Business

Free trade deal done with South Korea

While the left wing were marching in the streets opposing the TPPA another free trade deal has snuck under their radar.

New Zealand has completed a free trade deal with South Korea.

New Zealand and South Korea have concluded a free-trade agreement that’s expected to cut $230 million of export tariffs in New Zealand’s sixth-largest export market, including $65 million in the first year.

The deal, which was announced on the sidelines of the G20 Leaders’ Summit in Brisbane, will initially eliminate tariffs on 48 percent of current New Zealand exports, with duties largely eliminated within 15 years. Two-way trade between the countries is worth about $4 billion.

South Korea has said it also aims to conclude FTAs with China and Vietnam before the end of the year, after agreeing recent deals with Australia and Canada. New Zealand is actively seeking such agreements after trade with China soared since an FTA was inked in 2008. The Korean FTA marks Prime Minister John Key’s first bilateral deal since being elected leader.

The Korean talks, begun in 2009, have previously stalled amid Korean concern about the impact of New Zealand agricultural exports on domestic producers.

“It has been a long, hard agreement to reach,” Key told reporters in Brisbane. “It’s a high quality deal. It was always going to be a tough negotiation but we have got ourselves now back into a level playing field with those countries that compete heavily in the Korean market and I think a lot of New Zealand industry will be happy about the outcome.”

Tariffs slated for elimination include a 45 percent rate on kiwifruit, 22.5 percent charged on sheep meat, a 40 percent levy on beef and an 89 percent tariff on butter.

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Government clamping down on wrong sort of bludgers

The other day the DomPost ran a piece on corporate welfare.

I’ve only just now had time to blog about it.

Spongers and parasites the lot of them. While decent Kiwi battlers get stuck in and work hard to earn their keep, this bunch are always on the take for someone else’s tax dollars.

Government programmes are supposed to be there to help the less fortunate – a safety net for the needy. But there are always a few who think they can play the system and take the rest of us for mugs. Millions of dollars goes to waste on these buggers while kids go hungry. It’s a bloody disgrace.

Chalkie reckons it’s time we stopped pussyfooting around with these companies and gave them a short, sharp shock.

You want examples? Chalkie will give you examples.

Chalkie does give examples, loads of them and lots of detail in the piece but below is the conclusion.    Read more »

Corporate bludgers costing Kiwi households up to $800 per annum

welfare

Bludging is rampant in NZ society.

But it is corporate bludging that is most outrageous.

And it is costing us a pretty penny. The Taxpayers’ Union has released a new report into corporate welfare and bludging.

The Taxpayers’ Union has launched new a report, Monopoly Money, which examines the cost and case for New Zealand’s extensive corporate welfare programmes. The report follows recent comments by TradeMe founder Sam Morgan, who questioned the Government’s corporate welfare programme, despite having been involved in companies that have received grants in the past.

The report, which examines the cost of corporate welfare examines government spending since the 2007/2008 budget, shows:

  • Since National took office, corporate welfare has cost taxpayers $1-1.4 billion ($600 – $800 per household) per year
  • If corporate welfare was abolished, enough money would be saved to reduce the corporate tax rate from 28% to 22.5%
  • If applied to personal income tax rates, the saving would allow the 30% and 33% income tax rates to be lowered to 29%
  • Alternatively, the 10.5% rate (applicable to the first $14,000 of income) could be reduced to 7%.    Read more »

Labour finds some bludgers it doesn’t want to give more money to

Labour usually think they can win power by giving away more of other peoples money.

They try to out bid National to win votes. Usually chucking mountains of cash and any bludgers who simply puts their hand out.

This election they have come up with a slightly different approach.

They are making irrigators pay for their own schemes rather than making the rest of us pay for them like the socialists in the National Party want us to do.

“There are also changes proposed to the funding of new irrigation schemes. Labour proposes withdrawing taxpayer support for new schemes and will instead recycle the funds raised by the charge on freshwater into that support.

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The ultimate example of the perils of dealing with second tier financiers

No matter how well heeled one is, there can often be a time when a second tier financier is required to bridge the funding gaps the normal trading banks won’t.

Our main banks are conservative with a capital C but in a twisted manner. They take enormous risks funding home owners into mortgages that at times are greater than 95%. But when it comes to property development they will generally only fund upto 70% of the total costs and they expect to be the last cab off the rank but first ranking – reducing their risk exposure to almost nothing.

