DCC public finance forum 12.8.14 (ten slides)

The ten powerslides presented by DCC group chief financial officer Grant McKenzie, as discussed at the public finance forum held earlier this month are available for download (see PDF below).

Figures might be, but the forum was advertised….

Public notices advertising the forum and the warm invitation extended by Cr Richard Thomson, chair of the Finance Committee, were unfortunately met with low attendance on the night. Few of the well-known vocal commentators on DCC’s financial position, or indeed, leaders of the Otago Chamber of Commerce, bothered to show. Those individuals lose a measure of credibility. Where were all the beleaguered ratepayers and residents? The local ‘interested’ accountants, economists, board directors, investors, and successful business people? Their apologies? Has everybody drowned with rising sea levels or been knocked from their bikes on the one-way? Blame Dave Cull.

Rob Hamlin and ‘JimmyJones’ did make the effort to be there, solidly plying their observations and questions in debate. Other members of the public also engaged. We didn’t hear the names of people who forwarded questions prior to the meeting, or what their questions were. Notwithstanding, the slides are the Council’s attempt to respond to issues commonly raised, in summary.

The first public finance forum was held on 27 November 2013. The second on 12 August was an opportunity to hear Grant McKenzie who arrived at the Council in January. He proves to be approachable, mild-humoured and self-effacing. Grant explores the expanded GCFO role ably supported by senior finance staff; his already onerous duties include the overlay of current fraud investigations, new systems for accountability and risk management, as well as the stadium review (due in September).

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[click slides to enlarge – scanned from forum handout]

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█ DCC Finance Forum (powerslides 1-10) (PDF, 18.6 MB)

For more information on DCC, enter the terms *finance*, *dcc*, *dchl*, *delta*, *cst* *dvml* or *stadium* in the search box at right.

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Other Reading – link supplied by Calvin Oaten
Sat, 23 Aug 2014 at 12:08 p.m.

An interconnected world was meant to reduce inequality – but that doesn’t seem to be happening.

### blogs.telegraph.co.uk August 22, 2014 13:18
Finance
Nobel gurus fear globalisation is going horribly wrong (technical)
By Ambrose Evans-Pritchard
David Ricardo’s Theory of Comparative Advantage has broken down after 200 years, or so I learned at the Lindau forum of Nobel laureates in Bavaria. The theory published in 1817 has been a guiding principle of free trade, taken as a given by every student of economics in the modern era. It has served us well, but just as Newton’s theories ran into limits and were overtaken by Einstein’s relativity, comparative advantage no longer explains the world. Under Ricardo’s model, inequality was supposed to narrow within countries as globalisation accelerated exponentially in the Nineties. Instead it is getting wider. The Gini coefficient measuring the spread between rich and poor is narrowing between countries, but is widening almost everywhere within countries, leading to a corrosive concentration….
Read more

● Ambrose Evans-Pritchard has covered world politics and economics for 30 years, based in Europe, the US, and Latin America. He joined the Telegraph in 1991, serving as Washington correspondent and later Europe correspondent in Brussels. He is now International Business Editor in London.

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Posted by Elizabeth Kerr

*Images: (from the top) Facebook – yahoofinance (advert); goodcars.co.nz – Finance your next car (advert); nzvf.co.nz – New Zealand Vehicle Finance (advert)

Unhappy, ruined #overpoweredbythugs

Received from Anonymous
Sat, 19 Jul 2014 at 10:11 a.m.

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Posted by Elizabeth Kerr

MarketOracle (UK): Four Horsemen

“Four Horsemen is a breathtakingly composed jeremiad against the folly of Neo-classical economics and the threats it represents to all we should hold dear.” –Harold Crooks, The Corporation (Co-Director) Surviving Progress (Co-Director/Co-Writer)

RenegadeEconomist. Sep 13, 2013 (98:54)

### marketoracle.co.uk Apr 13, 2014 – 05:53 PM GMT
Politics / Social Issues
Four Horsemen – Top Economists Explain the Source of Our Economic Crisis
By: Videos
FOUR HORSEMEN is an award winning independent feature documentary which lifts the lid on how the world really works. As we will never return to ‘business as usual’ 23 international thinkers, government advisors and Wall Street money-men break their silence and explain how to establish a moral and just society.
FOUR HORSEMEN is free from mainstream media propaganda — the film doesn’t bash bankers, criticise politicians or get involved in conspiracy theories. It ignites the debate about how to usher a new economic paradigm into the world which would dramatically improve the quality of life for billions.

