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On this site you'll find posts and pages from recent years. The site began as part of my public law practice after leaving Parliament in 2005. Accordingly it records my opinions, not necessarily those of Franks & Ogilvie of which I am a principal, or any client, or the National Party for which I contested the Wellington Central electorate in November 2008.

From the Wellington Writers’ Walk:

“It’s true you can’t live here by chance, you have to do and be, not simply watch or even describe. This is the city of action,the world headquarters of the verb”

– Lauris Edmond, from The Active Voice

Nothing to hide – supernatural surveillance – revealed preference on privacy vs security

  • November 18th, 2014

On The Nation on 15 November, I speculated that people might trade privacy for perceived security more readily than the commentariat think. I suspect that privacy is a recent pre-occupation of academics and lawyers because it gives them a new field in which to boss people (particularly business people) whether or not the public in whose name they claim to act would actually make the same choices if they knew the costs.

Among the reasons for that suspicion is the great mismatch between what people tell pollsters they worry about, and how most of us act. Though a few paranoids worry intensely, most ordinary people I know joke about surveillance, and allow collection of data by business without serious second thoughts. We are probably a bit more anxious about government data collection, perhaps because of well-founded suspicion that governments are much more likely than businesses to misuse date against us.

I thought I should see if there has been much recent  investigation of the topic. As it happens, there has. November 12 saw the release of a PEW survey reported here.

Daniel Solove’s summarised comment on it is here, and here.

I disagree with Solove only on emphasis and prescription, not the description of the issues.  I think he over-estimates the public anxiety about data collection per se, and is on stronger ground when worrying about misuse of it. In other words, intuitively when we trust the collectors to be only after us commercially, we are less genuinely worried than when we think data might be put to use by a coercive state, to persecute us, or to discriminate, or to permit covert or overt harassment.

To me it is idle to think that a democratic government will not be forced by public concern to collect as much information as is reasonably possible to prevent domestic terrorist attacks. That will ensue, lawfully or not, whatever the law says nominallly. Accordingly I would prefer to focus effort more on the achievable constraints on the holding of surveillance information, than on holding back the full tide of data collection.

As I said on Saturday, when you grow up in a small community, you assume general knowledge about you from most people you meet. Sometimes it would be great to know that it was better informed than gossip.  And we need to remember that we might be the first civilisation attempting to maintain mutual civility without a near universal belief that God, or angels, or gods, or other supernatural beings were monitoring and potentially holding us accountable for everything we’ve thought, let alone everything we do.

As a confirmed worrier about the likelihood of malign uses of power by the state, I suggest the following priorities:

a) first to strengthen the safeguards against surveillance data being unnecesarily accessible to politicians, to use against political enemies;

b) secondly to strengthen neutral  oversight of the  agencies that collect it, to ensure that they do not become septic independent centres of potential oppression and threat to democratic leadership (Hoover’s FBI);

c) thirdly, to ensure that transparency is general, to reduce the risks of improper privileged use of data collected by the state. the people should know most of what the state knows, if they wish, through open registers;

d) refining the Official Information Act to make it more reliably self enforcing (because the Ombudsmen are useless) but on the other hand increasing protection of communication that will be better if it is privileged, to stem the trend toward non-recorded communication and other devices to avoid the law;

e) making rights to correct more reliable;

f) beefing up protections against threats to longstanding free speech rights, including by ruling out the ‘right to be forgotten’,

g) reforming defamation law.

‘Who watches the watchers?’ – responding to ISIS

  • November 16th, 2014

TV 3’s The Nation  on 15 and 16 November screened significant interviews, with the PM,  Att. Gen Chris Finlayson, and defense expert Dr David Kilcullen.  As a panellist I wanted to ask supplementary questions more than to comment despite perceptive interviewing from Paddy Gower and Lisa Owen. Each interview could have prompted an entire hour’s discussion.

Serious people will want more on Kilcullen’s repeated references to steps needed instead of the containment  policy implicit in the western ‘no boots on the ground’ policy that depends on drones and air support for Kurds. John Key was asked about the ‘green on blue’ attack risk while we train the local fighters our strategy will depend on, but did not pretend there were as many answers as there are questions.

Some of  Kilcullen’s explanations are here, in the Australian of 1 November.

