The Stuff report of Transfield's shifting (and shifty) excuses  (and NBR's updates) for not paying its debts when due, plus the reported loss for last year, raise the question whether creditors could be on notice that  there are grounds to doubt its solvency If the company cannot in fact pay its debts on time, the creditors could have to disgorge to its liquidators any amounts paid while in that condition, for up to two years before the insolvency.

That would be devastating for Transfield's subbies. It could also stick in the craw of all New Zealanders because Aussie subbies to the parent company in Australia may benefit from the New Zealand claw-back without facing the same exposure. That could happen if the parent was a creditor of the New Zealand operation.

Here's how it works:

Part 16 of the Companies Act 1993 enables the liquidator of a company to recover any payments made within the previous two years if it was insolvent at the time payment was made.  Section 296 (3) provides an exception if the party which received the payment can prove  that:

1. they acted in good faith; and
2. there was no reason they should have suspected that the company was or would become insolvent; and
3. they gave value for the property or altered their position on the reasonable belief that the payment was not voidable.
4.  (all of (a) to (c) must be proved to establish the exception).

I have no inside information, but even if I did  I would not trust it in view of the culture of lying that might be acceptable in a company that has such stupid and varying excuses for not paying its debts when due.

So, here's the advice if you are a subbie to Transfield. It may be worth more than you are paying for it.

First – demand information from them to the satisfaction of your accountants to establish the current solvency of the company which is actually paying you (probably a New Zealand subsidiary).

Second – don't restart work for the scumbags till you've been paid everything due.

Third – record in writing to them that you will only work for them while there are no arrears, whatsoever.

Fourth – stick to that policy.

That could be the only practical way to get some prospect of protection from from Transfield's liquidators if they become insolvent. Under NZ law (blogged on 24 August) passed in 2007 you could have to repay everything received from them for work done before the payments, over the two years before the liquidation.

A more sure protection would be to require payment in advance. Assuming that is out of the question, there is probable protection from making it plain that you are altering your position materially looking forward, in reliance on the payment of an invoice for past supply, by restarting or continuing work on credit terms. You could need to be able to show that was in fact an alteration of position (i.e. you would previously have continued work in expectation of eventual payment, but not from now on). That is why you should record your new approach in writing.

The circumstances cry out for the subbies to form an informal association, or approach their trade association to form a sub-group to spread the costs of dealing with Transfield. The risks of cartel liability should be readily managed.

Note to NZ government – our obligation to give equal treatment to Aussie contractors in government procurement does not prevent you from having regard to any company record of (or cultural proclivity for) treating as suckers for the milking any contract counter-parties mug enough to assume that contract obligations  will be performed in good faith, in the absence of the clout to enforce.

My colleagues at work have been debating Syria. One circulated the Onion's take on Obama's predicament.

Another responded with a an arresting and original perspective.

[The Onion is ] Funny as usual. 

However, jokes aside, I think it buys into a misunderstanding about what is going on there.  The pieces just don’t fit the public narrative. Although, I must acknowledge “John’s Law” –  those who think it is a conspiracy don’t understand the power of the plain old  f—   up.

I don’t agree with the portrayal of Assad as in the least insane.  Only a few years ago he was being feted (and, ahem,  wined and dined)  by pretty much everyone as a practical reformer, trying to bring Syria out from under his fathers murderous shadow (remember, his father had a whole town liquidated to quell a rebellion).  Acts of horror abound in the Middle East, where strength and lack of pity are virtues.

I still don’t believe the public version of the gas story.  The cost benefit analysis was just too negative for Assad – score a very localised tactical victory (and even that isn’t clear) at the risk of forcing  Obama across his “red line”, and certainly facing a massive increase in funding for the rebels and probably some sort of air strike.  So we are left with the only motive as insanity, but there is no actual evidence he is of unsound mind at all.

And I don’t believe anything Kerry, Obama or anyone else says about the intelligence information, given previous misinformation about Iraq and straight out lies about Benghazi.  From what I can tell, the evidence of a military style poison gas attack by Assad’s forces is equivocal – its likely, but far from certain.

