Importers Institute

Time to Break Port Strike

2011-12-21T14:56:00.001+13:00

The time has come to break the strike at the port of Auckland. The Maritime Union is negotiating in bad faith and is bent on doing maximum damage to importers, exporters and everyone else in Auckland.

The Importers Institute does not, for obvious reasons, like this strike. But we would like it even less is we lived in a country where people are not allowed to strike. That is why we have consistently urged the parties to resolve their differences and have not taken sides. Until now.

The Union is not striking for better conditions for its members. It is protesting that the Port gave even better conditions to people who do not belong to the Union. Quite simply, it wants to retain a total monopoly on stevedoring and snuff out any possibility of the Port becoming more flexible and productive.

This is not a strike to protect Port workers. It is a strike to save the jobs and influence of the old geezers who make a living as union officials.

Both sides have engaged in spin. Shipping company Maersk came out and said its decision to move a service to Tauranga was influenced by the current disruption. This is simply not true. Decisions on port rotations have to be made months in advance. Maersk's contribution, eagerly seized on by the Port, was union-bashing, pure and simple. The fact that this particular union may deserve to be bashed does not change that fact.

The Port made it plain the union members have salaries in excess of $90,000, enjoy premium medical insurance and get paid for reduced hours. So what? Driving those container-straddling machines is a very skilled job and they have to work round the clock shifts. The pay does not seem excessive to us.

The Union complained bitterly that the Port had the temerity of writing to the workers direct pointing out the obvious: unless the operation becomes more flexible and productive, there could be redundancies. The Union called the letters "filthy, reprehensible and repugnant". What bollocks. They are nothing of the kind. Read them here and judge for yourself (h/t Whaleoil).

The Port has now offered a 10% pay increase. The Union responded by giving notice of yet another strike. It is not clear what the Union actually wants, except to ensure that it retains a total monopoly of stevedoring.

So, how do we go about breaking this strike? One option would be to do what President Regan did to striking air traffic controllers in the US thirty years ago. Sack the lot of them and employ new people. Unfortunately, John Key is no Reagan. He could, however, promote a law change to have union officials, who act in bad faith, held personally liable for the damage that they cause to others. We already have provisions to outlaw sympathy strikes, so this would merely be an extension.

The best route, however, would be for the Port of Auckland to simply make all members of the Union redundant and, like Tauranga, put its stevedoring out for competitive tender by private operators. The Labour politicians in the Auckland Council won't like it a bit, but will not ultimately have the political courage to stand in the way of management. There will be a period of disruption, no doubt, but as Qantas discovered, that is far preferable to a slow death at the hands of self-serving unionists. The Port can count on our support.

Fonterra Needs Historians, Not Lawyers

2011-10-13T11:25:00.000+13:00

The New Zealand milk cooperative Fonterra wants to form an entity called Kotahi (Maori for "standing together as one") with Silver Fern Farms, a meat exporter, and possibly other exporters and importers, to collude against shipping companies and ports.

That collusion is quite possibly illegal, so Fonterra has applied for a dispensation from the Commerce Commission. Ironically, one of the parties against which they want to collude are cartels of shipping companies, who themselves are still exempt from our anti-competitive laws.

The effect of the proposal is simple: Kotahi will use Fonterra's buying powers, augmented by those of its chosen partners, to get freight discounts from shipping companies. It seems probable that the shipping companies would increase the freight rates they charge smaller exporters and importers to compensate.

So, is this just a scheme to increase the profits of Fonterra at the expense of almost everyone else? And if that is all there is to it, how on earth could anyone think that the Commerce Commission would allow that?

Fonterra says that their real objective is to promote a National Infrastructure Plan. They said, "While Kotahi Logistics will be seeking to drive ocean freight and other transport costs for its limited partners and customers [...] achieving costs savings for the benefit of individual firms is not the primary driver. Rather, the Kotahi proposal is aimed at creating a more efficient freight system for all New Zealand firms by promoting greater consistency and more integrated investment in the transport sector."

Fonterra is New Zealand's biggest exporter. Can't they just use their muscle to achieve those objectives? Apparently not: "Even Fonterra - whose usage of containerised freight services currently dwarfs that of any other users - standing alone cannot expect to drive the necessary change", they said.

The cooperative is itself the product of a dispensation from our anti-competitive laws. They enjoy a virtual monopoly on the export of dairy products from New Zealand. Chinese consumers are desperate for infant milk formula packed in New Zealand - they don't trust local sources after a former Fonterra joint venture there was caught poisoning babies with adulterated milk powder. Some entrepreneurial traders are going around buying infant formula from retailers in New Zealand and shipping it to China. It won’t last. The authorities here will do whatever it takes to preserve Fonterra's monopoly.

The Importers Institute shares some of Fonterra's concerns about the lack of rationality in infra-structure investment. Port companies, like Auckland for example, are regarded as little more than cash cows by the local politicians who 'own' them. The usual business accountabilities are absent, because those companies are not businesses, they are extensions of local government.