“This conflict will not be over quickly or cleanly. On the contrary: it is, and will be, a multi-generational struggle against an implacable enemy, and the violence we’re dealing with in the Middle East and Africa is not some unfortunate aberration — it’s the new normal.”

Kilcullen highlights the risks from our internal responses (if the West fails to destroy the caliphate’s appeal to its own citizens):

“…if we fail to face the threat where it is today — primarily overseas — we’ll suffer the consequences at home. This isn’t to rehash some Cold War domino theory in which we “fight them there or we’ll fight them here”. It’s just to recognise the reality that a purely isolationist, defensive, policing strategy — protecting ourselves at home rather than seeking to defeat terrorism abroad — ultimately means the end of society as we know it. Mass surveillance, secret police, a national-security state, guards on every gate, a garrison society: that’s what a “defensive” strategy actually entails.”

He seems to be warning against the current mealy-mouthed approach to Islam within our countries, pretending that the conservative Islamic leaders, their schools and their doctrine are part of the solution, instead of recognising that they are fuel for the problem:

Western governments have been their own worst enemies here: the tendency to treat Muslim communities as a special case, to think that “mainstream” society can deal with “the Muslim community” (whatever that is) only through self-appointed, often conservative, authoritarian elders and notables, is to deny people the individual freedoms that belong to them, by right, as members of our society while absolving them from the responsibilities that go with those freedoms.

It’s to set up an unelected, often illiberal intermediary between our wider society and the idealistic, motivated young people who deserve — and from whom society has a right to expect— the same rights and responsibilities as anyone else. So the right strategy for dealing with 11/3/2014 The West’s failed counter-terrorism strategy requires a complete rethink domestic radicalisation is more freedom, not less — but with it must come more individual accountability.

We badly need more discussion of this, facing up to the lie that Islam is a religion of peace. It is no more peaceful than the religion that drove the Crusaders. The Protestant division between church and state,  and secularisation after the Enlightenment defeated the Popes, has eventually leached out that religious power in most of the West.

There has been no Islamic equivalent. I want to know how Dr Kilcullen would foster a similar change among the young people of pious Islam. It has a closed culture and kills apostates precisely to avoid that risk.

Do we need a ‘balance’, or a rule, on director liability?

  • November 13th, 2014

This afternoon I will present to a group of lawyers who’ve been sold a seminar session that knocks off their full 10 points worth of annual Continuing Professional Development in one day.

I hope some will be interested in policy because I’m struggling to see how I can make a bare legislation update interesting, to people there under compulsion, not intellectual or professional curiousity.

With luck I’ll be drawn into argument over what the courts are telling us on directors.

We’re all now floundering without a compass in the fog of company law. Confused legislation, and conflicting judicial approaches mean lawyers can’t confidently tell directors what is left of the ‘business judgment’ rule. It was not complicated in the recent past. It said that judges should not second guess business decisions in the absence of evidence of bad faith or gross negligence.

That was then. Now directors plow shareholders’ millions into buying legal ‘sign-offs’. Subjecting business decisions to lawyer reassurance brings lawyers into the heart of hundreds of businesses that would rarely have talked to a lawyer 3 decades ago. Yet the Lombard case showed that clean sign offs may not be enough.

Despite the high profile cases, not many directors have been held liable. Even fewer have had to pay material sums. But being sued is immensely costly and outcomes are unpredictable. Directors have heard that D & O policies may be invalidated, or not cover legal costs.

So director liability cases sow disproportionate fear. They justify universal investment in rituals of overt diligence to placate the unpredictable judges.  Sign-offs are bought at the cost of shareholders, not the directors. So director liability law is profitable for lawyers and insurers.  Yet the apparent ‘failure’ of prosecutions, and the absence of any New Zealand equivalent to the multiple century ‘die in jail’ sentencing we read about in other jurisdictions lead to deep disappointment from lay people. Court cases which may be a crippling waste of money and initiative can still  fail to build investor confidence. The rarity of useful recovery of investor money in court cases makes them seem farcical to investors who’ve been lead to expect more than law can deliver.

Chapman Tripp and Russell McVeagh have recently turned their fog lights into that fog. Chapman Tripp congratulates Parliament for passing something that was not as stupid as first introduced. Russell McVeagh draws atttention to an Australian court decision that highlights how much (probably unintentional) risk our directors face from recent poorly written reform, which Australian directors are now better protected from.

