Written By: - Date published: 2:26 pm, September 3rd, 2008 - 114 comments
Categories: labour -
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For any of you who thought the sharp end of capitalism was a nice place to be, the front page story in today’s Dom Post should change your mind. It’s about the lending practices of the loan sharks that have flourished in the twenty years since New Zealand had neo-liberalism foisted on it.
And it’s not pretty. According to the article Super Loans in Porirua is lending money to people at a rate of 8% per week. That’s 416% per annum. And it’s right across from the Work & Income office.
Of course this situation isn’t new. Porirua has six such ‘money lenders’ listed in its yellow pages alone. Manukau has 12.
Helensville has none.
Ponsonby has none.
Mt Victoria has none.
Fendalton has none.
So you’d expect this not to be an issue for those who represent upper middle New Zealand but when Judith Tizard and the Labour party palm the issue off:
Consumer Affairs Minister Judith Tizard said the Government was monitoring the situation – especially in Australia – and planned a discussion paper, but ruled out a cap on interest rates.
You’ve got to wonder if they remember what side their bread is buttered on. It’s part of the folk law of the 2005 election campaign that it was the turnout in Manukau and Porirua and all the other places ‘Labour’s people’ live that gave them their third term. It would pay for them not to forget that.
So Labour put up legislation regulating loan shark parasites and see who opposes it. At the very least it will let your ‘people’ know who still stands for them.
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rOb
Please state all the things you think should be banned. You can’t just say ‘bad’ things. Unless of course there is a referendum where we all get to name 10 ‘bad things’ and the countries most unpopular 10 ‘bad things’ are banned. What is ‘bad’ for you might be just great for me, and I do like my pies and I’m pissed my kids can’t have the occasional one at school.
“if a mechanism could be created to provide an equivalent service that was shown to be better for society, or potentially less damaging, would you support it?”
What kind of mechanism would that be?
I don’t borrow money myself because even if it was an interest free loan from Winz the repayments still have to be factored in. I don’t buy stuff I don’t need with money I don’t have.
I think some of the people in this predicament have got their priorities wrong, why do they need to borrow the money in the first place?
Please state all the things you think should be banned.
I’d like to ban stupidity Burt. Or at least make it painful!
Goodnight.
“Look at what the Greens are doing on gambling, an equally abhorrent form of preying on the poor/stupid/impulsive. It’s ruining families and communities, but the Government refuses to do anything about it.”
The Greens are a bunch of neo-wowsers who are trying to create their new feelgood morality that says “private money is evil” and want to either force all the pokie money to be handed over to the state (this was rumoured to be the big plan a little while back) or shut down those evil gambling dens outright. Most of Greens policy is extreme left due to where the party and most of their MPs sit politically and as such it reflects a position that is very anti-business, anti-private.
Let’s face it, a comparative few people who can’t control themselves are a good reason to shut down any sort of gambling? Or just about any hobby or recreation for that matter.
Labour just wants to impose food controls in schools in order to give another excuse to employ even more bureacrats and give them even more control over things because that’s what Labour stands for. The school tuck shops will just close and all the kids will go to the fish n chip shop up the road.
swampy I was going to raise a couple of points with you but by the time I got to the end of your “thoughts” it was pretty clear that there’s no point. You’re as ridiculous as burt or d4j.
Go to bed and stop wasting electricity.
“I’d like to ban stupidity Burt. Or at least make it painful!”
Ironically enough, that’s exactly what 8%/week does…
Perhaps it’s not fast enough feedback. Like you actually need each of these places to have a can of mace under the counter, and whenever anyone comes in to ask for a loan at 8%/week interest they give them a blast in the face.
I mean christ knows nothing else will work. Did you read in the article the woman who borrowed $50 to top up her phone? But he, don’t worry, coz if she can’t pay it back she can just extend it! Phew. And then? That kind of stupid can clearly only be corrected using an “ow ow ow hot!” kind of response.
I hate loan sharks with a passion. Believe it or not I also hate the very sloppy rules we have around Finance companies and how they can gamble away the life savings of Investors.
I also detest political interference in our Police Force did anyone see Close up TV 1 Project Equity
Report written in 2003 on the South Auckland crime scene and what needed to be done to fix it. Forecasting the dire consequences if it wasn’t done.
Then the message came from on High get every copy of those reports back we don’t want the public to know how bad the situation is and will be.
Everything that it said would happen is happening I wonder how you would feel if you were a parent of one of those murdered since 2003 in South Auckland. I really hate political interference in our Police force!!
Rob, are you capable of making a comment without trying to veer the thread into another topic? I suggest you start your own blog so you can get all these things that trouble you off your chest.
On the matter of the post I will say that the best way to deal with these sharks in the medium term is to increase benefits and wages (especially the minimum wage) but in the short term they need to be heavily regulated. Of course I would prefer if they were banned outright but I doubt that is a politically viable option.
