Archive for December, 2016

Look…no hands

happy-dustmenA garbage collection truck came down our street today. One guy driving and three fit, healthy men running behind, hoisting bins up to the truck then back to the kerb. A wave and bit of a smile as they did so. It’s Christmas week, I must put a little something in an envelope for them for a bit of Christmas cheer. Oh no! wait…..that was five years ago. Almost a lifetime ago. mechanical-armToday there was only one man driving the truck from which protruded a mechanical arm hoisting the bins off the kerb. And we all know that even the driver’s job will be gone in the next five years as driverless vehicles become a reality.

So what happened to that happy, energetic team of busy workers? Are they lying by themselves on their couch? Eking out their unemployment benefit to the detriment of their family’s well being? Getting less and less healthy and spending more and more time getting medical support? Getting more and more depressed as they cannot fulfil the dreams that they promised their children on the day they were born? And with helplessness comes frustration; and with frustration comes anger; and with anger comes violence. And with violence come the political platitudes from the opposition side of the House, regardless of which parties they are any particular year: “Someone needs to do something.” But the only something they ever do is shuffle countless millions of dollars between the various ambulances at the bottom of the cliff, depending on which way the political wind is blowing on any particular budget year.

We could blame the employer for putting profits ahead of people, but deep down we know that they live in a viciously competitive free market country. If they don’t take advantage of the mechanical / digital technology that they buy from overseas manufactures in order to collect refuse as cheap as their competitor, then they will simply go out of business. Then there won’t even be a job for them, their office staff and the mechanics.

Ironically, it was the fourth Labour Government that introduced deregulation and created this rampant, free market, dog-eat-dog system to New Zealand. Between 1935 and 1984, successive New Zealand governments had fiercely protected our businesses and their labour force from the competitive attacks of foreign companies. That included 20 years of Labour rule and 29 years of National rule. Not even the National Party tyrant, Muldoon, would bring in marketplace deregulation. But, under Labour’s Lange/ Douglas government, our workers became fully exposed to the competitive aggression of overseas suppliers who employed millions of low paid workers, women and  children working in horrific conditions, just so we could get lots and lots of cheap stuff. Overflowing trundlers were dragged around the Warehouse, the Warehouse where everyone gets more bargains in a year than they need for a lifetime. And once the genie was out of the bottle……. Well the next phase was that even the Warehouse, the Warehouse were not cheap enough as technology showed these overseas suppliers that they can bypass the local retailer and sell direct online. And if the duty/ gst portion of the purchase price is under $60, then the overseas supplier doesn’t even have to pay that. So then the young guy who lost his job and who started to shop online to make ends meet, suddenly finds his missus loses her job at the Warehouse.

David Lange certainly tried to reign in the beast he had unleashed, but it was too little too late. As political commentator Colin James wrote in his paper to the Stout Research Centre, Victoria University in 2004, “in late 1988 Richard Prebble and Sir Roger Douglas departed in high drama. But by then there was no way back: Lange was stranded in the hard glare of market economics and efficiency and his titular leadership died there in 1989.

The competitive marketplace took us into a state of manic consumerism. The masses demanded more and more cheap stuff like it was an addiction. The business people found it was cheaper to build robots than pay even the lowest paid humans. Read my words: current trends predict that, in China, 77% of jobs will be lost to automation within 20 years. And so today I saw what, twenty years ago I could never have imagined; one man in the cab of a truck operating a mechanical arm to collect household refuse. A social cancer was created by that fourth Labour Government, a cancer that targeted the very workers that the Labour Party  was established to protect.

Dog eat dog. It’s New Zealand Jim, but not as we knew it.

