Colin James in the DomPost today reminds us that the government agreed with the Maori Party to conduct a constitutional review. Colin says that the terms of reference will be released shortly.

But the article looks as if might have been chopped short by a sub-editor. I took particular note because of the cryptic reference to  ACT in the following: 

"The Institute of Policy Studies (IPS) and Centre for Public Law are running a conference next week, 10 years after an IPS conference in 2000 which ACT tried to wreck. The IPS is also leading a state sector project on Treaty issues after historical grievances are settled."

I'm curious because I think he is referring to the hui mentioned in my post several months ago. I might have been the only member of the ACT caucus at that hui. I didn't realise I'd left anything like that impression. The conclusion leaves much to follow up.

The article properly identifies Rodney Hide's current contributions to constitutional evolution, in local government, on regulatory restraint, and on the racism in the DRIP (Declaration of the Rights of Indigenous Peoples).  I've no doubt he will be influential standing up both for property rights and against race privilege as the Marine and Coastal Area Bill is released.

Every so often I get sucked back into reading 'climate change' arguments. I bought Gareth Morgan's book as a patriotic duty – when an intelligent New Zealander pays for me to get an objective account then I owe it to him to see what he thought.

Since then I've left the stuff pretty much alone. Unless you're prepared to learn the science, you'll usually be in the hands of the talented and persuasive folk whose articles you last read.

I'm sure there is a human influence on climate. I do not know whether it outweighs natural cycles. I do not know whether getting warmer is good or bad overall, though I rather like the world I know so I start with a preference against change. I do know that the richer we are the more scope we have to adopt technologies that minimise damage to the physical world without sacrificing things that no democratic leader will be able to persuade us to sacrifice.

The risks may justify sensible preventative measures. They are almost certain not to be the hair shirt policies on which the world is planning to waste $trillions. Our ETS  is possibly one of those, though it may be the least we can do under political constraints without incurring the geopolitical costs of simply repudiating the obligations we signed up to many years ago.

A friend recently sucked me back into this by sending what she considered to be a challenging web article. I could not open it. Instead of taking that as a piece of good luck, foolishly I sent her a short optimistic piece by Matt Ridley from the Huffington Post. She responded with a Monbiot article. I've followed up on some of the latter's links.  Then I came across a 2 July Telegraph piece by Bjorn Lomborg.

Cathy and I spent a happy couple of days escorting Bjorn Lomborg to dive the Poor Knights and white water raft during a New Zealand visit. I prefer his company to that of the gloomy Green party priests who deal with their personal demons by trying to inflict the modern equivalent of ecclesiastical rule on us all.

Lomborg believes that climate change is a risk. He urges precautions. But he wants them to be intelligent.

His Telegraph article reports on Copenhagen Consensus Centre research into the costs and benefits of current European energy policy:

"Using the conventional estimate that one ton of carbon dioxide is likely to cause about $7 (£4.50) of damage, [researcher Richard Tol] found that the total benefit of the EU policy was just £5.7 billion. In other words, every euro spent is likely to generate just three cents' worth of benefits. [Lomborg's] research shows that by the end of this century, the EU's approach will reduce temperature rises by approximately 0.05C – almost too small to measure."

That's my fill of climate change argument for this year. I do not want any more:

a)  because none of it can be conclusive to a layperson;

b)  because the physical world I know best is so much better and healthier than when I was young so my personal experience fits better with Ridley's optimism;

c)  because I prefer optimism to pessimism. It is less wearing. Optimists are more fun to have around. When there is uncertainty about which is most merited, why not choose the one that is more pleasant?

d)  because there is nothing I can do in my personal use of resources that will make a blind bit of difference to the physical world even if the pessimists are right, whereas

e)  there is much that I can do about the social world that might have some practical influence for good as well as equip us with more wealth with which to play our part in improving the physical world when the time comes.

Over the next few days we'll hear much on Sir Ron's contribution. I'll listen with none of  the reservations one often has about eulogies for people you know from working with them and for them, in strife and in success.

When I opposed the abolition of knighthoods and celebrated their restoration it was Ron I thought of as the embodiment of our version of nobility. It was him I had in mind when arguing that having a title that elevated some of us as models for all, was worth it despite knowing that some undeserving imposters would also benefit.

I do not recall a client who was more worth working for, or more fun to dine with, or more magnanimous in success or more decent in adversity.

Receiving a Yellow Page fax scam this morning prompted me to check out Internet NZ's new orb service. It is for online crime and the NetSafe providers probably see fax scams as belonging to the steam age.

I hoped that Orb might offer a download of a simple one button click to send off a spam message to Orb. Apparently not yet.

The Yellow Page scam has agreement in the fine print to pay to a UK company $159 per month for two years, payable yearly in advance. The fine print allows for the resulting debt to be assigned. I imagine it will be assigned to some NZ company that will then set about formal enforcement proceedings, but will agree to drop the enforcement for a compromise sum.