I’d follow the benefits (i.e. follow the money).  The parties who benefit from the media furore over the attack most are the Rebels and the Russians.  The Rebels because they score intervention, to partially counterbalance Iranian and Russian support for Assad.  The Russians/Iranians on the other hand have a huge interest in testing the West’s resolve and in humiliating Obama, who they have already sized up as a blow-hard who holds traditional diplomacy in contempt.   

So I think a likely scenario is that once Obama had issued his foolish ultimatum, and Russia was sure there could be no “coalition of the willing”, Russia (directly or via Iran) gave Assad personal security guarantees in return for him ordering gas to be used.  It is such an easy power politics win for them it is embarrassing. As long as they don’t get caught red handed, its all upside.  On this theory the gassing happened precisely because Obama issued the ultimatum.  we know from past performance that ordering the deliberate killing of thousands of civilians wouldn’t give Putin or the Ayatollahs even a moment’s pause.

In any event, for Obama to make a big deal about a ‘red line’ without having first stitched up a coalition behind the scenes was a monumental unforced foreign policy blunder, for which the Middle East and Eastern Europe will pay dearly.

I’m hoping the US does launch missile attacks, to at least salvage some measure of deterrent credibility.  It doesn’t matter either way to the Syrians, who have the misfortune to have become the playthings of great powers.  I hate being on Obama’s side on anything, but having made such a foolish ultimatum, he simply must make good on it.  Otherwise  Russia will be hugely emboldened, and that could lead to a bad place – an arms race in Europe.

The New Yorker says it all on the Syrian dilemma here and here.
Thanks James Clad.

[This was addressed to Josie Pagani after a conversation in which we both bemoaned the lack of intellectual humility, and primitive anti-Americanism in NZ commentary on the US dilemma]

It is striking from Select Committee News' detailed report of the Privileges Committee interrogation of Parliamentary officials, including the unfortunate Mr Thorn, that no Parliamentarian manages to rise above the tawdry tournament of the day to consider the public’s long term interests in free speech.

Mr Henry and other officials account for themselves well, given Member’s stupid attempts at scapegoating . Winston Peters and (sadly and surprisingly) Judith Collins distinguish themselves with questions that seem to have no purpose other than currying favour with journalists.

If the tenor of the questions is reflected in the eventual report of the Committee (which may not be the case if Chris Finlayson can inject some rigour into the thinking)  the episode may take us further toward the lawyer paradise of paralysed public process in the absence of legal advisors and formality for everyone conceivable. And the short-sighted journalists baying for privilege from investigation even incidentally will have strengthened the trends and the climate that will some day justify shutting them out of their most vital public function – that is searching out, by fair means or foul, and making public, the embarrassing and significant information that Parliament’s denizens would most wish to keep secret.

In other words, by inventing new categories of privacy intrusion, this time to make sacred the email traffic data of Ministers who do not want it known, and their own, they bring forward the day when it will be a sufficient justification to exclude them, or to criminalise their publication of unwelcome disclosures, simply because they are not officially supposed to have the information, or have failed to apply formally through the proper channels. That seems to be the gist of the accusations against Mr Henry, Mr Thorn and others) on the basis that the release of information was not wanted by its subjects. People who live by discovering and publishing truths that the subjects would rather keep secret or ‘manage’,  score a massive own goal in the long term by asserting essentially that privacy is a sufficient reason to block disclosure.

I am aware of the rationalisation and fine rhetoric seeking constitutional protection of privilege for journalists. Their arguments should not extend to protecting them from the kind of disclosure that they themselves rely upon. It would be outrageous for MPs to assert that journalists be forbidden from reporting on who is seen to visit MP offices. Sure, an electronic record of visits is more convenient than staking out doors and offices.  But the swipe card records are just a technologically efficient form of observation. Any of Ms Vance’s fellow journalists should have been free to report on her visits to Minister Dunne’s office around the critical time that the Kitteridge Report was leaked, if they had seen them.

