In 2000, the Initial vote on Kiwibank in the Labour-Alliance government was 16 votes against from Labour, and four votes in favour from the Alliance.

I was there when this was reversed, and in 2001 the four insurgent Alliance Ministers – Jim Anderton, Sandra Lee, Laila Harre and Matt Robson- received our foundation Kiwibank cards in Jim’s office.

New Zealand once again had a popular publicly owned bank to aid its development and counter the strangling grip of the privately owned foreign banks.

Finance Minister Hon. Michael Cullen said, begrudgingly, that the bank, operating from New Zealand Post premises, would get an $ 80 million loan , but not one cent more. Helen Clark continued her opposition by announcing she would remain an Australian Big 4 customer.

Kiwibank had been a long journey.

So, why had Alliance members campaigned so long and hard for this goal?

Jim Anderton had spelt out the reason in 1988 as the Lange Labour government continued its crash sale of public assets by putting the Bank of New Zealand with its 20 percent share of the banking sector on the auction block. In a 1988 parliamentary speech that led to his expulsion from the Labour caucus Jim Anderton said:

“The sale of State Owned Enterprises transfers ownership, control, wealth and resources from the public sector to the private sector…Once it is sold the policy options available…are almost certainly removed…Even after the worst stock market crash in New Zealand’s history…the Bank of New Zealand made an operating profit of $182 million in the 1987-88 financial year… (it) is virtually a perpetual asset…(and) commands 20 percent of the current financial system.”

As a highly capitalised bank the BNZ, meeting its huge taxation and dividends obligations to the government and with its long history in the development of New Zealand as an arm of government, the BNZ limited the destructive side of  private banks and kept profits and investment capacity in New Zealand.

Within a short time, an expanding  Kiwibank kept local branches open, and rapidly attracted customers. It paid back the initial government capital within 3 years. It now has over one million customers, including over 40,000 businesses.

Michael Cullen, resiling from his initial hostility, was to praise Kiwibank in his autobiography as follows:

“But Kiwibank proved its real worth to New Zealand in the early stages of the global financial crisis. The Australian  banks withdrew substantially from the New Zealand mortgage Market. Kiwibank stepped  into the breach. Despite its very small size compared with the Aussies, it was for a year or two the largest provider of new mortgages…since Kiwibank was set up, the Australian banks have emphasised their New Zealand character…”

Michael Cullen, the former Finance Minister then warned, and Minister Willis would do well to heed,  about the true character of the private banks:

“…when the crunch comes , one should never be fooled  about where their primary accountability will lie.”

In his 1988 speech to Parliament, opposing his own public asset selling Labour Party,  Jim Anderton also outlined the vision which in 2002 was to underpin both the  Kiwibank and  a newly minted  ministry of economic and regional development, of the public bank playing an essential role in national economic development:

“…if it were decided to run an active regional development policy the geographical spread of the branches of the Bank of New Zealand makes the bank the only Government agency with the detailed knowledge required to act of the Government… of providing long-term development funds for viable projects in all the regions…sale of such an extensive economic power…may lead to the operation of the bank for purely financial commercial reasons…small borrowers , and even Governments, suffer when dominant banks  are run for short term financial reasons and profits.”

All of these advantages are now at risk as the government , using the excuse of the need to raise capital for the bank to take on the Big 4, sets out to gift an essential economic tool to the private sector.

The New Zealand Herald revealed the government’s intentions on 25 July:

“In a routine letter of expectation sent to Kiwibank’s board chairman David McLean in April, shareholding ministers suggested they were open-minded as to how Kiwibank grew… ( Minister of State Owned Enterprises ) Goldsmith said the Government had no plans to privatise state assets, but conceded a possible outcome of the purpose statement exercise could  be that it decided it no longer wanted to own an asset.”

