Taxpayers’ Union – advocates or activists?

The Taxpayers’ Union has been a controversial player in New Zealand politics, given those who are involved (from the right of politics).

Their self-description on Twitter:

We’re the voice for Kiwi taxpayers in the corridors of power. With  and our 36k members, we fight for Lower Taxes, Less Waste, More Transparency.

But the causes they promote or oppose suggests that their focus is rather narrower than “the voice for Kiwi taxpayers”.

Their reaction to this article suggests a certain sensitivity to criticism – Newsroom: Tobacco ties undermine Taxpayers’ Union

“Here at the Taxpayers’ Union, we are no defenders of ‘Big Tobacco’ or its lobbyists.”

Jordan Williams’ words, in the foreword to a 2016 report on the impact of tobacco taxes, have a certain irony in light of his organisation’s financial ties to British American Tobacco.

In many ways, news of the tobacco giant’s “corporate membership” of the Taxpayers’ Union (for an undisclosed annual fee) should come as little surprise.

Since its inception in 2013, Williams’ organisation has consistently opposed measures designed to regulate or reduce the use of tobacco, such as the plain packaging law and the annual increases to excise tax.

Add in its ‘Clear the Air’ campaign for lighter regulation of vaping and other e-cigarette products – a sector in which cigarette companies themselves now have a large stake – and the alignment of beliefs seems clear.

Does that mean that Williams and company are mere stooges for hire, on offer to the highest corporate bidder?

Not necessarily (although the group’s most vociferous critics would surely beg to differ).

Egregious lack of transparency

British American Tobacco may pay its dues to the Taxpayers’ Union not to ensure it would take the party line against tobacco controls, but because it already shared those views as a philosophically “free market” organisation.

And the group’s argument about the regressive impact of tobacco taxes – that they impact the poor disproportionately – is one which carries some weight.

There would be value to some voters in an organisation which lived up to the Taxpayers’ Union motto of “lower taxes, less waste, more transparency”.

However, it’s in the area of transparency where the organisation most egregiously fails.

None of the numerous press releases and reports on tobacco put out by the Taxpayers’ Union make even a passing reference to the group’s funding from a cigarette manufacturer.

A Taxpayers’ Union spokesman pooh-poohed the suggestion of disclosing conflicts of interest, claiming doing so would “distort people’s perceptions of our work” given its many donors.

That’s an argument that doesn’t hold water, given the high standards to which the organisation is willing to hold politicians (take its criticism of Associate Transport Minister Julie-Anne Genter for the awarding of transport contracts to her partner, despite her lack of involvement in the decision-making process).

The organisation’s spokesman suggested taxpayer-funded entities had to be held to “a special standard” – but surely a group seeking to enhance government transparency should be purer than pure.

They should practice what they preach on transparency.

Also apparent is their interest in issues that seem to be straying somewhat from the interests of “Kiwi taxpayers”.

A few days ago:

This sort of general anti-government stance is common from the Taxpayers’ Union.  They look more like activists with vested interests in certain political outcomes rather than general advocates for reducing Government costs. This probably doesn’t surprise any Kiwi taxpayers.

Anti-competitive tobacco marketing tactics alleged

Despite significant reductions in the number of people smoking tobacco in new Zealand, and the increasing restrictions on marketing and escalating prices due to annual tax increases, the tobacco market is still worth $2.5 billion a year.

Market share:

  • British American Tobacco (New Zealand) – cigarettes 65%, roll-your-own 63.7%
  •  Imperial Tobacco New Zealand – cigarettes 23%, roll-your-own 31%
  •  Philip Morris (New Zealand) – cigarettes 12%, roll-your-own 5.4%

In 2016  government received a total of $1.7 billion in duty on tobacco sales.

About 605,000 adults smoke 2 billion cigarettes a year in New Zealand. That’s an average of about 3300 cigarettes per person per year, an average of 9 cigarettes a day, at an average cost of about $4,000 per year.

A statement of claim by Philip Morris that alleges anti-competitive marketing practices has been made public, with a significant number of redactions. However an unedited version had already been revealed.