“It’s Inside Job with bells on, and a frequently compelling thesis thanks to Ashcroft’s crack team of talking heads — economists, whistleblowers and Noam Chomsky, all talking with candour and clarity.” –Total Film

Source: http://www.marketoracle.co.uk/Article45199.html
The Market Oracle is a Free Daily Financial Markets Analysis & Forecasting online publication.

Watch at YouTube: http://www.youtube.com/watch?v=5fbvquHSPJU

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Posted by Elizabeth Kerr

The End of The Golden Weather?

Received from Calvin Oaten

Are we coming to the end of the ‘Golden Weather’? I say this, not in the meteorological sense, but rather in the sense that perhaps our society and its economic construct might be on the verge of a catastrophic change. Why? Well it seems that many signposts are pointing to an approaching collapse of the present model of the economy as constructed. This requires constant growth in order to sustain an ever increasing social budget. That in turn requires full or near full employment, a buoyant consumer market and a consequent ever increasing supply of energy and raw materials. None of these are finite, neither in New Zealand nor the Planet. The current model has, in order to foster this growth, taken upon itself to ‘jazz up’ consumption by cultivating a culture of instant gratification, fueled by intensive marketing, planned obsolescence, and last but not least, very easy credit.

This easy credit has been promoted heavily by governments, local bodies, banks, retailers and all manner of financial institutions. This has brought about a dynamic shift in society’s attitude to debt. It has encouraged folk to spend beyond their immediate ability, to the point where their indebtedness is assuming dangerous proportions. This is manifested by ‘economic bubbles’ forming, none more so than our own housing market. The people in the industry, real estate companies, banks, financial institutions all rev up the market by convincing people that property is a great investment which will always hold its value. But we only have to look at Ireland, the UK, the USA, and lately Australia to see the lie of this claim. Property can always go down just as it can go up. Take a look at Japan. Its property bubble burst in 1989 and has never recovered. Off by as much as 70-80%.

The result of all this is a hugely indebted developed world, including NZ. What caused this to happen? It seems to date back to around 1971, when then President Nixon was experiencing difficulty in financing the Vietnam war. At that time printing of money was constricted with the dollar being pegged to what is known as the gold standard. This meant that the amount of currency in circulation was limited by how much gold was held by the federal government. By leaving the gold standard the federal treasury was free to set its own parameters and to print accordingly. That resulted in a vast increase in all paper currencies around the world with a burst of inflation throughout the 1970s and 1980s.

Historically, all monies eventually revert to the mean, and this has always been to a standard unit of value, GOLD. Throughout history, even before Roman times this has always prevailed. Trust in paper currencies sooner or later fail and there is a collapse.

We’ve seen it in modern times with Germany (in the 1920-30s), Argentina (several times), Greece, and very recently Iceland. The USA federal government has just breached its self-imposed debt ceiling of $16 trillion. If anyone wonders what $1 trillion represents, look at it as a time equivalent. Let’s say one was to repay $1 trillion at the rate of $1 per second. Working 24/7, 360 days per year it would take “32,000 YEARS”. So multiply that by 16 and it is easy to see that this debt will never be repaid. Worse, it is growing as we speak.

Those with the power are unbalancing the fairness factor.

This reckless attitude has permeated into the human psyche and we see evidence of it here in little old Dunedin. Our society has degenerated into a selfish me world. Those with the power are unbalancing the fairness factor.

Take remuneration for example, fewer and fewer people are taking a greater share of the economic cake, and are quite blatant about it. Wealth is flaunted while many are moving into poverty. Financial rewards are all out of line with production balance.

It is noticeable that many of the highest remunerated are drawing their rewards from the public’s purse, without so much as a blush. Here in Dunedin we have a local MP tabling a bill in Parliament seeking a minimum wage of $15 per hour. This, on a 40-hour week equates to $600 per week. It would be up from $13.50 per hour or $540 per week. This is being vigorously opposed by many. But on the other hand we see public servants and others receiving enormously higher rewards. We have seen several instances in the last few weeks.

The retiring CEO of the Otago Museum with a salary of $310,00 per annum (pa) or $5,961 per week (pw). The DVML CEO receives $250,000 pa or $4,807 pw. The council owned company Delta, where the CEO is paid $380,000 to $390,000 pa or $7,500 pw. 41 additional staff paid over $100,000 pa or $1923 pw. Our own DCC CEO is rewarded with between $340,000 and $360,000 pa or $6,730 pw. The Vice-chancellor of our University of Otago receiving over $500,000 pa or $10,000 pw. Our DCHL group of companies last year paid its 7 directors $725,444 for what would optimistically involve about four weeks equivalent work each. This is repeated up and down the country and if anyone thinks this is sustainable they have to be in “cloud cuckoo land”.

