Reinvigorating The Local

Stephen Parry: Could you tells us your experience as a small business owner in NZ and how you experience the trade and investment policies we live under now and how that might change to make things easier for you.

Jesse: I am co-owner of Chalmers Organics, a food producer located in West Auckland. We specialise in plant-based meat and dairy based alternatives. We are a living wage employer, and a strong supporter of living wage Aotearoa. We have been in business for 24 years. My Mum and Dad, who are here, started the business a long time ago. We not only manufacture, we also market, sell and do our own product development in house. We have 30 employees and we are growing at 40% to 50% a year. We also have 800 domestic outlets and restaurants and cafes that stock our products. Being a living wage employer has yielded real economic benefits for our company. Our staff turnover rate is 3.5% versus the national rate of 18.5%, which creates real benefits for your company. There are more benefits than the financial ones but it’s good to talk about the really tangible stuff.

My partner Andrew also runs his own company. He has a residential building company and employs 8 hard working NZ men. The constant disappointment and surprise to me is they are really struggling in this so-called housing boom in Auckland. It is a real tragedy and sometimes it’s hard to think about. They are competing with foreign construction companies who import cheap labour, don’t pay their staff in NZ or in NZ dollars, so this is a loophole for them to pay less than the minimum wage. They not only export all their profits, they don’t pay tax in NZ. A lot of their employees only work for 18 months, and they work 7 days a week so they are not engaging in the community, they are not concerned with the longevity or quality of the NZ housing stock.

My partner obviously can’t compete with these companies. He pays a fair wage and they are proud of the houses they build and handing them off to NZ families who are hopefully going to live in them for a long time. So it’s not only the wages, but also the quality of the homes. He can’t compete with building companies that are increasingly labour-only companies that don’t provide materials. When labour is the entire overhead for the company and someone is going to undercut you 60%-70%, not only can they massively undercut you, they also can pull out more profit, so it’s a bit of a double whammy. A bit like leaky buildings, we are privatising the profits and sending them offshore and socialising the losses where local government and the NZ taxpayer is the lender of last resort.

The same can be said for low wages in the manufacturing industry. We know that big businesses traditionally pay the lowest wages and the NZ taxpayer is subsidising their profits by providing housing and low wage subsidies. People who are working 60 to 70 to 80 hours a week can’t support their families and live, certainly in Auckland.

One of the main issues with the current economic system is that it assumes that an actual level of competition is maintained, which is categorically not the case. For example, Woolworths Australia bought Woolworths NZ about 15 years ago and that converted our entire grocery system into a duopoly. Our experience with the big companies is they are far more willing to engage with small NZ businesses when they are under pressure from natural competition, and that keeps innovation and small NZ businesses alive. These big companies have a place, but with competition. Similarly, with Fletchers and the timber monopoly, more or less. This year, Andrew tells me timber’s going up 10%-14% because they can get a better margin offshore. Some may say that’s understandable, but unfortunately it leaves Kiwis in a position where it’s less and less viable to build your own home. I’ve got a lot to say about the building industry …

Obviously, over the next 2 decades the world is going to change more than it has, at least in written history, and NZ needs resilience to thrive in this environment. Depleting our local businesses and local skills is not the way for us to remain resilient. As far as international trade agreements go, when we are negotiating these we must protect our local businesses and that protects our local communities, keeps us alive, keeps us resilient, keeps us creative, keeps NZ in a good place.

It feels for us as a business that we are constantly fighting with the government as opposed to working together. For example, the Ministry for Primary Industries holds us to rather stringent labelling requirements, which is fine and it may seem like a technical boring point to note, but it is a silently rather expensive thing to maintain because any claim you make on label you have to substantiate through testing. We are fully for that, but the same restrictions are not applied to any of our competition from overseas. And when that’s pointed out they don’t have the resources or the interest to do anything about it. There are many examples like that for us, trading and following NZ’s food safety laws. For some time it has felt like there’s no one ensuring NZ’s domestic resilience, unless you’re a farmer. The focus is still heavily on dairy and meat for NZ, when organics and plant-based foods is the fastest growing food sector in the world by a long shot, and presents a much larger growth opportunity for NZ and is so much more sustainable in so many ways.