Scoop Businessdesk: What big tobacco didn’t want you to read

Philip Morris (New Zealand) is suing British American Tobacco (New Zealand) in the Auckland High Court, alleging its larger rival is breaching the Commerce Act in the way it ties up retailers.

They want to publicise the dispute but leave out details that show the lengths tobacco companies will go to protect market share and how the industry organises itself. A redacted statement of claims was released this week. Unfortunately for big tobacco, which has a $2.5 billion market in New Zealand, the original statement of claim was sent to BusinessDesk last week by a PR company.

The biggest slabs of blacked-out text in the redacted claim set out in detail BATNZ’s trading terms with retailers and show how much control it commands in the market it dominates.

The original release from PMNZ says the suit is an attempt to stop BATNZ “from engaging in anti-competitive conduct” such as “unlawfully incentivising and compelling retailers to restrict the availability of competitor products.” PMNZ general manager Jason Erickson said BATNZ’s “conduct restricts consumer choice, and we think it constitutes a clear breach of the law.”

In the lawsuit, filed in the High Court in Auckland, PMNZ alleges BATNZ “is unlawfully incentivising and compelling retailers to restrict the availability of competitor products.” PMNZ is seeking unspecified damages in five causes of action for alleged breaches of the Commerce Act. BATNZ has said in a separate statement that it “categorically denies the allegations.”

PMNZ also says the BATNZ rules have implications for the availability of so-called e-cigarettes

Tobacco advertising and branding has effectively been banned in New Zealand via the Smoke-free Environments Act 1990 and the Smoke-free Environments Regulations 2007, and rules on plain packaging have just come into force. But this doesn’t stop tobacco companies from finding ways to compete over marker share.

BATNZ dominates the market, and according to PMNZ does that in part through unfair practices. They allege:

  • For a retailer stocking BATNZ brands BATNZ’s trading terms give the company the first option on installing any new or additional unitry and the right to remove them at any time, according to the redacted paragraph 36 of the claim.
  • The retailer is required to keep the “primary units”, which are the top area of cabinet, “fully stocked with 100% BATNZ products at all times.”
  • The retailer must stock the BATNZ unitry with tobacco products “in accordance with ‘planograms’ – diagrams supplied by the company “showing which tobacco products must be placed in specified unitry spaces.”
  • Paragraph 39 refers to cash inducements offered to retailers provided they ensure at least “70% of the retailer’s tobacco products available for sale within the outlet are BAT” brands. It also requires that 70% of “low value” tobacco products on offer are from BATNZ.
  • BATNZ’s trading terms require the retailer to “ensure BATNZ is aware of” all rival brands sold instore.
  • The retailer has to agree to compliance spot checks by the company including allowing a BATNZ representative “to enter and inspect the outlet for that purpose as often as is reasonably necessary.”
  • The retailer must show consumers (upon request) the BATNZ price list and that must be done before any other firm’s price list is shown.
  • The retailer must keep the unitry clean and free “of any advertising material unless agreed with BATNZ in writing.
  • Retailers are required to accept and “range” new products, accepting an auto-allocation of a carton of tailor-made cigarettes.

Non-compliance means the loss of the cash inducements,  if the retailer gets two non-compliance notices in a three-month period or three in any 12 months.

Rebates are only given for sales to consumers. The payment is by way of a credit against BATNZ invoices and the company asserts the right to deduct it from any sums it is owed, the document says.

PMNZ says the rules are anti-competitive, breach the Commerce Act and have caused it to suffer loss and damage. The statement of claim alleges BATNZ’s conduct “shows flagrant disregard for its Commerce Act 1986 obligations.”

A BATNZ spokeswoman said in an emailed statement that her company is “confident that we are not engaging in anti-competitive conduct and will defend our position when the case is heard.”

“We are strongly committed, and have actively engaged for some time, to have reduced risk products regulated and legally available to adult New Zealand smokers as soon as possible,” she said.