The solution is not more bureaucratic control or five-year plans drawn up by technicians employed by central, local or corporate bureaucracies. The solution is to ensure that those assets are sold to the highest bidder and operated as competitive businesses - with no dispensations for anti-competitive behaviour. If, for example, Auckland fails to invest in gear to handle larger ships, they will lose that trade to a competitor who does, say Tauranga or Melbourne.

Fonterra must have spent a few million dollars on this proposal - the corporate litigation specialists of Chapman Tripp and the economists from NERA don't come cheap. They should have consulted less with lawyers and more with historians. Without exception, every economy that has ever attempted to replace markets with central plans devised by experts has ended up in total failure. The 'obvious' efficiencies of central planning never materialised, only shortages, privations and the growth in a class of corrupt planners. As someone said, if you introduce central planning to the desert, nothing much will happen at first, but after a while there will be a shortage of sand.

The Importers Institute urges the Commerce Commission to decline this proposal. We urge the government to take steps to free up our economy (including the break-up of export monopolies), instead of tying it up in the red tape of planning committees staffed by would-be experts. We would expect our largest corporation to share these aims. Sadly, Fonterra has failed to exercise business leadership, in this case.

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UPDATE: 19 Dec 29011. The Commerce Commission declined Kotahi's application for immunity from prosecution under the Commerce Act. If their future activities become anti-competitive, Fonterra and its partners can be prosecuted. The Importers Institute applauds this decision.

Forwarders Get Just Desserts

2011-08-12T16:14:00.004+12:00

Abba Logistics, a subsidiary of Chinese forwarder Amass Freight, charged an importer for fabricated and inflated destination charges. The Disputes Tribunal has now ordered Abba to refund all charges - fabricated, inflated and real.

Abba charged the importer a total of $6,535.07 over four shipments. The charges included a port service charge of $100 per cubic metre, a delivery order fee of $55 per shipment and an assortment of fabricated destination fees variously described as 'carrier security fee', 'document fee', 'port security fee', 'handling fee' and 'MAF handling fee'.

Abba also charged the importer US$25 per m3 for 'origin terminal handling charges' on two of the shipments. The terms were CFR (Cost and Freight), with all freight costs to be paid by the exporter.

The importer took the issue to the Disputes Tribunal and submitted that the only charges that Abba was entitled to collect were the delivery order fee of $55 per shipment plus a destination terminal handling charge of $65 per m3. It claimed for the return of the difference of $3,676.79.

Abba came up with two main lines of defence. The first was that when the freight was prepaid by the exporter, they would charge freight of US$25 and destination charges of NZ$100, but when the freight was payable by the importer, then they would charge US$85/NZ$65. They attempted to explain this by saying that "The market seafreight rates are always combined with a reflection ratio of destination port charges rates".

The second line of defence was that Abba was merely an agent for Amass and, if the importer had a problem with the charges it should take the matter up with Amass direct. We have since established that Abba is a New Zealand company, member of CBAFF (Freight Forwarders Federation) and based in Auckland. It has one sole director: Ms Emily SHIH. It has three shareholders, Messrs Shang Gen GE, Rong LING and Zheng Yi WU who all share the same address: 248 Yangshupu Road, Shanghai. That address is also the head office of Amass Freight International.

Nevertheless, the Tribunal took Abba at its word. It found that there was no contractual relationship between the importer and Abba. It ordered Abba to refund the total amount that it had received from the importer within ten days. It will now be up to Amass of Shanghai to pursue any proper destination charges directly with the importer.

The Importers Institute continues to receive a steady stream of complaints against forwarders who fabricate and inflate destination charges. In addition to Abba, an outfit called POTA Global Freight has come to our attention on several occasions. Our advice to importers is that they have no option but to pay the extortionate amounts demanded (or face demurrage charges) but should then refer the matter to the Disputes Tribunal.

Unlike Abba, POTA have refunded importers for the overcharges, when threatened with Court action. The Importers Institute sent a courtesy email to POTA's head office in Australia helpfully pointing out in the subject line that the "New Zealand Office of POTA is disgrace to your company's name". We said we "can't believe that a company with the history and international reputation of P&O has lent its name to [...]". We were surprised to receive an email from a Mr Steven Hussey saying "You rude asshole. I look forward to meeting you face to face real soon!"

Mr Hussey of Melbourne calls himself "Director - International" of POTA Global Management Pty Ltd (a division of P&O Trans Australia). We suspected that there was some sort of cultural misunderstanding so decided to consult with a specialist in these matters. We have now been assured that Mr Hussey's response is considered to be perfectly acceptable business etiquette in some parts of the docks in Melbourne.

The Importers Institute believes that it is high time that the Commerce Commission had a closer look at the totally unregulated forwarding sector. Importers should not have to put up with these rip-offs.
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UPDATE: 17 Aug 2011. Abba Logistics have appealed to the District Court against the decision of the Disputes Tribunal. We will report on the outcome.

UPDATE 2: 19 Dec 2011. The District Court cancelled the Disputes Tribunal dcision and ordered the matter to the District Court for a new hearing.

