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To The Front: What’s Peseta Sam Lotu-Iiga Up To?

To The Front! is a column by political commentator and activist, John Minto.


What’s Peseta Sam Lotu-Iiga up to?

On Monday last week National MP for Maungakiekie Peseta Sam Lotu-Iiga launched a private members bill to “license and regulate moneylenders”. It’s a bill which aims to puts some brakes on loan sharking.

Lotu-Iiga launched the bill without the endorsement of the government but with the support of a group of seemingly more liberal National MPs – Jackie Blue, Cam Calder, Melissa Lee and Kanwaljit Singh Bakshi.

It’s an interesting development. A cynic might say it’s because Labour’s challenger to Lotu-Iiga in Maungakiekie is MP Carol Beaumont who recently launched a Stop Loan Sharks Coalition with the support of a range of community groups. Perhaps Sam doesn’t want to be outdone by his local political rival.

However it seems that Sam as a Pacific Island MP is aware of the huge impact on the Pacific community of loan sharks whose predatory practices are continuing to destroy low-income families and communities.

Lotu-Iiga says the bill “.provides for a comprehensive regime change to combat the problems associated with some moneylenders or loan sharks.”

It establishes a registrar of moneylenders (with oversight from the Financial Markets Authority) to administer a positive licensing regime for moneylenders. The purpose of the bill says the National MP is to prevent undesirable and unfit persons from engaging in moneylending or being employed by moneylenders.

The need for regulation has been obvious for a long time. It’s worth repeating here the main findings of the report produced for the Labour government four years back by Auckland University Academics Eve Coxon and Melani Anae. Their extensive research into loan sharking in New Zealand’s Pacific Island communities concluded:

    · Overwhelmingly Pacific credit consumers borrow for everyday household expenses as opposed to luxury items. Purchasing cars was the second most important reason for seeking credit while borrowing to meet social/cultural obligations was the third.

    · Even when Pacific consumers had good financial knowledge they felt they had limited choice in terms of credit available to them. Education alone is not sufficient to protect consumers.

    · Loan sharking has produced an environment of continuing pressure and stress in the lives of Pacific consumers. The report says “the realities for many are that they and their families are struggling to survive, not only physically but also mentally, emotionally, culturally and spiritually” It goes on to say “the confusion and stress caused by hidden high costs and exploitative credit contracts exacerbates their already vulnerable positioning with negative and dire consequences in many cases”.

    · The report found many Pacific consumers want “non-mainstream credit providers” to ease the stress and are keen to meet their financial obligations.

    · “The Credit Controls and Consumer Finance Act may work as intended for consumers borrowing from mainstream financial institutions. There is clear evidence, however, that the Act does not provide sufficient protection to credit consumers dependent on ‘fringe’ lenders”.

The response of the main political parties to attempts to regulate and control loan sharking has been woeful.

During its nine years of government Labour were repeatedly lobbied on the issue but to no avail. At one stage the report above was commissioned by the Labour government but was buried the very day it was released. The Minister of Consumer Affairs was Judith Tizard – enough said – while the Minister of Commerce who sidelined the report was Lianne Dalziel. Labour refused to entertain any financial regulation of loan sharks despite most other developed countries having firmer controls and despite the evidence loan sharks were destroying the families of the party’s most loyal supporters.

Labour was not going to put the least impediment in the path of these cockroach capitalists.

Under the ACT/National/Maori Party government we have a similar paralysis. Act MP Heather Roy was Minister of Consumer Affairs to be later replaced by Deputy Act leader John Boscawen. Predictably both are allergic to regulation of any kind.

It’s all a bit embarrassing for Lotu-Iiga. The government itself refuses to take on the job of regulation but has given permission to the MP to bring in a private members bill. Lotu-Iiga has been handed Oliver Twist’s bowl.

Meanwhile Labour in opposition wants to re-establish links with community groups and as in so many other policy areas it has changed its mind and MP Charles Chauvel introduced a private members bill last year to bring a different (and far more effective than the Lotu-Iiga bill) range of controls on loan sharking. However this was voted down in short order by the government last year.

If his bill becomes law Lotu-Iiga says “.harrassment, bullying, threatening and abusive behaviour will be in contravention of the bill”. That may be the case but it doesn’t mean anything will change. If the bill were to meet its aim of preventing “undesirable and unfit” persons from becoming moneylenders then it needs to stop such things as loan sharks collecting on their 600% interest loans or repossessing the family furniture because a default payment on what might have started as a $200 loan but has ballooned to $2000 in short order because that is what the loan was designed to do.

Nothing in Lotu-Iiga’s bill will prevent this. He seems to think the issue is that loan sharks are not polite enough. It’s not. He is setting up a straw man to knock it down.

It’s worth remembering the agonizing of former Minister of Commerce Lianne Dalziel and the current government over the need for regulation of finance companies after the collapse of so many and the loss of funds to New Zealanders with spare cash to invest.

Why are Labour and National so concerned for the financial welfare of better-off New Zealanders but have barely a passing concern for the poorest and most vulnerable in this country who have to borrow from parasitic predators to meet their daily living expenses?

4 comments:

  1. Ehoa, 25. May 2011, 10:51

    Hardly surprising given that Sam Lotu-Liga wants to be the next Minister for Pacific Island Affairs.

     
  2. Rob, 25. May 2011, 19:22

    600 #&^&# % !!!!!!!!!! Are you serious? I’m in the wrong business. I guess loan sharking is the thick end of the wedge. If controls are placed on these guys then scrutiny will fall on the next level of loan sharking, namely finance companies. This would be disastrous for those in parliament as they have too much vested interest in that area.

     
  3. Leon Henderson, 25. May 2011, 22:00

    There are very few people like John Minto in New Zealand – people who are prepared to put their necks on the line to confront the numerous evils of what is an abhorrent economic system presided over by extremely unsavoury consortiums and their lackey’s (such as the Labour and National parties) and it can only be desperately hoped that in this pivotal year where both the MMP Electoral System and the last few remaining State assets, whats left of the social welfare system, whats left of ACC, etc, etc, are all under deadly threat from the extreme right-wing saboteurs of this country, that the masses will snap out of their ignorant torpor and vote Green and Mana in vast numbers. If they fail to do so, God help us all.

     
  4. John Laver, 23. June 2011, 2:49

    Hi John Minto,

    Excellent commentary, thanks. The idea and the fact of laissez-faire rationalized usury in New Zealand should be exposed as the deeply morally repugnant scourge that it is. It’s a betrayal of the fundamental character of Kiwi democracy.

    Also, what needs to be challenged at all times is the usurers’ (false) laissez-faire assertion that human beings are all “units of rational choice”. This is a core item of their market ideology and yet it has been demonstrated to have no basis in actuality. It’s a zombie idea, but one that is constantly cited and accepted uncritically.

    Best regards,

    John Laver