Nicola Willis announced:

Kiwibank has been given the green light to compete more vigorously with the big four Australian-owned banks that dominate the New Zealand banking sector.

Finance Minister Nicola Willis announced today that, following a market testing process, Cabinet had approved Kiwibank’s parent company raising up to $500 million of capital to fund the bank’s growth.

“Allowing Kiwibank to raise up to an additional $500 million is the first step towards giving Kiwibank access to the capital it needs to truly compete with the big four Aussie banks while retaining its intrinsic New Zealand identity. 

“The Commerce Commission reported last year that New Zealand’s four largest banks did not face strong competition when providing personal banking services. 

“Advice to the Government is that an additional $500 million of capital could support up to $4 billion of business lending or $10 billion of home lending. 

This is a smart move, for a number of reasons.

1. Having private capital in Kiwibank will be beneficial with those shareholders being able to push for greater commercial discipline
2. Kiwibank is too small to compete effectively with the larger banks. Access to more capital means they should be able to increase their market share
3. By using private capital, the government doesn’t ned to borrow money. I would rather the Government put $500 million into hospitals and schools, than a commercial bank – as should any sane person.

It is important to note this is not an asset sale where the Government is selling some of its shares, and receiving money for them. It is the company (with government permission) doing a capital raise. The money from that goes to Kiwibank, not the Crown, allowing them to expand. It will mean that a percentage of Kiwibank will be privately owned (I estimate around 20% to 25% based on Kiwibank net equity of $2.24b) but the Government has committed to keeping a majority stake.

The Herald reports:

A prominent New Zealander whose case was shrouded in secrecy last month can now be identified as former Deputy Police Commissioner Jevon McSkimming.

The ex-top cop faces eight charges of possessing child exploitation and bestiality material.

McSkimming, 52, first appeared by audio-visual link in the Wellington District Court in early July, but was granted interim name suppression as well as suppression of his charges.

It was widely known that McSkimming was the individual, so it is good name suppression has lapsed.

While it is sad to see the second most senior police officer in court on criminal charges, it is good that we have a system where no one is above the law. There are many countries where such an individual would never be charged.

I should also note that McSkimming is entitled to a defence to the charges. While I presume there is proof the material was on a device or devices he owned, he has potential defences such as they were related to a case, or someone else accesses his device, or they came through malware. How credible those defences are will depend on the evidence that goes before the court. So please no-one rush to judgment.

Erica Stanford and the PM have announced incredibly significant changes to New Zealand’s secondary and vocational education system. I’ll explain what they are shortly, but first everyone needs to understand that the status quo is not working. That’s not an opinion, but backed by hard global data.

Since 2000 our scores on the global PISA test has dropped 28 points for reading, 44 points for maths and 26 points for science. If you defend the status quo, you are saying we should settle for more decline. Ironically over the same time period NCEA achievement rates have risen.

It doesn’t have to be like this. In Ireland the changes since 2000 have been just -11, -11 and -4 compared to -28, -44 and -26 for NZ. The UK is -1, -6 and -15. The US +0, -18 and +10.

The decline is not due to our top students performing less well. It is because of the tail end of students having a greater and greater gap. So if you care about equity in education and closing the gap between the top and bottom performing students, you should be not be supporting the status quo.

The changes announced today are huge. This is no tinker. They were designed by an advisory group of principals who are at the coalface and know what does and doesn’t work. The key changes are:

• NCEA Levels 1, 2 and 3 are gone.
• Year 11 will do a Foundational Skills Award in literacy and numeracy. Year 12 the New Zealand Certificate of Education and Year 13 the New Zealand Advanced Certificate of Education.
• The standards-based assessment system where you can do a collection of individual standards such as coffee making is replaced with a subject-based approach that requires coherent programmes of learning.
• English and Maths will become compulsory for Year 11
• The two certificates will require you to pass at least four out of five subjects
• Assessment in each subject will get students a grade out of 100, with the traditional grade ranges of A to E. Parents, students and employers will once again be able to understand how a student is doing.
• There will be a focus on stronger vocational pathways with new subjects and standards co-designed with industry experts in areas like construction, automotive and hospitality.