On our local public scene we have seen the city’s debt burgeon from $212.486 million as at 30 June 2005 to $602.008 million at 31 December 2011. We now know that this has considerably changed for the worse, since. The stadium is a financial disaster, in serious damage control, the Otago Settlers Museum is over $40 million, the Town Hall/Conference Centre is over $50 million, and we are looking at somewhere near $100 million for the Tahuna upgrade. No-one in office seems to either understand, or simply passes it off as someone else’s problem.

We elect these people to conserve and look after our treasure, and what happens? It just goes from bad to worse, with all manner of rascals leaching off us in different ways. If only someone in office had the intestinal fortitude to stand up and say, “enough, this has got to stop”. But sadly, it gets back to that culture I mentioned. “I’m OK Jack”, never mind anyone else.

Is all this sustainable? Ask yourself. We don’t know when the situation will break, but it is certain that it will. The whole developed world is awash with debt and frantically creating more by the day, in a desperate move to save the situation. But it is pretty simple, how can more debt solve a chronic debt malady? It is pretty much synonymous with supplying a chronic alcoholic with more whisky. We are in for very interesting times.

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Posted by Elizabeth Kerr

Dunedin and the southern region’s business future

THE CLIMATE
(we’re sluggish, indebted and unproductive, working long hours for unremarkable results, there’s little or no ability to pay all our living expenses even if we can afford a mortgage — few Dunedin businesses are on the global map, very few of our citizens invest in ‘research and development’ or know what export truly involves — there is splendid isolation, no cohesion, and a striking absence of astute regional leadership)

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Our economy is drifting in very dangerous shoals. The only plausible avenue to sustained growth will be export-led. The high value of the dollar precludes this. Unless we act now the painful process of rebalancing our economy will be forced upon us at some future stage. At that point the pain will be even greater.

### ODT Online Fri, 4 May 2012
Opinion
Boosting export sector only way out of malaise
By Peter Lyons
We are living in a world of zombie economies including our own. These economies are characterised by high debt levels, stagnant or shrinking economies and policies of austerity that offer no solution. Finance Minister Bill English is promising a budget of little hope. He offers austerity almost with relish. It fits his ideological bent towards smaller government. A further unexpected $1 billion budget shortfall precludes any positive spending initiatives. Meanwhile the governor of the Reserve Bank wrings his hands over the high New Zealand dollar which is shredding our export sector. He has maintained this ineffective stance for a number of years.

Positive economic management appears beyond the scope of our policy makers.

New Zealand has been in or on the verge of recession since 2007. Most of the Western world has followed a similar path.
Read more

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LOCAL SENSELESSNESS
(where the ad hoc stadium spend has crippled the council, all the time missing the bigger outlook of how to serve the South Island’s contribution to export-led economic recovery — oh hey, the council’s junior bureaucrats and mayor say let’s play dress-ups with a few central city warehouses and six suburban amenity centres — the Dunedin City Council has to undergo major attitudinal and structural change)

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Apart from the ongoing clusters, there has never seemed to be any straightforward strategy to push economic growth in the city or the region.

### ODT Online Sat, 5 May 2012
Planning for future of Dunedin Inc
By Dene Mackenzie
Dunedin’s economic development draft strategy will be released on Monday. For the first time, the document will be signed off by stakeholders representing diverse areas of the city. There are several things business editor Dene Mackenzie hopes will be included in the new 10-year plan. For about 25 years, Dunedin’s economic strategy has doddered along. Past plans have included Dunedin City Council officers travelling to visit large-scale manufacturing enterprises in a bid to persuade them to establish themselves within the city boundaries, through to catchy slogans and billboards at airports. During that time, the city has seen its large-scale manufacturing base shrink with the loss of thousands of jobs.

Reviews of city council funding strategies need to be undertaken and the strategy must be inclusive of the needs of the business community. It seems that, often, funding decisions are applied on an ad hoc basis, when better value could be extracted from ratepayer funds.

More than 90% of Dunedin businesses are said to have no intention of exporting in the future and the city captured only 2.5% of the country’s recent migrants. That must change for the city to grow and prosper.
Read more

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Posted by Elizabeth Kerr