Marketing practices of tobacco companies have been criticised for a long time, which isn’t surprising given their marketing of dangerous products, the sales of which rely on getting customers addicted.

Tobacco retailer safety

With the continually rising price of tobacco and cigarettes, and a presumption (mine) that people inclined towards committing crime and those associated with them  also tend to be inclined towards smoking, the number of robberies related to tobacco have increased. These robberies are often violent, and dairy owners and staff  are often the victims.

Dairies can choose whether to stock tobacco products or not, but it is a major source of revenue for the small businesses. Who should be responsible for their safety?

Of course the police have a duty to protect any retailer of legal products from theft and violence – to an extent. They cant be at every dairy all the time.

ACT MP David Seymour is suggesting that the Government direct more of the substantial amount of tax and duties they get from tobacco into paying for retailer safety.

Another suggestion is to admit that escalating taxes and prices have created an unintended consequence, and lowering the taxes would alleviate the theft and violence problem but that is debatable.

Today’s ODT editorial looks at the problem, and comes up with what should have been an obvious answer – tobacco product suppliers should protect their retailers.

ODT: The smoking gun of tobacco taxes

Dairy owners are again starting to worry that the next person who enters their shop may be a thief who could turn violent as he or she demands cash and, increasingly, tobacco products.

A search of media outlets shows a pattern of increasing crime against sellers of tobacco products, as their price has escalated through increased excise taxes.

The New Zealand tobacco industry says it makes a significant contribution to the New Zealand economy in terms of government revenue, retail sales and employment. It pays more than $1.8 billion in total taxes each year.

Tobacco products make their largest financial contribution to the economy in the form of excise taxation. The industry also says tobacco is an important source of revenue for about 5000 New Zealand retailers, the vast majority of whom are small, independent retailers and dairies.

A debate has again broken out about who should pay for the protection of the retailers selling the tobacco products. Fewer outlets are now selling tobacco and communities celebrate the success, believing fewer people are smoking as outlets reduce.

However, aggressive cost-cutting has helped some of the largest tobacco companies retain their profits, despite falling sales.

One of the arguments being made to help protect dairy owners is to just stop selling tobacco, of course ignoring the fact tobacco is a legal product and a genuine part of a service dairy owners can offer their customers. Unless another high-margin product emerges to replace it, dairy owners will still sell tobacco.

Act New Zealand leader David Seymour is at the other end of the spectrum, saying after two violent robberies in less than a week, it is only a matter of time before someone is killed.

The money collected by the Government each year in tobacco tax revenue is blood money, obtained by putting the lives of people at risk, he says.

But Mr Seymour is somewhat off the mark when he calls for the Government to direct 10% of tobacco tax revenue to protect vulnerable business owners.

Surely it is time for the tobacco companies themselves to start protecting the people they want to sell their products? Revenues from global tobacco sales are estimated to be close to $965 billion, generating combined profits for the six largest firms of $67.5 billion.

That’s a good point. If tobacco companies want to protect their sales and profits perhaps they should do more to protect their retailers.

Tobacco tax to rise again

Is rising tobacco tax fair?

Helping to quit is not the only cost of tobacco use though – health costs are high, as are related issues of poverty.

The details from Stuff:

From January 1, 2018 the tobacco tax is 83 cents per cigarette, with GST levied on top of that. A smoker who smokes 20 cigarettes per day is paying $133 in tobacco tax each week, including GST.

How much tax is being collected?

The Government collects $1.7b per year in tobacco tax itself, and $1.9b when the GST on the tobacco tax is included. According to Treasury, this amount is forecast to grow to $2.2b by 2021.

Only $62m, or 3 per cent of this money, is spent encouraging or actively helping smokers to quit.

But increasing tax has encouraged many people to quit.

Tobacco tax has played a part in reducing the proportion of adults (aged 15+) who smoke from 20.1 per cent to 15.7 per cent over the last 10 years.

However 600,000 people still smoke.

A pack a day smoker earning $45,000 a year would pay 15 per cent of their income, or close to $7000 per year in income tax and a further 15 per cent (nearly $7000) of their income in tobacco tax each year.