The case for change is overwhelming. Apart from the massive decline PISA scores (despite an increase in NCEA achievement rates, which shows the two were not aligned), research has found the following:

• 60% of teachers don’t believe NCEA Level 1 is reliable
• 71% of employers don’t see NCEA Level 1 as a reliable measure of knowledge
• Only 54% of Year 12 and 65% of Year 13 students achieved NCEA with three or more full subjects
• The focus on accumulating credits gets in the way of learning
• Often students stop studying as soon as they achieve the minimum number of credits, students tell teachers they are only interested in learning if it’s worth credits 
• Lack of deep learning and does not encourage students to learn independently- tertiary providers report having to teach students how to learn 

The proposed overhaul is open for consultation until 15 September. I would urge parents especially to submit on it. This is arguably the most important reform the Government will undertake, in terms of New Zealand’s future.

The consultation document is below.

The Post reports:

The man who threatened to kill then Prime Minister Jacinda Ardern told the judge sentencing him “I’m horrified I’m in prison” – but that’s where he will spend the next 11 months.

Richard Sivell was sentenced at Tauranga District Court on Wednesday after being found guilty at a judge-alone trial back in October of threatening to Kill Ardern, obstructing police and failing to provide a phone PIN.

It was revealed at his trial that Sivell told an online channel he’d be “quite happy to execute” Ardern – he’d make the gallows if needed – and he claimed he wanted to hear her “neck snap”.

Sivell also described via text in a different social media channel how “common law” or sheriffs would be able to “apprehend her [Ardern] and put her in a cell”.

“Judge her for high treason and crimes against humanity and execute the c….”

This is horrific language, and a rare example of where you should go to prison for what you say. I don’t care what you think of a politician, nothing excuses saying you want to murder them and hear their neck snap.

Megan Woods has announced she will go List only at the next election. There are two reasons for this.

1. She was at serious risk of losing the seat at the next election. It is the most likely seat for National to pick up on the proposed boundaries, and National’s Wigram electorate has had soaring membership and finances
2. If Labour loses the next election, she can leave Parliament without a by-election.

Woods has held the seat since 2011 when she succeeded Jim Anderton. At the last election her majority was only 1,179 compared to 14,770 the election prior.

The Taxpayers’ Union released:

The New Zealand Taxpayers’ Union is pleased to announce the appointment of two new members to its Board of Directors: Hon. Stuart Nash and Dr John Harman. Their combined expertise strengthens the organisation’s leadership as it continues to champion lower taxes, less waste, and more accountability.

Stuart Nash, a former Cabinet Minister of Revenue and Member of Parliament, brings deep experience in public policy and governance. His insights from inside government will add valuable perspective to the Taxpayers’ Union’s advocacy for efficient public spending.

Dr John Harman, a seasoned business leader and healthcare expert, joins the board with decades of experience in management, innovation, and public health. He brings a strong commitment to transparency and performance-driven systems to further the Taxpayers’ Union’s mission.

Delighted with both of these appointments. Especially pleased to see a former Labour Cabinet Minister join the board. Reducing wasteful spending should be a priority for all political parties.

Scott Simpson announced:

Surcharges will be axed to put money back in Kiwis’ pockets, says Commerce and Consumer Affairs Minister Scott Simpson.

“Surcharges are a hassle and an unwelcome surprise when shoppers get to the till. That pesky note or sticker on the payment machine will become a thing of the past.

“We’re banning surcharges so consumers can shop with confidence knowing how much they will pay for their purchases.

“New Zealanders are paying up to $150 million in surcharges every year, including excessive surcharges of up to $65 million. That’s money that could be saved or spent elsewhere.

This should be a popular move, that Consumer NZ has been calling for. Some have worried it will mean businesses will just put prices up, but that misses a second aspect to the announcement:

The ban follows the Commerce Commission decision to reduce interchange fees paid by businesses to accept Visa and Mastercard payments, a move to save businesses around $90 million a year.

