Dalziel And Cameron
The Mayor & The Neo-Liberal Ideologue
- Jeremy Agar
The Mayor of Christchurch, Lianne Dalziel, told residents that their under-insured city is a billion dollars short of what it needs. Eventually, in 2015, the Christchurch City Council (CCC) resolved to sell assets worth $750,000,000. This does not seem a popular decision, though it’s hard to know, as public discussion has been avoided and the numbers haven’t been explained. From the start of her term, in 2013, the incoming Mayor had warned of money trouble and when she commissioned advice, it seemed a sensible thing to do.
She was also helped by the embedded managerial culture that binds local councils. In keeping with the prevailing political mood, which mandates hypocrisy, the Councillors at CCC are said to exist in a “governance” role. They’re supposed to be a board of governors, rubber stamping the decisions of staffers. In a managerial culture the last thing that’s needed is for politicians to represent the views of those who voted for them. Local government seeks to take the politics out of politics by making the Councillors depend on reports from senior (ambitious) bureaucrats, without which nothing can be done.
In Christchurch the pretence had reached absurdity. As is customary when a new Council gathers, the Mayor talked of unity, contrary views being routinely dismissed as evidence of a “dysfunctional culture”. So, official opinion expressed astonishment when six Councillors, elected as The People’s Choice (obviously Labour) proposed moderate and conventional alternatives to the debt hysteria. The other seven councillors had labelled themselves as the inevitable “independents”, as though they were not connected to other groupings like - let’s leap here - National. To take just one current example of the farcical depths of the double standard - in Auckland there is open and (rightly) unremarkable talk that Rightwing Councillors have been planning strategy with John Key himself.
Minister Of Commerce
The Mayor owed her election to her former role as a constituency Labour MP for 23 years. Less well known is her role as Helen Clark’s Minister of Commerce from 2002 (and subsequently Minister of Economic Development), an appointment which Wikipedia says surprised Mike Williams, a leading Labour Party insider. Dalziel was not known to be notably interested in matters financial or economic. Certainly her public persona has been as a mainstream and locally popular Labour politician, and while there was some surprise that Dalziel did not line up with the Labour Councillors, she couldn’t – at least not on the widely known evidence - be accused of inconsistency or expediency.
Her apparently orthodox Labour background probably helped her sell the idea that she was a middle-of-the-road pragmatist and the debt crisis was real. There is no logical connection between being short of money and needing to sell. Keep Our Assets Canterbury (KOA) has explained the several alternatives that make more sense. So, why the panic? The answer can be found not in Christchurch but at the Ministry of Economic Development (now called the Ministry of Business, Innovation and Employment [MBIE]) where Dalziel was central to the Clark government’s failure to mitigate, let alone reverse, neo-liberal policy.
When Dalziel headed the vital Parliamentary committee dealing with finance policy she picked Rob Cameron to provide advice. Cameron Partners (CP) are investment bankers, their business being about transferring public property to private owners. They’ve been central to a list of giveaways from the public realm to the privateers. This background might explain the early endorsement of Dalziel by the Canterbury business elites, a very conservative lot. They knew what the rest of us didn’t know.
In 2004 and 05 Dalziel’s Ministry reviewed financial products and providers, that’s the non-banking finance sector, which includes mortgage brokers, insurance brokers, investment advisers, financial planners and finance companies, the objective being to enable “a sound and efficient financial system; investment which encourages growth and innovation; (and) an environment which facilitates wealth accumulation”. Even as finance companies began to collapse, the Ministry reported that the “current regulation of the financial sector is not fundamentally flawed”. In 2006, after three of the companies had fallen with $370 million in deposits, a discussion document said that the “objectives behind the rules were not flawed”.
Crisis? What Crisis?
On Dalziel’s advice, the Clark government saw no problem with the activities that were shortly to cause the Great Financial Crisis (GFC). The language is instructive. Governments now devote massive attention to propaganda, to “spin”, with communications departments splashing our taxes on manipulation and distortion, yet in the whole buzzing Beehive no-one picked up that to say that the already collapsing system was “fundamentally not flawed” reveals a disturbing ignorance among the hugely salaried mandarins. None of them knew that exactly the same assurance, expressed by the same phrase, was so common in Washington and Wall Street in 1929, as the Great Depression began, that it has become a joke. To the economically and historically literate, that is.