Developers often undertake huge projects. Hardly any developer will sit on millions just to plug into a development when logic persuades them to invest their equity.

That ultimately leaves the necessity of dealing with second ranking funders. The types of which existed in spades before the GFC when most in our country were wiped out.

Most second ranking finance companies are scoundrels and owned by private individuals. Half the time the Modus Operandi is to screw the developer and the financiers look for any opportunity to pull the rug on unsuspecting developers.

Hardly a surprise to see this developer have the embarrassment of  having a trick played by a financier in the public domain. What is most interesting in this instance is that the developer has settled the matter which clearly signals he had no issues with finance and more clearly signals that the financier was the issue.

Tony Gapes is set to take back control of New Zealand’s most intensive affordable housing project after receivers last night confirmed the property developer has settled a company debt.

Some 420 apartments and townhouses are planned for the Springpark estate on a 10.5ha site in Auckland’s Mt Wellington. The first stage is expected to be completed next year.

Springpark is seen as an affordable homes project, with townhouses in stage one priced from $399,000 to $554,000. Most have already sold.   Read more »

Sin taxes and stealth taxes affect the poor more

All sorts of people are proposing taxes on sugar, fat and other supposedly bad things.

They are modelling their taxes on tobacco taxes without thinking through that in the case of tobacco it is the smoker who pays With sugar taxes it will be everyone who pays and the burden for these stealth taxes falls disproportionately on the poor.

Chris Snowden explains this very well in this video:

[T]he IEA’s Director of Lifestyle Economics Chris Snowdon examines the extent of the burden of indirect taxes and government sin taxes on the poorest groups in society and how these have changed over time. This film is an excerpt from a recent IEA panel debate event on the ‘Cost of Living’ crisis, in which Chris was outlining the findings of his recent paper ‘Aggressively Regressive’.

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An insiders view of bankruptcy and insolvency in NZ

A reader emails:

Hi Cam

I read your blog from time to time and also tend to pick up pieces you run on insolvency type issues such as the one you ran recently titled “Bankruptcy is a Joke.”

I am in my 50s and have pretty well been part of the insolvency industry in NZ since the day I walked out of Uni all those years ago. I thought I would post a few pieces to you on insolvency to explain how it works and why we have so many issues in this area. I will also proffer some solutions, one of which would save the government money, direct public insolvency resources to better use and tidy the industry up a little

In the big picture insolvency procedures are critical to a capitalist economy. The business and consumer cycle in its simplest form has birth (of a business or a consumer) their life and their death (for the consumer not their literal death but their financial death). Insolvency is the ailment that leads to death. Insolvency procedures are in place to clean up the bodies and bury them. If you don’t clean up the bodies you end up with a stinking mess. At its heart it is the realisation of the assets that are left and a sharing of the proceeds of those assets amongst the creditors pro rata.

In this piece I will discuss liquidations. I will follow up later on bankruptcy and the use of trusts. There are 3 common ways a company can be placed into liquidation. By a shareholder resolution, by its board if the constitution allows (rare) and by an application to court usually by a creditor. With shareholder and board appointments the appointers choose the liquidator and if they consent before hand they are appointed. With a court application the petitioning creditor can seek consent from a liquidator to take the appointment. If no liquidator consents to the appointment then by default it goes to the Official Assignee. The Official Assignee also appoints themselves to liquidations of companies controlled by bankrupt shareholders.

As a general rule you can have confidence in private liquidators appointed by the court. Why? These liquidators have gone in at the request of a petitioning creditor and sometimes have an indemnity for fees. They are hardly going to bite the hand that feeds them. They are also less likely to favour the shareholders or directors over the creditors. At worst they might be professionally out of their depth and miss asset realisation opportunities. In some cases despite court appointment they just don’t do their job properly. But as I say this is rare in court appointments. If you scan public notices or the Gazette the bulk of court applications and appointments are on the petition of IRD. IRD has its owns liquidators in high profile firms and some others around the more provincial areas. These liquidators are as a general rule highly experienced and do a good job.

