Mediaworks didn't need our money

I've scanned in more documents about the Steven Joyce's Mediaworks bailout. The key one today: A September 2009 briefing by the Ministry of Economic Development on Mediaworks' financial position, titled RBA Licence Renewal Payments: Modelling of Options.

When the RBA had originally asked for a bailout, MED had modelled their costs and concluded that they didn't need the money. After Steven Joyce had decided he would proceed anyway, they asked Mediaworks and The Radio Network, the two biggest players, to open their books, and commissioned Deloitte to update their model. Their conclusion was that the companies were under some financial pressure. However,

the base case modelling suggests that, in the absence of any further deterioration in financial performance, the licence purchases at the prices contracted with the Ministry should be affordable without compromising the longer term financial viability of the companies.

This conclusion does not change, even for the worst-case scenario modelled. Each entity remains profitable (albeit at reduced levels) with interest cover nevertheless being tight against the assumed capital structure.

Deloittes did note that if revenue declined, the companies would be in trouble (a statement of the obvious), but that their underlying profitability was sound. They recommended a wait and see approach and reviewing the situation closer to when the payments were actually due. The Ministry noted that the companies had known about the need for these payments for a long time, that they had plenty of options available (e.g. asset sales, cost-cutting, or injecting capital) if they needed money, and noted a lack of evidence that such options had been explored before going to the government for a hand-out. They concluded:

Considering the above, the Ministry still does not see a strong case for the Government to accede to the RBA's request, a move which would place the Government in a credit-financing role in lieu of the existing market mechanisms. It is recommended that no further consideration will be given unless suitable evidence was provided by the affected broadcasters that all alternative avenues have been adequately explored.

This advice was ignored. Two weeks after the briefing was given, Joyce wrote to John Key seeking permission to bring an urgent paper to Cabinet on the issue. The letter made no mention of the modelling at all, and accepted at face value the RBA's claims that its members were too poor to pay, despite their books showing that the opposite was the case.

It is not a crime to dislike the police

In this country, we have freedom of speech. Which means that you should be able to express your dislike of those in power, right? Apparently not:

New Zealand singer Tiki Taane is due to appear in Tauranga District Court on Friday after being arrested in the city early Sunday morning.

He was performing at a gig at Illuminati on Harrington Street when police arrested him.

Taane is charged with disorderly behaviour likely to cause violence to start or continue.

A number of people at the gig on the night say Taane began singing 'f*** the police' when they were carrying out a standard inspection of the club.

The police would no doubt consider this incitement. But that requires intent, and in the absence of more specific words commanding an attack, that looks dubious. In addition, the right to freedom of speech is most forcefully engaged when it is directed against those in power. And that means those in power need to exercise caution when dealing with such expressions. Unless there was actual violence, then the police's intervention in this case looks more than a little self-interested, aimed at forcing people to respect their "authority" rather than protecting the public.

No matter what the police think, it is not a crime to dislike them, and it is not a crime to say so, publicly and forcefully, to their face. In a free and democratic society, that is something they just have to put up with, just as the Prime Minister does. If they can't, or won't, then they have no business being police.

Goff fails on bigotry

Yesterday, the Labour Party released its party list. Today, one of its MPs is denouncing it as being dominated by "a gaggle of gays". Does Labour leader Phil Goff denounce this for the bigotry it is, and point out that those gay MPs have been given top spots because (unlike the complainer) they've worked hard and distinguished themselves? Of course not:

Leader Phil Goff said Mr O'Connor had been told off for the comments, but that the "West Coast language" was actually likely to help him in his bid for the electorate.

That's right - according to Goff blatant homophobia isn't really a problem, especially if it helps a redneck MP get redneck votes. Another example of his poor instincts, his consistent failure to do the right thing, his lack of virtù. Helen Clark would not have put up with this shit, and neither should Goff.

(As for O'Connor's complaint about there being too many unionists, he is aware that this is the labour party, right? Founded explicitly to be a political voice for the labour movement? Complaining about it being full of unionists is like complaining that National is full of farmers and businessmen...)

If you live on the West Coast, then I'd advise against giving O'Connor your electorate vote. The good news is that he's not on the Labour list, so then its just a question of whether you want to reward a party whose leader excuses bigotry and thinks all West Coasters are bigots like O'Connor.

