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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 Writersí Walk:

“Itís true you canít 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

The loss of Shane Jones is real for all of us

  • April 24th, 2014

The gloating over Labour's discomfiture since Shane Jones' loss of patience with Damien O'Connor's "gaggle of gays and unionists" should not disguise New Zealand's loss.

Shane Jones was the Maori leader most likely to end the intelligentsia's disastrous experiment with Treaty separatism. Recall that he was not only showing Labour Party leadership credentials when he bluntly denounced Auckland's racist Unitary Plan requirements for "cultural impact assessments". When he did not back down, and instead elaborated, he was also putting in a claim to lead the country out of the constitutional swamp.

National's silence is consistent with its recent abandonment of respect for property rights and equality before the law.  Since ACT lost its mana, Parliament has had no champion of fundamental rule of law principles. Rt Hon Winston Peters fitfully emerges to remind the government that Treaty appeasement perverts core values, but no one there has even bothered to recall Sir Douglas Graham's reassurances that the Treaty was a matter between the Crown and iwi and would not affect a square inch of private property.

Crown negotiators continue to resist attempts to include provisions in settlements that would directly affect private property, but it is telling that it was left to Law Professor Ken Palmer to remind the Auckland Council of Labour's statutory reassurance to voters in 2005, that they would not be afflicted with ransom demands disguised as 'consultation'.

Even Shane Jones has not couched his objections in terms of principle. With the disclosure obtained by NBR it seems that Auckland Council considered the problems with its Plan as solely a question of political management, to slide it past objectors. For those outside the paywall an earlier NBR piece gives a reasonable flavour. So far there appears to have been no hint of appreciation that the Plan is hostile to the very core of the Treaty.

The Treaty's legally orthodox principles entitle iwi to compensation for breaches of classical property rights. Under the 'foundation constitutional document' theory those rights were secured for all of us when Maori and the Crown signed the Treaty.

Remember the words -

"Her Majesty the Queen of England confirms and guarantees to the Chiefs and Tribes of New Zealand and to the respective families and individuals thereof the full exclusive and undisturbed possession of their Lands and Estates Forests Fisheries and other properties which they may collectively or individually possess so long as it is their wish and desire to retain the same in their possession…"

Now think about how Auckland Council is trashing those principles in the draft unitary plan.

It is not excused by the Local Government Act 2002. That Act says
“In order to recognise and respect the Crown’s responsibility to take appropriate
account of the principles of the Treaty of Waitangi …” two parts provide principles and
requirements for local authorities that are intended to help Māori participate in the
processes of local authorities to make decisions
.

Nor does The Local Government (Auckland Council) Act 2009 help the racists behind the Unitary Plan
“[Part 7] establishes a board whose purpose is to assist the Auckland Council to make
decisions, perform functions, and exercise powers by … ensuring that the Council acts
in accordance with statutory provisions referring to the Treaty of Waitangi”.

I've found no central government "principle of the Treaty" or any other excuse for their Unitary Plan provisions. The following is still Wellington orthodoxy
" With respect to local government, the dominant view is that local government owes no responsibilities under the Treaty, apart from specific statutory obligations (Department of Internal Affairs, 2006).

But when Shane Jones has gone who will have the courage and the wisdom to denounce the racists' seduction of Maori into trampling the property rights of their Auckland neighbours? They will be doing just what so many Treaty grievance processes have set out to redress.

Betterment levies for irrigation schemes

  • April 24th, 2014

I wonder why I've not seen betterment levies proposed for irrigation schemes. A century ago they reimbursed far-sighted local government for its massive investment in roading New Zealand's hinterland. They meant that:

  • landowners with windfall gains were required to pay a portion of their gain;
  • those whose land did not benefit did not have to pay (ensuring fairness within the County or roading district);
  • landowners who gained economic potential had a strong incentive to use it, because they had to up their income to fund the levies;
  • the capital infrastructure expenditure therefore began earning its full potential earlier than otherwise.

