How bizarre! Absurdistan revisited

by Graham Adams / 05 June, 2017

Donald Trump may be making New Zealand seem like a beacon of normality but we still have an impressive number of our own oddities here. Graham Adams goes back to the weirdness well.

Two years ago, I wrote in North & South about New Zealand as the Absurdistan of the South Pacific. After the US elections last November, it might seem a little pointless to reprise that theme because the lunacy of Donald Trump’s short, tumultuous reign has suddenly made our often daffy little nation seem like a model of sanity and reason in comparison.

Amid the relentless news about the chaos of Trump’s America, who cares if we’re the only nation in the OECD that doesn’t have a deposit guarantee when Australians can count on $A250,000 per financial institution? Or that we turned on Kim Dotcom in 2014 for bringing us news from the outside world – in the form of Julian Assange, Glenn Greenwald and Edward Snowden – that the state has built an extensive apparatus that enables it to spy on us? Or that Mike Hosking and John Key maintained that a persistently overvalued New Zealand dollar and Auckland’s insane house prices were signs of our success and economic strength?

Nevertheless, we have recently experienced a few outstandingly odd things worth recording, including that our three-strikes sentencing policy means you can get seven years in jail for pinching a woman’s bum. This may seem more like Dubai than New Zealand, but unfortunately it’s not, as 20-something Raven Casey Campbell found out in November 2016.

Campbell had previously been convicted on two separate strike offences – robbery and aggravated robbery – and was serving a jail term for the latter crime. In sentencing him to seven years for grabbing a Corrections officer’s bottom, Justice Kit Toogood said: “It may seem very surprising that this consequence could be required by law for an offence of this kind, but that is the law and I have no option but to enforce it.”

Dunedin law professor Andrew Geddis was happy to help any layperson struggling to understand the judge’s comments. He wrote in The Spinoff: “A little bit of translation assistance may come in handy here. When a judge says a legislative outcome is ‘very surprising’, that is judicial code for ‘batshit crazy’.”

Toogood recommended early parole but, if he doesn’t qualify, Campbell may end up serving the full seven years, at a cost to taxpayers of around $700,000. Which gives some insight into the consequences of a justice policy too often driven by a desire for punishment well beyond the point of reason. Most notably, we are spending $1 billion to expand the country’s prison capacity by 1800 beds as our jail muster goes over 10,000, even though, according to the government, total crime rates have fallen 14 per cent since 2011.

In the past year, we have also watched the government pay $925,000 to David Bain that definitely wasn’t compensation and should not be construed as such by anyone at all. He was acquitted at a retrial in 2009 after earlier being convicted of the murders of five members of his family and spending 13 years in jail, but even a report by retired Canadian judge Ian Binnie recommending compensation wasn’t going to make the government budge.

There was no way it was going to pay Bain anything that resembled compensation – to the extent that Judith Collins, the then Minister of Justice, was moved to bin Binnie’s 2012 report after commissioning a critique by a retired New Zealand High Court judge, Robert Fisher. This report led to a further report by retired Australian judge Ian Callinan, who was asked to decide whether Bain had proved he was innocent on the balance of probabilities.

Callinan was not satisfied that the threshold for compensation had been reached but in August last year the government coughed up $925,000 anyway, no doubt realising that a big sum of money was the only way to make the problem go away since it had drawn out the compensation debate for seven years for largely political ends.

It fell to Amy Adams as the current Justice Minister to publicly swallow this very large dead rat, which gives new meaning to “having a dollar each way”. Inflation being what it is, the government’s solution is now known as “having a million dollars each way” – a million for Bain and a million for the judges writing the reports in order to deliver the sort of compensation you pay when you’re not paying compensation. (The Binnie and Fisher reports reportedly cost a total of $600,000, while the Callinan report added another $400,000.)

Of course, the three-strikes law and Bain’s payment are not the only weirdnesses we have to thank the current government for. Hunkering down in the run-up to the election, it is busily denying there is a crisis in Auckland’s housing market even as average prices stay over $1 million, and the state is on track to pay $30 million this year for the homeless to squat in motels. At the same time, it’s also busily insisting that the immigration floodgates will be left wide open, even as the Queen City’s infrastructure creaks and groans – whether it is clogged roads, overburdened hospitals and schools, or sewage spilling into the city’s harbours.

It is clear, however, that when this government is called upon to deal with pressing political problems, denial is now only a preliminary step before an extensive deferral.

Swimmable rivers and a predator-free New Zealand have been shuffled well into the future – 2040 and 2050 respectively. And after Bill English had insisted for eight years as John Key’s offsider that superannuation for all at 65 was affordable, he is now insisting it isn’t. In March, he bravely tackled the issue of adjusting the age of eligibility by putting it off until 2037, when most of the baby boomers will already have received their pension. (Just as perversely, Labour advocated extending the eligibility age when they were vying for election in 2011 and 2014 but now, under Andrew Little, find the proposal outrageous.)