I do not argue that they should necessarily have had automatic access to the swipe card records, but it is not at all obvious that even such transparency is any more remarkable than the OIA disclosure now imposed on most written public officer communication. Indeed it would probably have less chilling and distorting effect on the quality of official and Ministerial communication.

The fourth estate plays a critical role. But it should claim no greater, and no less privilege than the public it serves. Their freedom of speech is ours. And they should be as vigilant to protect the freedom of others to discover the truth, however reluctant the subjects, as they are of their own freedom to find out and to report. Journalists should hate privacy law as cats hate dogs.

The public have a substantial interest in knowing whether Ministers are untrustworthy with confidential information. We have a similar interest in a Prime Minister being able to institute simple and direct processes to test his Ministers’ trustworthiness and veracity. The Ministers may invoke privileges against self-incrimination if criminality is involved, and there may be categories of communication that are privileged. But there should be no newly invented  impediment to finding out and publishing the information that casts light on a disturbing breach of trust.

From what emerges from the reports of the interrogation, Mr Henry should be commended for a job well done, and Mr Thorn reassured that he did no wrong.

Voidable preferences

Suppliers beware! You can now be made to repay many times more than you've ever earned from customers which go broke. Your money will go into the liquidators' pool for the benefit of the IRD, the banks and other secured creditors, Then after liquidator's expenses you'll share equally with other unsecured creditors in what is left. Often they include the people who've taken the company into insolvency. You have no entitlement to recover what you've supplied.
 

Our Court of Appeal confirmed this position late last month in Farrell v Fences & Kerbs Limited. More details appear later, but the decision means that the claw-back can apply to payments throughout the two years before insolvency of the customer company, even where:
a) there is no argument about the fair market value supplied,
b) you had nothing to do with the company's difficulties, and no knowledge or reason to know about them;
c) you've naturally passed on most of what you were paid, to your suppliers, subbies and employees; and
d) you are not an insider or in any position to direct the company's decisions, there is no question of any improper attempt to get unfair priority, or anything else out of the ordinary course of business.

How could the law be so stupid? Is this intentional, or an accident? Is this because we are copying other countries?
Answers – because we now routinely legislate by slogan, it is intentional and it is a foolishness all of our own. All the countries with which we usually compare ourselves have stayed with the soundly principled approach to voidable preferences inherited from the great English company law pioneers.

Sadly this is just one of many results of lawmaking by well-meaning people who think that the merit of law depends on the virtue of its intentions. Too many lawyers temperamentally cannot accept that the results depend on the practical incentives created by law's detail, not the nobility of the slogans they write into it. Lawyer/priests now infest the ranks of policy 'analysts' who guide and feed legislators, they infest the courts, and the law society (see Attorney General Chris Finlayson's recent exchanges on the Society's approach to the GCSB issues). Our Parliament is less infested than many, but only because we have a relatively low proportion of lawyers. On the other hand, astonishingly few of our legally qualified MPshave the education in reality of coal-face law practice, let alone any business law experience.

Unfortunately even practical experience does not convert people who are predestined to sacrifice others in the cause of noble slogans. In the case of the claw-back the slogan is "pari passu" or equal sharing. The small coterie of insolvency lawyers who serve liquidators contain too many who see nothing repellent in liquidators gouging penance payments from former creditors. Perhaps they think creditors deserve it for failing to recognise that they were dealing with a company heading toward liquidation.

In the past perhaps these worthy lawyer-clerics would have satisfied their clerical urges safely in the churches, or in other professions that rewarded ability to express 'feelings' and did not demand much mathematics or economics or other objectivity. For the past few decades they've been pouring into legal training.

Is there any way to protect yourself against such clericalism?
For most purposes the only practical protection against the claw-back exposure is to demand payment in advance. Third party guarantees could help, but even they have some technical fishhooks.
In many sectors a change in custom to requiring payment in advance could impose uncompensated cost for all concerned. There are powerful reasons for the near universal progress payment pattern in the construction industry for example.