Small businesses do take better care of the community. We treat our employees better. I am proud and loud to say that. We provide services that large companies don’t and won’t, largely because you can’t upscale many small business models. Business owners throw more hours into the work they do, and they are more inspired by the opportunities for innovations – most innovation comes from small businesses in NZ.

I see the main challenges to be addressed over the next decade as how we support and protect our local businesses so they can thrive and help make NZ more resilient, cultivating skills and sustainable practices to fortify us for the big coming changes, the potential for massive climate change and the turbulent socio-economic times that may follow that.

Stephen: You talked about the disconnect between you having to meet stringent standards when producing food products for the market, but at the same time competing with imported products where the same testing standards aren’t applied, so it’s an unlevel playing field. Once local producers were protected by tariff protections at the border to maintain competitiveness of local businesses. These days this is defined as protectionism and people run to the hills when they hear the word. What’s your view as a small business owner of protecting the viability and profitability of small businesses at the border?

Jesse: – Competition is good. Products come from offshore and they provide competition for local businesses and they keep you sharp, and I’m not against that necessarily. Tariffs are tricky. There are a lot of NZ businesses that export and they are penalised in the US and other countries for that. I think there’s no simple answer, it’s industry by industry. For us, we are undercut constantly by international companies, and we are very strong in NZ, very competitive and very motivated. So we are doing OK and at a size when we are a bit more flexible. But smaller businesses, they really can’t compete. I think it’s unrealistic for smaller industries to ever have voice enough for government to put tariffs on products that come in. For the building industry tariffs is so far out of the conversation that it’s not really a subject. There’s so many other issues to tackle before you have got anywhere near that.

Glenn:[He Mihi] I am one of the national secretaries of the Public Services Association. The union is growing rapidly, now almost 68,000 members, so it is an exciting time. While I am going to talk about public services, we also have members in District Health Boards and the wider state sector, we are the largest union in local government and have significant membership in the community sector organisations.

First, I want to comment on the nation state. It remains the main bulwark we have against the worst things that we see in the international trade arena. For all its plentiful flaws it is still the main tool we have, including for public services. How we think about public services is as important as what we think international agreements should do in relation to public services. NZ is still reasonably unusual in that central government still delivers the bulk of public services.

Challenges facing us are similar around the world. Climate change is the big one: public services as emergency response, the just transition through income support and retraining, even public order in socially difficulty times. So public services have a big role there. In core social issues of inequality, poverty, housing, health, education, the state has a critical role in delivering services. Provision of decent work is a huge responsibility. The state needs to be a leader not just in how we regulate but also as an employer. We need to have full employment, jobs that are well paid, with no gender or ethnic pay gap. Where work is secure. And in Aotearoa NZ we have a particular challenge in how we honour te Tiriti and deliver public services across the country.

Thinking about challenges facing public services themselves, one that’s not unique to NZ is how we think about public services. We’ve been living the last 30-40 years within the neoliberal paradigm in which the individual and individual choice has been put above our ability to respond to complex problems as a collective and the need to support each other. We have to change that narrative. On top of that has been another narrative that is a lack of trust in government, which goes together with the neoliberal paradigm. As government has increasingly bought into that individualist approach, that it’s not so much our problem as your problem, people have become frustrated and lost trust. Then you get something like the global financial crisis, which we know was a massive failure of international capital, but has been portrayed by many people as a failure of governments, and the deficits that arose from that erode government trust. And the last nail in the coffin is people like Trump who have set out to erode public confidence in public institutions. We are relatively fortunate in this country, we haven’t had the worse of these excesses. But the example Marilyn Head from the Nurses Organisation gave of change in Pharmac back in 2009 is an example of the kind of question that has arisen here. That’s a huge issue for public services.