It seems that neither the Minister nor any of her advisers, nor any of her PR spinners - no-one – has read about the Great Depression, so we can’t be surprised that (like the “austerity” Cameron outfit in the UK which might also be so woefully uninformed) they so readily repeat the same mistakes as in 1929. With blind ideology and ignorance to guide them, in 2008, the GFC year, the Government, now National, required financial service providers to register and to join a consumer dispute resolution service. “However”, as Jane Kelsey notes in her recent look at “The FIRE Economy” (my review of which is elsewhere in this issue) “almost anyone could register; only criminals and undischarged bankrupts were excluded per se”.
That same year, year zero, after Bear Stearns, in the US, and Northern Rock, in the UK, had fallen, a New Zealand Ministry task force was enjoined to develop a policy for expanding capital markets. It did not call for tighter oversight. That would mean using “regulation” - the “r” word. Also in 2008 a task force was set up “to identify key constraints and opportunities for developing the financial system. Second, they should identify and debate options to improve the system's performance. Finally, they were to develop a blueprint and action plan to make these changes happen” (this quotation and those that follow are from Kelsey).
Nine of the 15 members were from finance. The chair was Cameron. And although National now ruled, and money policy is at the core of National’s neo-liberal project, the chair of the committee was still Dalziel. Key knew she was a safe pair of hands. Cameron’s task force explained what it wanted to result, the overall aim being to switch the country from having lots of small companies to fewer big ones. To do this, to get rid of small businesses so that big business could get bigger, Cameron was into “improving the links between public and private markets by facilitating the development of more lightly regulated exchanges; encouraging partial listings of central Government-owned companies, and broadening the range of high-quality debt offerings on the market by increasing the availability of retail debt offerings from Government, local authorities and Government-owned businesses – including long-dated debt”.
Cameron wanted to “partially list central and local Government-owned companies; to investigate impediments to foreign-controlled financial service businesses (such as banks) undertaking partial listings of local subsidiaries in NZ, and to expand Government debt securities on offer, including longer-term debt, inflation-indexed bonds and foreign currency debt”. Presumably in order to encourage “new capital commitments to venture capital” by Government, Cameron wanted “greater clarity to protect property rights”. And just in case the message wasn’t clear, he put it another way: “There should be no expropriation of property rights without compensation”.
In modern NZ, with one of the strongest ethics of privatisation in the world, the idea that the Government might seize corporations is farcical. Cameron was signalling that he could be relied on for purist neo-liberal advice. His language here, and elsewhere, anticipates the tone of the Trans Pacific Partnership Agreement lobbyists. In 2010 an advisory group on “financial services exports” chaired, as always, by Cameron, included individuals who had previously worked for Hanover Group, Citigroup, Goldman Sachs International, Fay Richwhite, JP Morgan Chase and Lehman Brothers, all (as Kelsey notes) “organisations associated with the GFC or New Zealand’s financial controversies. The Cabinet documents acknowledged that ‘their current employers or businesses undertake activities that may benefit from any policy changes or funds domicile and associated activities’”.
Industry Capture, Vulture Capitalists & Hubs
As Kelsey remarks: “It is hard to imagine a starker example of industry capture than asking leading members of the finance industry to recommend how the Government should expand capital markets and regulate them”. The Cameron Report to CCC in 2014 spoke of the “rich opportunities” that awaited from the proposed asset sales. This echoes language his 2009 task force used: It was “important to take the time to stand back from the crisis and think about how we can use this as an opportunity to reshape our capital markets to better serve New Zealand”.
That was Cameron’s reaction to the GFC. Cameron is a shock therapist, a vulture capitalist, knowing that disasters, be they natural or social, are opportunities to grab more. What better chance would there be than a series of earthquakes in NZ’s second largest city? Existing public capital markets were thin and private capital and derivative markets underdeveloped. They needed to be larger. It was also bad that State and local government enterprises were not listed on the Stock Exchange.