Forwarders Fined Millions

2011-06-15T13:36:00.003+12:00

The High Court of New Zealand approved a set of fines on price-fixing forwarders:

* Schenkers (a German State-owned company): $1.1m
* BAX (now a division of Schenkers): $1.4m
* Panalpina (a Swiss company): $2.7m

Settlements had already been reached for similar conduct with EGL and Geologistics International and the total cartel penalties imposed to date by the courts is $8.85m.

Kuehne & Nagel is still to have its day in Court.

The forwarders got together and conspired to charge agreed amounts for security costs imposed by US and UK authorities and to introduce a currency adjustment factor following a decision by the People’s Bank of China to stop pegging the local currency to the US dollar.

Justice Allan commented that the surcharge agreements were “part of a sustained course of conduct involving covert meetings and communications.” He also noted that the conduct occurred in “a market of fundamental importance to New Zealand.”

Schenkers has spent more than US$55 million worldwide dealing with regulatory authorities and created a mandatory web-based training facility for its employees globally. The Importers Institute hopes that the message will get through and congratulates the Commerce Commission on these successful prosecutions.

Import Insurance

2011-01-11T10:12:00.000+13:00

Do you insure your import shipments? Some importers choose not to (in effect, they self-insure) while others are happy to leave that task to their suppliers overseas.

We recommend that importers should look after their own insurance, preferably by getting an open policy with a local company. There are only a handful of specialists in this area, so it is relatively easy to compare their products.

One that caught our eye recently is a product called Cargo Plus, from QBE Insurance. They have a plain English policy that, unlike many others, gives cover for loss of profits. They have also decided to forego that perennial excuse for not paying out on claims: "insufficient packaging".

For more information, contact Neil Cousins at QBE, Tel (09) 308 8612, ncousins@qbe.co.nz.

China Free Trade Mess

2010-12-09T17:07:00.004+13:00

New Zealand signed a trade agreement with China. From 1 January 2011, some duty rates will be marginally lower for goods of Chinese origin, when imported direct from China. The implementation, sadly, is a mess.

The reductions are not as simple as "10% becomes 8.1%". Officials decided instead to create separate tariffs for different items. For example, men's cotton shirts not exceeding 81 cm chest measurement will pay 8.1%, but other sizes will pay 10%, unless they are not made of cotton or man-made fibres, in which case they will pay 8.1%.

Confused? You should be. This appears to us to be a make-work scheme for Customs officials. It is not clear what will happen to goods from Southern China coming out of Hong Kong. There is even talk of going back to the archaic system of obtaining hard-copy certificates of origin for Hong Kong goods, a bureaucratic nightmare that we discarded years ago.

This means that we will need to know, for each garment imported, the following four items:

1. Garment type: shirts, blouses, etc. (but not general descriptions, such as "tops")
2. Gender: men's / women's / unisex
3. Predominant fibre: cotton / wool / man-made fibres / other
4. Method of construction: woven / knitted / other

Importers wanting to find out what duty rate will apply to their products, will need to go and inquire individually for each tariff item, using this website: http://www.chinafta.govt.nz/2-For-businesses/2-Tools-and-resources/3-Tariff-finder/index.php.

To try to make it a little easier for apparel importers, we have put together a spreadsheet, which lists the duty reduction calendar for all tariff items in Chapters 61 and 62 of the tariff. Please contact our Customs brokers if you require assistance with finding what tariffs will apply to your goods from 1 January.

Forwarding Rip-offs

2010-10-24T20:10:00.001+13:00

Six international forwarders have agreed to plead guilty in the US of conspiring to fix prices for international air freight shipments. Collectively, they have agreed to pay fines of over USD 50 million.

We reported earlier that the New Zealand Commerce Commission filed proceedings in the High Court in Auckland against a number of prominent local forwarders, alleging price collusion. The forwarders involved are Schenkers, BAX Group, Kuehne & Nagel, Panalpina, EGL and Geologistics. These are the same companies that have agreed to plead guilty in the US.

The Importers Institute continues to receive evidence from importers ripped off by the forwarders' China scam. This is how it works: an importer buys goods from China at a price that includes freight; the freight costs are set by shipping companies and are much the same for all forwarders. The actual freight cost is, say, $5,000 and the exporter adds that to his price. He then finds a local forwarder that charges him $4,000.

When the goods arrive, the importer gets a bill from the local agent of the Chinese forwarder inflated by $2,000 with fees like 'China surcharge', 'security fees' and wildly inflated 'port service charges'. The local agent remits $1,500 to the forwarder in China, who thus recovers his 'loss' of $1,000 on the lower quote that got him the job. The exporter pockets $1,000 and the scam forwarders get $500 each to line their pockets.

The importer loses by paying $2,000 more than the going rate. The other big losers are the forwarders who missed out by quoting an honest freight rate. You would expect that the local forwarders association, an outfit called CBAFF, would be keen to denounce this scam, since it affects its honest members and brings the name of their trade into serious disrepute. But, no: their stock reply is that they never comment on what their members charge.

We asked importers to send us copies of invoices with dubious destination charges. In addition to the earlier example from POTA Global Management (a division of P&O Australia) we have now received copies of invoices from Abba Logistics that include imaginary charges such as 'port security fees', 'carrier security fee', 'handling fee' and others, on top of inflated 'port service charges'. Do keep those invoice copies coming, and we will expose the forwarders involved.