Renationalisation Pledge

Warning bells should ring for Labour and the Greens. Labour members and voters triumphed over the initial opposition to Kiwibank of Helen Clark and Michael Cullen to Kiwibank. The Green Party has pledged to oppose asset sales. As Alliance MPs, Green Party founders Jeanette Fitzsimons and Rod Donald campaigned for Kiwibank . Labour and the Greens must form a united front in defence of Kiwibank.  A pledge to re-nationalise and expand through government financing ,there are multiple financing methods available , will deter the circling sharks which include the Australian bank competitors.

Governments of all stripes throughout the world recognise the crucial developmental role of a large state bank as an essential tool for long term investment and development. Labour and the Greens can unite to build on the vision of Jim Anderton and ensure that New Zealand is not, once again, deprived of its state-owned bank by a short-sighted government acting in the narrow interests of the private sector and not in the best interests of New Zealand.

EDITOR’S NOTE: Matt Robson and others are calling on the New Zealand Government to abandon any plans to privatise Kiwibank and to commit to keeping it in public ownership.

You can sign the petition here.

The supermarket sector is finally about to receive some serious government intervention. Following a scathing report from the Commerce Commission, it’s now almost inevitable that the Labour Government is going to have to introduce some major changes to this vital but uncompetitive retail sector. And these moves are likely to be popular.

The report, released on Thursday, met with almost universal praise and celebration. And it surprised everyone with just how scathing it was about the supermarkets, and how radical its early recommendations are.

The first key point the supermarket sector report makes, is that the current groceries sector is utterly broken. It paints a picture of a Foodstuffs and Woolworths duopoly making super-profits – in excess of 20 per cent return on their capital – by ripping off both food suppliers and customers. The report found that food prices are the sixth highest in the OECD. Staff, too, are heavily exploited to help make billions of dollars in profits.

The second key point is the possible suite of reforms that will be necessary to fix the sector. These range from encouraging supermarkets to reform themselves, through to serious state intervention to break up the mega-entities that control the market, or even the state setting up a third supermarket chain (in the way that KiwiBank was introduced).

One of the first media articles on the report on Thursday explained that expectations for the announcement were quite low, and some were ready to be disappointed – see Hamish Rutherford’s The Commerce Commission heaps pressure on Government to deliver supermarket changes (paywalled). He says that “The supermarkets appeared shocked by the report.”

Rutherford summed up the reform options: “The Commerce Commission’s recommendations for measures to improve wholesale competition are a spectrum, ranging from modest changes on a voluntary basis, to creating a new wholesaler or even forcing the break-up of the groups into retail and wholesale. Aimed at attracting a new major retailer into the New Zealand market, it could be accompanied by forcing the supermarket to sell off certain sites to a new player.”

The mood for a more interventionist state in broken markets

In the above article, Rutherford also explains that such a scathing and radical report really puts pressure on the Labour Government and the Commerce and Consumer Affairs Minister David Clark to actually carry out some substantial reforms. Rutherford concludes: “with such a clear verdict of a duopoly exercising market power in such a mammoth sector, the Government will quickly need to find a suitable response.”

Stuff newspapers political editor Luke Malpass also emphasised how the report squarely puts the ball into the Government’s court, making it almost impossible for them to avoid doing something big. He says that normally these types of reports take the pressure off governments: “Market studies are great for governments. If nothing else, a Commerce Commission probe creates the appearance of government action long before the action happens”, but given the tenor of this particular report, “the Government will have to actually do something this time around” – see: Labour’s $22 billion supermarket problem — and opportunity.

According to Malpass, David Clark is a good fit for this role (better than the ill-fated Health portfolio), and he’s inclined towards proper reform: “His view is simple: Labour campaigned on doing this, he thinks that there is a mood for real change, and now it will be up to the Government to get on with it.”

Government intervention is also likely to be substantial, Malpass points out, because there’s now a strong public philosophical mood for the state to act: “This political landscape has changed massively from five years ago. There seems to be a pretty good public appetite for the Government to sort some of these things out. If anything, Labour’s only downside risk here is not doing enough. And if Covid has taught us anything, it’s that – rightly or wrongly – Kiwis are quite happy for governments to intervene in the right circumstances. In the coming cost-of-living political war, the party that convinces voters it is the one on their side will be rewarded.”

