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Jenée Tibshraeny on what was worse than Parliament mistakenly passing a law enabling taxpayers to lend billions to business

Jenée Tibshraeny on what was worse than Parliament mistakenly passing a law enabling taxpayers to lend billions to business
Grant Robertson. Press Gallery pool photo.

By ​Jenée Tibshraeny

The creator of Veep, The Death of Stalin, and In the Loop - Armando Iannucci - could’ve filmed a political satire at Parliament this week.

We had the extraordinary situation on Thursday, where the Government gave itself the power to issue billions of dollars of loans to small businesses, without realising it.

An administrative error, involving someone clicking on the incorrect confusingly-named file, saw the wrong Bill tabled and then passed within hours.

The version MPs thought they were passing was one that enacted all the tax changes the Government had already announced to ease the pain of the COVID-19 crisis.

The version that actually passed was one that additionally included clauses giving the Inland Revenue Department (IRD) the authority to issue small businesses loans on behalf of the Crown.

The crazy thing is, MPs didn’t know what they had just rubber-stamped until I reported it on Thursday afternoon.

I got lucky and saw the creation of the Small Business Cashflow Loan Scheme in the Bill, made a few quick calls to confirm I was reading it correctly, and hurriedly broke the news - without at that stage knowing the wrong version had been put in the system.

As I have since found out, the debacle caused Cabinet to meet on Thursday night to approve details around how the scheme would operate - the Bill simply gives the IRD the power to issue loans, but doesn’t detail loan values, eligibility, interest rates, etc.

I understand the matter was due to be brought before Cabinet on Monday, May 4, ahead of legislation being passed under urgency later that week.

I've been told work on the scheme had been done by Thursday night. So even though things were rushed and horrifically messy, the outcome is ultimately the same.

Officially announcing the Small Business Cashflow Loan Scheme at the 1pm press conference on Friday, Finance Minister Grant Robertson acknowledged the botch-up and said: “This [the scheme] is something we always intended to do, the legislation simply created the enabling framework for that.”

Show us the due diligence

The Opposition is rightly upset.

National’s finance spokesperson Paul Goldsmith said: “New Zealanders expect its Government to have gone past the panic stage of the crisis and to be capable of carefully thinking through detailed policy that will target assistance to those most in need.”

ACT leader David Seymour said: “The error raises questions about the Government’s competence. Given the speed at which this legislation was drafted, the Government should also explain what due diligence was done by Treasury and IRD officials on the small business loan idea.”

I believe both Robertson and the public sector that has served successive governments are competent.

However, the Opposition makes a crucial point - the Government needs to give us the hard facts and proactively release the advice behind its decision-making, soon after decisions are made.

Robertson couldn’t, in the press conference, provide satisfactory answers on how much he expected taxpayers were putting on the line for these loans.

Nor could he say how the IRD would assess credit risk - other than to say the IRD is well-placed to do the job, as it already has a lot of financial information about businesses.

Journalists were left deciphering what the scheme meant in practice from a PRed press release, with no supporting documentation.

Issues with the Business Finance Guarantee Scheme too

But here’s the kicker - a line was slipped into the bottom of the release, saying the Government is no longer requiring banks to take security when issuing taxpayer-backed loans under the existing Business Finance Guarantee Scheme (which is distinct from the new scheme).

So it will be at banks’ discretion whether they take security for the $6.25 billion of loans they’re expected to give businesses, which taxpayers are 80% on the line for. No big deal!

Robertson’s response to my question around taxpayer exposure, once again didn’t fill me with confidence.

Then later in the press conference he mentioned agricultural businesses will also be able to apply for bank loans under the scheme. They previously couldn’t. Sorry what? Another huge change mentioned nonchalantly.

I thereafter asked both Robertson’s office and Treasury to urgently provide me with an updated eligibility criteria for the Business Finance Guarantee Scheme. No response until 5pm.

But wait, there’s more. The Treasury response unveiled further changes to the scheme to make it accessible to more businesses.

Among these, very small businesses can now apply and businesses don’t need to have exhausted other options with their banks before being eligible. Wow.

Banks didn't know the changes were coming, pretty much until we did.

Rewind to April 1, when Robertson announced the eligibility criteria of the initial iteration of the scheme, and detail was once again lacking.

Treasury couldn’t give me a copy of the eligibility criteria until very late that night and banks weren’t in fact ready to start receiving loan applications straight away.

Confusion when we need confidence 

The consequence - people are left confused and then upset the support offered to them isn't what they thought it was.

The information media provides is incomplete in the first instance and banks' phone lines get jammed as they're swamped with enquiries.