Forwarding and Honesty

2010-09-21T14:03:00.000+12:00

The Importers Institute receives a regular stream of complaints about freight forwarders. Sadly, they are often justified. Some forwarders' charges are outrageous.

Take the case of POTA Global Management NZ Ltd, a division of P&O Trans Australia. We have earlier reported a scam operated by POTA's agents in China, where freight ends up being collected at both ends. When threatened with Court action, POTA promptly refunded an importer for a fictitious "China Surcharge" but continues to charge it to other importers.

That is not the end of it. A recent invoice from POTA included a "bio-security fee" of $18, a "compliance fee" of $36 and a "port security fee" of $36. These fees all have something in common: they are a figment of POTA's imagination. They don’t exist. They are made up. They are devices to extract money from importers under false pretences.

Those fees apply in addition to delivery order and administration fees of $50 and "port service charges" of $70 per m3.

Another forwarder, Agility, recently agreed to pay a fine of US$600 million to the U.S. government for overcharging the military on supply contracts in the Middle East. The Arab-owned company (with a subsidiary in New Zealand) was black-listed from future US government contracts.

The Commerce Commission has filed proceedings in the High Court in Auckland against a number of prominent local forwarders, alleging price collusion. The forwarders involved are Schenkers, BAX Group, Kuehne & Nagel, Panalpina, EGL and Geologistics. The Commission said, "Agreements between competitors to fix, control or maintain prices distort the normal forces of competition and keep prices artificially high".

Our advice to importers is that they should always seek a full quote from forwarders, including destination charges. If you have been ripped off by a forwarder, we suggest that you take the matter to the Disputes Tribunal and forward copies of the invoices to the Importers Institute (in confidence). We will continue to expose dubious practises to the disinfectant of sunlight.

Customs and MAF Increase Fees

2010-06-21T16:27:00.001+12:00

From 1 July, the New Zealand Customs Service will start collecting a new 'Biosecurity Levy' of $12.50 per shipment on behalf of MAF.

This will be added to their own CIT - Customs Import Transaction Fee. The Service said, "these import transaction fees are applied to cover the time and costs associated with processing imports and are used to fund border risk management activities." They used to be funded from general taxation.

The new fees will also apply to some private imports and shipments of personal effects which were previously exempted.

The Customs Service advises that the GST increase from 12.5% to 15% on 1 October will apply based on the actual date of arrival of the goods -- not the date when they are cleared through Customs. If goods are cleared in September, but arrive in October, the rate will be 15%. Conversely, if goods arrive in September but are cleared in October, the rate will be 12.5%.

Importers Call for World-wide Boycott of Maersk

2010-05-28T20:43:00.001+12:00

Maersk, one of the world's largest shipping companies, announced that it will no longer carry frozen orange roughy fish on its ships.

The shipping line's New Zealand manager, Julian Bevis, said the decision had been made in line with the company's sustainability policy.

Owen Symmans, chief executive of the Seafood Industry Council, said Maersk had turned its back on New Zealand's fifth-largest exporter.

The New Zealand office of Greenpeace described the decision as "earth shattering" and demanded an end to the trade in bluefin tuna.

Greenpeace New Zealand is campaigning against what it describes as "Fonterra's climate crimes". Fonterra is New Zealand's largest exporter of milk products and, at this stage, it is not clear if it too will be affected by Maersk's sustainability policy.

Orange roughy exports were worth $51 million last year. Gavin Lockwood, deputy chief executive of the Fisheries Ministry, said New Zealand fish stocks were sustainably managed.

Daniel Silva, secretary of the New Zealand Importers Institute, called today for a world-wide boycott of Maersk. "Maersk are not right to destroy a legitimate trade just to make their Danish owners feel morally superior. What comes next, a ban on carrying Palmolive soap to save the orang-utan, or an exit from New Zealand to punish our dairy farmers for their 'climate crimes'?", he asked.

Silva said that importers and exporters need to make it very clear to companies like Maersk that their livelihoods are not to be traded for cheap publicity stunts like this. He urged all Importers Institute members and their suppliers and clients throughout the world to boycott Maersk, until the company reverses this decision and apologises.

Update: Maersk have reversed their decision, but are yet to aplogise.

The China Surcharge

2010-05-03T15:23:00.002+12:00

One of our members imported a couple of shipments from Xingang in China. The freight was prepaid by the supplier in China, but the New Zealand forwarder billed the importer $1,400 for a "China surcharge" and $1,800 for "overseas shipping".

The importer queried these charges, but the local forwarder (a P&O subsidiary) dismissed the inquiry saying that the charges were their standard tariff prices. The importer went back and asked just what exactly is a "China surcharge" and why was he being charged for "overseas shipping" when the freight had already been paid in China.

The forwarder replied by saying that they were just billing what their Chinese principal had asked them to collect. Delivery was refused until the bill was paid in full. The importer paid the charges and then referred the matter to the Disputes Tribunal. As soon as a hearing date was set, the forwarder decided to refund the disputed charges, in full.

