Yunus wants Sonia to open microcredit banks for women

from The Daily India

By Indo Asian News Service

New Delhi, Jan 31 (IANS) Nobel Laureate Muhammad Yunus wants to open a non-profit microcredit institution for women in India that could be headed by Congress president Sonia Gandhi. Although the government has not officially agreed, it is positive to the idea, said party insiders.

Yunus, who spoke to Sonia Gandhi on the sidelines of the two-day international conference on Mahatma Gandhi's Satyagraha centenary that ended Tuesday, told the Congress chief that she should take the initiative in promoting microcredit in the country.

As of now, the government does not have a microfinance institute though there are NGOs working in the field.

Yunus reportedly told Indian leaders that Bangladesh's Grameen Bank model on microcredit could work in India. 'But microfinance should be recognised as a legitimate business with a legal status in India.'

So, if Sonia Gandhi wants to accept his proposal, India needs to meet a number of institutional requirements and give budgetary support to the microfinance sector.

'During his discussions with Sonia Gandhi, Yunus expressed his desire to promote microcredit institutions for women in India. He wanted the Congress president to head it,' said a party leader.

'Sonia Gandhi was very positive about the suggestion. She is expected to discuss it with the government and give a formal response to his proposal.

'The Congress president believes that microcredit institutions will help economic development percolate to the grassroots level,' the party leader added.

Yunus, who heads the Grameen Bank Trust, won last year's Nobel Peace Prize for his network of microcredit institutions that have given credit worth $4.4 million to 4.4 million families in Bangladesh. On Wednesday, he will inaugurate a branch of the Grameen Bank Trust in Mumbai. The trust will begin work in Assam also.

Sonia Gandhi and her MP son Rahul have been propagating microcredit institutions for the rural sector. Rahul, who toured southern states to learn about women self-help groups and microcredit financing, reportedly wanted to introduce such institutions in north India, particularly in his and his mother's constituencies in Uttar Pradesh.

Copyright Indo-Asian News Service

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Canada to Discuss Free Trade With Peru

from The Embassy

Peru and Canada could start discussions for a bilateral free trade agreement as early as February, according to Peruvian Agriculture Minister Juan Jose Salazar.

During a visit to Ottawa last weekend, Mr. Salazar said the talks would begin when Canadian Prime Minister Stephen Harper considers the time opportune, stressing that Peru has great expectations in achieving such an agreement, having done initial evaluations into the benefits of such a deal.

Mr. Salazar is the highest-ranking official from Peru to come on a working visit to Canada since former president Alberto Fujimori in 1998.

Mr. Salazar told Embassy his visit was first and foremost a political gesture. Peru wants to be closer to Canada, both politically and economically. He expressed his government's awareness of the Canadian market's significance for Peruvian exports, the potential benefits of a bilateral free trade agreement, and how co-operation in critical areas can be consolidated and improved.

In Quebec, the first stop of his visit, Mr. Salazar signed an agreement with an agricultural financing institution, which will allow Peru to receive assistance in areas such as geodesy, cadastre, land property rights and insurance. The goal is to select a pilot region in Peru in the next 60 days and within a year implement programs similar to existing ones in Quebec. The overall goal of this and other initiatives is to propel transition in agriculture, from subsistence models to achieving export competitiveness in a free trade context.

Canadian investments in Peru are very significant, estimated to be around $5 billion, particularly in the mining sector, with a bilateral investments protection agreement already in place. After the uncertainties surrounding Peru's last presidential election, with the second ballot contested by radical candidate Ollanta Humala and former president Alan Garcia, the victory of the latter–albeit a relief–still left the lingering doubts of his commitment to pursuing his predecessor Alejandro Toledo's macroeconomic policies. One of Mr. Garcia's first official visits as president was to the Canadian Embassy in Lima, where he reassured diplomats about the respect for the rule of law and legal certainties for Canadian businesses.

Currently, more than 80 Canadian companies are carrying out mining exploration operations in Peru. Mr. Salazar pointed out it is state policy to secure those investments, adding that although in the past some Canadian extractive industries had contravened laws and have had a poor track record in pollution, things have changed dramatically over the last decade. He has personally been involved in rigorous evaluations and is very pleased with the results. Today, the local communities are the first defenders of the mining activities as they have found great social support through the companies' corporate social responsibility initiatives and their activities are compatible with best environmental practices and agriculture, said Mr. Salazar.

Peru has reached a free trade deal with the United States, though it has yet to be ratified by the American Congress. Mr. Salazar said Peru has complied with all the agreements, but now some Democrats in Congress are expressing concerns over labour and environmental issues, "complicating the scene." Mr. Salazar said at home, the issue was initially politicized, but now there is widespread support. He concurred that free trade poses a challenge for traditional agriculture, and explained how the Peruvian government is committed to policies that would ameliorate the transitional difficulties faced by some sectors and sensitive crops in the initial period.

In terms of regional relations, free trade initiatives are a divisive factor. Within the Community of Andean Nations (CAN), Colombia and Peru are pursuing them, whilst Bolivia and now Ecuador are intent in their opposition. Venezuela had left the CAN over the issue. And yet, Mr. Salazar expressed his optimism on reaching consensus within CAN, based on the fact that the European Union would only negotiate bloc to bloc. Nonetheless, he was quick to add that others–Chile–had negotiated bilaterally and "[Peru] cannot wait forever. We have a commitment to the poor, and millions of poor people are in rural areas."