On April 1 I refrained from publicly venting my frustration.

I accepted that in an initial response to a crisis, imperfect action is better than inaction. 

I saw how hard the Government and its officials were working, making life/death decisions based on imperfect information, and wanted to give them a break. They did a good job.

Now the Government needs to take that extra day if it needs to, to get its ducks in a row, so its announcements provide the certainty and confidence businesses need to tackle tough decisions.

The public is putting an immense amount of trust in the Government as it circumvents the usual checks and balances to get us through this crisis. But trust is earned. It's also key to maintaining social cohesion.

Oddly, I can dismiss Thursday’s passing of the wrong legislation as an extraordinary genuine mistake.

But the lack of transparency around decision-making and incoherent way of announcing a billion-dollar policy change, are inexcusable.

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100 Comments

Sir Henry Wootton speaking for Britain at the Assembly of the League of Nations in Geneva 1933 gave two addresses to the the Assembly. One was concerning the traffic of synthetic beer the other about the problems arising from Houses of Ill-Repute. Unfortunately Sir Henry presented his papers in the wrong order. But no one noticed. Fiction by A.G. Macdonell, but nonetheless non fiction it would seem our Parliament nowadays.

Covidiots

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[ ] they are hopelessly incompetent. Actually quite staggering and scary. Even scarier is they might win the election in a landslide victory.
I reckon it's time we ignore the government's commands. Give them the big one finger salute.

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The scary part of that isn't that Labour might win in a landslide (probable) but that there is no credible alternative to give New Zealanders another option.
Which of us would want Bridges or Collins or Bennet as PM; representing us on the Global Stage? Getting Winston from time to time is bad enough! (Although to be fair, he's done a good job when required)

I’d vote for Bill English

Problem is, he also exacerbated the household debt situation we're in now by refusing the RBNZ a DTI tool that would have helped them stimulate the economy without causing asset inflation that now puts it at greater risk.

You would make Farmer a 3x Loser then.
Now his mother Norah I would vote for but she was from a time when a womans place was largely different than now. But her children that's another matter. Do you remember the FF nutter who wanted to stop every drop of fresh water reaching the sea.....

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I agree Fritz. They are supposed to govern at our pleasure not control us at theirs. What is it going to take for New Zealanders to stand up and be counted ?? We need to demand accountability from all Parliamentarians !

Probably why neither major party has been willing to implement the Electoral Commission's recommendations incl. reducing the threshold under MMP to 3%. While there are fewer choices to be had, they can bank on keep large chunks just because the alternative is "worse" in some way or other. Thus reducing the need to act on what the population wants.

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"Confusion when we need confidence"

Haha funny, I don't remember EVER having any confidence in the current lot in the last 2.5 years :P

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This lot is the most incompetent lot that has ever been in parliament bar none!
I stated this would be the case when they got in the back door thru Peters!
Unfortunately there is no one with the experience or ability to run NZ as a business.
Ardern has let the authority get to her head know and is a control freak.
The unfortunate thing is that there are so many sheep in NZ and I am not talking about the wooly ones!!

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Credit given where credit is due. On this, you were right.

Fritz, I am always right, whether you want to admit it or not!

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It's easy to look competent when you don't actually do anything - John Key's government.

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Labor party manual : " if you have nothing to say - refer to John Key"

In fairness, that is the in the manual shared by both parties. The last lot were still doing that 8 years into the last government, as if they'd been powerless to act over 8 years.

Do you work for the government? The only time I see comments from you are defending the government, specifically Labour.

He does ; he is the person who did the counting of Chinese - sounding names for them .

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I certainly didn't ask or want for the people in power to run NZ as a business. To what end? Produce the highest GDP/capita? So Liechtenstein is the goal? Back in 2014 we were 2nd in a Forbes Top 10 list of the most profitable countries for business, should we be aiming for Number 1? What does an ideal 'NZ run as a business' look like? Exporting the most profitable products we make and importing only what is necessary to produce the most profitable exports?

That said a very disappointing and unprofessional mistake by the government. Glad to have people in the media like Jenee to hold them to account. Certainly better than a lot of the droll questions the gallery press ask during the daily briefings.

You live up to your name.

You must love the good feelings this gov promotes

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Someone has to be our voice for venting frustration in the parliamentary bullpit. That's you, I guess Jenée, Well done.

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Great work, Jenée!!

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Real journalism. Makes for a refreshing change from parrots and shills.

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Wrong bill. Billions. Rubber stamped. Mistake under pressure, yes. Unforgivable, nevertheless. Indicative of multi system failures. In this context, with these stakes for the taxpayer and the need for accountability and level headedness.......all I can says is, "Can we trust ?" ....when the fallout has not yet started.No.