Given that poor people are more likely to smoke that must have a huge impact on their quality of life – and the quality of life of their families.

The tax is being paid by those for whom the policy is failing. Māori, Pasifika and those on low incomes are over-represented in this group.

Of course reducing smoking is a very important health goal, but addicted smokers are surviving on significantly less money per week after paying the tobacco tax. A pack-a-day smoker has $133 per week less to spend on heating, good food and clothes for children.

There are other adverse effects of rising tobacco prices – dairy robberies are increasing and often involve violence. Other crime to finance tobacco purchases is another.

The author of the Stuff opinion piece is Kathy Spencer, a (non-smoking) former Deputy Director-General in the Ministry of Health (responsible for Sector Policy) and a former Manager of Personal and Indirect Tax in the Treasury. She suggests:

Smokers need more active help to quit and there are now many ways to do this: more active support from health professionals, programmes like Quitline, nicotine replacement, e-cigarettes and so on.

The new government has the opportunity to introduce a fairer approach:

  • Double the amount spent on actively supporting smokers to quit, especially Māori, Pasifika and low-income groups.
  • Freeze the excise rate at the current level.

Success will mean that the Government will lose the $2b in revenue that it has been getting from addicted smokers.

It’s time to start thinking about collecting this revenue in other ways, from people who are in a better position to contribute.

I don’t think that increasing taxes of non-smokers to finance attempts to get smokers to quit would be very popular.

Tobacco dominates dairy revenue

A lot is being said about violent robberies of dairies. Tobacco is often the target of thieves, and suggestions have been made that dairies should stop stocking tobacco to protect themselves.

An Associate Minister of Health has said dairy owners should stop selling cigarettes, and the ‘higher security’ of liquor stores means they may be more appropriate outlets.

RNZ: Dairy owners blame cigarette price hikes for robberies

Dairy owners should stop selling cigarettes “if they feel too threatened” by robbers, says Associate Health Minister Nicky Wagner.

A packet of 20 cigarettes will cost about $32 by 2020, after four legislated 10 percent year-on-year price rises.

Dairy owners say the price hikes are making cigarettes more and more enticing for thieves.

Ms Wagner said cigarette sales might be more appropriate for liquor outlets.

“Maybe we should sell them with alcohol because the security systems in an alcohol convenience store is usually much higher than [in] a dairy,” she said.

There’ a major problem with these suggestions. A large chunk of dairy revenue is from tobacco products. Many dairies would be not be viable businesses without tobacco which can represent towards a half of their revenue.

And there are other complications too, as reported by the ODT: Liquor licence in doubt

A Dunedin supermarket  with a perfect record selling alcohol faces losing its liquor licence over the amount of tobacco products it sells.

A report  on the licence application by Brockville Four Square Supermarket said the police, public and Medical Officer of Health did not oppose the liquor licence, and there were no issues about the suitability of the applicants Greg and Zandra Davis.

The problem was a breakdown of the shop’s sales revenue showed the principal income  of the business  came  from the sale of tobacco.

Foodstuffs, which owns the Four Square chain, said tobacco was increasingly becoming shops’ main  revenue stream,  as prices rose each year because of government tax hikes.

Dunedin City Council liquor licensing inspector Tony Mole said in his report  39.50% of the shop’s  revenue was  from  tobacco products, while food products made up 28.64% of  income. According to  the Sale and Supply of Alcohol Regulations Act 2013,  the  shop’s high tobacco income meant it had to be considered its  “principal business”.

I’ve seen claims from elsewhere that suggest tobacco is the principal business of many dairies – this supermarket is in a similar situation to a dairy.

“Under this interpretation of the Act and the regulations, we would conclude that Brockville Four Square cannot be considered a grocery store for the purposes of licensing,” Mr Mole said.

The shop  did not appear to meet the requirements  for a different off-licence application, documents showed.

This is not the only supermarket with this problem.

Cockle Bay Four Square, in Auckland, also had its liquor licence renewal application declined last year on the basis it  sold too much tobacco to be considered a grocery shop.