The interchange fees are a bit of a scam. I’ll use an analogy with the telco sector. Telcos used to change a mobile termination fee. So if you were on (then) Telecom and called or texted a (then) Vodafone phone, the telcos would bill each other a few cents a minute. This allowed them to then have plans where you can call other phones on their network for free, but had to pay to call or text phones on other networks. This led to entire schools having all their students on one network as you couldn’t afford to be on the one your mates were not on.

This was basically a scam. The actual cost of transferring a text was miniscule. Think 0.00001c or the like. But the fees were great for the incumbent telcos, as they kept out new comers and also generated money for them.

Interchange fees are somewhat similar. The Commerce Commission stated:

It costs New Zealand businesses around $1 billion a year to accept Visa and Mastercard payments, which is often passed onto their customers through surcharges and higher product costs. 

The Commission has determined this cost is too high and has acted to reduce this cost for businesses by around $90 million a year.  

“This is an important step in our continued work to cut costs for businesses and consumers. Our latest decision builds on the initial fee caps set in 2022, which led to $140 million in annual savings to New Zealand businesses,” Commerce Commission Chair Dr John Small says. 

The actual cost of transaction is near zero. There are definitely fixed costs in the network that have to be covered, but the variable cost is very very small. There is a case that fees should be based on the number of transactions, not the value of them. A $1,000 payment costs the same to process as a $10 one. The Commission noted:

The current retail payment system lacks strong competitive pressure and most merchants are price takers for interchange fees. Despite current regulatory caps, interchange fees on the Mastercard and Visa networks in New Zealand remain significantly higher than in comparable jurisdictions. For example, interchange fee caps for personal domestic credit card transactions in New Zealand are more than double the caps in Europe.

So the combination of the Commerce Commission reducing the interchange fees, and the surcharge ban should see both businesses and consumers better off.

Net farmer confidence has jumped from -66% a year ago to +33% in the Federated Farmers Survey. That’s great news. I can’t recall ever seeing such a dramatic change in just 12 months.

Michael Reddell writes:

When our kids were little one of the books we often read them was “Bears in the Night” in which the young bears, hearing a noise outside, sneak out of the house at night, climb Spook Hill and then, terrified by the sudden appearance of an owl – not the most threatening of birds – whose call they’d heard, rush back to the comfort and security of home and bed. 

It came to mind when reading some of the arguments being advanced by government officials and banks over the Credit Contracts and Consumer Finance Amendment Bill currently making its way through the Finance and Expenditure Select Committee.

The key controversial bit of the bill is the proposal to legislate retrospectively to close down class action suits currently before the courts against ANZ and ASB in respect of flaws in loan variation procedures etc that occurred between 2015 and 2019. 

My position is retrospective legislation is wrong, especially to explicitly interfere with a case that has been before the courts for almost six years. No problem with changing the law to prevent or change future law suits, but definitely not to change the rules for a legal action already underway.

Retrospective legislation is, almost without exception, an odious concept. Perhaps one might make an exception where, say, there was a clear typo in the legislation, giving a quite different meaning to the words of the legislation than Parliament had clearly intended. That wasn’t the case here. Rather, right or wrongly, Parliament changed its mind in 2019 about what the law should be going forward. Now the government – egged on by the banks – wants to make it as if a consciously and deliberately chosen law never was.

I agree.

What is puzzling is why the government would propose to amend the law retrospectively to help out large and highly profitable foreign banks. And in so doing to bypass what is apparently usually the practice when (as happens on rare occasions) retrospective legislation is passed, when cases already before the courts are (apparently) protected.

I hadn’t paid an awful lot of attention to the whole issue until two or three weeks ago when big scary numbers generated by the Reserve Bank were reported (eg here) and thus entered the public debate under headlines (not, to be clear, sourced to the Reserve Bank) about threats to the financial system unless this retrospective law was passed. $12.9 billion (the maximum estimate reported) sounded like a lot of money

It is a big number, and a nonsense number. The current legal action has had a $300 million settlement offer, so you could simply change the law for future legal actions, and cap the exposure at $300 million.

