The problem for Shearer
The undisclosed bank account is posing some challenges for David Shearer, beyond just the transparency issue.
Stuff reports:
Shearer told Fairfax Media yesterday there was no advantage to having the account and there was “nothing special about it”.
Asked what that said about his financial expertise, given low interest rates in the US and the exchange rate losses he may have suffered from a rising New Zealand dollar, he shrugged and said: “The bottom line is it is there, and I have nothing more to say about it really.”
Banks today also questioned why Shearer would keep such a large amount of money in an account that paid such low interest – maybe 1.5 per cent – when he could earn more in New Zealand.
Shearer had also disclosed a mortgage in the register, which would charge a higher interest rate than the banks paid on deposits in New York.
“Why doesn’t he transfer some across and pay off his mortgage?” Banks asked.
How an MP arranges his or her personal finances should generally be of no concern to the public – it is a private matter. But when due to a stuff up, you force it into the public arena, people naturally get curious. You just can’t help it.
Now some people have got over-excited and have been saying that Shearer has a conflict of interest with Labour’s policy to spend billions of dollars pushing down the exchange rate, as that would allow him to convert his US dollars into NZ dollars at a higher profit.
I’m sorry, but that’s ridiculous and is the sort of paranoia best left to some of the extremists on the left who likewise allege that John Key was asking questions in Parliament on Tranzrail to help their share price, rather than because he was (then) Opposition Finance Spokesperson.
Labour want to waste billions of dollars intervening in the exchange rate because they think it will be popular, not to help their leader make money on currency transactions.
So I don’t think the public will have a bar of the conspiracy theories.
But what the public do understand is paying down your mortgage. It’s something common to most families. You pay much more on your mortgage than you get in a bank, so you always transfer surplus savings against your mortgage.
And what the public will be wondering, even though it is none of their business, is why would you have several hundred thousand dollars in an US bank account, and not use it to pay down or off your mortgage. I mean no one sensibly wants to pay more interest to your bank than they have to.
The only three answers I can come up with are:
- You’re financially incompetent and it never occurred to you.
- You’re so well off, that saving thousands or tens of thousands of dollars off your mortgage doesn’t matter in the bigger scheme of things.
- There is some other reason to want to keep the money in the offshore account.
Have I missed a significant possibility?
Vernon Small also touches on the political side of the non disclosure:
The blunder shows a slackness and a lack of attention to detail unbecoming a prime minister.
Even having the account – rather than closing it quick-smart when he became leader – is problematic.
What of Labour’s views on economic nationalism? What about investing in local enterprises rather than leaving the money at low interest rates to be invested in the US?
And why not close it and bring it back now? Surely not because he is waiting for the exchange rate to move back in his favour? Mr Shearer, currency speculator?
It isn’t necessary to get overexcited by the ramifications of all this to see the potential for political harm for Labour and Mr Shearer.
By far the worst is that at a stroke he has neutralised attacks he could make, come the 2014 campaign, on John Key’s “brain fades”.
It is not hard to see how they will be turned back on him.
Which is worse: forgetting a swift mention of Kim Dotcom in a briefing by spooks or failing to remember for three years in a row your nest egg tucked away in a New York bank?
Labour had a very obvious campaign around Key having so called brain fades. It is now in tatters.
UPDATE: We have has some useful additional possible explanations. The list now is:
- You’re financially incompetent and it never occurred to you.
- You’re so well off, that saving thousands or tens of thousands of dollars off your mortgage doesn’t matter in the bigger scheme of things.
- Deliberately not paying off the mortgage, so he appears “an everyday bloke”
- Is writing the NZ mortgage payments off tax as an investment property
- Waiting for the exchange rate to drop, before he moves the money back to NZ
- There is some other reason to want to keep the money in the offshore account (US itunes purchases?)