It happened in the USA as well. Now they have what they refer to as the “Rust-Belt States”. Do you think the inhabitants of those states don’t want revenge on the global free market? Just watch that Reality Pawn Shop show based in Detroit; it’s the most depressing show on TV. Do you think they can’t take revenge? They just voted in Donald Trump! And that was working people turning their backs on the Democrats and voting Republican. The equivalent of our working people voting National. They voted Trump because, although a billionaire capitalist republican, he promised he would protect America from the outside world. It was the rust belt states that saw Trump elected. Do you think they care if he was lying? They do not! Do they care that his election may bring the whole country down to the level of their sorry state? They do not. They have nothing more to lose!!!! It was how the French peasants felt when they rolled the guillotine out. It happened in Europe and its happening now in the new industrial zones throughout Asia. Mass unemployment is coming to a town square near you. Man the guillotines.

I am a believer that there is no point complaining without actually proposing a solution. Howling to the moon is a waste of energy. I am no economist (only got a C in Economics 101, might have been a C-) but even blind Freddy can see that, at government level,  we do need to protect our people from the cyber takeover. That we as a community need to go cold turkey 0n our rampant consumerism and think: lower volume, better quality; less reliance on machine-made and more balance for hand-made. And I think we need to change the tax regime to achieve this: balance less tax income from businesses with less tax expenditure on social welfare.

This is how I think it could work: currently payroll cost is a normal business expense that gets deducted from revenue before tax is paid. So effectively 28% of the wage bill is subsidised by taxation. But if, say 35% of the employee wage bill (non-managerial and staff unrelated to the employer) was deducted from their tax bill, then employers would be financially encouraged to employ more people at the hands-on end of their business and pay them a reasonable wage; particularly if, on the other side of the ledger, robot-workers were heavily taxed at customs. For government, more employment saves unemployment benefits; creates healthier lifestyles; increases social interaction; reduces demand on health services; people with busy lives create fewer social problems/ costs , including law enforcement.

That’s all ‘back of an envelope’ accounting so needs a bit of refinement, but I hope it’s enough to get the people in positions of elected social responsibility coming up with more and better ideas. Protecting our local industries from foreign aggression on one hand and ensuring meaningful work and fair wages for our people on the other, so that the disenfranchised in our community can once again contribute to our economy, earn their own money, provide for their families and restore their dignity. Full, sustainable employment should be the catch cry for the 2017 election year.

At government level we still have the opportunity of finding a peaceful solution with both major parties in effectively an embrace in centre ring. But history has shown, and countries in crisis around the world still show, ours is a fragile peace. It won’t take too many more families living in the powerless, stressed and violent conditions they are in today, before what happens in the homes today happens in the streets tomorrow.

And since it just doesn’t feel right giving a bit of Christmas cheer to a mechanical arm, why not drop a gift off at Women’s Refuge? There is never any more frustration-turned-anger than at this time of year when men are supposed to be able to give their children the best family Christmas ever. So there will be vulnerable and unloved women and children sheltering there over Christmas who really need a random act of kindness from the community.

 

 

 

 

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Power poles for the people

Well the report is out, the head has rolled, the fix is in. The saga of the rotting and dangerous power pole network operated by Dunedin City Council-owned Company Delta/ Aurora has come to an end.

Power Pole crashes in wind. Photo credit to Hamish McNeilly: Fairfax NZ LtdSTUFF

Power Pole crashes in wind. Photo credit to        Hamish McNeilly/ Fairfax NZ Ltd

Of note is that it was the Chairman of the company whose head rolled not the CEO, which is as clear an indication as you will get that this was not a management failing. The CEO was actually endorsed by the upper echelons as having done a good job in difficult circumstances. Which is spin- speak for: the CEO was just doing as he was ordered and had found the copy of the Board minutes to prove it. Damn his efficient filing system. Those minutes would have included a copy of the report highlighting the urgent need for a drastic increase in maintenance work on the power poles; that report was presented to the Board six years ago, in 2010; that was the year Dave Cull became Mayor. There was some splutter that the root of the problem was Delta/ Aurora having to contribute $29 million to the Stadium debt. But that payment would not have been necessary if Dave Cull had not committed a $24 million budget for his cycleway project; a budget that went into blowout phase from day one and, if it ever gets completed, will more likely nudge $100 million. If the cycleway does not get finished, then it will be left as a half-cocked disaster. Lose-lose.