One of those KCs – James Every-Palmer – actually told FEC (at about 24 minutes in) that the sums being sought in the cases against the ANZ and ASB were “as I understand it, hundreds of millions of dollars” (before then handwaving to tie this to a system-wide $12.9 billion dollars). ANZ and ASB together make up the best part of half the banking system, so if the Bankers’ Association understands the claims against them to be “hundreds of millions” then even if that represented $1 billion in total, it is all but impossible to see how the rest of the system could be exposed to $12 billion of claims.

Yet it is this ridiculous number that has convinced Government Ministers that they must push through a retrospective law change.

You can understand why the ANZ and ASB and their shareholders would prefer not to pay such a sum, and would (a) fight it in court, and b), if they could, lobby for a retrospective law change. But it simply isn’t a financial stability issue. It is worth remembering that 15 years ago a big tax case went against the banks, costing them $2.2 billion in an economy then about half the size (nominal GDP) of today’s (and in the midst of a severe recession). Banks affected emerged just fine. 

Lobbying for a law change is cheaper than complying with the consequences of not following the law!

Business Journalist Jenny Ruth also writes:

I’m starting to think New Zealand’s banks must be sitting on mountains of undisclosed errors and emissions, all of them committed within a specific four-and-a-half year period.

How else to understand the hysteria and wildly improbable claims in their submissions to parliament’s finance and expenditure committee (FEC)?

Chicken Little and the boy who cried wolf have nothing on them.

I do hope the politicians sitting on the FEC have their bullshit detectors finely tuned.

Nice calling out.

In my previous post on this issue, some commenters said that consumers weren’t really “harmed” by the banks’ disclosure failures, so requiring full refunds is unfair. This misses the point of consumer protection laws.

Take an analogy – if you get a speeding ticket, you can’t argue your way out of it by saying “but I didn’t crash into anyone, so no harm done.” If you broke the law, you pay the fine. That’s how deterrence works.

From a consumer protection perspective, banks are dealing with other people’s money and making billions in profits from it (which I support – you want profitable banks). But we expect that they follow basic disclosure rules that help customers understand what they’re signing up for. These rules exist because there’s a massive power imbalance between banks and their customers.

Consumer protection laws work because they create real consequences. Take away those consequences retroactively, and you’re basically telling every bank in the country that compliance is optional – as long as you can afford the political lobbying afterwards.

Paul Goldsmith announced the following electoral law changes:

• Closing enrolment the day before advance voting starts, so that a final vote count can be done in a timely manner (In Australia it closes 26 days before the election)
• Banning provision of free food etc within 100 metres of a polling place
• Adjusting for inflation the disclosure limits for party donations from $5,000 to $6,000 (it used to be $15,000!)

It has never been easier to enrol and vote. The advent of advance voting has made it far far easier to vote. so long as people know the enrolment deadline, the vast majority will enrol on time. When there is no enrolment deadline, it is no surprise so many people leave it to the last minute, which then requires special votes which take so much longer to check and process.

Do you recall Jacinda promised to solve homelessness? I think she said in four weeks.

Would it surprise anyone to learn that according to the census, it increased 37%?

The Homelessness Insights report shows that the numbers homeless increased from 3,624 in 2018 to 4,965 in 2023. In the previous five years, it dropped 12%. So Key and English saw a 12% decline and Ardern a 37% increase.

Paul Goldsmith has appointed the Judicial Conduct Panel into Acting Judge Ema Aitken. The members are:

• Honourable Brendan Brown KC. Brown will chair it. He was a Court of Appeal Judge for 8 years and High Court for 11.
• Honourable Justice Jillian Mallon. She is a current Court of Appeal Judge for 2 years and High Court for six years before that
• Right Honourable Sir Jerry Mateparae, GNZM, QSO, KStJ. He is a former Governor-General and Chief of Defence Force

He has also appointed Tim Stephens KC as special counsel for the inquiry.

I attended the last Judicial Conduct Panel’s hearings. I look forward to attending this one.

Stuff reports:

New Zealand exports will face a 15% tariff after the latest moves from US President Donald Trump.