Jim Farmer QC reflects on his experience defending the Lombard directors. He penetrates further than most commentary, though without showing much more than silhouttes. He draws on the respectable scholarship that our courts ought to discuss, but have not..

Farmer sets the scene referring to the constant and ludicrous cry of the regulators for

…” shorter and simpler offer documents”.

He goes on:

“Having defended the directors of Lombard in their unsuccessful appeals in the Court of Appeal and Supreme Court (except as to sentence in the latter), I find that objective and, generally, the cry for less time on compliance one that has a major disconnect with the views of the Judges, which can be broadly summarised as a need for more, not less, detail.  

This may be the inevitable outcome of the statutory provision in the Securities Act that empowers the Court to find a statement misleading and untrue by omission but it is also a reflection of the way in which Judges, who seldom have practical commercial or board experience themselves, interpret that provision.  While there is invariably judicial denial that hindsight is being applied, the fact of a corporate collapse and the sense that someone within the company must be to blame – rather than external events beyond the company’s control – puts directors at risk when the offer documents are later subjected to close judicial scrutiny.”

The paper helpfully traverses the origins of company law, and the unique features that made it a key to the Anglo-sphere leaving competing economies behind. But curiously it does not highlight the key protection created by the classical era judges which modern legislators and judges have discarded. Perhaps even the best of the current judges and commentators do not remember what we’ve dumped, if  Farmer’s paper is a guide.  He does not highlight the importance of losing the distinction between dishonesty on the one hand, and foolishness or carelessness on the other. The law once assured ’stakeholders’ it would not forgive directors who were dishonest, or who feathered their own nests at the expense of the company, but on the other hand (with some anomalous exceptions) it broadly told stakeholders not to come crying over spilt milk for losses from poor choice of directors, including if they were incompetent or negligent.

Farmer refers to

..”the famous case of Re City Equitable Fire Insurance Company in the English Court of Appeal in 1925 where it was allowed that directors’ duties had to be viewed, first, in the context of the particular business carried on by the company and, secondly, the manner in which the work of the company was distributed between the directors and management.  The Court also said that regard should be had to the fact that directors’ duties were of an intermittent or part-time nature to be performed at periodical board and board sub-committee meetings.”

He calls on judges to revive that kind of balancing assessment.

I think another approach is more likely to bear fruit. Judges already think they are balancing risks, where the legislation allows.Some show pride in decisions that require directors to continually ‘up their game’. They think they are doing God’s work in making it risky for people to take on directorships who can’t penetrate the mysteries of modern compliance accounting. They feel particular virtue in discouraging sleeping directors, and house-hold name appointments.

I’ve seen no evidence that any modern judge or legislator has taken into account the highly respectable scholarship that suggests that directors should be sleeping stewards,  lest they have a dog, and bark as well. That view of proper directorship is particularly important to justify the near universal pattern in small companies, where it would be absurd for directors to try continually to follow the activity of their general manager. Directors are often appointed solely as a probity backstop. They do their job well if they  come awake only when an agency risk is likely to materialise (the risk of management diverting company resources to their own benefit) or when it is time to change management.

Instead some judges, too many journalists and most regulators (many of them of the lawyer/cleric persuasion) may take at face value much of the voluminous ‘governance’ dogma. It seems designed to make out of directing a full time, licenced craft and mystery. It requires directors to set strategy, to oversee accounting and other compliance activity, to second guess and engage with management in myriad ways.  For many companies and investors that may now be their reasonable expectation. But that  hands on governor model has not been shown to be value adding.  It has no more empirical research foundation than ‘angels on the head of a pin’ theology.

When invited to consider whether  extra liability and diligence is efficient our judges/regulators have no tools for considering the question. Several I’ve discussed this with are puzzled by the argument that directors will demand part or, or much of the return that should be going to shareholders, if they face the asymmetric risk (having to reimburse for losses, but not receiving the gains of efficiently risky decision-making).  They understand that having to compensate shareholders (or creditors) for risk decisions necessarily made under the uncertainties of time pressure, inadequate information, and competing priorities, could be problematic, but they miss completely the significance of not sharing in the upside of such decisions that prove profitable. The director’s incentives when faced with asymmetric risk are to over-invest in precautions, especially when the cost can all fall to the account of the company (shareholders).