Crony Capitalism III

On Thursday evening, TVNZ revealed that Communications Minister Steven Joyce decision to bail out his former company Mediaworks with a $43 million soft loan was contrary to all advice from his officials. My copy of these documents (obtained under the OIA) arrived over the weekend, and I've been going through them. And they show that the story is, if anything, worse than TVNZ suggests.

I'll be gradually scanning the relevant documents and putting them online (so more links will appear in this tomorrow). But here's the core story:

• Radio Rhema writes to Steven Joyce pleading poverty over their long-expected bill for broadcasting rights, and asking for a concession. Joyce responds that he "do[es] not see it as appropriate to deal with these sorts of requests on an individual basis" and points out that the government is short of cash too.
• The Radio Broadcasters Association writes to Joyce on behalf of its members asking for its broadcasting fees to be spread over the term of the licences, effectively a return to annual fees. The Ministry of Economic Development hires Deloittes to analyse the financial situation of broadcasters and concludes that

  the modelling has shown that the current contractual payments will affect the profitability of the broadcasters, but all but the most pessimistic scenario sees that operations remaining viable based on the financial assumptions made. [That scenario assumed the broadcasters would remain unprofitable until 2030 - I/S]

  The Ministry does therefore not see a strong case for the Government to accede to the Associations request, a move which would place the Government in a credit financing role in lieu of the existing market mechanisms.

  In English, that translates as "they don't need the money and should piss off".
• Followup advice from MED, in response to "anecdotal information that the trading position of at least one of the main broadcasting companies has deteriorated", repeated this conclusion, and warned of the danger of the RBA lobbying other Ministers.
• According to the Herald, that is exactly what happened: the RBA lobbied and lobbied until they found someone ignorant enough of the situation to agree to their demands: the Prime Minister. But the documents show this to be false. Key met with Mediaworks CEO Brent Impey in early August, but Joyce had already asked MED to present him with options for deferred payment in July. On July 30, a week before Key's meeting with Impey, he wrote to the RBA informing them of this decision.
• Over August and September MED negotiates with the RBA, and gets major broadcasters Mediaworks and The Radio Network to open their books. A further analysis by Deloittes on the data again finds that they do not need the money: the payments will affect profitability, but they can afford it. Alternative payment options make only a marginal difference. The real problem is the capital structure imposed by their foreign parent companies - a problem entirely of their own making. Despite this, negotiations continue.
• In late September MED realises they need Cabinet approval for a change in policy and push through an urgent Cabinet paper. The paper highlights the modelling showing the deferral is unnecessary, but introduces the threat of Mediaworks defaulting on its licence payment and going into liquidation. Cabinet is scared into line. Mediaworks laughs all the way to the bank.
• Six months later, in May 2010, MED realises that the deferred payments are a loan and therefore require the approval of the Minister of Finance [link to come]. The advice Treasury gave him on this will be fascinating...

So, this isn't just a case of Steven Joyce giving taxpayer's money to his old company - its a case of Steven Joyce giving taxpayer's money to his old company when the modelling showed they did not need it, and scaring his Cabinet colleagues into line with a scare story about TV3 imploding - a threat he knew to be false. Its crony capitalism and corporate welfare, all rolled into one, with a side-dish of lies and incompetence. This is how Steven Joyce, the heir apparent to John Key, operates. And its not a pretty picture.

New Fisk

Beware men of power who turn to writing books

Labour's list

The Labour Party released its party list today. Unlike last election, where they ranked new blood higher than some established MPs to renew their party (and so gained a significant influx of talent), this time they've focused squarely on incumbent protection, with only 3 new MPs in the almost guaranteed to get into Parliament top-30. Which means that if they want to bring new people in, they have to up their party vote.

As with last election, I've done a table showing the top candidates relative placements with last time. The big winners are those who have won a frontbench position in the past term - David Parker, Clayton Cosgrove, Charles Chauvel and Grant Robertson. The losers are Phil Twyford and Rajen Prasad, who get demoted even though retirements have opened up space for everyone to move up. I wonder what they did to offend Phil Goff...?