Technology is also a huge challenge. So far public services are mainly grappling with it in terms of how do we deliver our services online. At the same time we know our government agencies are big advertisers on Facebook. We know there’s the challenge of the platform approach to delivering services, not just in terms of employment. There’s a platform out there called MyCare. We spent a lot of energy in the community sector getting equal pay for care and support workers and getting equal hours. MyCare is this community run platform which has come into the care and support sector and which enables willing workers to be put in touch with people with disabilities or elderly in their home, completely outside of the arrangements that exist. It’s a locally owned vehicle at present, but who is to say it won’t be taken over by a multinational with all that goes with that. And the model could be applied more broadly.

There’s another major challenge for the state and public services to respond to the challenges of te Tiriti.

Looking to what we can do, we need to look at the domestic and the international levels. We need to have a default that public services need to be run by the state with no privatisation and no public private partnerships (PPPs). We are fortunate that, although PPPs are in our schools and we have one major prison built under PPPs, it’s not as pervasive as it has been in places like Australia. We need to prevent the marketisation of services. And we are still dealing with the funder-provider split inherent in the reforms of the 1980s. If we think back to the 1990s when they privatised ACC, what they did was privatised the market so private firms could come in and compete with ACC, which fundamentally undermines the public good elements of ACC. And with the funder provider split, we saw in the 1990s that it doesn’t matter who delivers services, the state funds whoever. Fortunately the plug was pulled on that but we still have many aspects of public services under the funder-provider split. We need to think before we corporatise public services. Public services in the 1980s were set up for privatisation. A number were pulled back, and we had to renationalise one or two. But they are vulnerable.

We need to ensure that foreign companies pay their fair share of tax and apply a public interest test before we contract out any services. And we need to ensure that public sector workers and citizens have real influence in public policy and how public services are delivered. It’s not enough to say don’t privatise and stop international companies coming in. We also need to rethink how we behave in order to help rebuild that trust around collective action. We need to put te Tiriti in the State Sector Act and ensure that state services are working with Maori while providing culturally safe places for Maori to work. There are some grounds for optimism, although there are risks in creating expectations that might be dashed.

Then to the trade agreements aspects of this. If our public services are configured in ways that make them vulnerable, that’s a problem. We need to look at ourselves first and then look at the agreements. I don’t have much in the way of original ideas, everyone has already mostly said it. I really like the good global governance stuff and, as affiliates of Public Services International, those global union federations have a role to play in ensuring that happens. We need to ensure the agreements have a lens on the public good, rather than the interests of private investors. The notion of a public interest test before privatisation is the kind of thing you could build into those agreements.

I like the idea of having hard expectations laid down that government would have to adhere to in negotiating those agreements. There needs to be genuine recognition of te Tiriti and indigenous peoples in those agreements, and agreements to hold corporates to account, not just governments. And just one thing I learned from Trump via George Monbiot, it’s a good idea if you have agreements to have sunset clauses or review clauses. His comments about NAFTA rang true: something created in a particular time for a particular agenda might no longer hold true, and after a period of time why not stop and take stock and review?

Stephen: You talk of the tendency within the neoliberal orthodoxy to have what were traditionally state services competing in the market through the funder-provider split or direct privatisation. If there were to be one policy intervention that would go some way to remedying that, the low hanging fruit, what would that be?

Glenn: A whole framework of reforms have created this environment. I’ll go with a public interest test. It won’t fundamentally change the dynamics of the framework, but it will require government agencies to stop and think.

How do we reinvigorate local authorities and empower local communities in the future, in the scope of the issues in these agreements? As soon as possible, local government must be made really local in terms of area, character and cohesiveness. It must also have full responsibility for designated and defined local matters. The model must be fully democratic, and its responsibilities independent of central government. The model must not be a corporate or commercial style bureaucracy along the line of the current Auckland Council, which in my view is a huge anti-local anti-democratic body, the opposite of all that local government is supposed to be.