It will be interesting to see what scumbag lawyer (if any) will work for the perpetrators of this scam. Perhaps they will use experienced debt collectors without lawyer assistance.

Chapman Tripp have two crisp public comments for directors. The first applauds Judge Jan Doogue's refreshingly unequivocal decision in the Feltex case, though noting some chinks that could undermine its precedent power. 

The second Chapman Tripp comment reminds directors of new risks down the line, if public enforcement of directors duties codified into the Companies Act is not confined to directors who have been bad or reckless, and not merely foolish or careless.

On the comfort to draw from the Feltex decision Chapman Tripp say:

"We consider that, on balance, the judgment should be a source of considerable reassurance for New Zealand directors.  While directors must always give appropriate consideration to material placed before them, they are entitled to trust those advising them, so long as such trust is warranted and there are no reasons to suspect that it may be misplaced."

I'm less sanguine, for two reasons:

a) the fact that the Companies Office used its powers and our money to prosecute a case where there was no evidence of impropriety should worry everyone. Many laws now stipulate for strict liability in unfairly broad terms. People have reassured each other that they should not worry. because the authorities would only use them against people who deserved it. The Feltex case (and probably the Nufarm case) say – wake up!

b) look carefully at the qualifications at the end of Chapman Tripp's assessment – "so long as such trust is warranted and there are no reasons to suspect that it may be misplaced."  

They no doubt seem reasonable to lawyers, sitting in comfortable hindsight. But most business decisions are made  under uncertainty.  One simply does not know whether "such trust is warranted". If you do know then the decision is a no brainer – indeed it justifies the challenge of the Shareholders Association Chairman cited by Chapman Tripp – "that begs the question of why directors have to be paid so well for exercising their judgement”. Instead most business decisions are necessarily judgments which balance the cost and practicality of getting better information against the costs and losses from delay, including  loss of opportunity. 

In practice there are also frequently "reasons to suspect that [the trust] may be misplaced". A director works with the material given. One often has "reason to suspect" that the people on whom one is relying are less than optimum. Some will be learning on the job, and making the mistakes that we all must make. Others will be known to be out of their depth, but retained because they are the devil we know, and in a tight labour market they are better than no one. Some may even be being "managed out" because labour law says they can not be dismissed. So the "no reason to suspect" qualification phrase  in the Chapman Tripp assessment is weasel words.

Using them is excusable - they are drawn from the sanctimonious phrasing of section 138 of the Companies Act. But they are dangerous until they are recast, or bold judges like Jan Doogue find a way to make them mean something like "no reason to conclude, after balancing the relevant risks and costs and benefits as they then appeared to the director, that it was imprudent to rely on those advising them".

It is rare that one has "no reason" to suspect possible unreliability. The usual case is that there is some reason, but it is outweighed by much more reason to rely, and to act on that reliance, knowing that sometimes it will be misplaced.  That is the risk shareholders want the directors to weigh and to take on their behalf.

To answer the question of the Chairman of the Shareholders Association – if shareholders want the upside of good faith judgment when it proves right and want the blood of directors when that same good faith judgment proves to have been unwarranted, then the shareholders will find that the directors will demand a goodly part of the return that the shareholders are expecting. If directors pick up the downside risk for shareholders they will want the return to justify it.

The emails are mysterious in one respect – it seems that much of the early discussion between Jim Farmer QC and Sir Edmund Thomas preceded a thorough understanding of the facts. Astonishingly it seems Jim Farmer may not have seen the relevant company indebtedness documentation and accounts at any time covered by the correspondence. Nor did he seem to think until very late that it could be necessary to know exactly what his client and the other eminent people involved had actually said to each other or to the court.

It is possible that Ted Thomas was unduly agitated by a premature and overheated account from Farmer. Perhaps Jim Farmer's evolving views on how he should advise his friend Alan Galbraith will be excused as a necessary retracing of steps as more of the basic information became clear. 

Nevertheless it is easy to understand Thomas'  mounting alarm and estrangement from Farmer after Farmer decides that it is not up to him (or Alan Galbraith QC or Colin Carruthers QC) to take steps to cleanse the Court even if Cheif Justice Dame Sian Elias remains indecisive.

Thomas was entitled to expect that Farmer would not have consulted him without knowing most of the relevant facts.

Yesterday I was proud to move the admission to the bar of  Jordan Williams, from my firm's staff. The presiding judge (former Waitangi Tribunal Chair  Joe Williams)  reminded the new entrants (and their moving counsel) to live up to the professional standards required to maintain our centuries-built inheritance of the rule of law. That means placing service ahead of personal interests.

Foremost is our duty to the court – the only duty that prevails over our duty to the client. Justice Williams emphasized integrity.