2011 Rank	Name	2008 Rank	Difference
1	Phil Goff	3	+2
2	Annette King	4	+2
3	David Cunliffe	8	+5
4	David Parker	17	+13
5	Ruth Dyson	13	+8
6	Parekura Horomia	5	-1
7	Maryan Street	9	+2
8	Clayton Cosgrove	18	+10
9	Trevor Mallard	14	+5
10	Sue Moroney	22	+12
11	Charles Chauvel	27	+16
12	Nanaia Mahuta	10	-2
13	Jacinda Ardern	20	+7
14	Grant Robertson	46	+32
15	Andrew Little	--	--
16	Shane Jones	16	0
17	Su’a William Sio	24	+7
18	Darien Fenton	33	+15
19	Moana Mackey	25	+6
20	Rajen Prasad	12	-8
21	Raymond Huo	21	0
22	Carol Beaumont	28	+6
23	Kelvin Davis	29	+6
24	Carmel Sepuloni	35	+11
25	Rick Barker	34	+9
26	Deborah Mahuta-Coyle	--	--
27	Stuart Nash	36	+9
28	Clare Curran	45	+17
29	Brendon Burns	49	+20
30	Chris Hipkins	47	+17
31	David Shearer	--	--
32	Michael Wood	56	+24
33	Phil Twyford	26	-7
34	Stephanie (Steve) Chadwick	30	-4
35	Kate Sutton	63	+27
36	Jerome Mika	--	--
37	Iain Lees-Galloway	48	+11
38	Josie Pagani	--	--
39	Lynette Stewart	--	--
40	Jordan Carter	70	+30
41	Kris Faafoi	--	--
42	Christine Rose	--	--
43	Glenda Alexander	--	--
44	Susan Zhu	--	--
45	Rino Tirikatene	--	--
46	Sehai Orgad	--	--
47	Megan Woods	--	--
48	Mea’ole Keil	--	--
49	David Clark	--	--
50	Richard Hills	--	--
51	Anahila Suisuiki	--	--
52	Hamish McDouall	60	+8
53	Louis Te Kani	--	--
54	Tat Loo	--	--
55	Soraya Peke-Mason	--	--
56	Julian Blanchard	59	+4
57	Peter Foster	--	--
58	Pat Newman	--	--
59	Julia Haydon-Carr	--	--
60	Michael Bott	--	--
61	Vivienne Goldsmith	67	+6
62	Nick Bakulich	--	--
63	Chris Yoo	53	-10
64	Barry Monks	--	--
65	Hugh Kininmonth	75	+10
66	Jo Kim	--	--
67	Paula Gillon	--	--
68	Carol Devoy-Heena	76	+8
69	Ben Clark	--	--
70	Chao-Fu Wu	--	--

Also notable for minor demotion are Parekura Horomia and Nanaia Mahuta. neither have really been performers this term (Horomia because of incompetence, Mahuta because she's taken time off for family reasons), but they are Labour's most high-profile Maori MPs, and their demotion sends a message about what the party cares about ATM. And the answer seems to be "not Maori".

So much for "closing the gap"

Remember "closing the gap with Australia"? National made this a core part of its election platform in 2008, challenging the then-Labour government over the difference in living standards between New Zealand and Australia. They continued this rhetoric after being elected, promising that the gap would be closed. Then, once in power, they did nothing, and in fact pursued labour market policies designed to widen the gap by lowering kiwi wages. And now, National is promoting those lower wages as a selling point:

The fundamental competition is for capital, including Australian capital, he said, and over the next few years New Zealand's advantages would become more apparent.

"One is the wage differential. We have a workforce that is better educated, just as productive and 30 per cent cheaper," he said.

(Emphasis added)

So, rather than "closing the gap", National is supporting the same thing it always has: a low-wage, low-skill economy, designed to deliver cheap peons (and therefore higher profits) to foreign businesses.

Greens ahead in Germany

Last month, the German Green party won a stunning victory in the state of Baden-Wuerttemberg, winning more votes than the Social Democrats and creating Germany's first Green-led state administration. Today, a poll by Stern shows that if elections were held today, they would repeat that result, and Germany would have its first Green chancellor.

The article attributes this to the Fukushima meltdown, but there's a lot going on in German politics at the moment, with the governing coalition gradually sinking under its own incompetence. And the Greens seem to be winning the argument against the unattractive looking SPD. Still, its a long way until the next German election (currently scheduled for September 2013, and difficult to have earlier), and a lot could change before then.