The possibility of the Reserve Bank using debt-to-income ratios to cool the housing market has also been deferred until after the elections by Finance Minister Steven Joyce. And I suspect the same will happen to the inquiry into assisted dying by the Health select committee. It will delay issuing a report until after September 23 because, if its members recommend a law change, it will put Bill English, a devout Catholic, in the position of having to reject it outright, as his faith demands.

One problem that could not be deferred forever was the question of our foreign trust regime being used to hide money from overseas tax authorities and to help launder vast sums of illicit proceeds.

The Panama Papers burst onto global media sites in April 2016 and quickly turned into a political firestorm that John Key couldn’t put out with his usual insistence that there is nothing to see here. So he enlisted tax expert John Shewan to investigate.

Shewan found no evidence of abuse but conceded the system could be open to abuse, with the result that the law has now been changed to give IRD much more information about who is setting up a foreign trust here.

The law takes effect in July this year and will probably be effective, but the damage our lax regime has done to our enviable international reputation for transparency and honesty has been severe. The fraud-busting, London-based Sarawak Report – which has hundreds of thousands of readers – has highlighted New Zealand’s role in providing a smokescreen for illicit money, including proceeds from the 1MDB scandal, which is reverberating around the world as governments try to track what happened to the billions illegally extracted from Malaysia’s sovereign wealth fund and laundered through tax havens.

And it’s not only our reputation for transparency and honesty at stake. The government has also ended up looking like complete muppets.

The sad truth is that we sold our reputation for such a paltry amount of money it recalls the biblical story of Esau, who sold his birthright for a “mess of pottage”. He was very hungry apparently but history hasn’t judged him kindly, despite his stomach crying out for a bowl of lentil soup. He has become an enduring symbol of short-sightedness and greed.

Our pottage is a mere $24 million a year in lawyers’ and accountants’ fees for setting up and administering foreign trusts, of which the government receives around $3 million in taxes.

Three million? When most jurisdictions set up tax havens, in return for the privilege of hiding money they demand substantial recompense via fees, or that the money be deposited in their new host country. We don’t. As tax specialist Andrea Black wrote on her blog in September 2016: “Tax havens charge fees or levies or require the dosh to be parked in the country concerned. None of which applied here. So as a country we got the bad name but not the income – genius.”

No wonder a senior economist emailed me about the foreign trusts debacle in response to an article I had written: “Foreign trusts are just another dimension of the fact that we are a soft touch, a nation of good-natured fools just ripe for the plucking.”

US billionaire Peter Thiel was quietly granted New Zealand citizenship using a clause allowing “exceptional circumstances” of public interest. Then Minister of Internal Affairs Nathan Guy can no longer remember what those exceptional circumstances were. Getty images.

That is vividly apparent in our immigration policy. The government justifies mass immigration partly by arguing that our ageing population means we need more young workers to support them. But, as Winston Peters has pointed out, we have accepted 87,000 older immigrants over the past 15 years, who currently need only 10 years’ residency to qualify for superannuation. A proposed shift to 20 years won’t happen until after the elections.

We have also asked young immigrant workers to commit to sponsoring their parents for five years after they arrive, but many have gone on to emergency benefits. Last October, Immigration Minister Michael Woodhouse admitted that has been costing taxpayers “tens of millions of dollars a year”, as well as burdening the health system. The brilliant solution Woodhouse proposed? Extend the sponsorship period to 10 years – which has as much chance of working as the previous one. He might as well make it 50.

And when their offspring leave for fresh opportunities overseas, we don’t demand they take their parents with them, even though the argument most commonly used for admitting them in the first place is that it is harsh and culturally inappropriate to separate parents and children.

After intense political pressure last year, the government has frozen the parent category, but only temporarily. It’s certainly hard not to agree with New Zealand First’s Ron Mark, who said in Parliament last November: “National are not interested in cutting immigration but are allowing New Zealand to be taken as a country of gullible fools.”  

In 2011, we quietly gave citizenship to billionaire Peter Thiel, who had invested in local technology companies and made a donation to a Christchurch earthquake fund of $1 million. We weren’t told about the citizenship deal until NZ Herald journalist Matt Nippert stumbled over it in January, which perhaps isn’t entirely surprising given the official ceremony was held in Santa Monica, California, which is a long way from local journalists’ rounds. And despite the then Minister of Internal Affairs Nathan Guy using a clause that allows the minister to grant citizenship in “exceptional circumstances” of public interest, Guy can no longer remember what those exceptional circumstances were.

Nippert has since shown the extraordinary citizenship grant hasn’t been repeated (apart from the cases of two newborn babies), making Thiel a unicorn. It could be concluded that Guy must suffer from early-onset amnesia to be so forgetful about such an unusual occurrence.

We gave Thiel citizenship despite the fact he has never lived in the country, and certainly not for the majority of five years required before it is usually granted. Nor did he intend to live here. He did say it would allow him to promote New Zealand more effectively, although there was no reason residency wouldn’t have done just as well. We haven’t heard from him since, apart from him buying a 193ha property in Wanaka for which, as a citizen, he didn’t need Overseas Investment Office approval.

Naturally, the government is keeping as quiet about our spy agencies’ connections with Thiel’s big-data technology company Palantir as they were over his sudden incarnation as a fully fledged New Zealander in 2011.

