www.mccully.co.nz 29 July 2005
www.mccully.co.nz 29 July 2005
A Weekly Report from the Keyboard of Murray McCully MP for East Coast Bays
Planning to build up a share portfolio, or maybe buy some residential or even commercial property, but found the interest costs just kill the deal? Fear not. Help is on the way, courtesy of the new high risk, low return player in the financial market, Duck Bank, and its chief executive Trevor Mallard.
Duck Bank works like this. All you have to do is enrol at a tertiary institution. Choose something really soft – Women’s Studies or Ethnomusicology (seriously) would fit the bill. Hang onto your full-time job, (you can probably average less than two hours of lectures a day). Then apply for your student loan. Claim the loan to cover your course costs.
Then claim the loan to reimburse $150 a week of the living costs you are already paying. There’s your $6,000 to $7,000 interest-free nest egg each year to provide the deposit on your new property or share portfolio. Then hang around for eight to ten years (doesn’t matter if you fail the odd year) to pick up your Masters or PhD in Women’s Studies or Ethnomusicology (both of which are perfect qualifications for a top public service job under the Sisterhood) and your nest egg will be complete.
According to this week’s announcement by Trevor Mallard, your Duck Bank loan will become interest-free next April. So why would you be in a hurry to pay it back? No, you won’t find a better deal in town than the new interest-free Duck Bank student loan scheme. Unless, of course you happen to be an electrician or a plumber or a truck driver who has had to pay the cost of setting up your own business. Or a taxpayer who will ultimately have to pay the price for one of the most foolish and reckless electoral bribes in New Zealand history.
The Impending Blowout
Much wailing and gnashing of teeth has accompanied any updating of the total of student loan debt (now over $7 billion) in the past. But only about 55% of students use the loan scheme. Now that Duck Bank plans to make the scheme interest-free, that percentage will rise dramatically. And of course the amount borrowed per student will also go through the roof (if you don’t have to pay interest, why wouldn’t it? Indeed, Westpac have released an estimate that the total debt could rise by an additional $10.9 billion over ten years with an annual cost as high as $1.1 billon) So, if Mr Mallard gets his way, the quantum of student debt is about to get a whole lot bigger, leaving students with larger loans to contend with. Oh, and taxpayers effectively footing the interest cost in the meantime.
Spent the Lot
Remember the emphatic words of Michael Cullen at Budget time this year? There would be no room for tax cuts because he had, in effect spent the lot.
“Over the next three budgets the allowance for new spending has been set at $1.9 billion a year, thereafter growing by inflation. That is a target that will require careful prioritisation and some moderation of expectations.” Address to PriceWaterhouseCoopers Briefing, 9 June 2005
“We must not fool ourselves into thinking there is more room to move when it is not the case. In an economy operating at full capacity, cutting tax or raising expenditure beyond what is already planned, or even signalling an intention to do so, will flow immediately into higher mortgage rates for homeowners and higher interest rates for businesses.” Address to KPMG Tax Seminar, 3 June 2005
Isn’t it wonderful how a couple of adverse opinion polls and a mild dose of caucus panic can change things? Within weeks Cullen was sanctioning the $300 million plus a year student loan package. So now we know why Labour members were so keen to line up and vote for the legalisation of prostitution.
Yet Another TVNZ Digital Bungle The latest (third, by our count) TVNZ foray into the digital realm appears to have unceremoniously sucked the kumara. The Freeview digital service was announced by the state broadcaster in 2003. The plan was to offer a free digital service to those prepared to invest in a set top box. But all of a sudden, nothing is happening on the Freeview front. Word within around the market place is that the project has been put on ice.
All of which leaves several really interesting questions to be answered. You see, to make the service possible TVNZ took a three year lease on a satellite transponder. The cost: a little under $7 million a year. And an option on a further transponder was signed up as well.
But now, the Freeview service seems to be going nowhere. Any pretence that a rollout is imminent has been abandoned. So the question which remains is just why the state broadcaster has committed to $20 million worth of transponder space which clearly it can’t use. Not as interesting as Judy Bailey’s pay packet, but surely worthy of an explanation.
The Judy Bailey Contract
On the agenda for this Thursday’s TVNZ board meeting was the now infamous Judy Bailey contract. Last year the board’s remuneration committee approved an $800,000 one year deal. Now the board is being asked to approve negotiations for a three year deal for a somewhat lesser sum.
All of which raises the truly excellent question: if the company was always intent upon keeping Bailey for the medium term, why on earth did they pay a premium for a short term arrangement a year ago? That will surely take some explaining.
Revelations at NZQA
Members of the Education Select Committee were told this week of the appointment by the New Zealand Qualifications Authority of an "independent evaluator" to assist with this year’s NCEA examination. And just what, we hear you ask, does an independent evaluator do?
Well, the Committee was told, an independent evaluator would assist the Authority by reviewing all 418 examination papers and checking them for potentially offensive stereotypes. (Remember the inclusion by an NZQA pinko lefty of a crass Don Brash cartoon, accompanied by the reference to MPs unsympathetic to Maori, in an exam paper last year?)
And what qualifications, pray tell, would such an independent evaluator require. Ah, the Committee was told, said evaluator was "chosen for their experience and good judgement." These both apparently being qualities not found in any of the 288 (there were only 97 back in 1999) staff currently employed at the $71 million a year (for the year ended June 2004) Authority. How very very revealing.
Project Protector Day Of Reckoning Looms
In December of last year Defence HQ took delivery of an Ombudsman’s draft report on the awarding of the Project Protector contract. Project Protector involves the purchase of patrol craft as well as the US$100 million Multi Role Vessel.
The fact that the Ombudsman’s draft was less than laudatory is evidenced by the fact that Defence have had some of Wellington’s most expensive lawyers spend nine months challenging the wording. But that process is now complete. A final report is due within weeks.
The worldwide headquarters of mccully.co has had its best investigators on the case. And from where we sit the whole thing looks seriously dodgy.
After the procurement mistakes made over the LAVs, the LOVs and now Project Protector, serious questions need to be asked about a process which sees desk jockeys at Defence purchasing equipment which may not meet the needs of the service people whose lives may depend on it. And we know just the people to ask those questions. So watch this space.