Disallowed

The Regulations (Disallowance) Act 1989 is one of our more obscure pieces of constitutional legislation. It allows for Parliamentary scrutiny of subordinate legislation (regulations, rules etc established under another law), and for those regulations to be overturned by motion of the House. Parliament's Standing Orders provide for a committee to perform such scrutiny, and allow any member of that committee to move that a regulation be overturned. Interestingly, if a motion to overturn is not debated and voted on within 21 days, it takes effect - giving us in theory a powerful check on the executive.

While many regulations have been reviewed and amended by the committee since the law was passed, nothing has ever been disallowed. Until today, when some provisions of the Road User Charges (Transitional Matters) Regulations 2012 were disallowed after a motion by Charles Chauvel was allowed to expire. Its a minor constitutional milestone, and one which shows the value of the disallowance scheme. And hopefully Graeme Edgeler's complaint about the New Zealand Teachers Council (Conduct) Rules 2004 will have the same result.

For those who are interested, the Regulations Review Committee's report on the RUC regulations is here [PDF].

Goodbye Charles

Labour MP Charles Chauvel has announced he is leaving Parliament for a UN job. Bugger. He was one of Labour's more talented MPs, a strong voice for equality, republicanism, and the environment, and he would have made a good Minister one day. But I guess watching Labour sleepwalk to defeat in 2014 and the prospect of demotion by the ageing clique around David Shearer was just too much for him.

Meanwhile, I'm wondering how many other Labour MPs will be forced out by the old guard. Labour's focus on incumbent-protection in its 2011 party list has already stripped it of most of the talent it gained in 2008; how much more is it going to lose due to the refusal of ageing time-servers to relinquish their death-grip on the party?

National: Homophobic bigots

At the moment several African governments are progressing virulently homophobic legislation. There's Uganda's "Kill the Gays" bill, which would impose the death penalty for homosexuality and require reporting of homosexuals to the government. And in Nigeria there's similar, though less brutal, legislation, which would (among other things) outlaw LGBT support groups.

Today Labour's Charles Chauvel tried to move a motion expressing Parliament's condemnation of this bigotry:

CHARLES CHAUVEL to move, That this House note with grave concern both the recently retabled legislation in Uganda, that would increase the penalties imposed in that country for certain consensual sexual activity between two consenting adults in private, and the legislation, passed recently by Nigeria’s legislature but not yet signed into law, which would criminalise freedom of association and advocacy for same-sex couples and organisations; and state its hope and expectation that the New Zealand Government will urge other governments to uphold the rights of all people to their privacy and dignity in accordance with international law.

National vetoed it.

I think this tells us exactly where National stands on gay rights. They'll send John Key along to the Big Gay Out, but at their core they're simply bigots, no different from Family First or the Sensible Sentencing Trust.

Climate change: A pathway to failure

Earlier in the week the International Energy Agency released its assessment of New Zealand energy policy (offline). The media - based on the online executive summary [PDF] - reported the review as "mixed". The IEA praised our use of renewable energy, but had some damning criticism of National's new energy and energy efficiency strategies, basically saying that they set goals without any concrete measures to achieve them.

But it gets worse. Buried in the report was some damning criticism of the ETS as well:

Charles Chauvel, Labour's Environment Spokesperson, says that in a study released on Monday, the Paris-based IEA concludes:

- Keeping a fixed carbon price at current levels (NZ$25/tonne) will fail to phase-out the use of carbon-intensive coal in electricity generation by 2021;

- the current design of the ETS means that NZ will probably not meet its domestic targets of a 10-20 per cent emission cut under 1990 levels by 2020 and 50 per cent by 2050.

As Chauvel points out, these are both changes introduced by National. And what it means is that rather than being a mechanism to reduce emissions, National's ETS has become a pathway to failure. Sure, we knew this all along, but its nice to have it confirmed. Faced with the greatest environmental challenge humanity has ever faced, National's response is to spin and pretend it is doing something, while letting business as usual - the problem - continue. Just like they did with the recession (and look how well that's worked out!)