Before the Court of Appeal decision in Farrell v Fences & Kerbs Ltd several lower court decisions had minimised the problem, by interpreting the relevant words to achieve a practical position close to what prevailed before the 2007 changes, and close to what prevails in Australia. The key distinction is whether the payment is in relation to a credit transaction, or is instead for value to be delivered after the payment. The lower courts held that a payment could be protected when it was to discharge a debt incurred for goods or services or other value already delivered. Our Court of Appeal says the exception from claw-back applies only to payments in advance of delivery of the value (good, services etc).

The Court of Appeal's approach is a legitimate and orthodox interpretation of the words introduced in 2007. But it would have been less worrying if the decision had shown some sign of recognition of the costs of the decision. Instead the Court appears to have felt it was doing God's work.

The 2007 law change finally abandoned the sound rationale for voidable preference law. Voidable preference provisions were first designed to reinforce the base structure of company law. That structure allows directors and management full control or so long as there is an equity shock absorber for the consequences of their good faith decisions in the interests of shareholders. When that shock absorber has gone, control must pass to representatives of the next tier stakeholders – the creditors.

Voidable preference law should discourage those who are about to lose their management powers, from abusing them to protect favoured creditors from the haircut they are all about to take. So most countries focus voidable preference provisions on transactions with insiders. The early terminology was direct. "Fraudulent preference" morphed into voidable preference, and now in NZ down to "insolvent transaction".

Worldwide, the orthodox approach to unfair preference allows a relatively short period, 3 or 6 months, in respect of which all transactions are potentially reversible, and a longer period, typically several years, during which transactions with "insiders" can be reversed. For example, the Australian Corporations Law relation back period is normally 6 months, but extends to 4 years if the payment was to a related party, or up to 10 years if the purpose was to defraud or delay the rights of creditors.

In New Zealand, the Court of Appeal has now held that the words used in our statute are not consistent with indications that Parliament thought it was broadly assimilating our law with Australian law.

The Court of Appeal intend to make the rule simple and predictable, without the need for future litigation. That has been achieved. With a few statutory exceptions most payments for goods or services supplied on credit can be clawed back if an insolvent customer goes into liquidation within two years.

The Court appears to regard the increased certainty of the law as self-evidently valuable, without appearing to weigh it against the consequential increased uncertainty over suppliers' income. With up to two years past payments at risk, uncertainty is unavoidable as business scrambles to change contracts. They will have to nullify the dire effects of the law. Perhaps auditors will have to take an interest in this. Should there be a claw-back contingency for businesses, as a part of their revenue for each preceding two year period if they work in sectors with high insolvency risks?

This is not a trivial problem. Consider for example a contractor with a long running building contract that consumes most of his capacity for two years. He might take all reasonable precautions to limit credit exposure, such as stopping work past payment deadlines until paid. Nevertheless he could face a claim for up to two years total revenue (not just profit), notified long after the job is finished.

Lawyers too are exposed. Not many clients would want payment in advance to become standard practice. I would not respond well. I find it more satisfying to work in expectation of being paid by a satisfied client after the outcome is known. There are rumours that the legal profession might help fund the certain appeal of the Court of Appeal decision to the Supreme Court.

In our opinion the Supreme Court could find it easy to reverse completely the Court of Appeal's approach to the issues but that is unlikely. It may need a substantially different theory of the case, and the legislative history is of decidedly mixed usefulness if the Supreme Court is minded to grant the appeal. A legislative solution could be better even if an appeal succeeds.

Business should be gearing up to ensure that government (as well as the Supreme Court) understands the differences between dynamic and allocational economic efficiency. Understanding that would make it less easy for sermons to pass for law reform 'analysis'. In this case a legislative solution could be very simple. Despite the customary Australian complexity, adoption of the Australian provisions would be less costly for New Zealand than extended years of pious legal service to our extremist equal sharing doctrine.

Wellington sucks. All capitals suck.

They suck money, power, initiative and ambitious people. Paris sucks from all of France. Vienna’s glories were sucked from throughout  the Austro Hungarian Empire, Rome’s from her old empire and its Catholic replacement.  Powerful capitals suck without apology.

