Government needs to shake up insolvency practice

The NBR had a great article on the weekend about the slow burning?Insolvency Practitioners Bill. Written by?Murray Tingey, David Friar and Wayne Hofer from Bell Gully it highlights why there needs to be some controls and licensing around insolvency practitioners.

More than two years after the Commerce Committee reported back on the Insolvency Practitioners Bill, Parliament took up the second reading of the Bill on September 26 ? the next step in what has been a long and protracted process.

Under the current law, the restrictions on who can be an insolvency practitioner (such as a liquidator or receiver) are limited.? You must be over 18, not bankrupt or subject to the Mental Health Act, not related to the company, and not have a dishonesty conviction in the past 5 years.

There is no requirement that the practitioner have any minimum skills, qualification or experience, or even any requirement that the practitioner live in New Zealand.? There are also difficulties in enforcing the requirements as to who can be an insolvency practitioner. ? Read more »

Len Brown’s out of control borrowing and spending

Policy Parrot says:

A health check of Auckland Council finances by Cameron Brewer should make rate payers develop sweaty palms.

Debt ceilings have risen to 275% and Long Term Plan have seen an increase to forecast debt of another half a billion dollars.

Auckland Council is out of control on spending. As Brewer points out the Coucil debts are going to possibly spiral into a dangerous and unaffordable burden if and when low interest rates increase.

And what of internal debt? Council loans itself money internally on short term interest free loans which it is understood are typically not repaid but perpetually renewed annually to avoid reporting on the balance sheet. Short term loans don’t require Council to report them as debt. The clever trick is to therefore renew these loans each year by recording a repayment and then a new loan.

Smoke and mirror accounting is not just a feature of Ponzi schemes and finance companies!? Read more »

Is Wongaland between Wogistan and Bogo Bogo Land?

We have heard about Wogistan and then Bongo Bongo Land, but what on earth is Wongaland?

Britain has an “Alice in Wongaland” economy in which people are taking out payday loans and raiding their savings to fuel shopping sprees.

Retail figures, published by the Office for National Statistics this morning, are expected to show that people are returning to Britain’s High Streets.

Experts have said that the warm weather, increased consumer confidence and the “feel good factor” created by the Royal Wedding stimulated growth.

However Ann Pettifor, of Prime Economics, warned that the improved figures were fuelled by debt and will ultimately prove to be “unsustainable”? Read more »

Auckland Council pays interest at $1 million per day

The?Auckland Council 2013 Pre-election Report?(PDF 477KB) makes for sobering reading. Especially Page 6.

Here, the CEO’s report lists the Council’s debt parameters including the fact that now, and over succeeding years Auckland’s borrowings amount to “Net interest on Council debt at 20% of annual rate revenues”.

councildebtNow that’s a lot of dosh and in understandable terms, given that current debt totals around $6 Billion, at a 5.75% interest rate this is an interest payment to the banks of just under?$1 Million per day. Yes, every day. ?? Read more »

Cry Baby of the Week

Cry Baby:?Teresa Fesuiai and her husband



The incident: In 2003?Teresa Fesuiai and her husband borrowed $819 for pay for some new car tyres. They then went back to the lender and borrowed more money…six more times to pay for?for family events, gifts and other expenses.

They then consolidate their lending with a loan of $18,639 to settle the existing total and a $1000 cash advance.

The Fesuiais make regular payments until March 2007, and manage to pay off $23,000. And then they stop paying.

They are then pursued by debt collectors, lose a court case and have to pay costs associated with the collection efforts. They are now facing losing their house to settle the debts. ? Read more »

Axe interest free student loans says Brash

Don Brash has suggested the government axe interest free student loans in order to assist in paying for the?Christchurch?re-build.

Former National Party and ACT leader Don Brash says the Government should use the increased cost of the Christchurch rebuild as an excuse to ditch interest-free student loans.

Prime Minister John Key yesterday said the estimated cost of rebuilding the quake-hit city?was now $40 billion, up from $30 billion in December. The direct cost to the taxpayer has been bumped up by another $2 billion, but Mr Key said this wouldn’t impact on the Government’s plan to get the books back into surplus by 2014/15.

Speaking on Firstline this morning, Dr Brash said the last Labour Government introduced “a number of very unfortunate spending programmes” which should be cut back.

“National criticised those? but has left them all in place,” he says.

“You’d think with the Christchurch earthquake costing the Government itself an estimated $15 billion, they would have used that to explain to New Zealanders why some of those programmes have to change.”? Read more »

Richard Meadows responds

Earlier today I posted about student loans and why interest free student loans need to go. The author of the source article has emailed a response.

For whatever reason my comments are not being published on the blog – I would be surprise if you censored my mild response so perhaps there’s some glitch. [WO: It was a glitch, comments are now enabled]

Re:student loans. Your post is a bit of a misfire – we seem to hold similar views.

I have written extensively about the student loan scheme and concluded that there has to be some kind of interest rate reintroduced.

I urge you to read this previous article which I linked to in the one you have attacked:

Here’s a sample quote:

“Students have now been sucking on the election lolly for more than six years. One thing’s for sure – it will be a bitter pill to swallow.”

I myself have a reasonable sized student loan and would be perfectly happy to pay interest on it.? Read more »

That crazy Bernard Hickey

Wow, what a guy.

Fresh from telling anyone who’ll listen that NZ’s biggest problem is its addiction to property, Bernard Hickey is now telling punters to get in quick to borrow against their home.

It seems that Esteemed Bill English (or Wiremu Pakeha as he is known as in Tuhoe) and the Reserve Bank is soliciting feedback on Loan value ratios, or LVRs.

This means that banks may not be able to loan more than a certain amount on a home, maybe 80%. (You will remember in the property boom 5-10 years ago, you could get 105%, because you needed a plasma TV to go with your Grey Lynn villa).? Read more »

About time student loans thieves were targeted

Finally, the government is going to start tracking down student thieves who have absconded without honouring their debt repayments on student loans.

The Government plans to hound student loan holders who have gone overseas leaving big debts behind.

Australian-based borrowers in particular will be targeted, as the Inland Revenue Department increasingly uses legal action or debt collectors to claw back money from the most reluctant payers.

Overseas-based borrowers are responsible for 80 per cent of overdue repayments, which amounted to $418 million in October.? Read more »

On Corporate Bludgers

Bludgers of any type are odious, but none?more-so?than corporate bludgers:

Consider the difference between Silicon Valley entrepreneurs, who are taught to ?fail early and often,? and large corporations that leech off governments and demand bailouts when they?re in trouble on the pretext that they are too big to fail. Entrepreneurs don?t ask for bailouts, and their failures do not destabilize the economy as a whole.