This mood for a bigger and more interventionist state, especially in regard to the broken supermarket sector, is very well examined by Max Rashbrooke in his column, Supermarket prices: Politicians have dropped the ball, which begins like this: “The forensic evisceration on Thursday of our uncompetitive supermarket duopoly is a landmark moment, a sign of shifting attitudes towards capitalism – and a massive test for Commerce Minister David Clark.”

According to Rashbrooke, Clark has a big job ahead, and will have to resist “a determined lobbying campaign by the supermarket duo”, but ultimately will achieve his own redemption if he can create a legacy as the Minister “who broke up the big two”. And the fact that he even has this task is a sign that the “laissez-faire thinking” of the past that allowed the market to evolve into a duopoly is out of fashion.

Rashbrooke points to other broken sectors that will also need reform, including electricity, building supplies (where “Fletchers utterly dominates”), petrol, and banking. And he suggests that in the new environment, National is likely to be onboard with radical reform, “because conservatives need capitalism to work properly and retain the public’s support.”

Economist Cameron Bagrie also thinks the Government has a strong incentive to go hard on supermarkets, and that the construction sector and banking should be next – see: Supermarkets are sitting ducks for pro-competition regulation (paywalled). He notes the Government is building up the Commerce Commission’s capacity, budgeting “$30.4 million extra for the commission over three years, and $13.9m per year thereafter.”

Bagrie believes that reform of the grocery sector will be favoured by Government because rising inflation is “not likely to be economically or voter-friendly”, and “Moving on supermarkets could help around the edges to contain inflation.”

Media commentators are also keen for the Government to deal to the supermarkets. Heather du Plessis-Allan says she’s hoping for big reforms to increase supermarket competition but is not sure this will happen, especially given that promised reforms in the petrol market don’t appear to have worked – see: We pay too much for groceries.

She says reform will be difficult, but electorally rewarding: “The easy option is to force the supermarket chains to supply a third player with wholesale groceries at reasonable prices so they can compete. The hard option is force the supermarket chains to sell off some of their stores or brands. Either way, this will kick up a storm in the sector. The Government will buy itself a fight. Does it have the courage? I’d like to see it go hard. I think there’s public support from frustrated shoppers.”

Similarly, Kerre McIvor is sceptical of reform eventuating, but says it would be popular: “waving a stick at big international companies and millionaire supermarket owners is good for votes from families doing it tough, and if this Government knows anything, it’s how to capitalise on populist causes. The big two would be sensible to take this report, and its recommendations, very seriously” – see: The supermarkets should take ComCom report seriously (paywalled).

Newspaper editorials are also favourable to reform. The New Zealand Herald’s editorial said the report findings “are unsurprising”, but “What’s important is what happens next” – see: Smashing the supermarket duopoly is a safe bet for Labour (paywalled). The newspaper says “with inflation on the way voters are sure to be supportive of any measures to increase competition.”

The Otago Daily Times argues that the reforms must be radical: “consumers, suppliers, and potential new retailers will be expecting the Government to do something more than tinker” – see: Supermarket changes unknown.

Although a lot of reform conversation is about helping assist a third supermarket chain into the market, the ODT says greater regulation of current grocery store pricing is also required: “Questions are already being raised about whether an extra big player or two would necessarily make the improvement sought without some sort of control of the margins on grocery items.”

Marketing lecturer Robert Hamlin, from the University of Otago, is also being reported as advocating regulation above what is required to get a third grocery chain into the market – see RNZ’s Strong regulation needed to counter supermarket price gouging – marketing expert.

He also believes that government price controls must be introduced, arguing supermarkets are “like a power company, they’re essential to modern living, and it’s important that they should be regulated to make sure that they actually do deliver”. Hamlin argues there’s a need for a dedicated senior Minister in charge of supermarkets, rather than just an independent regulator: “I would imagine there will be a call for an independent regulatory authority… that would be a very poor idea because I doubt if it would stay independent for very long – that it would be captured by the people it’s supposed to be being regulated by.”