Forgivable??? NO!
reAlly if something so inportant can pass undetected.......... Typicial Labour, NZF and Green.
Absolutely froggen useless!

This has got South Canterbury Finance written all over it.

Yep IT sales folk and systems consultants would visit and visit coming away thinking, gee they are good & doing fine because we can never sell them, even our good stuff

Turned put to be Wizard of Oz stuff.
They had no system.
If they had bought anything, there was nothing to plug the new stuff in to!.

We have seen this also with MoH.
No contact tracing system for a tracing App to plug into.
Immigration arrival cards, hand written, not digitized, nothing given to police.
Early on Dr B saying how happy they are to link data base together

Wizard of Oz

We probably should have been funding them for this before now, eh.

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Yet if someone were to make a similar blunder in the private sector? In our game if someone were to rush through/sign a supply contract without diligence that ends up exposing the company to millions of dollars of potential damages they would be out of a job.

Having worked with/for a few government agencies you get used to a saying:

'Near enough for government work'.

I joke you not.

And if it goes tits up.. apply the Wellington suffel. Blame the system that the previous Govt implemented.
Bridges a dick, Bennett OMG, there is no other choice...
I.O you would know of Bennett's street credit outside of the PR. Far from good, from what I hear from insiders....

Technically, this is a highly embarrassing and silly clerical mistake, BUT the Treasury appears to already have done the work behind the plan and the law was ostensibly to be passed the next Monday.

So the financial ins and outs were planned. It's the incompetent looking clerical mistake that was not planned.

Interesting that neither the government nor the opposition (including the committee for oversight of the response to COVID-19) noticed it initially, with that honour falling to Jenée Tibshraeny and Interest.co.nz. Kudos to Jenée, not the government or their eagle-eyed oversight committee.

"Yet if someone were to make a similar blunder in the private sector?"

last time I looked no heads rolled at ANZ. Oh yes, it was a junior staffers fault.
Last time I looked the cloggy at Fonterra got all his bonuses
Last time I looked there was not the bloodletting at Fletchers that was required.

Indeed most kiwis have a very poor opinion of our large companies management.

Tax payers don't foot the bill in the private sector.

People who spend tax payers funds need to be held accountable.

Tax payers don't foot the bill in the private sector.

Err...so...there's some stuff going on at the moment you should know about...

(Also, WFF, Accommodation Supplement are both wage subsidies footing bills the private sector would otherwise have to cover.)

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How perverse that they can rush this through, putting the tax payer on the hook for up to 80% of lending through the banks to businesses, but we still can't get any level of guarantee for bank depositors.

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GR must be the most overrated minister in living memory.
Mediocre at best. Jenee, I think you are being generous in saying he is competent.

Excellent work Jenée!

I don't know of I should laugh or cry though. Perhaps, in the absence of a democratic solution, shall we resort to a short prayer?
"Dear Lord, Please help them..."

“Dear Lord, Please help us ...”

It's all there in the national anthem.

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God help us !

We have to rid ourselves of this incompetent bunch of knee-jerk-over-reactive easily panicked idiots as soon as possible .

They have systematically dug us into an enormous hole with this covid over-reaction , and the damage is going to be with us for years .

Its time for National to embark on a fully aggressive war -footing campaign to remove the COL

Yes, it’s time for the gloves to come off and some credible candidates to stand up!

Agreed, at the very least give themselves half a chance here.

Surely there is better than Bridges and Bennett in National.

First step for National is to find some credible candidates. And to tell us whether they're in favour of the option of bailout loans for small business, or against it.

Well heres one of their 'credible candidates' (sarc)
https://thedailyblog.co.nz/2019/11/08/chosen-to-rule-what-sort-of-christ...

So are you suggesting he should be disqualified or disregarded on the basis of his religious beliefs ??

In some instances that would be a worthwhile consideration. Not in this case.

However, if we must have a former Air NZ CEO to run the country this is not the right one.

Agreed...Rob Fyfe was a people person and new how to truly be inclusive...Luxon was very divisive.

No more than people have an issue with Brian Tamaki,as long as it is all out in the open and people know what they are voting for...
and I speak as someone who has worked for him...there was no one sad to see him leave Air NZ...which he did as soon as the sweet set of circumstances he inherited from Rob Fyfe...as soon as headwinds started last year,he was out,with around $30 mill in wages,bonuses & share options.
He was trained and learned his management style in North American corporates..

Let Luxon join the backbenches. With any luck, it will be a long time.