This is a complex issue.

Security of supermarkets and dairies may need to be increased substantially if they want to safely sell tobacco.

The price of tobacco, pushed up by regularly increasing tax, has in large part created this problem, but it is also a law and order issue. It seems to be getting so bad that the police may need to put more resources into rapid responses to diary robberies – and liquor stores also have high robbery rates in some areas, so they aren’t necessarily the solution.

Poor reports on poorest households

Things may not always be quite as they seem at first glance.

Stuff: Poorest Kiwi households face much larger cost of living increases than big spenders

A recent jump in the cost of living hit the lowest paid Kiwis much harder than the big spenders, new figures show.

In the first three months of the year, inflation for all households jumped 1 per cent, bringing annual inflation to 2.2 per cent, the highest since 2011.

On Thursday Statistics New Zealand released the household living-costs price indexes, giving a breakdown of how price increases hit different groups.

The figures showed that the rise hit the lowest earners the hardest. Beneficiaries saw their overall costs rise by 1.4 per cent, almost three times the increase faced by the 20 per cent of households with the highest spending.

That sounds like a significant disparity for poor households. But what comes next changes the perspective somewhat.

While overall inflation rose partly because of increases in the cost of fuel and food, Statistics New Zealand said inflation was especially high for beneficiaries because a greater proportion of their income went on tobacco. Each January, the excise on tobacco products increases by 10 per cent.

So inflation went up more for poor households that used a significant amount of tobacco.

Whether tobacco taxes should keep going up is another matter.

But one of the key pieces of information about households was not revealed until well into the item.

“Higher costs for cigarettes and tobacco had a greater effect on beneficiaries,” Statistics New Zealand’s Nicola Growden said.

“About 5 per cent of their spending went up in smoke, proportionally more than most other types of households spent.”

Predominantly Maori households faced a 1.3 per cent increase in inflation – higher than average – while superannuitant households faced a 0.9 per cent increase, slightly below average.

Maori are over represented in poorer households, and also smoke much more than non-Maori.

And superannuitants are also less likely to be smokers as they don’t die as young.

Meanwhile Labour’s finance spokesperson Grant Robertson put out this on the same topic.

Cost of Living increases hit those with least the hardest

Posted by on May 04, 2017

Beneficiaries, superannuitants and people on the lowest incomes continue to bear the brunt of higher inflation, according to the latest data from Statistics NZ, says Labour Finance spokesperson Grant Robertson.

So he’s also referring to the latest inflation data from Statistics New Zealand.

“Since National came to office (December 2008) inflation for those on the lowest 20 per cent of incomes has increased by 17 per cent. But for those with the highest 20 per cent of incomes, it has increased by only 10 per cent.

“The cost of core inflation items like food, fuel and rates are all soaking up an increasing chunk of the incomes of the lowest paid people. These are costs that Kiwis can’t avoid – and they are rising faster than other costs in the economy.

No mention of one of the most significant factors, tobacco use and tax.

“High housing costs, rising rents are all eclipsing the mediocre wage increases for New Zealanders. Yesterday the latest wages data showed that 67 per cent of Kiwis got a pay rise of less than inflation, which means they effectively are working harder for less.

“Rather than address these problems National doesn’t have a plan for the economy, to help boost our notoriously low productivity, nor to help Kiwi families.

“Only a Labour-led Government will help address the growing cost of living crisis in New Zealand for low income Kiwis and we’ll deliver the shared prosperity that all New Zealanders deserve,” says Grant Robertson.

Robertson either didn’t pick up on the tobacco part of the statistics, or he deliberately left it out of his post.

But the Stuff item quoted him in their article, and also managed to, eventually, highlight the impact of tobacco on poorer households.

 

Time to rethink the tobacco problem?

Violent robberies of dairies and service stations have increased, with tobacco products often being the target. Is it time taxes on tobacco were reassessed?

I received this by email:

I find the zealotry of Turia on tobacco incredibly naive.

