Monday's pick of the links
Master Builders' guarantee in the spotlight; New Covid wage subsidy prosecutions; New mega-polytech in crisis; the crazy dual rent subsidy system; Boris' MO revealed; The Craic
TLDR: These are my picks of the standout news, scoops and curios from news sites and other primary sources over the last day or two, with my perspectives on them. This is especially for paid subscribers first and designed to help me get the Dawn Chorus out earlier, to show you what I’m focused on in an efficient way, and to help you sort through the news noise to find what matters.
Paid subscribers are welcome to add their best picks in the comments for all to see.
Scoops and news of note here in Aotearoa this morning
More building sector carnage
The Master Builders’ Association is in the firing line this morning after claims against two builders were not successful.
Jonathan Milne has an investigation via Newsroom of Joel and Elly Wilton who paid $1300-plus for a Master Build Guarantee on $2m of renovations by Registered Master Builder Deek Tocker.
Geraden Cann has a piece this morning on Stuff on 14 clients of Jonesy Construction Ltd1 who are out of pocket on guarantees they paid for after ‘Jonesy’ didn’t apply for guarantees to the Master Builders Association.
Despite Master Builders honouring the guarantee in similar situations in the past, those affected have been told they are not entitled to coverage.
Many of the builds sit as they did when the Jonesy Construction folded early in May.
(Master Builders’ CEO David) Kelly says he is “extremely disappointed” a member of his association had let homeowners down and engaged in practices that did not comply with standards or guarantee requirements.
Kelly says Master Builders has set up a free confidential support service which could supply counselling and wellbeing support to affected homeowners.
Kelly maintains the unlodged guarantees will not be honoured, without expaining why, when it had done so in similar situations previously. Geraden Cann via Stuff
There is a fair amount of ‘he said, she said’ in these pieces, but the Jonsey one is more problematic for MBA, given there are so many homes involved. The story featured on the front page of the Dominion Post this morning too.
These stories of first home buyers and others stiffed by developers and builders who disappear in a puff of legal smoke is a common theme developing. It adds pressure on the Government and the likes of Fletcher Building to sort the supply chain issues that are so destabilising for all the consents still in the pipeline. It undermines confidence and reinforces scepticism about buying new or building, both of which are crucial in the long run to deal with our housing affordability crisis.
This sort of thing will also increase calls for some sort of Government-backed house-building guarantee to improve confidence and quality, and to avoid a 2008/09-style collapse when finance companies imploding all the way through the construction sector, sparking a wave of tradies jumping on planes for jobs in Australia. It took a decade for our sector to start recovering and it reinforced the boom-bust thinking that means many companies don’t invest in productivity-improving technology or sector consolidation.
Finally, a few more prosecutions loom
Sam Hurley reports for NZ Herald-$$$ this morning that 16 people are now facing charges for allegedly defrauding the $20b Covid wage subsidy scheme of $681,693.60, with the Ministry of Social Development (MSD) preparing to prosecute a further five people. MSD has also passed on 10 cases involving larger sums to the Serious Fraud Office, Hurley reports.
As of last week, MSD said it has recouped $798.9m in wage subsidy repayments.
It has completed 15,066 pre-payment and post-payment checks on wage subsidy applications, resolved 5553 allegations of wage subsidy misuse, and completed 543 wage subsidy-related investigations.
"Our integrity work to date has given us confidence that the vast majority of businesses that received wage subsidies did so honestly," van Ooyen said.
"A lot of times where wage subsidies were wrongly claimed, it was an honest misunderstanding about eligibility rather than a deliberate attempt to deceive." Sam Hurley reports for NZ Herald-$$$
These aren’t encouraging noises from the MSD. I wonder how sanguine it would be about these billions of dollars if they had been given in cash to beneficiaries. MSD has been much more aggressive chasing beneficiary debts. The Auditor-General has been particularly critical of MSD.
A review by Auditor-General John Ryan, released in May last year, told MSD to toughen up its approach to possible misuse of the wage subsidy scheme.
The report urged MSD and other departments to prosecute companies it believed had wrongly accessed the scheme.
"Because this approach has greater risks of fraud and error, strong post-payment checks are vital to verify that those who received money were eligible," Ryan said.
He also criticised the work MSD did to test whether employers were complying with the rules.
"After payment, MSD's reviews mainly consisted of a verbal confirmation of information by employers," Ryan wrote.