Creative invoicing by some forwarders is nothing new and that is why we always advise our members to nominate their own forwarders - regardless of where the freight is paid. Importers should get written quotes for all charges, including "Port Service Charges", these days a significant revenue item for forwarders that has little to do with actual port costs.

MAF Abandons 12-hour Rule

2010-04-28T17:53:00.001+12:00

MAF decided not to enforce a rule designed to punish importers who fail to make a declaration twelve hours before the ship arrives in port.

The Importers Institute criticised the planned rule as case of bureaucratic over-reach - and a money grab. Other trade associations were also opposed. MAF has now decided to leave the 12 hour rule "as a voluntary requirement in the short term".

MAF's Latest Trade-Impeding Money Grab

2010-02-26T12:26:00.000+13:00

MAF Biosecurity has issued a new 'law' (under delegated authority) to start detaining thousands of low risk containers, physically inspect all six sides of each box, while charging importers $100 per hour plus fees.

Under the current system, importers send their declarations to Customs, who in turn pass a copy on to MAF. If the quarantine inspectors decide that they need more information about a container, based on the declared contents, exporter, importer, origin, etc., they place a 'hold' on the container and the importer needs to apply for a permit. If the container is deemed to pose a biosecurity risk, an inspection may follow. The vast majority of containers pose no risk and are released immediately.

The new system, called "the 12 hour rule", will work in the same way, except that if the importer fails to lodge his Customs clearance twelve hours before the ship's arrival in port, then the containers will be placed on hold, even if they are not flagged as being of interest. To get possession of their goods, importers will have to pay for an inspection at the rate of $100 per hour, plus fees. The obvious purpose of this is punitive, since the containers at issue are not considered to pose a biosecurity risk.

The reality is that MAF has nowhere near the capacity to inspect thousands of low risk containers. That is why it is proposing to give itself another month to "work with industry [...] to help them comply". We predict that several things will happen: [1] there will be an increase in risk, with many officers being diverted from biosecurity work to punitive inspections of no-risk containers; [2] containers will clog up hub ports, such as Tauranga and Napier; [3] there will be an outcry from importers who will have to pay hefty fees to MAF coffers and incur demurrage and container detention costs; and [4] the whole thing will collapse under its own weight and become yet another example of an over-reach blunder by MAF.

Over the last ten years, the number of people employed by MAF (along with the salaries paid to their managers) has ballooned. Are you feeling bio-secure yet? Elected politicians are the only effective check on the onslaught of bureaucrats in empire-building mode. The last lot (Labour) were ideologically inimical to business and allowed the bureaucracy to expand by one-third. We had higher hopes for this government.

Climate Change and Eugenics

2010-01-31T21:00:00.003+13:00

Eugenics is the study and practice of selective breeding applied to humans, with the aim of improving the species (Wikipedia). At its pre-war height, the movement often pursued pseudoscientific notions of racial supremacy and purity. It was practiced around the world and was promoted by governments, and influential individuals and institutions.

The second largest known eugenics program was created by social democrats in Sweden and continued until 1975. The pseudo-science was considered as 'settled' by progressive bien pensants in Europe and the US in the early decades of the 20th century. Then, the second World War came along. Several million dead bodies somewhat discredited the 'science'. Suddenly, no one believed in it any longer but, even more remarkably, no one had ever believed in it, apparently.

Which is pretty much where we are now with Global Warming. I predict that, not before long, no one will believe in this proto fascist construct - and you will be hard-pressed to find anyone willing to admit that they ever did. But, like eugenics, not before untold damage has been inflicted on millions. The stupidity of converting crops to biofuels has consequences. Eco-entrepreneurs make millions, millions die.

The wheels are falling off the climate change bandwagon. The corruption of science evidenced by Climategate is simply too blatant to ignore. The IPCC turned out to be as corrupt as you would expect a United Nations body to be. Politicians everywhere who went along with this charade are finding out all about the Turnbull effect.

You read it here first. About three years ago, we commented on these matters in an address given to a group then celebrating the 50th anniversary of the Treaty of Rome. Some extracts from that address:

"The Importers Institute is pleased to be associated with the celebration of the 50th anniversary of the Treaty of Rome. That is because we believe that international trade is good. It is certainly preferable to war. That, we must not forget, was the main reason why the founding fathers of the European project sat down in Rome 50 years ago and decided to free up trade among European countries.

"Let us celebrate the success of that project, but let us not forget that it is under constant attack. Many Europeans seem to have forgotten the lessons of history and are again flirting with a form of fascism. This time, it is eco-fascism and is dressed up as a wish to "save the planet".

"These people are opposed to free trade. They fret about "food miles" (but, strangely, not about clothing miles or pharmaceuticals miles) and say that the only way we can save the planet is by de-industrialising, reducing food production and restraining the mobility of people.

"In fairness, this disease of the mind is not exclusive to Europe. You will be familiar with Al Gore's alarmist documentary, the one that seems to say that we must all panic now, before it is too late. Mr Gore relied heavily on a graph showing a very close correlation between past temperature changes and concentrations of CO2 in the atmosphere. What he conveniently omitted to tell us was that the levels of CO2 changed 800 years after the temperature went up. There is a correlation all right, it is just that it goes the other way. How inconvenient.