NZ has a huge problem with P and cannabis, not to mention black market tobacco, precisely because the taxes of tobacco have been increased so sharply. It was silly to think you could tax it out of existence, people can and will use substitutes. Entirely foreseeable side effects and banning dairies from selling tobacco will only run owners out of business and shift robberies to petrol stations and supermarkets.

I can understand the zealotry of Tiriana Turia to an extent, as Maori have been affected disproportionately by adverse effects of smoking. She drove the substantial increase in tobacco tax, and this has been effective in lowering rates of smoking.

Smokefree NZ: What are our smoking rates and how are they changing?

Smoking rates in New Zealand Aotearoa continue to reduce, with 17% of adults currently smoking, of which 15% smoke daily (this has dropped from 25% in 1996/97).

Although 605,000 New Zealand adults still smoke, over 700,000 have given up smoking and more than 1.9 million New Zealanders have never smoked regularly.

That means over 2 million people, over half the population, must have smoked regularly at some time in their lives.

Smoking has changed in the last half century from a socially acceptable (by those who smoked) widespread practice to a fringe activity.

Social pressure against smoking and rising prices are having an effect overall.

  • Youth aged 15–17 6% (down from 16% in 2006/07)
  • Young adults 18-24 24% (down from 28% in 2006/07; however this age range now has the highest smoking rates of any age group)

Younger people are smoking much less, perhaps due to price pressure as much as peer pressure, but rates jump when they have more money available.

However Turia’s concerns are obvious when you see this demographic:

  • Māori adults 38% (40% in 2007)

That’s over twice the overall rate, and it has hardly come down. So price pressure can’t be working effectively.

  • Pacific adults 24% (26% in 2007)

That hasn’t moved much either.

Is it time for a rethink on how to address this? Maori and Pacific people may need different incentives to quit smoking (or better, to not start smoking). Rising prices just seems to give some an incentive to steal.

Maori and Pacific Island people also figure disproportionately in unemployment and low incomes. The price of tobacco puts even more financial pressure on them.

Logically one might think that $20 a packet of cigarettes – that used to be a common daily consumption level – would be a huge deterrent, but for some demographics it obviously isn’t working much.

Why do young people start smoking in the first place? Not getting addicted is an obvious aim, but prevention is proving difficult amongst Maori in particular.

Further increases in prices are likely to increase related crime, increase deprivation and push some to other drugs – cannabis must be getting price competitive, and smokers must be more easily tempted harder drugs as well.

It looks obvious that a rethink and a different approach is needed.

It’s easy to see what is not working, but it’s a lot more difficult to come up with effective solutions.

Why do dairies sell tobacco?

With a growing number of violent robberies of dairies in Auckland why do they sell Tobacco products? They are not the only target of thieves but the escalating price seems to be a major factor in precipitating the spate of attacks.

Tariana Turia wants to take it further:

More:

Dame Tariana Turia says New Zealand needs to stop selling cigarettes – “we should not be allowing it to be sold in our country”

“get rid of the cigarettes, get them out of the country, and allow our people to enjoy some good health”

Would removing cigarettes from dairies and service stations stop violent robberies? That’s unlikely, but it would probably reduce them significantly.

Would banning tobacco altogether be a solution (it would reduce tobacco consumption) or would it just create different problems? Like more cannabis use?

Doubting climate change science

It’s not just mainstream science that suggests that climate change is a problem of major importance, mainstream media tends to agree.

The Press has an editorial on Doubting climate change science is no joke

There are times when the Donald Trump presidency seems comical or even fun, an absurdist exercise in postmodern political theatre.

But in other ways the Trump administration is too potentially dangerous to joke about. Its approach to climate change is one of them.

Scott Pruitt, Trump’s appointee as head of the Environmental Protection Agency (EPA), has broken with global scientific consensus and argued that carbon dioxide is not a primary contributor to global warming. He told that a US news programme that “measuring with precision human activity on the climate is … very challenging to do and there’s tremendous disagreement about the degree of impact”.