Cash loans as such have always been around. Probably the worlds second or third oldest profession are the providers of these services. Of course it seems shocking to the sensibilities of those of us who choose not to use them. But they are needed by many of the less fortunate, for many diverse reasons including basic necessity. So now the Govt considers legislating against such arrangements, what are these people supposed to do? I contend
that a broadbrushed approach to this would be an oppressive move by any govt.
Of course the fees and rates are high, this all makes sense as the greater the risk the higher the reward. Make no mistake these are very high risk lending arrangements for the lender. Without the prospect of reward, they would not undertake the work. Remember a good deal of the costs go towards underwriting the bad loans, chasing the debtors, & vast administrative costs on small unsecured lending. Broadbrushed Govt legislation would likely see the rise of criminal blackmarket lending, which nobody wants to see.
IrishBill says: Dad. You were banned for a week and warned about breaking that ban twice. Now you are banned for two weeks.
what is winz there for? these people should be being helped by winz and not being gouged by these predators. oh thats right. national is going to privatise winz and then they will get all the interest to add to their bonuses. the bonusses they get for not giving beneficiarys their full entitlement.
Randal. Do yourself some credit & undertake some reasoned debate.
I await with anticipation.
T-rex
randal picks up where my comment @ 7:49pm last night left off.
My personal favourite solution to loan sharks would be to knee cap them without the option of rolling up their trouser legs first.
However, that’s not going to happen. Effective regulation probably won’t happen either.
What if the victimised communities started having a spate of fires in the neighbourhood? Say, loan shark offices got burned in a kind of grass roots poetic justice thing?
Insurance premiums for them would sky rocket and they would ‘disappear’.
Meanwhile, raise the benefit levels and extend wff to include unemployed parents.
For anyone delusional enough to believe you can effectively budget on the benefit, please, get real. The benefit is meant to be a safety net. If large numbers of people are frequenting loan sharks, then it is surely a sign that the time for some net repairs is way over due.
I’m a wee bit disappointed that no-one has picked up on the fact that large retailers are also preying on poverty to increase profit margins. Oh well.
I’m a wee bit disappointed that no-one has picked up on the fact that large retailers are also preying on poverty to increase profit margins. Oh well.
Bill, if you want to write a post on this and send it to us we may consider it.
Legislation will not stop people making stupid decisions, underground loan sharks anyone?
I don’t think people criticising the interest rates per se have really thought this through. These businesses mostly operate on very small loans, $50 here, $100 there. While as a percentage the interest rate seems crazy, as an absolute amount on a small short-term loan it’s not a lot. To use the example from the article of a $50 loan over 10 weeks, they only get $40 for the overhead of setting up and taking weekly cash payments for a $50 loan and taking the very high risk of not recovering it.
If there is a cap on interest rates of say 50% pa then the interest on the $50 loan for 10 weeks is roughly $5. No-one is going to do it for that. The lenders will either go out of business or find a loophole, and the customers will go to the leg-breaking kind of loansharks instead.
Oi, Billy. We have a passing off problem. Get another nick.
And for the hilarious collection of loopholes already uncovered by the Queensland legislation mentioned in the Dom Post article see http://www.news.com.au/couriermail/story/0,23739,24187752-3102,00.html
coge dont hold your breath. I dont flap my gums debating with fools who wont see the nub of the problem. if you want debate go and stand outside cash advances in porirua and talk to the peopel going in there about what they need the money for.
OH, every law gets worked around or broken to some extent. The idea we shouldn’t regulate this industry because some people might find a way around it is absurd. At the very least stronger regulation would make it harder for these lenders to access their victims (like not having them across the road from W&I).
I walked down Courtney Place the other day and saw one of these agencies advertising:
“Need some quick cash for a big night out on Courtney Place? Come see us”
You can’t advertise cigarettes like that.
Randal, if things were hunky-dory in Labour land, there would be no need for these cash loans. But that will never happen, regardless of the administration. The businesses go where they are needed. They always have. Maybe you could stand outside WINZ & offer a solution to those who have been turned down additional help for basic living needs. One that doesn’t involve law breaking.
I’m not as far removed from folk in these situations as you might imagine.
coge
The only people who are far removed from these people are the people who think welfare will solve the problem. Que randal’s next comment.
Burt – it’s “cue” not “que”. “Que” isn’t even a word. And you’re calling Randal stupid? Stones. Glasshouses. Live in.
“Que’ isn’t even a word
It is in Spanish, and it’s my general response whenever I read one of burt’s comments.
I’m more of a WTF??? guy when it comes to Burt’s comments…
I’m sorry, he’s from Barcelona.