Calls for a Telecom-style breakup of the supermarket duopoly

Many commentators are drawing parallels between the state of the supermarkets and how the Telecom monopoly was broken up in the mid-2000s. For the best argument in this regard, see Ernie Newman’s column, Supermarkets – the Telecom parallel (paywalled).

Newman, who was once the head of the Technology Users Association of NZ, and now advises the Food and Grocery Council, is emphatic about the need for a break-up being forced on the supermarkets, starting his column like this: “Like cracking open an egg and finding it rotten, the Commerce Commission has exposed in one dramatic report the ugly reality of market power abuse in our supermarket sector.”

He argues that the split up of Telecom and major reforms to the telecommunications market quickly brought about huge benefits for the consumer, and the same can happen with groceries: “So can consumers, and grocery suppliers, expect a similar outcome from this action against supermarkets? Emphatically yes. The core problem is the same – blatant abuse of extreme market power. The detail is different, but arguably less challenging in the distribution sector which is about trucks and real estate, unlike the technology sector grappling with massive and continual technological changes.”

However, business journalist Bernard Hickey is much less sure. He says the Commerce Commission report is “a detailed, meticulous and cracking read” but dissents from the growing chorus who suggest big structural reforms could be easily implemented – see: Don’t bet on a breakup.

Here’s Hickey’s main point: “Unlike Telecom, which was a locally-listed and a former state-owned network monopoly that could be relatively easily broken in two with legislation, a share split and a couple of minor regulatory tweaks, the two supermarket chains’ ownership structures (two cooperatives with individually owned supermarkets and an Australian-owned corporate) mean they would both be fiendishly complicated to unravel and replicate with legislation and simple corporate action.”

Land reform to help new supermarket rivals

One of Hickey’s preferred fixes involves helping foreign chains enter the market with “accelerated RMA help for [property] sites or overseas investment exemptions, which should be expedited.”

This is because the Commerce Commission report shines a light on the problem for new supermarket companies face acquiring property for stores. Suitable land is hard to get, and this is partly due to a lot of council and resource management rules and processes, but also because of strategic actions by the existing grocery companies in blocking site availability. This is all explored in Dileepa Fonseka’s Pulling out all the stops to get a new supermarket player into the market.

For more on this, see Eric Crampton’s Why it’s hard to open a supermarket in NZ. He explains that a lot of suitable sites for new supermarkets have contracts that prevent them being used for this purpose: “Existing supermarkets either own those sites already, or previously owned them and sold them off with encumbrances on the title restricting any future owner against using the site as a supermarket, or the site is part of an existing shopping centre where the supermarket has an exclusivity restriction.”

See also, Crampton’s column, KiwiGrocer is a classic Catch-22.

KiwiShop: “Where everyone is at the front of the queue”

Probably the most contentious and interesting reform option put forward by the Commerce Commission is the government establishment of a supermarket chain. Max Rashbrooke comments on this, saying “Though I can’t see the state running a supermarket well in the long term, this could be the short-term circuit breaker we need. The risks would require careful assessment, but the benefits to consumers and suppliers would probably be substantial.”

For a much more enthusiastic embrace of this idea, see Martyn Bradbury’s Why we urgently need a State owned supermarket.

The way that such a “KiwiShop” would operate is sketched out further today by marketing specialist Associate Professor Mike Lee of the University of Auckland, who says that such an idea could be as successful as KiwiBank, but operating more as a not-for-profit public service – see: Subsidies not soft drinks: The brave new world of Kiwishop (paywalled).

He argues that when the market fails, the government needs to enter: “Governments need to step in when systems fail, or when the profit incentive of the major players result in poor levels of wellbeing for the population. That’s why governments get involved in public housing, public transport, public education, and public health. So why not try public retailing?”

