and discussions with breeders, a tiny red and white cavalier King Charles spaniel became part of our household.

And the fun began.

I won't bore you with the details of his upbringing. Suffice it to say that he is now almost fully grown and it is difficult to imagine our house without his cheerful and active presence.

And that, I think, applies also to the cat - our lovely 7-year-old chocolate and cream Birman. Mind you, it took a while for the energetic canine interloper to be accepted, and many a whack upside the ear had to be administered by the cat before the newcomer found his proper place.

But these days they live together companionably, from time to time chasing each other all round the house and playing hide and seek, the rest of the time peacefully going about their mysterious feline and canine occasions.

Now, as a dog-owner, I am entitled to have an opinion on the question of microchipping all dogs and, indeed, I have such an opinion. It is, in a few words, that this is probably the stupidest idea this Government has come up with so far.

It is stupid because the entire exercise, which will have to be carried out at significant expense to city dog-owners and huge expense to farmers, will achieve absolutely nothing.

If anyone thinks it will make the slightest difference to the number of dog attacks or to the number of dogs running loose, then they have holes in their heads.

It is an exercise in futility and it staggers me that those who came up with the idea, and those who have bought into it, could ever let it get as far as it has.

The best and most concise explanation of the worthlessness of this exercise is to be found on the website of Federated Farmers, which makes these unarguable points: (1) To read a microchip, dogs have to be either caught or destroyed because the range of scanners is less than 5cm. It is likely that a microchip will not be of any use in catching dangerous dogs. The majority of dangerous dogs are not registered, and are even less likely to be microchipped. The notion of someone reading a microchip during an attack ... is preposterous.

(2) Microchips do not stop dog attacks. A dog with a microchip is no more or less likely to bite than a dog without a microchip. Rather than aid identification of dogs that attack, the added cost of microchipping will further discourage people from registering their dogs, thereby increasing non-compliance. Already, the number of dog-owners who do not register their dogs is nearly one out of two.

(3) The microchipping legislation has been created in response to dog attacks. However, in most dog attack cases, identifying the owner is not an issue, meaning that microchipping will neither prevent dog attacks nor improve the accountability of dog-owners when dog attacks occur. Therefore, this legislation is costly and pointless.

(4) The only beneficiaries of this senseless legislation are veterinarians, who stand to gain directly from dog-owners in yet another raft of unnecessary compliance costs.

So I am left with the inescapable conclusion that this is just another example of a Government - as governments so often do - giving the appearance of doing something about a perceived problem while doing nothing at all - and at someone else's expense.

Either that or this Administration has run out of ideas on how more rigidly to control the populace and in desperation has turned to trying to control dogs.

What next? Microchipping all men because some of us rape, kill or assault women and children? Watch this space.

Charles Waldegrave: Family package logical for children's welfare

Bringing up children is a costly business. Most income and expenditure studies show that the parenting phase is the poorest phase in the lives of most adults when all income and costs are taken into account.

The Working for Families package is a smart piece of public policy that invests in children and their families. The substance of the package begins on Saturday.

Practically all parents love their kids and happily give up sleep, independence and plenty of resources for them.

In reality this comes at a considerable cost.

Our research in the New Zealand Poverty Measurement Project has shown during the 1990s and the early part of the new millennium, that more than 30 per cent of all children lived below the poverty threshold, whereas fewer than 20 per cent of all adults suffered the same experience.

The trend of these figures is not dissimilar from other countries with similar situations.

That is why governments in most OECD countries have developed family assistance packages.

The Australian Government, for example, pays tax credits to 82 per cent of their families with children at a cost of $15 billion ($17.5 billion) a year.

Britain goes further with a weekly child benefit that is available to all families regardless of income and a child tax credit for most.

The New Zealand version, Working for Families, will cost about $1.6 billion a year and reach 348,000 families with children.

This is about a third of all households and three-quarters of all the households with children. It is the biggest fiscal investment in the children of this country in three decades.