Tane said:
I’m not sure what you mean by this, perhaps you could elaborate so that then I can disagree with precision rather than in general (I spent the first 17 years of my life in Mangere during which Lange was the local member).
r0b:
“Guidelines and recommendations have been around for decades. Obesity is increasing, obesity on the young is increasing.
So given that guidelines and recommendations don’t work – which is worse, banning crap food in tuck shops, or doing nothing to tackle a health problem which is debilitating for individuals and very expensive for society (or if you prefer Dean, for the tax payer). Serious question Dean, guidelines and recommendations don’t work, so (phrasing it in terms that you understand) should the tax payer be footing the bill?”
So, if education on the matter fails then instead of looking at why it’s not working – given that it’s pretty obvious what overeating or eating the wrong kinds of foods in excess does to someone – we should simply move on to banning?
We shouldn’t look at why the education isn’t working and improve it?
r0b, I think you just enjoy the control aspect.
Imagine if the same kind of energy, education and advertising that smoking recieves was applied to the obesity epidemic. But I think we both know why this isn’t being done.
Anti-smoking promotion is clearly negative, and demonstrates the health issues involved. It does not seek to pull any punches. The most we see on obesity is positive reinforcement, because people are too scared to offend anyone. Of course there are a small percentage of people who are overweight despite an excellent diet and plenty of exercise, but these are very much in the minority, despite what some homeopaths or other quacks have to say. I would put it to you that the majority of obese people choose to be so because they are not being properly educated, because they know the taxpayer will have to foot the bill and – dare I say it – because of cultural influences.
Banning food in school tuckshops is not going to stop this, or even make much of a dent in it.
Pity you didn’t respond Felix cos I’ll just have to assume you are unaware the Greens are communists and assorted fellow travellers from way back. It’s no surprise at all they want to ban so many things, especially many things to do with business activity.
Most of what they are harping on with food and smoking and what have you is codeword stuff for attacking “greedy corporates” and what not which in turn is pretty much just communists/socialists who hate private business.
Now, if there was anything else you meant by that rejoinder, feel free to elaborate…
“I walked down Courtney Place the other day and saw one of these agencies advertising:
“Need some quick cash for a big night out on Courtney Place? Come see us’
You can’t advertise cigarettes like that.”
If you are dumb enough tto take a loan out to go drinking, you deserve a bloody high interest rate.
You can’t legislate stupidity
“vto
September 3, 2008 at 8:08 pm
but seriously seriously where on earth does it start and end – I mean the state apparently now needs to tell people what to eat (never used to), to exercise (never used to), how to manage money (ditto), how to raise their children, It really is cradle to grave and is becoming more so.
Is it becoming more so because of the very fact of state interference in the first place? I mean, the gummint is responsible for everything (with the correlation that the people are responsible for nothing).”
Where the rot has set in is the state telling parents how/how not to bring up their kids and other not so subtle ways of undermining parental authority. Once that’s well established then the way is open for all this other stuff, the state telling people what to eat, exercise and so on. Parents are just breeding and financial support units who don’t have a primary role in teaching their children the things of life any more. The state can now take over all the educational stuff and churn out kids attuned to their ideology.
The fact is that the education system is a poor way of delivering these lessons in life because it is less than one third of a child’s life. They spend a helluva lot more time in their families learning stuff there than they do at school. The other problem with using the education system to deliver these messages is that it crowds out the stuff the education system is supposed to do, like the 3 Rs.
Back to topic… if you think the government should regulate just about everything that moves just to protect poor people from their own inability to function properly in society, then go for the obvious solutions, like giving people food vouchers, electricity vouchers or whatever for their basic needs each week. So far as I can tell, practically everyone on the left of politics is vehemently opposed to any such idea. But you are seeking to ban everything in sight for the sake of an irresponsible minority. Why not just deal with the irresponsibility directly instead of punishing everyone else.
RE:-
When National starts saying we’re going to end the prohibition on drugs, we’re going to allow euthanasia, we’re going to allow abortions on demand, we’re going allow polygamy and gay marriage, etc, etc, then you can start saying they believe in personal responsiblity.
Reading along I was struck by this comment. Can you tell me which party is saying this please. I want to make sure no one I know votes for them!
Oh Christ its the libertarians. I hope you don’t walk on my footpaths or drive on my roads ‘cos that’s theft bro. And that would make you a thief.
cap: “rambling mission” – pretty much sums the rightie trolls up perfectly.
Robinsod”
“Oh Christ its the libertarians. I hope you don’t walk on my footpaths or drive on my roads ‘cos that’s theft bro. And that would make you a thief.”
Oh dear, it’s the communists. I hope you don’t earn more than your neighbour or drive a better car than somebody in Otara ‘cos that’s being a top hat wearing capitalist bro. And that would make you a hypocrite.