There has been a trend over the last few years for IRD appointments to go to the Official Assignee. This can only happen if IRD’s preferred liquidators do not consent to take the liquidations or IRD does not bother to ask them for a consent to be liquidator. I suspect the preferred liquidators are picking and choosing leaving the rest to go to the Official Assignee.

By far the bulk of liquidations in NZ are voluntary appointments by shareholders. 75% of shareholders can vote to put a company into liquidation and appoint a named liquidator. If the liquidator consents to appointment then they are appointed.

Why do companies go into voluntary liquidation? Some do so because they no longer have a purpose to exist. The business has been sold or ceased, creditors have been paid (or funds are there to pay them). These are usually solvent liquidations and a tidy up. They also allow a distribution of capital back to shareholders tax free. Other reasons are that the shareholders just come to the realisation that the company is insolvent and needs to go. There is not always huge creditor pressure it is just the right thing to do. Then there are voluntary liquidations that occur because a creditor is heading towards liquidating the company. If you look at the stats in the Gazette IRD is the petitioning creditor in the bulk of liquidation applications. However, there are some other organisations that apply a zero tolerance policy to debt collection -” if you don’t pay we will liquidate you.” That sends a good clear message. Unfortunately for most day to day creditors the cost benefit of liquidating debtors does not stack up and so they leave it to others usually IRD.

A stat demand is in effect a test of insolvency. When a creditor issues a stat demand if you don’t meet the debt or dispute the debt the company is deemed to be insolvent. The next step is to apply to liquidate on the basis that the company cannot meet its debts as they fall due.

Many companies at this point go into voluntary liquidation. Why? There are a number of reasons. Dealing with a failing company is stressful. Just biting the bullet and going voluntary is a sensible option. Having a liquidator of your choice appointed at your cost can avoid the harder scrutiny of a court appointed liquidator. And, in some cases the the voluntary liquidation regime provides an avenue to spirit assets away or allow transactions that have occurred in the 2 years prior to liquidation to go unchallenged. It can also shield directors from banning orders and other remedies for creditors under the Companies Act and other legislation.    Read more »

Dobbing in rorting ratbags

Finally someone ready to take their head out of the sand to attempt to address the cartel behaviours of the construction material suppliers.

Anne Gibson reports:

The Commerce Commission is so concerned about construction industry cartels, price-fixing and bid-rigging that it has launched a website calling for whistleblowers.

Kate Morrison, the commission’s competition general manager, said the site -construction.comcom.govt.nz – went live partly as a result of Canterbury’s rebuild but also Auckland’s busy building sector.

“It is widely acknowledged internationally that corruption, fraud and anti-competitive practices, for example price-fixing, bid-rigging and market sharing, occur after natural disasters.”

And it wasn’t just Canterbury; rorts could be widespread in other parts of the country.

“The idea for a website arose from our work with the sector in the last few years. We saw a need for a user-friendly guide specifically tailored to the needs of construction businesses and workers to help them understand and comply with the laws we enforce.”

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Simon Bridges mans up – Kicks cartels like BSC to touch

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Credit where credit is due.

Today Simon Bridges has announced that he is sorting out the mess created by Labour and is giving Kiwi companies the chance to operate on a fair and level playing field when it comes to government procurement/tenders.

In a release titles Improvements to Procurement Rules, Bridges says;

“The change means suppliers of cleaning services will no longer be required to join and pay for membership to an industry association to contract with Government,” says Mr Bridges.

“Instead, the Government will be able to contract with all suitable suppliers of cleaning services and award contracts on the merit of tenders.

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Oh dear, sounds familiar here too

Coles

I’ve forgotten how many weeks it’s been for Countdown’s PR mess thanks to Shane Jones’s exposing their mafia stand-over tactics against Kiwi suppliers.

Now we see Australian supermarket giant Coles up s**t-creek without a paddle.

The Australian watchdog the ACCC has fired a 50cal Gatling gun against this supermarket for similar tactics Countdown is under the pump in New Zealand for.

“The ACCC alleges that in relation to 200 of its smaller suppliers, Coles required agreement by the supplier to the rebate within a matter of days.  If these suppliers declined to agree to pay the rebate, Coles personnel were allegedly instructed to escalate the matter to more senior staff, and to threaten commercial consequences if the supplier did not agree.  The ACCC alleges that, in a number of cases, threats were made when suppliers declined to agree to pay the rebate.    Read more »