"All that happened about 10,000 years ago, long before humans invented SUVs, hospitals or air-conditioning. The medieval warm period was another inconvenient truth. So inconvenient, in fact, that the IPCC relied heavily on a graph showing that it never existed. The now infamous hockey stick graph showed a flat temperature line stretching back one thousand years, rising steeply from the beginning of the industrial revolution. Unfortunately for the alarmists, the graph was proven to be not just scientifically wrong - it was an outright fraud.

"The more that people begin to realise the actual impact on their daily lives of the eco-fascist agenda, the more they are likely to question the pseudo-scientific hype used to justify it. The eco-fascists reply against this inevitable backlash seems to be to shout that the "science is settled" with increasing shrillness. Settled science: now there's an oxymoron if ever there was one.

"But, is such talk really inconsequential? People bent on 'saving the planet', with their talk of food miles and taxes on air travel, have the potential to destroy the very basis of our economy. Instead of countering their fallacious arguments with science, we seem to be saying that yes, you are right, but please go easy on us because we are quite green ourselves. What a strategy!

We want to keep access to Northern hemisphere markets and would like their tourists to continue to fly twenty four hours to spend their money here, while agreeing that air travel is bad for the environment. Then, we spend a few million dollars on a ‘buy local’ campaign. If madness is defined as the ability to simultaneously hold contradictory beliefs, the inescapable conclusion is that we are being governed by the insane.

"Let us celebrate the real success of the Treaty of Rome and that was the opening of borders and the increase in prosperity that only trade can deliver. Jean Monnet and Robert Schuman did not set out to create an isolationist Europe, inimical to trade and wedded to romantic notions of economic self-sufficiency. We should celebrate their legacy by refuting those notions."

Green Confetti

2010-01-01T12:50:00.004+13:00

The Greens and the last Labour government decided to fund a "Buy Kiwi Campaign". They spent $10.2 million from our taxes, most of it ($8.4m) with an advertising agency.

The Ministry of Economic Development has now commissioned a review from consultants MartinJenkins and Associates. The report is available from the Ministry's website.

The report concluded "there was no convincing evidence of overall impact on consumer spending", "there was a lack of conventional policy analysis" and "there was no assessment of the likely impact or of the costs and benefits". In other words, Green and Labour politicians spent our money like confetti, spraying it against the Wellington wind - and achieved nothing of any use.

We could have told them all of that before they spent a single cent of our money. The only beneficiaries were some residents of Grey Lynn, who lined their pockets with the advertising extravaganza.

Fort another example of Greens wasting your money as if there was no tomorrow, have a look at this page from the Customs website. People who were trained as a Customs officers spent an enormous amount of time calculating that Customs spent 110.7016779 tonnes of CO2 equivalent on diesel for their boats in 2006.

No doubt, this was to be measured against emissions in later years, on the road to a "carbon neutral" future. Fortunately, this whole nonsense seems to have been dropped, as there are no subsequent reports. Customs officers will not have to paddle kayaks when boarding ships.

Mercantilism is not Free Trade

2009-11-22T14:10:00.000+13:00

The Government decided to break a promise made under APEC to have free trade by 2010. Tariffs will remain frozen for another five years. This decision was made against advice from Treasury.

Why? In a word, Mercantilism. This is a discredited economic theory that holds that exports are good, imports bad. It is much beloved of bureaucrats who make a handsome living 'negotiating' with each other at plush venues all around the world. One such professional trade negotiator, Tim Groser, is now our Minister of Trade Negotiations.

The evidence that the current tariffs of 10% on clothing and shoes serve no useful purpose is compelling. There is not a single company that decided to manufacture in New Zealand because of those tariffs - they are just too low for that. All that they achieve is to make clothing and shoes, which are practically all imported, more expensive for consumers. And yes, they do keep a few bureaucrats employed, like Customs officials - and trade negotiators.

The Treasury had a look at the issue from a national interest perspective and recommended against the freeze. Customs, MAF, the Ministry of Economic Development and Foreign Affairs had a look at it from a self-interest perspective and recommended a freeze. Trade bureaucrat turned minister Tim Groser went with his former colleagues.

A survey on globalisation published in the Economist in 2003 (www.economist.com) said, "The multilateral approach to trade liberalisation [...] does have a horrible flaw. It espouses the idea that lowering trade barriers is a concession you make to your trading partners; a sacrifice for which you require compensation, or "reciprocity", in the jargon. This mercantilist view of trade - exports are good, imports are bad - is an economic fallacy. Politically - and this is to endorse a point made by sceptics - it serves to enthrone producer interests, neglecting all others. Trade agreements go forward when exporters on all sides tell their governments that they see something in it for them; the interests of importers (that is, workers and consumers at large) are implicitly regarded as politically insignificant."

Minister Groser decided to keep imposing tariffs on New Zealand consumers in the face of evidence that they serve no useful purpose, so he can use them as bargaining chips in future negotiations. As if other countries cared. China signed a free trade agreement with New Zealand for purely political reasons, not because it wants to push its market share of imported clothes beyond 100%.