Reported back

The Health Committee has reported back [PDF] on the Smoke-free Environments (Controls and Enforcement) Amendment Bill and recommended it be passed with amendments. The core provisions of the bill are unchanged, but there is one important amendment: massively increasing penalties for selling tobacco products to minors. Currently this stands at $2,000; the bill would increase it to $5,000, or $10,000 for a corporation. Its a good move, which has been a long time coming, and hopefully it will result in better compliance with the law.

Samoa's democratic decline continues

Samoa had an election last month, and as usual for Samoan elections, the courts are now busy dealing with election petitions from disappointed candidates, as well as private prosecutions for bribery from candidates who did not receive enough votes to file petitions. Samoa's Prime Minister thinks this makes the country look bad. But he has a solution: ban election petitions. In other words, let people get away with buying elections.

As the Samoa Observer points out, there is another alternative. The number of petitions is so high because electoral corruption is ingrained in Samoa. The government could instead stamp it out and ensure clean elections. But how would that help the Human Rights Protection party stay in power?

An explanation for the tupperwaka

Yesterday I expressed disquiet about the proposed ownership scheme for Pita Sharples' tupperwaka. While the government would be paying for almost all of it, Ngati Whatua will end up owning it. A friend who works in the public service has pointed out an explanation for this:

There is however an explanation for the ownership structure and that is that no government agency wants to wear the capital charge, depreciation and operating costs for an expensive idea that has come out of the blue, unbudgeted at a time when everyone's budgets are shrinking and when the government has no use for it after the tournament. People would have been falling over themselves to not own it.

But while that explains why no government department wanted it, it doesn't explain why it is being given free to Ngati Whatua rather than sold to the highest bidder. And that aspect smells of a sweetheart deal for a powerful iwi in a marginal electorate.

Crony Capitalism II

Steven Joyce's decision, highlighted last month, to bail out his former company MediaWorks with a $43 million soft loan smelled pretty bad already. Now it smells worse. Last night TVNZ revealed that the loan was initially denied after consistent advice of Treasury and the Ministry of Economic Development, but granted after former MediaWorks CEO Brent Impey personally lobbied the Prime Minister.

In the documents obtained by ONE News, the Ministry of Economic Development said it "does not see a strong case" for the loan, and warned the deal will "carry a financial risk" for the government.

Treasury said the loan would effectively see the government "acting as a bank" and taking on additional risk.

[...]

Initially Communication and Information Minister Steven Joyce said "no" to the deal. But then the former head of MediaWorks went lobbying, taking the matter higher.

Brent Impey talked to the Prime Minister during the TV3 Telethon, asking for payment to be deferred for radio licences. And eventually Cabinet approval was given.

So personal networks trump considered government advice. This is not how our government is supposed to work. Instead, its just crony capitalism. And we should not tolerate it in New Zealand

Abortion Supervisory Committee: the vote

Today parliament voted on appointments to the Abortion Supervisory Committee. But as usual, the Christian Taliban attempted to derail things by trying to appoint one of their own. Here's who voted for it:

Ayes

Noes

Shane Ardern (National, Taranaki-King Country) Chris Auchinvole (National, West Coast-Tasman) Kanwaljit Singh Bakshi (National, List) Jackie Blue (National, List) Chester Borrows (National, Whanganui) Simon Bridges (National, Tauranga) John Carter (National, Northland) Jacqui Dean (National, Waitaki) Bill English (National, Clutha-Southland) Chris Finlayson (National, List) Te Ururoa Flavell (Maori Party, Waiariki) Aaron Gilmore (National, List) Jo Goodhew (National, Rangitata) Sandra Goudie (National, Coromandel) Nathan Guy (National, Otaki) Phil Heatley (National, Whangarei) Tau Henare (National, List) Rahui Katene (Maori Party, Te Tai Tonga) Melissa Lee (National, List) Peseta Sam Lotu-Iiga (National, Maungakiekie) Tim Macindoe (National, Hamilton West) Tod McClay (National, Rotorua) Hekia Parata (National, List) Paul Quinn (National, List) Eric Roy (National, Invercargill) Katrina Shanks (National, List) Pita Sharples (Maori party, Tamaki Makaurau) Tariana Turia (Maori Party, Te Tai Hauauru)