So a  key need is to re-establish for the clerical lawyer class the moral/economic  underpinning of classically efficient rules, such as caveat emptor, and the ‘business judgment’ rule.

Farmer’s piece heads in the right direction. But it should have a simple concluding paragraph.  There is no point in  calling for ‘balance’ from judges un-equipped to work through the factors. So we’d be better to revert to the bright-line rules of more simple days (simple rules for a complex world).

In brief:

  1. Limited liability is not a privilege – it is efficient standard form contracting for allocation of the inevitable risks of loss in a business world where we know, and want, to allow for an infinite range of decision modes, ranging from simple intuition, to the most highly systematic and researched decision – making.
  2. director liability should be swift and ruthless for dishonesty. Current law is disgracefully slow, and expensive in maintaining the right levels of risk for dishonesty;
  3. There may be a category of negligence so wanton that it would be efficient to characterise it as deemed breach of the duty of good faith (call it recklessness as to the outcome for others).
  4. But otherwise shareholders accept the consequences of mistakes in the selection of directors, and directors honest mistakes or derelictions, as just one species of the risks of investment, among all the much bigger ones they accept when gambling on the unknown future;
  5. More specific ex ante allocations of risk can be matters of contract (including the Articles or constitution of the company) which can vary for the circumstances of each company.

Cr Lester needs support – take responsibility for your own safety

  • November 12th, 2014

How refreshing to see Cr Lester willing to reject a fun police role for the Council. The numbers who’ve hurt themselves on the wonderful swings that appear from time to time in the Town Belt near our home are a tiny fraction of the people who’ve thrilled themselves.

The swings are so much more spectacular than anything people will have experienced in the boring ‘play grounds’ with their dumbed down gear. I wonder if people are becoming more susceptible to panic and letting go of these ropes precisely because they are so unfamiliar with exposure.

James Delingpole’s speculates on this indirectly in his Spectator comments  on his kids learning from living in the country, including the use of  fire arms. Thanks to Whale Oil for the link.

Reason #10 why big business is wrong, the Greens are right to oppose uber-city amalgamation

  • November 11th, 2014

A  good reason for Wellington fighting the uber-city like the plague, is the opportunity it creates for well meaning fools to write their wish lists into the consequent brave new super city single plan. Fran Wilde’s team, and the LGC have urged the opportunity to replace multiple plans (effectively current regulatory competition) with a shiny new unitary plan, as a reason to ape Auckland’s move to a super-city.

The Proposed Auckland Unitary Plan has many elements calculated to stop spontaneous intensification of the leafy inner suburbs, and to force new home buyers into the distant suburbs.

And even out there, the planners’ economic ignorance is at work. They’ve decided to handicap medium and large scale development. Planners and nimbys having broken the market, they then double the damage with patches over the consequences of their market vandalism.

Italics below are quoted from the 7000 pages of the draft plan:

The Unitary Plan requires 10% of all developments greater than 15 units or sections to be made affordable and be held in perpetuity with Council approval being required on resale/re-occupation. Social housing providers are excluded.

Part 3, Chapter H, section 6.6.1.1 says:

Where a new development within the RUB contains more than 15 dwellings or involves the creation of more than 15 vacant sites, at least 10 per cent of the total number of dwellings or vacant sites within the development must be retained affordable housing. Where a framework plan applies, this requirement applies to the entire framework plan area.

Part 3, Chapter H, section 6.6.1.3 says:

1. Except for retained affordable housing provided by a community housing provider, retained affordable housing must have a legally enforceable retention mechanism, including, but not limited to, a covenant supported by a memorandum of encumbrance registered on the certificate of title or consent notice under the RMA, that:

 a. limits rent or re-sale (including a future dwelling in the case of a vacant site subdivision) to an occupier who is approved by the council as meeting the eligibility criteria below, or

b. limits resale to a community housing provider approved by the council, or

 c. limits rent and resale to a formula that ensures that the dwelling remains affordable into the long term, including a future dwelling in the case of vacant site subdivision, and

 d. provides for monitoring of the terms of the covenant or consent notice and the process should those terms be breached including where occupiers have defaulted on the mortgage and lenders seek to recover their interests in the property, and

 e. is legally enforceable by the council in perpetuity.