Just another plant by Key and his elk, in an attempt to enslave NZ inc with more overseas debt and strip us of the assets we have left.

It is difficult decision to understand for an immigrant like me.
Are stopping potential deaths and spread of virus that important for NZ ?

Dat u Donald? Tremendous tweet.

Stay home saves lives but kills economy. Trump choose not to kill economy when Ardern chooses to save as many lives as possible.
I don't know why everybody says Arden is right and Trump is just a clown

The US economy seems to be doing just fine, so that worked out..

Multi generational Nat voter.
Yeah I see nothing to vote for in Beidges and even worse Bennet!
We go on about useless Labour is then we look at Brisges and his 2IC.... there is nothing.. full stop

Bridges and Bennett would have NZ open now.
Being in limbo doing nothing at the moment is crippling NZ.
We have had 20 deaths unfortunately but they all would’ve moved on in the near future, and for that we Re going to have far more deaths through ArdernS control and dictatorship.

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"Bridges and Bennett would have NZ open now."

Thankfully the vast majority of NZers accept what disaster that would be.
Bridges and Bennett may have unrivaled experience developing profitable businesses from scratch but
epidemiologists they are not .

But neither of them have ever had any hand in running a buisiness. Not that I think that is a prerequisite to be a good politician.

Sorry, should have added (sarc)

Yep, there would be thousands dead if Bridges was running the show.

On the health side of things the govt has does reasonably well albeit with a fair share of luck given we left our borders uncontrolled as long as we did.

On the economy side of things they have had quite a panicked approach and they are looking very amateur at best

Rubbish, there may well have been more elderly deceased but what you have to measure that up against is the carnage from being closed up!
We will wait and see what does happen when we are open for business.
Hopefully I am wrong and we don’t have the no. of deaths due to Ardern having us locked up for too long unnecessarily.

You want open borders too?

I tip my hat to you TM2,as well as a property guru,you are also an accomplished epidemiologist and public health expert...

“One signature a lot of these armchair epidemiologists have is a grand solution to everything,” (actual epidemiologist) Bergstrom says. “Usually we only see that coming from enormous research teams from the best schools, or someone’s basement.”

Brazil. Now there is a country with a leader for you to look up to

Jenée you forgot to add "The Thick Of IT" TV series, which is the British inspiration for Veep, that's created by the same script writer. https://www.youtube.com/watch?v=AuBSwFwhxrs

But seriously is WTF!!!!

Ok it could have been worse, we could have some one like Trump! ;)

Should have got the House to Pay taxes on their 2nd/3rd/4th/5th ------to infinity--houses......-and the Sir Bob Jones/Key style of miss-Leading the Taxpayer......

Billions in retrospect....But I digress.

Maybe we should have walked it...Moore. And Approved a 100 Year old...walk and work about...

https://www.thesun.co.uk/news/11523326/captain-tom-moore-raises-whopping...

Not a 1000 Pound doNATION....but a 73million...free gift for a Fighter...........Centenarian. Magic.

Worth a knighthood......unlike the other beneficiaries.

Finally the reality is here, instead of the unpopular bailing out by the government, now it wants everyone else who is economically productive and viable to bail in everyone else who are not. The maxim of if one dies all dies, no one is left behind. I cannot help but think this country will be completely broke by the end of the year. By the way who is going to bail out NZ? IMF? Worldbank? Extraterrestrials? Communism at it's purest.

Future RBNZ statement:
"Something market dysfunction, something provide liquidity, something supporting New Zealand."

Then push some buttons buy a load of government debt. The ol' Reserve Bank reach around for government.

Anything you have saved in NZD, transfer it to something with medium term value store potential now.

Do you think NZD will drop further?

That is what they said.
Personally, how can we dip against a USD that isn't worth squat with the money creation???grab your wheel barrow..

Those who see it coming have done that.

Calling it... Jenée Tibshraeny. Hat tip!
There are people out there who can see through the BS, keep on trucking. Hopefully they will be the ones that will feather your nest for you actions / morals.

Jenee, you are just making clickbait headlines, legislation is frequently amended post final reading. Might I suggest you dig into the bigger issues at hand, such as why NZinc can't get its collective self together to work around the new covid operating environment and why a govt loan is required for so many businesses? Quite a lot of government intervention in a market based economy don't you think? I want my money back NZinc you aren't free marketers...you are communists!

I see they are having another crack at the democratic process with the RMA.

“However, under the new powers resource consent decisions for large projects would not go to council and public input would not happen. Instead, a panel of experts chaired by an Environment Court judge would determine whether a project could be given the green light, he said.” David Parker

Why bother with the election this year ? Let’s just do this ! We’ve got it covered. All’s good in Godzone !