Rick Barker (Labour, List) Carol Beaumont (Labour, List) David Bennett (National, Hamilton East) Paula Bennett (National, Waitakere) John Boscawen (ACT, List) Gerry Brownlee (National, Ilam) Cam Calder (National, List) Hillary Calvert (ACT,List) Chris Carter (Independent, Te Atatu) David Carter (National, List) Charles Chauvel (Labour, List) David Clendon (Green,List) Jonathan Coleman (National, Northcote) David Cunliffe (Labour, New Lynn) Kelvin Davis (Labour, List) Catherine Delahunty (Green, List) Roger Douglas (ACT, List) Peter Dunne (United Future, Ohariu) Kris Faafoi (Labour, Mana) Darien Fenton (Labour, List) Craig Foss (National, Tukituki) Kennedy Graham (Green, List) Tim Groser (National, List) Kevin Hague (Green, List) Hone Harawira (Independent, Te Tai Tokerau) Pete Hodgson (Labour, Dunedin North) Parekura Horomia (Labour, Ikaroa-Rawhiti) Gareth Hughes (Green, List) Raymond Huo (Labour, List) Paul Hutchison (National, Hunua) Shane Jones (Labour, List) Steven Joyce (National, List) Sue Kedgley (Green, List) Annette king (Labour, Rongotai) Colin King (National, Kaikoura) Iain Lees-Galloway (Labour, Palmerston North) Keith Locke (Green, List) Moana Mackey (Labour, List) Trevor Mallard (Labour, Hutt South) Wayne Mapp (National, North Shore) Murray McCully (National, East Coast Bays) Stuart Nash (Labour, List) Russel Norman (Green,List) Damien O'Connor (Labour, List) David Parker (Labour, List) Lynne Pillay (Labour, List) Simon Power (National, Rangitikei) Rajen Prasad (Labour, List) Mita Ririnui (Labour, List) Grant Robertson (Labour, Wellington Central) Ross Robertson (Labour, Manukau East) Jamie-Lee Ross (National, Botany) Heather Roy (ACT, List) Tony Ryall (National, Bay of Plenty) Carmel Sepuloni (Labour, List) Lockwood Smith (National, Rodney) Nick Smith (National, Nelson) Maryan Street (Labour, List) Georgina te Heuheu (National, List) Anne Tolley (National, East Coast) Chris Tremain (National, Napier) Metiria Turei (Green, List) Phil Twyford (Labour, List) Nicky wagner (National, List) Kate Wilkinson (National, List) Maurice Williamson (National, Pakuranga) Michael Woodhouse (National, List)

Amy Adams abstained. Allen Peachey, Lindsey Tisch and Jonathan Young are marked as voting both ways. Around 20 MPs, including John Key, Phil Goff, Rodney Hide and Jim Anderton, were not present for the vote.

Note the trend. This was a National - Maori Party amendment, the former driven by social conservatism, the latter by Turia's weird concerns about racial numbers (she thinks abortion is bad because it leads to fewer Maori children; people must be forced to breed for the greatness of the volk!) Meanwhile, the Greens showed themselves to be consistently liberal, and ACT again showed itself to be more liberal than National.

Climate change: The PCE on the ETS

Back in 2009, National "reformed" the ETS, adding enormous ongoing subsidies for polluters and giving farmers - our worst greenhouse gas emitters - a free ride until 2015. They're now engaged in the first review of the scheme. And the Parliamentary Commissioner for the Environment, our independent environmental watchdog, has a few things to say about those changes [PDF].

The PCE's submission highlights the yawning gap between our policies and our commitments. We've publicly committed to a 10 - 20% reduction on 1990 levels by 2020. But current projections show our emissions will be 30% above 1990 levels by that date:

Some of this is attributable to bloc deforestation, as trees planted in the early 90's come up for harvest. Some of it is also due to the relentless rise in dairy emissions. And some of it is due to our continued use of old, dirty technology. But regardless, one thing is clear: we are not going to close that gap with an ETS which exempts half our emissions and hands out unlimited amounts of free credits to polluters for the next hundred years.

