Monthly Archives: Jul 2017

Addressing banking sector concerns in N.Z.

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I remember the onset of the 2008 Global Financial Crisis all too clearly. In the space of about two years 31 separate New Zealand finance companies crashed and burned, taking about N.Z.$3 billion worth of savings with them. The crash of so many companies and the resulting fallout cost numerous jobs, led to criminal trials for fraudulent activity and caused a loss of trust in banks. Nine years later, not having learnt much from the previous crash New Zealand, like the world at large is at risk of another, possibly bigger, crash.

The causes of the 2008 Global Financial Crisis are well documented. In the United States lax banking regulations led to the failure of Fannie Mae’s, Freddie Mac’s, Lehman Brothers amongst others . Hundreds of billions of dollars was wiped from the value of the U.S. economy when Lehman Brothers collapsed. The bailout plan authorized by U.S. President George W. Bush cost about U.S.$700 billion to enact. Following these collapses President Barak Obama passed legislation called Dodd Frank Act which enabled large scale reform of the banking sector, in terms of transparency, tightening up reporting requirements and protecting whistle blowers.

In New Zealand the following are just some of the financial institutions that failed in 2006-2010 (N.Z.$)¹:

  • Capital Merchant Finance ($190 million)
  • South Canterbury Finance ($1.6 billion)
  • Provincial Finance ($296 million with $273 million recovered)
  • Bridgecorp ($467 million)

¹67 went into liquidation or receivership, or entered moratoria all up between 2006 and 2012

I believe that legislation needs to be passed in two respects to bring accountability to the banking sector, but also institute a better code of practice than the one that exists. Elsewhere I have mentioned the need for better whistle blower protection. This is to ensure that the fate of whistle blowers at the Ministry of Transport who exposed fraudster Joanne Harrison and lost their jobs for doing so, is not repeated.

But perhaps the biggest reforms that I think need to be made are to how individuals enter and exit the financial industry, and the range of tools that can be used in dealing with significant breaches. We have the Financial Markets Authority investigating significant breaches, which is well and fine. But, given the size of some of the aforementioned collapses and the fact that individuals who had leading roles in precipitating said collapses were handed what I think were very light sentences, I think the law needs an overhaul.

For small fraud (less than N.Z.$250,000), claims can be dealt with in the District Court and the High Court deals with larger claims. We saw out of the court trials arising from the collapses of companies like Bridgecorp that in many cases the sentences were too light. The sentences did not appear to take into account ill gotten assets such expensive cars. Nor did they appear to stop the defendants from working in the industry again. The sentences should be proportionate to the size of the losses incurred by the investors. Such a scale could look like this:

  • Category E (dealt with in District Court) up to $250,000 = suspension of trading license + fine (up to $250,000) or jail sentence (up to 2 years)
  • Category D – $250,000 to $10 million = loss of financial trading licence + confiscation of luxury assets or fine (up to $500,000) or jail sentence (up to 5 years)
  • Category C – $10 million to $100 million = loss of financial trading licence + confiscation of luxury assets + fine (up to $1 million) or jail sentence (up to 15 years)
  • Category B – $100 million to $250 million = loss of financial trading licence + plus fine (up to $2 million) + jail (up to 25 years)
  • Category A – $250 million+ = loss of licence + fine (up to $4 million) + jail (up to 40 years) + confiscation of luxury assets + loss of passport

Sound harsh?

Not as harsh as thousands of investors having their retirement plans and anything that they might have been relying on their investments to fund now having nothing to show for their efforts. Not as harsh as hundreds of people working for these forms in good faith finding themselves without a job because of the collapse. Nor as harsh as any community finding that sponsorship of community events and projects have just gone up in smoke.

The mental health bomb

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The lunatic is in the hall.                                      

The lunatics are in the hall.

The lyrics from Pink Floyd’s “Brain Damage” are haunting and disturbing. They talk of an issue many people have, but which few want to know about; an issue  that lingers like a bomb that occasionally explodes in people’s faces with horrifying results.