From our taxpaying compatriots Wellington has sucked Te Papa, our excellent suburban trains, the motorways which were superb when built 50 years ago and countless other institutions including the national orchestra and ballet. Head offices had to set up here when business survival depended on government concessions. They sucked for us. Head offices matter. Where bosses and owners live they endow theatres, patronise artists, and sponsor monuments to themselves and their businesses.

Good capitals repay their countries with concentrated vitality and innovative force. But the world is littered with faded former capitals puttering along on history. Sentimental subsidies may merely postpone and prolong decay. Sucking can’t last without offering something valued in return.

If Wellington's response to earthquake risk is to double our sucking efforts while clinging to the past, we’ll merely prolong a decline. With our forebears’ example, the Sunday shake stimulus might instead overcome inertia. It might help us replace the timid young fogies who exercise the suffocating control powers of Council, with people who like change and do not fear the future.

Wellington grew to real power on more than formal authority. It has been a city of leadership. It still can be. We have the new planetary businesses spinning off Sir Peter Jackson, and the TradeMe/RodDrury schools of digital entrepreneurship.  In the very recent past, our Reserve Bank was recognised as the best in the world. During our confident reform days under Roger Douglas, our Treasury was internationally attractive for top young economists .

Our forebears were similarly resilient, and willing to discard the past.

When the 1848 earthquakes ruined Wellington, they rebuilt shrewdly. They were not insured. Many started again with nothing. Yet when Auckland collected over six hundred pounds as a relief fund, they voted to decline it, respectfully, to reinforce their determination and self reliance.

Those pioneer Wellingtonians were quick learners. Not a single wooden house suffered much damage other than to chimneys, though all the masonry buildings were demolished. So they established our preference for light buildings, completely alien to their inherited traditions. The few who did not learn from 1848 got another lesson in 1855 when our leading hotelier, Baron von Alzdorf was killed in the brick mansion he’d defiantly rebuilt. He was determined that he could build a ‘proper’ building out of brick that would not fall down.

What’s the point of this history?

Many modern foolish Barons are in local government. Instead of accepting warning shakes as an invitation to welcome change, they  cling desperately to the known, the familiar, the “historic”. They’ve been at it for years. We’ve wasted tens of millions on their sentimental attachment to trolley buses.

As this is written, Cr Pannett is vowing that the Public Trust Building will not be replaced, and calling on central government to pay for her aesthetic preferences. The obscurantist council has just voted to waste over $40m on preserving the Town Hall, instead of giving our internationally renowned earthquake engineers the chance to shine at home. I’d love to see what our world leading architects could do in a new build.

Consider the February decision to stop Mark Dunaitschik from replacing the vacant Harcourts Building.

HSBC Tower next door is new, sound and built on base isolators. Yet it was 'closed'  the day after our recent Sunday warning shake. The 24 story HSBC building was largely idle until engineers could say the old Harcourts building was not going to collapse against it .

This dedication to preservation is not about the look and feel of Wellington. The reactionaries in the Historic Places Trust (the main culprits in this Harcourts building saga) rejected an offer of lightweight facades with an appearance identical to the current Edwardian/Aussie melange. Clearly winning means more to the heritage zealots than appearance. So they and the anxious building owners are spending up to one million dollars on lawyers and expert witnesses. The Historic Places half of that waste is taxpayers'. So the National government must share the blame. They've known for years that the zealots despise property rights. The government has had ample time to strip away their excessive power.

Power attracts people who want to show their superior ‘values’. Demonstrated submission to those values is the real objective, not preserving a particular treasure. Hence the lack of interest in a look and feel preservation. Religions call for othewise pointless sacrifices just to show piety and power.

Other rulers too invent noble excuses for imposing risk and losses on others. In the 19th century worker lives were sacrificed to "progress". This generation's callous bosses are in the green movement, and wherever they can control land uses. They get their kicks by showing their willingness to sacrifice others to their superior aesthetic and cultural values.