 Part 3, Chapter H, section 6.6.1.4.2 says:

 To be eligible for retained affordable housing:

 a. at least one member of the household must be and will remain a New Zealand resident or citizen

 b. at least one member of the household at the time of the application to council must be employed on at least a part-time basis (more than 20 hours a week) with an employer within Auckland

 c. the property must be used exclusively as the household’s primary residence

 d. households that seek to purchase dwellings must have sufficient assets to provide the required deposit

 e. Households must have an income of between 80 and 120 per cent of the regional median household income.

The damage is not only from the direct ‘confiscation’ disincentives to large development. Think of the political dynamics of the consent process when developers face neighbours who not only prefer the status quo, but also fear the impact of ‘social housing’ in every significant development, however socially and economically disastrous it proves to be. The developer hands over to the Council in perpetuity the power to inflict the city’s scum as neighbours on the full paying young families. Suck that up you evil would-be providers of housing. It may be entirely unfair to  describe ‘affordable’ housing beneficiaries like that, but people will take the precautionary approach of fearing the worst. They have no reason to trust Council reassurances in planning matters.

So here is a succinct summary of what should guide the response to the affordable housing challenge.

 

 

Three strikes decision shows de facto judicial supremacy

  • November 6th, 2014

There has been surprisingly little attention paid to the Court’s decision last Friday not “to order that [a gang murderer] serve a life sentence without parole” despite the judge’s admission that she was “required [by the three strikes law] to order that [he] serve that life sentence without parole” unless it would be manifestly unjust.

She then converted that requirement to find manifest injustice  into the standard pre-three strikes judicial quibbling about disproportionality. With breathtaking ease she slid past a previous manslaughter to focus on the ‘relatively minor’ nature of the offences that triggered the three strikes law application, managing to take into account also the ’signs that you wish to be more pro-social as noted in the presentence report’ .

She completely turns on its head the law’s intent that offenders get greater certainty about the consequences of offending, noting that the murderer would not have known at the time of the earlier offences of the three strikes certainty.

Judicial naivete at its worst. It is only by applying the law, that offfenders believe that it will be applied. The most clear lesson  from the experience where three strikes certainty was followed by dramatic reductions in offending, was that pitiless certainty finally sent the message to offenders that they could no longer gamble on meeting soft judges and gullible parole boards.

Sensible Sentencing is correct to highlight this judgment in their Judge the Judges website.  But the judge concerned is orthodox.  Judges generally resist punishment as a legitimate and sufficient purpose of sentencing. With Parliamentary sanction they have collectively warped criminal law from doing justice on behalf of victims and the innocent, into a primary role of therapy for the criminological needs of offenders. They do not respect the common sense intuitions of ordinary people. They resent the demand for retributive, incapacitating and deterrent punishment. To them only rehabilitative objectives are truly noble.

Parliament is complicit in this. The 2002 codification of sentencing principles was deliberately opaque. It tells judges contradictory things because the politicians wanted to be able to legislate incompatible slogans. They know that people hear differentially, so that they recall only the slogans they wanted to hear, and do not remember that the same politician also legislated the opposites. Politicians fail to legislate priority ranking to the competing considerations in sentencing partly because the debate on priorities would reveal how far their values are from those of most voters.  Hiding from voters in this area is abetted by shared values with the media. We saw recently how bewildered the media were by the public’s indifference to the Dirty Politics beat up. They are even further from understanding ordinary peoples’ dislike of elite views on criminal justice.

Within the club the insiders deride voter opinions. So all parties collude to avoid open Parliamentary debates where that would become evident to voters.  Democracy relies on consensus on many such compromises, though it is reprehensible in this area.

So MPs consciously leave it to the judiciary to reconcile sentencing contradictions unaided by legislative ranking. The judges are not unhappy, because they do not want the legislators to straitjacket them either. They have more power with contradictory law. They deliberately ignore law they do not like in any event, such as the clear legislative  instruction to deliver maximum sentences for the worst cases. I cannot recall any maximum sentences for serious crime, ever.

What happens in Parliament is a reflection of the pressures of democracy, plus the normal ‘tribal identification/in-group/out-group’ mechanism among ruling cliques. Politicians want to pass law that looks as if they respect the overwhelming public sentiment. So they put words into law that appear to respect it. But most of them also wish to maintain respectable membership of the insider club. That means they must flash elite class badges at key times. The simple way is to espouse values that are different from and ‘superior to’ common values.