Lee envisages a KiwiShop that employs welfare beneficiaries, trains them up, prioritises the sale of New Zealand goods, and doesn’t sell harmful products (such as cigarettes and soft drinks).

In contrast, Herald business commentator Kate MacNamara says the KiwiShop-type idea is “risible”: “For one thing, it conjures alarming visions of the Prime Minister’s chiding hand on your supermarket trolley steering it firmly away from the biscuit aisle (renamed ‘occasional treats’ and cordoned off before mid-afternoon)” – see: The problem of supermarkets’ power and Government’s attitude to competition (paywalled).

Chris Trotter says it’s not going to happen anyhow. He says that David Clark and his colleagues are allergic to such “democratic socialist” ideas, which would be seen as too much of a threat to capitalism – see: The Sin of cheapness.

Finally, not everyone is convinced that the supermarket sector is even broken and in need of reform. Mike Hosking says that the “report found fault for no other reason than all reports find fault”, and the problems of the current market are because: “It’s not easy doing business at the bottom of the world with a small population and a weird geography” – see: Nothing will change from the supermarket inquiry.

There continue to be so many unanswered questions about Hisco’s departure from the ANZ, and for many journalists the story just doesn’t seem to add up. For example, writing on the Interest business website, Gareth Vaughan says The scale of departing ANZ NZ CEO David Hisco’s public humiliation by his employer doesn’t fit the crime he’s said to have committed.

He wonders “why wasn’t some agreement reached that didn’t require him to be publicly thrown under the bus?” But here’s his main point: “it’s hard not to wonder if there’s more to Hisco’s departure than publicly claimed by ANZ. Whilst undoubtedly a bad look, Hisco’s alleged conduct is hardly the crime of the century. Especially not for a CEO who must have met his shareholder’s financial expectations over almost a decade, and who has worked for ANZ for 39 years.”

Like other journalists, Vaughan suggests that it had more to do with a recent, more substantive, scandal in which ANZ was in huge trouble with the Reserve Bank for not following some important lending rules: “Hisco’s tenure as ANZ NZ CEO was certainly blotted recently with news the bank was being censured by the Reserve Bank, which also revoked ANZ NZ’s accreditation to model its own capital requirements for operational risk, citing a persistent failure in controls and the director attestation process at the country’s biggest bank that dates back five years. The attestation failure is a big deal… However in Monday’s press conference Key blamed a junior staffer for the events leading to the Reserve Bank censure.”

John Key’s role in all of this – as Chair of ANZ NZ, and Hisco’s executioner – is being focused on by a number of journalists. For Hamish Rutherford, Key’s performance on Monday to explain Hisco’s departure was very impressive, but in reality “Key is starting to look like an advertisement for stronger regulation” – see: ANZ is building a case for stronger bank regulation.

In terms of the scandal involving ANZ’s problems with the Reserve Bank, Rutherford was alarmed to see “his blithe dismissal of concern about the way ANZ’s board handled itself around its failure to discover that it had been using an unauthorised model to calculate part of its operational risk model, since 2014, without knowing about it”.

Rutherford sees Key’s casual dismissal of the details of the serious failings of ANZ as actually making it more likely that stronger regulation will result: “It all sounded pretty plausible in real time, but Key’s performance has surely put both the organisation he heads, as well as the industry, under more scrutiny. After all the drama of the Royal Commission into the financial services industry in Australia, everyone in New Zealand banking circles is aware that the Reserve Bank is sensitive to claims that it is a light touch regulator which is being gamed by the money boys. ANZ might believe its board was entitled to rely on what it had been told, but no one else has been held responsible for the mistake.”

And now the Reserve Bank is under scrutiny for its regulatory rule of the banks, particularly for allowing ANZ to get away with flouting the rules for so long. According to Rutherford, Finance Minister Grant Robertson will very interested to ascertain if the Reserve Bank’s regulations are too light: “Robertson will soon move to the second stage of a review of the Reserve Bank, with this one looking at whether or not the current regime under which it regulate banks – which to a large extent is based on trust – is adequate.”