Chile leads the region in free trade agreements with the rest of the world. Mr. Salazar noted how his country and Chile could potentially work together to increase access to Asian markets with complementary exports.

As in any discussion with South American leaders, the current political climate made its way into the conversation. Mr. Salazar conveyed his take on events, saying solutions to poverty reduction won't happen with exclusionary policies, and while each country's identity has to be preserved, the region has to overcome policies that are proven to lead to dictatorial regimes and that do not create the conditions for development that the vast majority hopes for.

Regarding Peru's domestic politics, many international observers have expressed concerns over the proposed reinstatement of the capital punishment in the country. Mr. Salazar explained the proposal came out of cabinet and is currently before Congress, and made it clear he does not consider it a solution to crime or violence. When confronted with the negative reactions in Europe–and possibly in Canada–he expressed his hope this would not hinder co-operation and that his country should be judged by its firm commitments to openness and the rule of law. The message is: Let's talk free trade.

Vladimir Torres is an Ottawa-based Latin American affairs analyst.

editor@embassymag.ca

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Phumzile: Poverty = crime

from News 24

Cape Town - South Africa must end poverty for millions and build moral values to help stop violent crime and corruption, the country's deputy president Phumzile Mlambo-Ngcuka said on Tuesday.

South Africa is Africa's biggest economy and has one of the highest crime rates in the world, with armed robberies and other crimes of violence continuing to shock a country preparing to host the Soccer World Cup in 2010.

"The unacceptable numbers of South Africans that still live in poverty and deprivation clearly is one of the problems (contributing to crime)," Mlambo-Ngcuka said at a conference in Cape Town.

In the latest incident, David Rattray, a renowned military historian and friend of Britain's Prince Charles, was killed in a robbery at his home.

The killing provoked an outcry from business and political leaders, who bemoaned the violent crime plaguing South African society despite official figures showing murder rates declining.

Mlambo-Ngcuka said it was essential to alleviate poverty and unemployment for millions to help cut crime.

"Too many of our compatriots are unemployed and do not have access to productive economic opportunity," she said, adding sharing the wealth of the nation was a moral responsibility.

South Africa's economy has grown solidly in the past few years, averaging nearly four percent annual expansion, but unemployment remains high, officially estimated at 25.6%.

Mlambo-Ngcuka said moral decay had fuelled violent crime and firm action should be taken against public servants found guilty of corruption.

The police and armed forces should exhibit behaviour that was exemplary and beyond reproach, she said.

"They should be encouraged to exhibit higher public service ethos, higher public service spirit and public morality. Anything less can be traumatising to society because our people need standards," Mlambo-Ngcuka said.

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South Africa: Fight Poverty Through Energy Provision - Sonjica

from All Africa

BuaNews (Tshwane)

Bongani Mlangeni
Pretoria

Minerals and Energy Minister Buyelwa Sonjica has called on Southern African countries to fight poverty through the provision of energy.

Speaking at the South Africa-Chile Inter-governmental seminar on Tuesday, the minister said these countries needed to improve and increase energy supply to their citizens as this would contribute to poverty alleviation.

Other countries which participated in the seminar included Brazil, Angola and Mozambique.

"Access to energy for poor households can go a long way in reducing poverty and improving the lives of the poor. We need to apply our minds to how we improve the provision of energy, said Ms Sonjica.

The minister explained that it would make sense for all countries to begin to apply their minds in the area of energy provision and other areas with comparative advantages.

"It would make sense that we get worried about energy supply security given the strategic importance it plays in our economy," she said.

The developed world, Minister Sonjica said, owed its success to the availability of energy as it forms the basis of success for the economy of any country.

The minister further urged the countries participating in the South African-Chile Intergovernmental seminar to improve their cooperation in areas such as skills development and exchanging of knowledge in the field of mining.

It was estimated that by 2050 the world population would have doubled, and this would put strain on energy supply.

"No government can only rely on their national policy for their energy supply to grow its economy," Minister Sonjica said, adding that it was for these reasons that different nations needed to cooperate and learn from one another.

Minister Sonjica said cooperation in the energy sector must be extended to mining, as South Africa's experience and expertise in deep level mining could benefit the southern region.

"We have a competitive advantage on seismology and other relevant techniques but still have a serious challenge in predicting the seismic events in the mines leading to deaths of miners,".

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Children’s parade against poverty

from The Hindustan Times

Monica Sood

Young India demands to be heard and seen. And this was evident when the National Stadium resounded with cries of “9 is mine,” as 6,000 children demanded their right to proper education and health.

Schoolchildren, not just from Delhi, but from across the country, gathered at the National Stadium on Tuesday to highlight the poverty and plight of children of a ‘less visible’ India.

Dressed in colourful traditional attire, the children participated in the ‘Public Parade Against Poverty’— a unique '9-is-mine' campaign urging the government to allocate nine per cent of the Gross Domestic Product to education and health.

Supported by the Wada Na Todo Abhiyan (Keep Your Promise Campaign)’ — a national coalition of over 900 grassroots organisations across 15 states, the parade saw the culmination of the target of collecting 1,00001 signatures from school-going and out-of-school kids under the age of 18. It will be submitted to PM Manmohan Singh.