The biggest part of the package begins payment to families later this week.

Most families with children, where the combined income is under $60,000 and at least one parent is employed, will receive on average $100 a week extra.

This sort of sum can make a real difference for children. Increased family assistance in other OECD countries has been shown to improve health, education and housing.

But the policy has its critics at both ends of the political spectrum.

There are those who say that Working for Families is pushing a beneficiary handout mentality into the middle classes.

They say it would be better to help families by replacing the policy with tax cuts for everyone.

But 90 per cent of Working for Family payments are tax credits paid through Inland Revenue Department, not welfare benefits paid through Work and Income, such as the unemployment benefit and domestic purposes benefit.

They are work-related tax credits for families with children.

Tax cuts across the board would not invest in children in the same way.

Furthermore, to the extent that they could help families, they would invest more in the children of the wealthy rather than those on low and middle incomes.

The greater the income, the more the family would gain.

The argument against Working for Families from the other end of the political spectrum is that families on income-tested benefits are discriminated against.

Such families are entitled to parts of the package, including more income through increases in family assistance and the accommodation supplement.

They are not, however, entitled to the new in-work payment and the family tax credit parts of Working for Families, which are only for those who work 30 hours or more a week or, in the case of sole parents, 20 hours a week.

Working for Families has been designed to encourage people to move off benefits and into work.

The in-work payment part of the tax credit system has been planned to make work pay much more than a benefit.

The incentive has been backed by United States research which shows that income supplements help people in temporary, low-paid and insecure jobs to gain a sustainable foothold in the labour market rather than being constantly recycled through temporary employment and then unemployment.

It is hard to see how people on benefits are discriminated against simply because they don't receive a tax credit designed to give people incentives and traction in the labour market.

With our unemployment among the lowest in the OECD, the opportunities for work and the substantial tax credits are considerable.

Providing an incentive to move people off welfare is a rational step.

For those of us who have worked to reduce poverty and increase the living standards for low and middle-income families, Saturday is a red-letter day.

After years of crude policy settings with a single focus on the economy to the neglect of the social contribution, this is a welcome balance of social and economic policy.

* Charles Waldegrave is a social policy researcher at the the Family Centre Social Policy Research Unit and joint leader of the New Zealand Poverty Measurement Project.

Susan St John: Very poor just get poorer

Working for Families continues to be great news for many low-income families. Once fully implemented next year, after years of neglect, there will be an extra $1.6 billion a year for children.

But once more the worst-off among poor children have been left out.

From today a family on an income $35,000, for example, will get about $144 a week more in family assistance. But 230,000 of the worst-off children get nothing in the package because their parents or caregivers are not in paid work.

They may be on benefits or student allowances. They may be grandparents on New Zealand superannuation supporting their grandchildren in times of great family stress. These families face the same rising costs for their children.

Deb (not her real name) is a sole parent on the domestic purposes benefit, struggling to feed four boys.

She left a violent relationship with nothing and receives no financial support from family or the boys' father. She lives in "falling down" rented accommodation and has debts with Work and Income.

In contrast to the family on $35,000, Deb will get nothing at all on Saturday.

She says: "On the DPB I have been kept in survival mode a lot of the time, with the boys constantly saying they are hungry. I have gone to university to better my chances of earning enough to support them financially - but only part-time because I am conscious their emotional wellbeing is dependent on my presence in the home.

"The Government, by giving me less, is saying I am of less value than the paid workers. Even worse, it is saying my children are of less value than the children of paid workers."

The Government has been quick to point out in its defence that children in families on benefits were included in last year's increases in family support. They were - but things were not what they seemed.

The problem is that beneficiaries face vicious poverty traps because the harsh benefit system has forced many to rely on heavily means-tested supplements.

At the same time that Deb received an extra $70 a week family support last year she had most of it taken away in a core benefit reduction and a lower special benefit because family support was included in the income formula.

The minister said this was not of concern because the changes were designed to leave "no one worse off".