The best single article examining John Key’s role in the multiple ANZ scandals has been written by Bernard Hickey, who suggests that Hisco’s axing is an attempt by Key to stave off other resignations (including his own) and to generally prevent the sort of scrutiny that might lead to a Royal Commission of inquiry being established – see: The smiling assassin returns for his biggest hit.

Hickey reminds us of Key’s previous modus operandi as prime minister of “quickly and cleanly cutting out people who he saw as having failed or erred, and were dangerous to National’s success in government.” He suggests that the same ruthless leadership style is on display here, and that “Hisco represents Key’s most significant engineered exit” yet.

Here’s Hickey’s conclusion: “Key’s removal of Hisco was the least he could do to protect the bank, to show leadership for the big four banks’ reputations here, and to protect his own position, especially in the eyes of the ANZ group board, which he is a member of. He faced some big calls as Prime Minister. He just made his biggest one yet in his directorial career. It remains to be seen whether it’s enough to save his own position, ANZ’s position, and to stave off a Royal Commission here.”

Similarly, Gordon Campbell today writes that “Hisco’s managed exit is just another conduct and culture diversion. It should be treated as a scapegoating exercise, and not as a genuine gesture of reform” – see: On our Wild West banking culture.

Campbell views this episode as a good example of obvious complacency in the banking sector, as well as complacency from the politicians about the need for a proper inquiry: “Another example of Key being asleep at the wheel? Maybe so. Remember how – when the Australian Royal Commission into banking came up with its damning findings in February about how the banking industry operated – our bankers and politicians claimed that we did things differently here? We were supposed to believe that whatever bad things the parents of the Aussie banks that dominate our banking environment did at home, their branches here behaved quite, quite differently. Yeah right. Somehow, the recent Reserve Bank and Financial Markets Authority inquiry into the conduct and culture of our banks missed the debacles at ANZ entirely.”

One banking insider – former BNZ chairperson Kerry McDonald – has been particularly scathing about the role of Key and his fellow ANZ board members. He asks: “So what was the New Zealand board doing to manage and monitor expenses?”, and he says “If the ANZ board is not capable of having systems and processes in place that identify problems of this nature – chief executive spending or the way risk is managed – then you’ve got to have serious doubts about their ability to run a bank” – see RNZ’s ANZ boss’s departure raises ‘serious doubts’ over NZ board’s ability.

There have already been more limited inquiries and review set up. But these are not assuaging McDonald’s concerns, according to this article: “Mr McDonald said the recent banking sector inquiry was ‘once-over-lightly’. He said the Finance Minister should get directly involved, and it was time the Reserve Bank showed it could regulate the sector effectively, or that there were wholesale changes at the central bank.”

The same report quotes Prime Minister Jacinda Ardern playing down the need for intervention: “Ardern doubted that the central bank was failing to do enough. ‘That’s not something I would necessarily have thought was true.’ She said the banking inquiry was focused on whether consumers were being treated fairly, rather than the personal integrity of those operating in the sector.”

There are now renewed calls for some sort of Royal Commission of inquiry into the banks in New Zealand. The leading voice is former banker and current KiwiSaver provider Sam Stubbs. He has written an opinion piece arguing that, although the Australian banks insist that they operate with greater ethics in New Zealand, “the opposite seems to be unfolding” – see: ANZ’s David Hisco debacle shows New Zealand needs a banking Royal Commission now.

Here’s his case for a thorough inquiry: “This debacle shows that a Royal Commission of inquiry into banking is sorely needed in New Zealand. The FMA and Reserve Bank do not have the powers of enquiry a Royal Commission would have. Management need to be under oath and whistleblowers protected by law. It would cost approximately 1 per cent of bank profits this year, and give everyone confidence. Given this is an industry that is so critical to our individual and collective wellbeing, a properly resourced enquiry is what we deserve. And politicians should establish one quickly”.