Our forebears pioneered may sensible things. We are unworthy inheritors of the country they built with shovels, picks and wheelbarrows if it remains beyond us to  capture a small part of the rain that flows uselessly to sea. If central and local government and private investors must risk capital to make it possible because the beneficiaries are too anxious about the future, when they get the increases in land value and economic activity from irrigation they should richly reward those who took the risk. Deloitte have put their reputation on the line for Ruataniwha.

And if the naysayers are right, and there is no net betterment (as reflected in land value increases) then the risk takers have done their dough.

What is unfair about that?

Snowball Effect

  • April 17th, 2014

I’ve agreed to be a director of The Snowball Effect Ltd, to help make it New Zealand’s leading equity crowdfunding platform.

The FMA is expecting 12 applications for the necessary licences. Only a few will reach critical volume, so companies looking for funds will benefit from the intense competition among platforms to survive.

Let the games begin.

Equity crowdfunding could be the vital step in recapturing New Zealand's entrepreneurial culture. Over a century ago we were among the boldest, productive risk-takers in the world. In 1901 alone (admittedly a boom year) our vibrant regional share markets could float more than 100 New Zealand mining companies. Some returned huge profits. It needed only simple law, but severe consequences for fraud and bad reputation.

We shared that law, willingness to save and freedom to gamble on investment with our Anglo-sphere brothers (the US, Australia, and Canada). Our pioneering was not confined to bringing new land into production. Experimentation was widespread. In politics it included votes for women, old age pensions and state capitalism to compete with overseas overlords (Bank of New Zealand, Public Trust, Railways). The state capitalism proved to be an expensive educative experience.

A century ago other forms of gambling were also prevalent until the state claimed a monopoly. For over 60 years the state has fostered (unproductive) zero sum gambling. The TAB, later the Lotteries Commission, then the ‘pokies’ have reached their current total turnover of more than $10bn per year. The losers are often people who cannot control or afford their losses. In contrast with the micro-management of middle class savings, the state has seen no need to make more than cosmetic restrictions on amounts and frequency of gambling ‘investment’. There is no control on insider trading. Risk statements are rudimentary.

Meanwhile there have been steeply increasing constraints on the freedom of competent adults to ask other competent adults to share in productive risks. Capital markets have become largely confined to the big end of town, to private equity, and other investors who qualify for the exemptions from securities law offering restrictions. And as I can testify, several generations of lawyers and accountants have prospered from mastering the intricacies of preparing disclosure material that no one asks for, or would be prepared to pay for if they had a choice.

Now equity crowdfunding is opening a window into the stuffy room. With prohibitive costs and compliance risks lifted, once again adults will be free to gamble on productive investment in infant enterprises.

I look forward to being part of this rejuvenation. With luck and energy our platform will enable some companies to soar, and make those who gamble on them wealthy. It will not need to apologise for the gambles that turn out to have been based on unfounded but honest optimism. But I expect a successful platform to need demonstrated determination to deal to any crooks who abuse their new opportunities.

Opposition damages public morality with Oravida claims

  • April 16th, 2014

Political journalists continue to give credibility to the Oravida beat-up. I've not heard anyone I know, outside the 'beltway' set, who share their faux indignation. Perhaps aspects yet to be revealed will vindicate the accusers. But on what has been disclosed so far, those alleging corruption disgrace themselves.

We come from an era, widely regarded as our most incorruptible, when all manner of goods were marked with the Royal crest, and the words "By appointment to HM the Queen". Approval as suppliers to the Crown was overtly advertised, for the benefit of the supplier. I recall no concern that it was a corrupt practice.

Nor is there any objective argument that Ms Collins advocacy for any dairy interests in China or elsewhere, has been inimical to the interests of New Zealand. The allegations of corruption are the single element most likely to reduce the barriers to corruption. When it is acceptable to equate such innocuous behaviour with corruption, we lose the capacity to distinguish, and 'everybody does it' becomes a more likely excuse for genuine corruption at other levels

If there was some indication of covert payments then it might run. But most of us know that there is implicit personal endorsement, even if it is unwanted, in most engagements of powerful people.