To ensure that local government and communities are fully empowered, NZ needs a formal constitution. It’s my belief that is the answer to several problems, including things focused on in this discussion. Possibly along the lines of the Swiss federation where there are defined constitutional safeguards for local areas, which are called cantons. The councils and citizens have clear rights of self-determination in their areas, which cannot be changed by central government without a nation-wide referendum requiring 2/3 majority of voters agreeing to change. That’s direct democracy, which has not spread very far and it’s time it did. It helps to provide stability for local bodies and local communities and protects them from arbitrary changes to their local government, which we see endlessly in NZ, where powers, functions and costs can be altered at the whim of Parliament. Having talked to people in Switzerland, I believe that such a system has strengthened the communities and fosters active participatory democracy, not a dying and cynical one that is developing in NZ. I really appreciate what Jess said about how we need to get democracy discussed in our schools.

As a basic principle, central government must accept self-determination on local matters through their local councils. That would require Parliament to consult local government about any international trade agreements, with local government being able to reject any proposals that limit its specific local government constitutional rights. In Switzerland such changes to the constitution and powers of either sector of government must be subject to a compulsory referendum of all citizens.

In the international context, any trade agreements should include such matters as the protection of human rights, the environment, the Treaty and democratic institutions, to name a few. I would hope that this hui will also be pushing for an international agreement requiring real free trade and free trading and set a timetable for the elimination of specific trade agreements, such as TPPA, GATS and the China NZ FTA.

Some of what I heard yesterday seemed to be focusing on current institutions and looking at some modifications. I may have misheard it. It seems that this was losing focus on the goal of this hui of an alternative and progressive trade strategy. Aren’t most of these institutions the products or tools of the trade system that has grown up over several decades and has brought us here today, like WTO? I think it’s had its day.

We also need to decide what we are talking about when we say free trade. Do we want to push for fair trade, or equitable trade as it was described earlier, and enunciate what it means? Do we want to push for our version of trade agreements which clearly state the conditions under which we are ready to trade? One speaker suggested yesterday we can’t take sides, while another suggested we need to pick up the bits that we want and not move into areas we don’t want. Rod Oram referred to the current free trade illusion, which is what it is – we have been brainwashed.

Local and central government must not be exposed to challenges or interventions by foreign companies, multinationals, or agreements like TPPA, GATS or the China agreement. Nor should international treaties conflict with the constitution which I hope we will skilfully guide ourselves to in the next 10 or 20 years. This takes me back to the Swiss example, which is one of neutrality. Countries should be free to trade with whomever they choose. No countries or conglomerates should be given special powers or access to disputes tribunals, or demand conditions that undermine rights in the intended trade partner. This country needs the backup of a strong constitution to bolster its trading principles and positions to protect the citizens and give them certainty.

In conclusion, I believe that to achieve appropriate and reinvigorated communities and relevant local government we must have a new, well balanced dual system of government. We need to get rid of the current system which creates instability, unnecessary costs, unfair parliamentary delegation of tasks to local government with impacts on local communities. Central government often forces things on local government, sometimes because it simply doesn’t want to deal with the issues or the costs. I look forward to a formal constitution that will address these issues.

Stephen Parry: strong interest in alternative or new economics, which flies below the radar of a lot of what’s talked about in trade agreements at the state level. Can you speak to what you perceive as the issues challenging local community organising and how that intersections with trade policy in the broader local economy.

Gen: [He mihi]. One thing we need to be careful about with trade agreements is to make sure that rules that are in there to regulate on various things we want, such as financial markets, that they don’t also impact on community organising of different forms of new economics. For example, laws on health and safety that have gone a bit overboard have caused difficulty for after school care programmes in having parents of kids come in and give afternoon teas, as everyone now has to be police checked if they are going to be anywhere near a child. That means we are stopping communities from being able to look after children because we’ve got these over-exertive rules on health and safety. We need to be careful in our trade agreements to make sure we don’t do that in the same way to these small operations that are growing in local communities.

I got very involved in the campaign on the ground to raise awareness about the TPP and it was quite easy to get a lot of motivation from people because it was so obvious there were so many problems with it. I did everything in that realm from handing out fliers to organising public meetings and educating people about it to writing submissions and making submissions to parliamentary select committees. We walked to Parliament from Christchurch as part of our campaign and most recently I chained myself to a train track. We did kind of everything in the legal means of protecting or lobbying about these things. I was incredibly disappointed around the results after campaigning for a change of government who we thought were hopefully going to go the right way on the TPP and then didn’t. It was terribly disappointing after putting in 4 years of intense energy. I felt quite depressed and was wondering: is this where I want to put my energy, into these things that are so high level? Can people not working at that high level of government and international agreements really make any difference?