Trump signed the order for new tariffs to go into effect in 7 days on a wide swathe of US trading partners.

The tariff will be levied on New Zealand exports to the US. In Trump’s “Liberation Day” event on April 2 New Zealand exports were marked down for a 10% tariff – so the new rate is an increase.

A bad decision, economically and politically. US consumers will pay more, and NZ businesses will suffer.

It also means that we will end up trading more with other countries such as China, so it is also geopolitically stupid.

The Post reports:

The Green Party and its closest mayoral candidate have independently come up with near-identical housing policies by targeting land banking with a promise of lessening future rates rises.

The policy, rolled out separately by independent candidate Alex Baker and Green Party councillor Geordie Rogers and other Greens candidates, would see the council change its rating system to be based on land value, rather than the value of land plus whatever is built on it.

I support rates being on land value only. This will encourage more efficient use of land. It will also encourage people to invest more in upgrading houses, if you can do so without worrying that your rates will increase because you have added something on.

A reader copies me into a letter to the Minister:

Dear Minister of Internal Affairs Van Velden,

The National library has announced that there will be a closure today of the Molesworth Street library ground floor, from 11:30am to 3pm on Friday 1 August for a private event.

I understand that the closure is because the coffin, complete with body, of a recently deceased deputy chief executive of the Department of Internal Affairs is, on the orders of the Chief Executive, to be put on display in the foyer of the National Library in front of the He Tohu exhibition.

The exhibition is hence closed to the public, who pay for it and who own it, for a private event at short notice during business hours. I do not regard such a  closure – an arbitrary privatisation of public space – as a legitimate use of public resources.

Additionally, our national library is not, in my view, a space appropriately used as a temporary necropolis or morgue for the purposes of expressing private grief. It’s our nation’s public library, for books and exhibitions, for god’s sake! 

Equally, library staff are required to be at work as part of their employment agreements and some – many? – may not feel comfortable or appropriate to share part of their working space with a corpse. Yet they are being given no choice in the matter.

As a society, we have funerals and tangi as appropriate fora for expressions of grief and sadness and churches, halls, private homes and marae as appropriate places for dead people to temporarily be for those social purposes. Again appropriately, staff have the employment right, paid for by the public, to chose to attend such events on the death of a colleague and express their grief for their death in those shared private spaces. Not the National Library!

Could you please respond regarding whether you support or not the decision taken by your Chief Executive to close the library and temporarily install a corpse? (I understand that the short-notice decision from the top has created considerable internal disquiet at all levels within the library)? 

If you do indeed support the decision of your departmental Chief Executive to unilaterally make parts of our public library into a temporary private necropolis at his whim, could you please further indicate who now amongst the staff of our library possesses the posthumous right to to use it as such? 

This is astonishing. Totally inappropriate to turn a workplace into a morgue, let alone the National Library.

Radio NZ reports:

Houses and rents are more affordable as costs fall and consumers benefit from lower interest rates and higher wages, according to new reports from Massey University.

National home affordability improved 8.7 percent in the three months to June, on top of a 9.3 percent improvement in the first quarter of the year.

Report author, Massey Business School senior lecturer Arshad Javed said a combination of lower borrowing costs and wage growth has helped offset affordability pressures in many regions, even where house prices stayed high.

This is good news. Basically the report looks at three factors – house prices, incomes and mortgage rates.

For the quarter, the national median house price was down 1.2 percent to $763,000, while an average two-year fixed mortgage rate was 37 basis points lower to 5.66 percent, and weekly earnings were 1.65 percent higher.

That is the sweet spot – house prices down, mortgage rates down and earnings up.

The Herald reports:

Oranga Tamariki has been ordered to pay more than $100,000 in legal costs over a battle to remove a Māori child from her Pākehā foster parents. 

In her ruling, Justice Helen Cull is also critical of Oranga Tamariki’s ‘egregious’ campaign to discredit the foster parents.

