8 things at 8 am: Weekend Reads, Chai Chuah goes rogue, dairy farmers livid over work visa changes

Health Ministry CEO Chai Chuah effectively went rogue when he ignored his Minister’s advice and reassured DHBs they would receive money promised in a funding botch-up. Photo: Lynn Grieveson

In today's email we detail how Ministry of Health CEO Cai Chuah ignored his own MInister's advice.

1. The day Chai Chuah went rogue

Newsroom's National Affairs Editor Shane Cowlishaw has the scoop this morning on what went on behind the scenes between the Ministry of Health, DHBs, Treasury and Health Minister Jonathan Coleman in a frantic few days before and after the Budget.

Citing documents obtained under the OIA, Shane reports that Ministry CEO Chai Chuah effectively went rogue when he ignored his Minister’s advice and reassured DHBs they would receive money promised in a funding botch-up.

Treasury documents and internal emails show:

  • Director-General of Health Chai Chuah told several DHB chief executives a week after the Budget they would still get the extra funding, a move that Coleman had not agreed to.

  • The Ministry of Health sent a briefing to Coleman at least a week before the Budget advising him that the allocations would be different from the original estimates but he did not receive it as he was overseas.

  • Treasury officials were furious at their counterparts at the Ministry about not owning their mistake.

Pressure is mounting on Coleman and the Ministry after a string of unfavourable headlines.

When asked why Chuah had appeared to go rogue, and whether he had been told to take that course of action, Coleman told Newsroom he had not been aware of what Chuah had said and “that’s a question you have to put to Chai”.

Shane took up the Minister’s suggestion to ask Chuah about his actions, but the Director-General declined an interview request.

The Ministry’s media team provided a written statement from Chai, but it did not address why he had gone against the Minister’s wishes.

See Shane's full report on Newsroom Pro, where it was published first yesterday.

2. Dairy farmers still unhappy

Immigration Minister Michael Woodhouse yesterday unveiled the Government's foreshadowed backdown on its planned reforms to the work visa system.

Woodhouse lowered the wage threshold that defines whether a migrant worker can stay longer than three years from $23.50 an hour to $19.97 an hour, which effectively increased the number of workers who can stay on by 6,000 to 7,000.

But it wasn't enough for dairy farmers, who said most of their migrant workers and their families would still have to leave after three years because they were being paid less than $41,538.

Woodhouse confirmed that, saying the changes meant that 40 percent of dairy farm managers would be able to stay longer than three years, up from 20 percent before the threshold change.

That effectively means that 60 percent of immigrant dairy farm managers are being paid less than $41,538 per year ($19.97/hour) and are not expected to see their wages rise above that within their first three years on the job.

The low level of wages also appeared to surprise MBIE. Woodhouse revealed that MBIE's first estimates on the effects of the original $23.50 per hour threshold ($48,859 per year) were that half of the 38,500 workers on skilled work visas would be classified as lower skilled and have to leave after three years. This was based on data from over two years ago.

However, a fresh look at more recent numbers showed the $48,859 threshold would cut off 75 to 80 percent of workers. That implies that either the number of lower skilled and lower paid workers had increased, or wages had fallen in the last two years.

"That was not what the Government intended, so I think this is a helpful compromise," Woodhouse said.

Federated Farmers was unhappy that the compromise did not go far enough.

"The entire sector, and in particular the dairy industry, called for the government’s proposal to be amended to provide a framework for employers to attract and retain quality, motivated highly capable migrant employees and to help them develop their skills in the industry. Unfortunately, none of the changes proposed in the document released today will do that," said Federated Farmers' dairy chairman Chris Lewis.

The changes restricted the vast majority of workers to staying for only three years and meant they could not bring their partners and children, he said.

"This will reduce the competitiveness of New Zealand as a destination for motivated and qualified dairy farm workers, and take the heart out of rural communities relying on the families of migrants to provide critical mass to schools, social groups and community organisations."

Employers will now look to 'Phase Two' of the changes to the regime for more concessions, including the potential to increase the stand-down period from three years to five years.

See more in my full piece on the migration changes on Newsroom Pro.

3. 'Get together and write a carbon law'

Jan Wright, the Parliamentary Commissioner for the Environment, released her swansong report yesterday into what is arguably the most important environmental and economic of our time: climate change.

She didn't hold back, recommending New Zealand's politicians stop putting off the inevitable and reach a cross-party agreement on more effective and legally binding ways to tackle climate change.

Wright recommended New Zealand pass new climate change laws similar to those in the UK, which put greenhouse gas emissions targets into law and set "carbon budgets" to cap emissions.

But her suggestions were met with little enthusiasm by climate change minister Paula Bennett.