I get a charge from these ceremonies, seeing young lawyers set out to play their part in maintaining and renewing the institutions of the rule of law. The celebration lunch with Jordan and his family was unalloyed pleasure.

Then I went back to the office and became sick at heart.

Along with no doubt hundreds of other lawyers who should have been racking up chargeable hours yesterday, instead I clicked on  NBR links to emails between retired senior judge Sir Edmund (Ted) Thomas and Jim Farmer QC.

They say Chief Justice Dame Sian Elias  was "sick to the stomach" about  the Bill Wilson problem.

My hour on the emails does not resolve  whether Justice Wilson knowingly failed to disclose a material conflict of interests (the Supreme Court has already held that his interests were disclosed inadequately).  We still do not know enough to judge whether a reasonable person would conclude that Wilson's judgment could be affected by a feeling of obligation to Galbraith, counsel for the winning side in the Saxmere case.

But they do reveal enough of Farmer's thinking (and in hearsay the thinking of his client and friend Alan Galbraith QC, and friend Colin Carruthers QC) to justify Ted Thomas' fears that they were each more concerned about the interests of their friends (including the Chief Justice) than the integrity of the Supreme Court. For Farmer and Carruthers there is some defence – they were always subject to duties to their clients.

The Herald story cites from a  passage in a 24 July 2009 email from Jim Farmer. They include only the second sentence. The full paragraph says more. It reads:

"I thought that from my last email and our discussion at Court the other day that you had got the message that if this matter is probed, it will be likely to bring down Sian as well as Bill. While I have no brief for Bill, I do regard Sian as a close friend and I will always put friendship and loyalty above concerns about the 'system' which has its own processes for looking after itself. I would always have thought that would be your position too but am now worried that you won't leave this alone".

Whatever the Judicial Conduct Panel now does, the damage is done. The passage encapsulates the issue that suffuses the email debate. It appears to have driven Sir Edmund throughout. As a system insider (though often the establishment's pet outsider in court decisions) he is acutely aware of the system's vulnerability to group loyalty. His despair and willingness to sacrifice his friendship with Farmer show pungently the point I tried to get home during the Parliamentary debates on ending our right of appeal to the Privy Council, that integrity can go very quickly from a system which is expected to cleanse itself.  

The current damage started when no MP challenged what I am told was the refusal of the then MInister of Justice Doug Graham to lead or to allow Parliamentary impeachment of Northland District Court Judge Martin Beattie. Beattie was acquitted on charges with a defence that should itself have disqualified him from judicial office (essentially – I was too stupid to understand that I could not fiddle my expenses). His fellow judge Robert Hesketh did the decent thing and accepted punishment. He was rightly re-elevated afterwards to his current position as Director of the Office of Human Rights Proceedings.

The foolish law under which the Panel is appointed was said to have grown out of that experience with Beattie. It legitimised Parliamentary cowardice, by eliminating the simple notice of motion procedure that would have made impeachment unnecessary. The Speaker would have discreetly mentioned to the Chief Justice or directly to Wilson J that there was mounting pressure within Parliament for an impeachment. Because Parliament can act to cleanse the appearance of impropriety without needing proof to any defined standard, the persons embarassing the system must then either decide to go with what dignity they can muster, or persuade themselves that their cause is so simon-pure that it will prevail in Parliamentary debate.

Instead the Panel process will be an expensive show. Whatever it decides the stain is likely to remain. Ted Thomas' concerns are relevant even if Bill Wilson is vindicated – the people in the system are seen to be too close to each other to be sure that they really wanted to know the truth, and each player (other than Thomas) seems to have wanted to leave decisive action to others (called the "system" in the emails). Perhaps that word made it easier to avoid admitting that it was the court they were shying from serving.

What must happen is now clear. The government should tell us very quickly how they propose to restore assurance that we can get objective justice. They've had plenty of time to think. We need  to send cases to the High Court of Australia, or to take on outside judges on the Supreme Court when the people on our top court know too many of the parties, or have worked for them, or have relatives or close friends with such complicating interests, or have investments that will be affected by a decision, or are known to have longstanding friendships (or the opposite) with parties or their counsel, or have passionate known views on issues. 

The Chief Justice should have recused herself on the Ngati Apa case that plunged us into the seabed and foreshore mire. But it is no solution to say that we should not appoint judges like Dame Sian. We do not want only judges who have been so incurious or toadyish or colourless or spineless as to have never participated in the great debates of our society.

So we need a mechanism to neutralise the suspicions that will attend  such judges in areas of passion. We need access in some cases to patently impartial international umpires, outside the cosy hot-house that is our senior legal society.

Under the headline 'German Giants Flee Wall Street' Der Spiegel notes another stage in the decline of the NYSE as the world's dominant exchange.