As a humble opposition back-bencher I knew that when I was asked to open a building, or celebrate the commencement of a business, I was not asked for my rippling physique, or my rhetoric. I was asked because it was endorsement. It added weight to an occasion.

When I was asked to take up a complaint about bureacracy, of course I was putting my weight behind the complainant. That did not mean that I necessarily thought they should prevail. Nor did it mean they got a privilege. I was expected to do it even for companies and causes with which I had little sympathy. I went to their dinners and spoke at their AGMs, because they were entitled to expect me to be interested, and to help them if I could without impropriety.

In my mind, impropriety was simple. If I stipulated for, or accepted, a private benefit (more than a ceremonial bottle of wine, say) or failed to disclose any substantial pecuniary return, I was misusing my office. But othewise I should, and would advance the interests of any constituent or sector, with which I had sympathy, or a policy interest.

We do not want our leaders to be ignorant eunuchs, fed only the information they get pre-digested from officials. We want them to be well connected. We want them to test all they hear with people they know they can trust, from experience. And as I was warned when I entered Parliament by one of its most experienced Ministers, "Stick to the friends you had before you came here, because from now on you will not know who are your friends, and who are not, till you leave. You will not be sure which are the greasers, and those who are genuine".

So be staunch Judith Collins. And remind us all of the utter uselessness of an opposition (and political journalism that sustains it) in banging on about a Minister who is enthusiastic about a company her husband directs, when that opposition ignores huge issues, such as the risk expert report that suggests New Zealand is spending up to $10 bn on earthquake strengthening that is likely to save few lives if any.

 

A sense of proportion about risk, and be grateful for farmer success

  • April 16th, 2014

I look forward to playing with my latest farm toy. The family call it a 'golf cart'. It is a UTV ( said by a Jim Mora Panel listener to mean 'Utility Task Vehicle') but more commonly referred to as a “side by side”.  As dairy farmers upgrade their gear in the dairy bonanza, the rest of rural New Zealand benefits from their second hand off-road wheels.

The farm bike then quad bike largely replaced the horse several decades ago. Now they in turn will be replaced by UTVs.

The safety over-lords expolit the injury rates on ATVs to get ordinary people to cower apologetically before them. Ignoring the drive of many of us to use our machines to the limit for the same kind of satisfaction as we get from mountain climbing, or playing rugby, or skiing fast, or even perhaps binge drinking, they force industry leaders into snivelling apologies for accidents that are inevitable if people are to continue to be free to choose their preferred levels of risk..

Sure there are sensible precautions that could reduce pointless accidents without diminishing the thrill that is sought out by young and old users. But some of the effort that goes into documentation and 'safety planning' is empty and demeaning arse-covering.

We should instead all be marvelling at the price and performance of the machines that have replaced horses. Riding  used to keep New Zealand rural people lean and tough (and often injured)  The hysteria about quad bike dangers overlooks how predictable they are compared with horses. Especially horses in the hands of thrill seekers.

My UTV replaces my second quad but carries beehives. You don’t ask horses to do that. Can there be a better toy for an aging boy. Every year the machines are safer, more capable and more comfortable. UTVs are no more expensive in real terms than my primitive first quad from 20 years ago. A basic quad, new, can be a little over half the nominal price of 20 years ago and under 20% of the price, taking into account inflation and quality improvements. Farmers who complain about meat prices should think what it must be like for manufacturers trying to survive a sustained price drop to under 25% of what they got 20 years ago, with no end to real price reductions in sight.

But what would Nina do?

  • April 4th, 2014

In "The Idealist: Jeffrey Sachs and the Quest to End Poverty" Nina Munk skewers the clerical economist.

Deceptively simple descriptions of the gaps between rhetoric and reality do all the heavy lifting along with her charitable balance in describing him. It contrasts with his vilification of  people who disagree with him. Though his failure is tragic, sympathy for those he lifted with hope then failed, release us from feeling too sorry for the man who sacrificed intellectual integrity to indulge his poster child left-activism.