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Kaien Anti-Poverty Society survives with full new board

from The Northern View

By Shaun Thomas
The Northern View

After being on the verge of dissolution due to a lack of people stepping forward to fill positions on the board, the Kaien Anti Poverty Society (KAPS) had a huge turnout at their January 20 Annual General Meeting and will be able to continue their fight against poverty in the city.

“We had standing room only at our AGM! This new board was elected out of 15 nominations! The community enthusiasm for continuing the work of KAPS is truly a sign of hope. I look forward to volunteering for this new board,” said outgoing KAPS chair Erika Rolston.

The new board of directors, who met for the first time on January 27, consists of chairperson Sunflower Porter, vice-chair Katy Barker,

treasurers Pamela Gonzalez and Isabel Howard, secretary Pat Lawson, Free Store manager Miguel Gonzalez, communications liaison Frances Roelofs, and directors at large Lianna Faust and Charlotte Reece.

And while the group may have only had one meeting to date, Porter said they are anxious to begin addressing the issues facing people experiencing poverty as they work to eliminate it in the city.

“We are really enthused and looking forward to being as productive as the last board who have accomplished so much in such a short time,” she said.

“We hope to live up to those expectations and exceed them. We are looking forward to the continuing support of the community of Prince Rupert and hope to see this support at future fundraisers and public events.”

The Free Store, located at 571 McKay, continues to accept donations and volunteers. For more on the Free Store, call Miguel Gonzales at 627-5277.

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Job scheme fails to fight poverty

from NDTV

In last year and a half, about 300 weavers killed themselves in Nalgonda alone, while 200 committed suicide in Varanasi.

The death trail grew longer as thousands of weavers were pushed deeper and deeper into poverty.

But a programme that could have dented these numbers, the Swranjayanti Gram Swarojgar Yoojna, has failed to do so grounded by the government.

Sponsored by the Centre and the state, the seven-year-old programme is supposed to cover those left out by the National Rural Employment Guarantee Scheme.

Like the NREGA, it generates employment by extending credit and facilities like technical know-how and marketing facilities to small rural enterprises and artisans.

But till November 2006, the SGSY disbursed just 23 per cent of its credit target.

"There are certain problems with the SGSY. The main issues are, there are no banks in several areas, the lending rates are very high and also banks are not keen to take risk for the poor. I have written to the FM," said Raghuvansh Prasad Singh, Rural Development Minister.

A rural development ministry study reveals:

* Over 20,000 public sector banks across the country did not disburse even 25 per cent of their credit target. This list has been forwarded to the Finance Ministry and RBI to follow up.

* In West Bengal and Meghalaya as little as three per cent and in Manipur no credit at all was extended by banks.

* Banks consider artisans high-risk borrowers and prone to default. And the Governor RBI has been asked to rectify this "poor lending."

The rural development ministry believes that these changes are crucial to stem the distress of craftsmen and banks need to lower their interest rates from nine per cent to 4 to 5 per cent, a demand the finance ministry has rejected.

It is up to the Centre now to find out a way to allocate more funds for the SGSY, if it is serious about the benefits of the scheme reaching the beneficiaries. Unless that happens, eradicating poverty and achieving a nine per cent overall growth rate seems a tough task.

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Fighting world poverty

from The Times and Democrat

WMU will sponsor WorldCrafts Conference, Sale Saturday

By SHERRYL PETERS, T&D Correspondent

Local Baptist Woman’s Missionary Unions are helping to fight world poverty by sponsoring a WorldCrafts Conference and Sale this Saturday, Feb. 3.

The event will be held from 10 a.m. until noon at the Orangeburg-Calhoun Baptist Association located across from OCtech.

According to Kay Rutland, Association WMU director, the purpose of the conference and sale is to make everyone aware of the dire poverty so many people live in.

“We do have poverty in this country, and we do address that. Right here in Orangeburg County, we have CCMO (Cooperate Christian Ministries Organization) and the Samaritan House, just to name a few of the organizations. Many people are only one pay check away from poverty as it is,” Rutland said.

“But there are certain areas of the world where poverty is more widespread than it is here,” she added. “WMU is giving its best effort to stamp out poverty in every country. One way we are doing this is by buying arts/crafts from artisans at their asking price. The items are then marketed through WorldCrafts Ministry: Project Help for re-sale. That way, the artisans get their money immediately, and WMU is able to spiritually minister to the home areas of the artisans.”

Rutland said organizers hope many people will come out Saturday and purchase some of the items “in order to help spread the Word of God and His love for all people of the world.”

“And, every purchase will help take the awful sting out of poverty,” she said.

WorldCrafts Ministry was started approximately 10 years ago. In 1998, the ministry expanded when Ann Reese set up an endowment in honor of her friend, Mrs. Lamar Jackson. Since both ladies were heavily involved in English as a Second Language efforts, their goal was to build new spiritual relationships by reaching new artisans and their homelands throughout the world. Their Purpose Statement includes four objectives: to provide a sales outlet for indigenous artisans who lack adequate income possibilities; to provide ministry opportunity for missionary personnel to relate to the artisan; to participate in the economic and spiritual development of the crafter and to provide a tangible reminder for mission awareness for the purchaser.

Currently, WorldCrafts imports more than 350 items from 37 countries. This results in their supporting more than 2,000 artisans and their families.