I expect better from our government. I expect honesty and action. And so should you.

Chauvel on energy policy

The annual Power and Electricity World Conference is happening in Auckland today. Normally the Energy Minister gives the opening speech to the audience of New Zealand's top energy and electricity-sector executives, but for some reason Gerry Brownlee has chickened out. So instead, they gave his slot to Labour's Charles Chauvel, who has made good use of it. In addition to criticising the government's lack of a plan for the energy sector (deregulation and leaving it all to the market isn't a plan, its an abrogation of responsibility), he has also taken the opportunity to signal Labour's direction in energy policy.

Some of this is expected: restore the New Zealand Energy Strategy and biofuels obligation, and tighten up the ETS to send a real market signal for the adoption of renewables. But there's also some solid new policy, such as:

• gradually replacing all baseload thermal generation with geothermal, supplemented by wind and other renewables. We have the resources and the expertise to do this, and by focusing on geothermal, it neatly sidesteps any quibbling from electricity companies such as Genesis who do not believe in wind.
• using ETS revenues to fund "complementary measures" (which means emissions reductions). Previously the government has been reluctant to do this because our neo-liberal policy community doesn't believe in complementary measures (plus Treasury hates any suggestion of revenue tagging).
• a proper smart meter standard which gives domestic users access to lower tariffs when industrial usage is low.

This is good stuff, and it shows that Labour is still committed to a sustainable future - unlike National.

Climate change: Not durable

One of the desiderata of climate change policy is that it be "durable", capable of surviving a change in government. Polluters need to know that pricing is not going to just go away at the next election. They also need some certainty about the costs they will face in order to make investment decisions. New Zealand's climate change policy pre-2005 was not durable: while Labour wanted to act, National was locked in Denier mode and promised to repeal any measure. Post-Brash, National softened its stance from outright denial, but still promised to gut the ETS, as we are seeing now.

Unfortunately for their backers, their giant polluter-welfare scheme is not durable either. Last night in the House, Labour made it clear they would replace the scheme next time they are in government:

If Parliament passes this Bill in anything like its current form, a priority for Labour will be its repeal and replacement with legislation providing for a robust ETS and a fit-for-purpose series of complementary measures.

A rough outline of what that replacement would entail was spelled out in his list of Labour's proposed amendments: a return to a shorter phase-out, no transitional period, earlier entry for agriculture, a cap on allocation, stronger complementary measures, and legislated short and medium-term targets.

Nothing lasts forever. In two, or five, or eight years time, Labour is going to be in government again. Possibly sooner, National may find itself beholden to the Greens. Either is going to mean substantial changes to the ETS. Polluters had better factor that into their equations. They may get a free ride for the next few years, but anyone who thinks that these subsidies will last is simply a fool.

Climate change: Negotiations

Labour has released its correspondence with the government over their negotiations for a bipartisan deal on the ETS [PDF]. The government does not come off well. From the outset, they seem to have had problems deciding what they actually wanted to do, leaving Labour as the only party actually proposing anything. Just two weeks ago, after the release of the select committee report [PDF], their attitude was still "we'll come up with something and let you know about it when we do", while ignoring Labour's concrete proposals (see Nick Smith's letter of 3 September). Contrary to claims made by the Smith in Parliament, they had weekly meetings scheduled, and from the second-to-last document (an email from Chauvel to the Minister's office, document 11) it seems that Labour was still expecting to attend one for further negotiations (on Tuesday) as late as Monday morning - just hours before the government blindsided them with its deal. That deal was unlikely to have been cooked up in the six hours between that email and its release; Smith was just stringing Labour along while negotiating with other parties behind their back, the epitome of bad faith.