" … With expensive accounting rules, an increased threat of litigation and hundreds of millions of dollars in fines for some firms, the once prestigious New York Stock Exchange and other American markets have become unattractive to Germany's biggest companies. Daimler and Deutsche Telekom have fled this year and the few remaining are likely to follow. On June 18, the symbol of the German company Deutsche Telekom, DT, made its last run across the ticker at the New York Stock Exchange. Europe's largest telecom company left the world's biggest and most recognizable exchange after nearly 14 years of trading. The company is currently in the process of delisting from all foreign exchanges and will soon only be traded on its home stock market in Frankfurt. Deutsche Telekom is just the latest German blue chip to say goodbye to the American capital market. In an emblematic departure, Daimler, the first German firm to be listed in New York in 1993, officially quit trading on the NYSE on June 4, saying that it no longer needed a presence in New York to attract international investors. And Munich-based insurance and financial services giant Allianz abandoned the NYSE last fall."

I hope the MED officials working on our Securities Law Reform package see it. Because this article is not about the effect of the latest package of politico-regulatory responses to the GFC, now expected to add between 300 and 700 new regulations for capital markets to deal with. The current exodus is reported to be a response to existing regulatory costs (largely for disclosure  including Sarbanes Oxley)

"On average, companies must add another five to 10 people to their payroll for SEC compliance alone, and a company may need a dozen workers for required executive compensation disclosures,..".

and the risks of personal litigation liability  

"What the SEC fully doesn't grasp to today is that dealing with the US regulation system is a nightmare,…it's another reason to run to the exit door.

Sarbanes-Oxley reforms also require a company executive to approve on all financial reports. "The most important thing (about Sarbanes-Oxley) is that the CEO and CFO sign for the financial statements,….All it takes is one person in the company to make a mistake and (an executive) can go to jail. Executives who sign off on incorrect financial statements can face a sentence of up to 20 years."

Our new law must target crooks, people with criminal mens rea (guilty minds). It must not treat foolishness and over-optimism and carelessness as if they are similar species of wickedness. Because law that conflates them all will scare honest people into doing nothing, or spending time on fruitless compliance back-covering. They know that good faith business mistakes are inevitable if they are to take the kinds of risks on behalf of shareholders that have allowed people living off the work of our businesses to come to think that poverty is not normal. 

Politicians are now being pushed by voters who think that big losses should not be as normal as big profits, or that if they suffer them, taxpayers should take them over, or make rules to ensure they can never suffer them again.

The NYSE is suffering the consequences of such failure to distinguish wickedness from foolishness.

Keith Locke's call for gun registration maintains the Greens' usual faith in government  It follows last week's Sunday Star Times 'expose' of how many firearms are circulating. But both come at a curious time.

Because New Zealand's law has just been praised  by the authors of an international survey of firearms law, and firearms murder rates. The Herald's story on that study knocks the stuffing out of the efforts of Mr Locke and the SST.

Sadly for  Taupo's Jeremy Graves a willingness to look at the law and the evidence together is still too much for the Police to handle. Mr Graves was charged and convicted of assault for pointing an unloaded air pistol with a laser dot aiming device at Police who entered his home in the night.  A neighbour called Police when he heard glass smashing. Mr Graves broke into his own house after losing his key.

What a pity the Police did not laugh with Graves in relief on finding the mistake, since his laser dot on the 'intruders' was very effective.  Sadly they easily find judges willing to ignore the Crimes Act provisions on self defence, our history, and why people feel it is better to risk Police persecution in court than the fate of so many people who've suffered criminal home invasions. These judges uncritically apply not the law, but the unlawful Police policy that only they should be allowed to defend themselves with weapons that minimise the risk of the innocent defender coming off worst.

I suspect that Mr Graves would win an appeal. No doubt the Police can count on it being too expensive.

The  judge was silly enough to opine that Mr Graves would have been within his rights to use a baseball bat on the Police. How is that better than scaring them into properly identifying themselves with the red spot of a laser sighting device?

Take Matt Ridley's Ted-Talk of 15 minutes for an inspiring explanation of gains from trade. From the comment thread it seems it helped even some Greens to understand.

Thanks Brent Wheeler and Alan Dormer

TV 7 screens The Court Report on Mondays and Thursdays at 9-35 pm. Last evening I spent an interesting couple of hours with host interviewer Greg King, VUW's Steven Price, NZ Law Society Vice President Jonathan Krebs and barrister Michael Bott as the second in this new series was  filmed. 

This episode covers the Waihopai decision and the intention of the Minister of Justice to patch the law that led to the absurd jury acquittal of the sanctimonious vandals who caused $1m in damage.

The Ministry's advice to their Minister  left him with little choice. Unfortunately it does not reproduce the Judge's directions to the jury, but it says they were consistent with the law as stated by higher courts in New Zealand, and that the jury decison was consistent with the directions.  Without seeing the reasoning I can't persuade myself that can be the case, as the defence of "claim of right" requires a genuine belief that their actions were lawful, not that they were morally justified.