The causes of mental health issues are varied in their origin. It might be a result of the brain being starved of oxygen at birth or related to the use of illegal substances. It might be an attack or an accident, a major disaster or combat in a conflict. The symptoms will vary from one person to the next, as will the diagnosis and the how and the when of it occurring. Addressing the problems can be costly and take time, but the consequences of failing to do so are very much worse and can include violent crime or suicide. And contrary to the prevailing attitudes of the day, it is not a situation where “hardening up” is an acceptable thing to say or expect.

Nobody should doubt that mental health is a ticking bomb reaching into all facets of society. From the very poor to the very rich; from the newest citizen to those who have lived here all our lives – we all know someone who has struggled with their mental health.

In Christchurch the situation is particularly serious. Six years after one of the most devastating disasters in New Zealand history we have a situation where there are people just starting to register the first signs of major trauma. They might be children wetting their bed or having nightmares or older people bursting into tears after an aftershock. They affect their ability to concentrate on a task.

The issue is not helped by a decline in mental health facilities and the staff who have to operate them. Nor is it helped by physical damage caused by earthquakes and neglect by officials unable and/or unwilling to do their job. Such places aside from being physically unsafe create an an environment conducive to depression and neglect.

The Government response has been lacklustre and fails to acknowledge the complex nature of the problem. And those problems are leading to people to commit crimes not because they thought committing an offence is a good idea, but because all too often it is the only way to make “the system” notice you. So, what one is actually seeing are final desperate cries for help, from people for whom the next move might be suicide.

They deserve our help and our compassion, because failure to do so might have some dreadful consequences awaiting.

The lunatic is in my head

The lunatics are in my head

Report on options for Manawatu Gorge route ignored

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For as long as Manawatu Gorge has had transport links through it, they have been subject to slips. Some of them have been cleared in a matter of days. Some have taken several weeks.

With each slip business has been lost by the towns at either end of the gorge. People’s livelihoods have been disrupted, with locals and tourists alike forced to take detours.

A few weeks ago another slip came down. The gorge had not been long reopened after several previous slips. This time it looks like the disruption might be terminal, the patience of the communities having run out and the issue now a political football in election year.

In 2012 after a particularly severe slip event the New Zealand Transport Authority commissioned a report into alternative transport routes in the Manawatu Gorge. There were four options being suggested:

  1. A direct route that is the shortest and involves building a 5.9 kilometre long straight bypass – COST: $309 million
  2. Bridging to provide a straight a carriageway in parts of the gorge – COST: $415 million
  3. Overhaul what is commonly known as the long route, which is about 10 kilometres long and currently carrying most of the traffic, but which is not really suited for the volume of traffic it is carrying – COST: $120 million
  4. A tunnel, which would be New Zealand’s longest road tunnel and start and end about the same place as the direct route – COST: $1.8 billion

The geological structures and strata that any overhaul would have to be worked on is tricky. Large faults including, but not limited to, the Wellington Fault are nearby. The strata is largely sedimentary in nature and likely uplifted by seismic activity on the nearby faults. Old landslide zones abound along the slopes of the gorge

The report was ignored. It was shelved because despite the frequency of slips closing the gorge, it was not considered to be a priority.

Now, finally, with a slip closing the gorge blocking the road indefinitely, the Government has finally admitted there is a problem. But how do we know that this is not simply a case of electioneering in election year to counter resurgent opposition parties?

National not serious about crime

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When one thinks of a conservative party, they think of a party that is normally strong on law and order. It will be a party that spends more on the police, normally has a harder line on sentencing and talks about rights of the victims.

It all sounds well and good, if in the case of National, it were actually true. If National were serious about crime, then why is there this long litany of armed hold ups that have all been carried out in Auckland since 01 January 2017?