A Royal Commission should investigate all this spending
Grant Nelson from the GAMA Foundation has been running a great campaign on this. Here’s his opinion piece Stuff last week on this. Nelson is particularly critical of Treasury, which is routinely sceptical of other spending for beneficiaries and on social issues. Treasury, for example, successfully advised against a $50/week benefit increase for Christmas 2020.
Here’s Nelson (bolding mine):
At the beginning of March 2020, Business New Zealand put forward the wage subsidy they wanted and after they had discussions with Treasury officials, the wage subsidy was approved by Cabinet a week later.
Treasury officials then got a payment cap of $150,000 removed, so individual businesses could be paid up to $100 million or more. They then advised ministers of what they said were their two key recommendations.
The first was to pay the wage subsidy to all businesses, regardless of any decline in revenue. This was rejected by ministers, but it could have cost the country an extra $10 billion. The second was to pay businesses for 12 weeks in advance, despite a predicted lockdown of four weeks.
When they only succeeded in getting the 12 weeks payment approved by Ministers, they then went on to help Ministry of Social Development (MSD) officials prepare a declaration for wage subsidy applicants to sign. Grant Nelson from the GAMA Foundation via Stuff
Nelson rightly called for any Royal Commission of Inquiry into Covid to include a much closer look at all the spending. He’s right, if only to preserve the social license of any Government in the next crisis. National and ACT have called for a Royal Commission and the Government has said it is considering one, without specifying what should be probed.
The vast amounts of money given away by officials to businesses who did not need it has cost each taxpayer several thousand dollars and all the surplus cash started an asset price bubble.
This has impacted on the wellbeing of many New Zealanders by greatly increasing inequality, unaffordable housing, child poverty and inflation. The predictable outcome was the opposite of what the Government said that it wanted to achieve.
The failure of public servants to act in the public interest and the lack of accountability and transparency has highlighted the need for the public service to have greatly improved financial objectives and standards.
A royal commission of inquiry could investigate the management of taxpayer funds since March 2020 and recommend reforms. Grant Nelson from the GAMA Foundation via Stuff
So what? - In my view, It still beggars belief that any Government, let alone a Labour-led one, engineered $20b of cash giveaways to businesses, printed $55b and removed lending restrictions in a way that inflated asset owners’ wealth by $1t and inflated rents, and refused to accept the recommendations of its own advisors to give much more help to the poor. Literally, the Government made the rich much richer and the poor much poorer during a health and economic crisis where the heaviest health and wealth burdens have fallen most heavily on the poor.
Terror expert hired, then quietly dropped for Kidman
David Fisher has a scoop at NZ Herald-$$$ about how Otago University's Professor Richard Jackson had been told he had a role leading a national Centre of Research Excellence to fight violent extremism, but the offer was dropped after a critical review of the National Centre for Peace and Conflict Studies where Jackson had been director.
One of the people originally on the hiring panel, Dr Joanna Kidman, eventually applied for the job, was removed from the panel, and then got the job, Fisher reports from documents obtained under the Official Information Act.
Kidman has already proven controversial. This will not help matters.
More problems for Chris Hipkins
The ROVE reforms of polytechs has been going through without too much scrutiny over the last couple of years. It may be about to blow up in the Government’s face, and cause Education Minister (and Police) Minister Chris Hipkins some grief.
Mike Mather has this piece in The Press this morning on deep problems at the new mega-Polytech, which is in many ways an early example of the centralisation now being done via Health NZ on the DHBs.
The fortunes of Te Pūkenga, the country’s new merged mega polytech are in dire straits before the organisation has even properly begun functioning.
A damning memo sent from Tertiary Education Commission deputy chief executive Gillian Dudgeon to Education Minister Chris Hipkins paints a very black picture of Te Pūkenga’s fortunes – and provides illumination on the possible reason for the recent mysterious departure of chief executive Stephen Town.
Based at the current Wintec campus in Hamilton, Te Pūkenga is the result of the Government’s reform of vocational education and involves the country’s 16 institutes of technology and polytechnics and four Industry Training Organisations across Aotearoa becoming one entity.
Stephen Town is now on special leave. Town is no newbie. He was the CEO of Auckland Council under (with?) now-outgoing Mayor Phil Goff and is an experienced hand as a very senior public service leader. There is a very big budget blowout. Perhaps the debt will have to be forgiven in next year’s Budget, as the DHB debts were forgiven in this year’s Budget.
Te Pūkenga council member Peter Winder will be acting chief executive in the interim, Strong’s email said.
Dudgeon’s grim memo to Hipkins – which is dated May 16 but was published on the commission’s website late last week – sets out the details of Te Pūkenga’s troubles in stark detail.