The PCE makes four key recommendations: end the price cap and 2-for-1 deal, which currently subsidise pollution until 2012. Cap free allocation and phase it out faster, so polluters face an actual incentive to reduce emissions. Prohibit lignite projects from receiving free credits, and legislate to make the criteria for granting credits to new industries clear. And bring agriculture in in 2015, as currently required by law.

Unfortunately the government's review team of farmers and foresters seems to have been specifically chosen to do exactly the opposite, and extend both subsidies and agriculture's free ride. And if that happens, we'll all pay for it, to the tune of a billion dollars a year. Given our current financial situation, that is money we can ill-afford to spend.

On the tupperwaka

Yesterday the government announced it would be spending $2 million on a giant inflatable waka for the Rugby World Cup. The decision has resulted in a fair bit of flak, some of it deserved, some of it less so. Unlike many, I think the idea of a Maori cultural display during a major international event is a good one; it doesn't sell New Zealand as a business (something about which I could not give a shit), but it tells our visitors a little about us. At the same time, it does not sit well with the government's slash-and-burn austerity message, and you don't have to look far to find other things they could be spending the money on. But what really annoys me is the ownership structure. The government is putting up 95% of the cost, but after the event, Ngati Whatua (who are contributing just 5%) will get to own the thing. Surely if the public is paying for it, the public should own it?

Then there's the stench. We have a government Minister up for re-election in an increasingly marginal seat dropping a $2 million windfall on the largest iwi in his electorate. You don't have to be John Boscawen to think that this smells bad. Our government is supposed to have procedures to prevent that sort of cronyism. It will be interesting to see whether those procedures were followed.

Parliament and abortion

Today is World Health Day. And across the blogosphere, people are taking the opportunity to argue that abortion is a health issue, not a criminal one.

Inadvertently, the government seems to be joining the debate. Because top of the Order Paper today is the triennial motion to appoint members of the Abortion Supervisory Committee.

Hon SIMON POWER to move, That, pursuant to sections 10 and 11 of the Contraception, Sterilisation, and Abortion Act 1977, this House recommend His Excellency the Governor-General reappoint Professor Dame Linda Jane Holloway of Dunedin and Reverend Patricia Ann Allan of Christchurch as members of the Abortion Supervisory Committee, and appoint Dr Tangimoana Frances Habib of Hamilton as a member of the Abortion Supervisory Committee, each for a term of three years from the date of appointment, and appoint Professor Dame Linda Jane Holloway as Chairperson of the Abortion Supervisory Committee.

This should be a formality, but instead will be treated as an excuse for anti-abortion fruitcakes such as Bill English and Judith Collins to rant about the evils of abortion - something no MP really wants to sit through. Which is a mirror of the wider debate itself. The reason we have not reformed our absurd thirty-year-old abortion law, which effectively requires women to declare themselves mentally ill to access a basic medical procedure, is because no politician wants to subject themselves to that toxic debate. In effect, a radical religious minority are exercising a heckler's veto over our society, and the fundamental right of women to control their own bodies in particular, because our political leaders are too chickenshit to stand up to them.

But stand up to them they must. The present law is fundamentally demeaning. It creates real problems around access. And its currently being challenged in court. If that challenge is successful, we may find that abortion is - overnight - illegal in New Zealand, or subject to such tight restrictions as to make it inaccessible in practice. That outcome is possible because we continue to rely on an outdated law. If we want to prevent it, then we need to bring abortion law into the 21st century, and make it clear in law that abortion is a medical procedure, not a crime.

A bailout I can support

Last year, in a decision which is looking worse and worse by the day, the government bailed out South Canterbury Finance. Today, its opened the public chequebook to support another company: AMI insurance. AMI is one of the largest insurers in Canterbury, and its reserves had been practically wiped out by two successive quakes. There was real doubt whether it would be able to meet its claims. If it didn't, then thousands of Christchurch homeowners would find that they had lost everything, despite having taken appropriate precautions.

This is a bailout I can support. Where the SCF bailout protected greedy investors, most of whom should have known better and some of whom had invested precisely in the belief that the company would fail, this bailout protects customers. There's no suggestion of risky behaviour by AMI, it is simply a victim of appalling bad luck (like Christchurch as a whole). And no-one is going to be making a windfall profit out of it; there are no financial money-spinners with usurious fees who demand to be paid out (unlike SCF). This is about supporting the people of Christchurch, protecting people from the vicissitudes of fortune. And that is exactly what government is for.