Stubbs has also argued that it’s a potential conflict of interest for John Key to be a board member of both the local New Zealand operations of ANZ and also the Australian-based parent company. Similarly, he says “Doug McKay is chairperson of BNZ, and on the board of parent company NAB. In holding dual directorships, both are potentially conflicted. In tough times they could be in the unenviable position of having to choose whether to look after the parent company in Australia, or their NZ subsidiary” – see: ANZ and BNZ directors can’t have a bet each way.

Finally, this week’s ANZ CEO expenses scandal is far from being the first time that bank has been in serious trouble. In fact, the ANZ has had a whole list of dodgy dealings in recent years, which is covered well by Rob Stock in his article: Six times ANZ has been in regulators’ naughty corner.

It’s a big deal when the High Court rules against a former prime minister and fines them $6m for their reckless business practices. After all, it raises questions about the probity of such former political leaders, especially given that Jenny Shipley has a knighthood and holds the respected honour of being New Zealand’s first female prime minister.

This week a High Court judge ruled that Shipley is liable for up to $6 million after the collapse of construction company Mainzeal, of which she was the chairperson. Along with her fellow directors, Shipley was deemed by the judge to have been “reckless” in allowing the giant firm to keep trading for nine years while insolvent.

She will personally escape the fine, which her insurance will apparently pay. So, does this mean that she gets off scot-free? No, her reputation is hurt, and there are now questions about whether she should relinquish her knighthood, and whether it’s time for her to step down from her other public and business leadership roles.

The most damning response to Shipley’s loss in the High Court is today’s Dominion Post editorial which says: Shipley’s shiny post-politics career forever tarnished (). The newspaper points out that the $110 million her company was left owing to creditors has been “borne by the ordinary, hard-working New Zealanders politicians like Shipley usually champion.” And she had that position as a result of her “mana”.

Shipley’s loss in court “could hardly have come at a worse time” according to the paper, because it comes on the back of her recent public statements in praise of China. The editorial states: “The Chinese government was clearly using a former New Zealand Prime Minister as a propaganda mouthpiece.”

The reaction in the blogosphere has also been severe. Documentary-maker Bryan Bruce sees Shipley’s judicial loss as apt, because the controversy mirrors her time as a politician: “The legacy of both the Bolger and the Shipley neoliberal governments was that they opened up a huge gap between the rich and the poor in our country. They slashed benefits for example, as a result of which all the diseases that affect poor children the most all shot up” – see: Former PM ordered to pay creditors $6 million.

Bruce points out, “As a result of the Mainzeal collapse a lot of tradesmen were not paid, some of their businesses went under, and it caused their families a lot of stress.”

Leftwing blogger No Right Turn is asking why Shipley and her colleagues haven’t faced stronger penalties, saying it “seems to be a straight-up violation of s380(4) of the Companies Act, carrying a penalty of 5 years imprisonment. Which invites the question: why weren’t Shipley and the others prosecuted? Or do those laws against corporate fraud mean nothing?” – see: The obvious question.

He questions why the Financial Markets Authority hasn’t taken a case against the Mainzeal directors, and how it is possible that insurance can apparently cover Shipley’s $6 million fine: “Most insurance policies for us dirty peasants include a clause saying that they won’t pay out for intentional, reckless or criminal behaviour – so they won’t pay out if you burn your own house down, or if you crash your car while drunk driving or robbing a bank. Are the rules different for rich corporate directors? If so, it seems to be a perfect case of moral hazard, not to mention a terrible business decision on the part of the insurer.”

Unsurprisingly, the Government is now said to be discussing whether to remove the former PM from her role on a state-funded board. RNZ’s Jo Moir reports: “Sources have told RNZ that Dame Jenny’s role on the executive board of The New Zealand China Council had already been an item of discussion amongst senior Cabinet ministers in light of yesterday’s court judgement” – see: Future of Dame Jenny’s senior positions on multiple boards uncertain.

Moir also says: “It’s understood senior ministers saw Dame Jenny’s comments as failing to put the security, safety and wellbeing of New Zealand’s interests first.”