For several generations criminal justice has been one of those intellectual ‘lek’ areas, where the elite can boom their superior compassion to each other by ritually trampling on ordinary peoples’ instincts about justice, retribution, deterrence and incapacitation. I studied the criminological literature in which insiders reassure each other of a research foundation to their superior morality and intellects. It is flimsy bullshit. But they sincerely believe it. Because they want to, and need to.

Judges do too. That is how they feel superior to to their more effective predecessors, from periods in which our criminal justice was much more successful in protecting the innocent and upholding norms of civility. But because humans have a perverse application of the common ‘investment fallacy’ – that things are worth what has been invested in them, not what they will deliver in returns, we tend towards sacrifice in all faith based or religious behaviour. So judges and liberal politicians feel that the costs to avoidable victims, of the elite’s’ parades of  ‘compassion’, are the sacrificial price borne by ‘the community’ for holding to the higher values of the anointed. The greater the sacrifice, the more it demonstrates the anointeds’ superior virtue.

It helps that the sacrifice is largely borne by others, outside the leafy suburbs and safe offices of those making the law.

 

Banks’ class action prospects darken – other businesses should worry

  • October 24th, 2014

Sixteen months ago I irritated some banks with a post predicting they would lose in the New Zealand class action promoted by Australian lawyers in June last year.  If iPredict had a contract on that issue, the price should have rewarded me this week.

The AFR last Friday reported on a paper delivered to the Australasian Mining and Petroleum Law Association. It warned of the wide-ranging implications of the High Court of Australia’s decision that late fees were penalties. As such they are likely to be unlawful. The AFR reports mining and other businesses worrying about a need to redraft thousands of contracts.

It is highly unlikely that our courts will reach different conclusions. Business New Zealand, the Bankers’ Association, and other peak bodies should be getting suitable amendments  on the work programme of MBIE. It would be cheaper and probably result in better law to use statute pre-emptively to modify contract law, than to excite contract lawyers with thousands of amendments, and enrich litigators with opportunistic reopening of past conduct.

As I said last year the cost of good research and informative lobbying would be a fraction of the cost of just one of the cases business could have to fight.  If they choose to wait there could be many  cases exploiting the current legal uncertainty (a euphemism for centuries old hostility) toward rational penalty provisions.

Reportedly my comments on this last year annoyed some business leaders.  Singing the team song when in the cross-hairs is obviously preferred over realistic bad news and advice.  I can’t believe their own lawyers would have had markedly different conclusions unless they too were victims of pressure for group-think, so either the irritated business leaders were head in the sand, or the lawyers were muffling their advice.

Perhaps the leaders  thought I was enjoying their predicament.  I was not, as should have been clear from the stated view that a victory would not be in consumers’ best interests long term. Invalidating penalty provisions will make it harder for large businesses to control costs with effective incentives on the parties in the  least cost position to to minimise default.

And business peak bodies should have been doing some stitch-in-time spending too, to mitigate the impact of the pending Supreme Court decision in the case I posted on in August last year.  The case involves liquidators’ rights to claw back payments made to innocent creditors while a company is insolvent, unbeknown to the creditor (and perhaps the debtor company). I offered some free advice on minimising exposure in September 2013

The Supreme Court is in the unenviable position that whichever way it goes will produce an absurd result, from some-one’s perspective. The Court is confronted by law that is simply badly drafted.  Officials responded in 2007 to advocacy with what they apparently thought was something close to Australia’s law. It left confusion not only in the provisions, but also in the explanatory memorandum which courts can use to aid in working out what Parliament thought it was doing.

Perhaps business peak bodies have been doing some homework, but quietly? They should be stepping it up in both areas.

NZ research on LED risk from the Daily Mail

  • October 21st, 2014

Why has NZ media not reported this NZ research before the UK Daily Mail revealed it under the following headline?

“Are eco-friendly bulbs BAD for the environment? LEDs attract 50% more insects and could damage ecosystems

The catchline goes ” Scientists at New Zealand-based research institute Scion claim that if more insects are attracted to street lights they will be thrown off their usual path and into the jaws of predators”.

The Smithsonian is also running it.

Do we have no reporters with the curiousity or the knowledge to see the general interest in the story? Or has Scion not drawn it to their attention? Or is there a greenish bias against running stories that shade an energy saving campaign?
Perhaps the risk will accelerate the adoption of the new switching technology, that turns street lights off until motion detectors or other sensors decide they need to go on.