They think cost does not matter because it is landlords who must  find the money. Few have more than a shaky grasp of economics. They do not accept that ultimately tenants pay for scarcity of attractive space.  Money spent without an increase in Town Hall usability is resource lost to Wellington. It sucks up savings that should have gone on new and better capacity.

To pious preservationists the deadweight cost just confirms how sacred are their objectives. They measure piety by the sacrificial suffering it involves.

Since writing this comment first for Wellington's Capital magazine the Historic Places Trust has been forced to acknowledge limits to its power. They should be grateful to be saved from themselves. If the Harcourts façade some day kills people on Lambton Quay, we'll revile all who've put their heritage preferences ahead of  the lost lives, as well as property rights and our tradition of embracing change. They'll deserve it more than the Pike River directors and owners. We know  that "heritage" worship in Christchurch has killed. The Pike River miners and management did not know the odds they faced with the same certainty.

Do you need to understand FTA complexities in detail?

My colleague Rob Ogilvie has drawn my attention to an excellent paper, Uncertain Opportunities: Chinese Investors Establishing Investments in New Zealand by Paul Comrie-Thomson published by the NZ Contemporary China Research Centre of Victoria University this year.

I commend it to the Labour Party research unit.

Their Leader said this evening to NewsTalk ZB's Susan Wood that his colleagues responsible for the China FTA tell him it was not meant to prevent NZ from barring investment it does not want.

If that was what they meant, it is not what they signed. They should read Mr Comrie-Thomson's paper. There may be room as "Michael" and others have argued in comments on my previous post, to protect an Australian privilege under CER 1983, but it will not be straightforward. More importantly the proposed prohibition is simply not permitted by our ASEAN FTA ( as well as the Malaysian FTA mentioned in the previous post).

The sooo boring detail of deals that stitch us up may have eluded the politicians who actually signed them, but until they are properly understood Mr Shearer, stop digging.

The Labour Party’s new policy to prevent non-residents from buying existing houses seemed inconsistent with the equal treatment Article of the NZ China FTA. That FTA was a proudly claimed achievement of the last Labour PM – Helen Clark.

The FTA's definition of "investor" refers to a person "who seeks to make, is making, or has made an investment….". So it clearly looks at prospective investments.

But a technical reading of the equal treatment Article suggests that it may demand equal treatment once an investment has been made, but does not protect intending investors.

Under Article 138 of the NZ China FTA (National Treatment)  all investments and activities associated with such investments made by investors of both parties must be treated, "with respect to management, conduct, operation, maintenance, use, enjoyment or disposal"  no less favourably than investments of its own investors. The list does not include "acquisition" or similar words.

So under that provision a Chinese house buyer must be treated the same as a New Zealander after acquiring residential property, but the protection does not extend to prospective buyers. Whew for Labour!

But wait – another Article (the most favoured nation clause) commits New Zealand not to pass law that discriminates against Chinese investors in comparison with other overseas investors (such as Australians).

Article 139 requires that investors of [China] be treated no less favourably than investors of any third country [Australia] "with respect to admission, expansion, management, conduct, operation, maintenance, use, enjoyment and disposal" of investments.

So Chinese would-be  investors do not get direct rights to insist on investor equality but they can't be treated worse than Australians.

Labour has said Australians would still be allowed to buy residential property under their policy. This would breach Article 139.

And each FTA is different. The prospective investor exclusion does not apply, for example, to Malaysians. They can insist on equal rights to be there at Auckland auctions, whatever Labour wants.

 There are exceptions to Article 138, such as existing non-conforming measures or not being within the scope of a bilateral investment treaty. But these do not apply to Article 139.

What would happen if Labour got the numbers to legislate such a policy irrespective of the FTA? Parliament can, after all, legislate contrary to international law.

There would be serious legal, economic and political ramifications. The Chinese government could invoke the dispute settlement procedures in the agreement.  NZ exporters may lose their benefits under the NZ China FTA. NZ’s international standing as a good treaty partner would suffer.