In addition, there is pressure on Shipley to step down from her other company board directorships. Under particular scrutiny is her role on the board of the China Construction Bank NZ. Deputy Prime Minister Winston Peters has previously commented on this saying, “It is actually extraordinary that someone who has so little knowledge of banking, for example, should be in the second biggest bank in China”.

Peters spoke out again yesterday, responding to journalists quizzing him on whether Shipley should remain on her various boards: “What are you journalists doing about it? I’ve been telling you for years, I’ve been telling you since the Winebox Inquiry, since the BNZ scandal about this person’s incompetence and the incompetence of a number of National Party people to actually understand business or to represent our country properly.” He is also reported as saying that “public money is not safe” under the current situation.

This is covered in the Herald’s article, Winston Peters renews criticism of Jenny Shipley following Mainzeal court ruling. This points out Peters’ long-running problem with Shipley: “The animosity between the two goes back to 1998, when Shipley sacked him as treasurer and deputy prime minister in a coalition government.”

Prime Minister Jacinda Ardern has also been asked about Shipley’s roles, and although she mostly refused to comment for the moment, she has replied “It would very much depend on which boards you might referencing.”

The Reserve Bank has the official role of deciding what individuals are suitable to be company directors of banks operating in New Zealand. But so far the Reserve Bank has merely said that the Shipley court judgement will be “read with interest”.

Former economist with the Reserve Bank, Michael Reddell, has blogged to say that “They need to be seen to act pretty quickly” and “this isn’t a time for pleasantries.  Whether or not she stands aside voluntarily, or the owners remove her, the Reserve Bank should make clear that her continued presence on the Board (let alone chairing it) would not be acceptable to the Reserve Bank” – see: Fit and proper?

Reddell doesn’t believe it’s tenable for Shipley to stay in her position: “I can’t see that the Reserve Bank will have any choice but to indicate to CCB that they would object to the continued presence of Jenny Shipley on the Board. The Mainzeal case involved the failure of a substantial institution while Shipley was chair of that Board, and not because of some unforeseeable shocks out of the blue, but because of actions and choices that the Board had control over.”

Last year Reddell also raised important questions about the trend for former politicians such as Shipley to become company directors, lobbyists and businesspeople, and pointed out the dangers of this for democracy – see: Retired politicians in demand.

In addition, Reddell draws attention to how many former senior politicians are now working as directors for Chinese businesses operating in New Zealand, or other related entitles (including Ruth Richardson, Don Brash, Chris Tremain and John Key).

Others are suggesting that Shipley’s court loss represents a challenge to New Zealand’s ethical standing in the world. John Moore writes: “The fall from grace of Dame Jenny Shipley is both a personal blow to the former PM, as well as a blow to New Zealand’s standing on corruption indexes. Shipley has attained several lucrative positions on both private and public boards over the years since she was PM. Shipley, like many former politicians, has been able to leverage her past pubic service, as an elected politician, to gain wealth and power in her post-parliamentary al life. The light that has been shone on the dodgy activities of the former PM, while acting as a director in a private construction company, point to the endemic rotating door between parliament and lucrative positions in the business world” – see: Critical politics alternative analysis.

For those doubting what skills Shipley has for her business roles, it’s worth looking back to a 2009 interview she gave to Management magazine in which she explains her role: “Most of my consultancy and speaking work is on tracking mega­trends. I track political trends, demographics, the rise and fall of markets, and think about what should be on people’s radar screen so they apply their minds to strategy, allocating their people and finances into the right places. You learn so much… I then have fun pulling the situations and people together to think about what the new shape of the future looks like and where they fit into it” – see: Face to face: Jenny Shipley: Life after politics.

Finally, it’s not only former National Prime Ministers causing grief for their current political parties. Last year, Helen Clark was particularly active in New Zealand public life, leading to a quiet but definite backlash forming amongst some in politics – see Graham Adams’ Helen Clark’s chest-beating is wearing a bit thin and Richard Harman’s Buoyant Labour airbrushes out Clark.