If we are lucky, AMI will be able to meet the cost of its claims and raise capital elsewhere so that the government guarantee is unnecessary. If we are unlucky, we'll end up owning an insurance company. It doesn't seem to be fundamentally unprofitable, so that's not a terrible outcome either.

As for the longer term, it seems that regulations and reserves and reinsurance didn't contemplate two successive disasters of this magnitude. Maybe the government needs to look at that, to ensure that other insurance companies don't suffer the same fate.

Saving Berlusconi's bacon

Italian Prime Minister Silvio Berlusconi goes on trial today on charges of abuse of office and soliciting underage prostitution. Meanwhile, members of his party in the Chamber of Deputies are trying to interfere with the trial process:

The Chamber of Deputies, which is controlled by Berlusconi's conservative allies, ruled in February that the trial should have been diverted to a special court — one in which he would have been more likely to be acquitted. Lawyers will appeal on parliament's behalf to the constitutional court, which could rule that the case be scrapped.

These aren't the only charges Berlusconi is facing - he's also being tried in three other cases involving tax fraud and corruption. But his party has a solution for that too: shorten the statute of limitations for such crimes again. Thousands of trials will be aborted as a result, but Berlusconi will be able to walk free.

This is how things work in Italy now. Basic things we take for granted, such as the independence of the judiciary and the rule of law, are being undermined in an effort to protect a corrupt and criminal Prime Minister. But what's really appalling is that Italians put up with it. These are their rights under threat; its time they stood up to defend them.

More on the Urewera 18

Radio New Zealand has a discussion this morning [audio] with lawyer Grant Illingworth on the decision to deny the Urewera 18 a jury trial. Unfortunately, its rather difficult to discuss a judicial decision when the reasoning behind it is suppressed. But one thing is clear: both Illingworth and interviewer Kathryn Ryan think there is a strong public interest in a jury trial in this case. And I agree.

Meanwhile, Brian Rudman raises the issue in the Herald, pointing out that

The justice system, by compounding the atmosphere of secrecy and intrigue that has dogged this case for nearly four years, has now made a rod for its own back. Whatever the reality, the courts now risk being seen as part of this whole sorry saga.

[...]

The problem for the justice system in this case is that in an attempt, presumably, to ignore the political storm swirling around this case it has become a part of the political debate, whether it wanted to or not.

To help maintain the integrity of the justice system and avoid being caught up in the political backlash, the judges should have used the discretion at their disposal to opt for the jury trial.

Rudman is right. The decision not to do so, and to grant the crown a judge-only trial fundamentally undermines the credibility of the entire process. We can only hope that the decision is appealed, and that the Supreme Court makes the right decision and upholds the right to trial by jury. Otherwise there is a real danger of seeing a tainted trial, and a tainted verdict.

Secrecy corrupts democracy

The Intelligence and Security Committee - which is not a Parliamentary select committee, but a statutory one - will be meeting today to hear submissions on the New Zealand Security Intelligence Service Amendment Bill. The bill will grant the SIS wider powers to tap phones, hack computers, and spy on anyone they want. As a matter of general principle, you'd expect that the hearings and evidence will be open to the public, just like every other hearing on legislation. But you'd be wrong. The entire process will happen in secret. In effect, we are being shut out of our own legislature.

As Pablo at KiwiPolitico points out, there is no need for this secrecy. The hearings are not about the SIS's secret activities, but about what powers they should have.

What is being protected is not state secrets, not confidential material, or anything remotely connected to national security. The reason the hearings will be held behind closed doors is to conceal the lackey lock-step into which the committee will fall. It is about saving coalition face in an election year rather than addressing the serious concerns of intelligence service power-expansion. That shallow political PR calculation is the sole reason why these hearings will be held in secret.

This process is an affront to our democracy. Democracies do not make laws in secret. They make them in public, so that everyone can have confidence in the process and (more importantly) hold our representatives accountable for their decisions. Secrecy in a democracy fatally undermines legitimacy, just as it does in the judiciary. And given the nature of this bill, that is not something our democracy can afford to do.