It is natural to be hostile to overseas investors who own properties but keep them empty when there is a housing shortage.  But is there a housing shortage? The comparatively lower increases in rentals (than in house prices) suggest that the scarcity producing higher prices may be in property for speculation, more than for occupation. If that is true, eliminating marginal speculators could affect prices disproportionately. The proposed ban could work.

Even if the Australian approach could be sensible, we have traded away our sovereignty. We probably will not be able to risk adopting it. I discussed this sovereignty issue in my recent opinion for the Green Party, linked in a post in June.

I would prefer that Labour was not handicapped in this way. I rather hope that I've missed something, and the new policy can be defended better than the man-ban fizzer .  Unfortunately it may be just as much an own goal.

Bad news vs good, horror films vs comedy, complaints vs plaudits – few people find balance in these, or even in perceptions of which is dominant.  I criticise more often than I praise on this blog, though I'm generally optimistic, with much more to be glad about than to complain about.

It seems that complaint issues press more for expression.

So I'm glad to praise two great appointments announced this week.

Simon Tong's agreement to become M. D. of Fairfax NZ may raise eyebrows among his journalist employees. Though clearly not a "money man" he could be destined for automatic tribal suspicion, because he'll make no pretence of infused media consciousness.  But even the deepest-dyed news hounds have no agreed prescription for saving their industry. So the intelligent and dedicated people whose futures will now be influenced by Simon should breathe through their noses before judging him.

I know him. He can inspire extraordinary business loyalty, because that is what he offers, down and up. He listens, his ego does not blind him and he'll do his best to keep at bay any 'bullshit castle" culture of head office, despite being capable of spinning out management jargon out if that is what his bosses demand.

The other reassuring appointment is that of Rod Carr to Chair the Reserve Bank Board.

There have been worrying signs that our Reserve Bank is not the world leading institution it was for several decades. A lack of engagement by its thought leaders with New Zealanders worried about uncritical copying of failed overseas regulatory prescriptions has lead to muttering that it could be a question of capacity.

I think it is more just unwillingness. The GFC has been an excuse for conferring much greater power on regulators despite many of them having failed more uniformly than the institutions they were ordering to do silly, pro-cyclical things. So they are encouraged to feel they no longer need to persuade, They can just decree.

Rod Carr is not afraid to query sacred cows, to challenge orthodoxy. If RBNZ has started to lose that capacity for critical challenge to dopey consensus, there could not be a better appointment to restore Board support for it.

HSBC Tower in Wellington is new, sound and built on base isolators. Yet it is 'closed' to entry, and only the few MFAT or other employees who got there early enough to beat the closing order are productive there today.

Why? Because the vacant  'Harcourts' building (Temperance & General)  next door is threatening it. Engineers may advise that it is not going to collapse. But until then, the 24 story HSBC building is largely idle.

I posted on the Harcourt's 'heritage' fiasco in February. I've been meaning since then to take a careful look at the law governing liability for dangerous buildings that fall into the street.

Our courts (and public outrage) are currently resurrecting a degraded form of tort  exposure via criminal compensation., The pressure for Pike River shareholders to pay shows where it is evolving. Those in favour even want retrospectivity.

So my wish may some day be gratified, to see punishment for [heritage zealots*] who discourage strengthening and replacement of older weaker buildings.

The losses of HSBC tenants are directly referable to the interference with the property rights of Mr Dunaitschik. They are predictable.

Relevant Council immunity and other legal cover for the heritage zealots may survive, but our courts are deplorably inventive in finding ways around ouster clauses. In view of the calumny heaped on the shareholders of Pike River, I hope there is a silver lining to that inventiveness so that  if anyone is killed when the Harcourts façade falls, there is prosecution for those who put their heritage preferences ahead of our property rights (and lives).

[*this previously referred to Councillors. When it was first written I took at face value the council’s support for its Commissioners’ decision early this year in favour of the Historic Places Trust. I’m informed that in fact most councillors may deplore the Historic Places Trust’s interference in the Harcourts building case. That is reassuring, but does not absolve them. They are not visible leading any challenge to powers for their planners, or neighbours, to impose their aesthetic preferences on property owners throughout the city, indifferent to cost.]