The result isn't just a bad deal for New Zealand and the climate (but a very good one for National's rich polluter mates) - it will leave a toxic legacy which will prevent any future bipartisanship between the two major parties. It's one thing to say "sod off, we don't need you"; its quite another to string people along and then screw them. And it means that when the government can't juggle its opposing support parties and needs Labour's support, it is far less likely to be forthcoming.

The final document lays out Labour's proposals for an amended ETS. it is clearly still a work-in-progress - the final email talks of having the numbers checked by officials - and it is weaker than the scheme in place at the moment. But its also an effort to meet National's concerns around price volatility and agriculture while still retaining a functional system with incentives for reduction. It is unquestionably superior to the amendments proposed by National, but I guess it just didn't pander to polluters enough. And thanks to National's massive subsidies for pollution, ordinary taxpayers will be the losers.

Climate change: Chauvel on the ETS

Labour climate change spokesperson Charles Chauvel gave an interesting speech about the ETS to the NZ Oil and Gas Summit in New Plymouth yesterday. It's well worth a read. In it Chauvel outlines Labour's position on the ETS: while they obviously prefer the existing scheme which they passed prior to the election, they "accept that National and its supporters have legitimate expectations that the scheme will be changed" and are willing to work with them to adjust the parameters of the scheme to get an ETS backed by a broad majority. At the same time, there are also core principles that they are not willing to compromise. Chief among these are environmental credibility and fairness. The former requires that our largest polluter, agriculture, is included in the scheme, and that the total amount of credits in the scheme be capped rather than being allowed to grow with pollution. The latter requires that price caps and assistance to "at-risk" firms to prevent job losses or carbon leakage be both short-term and subject to a legislated phase-out, rather than being an ongoing subsidy from the taxpayer. If National insists on a scheme which does not meet these criteria, and instead provides an ongoing incentive for polluters to continue to pollute, they are happy to walk away and let the government try and find a majority with the Maori Party (who are even more hardline than Labour) or ACT (yeah, right) instead.

This puts the ball very clearly in National's court. And while John Key has threatened to turn to ACT to abolish the ETS entirely, Chauvel points out that that would have significant consequences for our international reputation, our economy, and our "clean and green" image (which as Minister of Tourism Key now owns). National's only sane option is compromise. And hopefully they will do it sooner rather than later.

Guest column: Time to stamp out loan sharks

By Charles Chauvel.

Ever since I became an MP, an issue that I have supported is the regulation of so called "loan sharks". Loan sharks prey on the vulnerable with unscrupulous rates of interest and this includes many of our Pacific people. They are the scourge of our community and instead of lending a helping hand keep borrowers in poverty. It is common for payday lenders to charge interest at rates between "only" 8% and 15% per week, compounding well into four figures at a time when mainstream rates have declined. Tomorrow, I am expecting a ballot, and if successful, I hope that my Bill will make it on to the order paper.

Increasing numbers of people are pawning items like bikes and children's toys just to meet essential expenses like their power bill. I saw an elderly man taking his weed eater into a loan shark outfit in Wellington, and it was distressing to watch first hand. One of the worst cases I discovered was a person who borrowed to buy a $3,000 car. The car was repossessed after two months and the owner ended up owing $19,000! If that was not bad enough, Loan sharks use bullying tactics to recover debts such as turning up and parking outside borrowers' homes. I was present earlier this month at the home of a person who was on the receiving end of this kind of intimidation. The loan shark company had previously broken into this person's house illegally and taken property that did not belong to the owner.

New Zealand is now one of a very few western countries that allows this abhorrent practice to continue. In light of the global credit crunch, many other countries have cracked down on fringe/payday lender practices and implemented usury rate caps. Restrictions apply in Japan, Singapore, and many countries in Asia, Europe and Africa. In Australia, three States and the ACT have implemented interest rate caps at 48%, and two other States are in the process of doing so. A part of President Obama's economic plan is to cap interest rates at 36% right across the US. In recent months nine of Canada's ten Provinces have passed specific payday lender legislation or have regulated the industry. Almost all countries in Central and South America have implemented interest rate restrictions.