Still, until the law is changed they could go back to do it again (as one of them has apparently said he wishes to do). He'd be sheltered by the reasoning of his previous acquittal. Is it not reasonable for him to conclude that a court has confirmed that his sincerity and purpose made it lawful?

And if he chooses to shift focus for his next crusade to the more traditional Catholic concern about abortion, on the same reasoning he'd be free to burn down an abortion clinic, or the home of a nurse who worked in one.

Despite being grateful to producer Sofia Wenborn and the Gibson Group team for the chance to chew the fat afterwards with her and my legal colleagues, I fear they will find it hard to turn this format into compelling viewing.

They underestimate how counter-intuitive it is to good lawyers to use stories and vivid images and pithy summations in public 'performance'. All our training and the judicial process are designed to produce instinctive mistrust of reasoning by anecdote, of incomplete and imprecise expression, of possible ambiguity, and of unanchored assertion. We are trained to move as quickly as possible from the tricky emotional swamp of incident to the safer ground of principle and abstract reasoning. So to the layman we are bloodless - in other words, boring.

That does not mean lawyers are necessarily the same in private conversation. But we learn to shift menal gears when we put on our professional cloak, and a good thing we do.

But TV producers trying to capture the drama of the clashes of principle and emotion behind contentious legal issues will be deeply frustrated by our profession's determination to suck the blood and emotion out of discussion. They'll also find our collegial courtesy (unwillingness to interrupt even boring repetition)  a challenge.

A few lawyers learn to cross the boundary back to letting their natural zing and passion come through even when they are in uniform. Sir Geoffrey Palmer does, for example. Lets hope Greg and his guests get there quickly.

Why build and husband political capital if it is not applied to show you mean what you say on things that would "make the boat go faster"?

Not only stopping, but going backwards to appease the selfish green lefties is hardly likely to build capital, or even regain what was lost (if it was much). What does the government think it worth risking popularity for?

The  Coromandel-for-us-alone spokesman on Morning Report gave it all away this morning. He had no joy in any gain for the environment. It was all exultation at smashing the government's resolve.

The pathetic suspension penalty for Comeskey's admitted dishonesty draws attention to the law profession's loss of control of its own standards in 2006.

Until then, when the messy mix of union protection and state control that is the Lawyers and Conveyancers Act 2006 was passed, the profession could vote for leaders who might replace members of a tribunal responsible for condoning such a serious erosion of standards.

I am proud of my part in delaying passage of that Act for several years. Phil Goff knew it was conceptual rubbish, so he did not push it through over the concerns I was promoting with the other lawyers in the House. But he was too busy with Foreign Affairs to fix the flaws. Unfortunately, the Disciplinary functions are now performed by the Minister's prefects. The profession can not elevate its own standards.

Which is not to say that it necessarily would if it still had the chance. I've posted before on the wet leadership of the profession when it comes to matching rhetoric about honesty, with action.

Fantastic Rugby for New Zealanders.

If I were the South African coach I'd be in two minds over whether to expose my team this week to the usual post game video review. How do you inspire your guys to counter general excellence and mistake avoidance, from an entire team?

And if I were Bill English I'd cancel the folly of Auckland's 'party central', and save us all one day's borrowing from foreigners. How will Auckland fill a ghastly old shed on a distant waterfront when they can't muster more than 25,000 spectators for a game like that?

The Economist report that John Key was sixth in a table showing Leaders' salaries as a multiple of GDP per head (John Key gets 10x our GDP per head) came on top of  widespread comment on the Speaker's triennial review of MPs pay and allowances, released on 1 July.

Most people will recall the comments on the report, not the report itself. Even Kiwiblog focussed on rebutting mistakes in the opinionated Herald editorial.

I'm disappointed with the review recommendations in two areas. One of Doug Kidd and Phil Barrys' concerns leads straight to a radical conclusion but they did not draw it. The other will be damaging if it is taken too far.

The first issue is identified in the review simply:

"We are concerned that the rate of growth in expenditure by the Parliamentary Service departmental and the Office of the Clerk in recent years exceeds by a wide margin the rate of growth in the economy (which has averaged 1.4% p.a. in real terms over the five years to 2009). Our view is that this trend is not sustainable and needs to be checked."

MPs are sheltered from the consequiences of their own dumb decisions that lead to our poor growth. Their personal experience is of constantly improving conditions, and they get elected by promising more to others, and by sticking to the political wisdom that the bearing bad tidings gets no votes, however necessary it might be to speak the truth to the people who would rather hear comforting platitudes.

A solution – MPs should be obliged, just like many company executives, to put a material chunk of their salaries at risk if they do not improve our wealth.