Everyone is invited to come look at the display samples and purchase items on Feb. 3. Some of the items include a bread cover from Thailand; greeting cards made from banana bark from Rwanda; a doll from Swahili; jewelry from India, Jordan and South Africa; soap from the Himalayas; doilies from Romania and Madagascar and painted, wooden eggs from Kazakhstan.

For additional information, call Kay Rutland at 803-536-5744 or the Orangeburg-Calhoun Baptist Association at 803-534-9712.

T&D Correspondent Sherryl Peters can be reached by e-mail at Boykinbaby@surrealestate.com or by phone at 803-263-4058. Discuss this and other stories online at TheTandD.com.

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Poverty Pinches

from Hard News India

A majority of people just cannot afford to pay for electricity

Hardnews Special

Last summer in a Kanpur locality, women padlocked the neighbourhood power station, which was refusing to listen to their complaints of frequent outages. For days together, they alleged, there was no power supply to their homes, where their children were preparing for examinations. Television images of distraught and angry citizens outraged by erratic power supply and threatening to take law into their hands had become a common feature. Power crisis, in many parts of the country, had become an internal security problem.

Discontented and angry citizens posed a threat to electric substations. Reports abound on how the distribution infrastructure, instead of being energised, is routinely vandalised, putting paid to the efforts of planners to provide access to electricity to the masses.

What compounds the misery at all levels is the leakage in the distribution of power. By a rough estimate 40 per cent of power is pilfered before it reaches its destination. The causes of this monumental theft are many. Besides the fact that there is absence of rule of law and quality governance in large parts of the country, one major factor for this is the rampant poverty in urban and rural areas. Many people just cannot afford to pay the price of power and it is easier for them to just sling a wire over distribution lines and enjoy electricity as long as there is supply. The failure of distribution agencies to provide assured supply gives rise to unlawful behaviour.

For a host of uncomfortable reasons, the government is not willing to own up to the problems of extreme poverty and lack of purchasing power that is derailing ambitious plans of the central government. “The assumption that people will pay is erroneous”, claims Surya Sethi, an advisor of Planning Commission. The National Common Minimum Programme (NCMP) promised electricity for all in five years. The Rajiv Gandhi Gramin Vidyutikaran Yojana (RGGVY), or village electrification programme, promises only access. The gap in the two mandates shows ambivalence about the disturbing reality.

There are just too many people who need electricity, but are in no position to pay. Providing access means that only those who can pay would be able to enjoy it. Assumptions go awry due to the flawed quantification of people living below poverty line (BPL). The official figure is 25 per cent, but, as Surya Sethi says, a more realistic estimate would be all those earning $1 a day, which works out to about 35 per cent of Indian population. In real terms, this means 35 crore-odd people barely earn enough to survive. These people just do not have the financial flexibility to buy a unit of power every day, let alone use it for the whole day round.

What adds to the overall gloom is that the targets that are fixed in the Five-Year Plans are just not met. The target during the 10th Five-Year Plan was 41, 000 MW, but the mid-term appraisal showed it would not be able to reach even 28,000 MW. For the Eleventh Plan, the estimated capacity addition is projected at 72,000 MW, but the country does not have the financial resources to generate this amount of electricity. China, which is always compared with India on most human resources and industrial indices, manufactures 80 per cent of power equipment, which is 12 times more than what India manufactures. The worrisome part is that the manufacturing capacity is overloaded and there is no way it can be increased till more power equipment manufacturing companies, like BHEL, are created.

Why are these targets so way off the mark? Isn’t the political leadership of the country aware of these fanciful targets? The problem lies in the inability to own up to the truth and scale down a target if it has not been met earlier. “It becomes difficult to set a lower target than what was in the earlier Plan,” explains Sethi. Authoritative sources say the top echelons of the government recognise the problem and also realise that it is not delivering, but they cannot really do much, as it would show their inadequacy.

One of the glaring omissions in thinking about the future of power sector is not enough attention is paid to the untapped energy sources. According to “India Power Sector 2006, though India is fifth globally in “consumable hydro-electricity capacity”, 78 per cent of it remains untapped. Only 17 per cent of the hydro-electricity capacity has been reined in and five per cent is being developed further.

The government brought in reforms to revive the fortunes of the bankrupt state-owned electricity boards. They promised to privatise distribution to prevent larceny. In Delhi privatisation failed to sort out the problems of distribution. Consumers have been angry with the speed at which the meter moves and also the quality of electricity. Outages still baffle the local government leadership.

Some of the states have been able to initiate reforms with some measure of success. Others, like Uttar Pradesh, are still trying to get their act together.

The shortfall in power is to be met through the proposal to set up Ultra Mega Power Plants (UMPPs), which will generate 4,000 MW or more. These power plants are meant to attract big private sector investment. Many of the big private players are bidding with conditions, as they believe they may have problems in getting environmental and other clearances.

The other ticklish issue is the price at which power is to be sold to the consumers. NTPC has shown that if it gets all the facilities that the UMPP have got, then it could generate power for less than Rs. 1.50/unit. Any private player would have to match NTPC rates before it is entertained by the state electricity board. The flipside is that whoever is able to bag and build a mega power project then that company would be in a different league altogether.

Private players, who are showing a lot of excitement for the policy of power ministry, are also a bit uncertain whether they would be compensated for the electricity they generate. They fear state control and politics could ruin their best-laid plans.