In January:

http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=11781928

In February:

http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=11804802

In March:

http://www.indianweekender.co.nz/Pages/ArticleDetails/7/7720/New-Zealand/South-Auckland-Superette-robbed-at-gunpoint

In April:

http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=11842093

http://www.radionz.co.nz/news/national/329327/armed-robbery-at-auckland-tab

In May:

http://www.newstalkzb.co.nz/on-air/larry-williams-drive/audio/detective-inspector-faamanuia-vaaelua-armed-robbery-in-south-auckland-sickening/

http://www.stuff.co.nz/auckland/93191139/armed-hold-up-at-tab-in-pakuranga-south-auckland

In June

It seems that not a single week goes past without a new armed hold up happening somewhere in Auckland. It might be Mangere or Manukau. It might be somewhere on the North Shore or out west in Waitakere. The target might be a family run dairy. It might be a superette or a bar – the targeting seems indiscriminate.

The victims are understandably fearful for their lives. It is quite a violating thought to know that you, in the course of your every day work life were subject to an attack on your premises by thugs. They might have been looking for cash or cigarettes to sell on the black market. Whatever the case the outcome is the same – another one for the crime stats, a legitimate business violated and the owner/operator scared to death.

So, this is what has happened in Auckland alone since June. It does not include any offences reported in Hamilton, Dunedin, Wellington, Christchurch, or anywhere else.

The causes can be debated, though one can fairly conclusively suggest that increased taxes on tobacco products are at least in part to blame. The black market is thriving.

So, just stop and think about this when you decide who to vote for in September. Who do you think will try to address the causes of these offences – National? Labour? New Zealand First? Greens?

And more importantly, WHY?

Public not trusting emergency evacuation warnings

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Civil Defence are concerned that people are becoming blase about disaster evacuation warnings. This particularly pertains to tsunami warnings because of the absence of a damaging tsunami event striking New Zealand. Social media critics are claiming that Civil Defence cry wolf over evacuation alerts and some are engaging in the dangerous and irresponsible practice of sowing division that makes people uncertain in times when certainty is necessary.

But one day a damaging tsunami will occur. The ones that have happened in recent decades have fortunately arrived at times in New Zealand when the tide was out far enough that the waves lost all of their energy making up ground in the tidal zone, or more likely were never going to be very large in the first place and – high tide or not – were simply out of energy when they got to New Zealand.

But picture this. A major earthquake has hit the South American west coast on the tectonic plate boundary off the Chilean coast. A Pacific wide tsunami warning has been issued. The waves will start hitting New Zealand about 13-15 hours from now. The largest wave comes ashore in Chile 10 metres high and causes heavy loss of life and damage.

The tide is coming in in Lyttelton when the first warnings are issued about with about 10 hours leeway. The waves will begin to strike on a rising tide. Based on computer modelling the waves are likely to reach 2-3 metres. Over the next several hours the warnings are refined as data comes in. Major damage has been done along the west coast of South America as far north as Colombia and there are waves heading for Hawaii, New Zealand, Fiji.

People are generally complying with the authorities evacuation advice. Despite the confusion about arrival times and wave size, people accept that a warning has been issued and they need to move to safer ground.

But on social media, disgruntled people are accusing Civil Defence of crying wolf. They say past tsunami’s turned out to be nothing and this one will be nothing as well – why should they worry?

There are some basic rules about tsunami’s that everyone needs to know:

  • There is MORE than one wave. Some have up to 8
  • The first wave is RARELY the biggest. The 1960 Chilean tsunami was triggered by a massive earthquake and the third wave was the biggest
  • The topography of the ocean floor means every tsunami behaves differently – is it for example a long narrow bay with a shallow dipping sea bed? In that case you will probably see the waves coming sometime before they get to you. Or is it an open beach with a steep drop off? In that case the waves will not be obvious until it is too late and hit the coast with significant speed that you will not be able to outrun
  • Do NOT go back in between waves as you won’t have time to get away. In tsunami events elsewhere this has cost people their lives
  • Be prepared to be gone for several hours
  • Stay away from coastal water features such as river mouths, estuaries and lagoons lest you get cut off