That chunk should go into a deferred receipt scheme. It could be paid out say 3 years in arrears, but adjusted in proportion to New Zealand's over or under-performance in gdp growth compared to the OECD average.  I'd suggest say 40% at risk. Ordinary MPs can afford it. They get well over 4 times the NZ gdp per head. They should have even more of their pensions at risk, tied directly to long term increases of average gdp. If it increases at a faster rate (or declines less) than the OECD average, they should get a bonanza. If it underperforms, they should lose proportionate chunks.

The second issue is the review's enthyusiasm for bulk funding and the reduction of provision of services in kind. I think they have insufficient concern about the behavioural effect of "bulk funding" and monetization of benefits for people with mutliple temptations to free ride on the efforts of others. Many may  simply take the monetary equivalent and use it in ways that benefit them personally, and not provide the services sought by voters.

They may not act differently from the beneficiaries who spend money on cigarettes and coca cola and grog, when the same amount distributed as food stamps could ensure a generation of kids with better nutrition.

I do not defend the general international travel privilege. Nor do I think that any form of international holiday travel should be subsidised. But I believe that there should be more, not less international travel by MPs. In my opinion the people of New Zealand get very material value out of many of the overseas tours that take MPs away together.

Many MPs get an exaggerated idea of not only their own importance, but of the importance and power of New Zealand. For those MPs is sobering to spend time in countries where nothing you do or think makes the slightest impact on the people around you, or their TV news or their newspapers. I've heard Maori MPs, for example,  exclaiming over how immaterial are their issues to the world and to indigenous people facing far more pressing problems.

More importantly, those group trips are now (since MMP and since Parliament ceased to have the 'lads' culture of a gentlemen's drinking club) often the only occasions when MPs from different parties get to know each other without the party label barriers up. When on a trip overseas we are treated as New Zealanders without much concern for the tribal differences. And in turn we come to remember that the things we share as New Zealanders and our common interests can be far more important than the things on which we divide. I believe I was more constructive as an MP after a few trips where I formed warmer personal relationships with MPs I'd never expected to like. In comparison to the gains for the country, the costs are trivial.

Those trips  should continue to include spouses. Unpopular though it may be to say it, in my experience spouses sacrifice a lot. Worst can be the gap that opens up as the MP grows and learns in the challenging job, while the spouse gets left behind intellectually. The shared experience of the people in a tour group as well as the learning from those met overseas may help reduce that dangerous disparity.

it is simply not true that private sector businesses do not allow senior executives to include spouses in travel. Some do expressly encourage it with limits of course. Others allow targetted executives (often those away from home a lot) to "cash in" a business class seat for two economy class seats. That should be encouraged.

Sitting in business class while your voting plebs are behind is not good for the MP's soul anyway.

The kids in the Youth Parliament yesterday debated and heard submissions on liquor law reform. One MP told me many of them were more blunt and commonsensical than their elders. Film director Taiki Waititi appeared before one of their committees. He's reported as "sick of seeing teens puking up or asleep in Courtenay Place". He had no firm view on the age of supply issue,  but said youth should take more responsibility.

Why is that not the heart of the reform? Instead the government is drafting up variants of the Law Commission's proposals – everything they can think of other than requiring personal responsibility.

Though Richard Long thinks their effort could misfire, the panel of worthies demanding that the government implement the full Commission ticket are well meaning dupes in the same strategy.

They're right that there is a problem. New Zealand decided 40 years ago to end the 6 o'clock swill, then to become "mature" continentals by making grog a normal part of life, with on demand 'civilised' drinking in restaurants and cafes and free sale in shops. But instead of turning into idealised French sophisticates we've unleashed many of ourselves as sodden Russians or morose Scandinavian berserkers.

The Law Commission has excited the Youth Divisions of the  political parties. They're joining forces to block a change in the supply age, though that age limit has so little substantial effect that their fight is essentially empty symbolism.

None of them address the simple question raised bravely by the Hospitality Association's Bruce Robertson. "Why not focus directly on personal responsibility for the behaviour we don’t want?".

It is not hard. Underage drinking is against the law in many countries. They enforce it with penalties on the underage drinkers. Not us now, though we did here, until recently. We also enforced law against drunken oafishness, littering, breaking glass, foul language, threatening behaviour.

Now instead we are to get another round of symbolic law, all aimed at people who supply liquor.

What use is that? Everyone knows there is unlimited cheap alcohol in supermarkets. Those who want to pre-load can always find someone to buy what they want.

Why no offence of public drunkenness? Why no enforcement of law against underage drinking? The answer is simple – the same excuse as is used for a whole string of laws, from dog control, to fireworks bans, that pretend to be tough by targeting the law-abiding with new restrictions, out of fear of tackling directly the wrongdoers.

Sir Geoffrey is quite frank about the reasons for not focussing on personal responsibility -"because the Police tell me it is too hard to enforce". Why? Because it would not be seen as "fair" to collect penalties that would make a difference?