The goal of electricity for all would need a holistic solution, and it simple cannot just be addressed by those who believe in a short-term technological fix. The government would have to ensure that higher outlay in social sector and use tools like microfinance to raise purchasing power so that the disenfranchised masses can feel the glow of power.

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Ban Ki-moon 'humbled' by walk in Kenyan slum

from Monsters and Critics

By Tia Goldenberg

Nairobi - United Nations Secretary General Ban Ki-moon paid his first visit to one of Africa's largest slums on Tuesday, saying he would work to improve the lives of Africa's poor, as residents of the sprawling area lambasted the UN for not doing enough for them.

Ban was visiting Kibera on behalf of the UN's housing agency, Habitat, as part of his three-country Africa tour.

'We have had many visitors here but we never see any results from their visits,' said Ann Wanjiru, a 37-year-old Kibera resident patiently awaiting Ban's arrival.

Wanjiru sleeps nine people in her small shack and must pay three shillings or about four cents to use the washroom - nearly the price of a small portion of maize meal or kale.

But Wanjiru, who was born and raised in the vast slum, said she has yet to see a change in her poor neighbourhood.

She came to see Ban to make sure he saw what her living situation is like, and called for an 'upgrade,' she said. Around 700,000 people live in Kibera.

Ban, meanwhile, zipped in and out of Kibera followed by a throng of slum-dwellers holding banners aloft reading 'We want affordable housing.'

He popped into several shops, housed in mud walls with corrugated iron roofs, before being briefed by Anna Tibaijuka, UN-Habitat's executive director, on flying toilets.

'They use flying toilets - you know when they do it in plastic bags,' she said. Slum residents, encouraged by the lack of toilets near their homes, often 'do it' in bags they then propel far away.

But Ban, looking calm and assured in a light-blue UN cap and tan safari shirt, said his first visit as UN Secretary General to the putrid smelling slum had humbled him.

'Having seen this situation where many people are suffering from a lack of affordable housing, sanitation, water and education, I am humbled and sad about their difficulties and their suffering,' he said, speaking on a hill overlooking the wide expanse of Kibera's l roofed homes.

'These people should not lose their hope,' he said.

Ban has said he would make the crisis in embattled Darfur a priority during his term with the UN, but in Kibera on Tuesday said the Millennium Development Goals, an eight-point plan to address poverty, should be fulfilled by the globally-set deadline of 2015.

The former South Korean foreign affairs minister said reforming the UN was also high on his agenda.

'I will make my best effort to make the UN more effective, efficient and more relevant,' he said.

But as Ban, the crowd of foreign journalists and UN staff moved out of Kibera, the hordes of slum-dwellers remained behind, retiring to the homes they say are overpriced.

'The UN has done nothing for us,' said Kibera resident Lawrance Makoka. 'We have not yet moved away from this place.'

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Poverty benefits in need of policy changes

from The Coloradoan

National research shows cliff effect can trap people into poverty

Initial research by the National Center for Children in Poverty has found that the very programs created to assist people also can trap them as they try to become more self sufficient.

Called the "cliff effect," the phenomenon occurs when individuals in poverty find their public benefits abruptly eliminated or reduced if their income increases, even marginally. Some of the research, which is being conducted in Colorado, was shared with residents at the University Center for the Arts last week sponsored by WomenGive, a local philanthropic organization.

Those who receive child care subsidies, food stamps and income tax credits may find losing such benefits is not worth the additional income that may come with a higher level of employment or working more hours. In fact, some families find they are worse off because of the cliff effect. The result hardly is the encouragement needed for self sufficiency.

The National Center for Children in Poverty hopes to use the research to compel changes in policy. For example, those who now receive public assistance may have a better chance to lift themselves out of poverty if benefits are gradually decreased rather than abruptly cut off. Another proposal calls for increasing the federal poverty eligibility levels and rewarding financial progress through incentives. Given that a number of benefits now link eligibility for services far beyond 100 percent of the federal poverty level, it is clear that policy regarding public assistance has lagged reality.

Nearly one-third of all households in Larimer County headed by a single woman are at or below the poverty level, according to the United Way of Larimer County.

WomenGive, which also is piloting a program to help women bridge the gap created by the cliff effect, is applauded for sponsoring such a meaningful and timely topic.

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Research Findings Cast Doubt on Arguement That Estate Taxes Harm State Economies

from the Center On Budget and Policy Priorities

By Elizabeth McNichol

In June 2001, President Bush signed federal legislation to phase out the federal estate tax. This legislation repeals the federal estate tax by 2010 and also effectively repealed by 2005 the state “pickup” taxes through which states share in federal estate tax collections. States can prevent this loss of revenue by “decoupling” from the federal change and, as of December 2006, 17 states plus the District of Columbia were decoupled from the federal changes.[1]

In a number of states the estate tax has generated considerable debate. Opponents of state taxes on inherited wealth — estate or inheritance taxes — often argue that these taxes will raise little revenue and will harm state economies. The logic underlying their argument is that these taxes will make the state unattractive to wealthy families and cause them to leave the state or discourage them from moving in. A number of recent studies on elderly migration challenge these assumptions. At most, recent studies find that estate taxes have a small effect on the residence decisions of the very wealthy elderly — few people are likely to be affected and the size of the effect is small. This suggests that the impact, if any, on a state’s economy and revenue collections is also likely to be small. The loss of revenue from the estate tax, on the other hand, is likely to harm state budgets and state economies by endangering funds for public services important to the state’s economy, including health care, education and infrastructure.