This degree of economic myopia is excusable in bureaucrats, but very inexcusable in a Minister. After nine years of economic lunacy and empty promises (remember carbon neutrality in our time?), we expected much, much better from this government.

It was interesting to read the cabinet papers prepared by officials and published in www.med.govt.nz. Every passage that referred to the only possible reason for retaining tariffs - as bargaining chips in future trade negotiations - was carefully censored. Why the secrecy? The Economist had the answer in the same article: "Most governments insist that the grubby details of trade negotiations be kept secret; this is their idea, not the WTO's. At the end of any round of trade talks, a triumphant breakthrough backed by all sides can be announced. In the meantime, as you might expect, governments prefer to keep their negotiators' craven submission to corporate interests under wraps."

We need to eliminate our remaining tariffs, not because we want to do other countries any favours, but because that is in the national interest. This concept is not evident to economic simpletons, but we did not expect to have to spell it out to a Minister in a National government.

This is not an isolated instance. Prime Minister Key has said that an economy-destroying emissions trading scheme is necessary to prevent other countries from imposing trade barriers against us. The idea that we would face trade sanctions for failing to worship at the altar of Green religion is simple commercial naïveté. No country could impose sanctions, because no country (other than New Zealand) will actually inflict deliberate damage on its economy to appease the global warming Gods. They will just pretend to do so until the ideological assault from the Left abates in the face of science and the facts.

The Wall Street Journal got it in one when it said, "To the annals of global warming lunacy, add this gem from New Zealand: According to a parliamentary committee, Kiwis should accept lower standards of living to protect the national image abroad."

This is the sort of thing that can happen when bureaucrats become policy makers.

Recession and Imports

2009-05-15T17:20:00.001+12:00

The current global recession started as an old-fashioned bank run in the US. Confidence in the liquidity of the finance sector was quickly restored by the injection of gargantuan sums of taxpayers' money, coupled with government guarantees.

The incipient run was stopped in its tracks and, other things being equal, the speculative housing and commodity bubbles that were built during the cheap credit boom would have burst, as all speculative bubbles invariably do.

Unfortunately, left-wing politicians in the US, Australia and the UK saw this as too good an opportunity to miss. Here was an excellent crisis proving that the intellectual bankruptcy of their collectivist worldview was not buried in the rubble of the Berlin Wall in 1989, after all. No, we cannot just allow the markets to do what they do and allow the speculative bubbles to burst. Instead, we will regulate, regulate and regulate even more and then we will borrow a few trillion dollars from our children and grandchildren to 'stimulate' the economy. Those who advocate strangulation by red tape, quickly followed by stimulation with other people's money, do so with a straight face.

In New Zealand, we are fortunate in that the politicians currently in power appear to be marginally saner. Besides, we just do not have trillions to waste. All we can do is to hunker down and wait until it all blows over. There was a glimmer of hope when the Swine Flu briefly replaced the Global Financial Crisis as the panic du jour, but that scare fizzled out. Soon, we may have to go back to global warming alarmism, unless some other apocalyptic certainty takes its place.

Importers are among the first to feel the effects of recessions. This one, however, is a little different from those that we have experienced in the last two or three decades. If you are importing goods that rely on discretionary spending, you are probably taking a big hit right now, but if you import everyday items that people need, you would hardly have felt a ripple.

Because the current recession is largely driven by media sensationalism aggravated by political opportunism, people react in different ways. They defer purchases that are easy to defer, for example instead of changing their cars at the end of three years, they keep them running for another year or two. That is why the car business in New Zealand is in meltdown, along with its support services, like shipping and ports. On the other hand, The Warehouse discount retail chain has just reported an increase of 1% on sales (Red Sheds, same store sales) for the most recent quarter, compared to last year.

Importers of everyday items, like non-luxury clothing, footwear and food are reporting unchanged sales or small drops at the worst. If your washing machine breaks down, you will probably buy a replacement, but that big plasma screen that you have been thinking about will probably have to wait a while longer, especially as you can no longer get a cheap loan on the rising value of your house.

Importers are reacting to the current climate with caution. An increasing number of them are moving their own warehousing and distribution functions to third-party logistics operators, who can usually provide a better level of service at a fraction of the cost, if done properly. They are also attempting to reduce their level of debt, to protect themselves against the outrageous behaviour of our bankers, who have simply failed to pass on interest rate reductions to their business clients while enjoying a government guarantee on their deposits.

Trans-Tasman Direct Flights?

2009-03-05T17:24:00.008+13:00

The Prime Ministers of New Zealand and Australia announced an intention to turn trans-Tasman flights into domestic flights. This idea has been on the drawing board since 1992. We'll tell you why there has been no progress.

About five years ago, we published an item of Import News that read:

"My friend Pam is still fuming. On arrival at Auckland airport, she was greeted by a $200 fine, because her shoes had some dirt – from one of Melbourne's better golf courses. You see, Pam's golf shoes are a threat to our 'biosecurity'. She is not alone. Anyone who forgets to declare a kiwi fruit taken from the Koru lounge in Sydney will face the same penalty. Never mind that the fruit was most probably grown right here in New Zealand."
http://www.dsl.co.nz/Institute/Article.asp?Ref=160

The traces of Melbourne soil in Pam's golf shoes are not a 'biosecurity' risk. The bureaucrats who fined her are not protecting anything, other than their own jobs.