The backstory is that, not long after first taking power, Mayor Cull initiated a total overhaul of the structure and personnel of Dunedin City Holdings (DCHL) the governing body overseeing all the Council’s commercial operations. The start of the process was the sudden decision to sell Citibus, one of the companies that DCHL governed. An urgent meeting of city councillors was called for a Friday afternoon; no agenda was advised, no pre-briefing papers offered. But Mr Cull obviously already had the numbers for his cause because, by the time they broke for Friday drinks, Citibus was on the market. After 100 years of history, the Mayor withdrew the City Council from all practical influence in the public transport service of the city in an informal afternoon meeting with not a hint of advance notice of the pros and cons for Councillors nor a consideration for public consultation with the owners – the ratepayers.

There were hints before the move that the City Council had a desire to take over the management of the whole public transport network from the Regional Council and ownership of Citibus may create a conflict of interest. Five years later there is not the slightest hint that Mr Cull was ever serious about that intent.

But that sale was only the start of the process. Soon after the whole Dunedin City Holdings board structure was overhauled. Heads rolled. Heads that had been very astute, in my opinion; certainly men that I would never try to bluff, nor would I ever dare turn up to a Board meeting and tell them I was prepared to compromise public safety to get the profits up. I would have walked out of such a meeting with a cardboard box full of my personal possessions.

At the time I was General Manager of Citibus. From a timing point of view, in terms of maximising company value, it was a very naive decision since Citibus was entering negotiations for a major contract. As part of the sale process, Citibus had to open its books to competitors who requested to go through due diligence for purchase. While the tender bid itself obviously would not be disclosed during due diligence, a lot of operational information had to be exposed. The tender worth over $7,000,000 over seven years was won by one of those companies that went through the due diligence process; they won the contract, from Citibus as the underbidder, by less than $1,000. Then they withdrew from the purchase process and brought their own fleet to town for the contract.

Mr Cull was very defensive about the sale in the press, claiming Citibus was  making huge losses.  In fact Citibus had no problem paying its bills and most certainly never required money from the ratepayers to top it up as was insinuated.

Citibus was structurally a very sound operation, well staffed, well resourced and providing a high standard of fleet, driving staff and maintenance staff. Citibus introduced a living wage policy for its drivers long before it became fashionable in these minimum wage industries. Every time we could muster up another million dollars we would invest further in new fleet and we made impressive progress in upgrading the fleet over the years.

The directors of Citibus set realistic levels of provision for depreciation to ensure that the standards of vehicle maintenance and replacement were never compromised. That level of depreciation meant that the books showed losses. But this was a ratepayer-owned company that set the bar high for all private bus companies to match and we focused on delivering high standards of service and safety to the ratepayers ahead of paper profits. But Mr Cull had a cycleway to build, in spite of the existing commitments to fund major projects like the stadium. He could not afford to risk a big rates increase so soon after being elected, so Citibus was sold after a single meeting on a Friday afternoon.

I can make no comment about Delta / Aurora management; I had absolutely no inside knowledge of their operation except that to note that during my time within the DCHL group of companies I never heard a bad word said about their CEO, Grady Cameron. I also know that the men who I faced in my Boardroom then were the same men that Grady faced in his.

But that all changed. The emperor emptied the seats around the Boardroom table and put his own people into them. He sought nationwide to bring his people from out of town. Sharp businesspeople. People who know how to squeeze a bit of extra profit out of a company when his worship might need it for the cycleway cockups and budget blowouts.

A few years later the power poles start falling over. Now we have to ring in the changes. But when you hear that ringing, Mr Cull, ask not for whom it tolls……

 

 

 

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