*

In a paper published in 2006, Professor Karen Conway of the University of New Hampshire and Professor Jonathan Rork of Vassar College used a multi-year framework to study migration patterns of elderly residents of all income levels. They concluded, “Our research casts doubt on the view that the elderly react to state EIG [estate, inheritance and gift] tax policies in making their migration decisions.”

*

A 2004 study by Professor Jon Bakija of Williams College and Professor Joel Slemrod of the University of Michigan Business School focused on the impact of taxes on just the most wealthy elderly — those that file federal estate tax returns. Their study is often cited by estate tax opponents because they found that high state estate and inheritance taxes reduce the number of federal estate tax returns filed in the state. But, the effect they found is very small. They concluded that any resulting revenue losses “would not be large relative to the revenue raised by the tax.”

*

One reason that state estate taxes are unlikely to have any measurable effect on state economies or people’s decisions about where to live is that very few estates are subject to the tax and the tax rate is low for large estates that do owe estate tax. Bakija and Slemrod also found that the average effective rate of state estate taxes in states that have decoupled from the federal tax is 4.5 percent. This is in contrast to the rate of 16 percent often cited by estate tax critics who generally emphasize only the top marginal rate.

*

Census and Internal Revenue Service data on migration also suggest that state tax policy has little impact on the size of a state’s elderly population. A relatively small percent of seniors — one half of one percent — move across state lines each year for any reason and most cite family, job or housing related reasons for the move. In addition, separate studies by Wisconsin and Iowa of the patterns of in- and out- migration of seniors conclude that tax levels appear to have no effect on these patterns.

In summary, recent research does not support the argument that states should reduce or eliminate their estate or inheritance taxes as an economic development measure designed to attract or retain elderly residents. The number of elderly residents in a state is more likely to be affected by other factors such as climate, the closeness of relatives, the availability of jobs and access to services such as health care than by tax policy. These new studies reinforce the conclusion reached in a paper published in 2000 by economists at Syracuse University that “states should focus on marketing their amenities, rather than using fiscal policy to recruit retirees.”[2]

Two other points about state estate taxes are worth noting from an economic point of view. First, if a state repeals its estate tax, other states may reap a substantial share of the benefit. This is because the estate’s heirs may actually live in other states and are likely to spend or invest their inherited dollars in those other states.

Second, the revenue loss from repealing the estate tax is typically quite substantial and may harm, not help, a state’s economy. This is because states must balance their budgets. A state must compensate for the loss of estate tax revenue by spending less on public services important to its economy such as education or health care or by collecting more in other taxes on state residents than it otherwise would have.

Retaining estate tax revenue could make a state a more attractive place to live by helping pay for public services and allowing the state to avoid raising other taxes.



Conway and Rork, 2006

In a paper published in 2006, Professor Karen Conway of the University of New Hampshire and Professor Jonathan Rork of Vassar College studied the effects of state estate and inheritance taxes on elderly migration rates using census data from 1970 to 2000.[3] They conclude that estate and inheritance tax rates have little impact on the migration decisions of people over age 65. To the extent that there is any connection between estate or inheritance taxes and migration, their findings suggest a quite different relationship. Rather than low estate or inheritance taxes causing the elderly to move to a state, it appears that an influx of elderly residents can result in the state subsequently lowering these taxes. This result could be explained by elected officials responding to the increased political clout of the elderly as their numbers grow. It can also explain why other researchers that rely on data from one point in time rather than from a series of years, as these authors do, find a relationship between tax levels and the number of elderly residents in a state.

In the conclusion of their paper Conway and Rork state, “Our research casts doubt on the view that the elderly react to state EIG [estate, inheritance and gift] tax policies in making their migration decisions. In fact, using two different analyses we find evidence that the causality may instead run in the other direction — states that experience high elderly net in-migration are more likely to subsequently eliminate or reduce their EIG taxes.”



Bakija and Slemrod, 2004

A 2004 study by Professor Jon Bakija of Williams College and Professor Joel Slemrod of the University of Michigan Business School focused on the impact of taxes on the most wealthy elderly.[4] They did find that high state estate and inheritance taxes have a statistically significant, but small, negative effect on the number of elderly in a state, as measured by the number of federal estate tax returns filed in the state.

Because this paper is often cited by opponents of state estate taxes, it is important to put the results in perspective. Bakija and Slemrod examined the implications of their findings on the concern that decoupling from the federal estate tax would end up reducing rather than increasing state revenues. This could occur if the estate tax caused a significant number of the elderly to leave the state and thus reduced collections from other state and local taxes such as income and sales taxes enough to offset the estate tax revenues that are gained by retaining the estate tax. According to the study, that is unlikely to be the case: “… our results imply that in the case of a decoupled estate tax, revenue losses and deadweight losses from these particular forms of behavioral response [tax-induced migration and related avoidance activities] are unlikely to be large relative to revenues collected.”[5] See box for more details on their estimates. Their finding that any such revenue losses would be small relative to the revenue raised by an estate tax is a reflection of the modest impact of state estate taxes on elderly migration.