Newsroom's Lynn Grieveson reported on Wright's last recommendations and the reaction in detail in this piece first published on Newsroom Pro yesterday.

4. Will Shane Jones win Whangarei?

Newsroom Co-Editor Tim Murphy has been doing a series of profiles of new candidates in safe seats. Now he's done one on Shane Jones, who's new to New Zealand First and standing in Whangarei.

Tim writes that if Jones wins the seat, or even does well, he could inherit a party.

Shane Jones is unlike any of the Sure Things profiled in this series. The other five (Deborah Russell in New Lynn, Simeon Brown in Pakuranga, Chris Penk in Helensville, Erica Stanford in East Coast Bays and Paul Eagle in Rongotai) are all new, all standing in one of their parties' safest seats, replacing a high profile MP who is standing down.

Jones, on the other hand is an old hand and a big personality standing against the holder of the solid blue seat of Whangarei. National's Dr Shane Reti is an MP who had a 13,169 vote majority in 2014.
Reti should be the surest of things. Only, he's not. A confluence of Jones' timing, NZ First's momentum and the prospect of fame, profile and influence for Whangarei now and in the future could see Jonesy emerge as the man.

Jones, so long as he crunches that 13,169 vote buffer down savagely, is on to a sure thing. He will become an MP either via an electorate upset of Northland-byelection-and-Winston-Peters-proportions, or via the New Zealand First list. If he performs creditably in the electorate contest, he will have won his party spurs and be perfectly placed to inherit the leadership when Peters departs this political coil.

See Tim's full profile of Jones on Newsroom here.

5. North Korea tunneling to NZ?

The other kerfuffle around Wellington yesterday was a strange report that emerged from the United States suggesting that North Korea was using VPN services to tunnel through New Zealand's servers and onto the internet at large.

That may have included using New Zealand as a stop-over for cyber attacks, although there is no confirmation.

Newsroom's Foreign Affairs and Trade Editor Sam Sachdeva covered the issue first yesterday on Newsroom Pro.

Foreign Affairs Minister Gerry Brownlee confirmed to Sam the Government is looking into the findings, but says the heightened internet activity is not proof of a New Zealand link to attacks - a view backed by an expert.

The revelation of New Zealand’s potential role in North Korea’s state-sponsored cyber attacks is in a report from threat intelligence firm Recorded Future, based on data from the insular country.

The report says there was a “near absence of malicious cyber activity from the North Korean mainland” between April and July 2017, indicating that most state-sponsored cyber attacks were likely being conducted from abroad.

Instead, it identifies New Zealand as one of eight countries - along with India, Malaysia, Nepal, Kenya, Mozambique, Indonesia, and China - where North Korea has “large and active” presences.

6. Numbers of the day

$6.75/kg - Fonterra announced yesterday it had lifted its forecast milk price for the 2017/18 season by 25c/kg to $6.75/kg. It also forecast 45-55c/share of earnings for fully shared-up farmers, potentially increasing the total payout to $7.20-7.30.

0.3 percent - Statistics New Zealand released its household living cost indexes for the June quarter, which showed that prices for beneficiaries rose 0.3 percent in the quarter, which was three times faster than prices experienced by the highest spending quintile of the population.

“Rising prices for the basics such as rent, electricity, and food had a greater impact on beneficiaries,” Stats NZ prices senior manager Jason Attewell said. “Over half their spending was on these essentials, compared with about a quarter for the highest earners.”

7. Weekend Reads

For the benefit of subscribers, here's a few longer reads on economic, political and social matters for the weekend.

This piece in The Atlantic looks in depth at the issue of filter bubbles and trust in the media. "To make collective decisions about our communities, our shared resources, and our government, we have to agree on basic facts. Today those facts can take on the shape of a funhouse mirror where we each see a distorted image tailored to our own expectations," Sally Lehrman writes.

Further to the UBI debate, Charles Kenny writes there’s a simple way to reform welfare: send money to those who need it, without conditions.

And further to the AI debate, this New York Times piece on how robots are being used to crash democracy raises some interesting questions about when a robot should be identified as a human.

So does that mean there will have to be 'Luddite-like' laws to protect jobs and ward off the robots? The American Enterprise Institute looks at that question here.

8. One fun thing

The Donald Trump circus continues to get more chaotic and dangerous by the day. Overnight, the Pentagon appeared to refuse to take an order from the President by saying his transgender ban announced on Twitter was not valid until it saw the order in writing.

Meanwhile, new Communciations Director Anthony Scaramucci (can he do the fandango?) is at openly at loggerheads with Chief of Staff Reince Priebus.

This tweet has some fun with that clash, using a picture from a meeting/standoff overnight and inserting some light sabres.