But I can't give this book five stars. It tells an extended sick joke but finishes without a punch-line.  I started waiting for it half-way through. The slow darkening of the bright pictures waken a niggling hope that Munk's perspicacity will identify elements worth preserving from Sach's presumptuous prescriptions. But she leaves a lot hanging.

For example, she describes Sachs' torpedoing of years of development agency work to create in Tanzania a self-sustaining domestic market in insecticide mosquito nets, when his vituperation badgered the world into a big bang distribution of free nets to everyone. We hear that they get used for fishing, and fencing goats, but we do not learn whether there was a dramatic reduction in malaria. Nor do we learn the fate of the local businesses that will be needed to replace the nets when the free ones wear out after five years.

But we do see enough for it to be clear that Sachs simply dressed up conventional modern 'non-judgmental'  charity in overwhelming optimism. This was in turn a thin disguise for the common left rejection of cultural explanations of persistent poverty.  There is enough commentary in the book to suspect that Munk was lead by her experience to respect our Western forebears' Christian capitalist virtues (thrift, diligence, honesty, rationality, freedom). Without a critical mass of those virtues our forebears could not have lifted us from the normal Malthusian cycles of famine, disease and tyranny.

Munk leaves Sachs with the dignity of some learning from his failure, though he appears not to admit it as such. After summarizing his decline into wild Occupy Movement fulmination against  the world and humans as they are, she quotes him qualifying his previous conviction that he knew exactly what should be done and that everyone who opposed him were stupid or venal.

"I believe in the contingency of life. This isn't one grand roll of the dice. The world is complicated, hard and messy".
But I really want to know what she would prescribe after her years of experience. I'll have to listen to this podcast.

ComCom notes odd monopoly argument

  • March 31st, 2014

Today the Commerce Commission gave notice of intention to amend one element of the formula that limits the profits of energy distribution monopolies. This further step toward ending current regulatory generosity (that may be costing users up to $150m per year) could result in a partial change in November this year.

The major review will still occur in two years. The Commission has signalled that it could then consider a "split" or two tier WACC. It could allow a higher return on new assets, to incentivise investment, but restrict the return on sunk assets to the mid-point of the relevant comparator WACC range. At that time the suppliers will be arguing strenuously that:

"Investments in infrastructure tend to have long payback periods. Any business case for making such an investment tends to be very sensitive to the assumed long term return. The prospect of a significant reduction in that return can signficantly weaken the business case for new investment".

That was cited by the Commission today from a submission by Maui Development in support of the common sense recognition that the current situation, in which elimination of a substantial uplift in returns could occur now or in 5 years time, weakens any positive investment incentive intended by the uplift.

Yet most of the monopoly suppliers tried to persuade the Commission that a formula review was not needed because the intended positive incentives "would not be diminished" by the uncertainty about whether they would remain after 2020.

Perhaps they assume cynical toleration of any arguments to keep a privilege. But it is odd to use a ridiculous argument that will surely come back to bite you. In the comprehensive review they will be asked why they think a potential cut-off date for an uplift will adversely affect their investment intentions, when now they are avowing that it is immaterial.

As is its practice, MEUG will not over-cook the own goal argument. Throughout our involvment with this client we have been instructed that arguments should be made only where they are consistent with intellectual integrity in the price control regime over the long term. .

Time to call out the earthquake sooks

  • March 24th, 2014

I'm waiting to hear that everyone will soon be fenced a safe distance from the two old statues in Parliament's grounds.  They've been found at risk of falling on people in an earthquake. No doubt the engineers who've done the inspection and the equally exposed Parliamentary Services manager will decide there is no benefit in failing to act with maximum rsik aversion.

Common sense would be too risky. They'll not be able to just put up notices saying "this statue could fall on you in an earthquake" and leave the rest to the same individual judgment we use every time we go into the bush where trees have limbs waiting to fall.

New Zealand's response to earthquakes risk is now grotesquely irrational. Sensible upgrading of requirements for new buildings is overshadowed by the cowardice over  existing building risks.