Pathetic – from all involved.

Rodney Hide has put enormous energy into implementing Labour's plan to centralise government of Auckland.

Will he feel it was worth it if the result of all that effort and political capital expended could be the imposition on the whole region of the 'precautionary principle' kind of rule exhibited in the ARC's bob-each-way decision to preserve an ugly old shed on their waterfront. 

Once it was decided to proceed with the left's cunning plan, National did very well to label Rodney with the responsibility.  If the demographics mean the structure is persistently dominated by the left's non-acheiver people and culture, making it monolithic leaves no localities free of their rule. They'll have the "rich prick" areas to tax to pay for their re-election bribes to the gullible voters who'll keep them in power.

One of my reasons for being glad that Kerry Prendergast is standing again in Wellington, is her conversion from enthusiasm for a monolithic Wellington region local government, back to sticking with the devil we know. At least some areas can be comparatively well governed while others suffer. And the comparisons can be instructive.

Auckland will soon lose that prospect of comparison. 

This was in draft as a brief law book review. I got distracted when criminal prosecutions were announced today of Vance Arkinstall and Rick Bettle among others, alleging misleading statements in the prospectuses and advertisements of Dominion Finance Ltd.

Vance was a longserving Chief Executive of ISI, the insurance and savings industry peak body.

Rick Bettle was a revered chief executive of Wrightson (before my time on the board of that company) and has since been one of the country's most highly regarded company directors. He has been a trusted government entity chair (TAB, Civil Aviation and Capital and Coast Health) and presided over the Institute of Directors In New Zealand.

What happens to the law, to the confidence of New Zealanders in the probity of our commercial leaders, and to the enforcement bodies when such people spend years in criminal proceedings?

They may be guilty as charged. They may be able to refute the prosecution claims conclusively, as all based on hindsight. They may escape on technicalities. Some may show that even due diligence did not reveal that the statements were incorrect. Others may fail  though they were equally unaware of the mistatements, because they have not kept a backcovering paper trail of diligence, even if they were in fact sensibly diligent. The cases may reveal a pattern of wishful thinking. They may instead show calculated risk-taking with the highest of motives, accepting personal exposure in the not foolish hope that continued confidence  would let the company trade through and avoid crystallizing the losses that are now certain.

I know nothing either way in this case. But  I do know one thing – these prosecutions and others like them could be seen in years to come as a watershed for our company  and securities law, and for respect for the law.  Which way that goes could in turn have more influence than all Bill English's tax changes, or Rodney Hide's red tape scissors, on whether we regain an enterprise culture, investing our own money productively in risky businesses,  or instead continuing to rely  on banks borrowing foreigners' money to fund our idleness..

The deterrent of the prosecutions could see the birth of  impeccable candour among company directors, ushering in a new age in which fear of prosecution makes it  possible to take at face value nearly all public commercial discourse, assuming statements have been checked to exhaustion for possibly misleading inferences. The resulting public confidence will see a flood or renewed saving and direct  investment by the newly trusting "mums and dads".

Or we could be watching a dramatic acceleration of the great decline in  opportunities for direct public investment, as promoters directors and major shareholders decide that the compliance costs (and risks) of public offering far outweigh any lowered costs of capital. On that scenario there will be little that the NZX can do to reverse its decline in significance. The power and revenue of private equity and other "wholesale" market intermediaries will surge, and whatever their 'financial literacy' or newly refreshed trust, for "kiwi mums and dads" there will be declining choice for direct investment.

This is not an attack on the Commission for these prosecutions. They may have been left with no choice but to pursue many of these cases, by rank culpability, or by the way the law is framed. I've long urged more enforcement and less fiddling with the rules. But the rules that need enforcement are the rules against fraudsters, against dishonesty. I hope the Commission is not deciding that the need to look tough justifies chasing people they do not suspect of genuine fraud, just because the regulations have redefined 'fraud' with strict liability for mistakes that had no dishonest intention.

I should have posted on this earlier when David Jackson, an eminent accountant, had to resign from the Securities Commission when the Commission launched  'civil proceedings' (essentially criminal prosecution-lite) against him and other directors of Nuplex. Or even earlier when John Hagen, with whom I sat on the Securities Commission began his ordeal under criminal law as a director of Feltex.

I do not know Jackson. But from what I know of the others they could never have imagined the liabilities they now face. Nor could many others who've worked with them and believe them to be honest and honourable. John Hagen put thousands of essentially volunteer hours into upholding standards of probity in the securities industry as an auditor, as a leader in his firm, and as a Securities Commissioner.

My fear is that as these cases wind on we will create a self fuelled spiral of decline in trust and the expectation of being law abiding, that are among our cultural treasures and competitive advantages.

What can protect ordinary investors from confusion and cynicism as they see commercial leaders in the dock (who can you trust?).