Doubting science by claiming that a theory is just a theory without broad consensus behind it is a favoured technique of tobacco industry lobbyists and others who try to confuse or dissemble. They pretend disagreement exists where it does not or they attempt to turn very small differences into polar oppositions.

It’s not just a big business tactic, it is also a religious tactic, like on evolution.

Does this sound familiar? Discovery Institute (which also opposes climate change science)  – Ranks of Scientists Doubting Darwin’s Theory on the Rise – “Another 100 scientists have joined the ranks of scientists from around the world publicly stating their doubts about the adequacy of Darwin’s theory of evolution.”

The Intergovernmental Panel on Climate Change (IPCC), Nasa and the National Oceanic and Atmospheric Administration in the US have all been clear that rising temperatures have been “driven largely by increased carbon dioxide and other human-made emissions into the atmosphere,” as a report from the latter two bodies put it in January.

As noted in US media reports, Pruitt’s statement even contradicted the position held by the EPA itself and conflicts with the laws and regulations the EPA is expected to enforce. The EPA’s own website says that “carbon dioxide is the primary greenhouse gas that is contributing to recent climate change”.

Most observers of US politics expected that Trump would follow through on the anti-environmental rhetoric of his campaign. They expected a retreat from positions taken by Trump’s predecessor Barack Obama. As a Trump insider explained last week, his campaign commitment was to undo Obama’s “entire climate edifice”.

Pruitt was known to be an advocate for the energy industry before his appointment by Trump. The New York Times reports that “in his previous job as the attorney general of Oklahoma, he sought to use legal tools to fight environmental regulations on the oil and gas companies that are a major part of the state’s economy”. He drafted letters to send to the EPA and other bodies pleading economic hardship if environmental rules were not relaxed and reportedly sued the EPA 14 times.

Pruitt is now expected to preside over funding cuts and a review of his agency’s role in monitoring emissions and protecting waterways. The implications of a wholesale attack on an environmental agency are enormous, and not just for the United States. There is nothing remotely funny about any of it.

Climate science is complex and evolving as more is found out about it. Claims should certainly be challenged claims are scientifically questionable, but cannot just be dismissed, just as tobacco harm could not just be dismissed because companies might lose some money and just as evolution cannot just be dismissed because some religious groups might lose some faith.

It is quite possible that the effects of climate change are a much bigger threat to the world, and to many more people in the world, than extreme Muslims and Islamic terrorism.

Many more New Zealanders are likely to be affected by increasingly severe weather events than they are by terrorism.

Doubting some climate science is healthy, if based on science.

Doubting the possible severity of climate change is understandable – but this doubt works both ways, it may turn out to be not as bad as generally predicted, but it could just as easily turn out to be worse than predicted.

Those who doubt the accuracy of current climate change science can’t have it that it is just inaccurate in a way that suits their ideology.

There is far less climate science that suggests we won’t have any problems with climate change than otherwise.

Doubting all climate science is not based on science, it is based on denial.

There must be some degree of climate change, there always has been. Science will help us learn more about it, it will help us limit our effects on it, and it will help us deal with whatever changes end up happening.

We should aim for better climate science, and not just dismiss it with claims of doubts.

 

 

Thin end of the ‘ethical investment’ wedge

Last week it was reported that some Kiwisaver funds invested in munitions and tobacco companies. This prompted a lot of comment about ‘ethical investments’.

An ODT editorial looks at Socially responsible investments:

Last week, Commerce Minister Paul Goldsmith said in Parliament there were indications several KiwiSaver providers had broken strict laws banning investments in cluster bomb makers.

A newspaper investigation analysed more than 100,000 individual assets held in nearly 500 KiwiSaver funds looking for 169 companies blacklisted by the New Zealand Superannuation Fund.

The analysis found half of KiwiSaver providers — mostly smaller boutique providers — have avoided blacklisted investments, but some people were unwitting investors in big tobacco companies and makers of banned weapons.

The investigation found three KiwiSaver providers have made investments worth a total of $2.3 million in a trio of United States companies blacklisted by the New Zealand Superannuation fund due to their production of cluster bombs.