Demands that 'government' keep people safe clash with the cold realities that New Zealand can't afford it. Nor can Japan or California, or indeed any government. Earthquakes involve vast forces beyond human control;

Earthquakes are in a class of risk which humans find difficult to keep in perspective. As MH370 shows we are transfixed by single events with an ultra low likelihood but numerous ‘innocent’ casualties. Flying and earthquakes are widely felt to be thousands of times more hazardous than  in reality.

Earthquake risk is now top of mind for New Zealanders. There is no limit to what could be spent to reduce earthquake death or injury. Yet the statistical risk of earthquake injury is negligible compared with risks we commonly assume without recrimination, including transport accidents, sport accidents, smoking, drinking and over-eating;

An individual’s statistical risk of major financial loss to earthquake is  trivial compared to the risks of property value loss to causes like fire, marital break-up, regional economic decline, bad neighbours, and losing your job and being unable to pay your mortgage.

Recent legislation, and recent cases have increased life risk liability risks for people in authority. The old tort exceptions for personal choice and contributory negligence have been largely eliminated. Accordingly fears of using property with very low life risks may be dramatically out of line with other risks.

  1. Employees are pressing employers to avoid premises seen as risky even if the risk is a fraction of the risks faced by employees in their homes, or getting to and from work;
  2. Employers are fearful of allowing employees to remain in such premises;
  3. Landlords are fearful of their exposures.

Retroactive earthquake strengthening may cost:

  • More than the cost of a completely new building (the Canterbury Earthquake Royal Commission mentions up to 120%)
  • As a proportion of the value of a building, many times more than the cost of earthquake ‘proofing’ new buildings.

Retroactively strengthening buildings outside our highest seismic risk regions is rarely likely to pass any rational cost/benefit test because few if any of them will ever cause an injury. The Martin Jenkins & Associates cost benefit study mentioned by the Canterbury Earthquake Royal Commission showed no  retrospective upgrading policy that could deliver net economic benefit. It used standard NZTA estimates of loss from death , injury and damage (the current figures include $3.67m per death).

Rationally almost all existing weaker buildings should be allowed to end their useful life naturally and be replaced. Even in high risk Wellington the $60m the Council is looking at spending on our Town Hall would possibly save more lives if spent on dedicated cycleways.

Infinitely more lives are likely to be saved, and innocent misery avoided,  if the amounts to be spent on earthquake strengthening were instead spent on road safety improvements, or dietary and health services, or locking up more drunk drivers and violent criminals.

New Zealand has few leaders with the incentives to ask whether earthquake strengthening spend is foolish:

  1. Engineers and building industry people profit from the spending even if it is wasted;
  2. Local authority staff are among those bruised  by new liabilities for risks they can only control by impractical back-covering rule enforcement;
  3. Rental property owners whose buildings are not presently seen as risky will profit from the shortages of space as ‘earthquake prone buildings’ become empty (and probably derelict);
  4. The owners of churches and schools and other public or heritage buildings that are not up to ‘code’ tend to be unfamiliar with rational cost/benefit analysis. They are fearful of looking as if they balance economic considerations against safety risks, however remote.

Many have not yet realised they will be personally  liable for $200k fines if they fail to comply with strengthening orders. There is another $220k fine for not excluding people from a building that has been declared unsafe (the Bill just says ‘earthquake prone’). Abandoning the building won't save the owners. They’ll remain responsible with an extra fine of $20k for every day squatters stay .

The risk of serious financial loss, to individuals and regions and to New Zealand from earthquake precautions and insurance premiums is likely soon to be more than the likelihood of loss from an actual earthquake.

There are few, if any, votes for politicians who point out any of the above. Their rationality will be depicted as hard-heartedness.

 

 

Do you know a lawyer looking for project work?

  • March 3rd, 2014

Wanted: an experienced pair of hands for litigation

My firm is busy. We're looking for someone with the right experience who can give us 15-30 hours per week. Good pay, flexible work hours. 2-3 month contract with likelihood of extension.

We'll adjust the job content to fit the right person.

Essentially, she or he will be systematic, with strong organisational and time management skills, familiar with large litigation files.

Ideally, the right person will also have good research skills.