Bakija and Slemrod note that the federal estate tax filing data they use does not allow them to distinguish between people who completely move out of a state and those who simply change residency for part of the year. The impact on a state’s economy of the decision of an elderly person to “move” out of state could be very small if these wealthy elderly residents are merely changing their legal residences by adjusting where they live for a few more months of the year rather than moving out of the state entirely, because they would continue to pay property, sales, and perhaps even income tax to the state. This is a very real possibility for wealthy families, as some two-thirds of people over 65 who are in the top two percent of net worth own second homes according to the Federal Reserve’s 2001 Survey of Consumer Finances.

Any State Revenue Losses That Might Result From Decoupling From The Federal Estate Tax Cut Would Be Small

In their 2004 paper on the impact of state taxes on the wealthy elderly, professors Bakija and Slemrod did find a statistically significant but fairly small effect of state taxes on the location decisions of wealthy elderly. In order to put these results in context, they examine what the results of their analysis imply about the revenue effects of decoupling a state’s estate tax from federal law.

First, they estimate that behavioral responses (i.e. either moving or other tax avoidance measures such as changing reported state of residence) of the level they found could reduce the amount of revenue collected from a state estate tax by 6.2 percent to 13.5 percent

In addition, they make rough estimates of the additional amount of revenue that could be lost if you include the effect on taxes other than the estate tax. To do this they assume first that people move five years before death and that all revenue from income, sales and property taxes that would have been generated by these residents is lost. (As the authors note this is a worst-case scenario as in reality it is unlikely that all of these individuals would completely pull up roots, sell their in-state property and spend no more time in the state.) Using the assumptions that people leave five years before death because of concern over a state estate tax and incur no taxes in the state in those years, they find that the total amount of tax revenue lost would range from 10.7 percent to 23.2 percent of the revenue generated by decoupling. When they assume that elderly residents leave 10 years before death, these estimates increase to 15.2 to 33.1 percent. Some critiques of decoupling — including a Wall Street Journal editorial — have cited these results as showing that as much as one-third of new revenue would be lost as a result of out-migration if a state decouples. While this is technically accurate it does focus on the absolute worst case scenario and ignores the lower and likely more realistic estimates.

Another conclusion of the Bakija/Slemrod paper is that the average effective rate of state estate taxes in states that have decoupled from the federal tax is 4.5 percent. This average rate is fairly consistent across estates of various sizes above $675,000, because of the deductibility of the state estate tax and the increasing number of other deductions — such as for charitable contributions — that larger estates take. This is considerably less than the 16 percent rate cited by estate tax critics who generally emphasize only the top marginal rate.



Other Analyses and Data

The Census Bureau prepares a report annually on the number of people who move. This survey includes information on characteristics of these movers as well as a question asking about the reason for the move.[6] The most recent survey covers moves between 2004 and 2005. Data on migration patterns from the Census Bureau’s survey also lead to the conclusion that the impact of taxes on the number of seniors in a state is likely to be small.

First, the vast majority of people over 65 do not move. And when they do move, very few seniors — only 0.5 percent — move across state lines each year for any reason. The most common reasons for moving cited by those over 65 are family-related reasons. The next most common reasons given are housing-related such as to move into new or better housing or less expensive housing. Seniors also report moving for work-related reasons, as well as because of climate or health. The Census Bureau survey does not specifically ask whether taxes are the reason for a move.

Officials in Wisconsin analyzed the interstate migration patterns in the Census data in order to test the theory that seniors move in or out of their state as a result of tax levels. In a brief analysis included in a memo accompanying testimony on three bills submitted to the Wisconsin legislature in 2005 that would have reduced or eliminated that state’s estate tax, the Revenue Department of the state of Wisconsin addressed the question of whether tax levels have caused the elderly to leave the state. Because one motivation for these bills was a concern that too many elderly were leaving the state as a result of taxes, analysts in the Wisconsin Department of Revenue compared elderly migration patterns in their state to nearby states with different tax structures.[7] They concluded that there is “little evidence that tax treatment has a significant effect on residence decisions by the elderly.”

The Fiscal Services division of the Iowa Legislative Services Agency used data from the Internal Revenue Service on taxpayer migration for a similar analysis. Their focus was on the income tax but the results apply to the debate over the estate tax as well. Specifically they examined migration into Texas and Arizona from Iowa and other surrounding states to see if tax differentials appeared to be playing a role in these moves. They concluded that, “While Iowa loses taxpayers and taxable income to both Texas and Arizona, Internal Revenue Service state-to-state migration data indicate that differences in state income tax policy do not explain Iowa’s out-migration to those states, as both higher and lower income tax states around Iowa have similar or even greater relative losses than Iowa.”[8]

In conclusion, recent research does not support the argument that states should reduce or eliminate their estate or inheritance taxes as an economic development measure designed to attract or retain elderly residents. The number of elderly residents in a state is more likely to be affected by other factors such as the closeness of relatives, the location of their places of work and access to services such as health care than by tax policy.

There are two other points from the general economic literature on taxes and economic growth that are relevant to this discussion. First, some portion of the benefits from estate tax repeal likely will accrue to heirs who live in other states. Those heirs likely will spend those dollars in those other states, with the result that only a portion of the dollars lost from estate tax repeal will remain within state borders. By contrast, public expenditures and even many other types of tax cuts are much more likely to lead to spending within a state’s borders, thereby providing some economic stimulus within the state.

Second, states must balance their budgets, so the loss of revenue from estate tax repeal must be offset by lower public expenditures, increases in other taxes, or a combination of the two. Since a large share of state expenditures are for services that are important to economic growth such as education, health care, and infrastructure, repeal of an estate tax runs the risk of hurting rather than helping a state’s economy.