If trouble were to arise, CP recommended, they could be handled through civil remedies and class actions. “By implication”, Kelsey adds, this means that “criminal liability should be removed”. At the same time as they were directing Dalziel in Christchurch, Cameron Partners were calling for NZ to become a financial “hub”. Few aspirations could be as badly advised as this. In 2014 the UK based Tax Justice Network (TJN), which has calculated that trillions of dollars have been robbed from the public purse, hidden away in tax havens, published “The Finance Curse”.
A “hub” in NZ would primarily be a device for enabling the country to become an accomplice in laundering the huge proceeds of billionaires such as drug dealers, organised crime, oil sheiks and Russian oligarchs. We would join Mickey Mouse outfits like Cyprus (remember its recent financial collapse) and Jersey (a British island), places where the influx of offshore cash has created notorious corrupt local elites. CP probably had in mind Singapore and Hong Kong, routinely listed – by Big Media in the neo-liberal world - as among the world’s “least corrupt” jurisdictions, but which the TJN calls “among the world’s biggest and murkiest tax havens”. CP would be assuming that NZ would join the club, these big players in the global finance game, so that we could yet again “punch above our weight” by emulating Switzerland or Luxembourg, but its more likely that we’d be one of the smaller offshore islanders, needing to compete by offering the billionaires more.
The increased rate of inequality in the neo-liberal world has been caused first and foremost by the financialisation of the economy. Among the major countries the UK is the prime example. The TJN has shown that the primacy of finance, based in London, is why Britain has “the worst social mobility in the Western world”. It’s why Scotland is alienated. It’s why the rest of the economy, starved of resources, is languishing. Big Finance rules. They call it “country capture” (see my review of “The Finance Curse”, in Watchdog 135, April 2014, http://www.converge.org.nz/watchdog/35/08.html).
If the British economy, many times bigger than NZ’s, can be skewed by the power of the banks, it’s inevitable that all the small tax havens, the “satellites” left over from the former empire - the “hubs” – will suffer more. Cameron wanted “to pick winners”, to make NZ an Asia-Pacific financial services hub, where offshores can set up trusts in NZ and be exempt from NZ taxes. This was a madness too far even for the Key government. I must apologise for repeating a quotation from the TJN, which cites an American academic’s accusation that Big Finance is waging a deliberate assault on society:
“Financialisation’s tactic is to load economies (governments, companies and families) with debt, siphon off their income as debt service and then foreclose when debtors lack the means to pay. Indebting Government gives creditors a lever to pry away land, public infrastructure and other property in the public domain. Indebting companies enables creditors to seize employee pension savings. And indebting labour means that it no longer is necessary to hire strikebreakers to attack union organisers and strikers… The aim is not merely to acquire land, natural resources and key infrastructure rents as in military warfare; it is to centralise creditor control over society”.
“Partnership” With Predators
The Cameron Report of 2014 to CCC appears to be a way to advance Cameron’s – and of course the present Government’s - repeated desire for local governments to “partner” with corporations. The port and airport are the obvious primary targets, but we can expect as yet unknown ambitions. All this means that Dalziel and Cameron saw nothing wrong with the behaviour of all the finance companies, either before, during or after the GFC, and as Mayor, Dalziel employed Cameron, her work partner since 2002 - the person who works in order to subvert and shrink democracy - to guide her Council. When KOA’s questions could no longer be ignored, Dalziel said she’d get a second opinion. That’s what you or I do if we get a tradie to do some work around the house. But when CCC was engineering a billion dollar coup against democracy it went back to the same outfit which had given it the inevitable prescription of privatisation. It went back to Cameron Partners.
Christchurch people have been told that they need to reduce debt. They have been told that the Council wants to ensure the long-term future of the city in the public interest by nurturing small business. Residents keep hearing about “recovery” and “resilience”. They were promised their ideas would prevail. Dalziel and Cameron are reversing all these ideals. They are secretly calling for piles of new debt to transfer power from the public realm, to be brokered by an industry which deals short-term in the interests of big private corporations. In the boardroom it’s about predation.