Why Christchurch could beat Auckland

  • October 20th, 2014

Canterbury people may one day thank the Christchurch planners whose incompetence has probably eliminated its CBD, at least as CBDs are known and loved by planners.  John McCrone in the Press describes without the common sneers, the dispersion of commercial and residential development, built around excellent roads.  It may mean Christchurch gains New Zealand’s nearest equivalent to the growth and energy of Houston, Texas.

Houston is hated by the elites, but it is where people choose to live. That city alone is now building more residences than the whole of highly regulated California. 

The hopeless dithering of planners, and their inability to empathise with people who have to make a return on capital could mean that Christchurch and Canterbury people are not saddled with a real CBD which the planners then warp everything else to serve, such as white elephant commuter trains and other ‘spines’.

So the region will be freer to react to the enormous changes coming from driverless transport. Their built pattern will not involve the forced concentrations so beloved of those who need to see heads nodding all in unison, on trains and buses. 

There’s another reason to think that the disaster inflicted on Canterbury by paralysing planning is short term. Unlike monolithic Auckland, Christchurch has had the safety valve of competing small local authorities whose decision-makers respect their customers. So business has been able to escape the costs and paralysis.

I’m looking forward to the time, not too far away, when our urban rail corridors compete with the Otago Rail Trail. We’ll love to cycle on them, for commuting, but also for fun, because the safety, speed, efficience and cheapness of self driving personal transport will have made them redundant. 

And country pubs will revive, as drunk driving becomes a quaint historical concern. When our cars can drive us home better than we can sober, the country pub and garden bar will recover their proper places in the sun.

Disclosure – I bus and cycle and walk to work, and have never had a work car-park in 40 years. But that does not mean I won’t share the joy of seeing the silencing of the little despots who keep trying to coerce us all into public transport.

 Thanks Whale Oil for the link to the Atlantic comments

NBR covering the right questions on Auckland electricity

  • October 7th, 2014

An independent Electricity Authority report may tell us whether some of the $17m Vector  admitted to spending on lawyers and experts fighting the Commerce Commission’s methodology for price control, could have been better spent on a few sprinklers and engineers.

Wayne Brown would agree. His forthright views in the Herald, also covered in the NBR updates, fit with what appears to be a developing strategy by Vector to exploit the blackout to justify higher charges.

There is a reason for a frenzy of lobbying right now, to persuade politicians to threaten the Commerce Commission. The Commerce Commission will decide by the end of this month whether to lower the chances of lines monopolies extracting excess profits. The Commission has received evidence that the current formula for calculating the permitted cost of capital is too generous. And plenty of claims that it is not.

But curiously, in none of the expensive expert material the lines companies have put before the Commission is any evidence that they have not invested because of inadequate returns. Indeed there is a startling lack of internal evidence that returns have been relevant to their decisions at all, despite media claims (mentioned below).

With the nutty Labour/Green policy to renationalise the competitive generators (by stipulated prices) gone for at least three years, legitimate consumer concern about electricity price increases will focus where it should, on charges by monopoly lines companies.

So it would be understandable if Vector aren’t putting their faith in wininng on the facts before the Commerce Commission, and are instead trying to take their fight over its head and straight to the politicians.

 They may have some reason to think it is working, at present. As NBR reported yesterday:

 Power bills could rise
It was Auckland’s fifth major power outage since 1998

Yesterday, Prime Minister John Key said if the city wanted a “gold-plated” network with redundancy, upgrades could mean higher electricity bills for consumers.

And a bit of blackmail  statement to Radio New Zealand a month ago, telling the government that it would not extend its network for new housing areas unless it could earn more than the regulated return.

Strange then that in evidence to the Commission, which of course could have been challenged by experts, neither Vector nor Transpower provided internal evidence that they would not have proceeded with their substantial investments at a lower regulatory cost of capital, or rebutted MEUG’s challenges to them to do so.

Vector argued against the Commission relying on evidence of the actual circumstances of the regulated suppliers. It claimed that the Commission should not assume that recent substantial investments and future investment plans by EDBs and Transpower are indicative of future investment. Vector did not provide any alternative asset management or other plan in support of its submission.

Disclosure of interest – my firm has advised MEUG on the regulatory WACC issues in the Commerce Commission’s Input Methodology Determination process.

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