The Prime Ministers are right. The only way to progress the domestic trans-Tasman initiative is to take it away from MAF. We have put up with their self-interested nonsense for far too long. Customs in both countries should accept an export declaration in one country as a provisional clearance into the other. It is perfectly possible to run a country without passenger departure cards. And you can't overcome 150 passengers and hijack a plane with nail scissors or tubes of toothpaste.

Briefing to Incoming Ministers

2009-02-05T17:13:00.001+13:00

The Importers Institute provides a briefing to new Ministers Maurice Williamson (Customs) and David Carter (Bisosecurity).

The good news is that you have inherited a top-notch Customs department. That is not just flannel produced by the department's PR, it is a fact established by reputable international surveys and it is also our observation. Customs protects the border and collects duties efficiently and with minimum disruption to trade.

The bad news is that the Ministry of Agriculture and Forestry (MAF) continues to encroach on the border protection work of Customs. Other agencies, like Immigration, are quite happy to delegate front-line duties to border protection professionals. But not MAF.

Have you noticed that, these days, after going through the Customs queue and waiting for your baggage to come out of the belt, you have to go through another lengthy queue? You hand out a form to a MAF official who then decides, based largely on intuition, whether or not to screen you. The people from Customs upstairs, whose job is to detect drug smugglers and illegal immigrants are apparently not to be trusted with figuring out whether you are likely to be trying to smuggle apples.

When MAF officials find bugs in containers, they promise to stop every shipment for the importer in question (or for other companies importing from the same supplier) for the next five shipments or the next twelve months, whichever occurs first. These stops are to be accompanied by charges of $100 an hour and the intention appears to be clearly punitive. Notice that they are not punishing an accredited operator for failing to detect risks and to alert MAF, they are punishing importers whose suppliers may not have done the right thing.

In reality, this is not going to work. They just don't have the manpower to inspect so many low-risk containers - a typical case of bureaucratic over-reach. Some importers will be put through a lot of inconvenience and expense and MAF will, no doubt, be asking you for more 'resources' (a.k.a. Money). This tactic seemed to work a treat with the last government: just have a look at MAF staffing levels in 1999 and in 2009. We suspect that you and your colleagues aren't quite so gullible.

Now, this has been going on for a very long time. About twenty years ago, Sir Geoffrey Palmer asked Gerald Hensley to look at border protection agencies and he recommended setting up a single agency. Ten years later, a National government asked Sir Ron Carter to do a similar review and his recommendation was essentially the same: form a single border protection agency.

The government changed before a decision was made and the new Labour ministers, Phillida Bunkle and Marian Hobbs, dismissed the recommendation on the grounds that Labour had promised the Greens that it would maintain a border agency dedicated to 'biosecurity'. The Ministers said that they would get Customs and MAF to work better together.

Ten years on, the departments have come up with a proposal for something called a "Trade Single Window". All they need is $120 million, more or less. We consider this proposal to be an answer in search of a question. You really should dust up the old reports. A single organisation will, of necessity, provide a single window. Customs use a modern relational database and we see no need to spend huge amounts of money on another big computer project.

There is also some unfinished business that you may want to turn your attention to: (1) a Law Commission report to do away with excessive departmental powers of seizure was dismissed by the previous government on spurious grounds; (2) Customs gave a monopoly to an outfit called ECN to clip the ticket on every import and export and, despite Ministerial promises to the contrary, this profitable contract was never put up for public tender; and (3) New Zealand importers still have to go through the absurdity of paying GST to Customs only to claim it back from the Inland Revenue a month or two later, while in Australia they are treated as a simple balancing debit and credit on the same statement.

The current recession means that you need to raise the bar on the quality of government's spending. Importers expect our border protection agencies to continue to improve services and reduce red tape. The only significant change in this area that the last government managed to make during the nine years that it was in power was the creation of an import transaction tax. We expect much better from you. Let us know if we can help.

Failed Airline in Trouble Again

2009-01-01T17:29:00.001+13:00

Air New Zealand is being prosecuted by the Commerce Commission for anti-competitive behaviour. The Commission alleges that the airline conspired with other airlines to fix prices.

Twelve other airlines that service New Zealand are also being prosecuted.

The action came as no surprise. Qantas paid a $75 million fine in the US and lifted its contingency provisions for any further fines from $57m to $135m. A Qantas executive went to jail in the US.

So, how much has Air New Zealand put aside? Air New Zealand chief executive Rob Fyfe said earlier this year, "We haven't set any figure aside at this stage, clearly there's an investigation going on - we have been named as a party of interest but there's nothing at this stage that allows us to identify a potential financial cost associated with that investigation."

Back in 2002, when the government decided to bail out the failed airline, we said, "Miss Clark and Dr Cullen have sent a message to the management of Air New Zealand: this airline will not be allowed to fail. Management is secure in the knowledge that there will always be another billion where the last one came from."