The position would suit a practitioner wanting to return to work, an experienced junior litigator or a very experienced litigation secretary.

Call Angela – 04 815 8035 or email angela.banks@franksogilvie.co.nz

The fine print matters – so Crimea will be Russian

  • March 3rd, 2014

Since we had to get up to speed with the domestic implications of free trade agreements, we've been paying more attention to international treaties. As usual the fine print is far more important than the title. The Ukraine predicament is a reminder, as explained below by my colleague Rob Ogilvie.

"A suggestion that the US had given “security guarantees” to the Ukraine was alarming. Security guarantees are a staple of international diplomacy, and when given by the world’s only super-power, they matter.  US security guarantees  to Germany and Japan have kept them from rearming, although that happy period in world affairs is ending. Both World Wars last century were triggered (though not caused) by security guarantees.  And it is exactly a hundred years since the boundless optimism and easy internationalism of fin de siècle Europe ended in the then unimaginable bonfire of WW1.

"History will no doubt clarify individual thoughts and motives of February 2014.  As a generalisation, in foreign policy Russia thinks chess, the US thinks monopoly.  It could all be blundering and opportunism.  However, it is at least possible Putin and his advisors have again suckered a naive US administration. The people’s revolution in Ukraine has given Putin the long awaited opportunity to annex Crimea, and possibly the rest of Ukraine, without fear of serious consequences.

"Tweaking Russia’s tail was fun when Russia was weak and demoralised, but now Russia is stronger and determined.  It will not allow Ukraine to align Westward – any more than the US would permit Alaska to secede to Russia or China.  The US should have realised a misplaced tweak could lead to aggression. If they chose to do the tweaking, they had better know their next steps.

"Perhaps the tweaking by Ukrainians was spontaneous. Whatever, the US again looks flatfooted.   Post Syrian fading “red line” the current US administration seems feckless, in international affairs at least.  Soaring rhetoric without hope of action – hence strategically irrelevant and a tyrant’s free pass.  Thankfully vainglory is leavened with real cowardice.  Obama will quickly reign in the braver, more reckless members of his team. “Grave consequences” (a Cuban missile crisis level threat) became “there will be costs” and now the plainly risible “we will work closely together to support Ukraine and its people at this historic hour” (sending victim support teams?).  Meanwhile,  the US has quietly withdrawn its navy from the Black Sea.

"And what of the other serious player, the Germans?  The idea of Germany lecturing Russia over the future of Ukraine would be funny if it wasn’t so bizarre.  Putin must be itching to say to the talented Merkel “you  tried that twice last century, how did that work out for you?”.  Ukraine is firmly within Russia’s strategic orbit, paid for in blood, treasure and horror way beyond our experience, and no amount of wishful thinking or bluster will change that.  Germany (in Stalin’s famous quip about the Pope) has no divisions. So why would Putin care for a moment what they say?

"Back to the “security guarantee”.  When the Soviet Union imploded the West realised to its consternation that many of their nukes were in Ukraine, then degenerating into chaos and kleptocracy.  A historically aware Ukraine was reluctant to just give away its only deterrent force.  So a series of deals were done – money and support in return for the nukes.  The nukes were returned to the much more responsible democratic Russia (sic!) and the US, Europe and Russia gave Ukraine a set of “security guarantees”.  The fine print makes interesting reading.  They each make pleasant sounding promises not to blackmail or invade.  But when it comes to the money clause, instead of “we will come to your aid if anyone invades you” they  jointly promise to urgently report any aggression to the …..Security Council of the UN!  Where Russia has a veto.  Enough said.  Clearly wiser heads prevailed.

"The Ukrainians weren’t fooled, and knew it was race against time to secure the right to emigrate Westward before Russia reasserted itself.  Perhaps if the West had left well enough alone Ukraine might have stayed independent long enough to pull it off.  But along with so much of the post Berlin wall promise, that will now just be a historical footnote “what could have been”.

"There are lessons here for NZ.  Relying on loose arrangements with a fading superpower, or the good offices of the UN is not a defence strategy, it is wishful thinking. Read the fine print."

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