The organisation’s financial situation was a “significant concern”, with the Te Pūkenga group forecasting an at-least $110m full-year deficit.
“This is $53.5m worse than budget ($56.5m deficit) and is predominantly due to lower provider-based enrolments,” she said.
The Tertiary Education Union is also very unhappy, as referred to here in a July 5 release.
Staff at Te Pūkenga, Aotearoa’s unified vocational education provider, have had enough of disrespectful consultation and they are speaking out. Well over a thousand people have signed a petition asking for a delay to the rollout of new Nursing and Social Work Curricula that’s being rushed through without content considered vitally important for both professions.
This one will keep brewing as a problem for the Government.
A two-tiered rental system
This is just plain nuts and a symptom of the dysfunction now evident in the Government’s policy of refusing to provide rent related subsidies for council social housing.
This Tina Law piece leads The Press this morning on how tenants within the same social housing complex are treated vastly differently.
A Christchurch social housing tenant is calling for an end to an “unfair and discriminatory” practice that sees him and hundreds of others pay more rent than neighbours living in the same complex.
Ernie Hall, 58, is one of about 1200 Ōtautahi Community Housing Trust (ŌCHT) tenants who pay, on average, 64% of the market rate. Hall pays $275.80 in rent a week, but gets an accommodation supplement via Winz of $92, bringing his weekly bill down to around $183.
But another similar number of ŌCHT tenants – about 1200 – pay just 25% of their income in rent, which means in nearly all cases, their rental bill is lower. Unlike Hall, they are eligible for an income-related rent subsidy, which sees the government top up the rent to meet market rates.
The reason some are eligible for the subsidy and others are not is purely down to timing. Hall, who lives in Addington, and 1200 others, were Christchurch City Council tenants prior to 2016, when ŌCHT was created. The others were taken on as new tenants after ŌCHT was set up.
This is a crazy consequence of a fight between Treasury and Councils over who should pay. And we all pay for this in the long run, which Treasury hasn’t done its actuarial work on.
The council created ŌCHT to run its social housing so the trust could access much-needed extra revenue through the income-related rent subsidy. But only new tenants were eligible – not the council’s existing tenants.
Former Labour cabinet minister and now-outgoing-Christchurch Mayor Lianne Dalziel is understandably unhappy.
Dalziel said she believed the existing system was unfair. She said the council and the broader local government sector had asked the Government to change to a more equitable system.
In response, officials defended the two tier system.
A spokesperson for the Ministry of Housing and Urban Development (HUD) said it was not appropriate to adopt a one-size-fits-all approach that enabled the income-related rent subsidy to be made available to all council housing.
HUD said the Government was focused on increasing the amount of new-build public houses to address the housing shortage.
So what? - This is all about Treasury thinking it is saving money. Or thinking it is. It will all rebound on the Crown in the end in the form of higher health, education, justice and corrections costs. It’s a liability that just hasn’t been priced and stated in the Crown Accounts. It’s ludicrous, in my view.
This is the same Treasury that tried to give businesses $30b in cash instead of the $20b it thought was great.
Scoops and news of note overseas
Boris, Boris, Boris…
I’ve included the tweet here because The Times is paywalled. There’s a lot of…er…flavour… in the recorded audio.
How Uber operates
Thousands of leaked files have exposed how Uber courted top politicians, and how far it went to avoid justice, the BBC and The Guardian reported this morning. They detail the extensive help Uber got from leaders such as Emmanuel Macron and ex-EU commissioner Neelie Kroes.
Uber says its "past behaviour wasn't in line with present values" and it is a "different company" today.
The Uber Files are a trove of more than 124,000 records, including 83,000 emails and 1,000 other files involving conversations, spanning 2013 to 2017.
They were leaked to the Guardian, and shared with the International Consortium of Investigative Journalists and a number of media organisations including BBC Panorama. They reveal, for the first time, how a $90m-a-year lobbying and public relations effort recruited friendly politicians to help in its campaign to disrupt Europe's taxi industry. the BBC and The Guardian
Profundities, spookies, curiosities and feel-goods
The Craic
Ka kite ano
Bernard
PS: I welcome other links of note from paid subscribers below.
Pro tip. Be wary of a construction company with the same nick name as the builder.
It's so simple really. Instead of channeling the insurance money through the builder, there should be a direct policy between the customer and MBA with the builder being a side party to stop them rorting the system.
This article published by Quillette is an interesting take on the rise and fall of Boris Johnson, and rather more measured than much commentary has been.
https://quillette.com/2022/07/08/king-boris-from-restoration-to-regicide/