Other families have found that because of the extra family support their income-related rents have gone up, and increases in the accommodation supplement are also offset against the special benefit.

Worse, from Saturday the special benefit is being rolled over into the even less generous temporary additional support payment, so the struggle of families with children and who are on benefits is about to get even worse. The working family on $35,000 with four children now gets a total of $288 a week in family assistance.

Ironically, for a policy built on the mantra that says work is the prime virtue, one parent in this family may now enjoy the option of staying home full time.

Deb, on far less income, should be getting at least as much for her four children. But after the benefit changes, and because she is excluded from the in-work payment, she will get far less.

There are dangers in the widening gaps between the non-working and the working poor.

Leaving the worst off further outside the normal living standards of society is a recipe for disaster.

There is already too much evidence of the social consequences of neglect. To the shame of Auckland, Third World diseases are common in our hospitals.

The University of Auckland's paediatrics department head, Professor Innes Asher, continually draws attention to the high rates of preventable diseases in children, such as pneumonia, TB, rheumatic fever, and serious skin infections.

Demand for food parcels at the Auckland City Mission, the biggest foodbank in the region, is at its highest level.

Auckland City Missioner Diane Robertson estimates that 16,000 to 20,000 Aucklanders a year - including many children - have required help. The mission also supplies food to 70 other foodbanks in the region.

When so many families with children depend on foodbanks in a food-producing nation can we really believe we have a successful economy?

* Dr Susan St John is senior lecturer in economics at the University of Auckland and economics spokeswoman for the Child Poverty Action Group.

Brian Fallow: Importing gas no small issue

Contact Energy and Genesis Power are at pains to reassure us that they will not start importing liquefied natural gas to fuel their power stations unless they really, really have to.

In any case, they say, the potential impacts on the economy are not nearly as bad as they are sometimes painted.

To that rhetorical end, they have commissioned a report from Bryce Wilkinson, of Capital Economics, and Kieran Murray, of LECG, on the "macro-economic consequences of importing gas".

Alas, it does not live up to its title.

It does not consider at all what the effects on economic output, employment and households' discretionary spending power would be of having LNG-fuelled power stations setting the wholesale price of electricity.

In the absence of a big model of the economy like the Treasury's, that would be hard to do.

But it would be more to the point than just giving soothing assurances which boil down to saying that the trade and current account deficits are already so bad that importing LNG wouldn't make them much worse.

With oil at US$60 ($100) a barrel and the exchange rate at US60c, the same amount of oil that we imported last year would cost about $5.5 billion a year. Compared with that, the report argues, an extra $400 million worth of LNG is neither here nor there.

We might as well be hung for a sheep and a lamb as for a sheep alone.

But that view invites a response along the lines that if you find yourself in a hole, first stop digging.

The problem arises from the way prices are set on the wholesale electricity market.

The spot price in any half-hour period is the price of the marginal generator. In other words, it is the most expensive power needed to satisfy demand in that period.

Other generators who have offered electricity at lower prices get the spot price all the same.

Much of the time that marginal generator is one of the gas-burning plants. It is especially likely to be so when demand is relatively heavy.

So the cost of LNG would heavily influence average wholesale electricity prices and, with a lag, retail ones as well.

The report assumes the two companies import 60PJ of natural gas to supply existing combined cycle gas turbine plants, including the one under construction at Huntly.

They do not consider the implications of any further gas-fired generation being built, though that would become more likely once the LNG infrastructure was in place.

And they take as given, the companies' estimated price range for the gas.

The problem is that in the Asia-Pacific region, LNG prices are linked to oil prices. The relationship is not one to one; a US$1 increase in the price of a barrel of oil does not necessarily result in a US$1 increase in the equivalent quantity of LNG.

But the most perfunctory googling throws up lots of reports of LNG prices rising as oil prices have climbed and of LNG supply contracts being renegotiated as as their oil price cap provisions are breached.