At the same time, even if the prosecutions are justified in law I foresee a tacit consensus emerging among business people that the law is deeply unfair if it targets people they believe to be decent and honest while politicians (and their own employees) are sheltered by other laws, for deceit, and theft and gross derelictions of duty. They will decide that securities law is written by cynical hypocrites who care only about appearances, not substance, and that it is enforced by morons. If that view takes root there will be a consensus like that already abroad about tax avoidance (and the tradesman cash economy). When enough people find justifications for  ignoring or evading the law you eventually get Italian style corruption. The "consensus of merchants" lies at the heart of our commercial morality. We generally trust that people will do their duty and what they say they will do. How long can that  expectation last when people see the law colliding with morality in yet another sphere (it is already mocked in employment law, and in welfare entitlements).

For two decades we have been writing aspirational slogans into securities law (and employment law ) instead of trying to confine it to what honest people do in practice. We are now reaping the consequences – regulators bound to enforce these aspirational statements against people who are not crooks. If they do not enforce, however unreasonable the law, the authorities will feed mistrust themselves for failing in their duties.

Even if those charged are convicted most of the market insiders will continue to regard the convicts as decent people, and some of them will remain leaders. People will not bother with niceties of reasoning. They'll simply decide "if even he/she is now a target, I could be too – best stay out of the territory, or do whatever it takes to make sure the authorities get no traction with me".

I have worried for years about the  potential costs of  law made by people who think it is enough to recite noble objectives, It is no consolation that at least one of the current targets regarded me as over-anxious.

And so, eventually I get back to the book review. Directors Duties and Powers is by Professor Peter Watts. He is one of the very few commercial law academics (here and overseas) with enough appreciation of the elements of the rule of law, and its fragility, to publish his  concerns about the trend to feelgood law (including self indulgent judgemade law). He has warned that eventually it could be an own goal.

For a flavour of his iconoclasm, here's his explanation for ignoring the fashionable topic of "governance".

"This is NOT a book on what has come to be called "corporate governance". ….If most companies, or most companies of a certain type, come to adopt a governance practice, it is usually not long before someone argues that directors are legally negligent if they have not conformed to the practice. Courts and legislatures need however to be vigilant on this score. It is not always necessary to integrate the ideal into the floor of duties, which is what the law should concern itself with. Many corporate governance ideas are the brainwaves of strong advocates, who like nothing better than to see their latest strictures turned into binding laws. All such notions and practices should be viewed with considerable scepticism by judges and legislators before being made compulsory…."

I'm not sure whether non-lawyers will appreciate the strength in that  delicate warning.

Peter was one of the best junior lawyers I've had the privilege to work with. He richly deserves the Legal Research Foundation's JF Northey Memorial Book Award for this book. I invited myself to the launch when I was unexpectedly free in Auckland at the right time last year. I should have thanked Peter before now by promoting his excellent work.

But for practical purposes, much of this scholarship will count as nothing if the dominant driver for  directors becomes fear of strict, crude and politically defined criminal liability, not the carefully balanced duties evolved over thousands of cases by the judges who oversaw the heyday of Anglo-Saxon capitalism.

If the US closes down our 1080 source I suppose we'll start getting it from China, because they'll make it if there is demand. It would be too rational for New Zealand to think of making the stuff for the world even though we reportedly use 90% of what is made. 

A season after I finally gave up on 10 years' opposition and allowed aerial application of 1080 with EPRO's deer repellent, my land had more birds and rich bush growth than I'd ever known.

I found no dead deer or cattle (though there were wild cows and calves in the area) but it did kill feral sheep (I found 14 carcasses).

Two years later there are still more birds than we had before. I've just had another TB testing round with no reactors on my place.  All my neighbours have suffered the restrictions of TB movement controls. I want to stay clear.

.

I hope some enterprising journalist tracks down our Professor Flynn in Dunedin to get his views on the report just noted in the Economist, that links average country IQs with their ranking for the  prevalence of infectious diseases.

"A rise in intelligence over the decades has already been noticed in rich countries. It is called the Flynn effect after James Flynn, who discovered it. Its cause, however, has been mysterious—until now".

The report summarises the findings:

"At the bottom of the average-intelligence list is Equatorial Guinea, followed by St Lucia. Cameroon, Mozambique and Gabon tie at third from bottom. These countries also have among the highest burden of infectious diseases. At the top of the list of countries with the highest average intelligence is Singapore, followed by South Korea. China and Japan tie in third place. These countries all have relatively low levels of disease. America, Britain and a number of European countries, follow behind the leaders. A list of the countries included in the study can be found at: www.economist.com/science-technology"

I'm puzzled by the indication that China has low disease prevalence. If it is indeed comparable with the wealthy west that is a phenomenal acheivement, given their relative poverty, population density, and the use of human dung as fertiliser.