As you can see, the world has, or is regulating this sector, but here in New Zealand the sky is the limit, with payday lender rates now amongst the worst in the Western World. Market forces are clearly not an appropriate determinant of interest rates at this low end of the socio-economic spectrum. It's all very well to guarantee bank deposits and slowly roll out a nine-day fortnight. But this is something that would help those in real financial trouble. I call on the Government to do the right thing and take action in this area now.

To that end, I have drafted a Members Bill which proposes interest rate caps in line with most other western countries. Labour, Greens, Maori, and the Progressive have all agreed to cooperate in an effort to push for much needed legislation to prevent these unscrupulous rates of interest currently being charged.

My Bill, called the Credit Reforms (Responsible Lending) Bill has three parts. Part 1 proposes to amend the Credit Contracts and Consumer Finance Act 2003 by capping the interest rate lenders can charge under a consumer credit contract at 48%. It also renders a contract oppressive if the lender reasonably believes the borrower will not be able to repay the loan. Part 2 amends the Credit (Repossession) Act 1997 by limiting the amount a creditor can recover from a debtor. Currently, loan sharks can recover the value of the goods at the time they were purchased and my proposal to change this to the value of the goods when they are sold. Part 3 proposes to allow pawnbrokers to charge administration fees if they are registered under the Second Hand Dealers and Pawnbrokers Act 2004, so they can charge fees as well as interest, removing the need for exorbitant interest rates.

I have heard of fears that any caps to the interest rate would in effect become the established rate. But it's certainly not worse off to have the default rate of interest cut from 2000 to 48% In any case, I look forward to a detailed and thorough debate on this Bill. A copy of the bill is available here

However, a member's bill has to be drawn from the ballot, and even if the Bill is selected in tomorrow's ballot, there is no guarantee of success, although I am very confident. The best outcome is for the bill to be adopted by the Government and passed into law.

I believe this is an issue which all parties can cooperate on and I am looking to all parties in Parliament for support. So far however, the response from National has been lukewarm and the Minister of Consumer Affairs, Heather Roy (ACT) has said she is not interested at all as it may force fringe lenders out of the market.

I am always happy to hear feedback on this Bill, as well as your views on loan sharks; you can email me - loansharks@charleschauvel.com

Cracking down on loan sharks

Over at Kiwiblog, DPF takes a look at Charles Chauvel's Credit Reforms (Responsible Lending) Bill aimed at cracking down on loan sharks and irresponsible lenders. The bill basically does two things:

• enables the Governor of the Reserve bank to set a maximum annual rate of interest for loans; and
• requires lenders to have a reasonable belief that the borrower is able to repay the loan.

In other words: ban usury, and make banks and lenders do their jobs and actually assess people for risk, rather than lending money to people who can't possibly pay it back. It's a good start in dealing with the problem of loan sharking, though as with DPF and Gordon Campbell I have some concerns that the Reserve Bank's maximum will become a target. But the bill certainly deserves examination by a select committee. And hopefully it'll get that chance after the next ballot.

(And I'm pleased to see that suddenly a lot more people are taking an interest in member's bills... a few years of work pays off)

Chauvel backs lowering the voting age

Labour MP Charles Chauvel - who apparently was young once - has come out in support of lowering the voting age, or at least of seriously considering it. Rather than the pedophobic attitudes displayed by Winston Peters, he

prefer[s] to take an optimistic view, that by educating and enfranchising people at an earlier age, we may well be able to reverse the alarming trend of decreasing young voter turnout and encourage those affected by political decisions to have a voice in making them.

And if you have even a trace of democratic sensibilities, that is something you should want to encourage.

Hopefully Chauvel will manage to persuade his caucus colleagues. But he'll need to persuade a lot more than that if the bill is to have any hope of becoming law.