Before I became enlightened to what was going on with TPP I was a paramedic for St John in Auckland, and in the process of that I became really aware of what the consequences of broken communities looks like. There’s all sorts of problems. We heard from the health experts about the social determinants of health, and as an ambulance officer you are really the ambulance at the bottom of the cliff. You are also seeing all sides of life, going from a job in South Auckland to another job in Parasite Drive. I moved to another job in Golden Bay/Nelson, where I stumbled across this idea of time banking. I was thinking all the time about these problems – why was the ambulance service going to jobs that weren’t emergency jobs. The idea of time banking became clear to me, how St John’s could use time banking as a volunteer reward system, as part of a longer-term process of knitting communities back together that would eventually reduce resource use.

I have been working on that for some years, but it has got me into other new economic ideas, such as community land trusts. Land is taken out of the market economy. The land is held by the community land trust and the house is owned by the person who lives in it. They don’t all have to be on the same land, it could be hundreds of houses across Auckland.

Another example is savings pools. We have talked here about reciprocity. Instead of paying interest on loans, a savings pool pays through reciprocity. Say I borrow $5200 to buy a new car from my savings pool, who are a group of people who share their money. I can pay it back at $100 a week. I will pay it back over 2 years. But I pay back my $5200 that I borrowed, and I pay back another $5200 over the same amount of time so that any of you have the opportunity to use that money as well. At the end of that payment period that money is mine that I have saved. We are working with savings pools to pay off mortgages, although that’s not easy so we are doing inter-pool loans.

When these different ideas work in unison, rather than all separate, we can get them all working together. For example, I am involved with a small native bush restoration project. We are going into business running school camps in that place. We are borrowing money in a savings pool style to start the business, then we will pay that back. On top of that my reciprocity will be available for time banks to seed fund their own social enterprises so they can fund themselves rather than always having a hand out to grant organisations and wasting time applying for funding.

Once you start getting all these new economic ideas actually working in unison then you have a whole different framework for how this can work. Mutual aid networks that started in the US are working with youth justice projects and are looking at tendering to run adult prisons instead of the prison industrial complex. There are loads of new economic ideas and working models actually happening throughout the world. There is no doubt that we need to change the economic system we have, it is taking us to the brink of total collapse, so we need to start creating these new systems and seeing if they work, and tweaking them until they do work.

That’s what these international trade agreements take away from us, so we can get cheap shoes from China or wherever. Christchurch used to have 12 shoe manufacturing businesses. Now there are none, pretty much, maybe one safety boot company still. We have these advantages for consumers of cheap stuff, but those consumers are also workers and now their work is gone, so how can they consume?

The challenges we face are the inability of people to recognise that we are in serious crisis now. In 10 to 30 years there will be serious climate change so we have to get food systems sorted out. As Ngati Whatua said yesterday kai is central and kai has always been traded. We need to be viewing food and agriculture as more than just a commodity, because there are all sorts of social advantages we can get, purposeful work, looking after our soils, feeding our people, and coming together in our local communities over food is one of the greatest ways to bring us together.

In closing, the principles that we need to work with are already out there. Kate Raworth’s Donut Economics and the economy alliance have the answers there about the principles we need to look at for our economic future and trade agreements.

Stephen: One of the beautiful things about mutual aid networks and alternative economic practices is that you don’t need to ask permission from the state, which is empowering, whereas tying yourself to train tracks to try to change the mind of a recalcitrant government around neoliberal orthodoxy is not so empowering. But we live in a world where we have a very strong central state, where capital owns everything, regulations at the state and international level. What could the state do to facilitate more grass roots developments of the kind you talked about?

Gen: One example would be trying to get time banking recognised by the IRD so it is tax free, and seen by WINZ as a beneficial thing for people on benefits to be involved in. This would help people see this monetary system is not the only economic system and that everyone’s hour is of equal value.