And, of course, we have just seen a 12 per cent drop in value of the kiwi dollar in a matter of weeks.

So the question remains: Why would we want domestic electricity prices to be hostage to world oil prices and the exchange rate?

Former Shell chairman Lord Oxburgh, in Wellington for a climate change conference this week, warned that the days of cheap oil are over.

"The earth is getting pretty well explored," he said. "The chance to find very much more [oil], especially in the concentrations which make it easy to get out, is very small. I'm not saying it is running out but it is getting scarcer and more expensive."

He said it was hard to see any pressures that would push oil prices down again, short of a major world recession. Oil prices would continue to oscillate but around a rising trend.

The report's authors admit that: "Experience has shown that a major change in relative prices globally, or in resource availabilities locally, can necessitate potentially painful and costly adjustments to the structure of the domestic economy."

A sharp rise in imported oil prices could send the dollar lower. "This could aggravate the pain to importers and consumers while benefiting exporters and some domestic producers of energy."

Even a major oil strike would be a mixed blessing. "A large domestic oil find could appreciate the currency, creating major losses and unemployment in traditional export industries."

In their opinion, the proposed LNG project "is too small statistically and economically to justify any material concerns of an economy-wide nature".

But, there is another problem.

Comalco has made it clear that the sort of electricity prices needed to make LNG viable would be too rich for its blood.

But if the aluminium smelter were to close, say in 2012 when its present power supply expires, that would suddenly free up about 5000GWh of electricity a year, about a seventh of national production.

What would that do to the economics of LNG-based power? It would certainly reduce the net present value of those generators' revenue streams in a big way compared with a scenario in which the smelter is still there. Would a billion dollar LNG terminal and re-gasification plant turn into an instant white elephant?

It looks like a Mexican stand-off: LNG means no smelter (with the loss of 1000 jobs and $1 billion a year in export receipts) but no smelter means no need for LNG, at least for another six years or so.

Comalco and Meridian Energy are in the throes of re-negotiating the power contract, a process not expected to be concluded until next year. They really need to know if Genesis and Contact will go ahead with LNG.

But Genesis and Contact really need to know if the smelter will still be in the picture post 2012. It's a mess.

Appearing before the commerce select committee last week, Electricity Commission chairman Roy Hemmingway aired his concerns about the possibility of a three-year generation crunch, if Comalco decided to close the smelter.

There is probably enough new generation due to come on stream to see us through to 2009.

But if the smelter is to close, the electricity it uses could take care of about six years' worth of normal growth in demand. Instead, investment would be needed in transmission to upgrade the equivalent of a dirt track connecting Manapouri power station to the national grid.

Generation investment plans would go on hold.

But what about the 2009 to 2012 period when the smelter would still be operating but no new generation was economic?

Hemmingway said some kind of intervention would be needed.

Intervention? In a market-based system?

The present industry structure is the handiwork of policymakers convinced that whatever the problem, the solution is a market. You want security of supply? You want efficient investment? Just build a market and they will come.

But what we have ended up with is the risk of the third winter power crisis in six years, and the prospect of electricity prices driven by the world oil market and the exchange rate.

Linda Herrick: Jamie needs to grow up

Jamie Oliver never spoke a truer word in the first episode of Jamie's Great Italian Escape, which started this week on TV One, when he said, "Going to Italy is selfish".

He is selfish, towards his wife. There were hints in his earlier series about starting up a new restaurant for teenage wasters that Jamie Oliver had a nasty attitude towards Jules. Then, he was close to neglectful as she stayed at home, alone and pregnant. Now, they have two children.

In Monday night's show, as paparazzi snapped the sobbing Jules when she bade farewell to hubby, all he could snap at her was, "You've helped them make 15,000 quid for that".

Good riddance, she should be thinking, as Oliver drove off to Sicily in his silly 1956 Kombi. He said he liked the Kombi because of nostalgia and "a little boy who had a dream".