In 2012, we also offered his Valar Ventures a great deal in a partnership with the publicly funded New Zealand Venture Investment Fund. Thiel made a profit of $23 million while NZVIF scarcely made anything, although both parties carried the same risk.

Some commentators said the “Heads I win, tails you lose” deal was standard angel-investing practice and assured us “there’s nothing to see here”. But, if that was the case, why did Steven Joyce quickly close the loophole last October when Thiel activated his generous buyback clause?

The government was slammed by many for what was seen as yet more corporate welfare. Although National is touted as the most business-savvy of our political parties, its track record is less than stellar. The SkyCity convention centre deal was a win-win for SkyCity; Warner Bros had us pay $34 million for the Hobbit; and the Tiwai Pt smelter successfully hit us up for $30 million.

And let’s not forget the Saudi sheep deal. Murray McCully’s help in setting up a sheep farm in the desert for a businessman cost us $11 million, despite it being a dismal failure, with some of the 900 pregnant ewes flown there dying, along with most of their lambs. Last November, the Auditor-General found no evidence of corruption over the arrangement, which leads to the inevitable conclusion that it must have been the result of serious incompetence.

These deals were overseen by politicians who had experience in the much-vaunted “real world” outside Parliament, including a successful businessman (Joyce) and a wealthy currency dealer (John Key) – as well, of course, as the man alleged to be the craftiest in New Zealand politics, sometimes referred to as Machiavelli McCully.

Kim Dotcom. Getty images.

But all of these clumsy and costly deals may be dwarfed by the Kim Dotcom affair that revolves around an entrepreneur to whom we are very unlikely to grant citizenship, despite the fact that in 2010 he gave Aucklanders a spectacular $500,000 New Year’s Eve fireworks display over the Waitemata Harbour. He has also lived here full-time for more than the required five years, even though the United States – or perhaps more accurately Hollywood – would much prefer him to be living there (but only if he resides in one of its prisons).

Dotcom has largely disappeared from the public eye, but he will zoom back into view if the case for his extradition fails. New Zealand agreed in 2012 to allow Dotcom to sue us if the FBI case against him was shown to be unfair and unfounded. We could be on the hook for a billion or more in damages.

If the prospect of having to pay out on our guarantee seems unlikely, it’s worth remembering that Sony wouldn’t join a civil case against Dotcom because it would have to agree to meet any damages if he won, which it thought entirely possible.

The case was never any of our business. As our High Court ruled in February, there are no grounds in New Zealand law for extradition under the online copyright charges he was initially charged with, given that copyright infringement is a civil matter in New Zealand, not a crime. Instead, we have moved from copyright charges to a conspiracy to defraud, which appears to be a way of criminalising copyright breaches.

We have already spent an estimated $30 million prosecuting Dotcom on behalf of the US government and will probably spend $20 million more as the case winds through the Court of Appeal and possibly the Supreme Court over the next few years.

The man who gave us the Dotcom debacle is, of course, John Key, who has vanished from political life without any convincing explanation for why he stepped down as Prime Minister last December after assuring journalists he was going to fight a fourth term.

No one saw it coming and no one knows exactly why he did.

But not very many people seem to care. They were persuaded by his claim that he was needed at home, despite his children being in their 20s, and reassured by his assertion that his wife, Bronagh, hadn’t pushed him into it.

Unfortunately, the inexplicably disappearing politician seems to be becoming a feature of our political life, with former Northland MP Mike Sabin vanishing in 2015 for still unexplained reasons, and then Key in 2016.

We can’t match Australia in this regard, however. Harold Holt had been Prime Minister for only 22 months before he disappeared while swimming at a beach near Portsea, in Victoria, in December 1967. He had been accompanied by two friends and bodyguards, but his body was never found and he was presumed drowned.

Conspiracy theorists have had a field day ever since, with explanations including that he was a spy and was picked up by a Chinese submarine waiting near the beach. Or that he was an alien, or that he was murdered.

The best story we can offer in response is the theory held by Sir Bob Harvey, former Labour Party president and mayor of Waitakere, that Prime Minister Norman Kirk was murdered by the CIA because he was developing a foreign policy independent of US interests.

That certainly wouldn’t have been a problem for John Key, who was Barack Obama’s golfing buddy in Hawaii and seems to have done the bidding of the US government in expanding the rights of our spy agencies to collect information on New Zealanders.

Recently, of course, Kim Dotcom has claimed Key resigned because he knew that two terabytes of the National government emails had been hacked and would be released before this year’s election.

If that rumour is true, National should be thrilled. As the release of Nicky Hager’s Dirty Politics and Dotcom’s Moment of Truth meeting in the Auckland Town Hall showed conclusively in 2014, New Zealanders hate being told what’s really going on behind the scenes. The backlash will be severe.

Of course, sometimes the backlash is delivered in advance. When news broke in March that a new book by Nicky Hager was due to be published, the response in the online comments sections of newspapers was mostly vitriolic. And this was before anyone knew what the book was about.

Welcome, once again, to Absurdistan.



This was published in the May 2017 issue of North & South.

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