The latest KiwiSaver report shows more than $28 billion is invested in KiwiSaver by 2.5 million New Zealanders.

Although the amount invested is a tiny percentage of  total KiwiSaver funds, it is still unacceptable some funds have broken the law.

The KiwiSaver providers should have been more careful to adhere to the legislation specifically forbidding investments in such companies.

Yes, if it’s illegal to invest in a certain type of business it is simply unacceptable.

But it can get tricky because many investments are not simple and easy to identify. The investigation found that Kiwisaver funds from the ANZ and ASB invested in other funds that invested in munitions and tobacco companies.

And it can get more convoluted. The Fisher Fund invests in the ANZ in Australia, so could be seen to be (very) indirectly linked to cluster bomb manufacture.

But the rest of the problem becomes murkier.

It is still legal to smoke in New Zealand and there will be some KiwiSaver investors who are relaxed about their funds being invested in tobacco companies.

In total, New Zealanders were found to have $102 million in tobacco companies, a small proportion of the total amount invested.

I certainly wouldn’t choose to invest in tobacco. But would it matter if the fund I invested in indirectly had a small amount in tobacco? It would make no difference to tobacco production or use if I was minutely and remotely connected or not.

The Government has rightly said it was unlikely to further regulate the KiwiSaver sector and the choice of the fund — and where to draw lines on what was an acceptable investment —  was up to individuals.

This stance has outraged Opposition MPs who want the Government to step in to tell the funds where they can and cannot invest.

Telling New Zealand KiwiSaver providers where to invest is a thin edge of something rather larger.

And that wedge was given a nudge last week. For example Kevin Hague tweeted “No doubt you’re shifting your KiwiSaver account to a company that doesn’t invest in cluster bombs. When you shift, think fossil fuels too”.

Currently, about 50% of New Zealand investors hold shares in Australian companies, including mining companies dealing in fossil fuels and extractive industries such as uranium, a key component of nuclear energy generation.

If all investment ceased in fossil fuel and other extractive industries it would create chaos around the world. While natural energy like wind and solar is great we are still very reliant on oil.

No government has the right to decide whether New Zealanders can invest in liquor or tobacco companies.

It is the individual’s responsibility to ensure they ascertain where their money is invested.

But the Greens seem to want to hammer the ‘ethical investment’ wedge. Julie Anne Genter:

Govt must set the ethical standard on KiwiSaver investments

The Government needs to set higher ethical investment standards for its default KiwiSaver providers, the Green Party said today.

“Profiting from the production of cluster munitions, landmines, and nuclear weapons is immoral, and most Kiwis wouldn’t want their Government directed savings invested anywhere near these companies,” Green Party finance spokesperson Julie Anne Genter said.

“Default KiwiSaver Funds need to be legally invested, at a minimum, and preferably ethically invested, so that New Zealanders have the best choices over where their money goes.

Obviously investments need to be legal. But ‘ethical’ is quite different.

New Zealanders already have the choice where their Kiwisaver funds are invested. As they should.

But I have concerns about Government setting ‘higher ethical standards’ for investments.

An interesting New Yorker article on whether divestment (ethical reinvestment) makes any difference – DOES DIVESTMENT WORK?

And there can be a costly downside as the ODT reports in City pays cost for divesting

Some of the Dunedin City Council’s divestment decisions have cost the city, it was revealed at yesterday’s council finance committee meeting.

The council voted last May to scrap any investments the fund had in the munitions, tobacco, fossil fuel extraction, gambling or pornography industries and to bar future investment in those industries.

The fund had produced $783,000 in profit during the eight months to February 29. However, this was $1.657 million down on the budgeted $2.44 million profit.

Some of the unfavourable variance was because of divestment losses, Mr McKenzie said.

The Dunedin City Council has a strong green lobby, and they succeeding in forcing divestment from companies they considered to be unethical. At a cost.

Kiwisavers should have choice. That could cost them. Apart from ensuring illegal investments are avoided the Government should not dictate what we can invest in.