The $108,000 indemnity costs stem from a battle over the long-term care of the girl, given the pseudonym “Moana” under automatic suppression orders for all those involved in the case, according to a High Court ruling. …

“I accept the Smiths’ submission that there was a campaign by OT [Oranga Tamariki] against them to discredit them and this was pursued on appeal.

“The egregious aspect of this approach is that [Oranga Tamariki] continued to discredit and undermine the Smiths on appeal … the Smiths had no other option than to defend themselves in order to continue to care for Moana, to whom they were committed.”

The least that should happen for the poor foster parents who were attacked by OT for basically being the wrong ancestry.

Radio NZ reports:

Several respondents said their schools bankrolled literacy catch-up classes and training from the Kahui Ako scheme that gave some teachers release time for specialist work with other teachers in their school or across groups of schools.

An English teacher from a large, low-decile school who RNZ agreed not to name, said that arrangement allowed her to work with four classes of Year 9 students who could not read.

The fact so many students can’t read after eight years of schooling is a disgrace. The poor secondary schools shouldn’t have to be teaching third formers (showing my age) how to read.

Stuff reports:

The directors of Nanogirl Labs have said the decision to appoint a liquidator for their company last year was devastating.

“We poured our hearts and souls into our business, we believed profoundly in the mission (and still do), and having that ultimately fail was incredibly difficult,” co-founders Joe Davis and Michelle Dickinson said in a statement to Stuff.

“Over the years [Nanogirl Labs] inspired thousands of New Zealanders – particularly young people – to embrace science, technology, engineering and maths. … We are incredibly proud of what the business achieved.“

The business went into liquidation in November last year owing Inland Revenue more than $265,000 in unpaid GST and PAYE, and nearly $200,000 to other unsecured creditors.

I was very sad to read that Nanogirl Labs went into liquidation – both for the principals, and the creditors. It is easy to say from afar that one should have closed down a business the moment it becomes unprofitable, but the reality is that many businesses have cashflow challenges and are constantly having to juggle creditors. Some make it through, but others do not. Being unable to pay your PAYE though should ring warning bells though, as that is money held in trust on behalf of employees.

“We are deeply saddened by this outcome, and understand the impact it has had on creditors and others connected with the business,” Davis and Dickinson said.

That’s good to have acknowledged. I know Michelle and Joe, and they are good people. That is not to say you can’t be critical of their business decisions, but I don’t think either were motivated by money in this business venture. Sir Ian Taylor has a nice take on it:

I’ve known Michelle for years. I’ve seen her walk into rooms full of young kids, many of whom had never met a scientist, and light up their imaginations with science made simple, fun, and real.

On her, a lab coat looked different. It wasn’t a symbol of authority; it was an invitation. It told kids that science wasn’t something to fear, it was something to play with, to explore, to enjoy. She didn’t need a whiteboard or a lecture hall. Just a box of household items, a bit of curiosity, and her unshakeable belief that every child, no matter their background, deserves access to the tools of discovery.

With her partner Joe Davis she built Nanogirl Labs to make that belief real.

From theatre shows and school assemblies to hands-on STEM kits, Michelle has shown up for our tamariki. Not once or twice, but relentlessly, for nearly a decade. She’s given thousands of kids their first experience of science. For many, she was the first person who told them, “Yes, you can be a scientist too.”

And for young girls, she offered something even more powerful: representation. Someone who looked like them, spoke like them, and showed them they didn’t have to change to belong in science. That matters more than most people realise.

Role models don’t just inspire, they shift what kids believe is possible. Michelle made science human. And fun. And possible.

Michelle is a brilliant scientist. She could have worked commercially for a massive salary for science entrepreneurs like Richard Branson, but her passion was bringing science to kids.

Sir Ian notes:

Even with the revenue gone and bookings cancelled, she paid her staff using personal reserves. She and her partner Joe didn’t take salaries. They sold what they could. They held on. But when there was nothing left to hold on with, she was forced to make the decision that so many others had to make because of covid.

The failure of Nanogirl Labs is painful – for the principals, staff and creditors. I do hope though that it doesn’t mark the end of Michelle’s contribution to science in New Zealand.