Oliver's TV celebrity has been built on his ruthless exploitation of the "little boy who had a dream" persona but what about the adult? He needs to take a good look at himself, although one suspects that when he does take a good look at himself, it's to apply more hair straightener.

Compared with other TV chefs, like Rick Stein - whose French series has been rudely pulled by TV One - even Oliver's vocab is childish. He describes British families as eating "scrote" and food as "wicked".

However, it was quite amusing to watch him turning up at a Palermo countess' palazzo and reversing the Kombi into one of her rubbish bins. Her expression was withering. And it was funny to see him trying to muscle in and cook at a Palermo fish stall where the men were having none of it. They were real tough guys who, he admitted, scared him.

Poor Jules. Behind the smiling happy-chappy facade, Jamie Oliver increasingly reveals himself as a misogynist plonker who mocks his wife's cooking and even ridicules her in the way he says the words: my wife.

Perhaps he will learn something about respect towards women as he drives around Italy - but then again, maybe not.

One lady who did earn a huge amount of respect late in life as an unexpected TV cook-celebrity was Jennifer Paterson, one of the Two Fat Ladies.

There is a first-class documentary about her life knocking about on the Food Channel called One Fat Lady, One Large Life. In it, an impressively long string of friends and relatives pay tribute to a woman who left school with no qualifications except in religious studies.

Paterson believed in God, having fun and the power of butter and double cream. She was never interested in material possessions and her only luxuries were cigs and booze, tucked away in the pockets of her voluminous smocks.

When she cooked for the Spectator, she performed outrageous acts such as running her fingers across Enoch Powell's head while blaring "coochy-coochy-coo" at him.

The BBC had a stroke of genius when they decided to pair Paterson with Clarissa Dickson-Wright for the Fat Ladies series. Paterson died of lung cancer in 1999, but the documentary is a reminder of what a splendid and unusual person she was. What you saw in her on screen was the genuine article, entertaining, eccentric, without ego.

A cockney greengrocer appears in the programme recalling how she had told him about the pilot, screaming with laughter about how it would never take off. Her international success - because she had loved to show off all her life - thrilled her. But it didn't change her. Jamie Oliver, little boy, take heed.

Talkback: This job's not bad, it's DM good

By Michael Goldthorpe

"Tell them that it's not all bad on the bottom rung."

That's how our adschool tutor phrased it when he asked us to talk to his students about our work in direct marketing.

His intentions were good. He wanted us to enthuse them about the "land below the line", hoping that more of them would take up the cause and maybe even get a job. But that was his attitude.

It's not his fault. It's just the way some ad-people think.

While occasionally there's a website that makes noise, or some smart use of text messaging that gets attention, most of the time New Zealand's marketing professionals see "DM" (direct marketing) and read "s*** that folds".

Now, that's not a bad thing.

It means fewer young people are keen to get into it. So it's that much easier to make a good impression.

I've only been in the industry 10 minutes and already I've doubled my salary and picked up a handful of prizes. And the future looks good.

Better yet, it's not that hard. All we have to do is say something interesting to someone who's interested. And the challenge of making it interesting is what makes it fun.

That's exactly what we did last year for South Auckland stud farm Hanaui Farm when I worked for Aim Proximity and, last month, we picked up three golds at the Direct Marketing Awards for our efforts.

Hanaui Farm had a product, it knew who'd be into it - we just told the one about the other. The client got $4400 for every dollar spent and we had a big night at the "Junkmail Oscars".

The fun of DM doesn't stop there. We get to make things, we play with stuff and we push people's buttons every day.

And, the good news for writers: We actually get to write.

If our goal is to slow the client's collateral's journey from the mail box to the bin, the challenge of how to do that makes this the best job in the world.

But do you think I'm going to adschool to tell them that? Not likely.

I like the fact that not so many students are banging down the door to take my job. Long may it last.

So, no, adschool tutor, it's not all bad on the bottom rung.

But are you sure you're holding the ladder the right way up?

* Michael Goldthorpe is a writer at Tequila.