Stacking the deck, why have a council and RMA if "would not go to council and public input would not happen."
... why would they to side step if there wasn't something dodgy and fishy about their projects. Hopefully they will fail miserably.

The RMA is only part of the problem its just as easy to become entangled in the various local regulations as well and thats why a competant planner must be part of your business model if you are doing a development. You would be amazed at the stories I hear of people who try to go it alone...and make a huge mess only to turn around and blame the rma or the local council for their cockups. Problem being that many people perceive property development (particularly) as their devine right and a path to riches regardless of whom it impacts upon which is where the RMA can be quite a good peice of legislation. I suspect some work will be done to improve the flow of projects through the framework quite how that is arrived at is anyones guess...

There is nothing wrong with holding any government to account.

In fact, to pretend that governments don't make mistakes, or to assume all will be automatically corrected is putting ones head in the sand.

So much bitterness and anger in this comment section... I can't believe how many people are still so butthurt that National lost the elections (both the previous one and the upcoming one).

Last time I checked,Parliament is made up from both sides...what were the Nats doing? Did they ask questions of this bill??

Simon is head of the COVID-19 oversight committee. He appears skilled in oversight.

I'm betting the vitriol will get worse after those 'leaked' poll results...Mr & Mrs Hoskings will be apoplectic with rage...Monday mornings rant will be off the scale lol..

For those on the right that say Labour has no one who knows how to run a business,read this:
https://www.stuff.co.nz/national/politics/103235167/national-portrait-mi...

Mr Parker was involved at the start up of our 5th largest company,a $14B Company...
What has Bridges & Bennet done in the real world??

In 1992 Bennett moved to Auckland,[7] where she worked in a rest home, first as a kitchenhand and then as a nurse aide. She began studying social work at the Albany campus of Massey University in 1994.[6]She became the welfare officer of the Massey University at Albany Students' Association, then, in 1996, the president, which she said gave her a taste for politics. She discontinued the social work component of her course of study, leaving simply social policy,[6] and graduated with a Bachelor of Arts.

Crikey...I rest my case,kitchen hand,nurse aide,welfare officer (social worker)...Politician

Not to mention welfare beneficiary before that. Her friends from the time even tried to speak out about her welfare receipt (there was an open letter), but were silenced.

If they made a mistake and they dont fund it, then surely no mistake will be implemented despite the Act?

Hard choices need to be made. One example is NZ government spending 6 million per week to subsidise airlines (mainly Air NZ) to fly their passenger fleet on charters using the belly hold only for cargo. The majority of those flights are going to Shanghai and Hong Kong to have the effect of stabilising the prices of fresh New Zealand produce and seafood in the Chinese market. How perverse is that?
At least do something with the seats up top. There are tens of thousands of people who are virtually trapped in NZ right now on temporary visas. No job and little or no access to support from WINZ. Put some crew on those aircraft. Let people fly for free to Hong Kong or anywhere the flights are going. As long as they can book a same day connection to onwards destination. So they don't have to leave the airport. If New Zealand citizens wat to return they can fly back the same way.

Yet I can't fly pups around NZ cause all the cargo is full hahahahaha

Damn you Labour Government for enacting a scheme to support small businesses. Proof right there that you school teacher/university lecturer types don't understand the real world. And there's plenty of time to apply business as usual levels of due diligence, consultation and so on to the implementation of this scheme. You should have moved more slowly, with greater caution and due diligence. And what, Government's not going to check the creditworthiness of all these businesses before you extend the loans to them, and spend an age putting in place security arrangements. You're leaving it to banks to decide - what do they know about this stuff? Now's the time for finely-targeted, precise policy. Sniper rifles, not bazookas. Smart, experienced business folks like those leading the National and ACT Parties definitely would not be giving loans to small businesses that might be in trouble as a result of COVID19.... These profligate small businesses need to be taught an austerity lesson. What we need here is some trickle down economics. Tax breaks and let the market sort all this out. Get rid of these nanny state, red tape idiots - who are even as we speak are ripping the heart out of the RMA, stripping the people of their democratic voice. God help us.

I'm hoping this is (sarc)...

Poe's law strikes again

It can be hard to tell in here sometimes ;-)

Guv'nance on the fly. It gets worse. Someone above was right, only God can save us now.

Kudos Jenee

Top work Jenee.

Whoops, passed wrong law... Wow, just wow...

We had to pass the bill to find out what's in it.... shades of ObamaCare.....

Days to the General Election: 23
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