In short, the negative effects of estate tax repeal on a state’s future economic growth could easily outweigh any small positive impact of preventing migration that eliminating the estate tax might produce.

End Notes:

[1] The estate tax in Virginia will expire effective July 2007, in Wisconsin in 2008 and in Kansas in 2010.

[2] Aging Studies Program Paper No. 22, “Chasing the Elderly: Can State and Local Governments Attract Recent Retirees?” William Duncombe, Mark Robbins, and Douglas Wolf, Center for Policy Research, Maxwell School of Citizenship and Public Affairs, Syracuse University, September 2000.

[3] Conway, Karen Smith and Jonathan C. Rork, “State ‘Death’ Taxes and Elderly Migration — The Chicken or the Egg?” National Tax Journal, Volume LIX, No. 1, March 2006 available at http://pubpages.unh.edu/~ksconway/NTJ_Conway_Rork_Finalv.pdf.

[4] Bakija, Jon and Joel Slemrod, “Do the Rich Flee from High State Taxes? Evidence from Federal Estate Tax Returns”. NBER Working Paper No. 10645, July 2004.

[5] Bakija, Jon and Joel Slemrod, “Do the Rich Flee from High State Taxes? Evidence from Federal Estate Tax Returns”, Abstract, NBER Working Paper No. 10645, July 2004

[6] Geographical Mobility, U.S. Census Bureau, Population Division, Tables revised September 24, 2006.

[7] State of Wisconsin Department of Revenue memo dated April 13, 2005 on “Senate Job Creation, Economic Development and Consumer Affairs Committee Hearing, April 19, 2005”

[8] State of Iowa Fiscal Services, Legislative Services Agency, Taxpayer Migration – Iowa to Texas and Arizona, February 10, 2005.

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"Poverty, the root cause of terrorism"

from Times Now India

Nobel peace prize winner of 2006, Mohammd Yunus feels India and Bangladesh are distant neighbours and blames the governments for keeping them apart. Speaking exclusively to TIMES NOW 's Senior Editor Srinjoy Chowdhury , Yunus said that it is poverty that is the root cause of terrorism.

Excerpts:

Srinjoy: Why is there such a distance between India and Bangladesh?

Yunus: Bangladesh is the next door neighbour of India. Many people from West Bengal actually came from Bangladesh. But only one bus goes between the two countries. That creates big distance amongst the people the two countries though we share the same language, the same choice. When the Nobel prize was announced for me, there were celebrations in both the sides of the border. But this kind of common feelings is not possible always because we don't know each other.

Srinjoy: India like many other countries has a lot of welfare schemes, many of those are topped down and increasing the possibilities of leakages. How can you deal with that?

Yunus: I consider the welfare programmes as temporary help to the distressed. But this shouldn't become the permanent feature of life. If it does, then you are actually taking the initiatives away from people. Welfare means you are taken care by some else. If somebody else takes care, people don't exert themselves and become inactive.

Srinjoy: In the past and even in your Nobel speech, you have linked poverty with terror. Would you specify your statement?

Yunus: We need to go to the root cause of terrorism. Terrorism has its roots in a very strong sense of injustice. It may be an injustice in the economic form, it may be political injustice or it may be social injustice. Economic injustice is always extreme poverty what no body pays attention to the poor. So, if we can address the poverty issue, social as well as the political issue, there won't be any terrorism.

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Children rally against poverty in New Delhi

from Daily India

New Delhi, Jan 30 (ANI): Dressed as fishermen and tribals, over 6000 students participated in a march against poverty here today.

The march was part of a unique "9-is-mine" campaign urging the government to allocate nine percent of the GDP (Gross Domestic Product) to the sectors, as committed by it.

"If the government cannot see the tears of its children, cannot hear their screams, then incidents like Nithari (murders) will keep of taking place one after another. The government is not moved by anything and in fact there is nothing like the government. The children are here just to remind the government of the promises it had made decades ago. There are no new demands," said Swami Agnivesh, a renowned social activist.

Activists said the march was organized a month before the announcement of the annual budget to remind the government of its promises.

"The government had promised to give us 9 percent of the GDP. It's not giving us. We want six percent for education and three percent for health. We want our due," said Paramjeet, a student.

The effort was supported by "Wada Na Todo Abhiyaan" (Keep Your Promises Campaign), a national coalition of over 900 development and grassroots organisations.

According to United Nations Statistical Institute for Asia and Pacific, there is an estimated 350-400 million people below poverty line in India, 75 per cent of them in the rural areas. A report by the agency says poverty has been reduced by 10 per cent in the country over the last few years.

But data compiled by the Planning Commission says poverty level has come down in the country from 37 per cent of its billion plus population in 1993-94 to 27 percent in 1999-2000.(ANI)

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Mental Health America to host poverty classes

from The Newark Advocate

Mental Health America is conducting classes in the coming weeks to help people escape poverty.

The agency is accepting applications from parents who have jobs but whose income is within 200 percent of poverty guidelines.

Applications must be approved by Job and Family Services before classes start, so applicants are encouraged to apply as early as possible. After telephone screening, MHA will invite eligible participants to sign-up meetings or private appointments in Newark or Pataskala to complete their applications.

The schedule includes:
# Newark: 10 to 11:30 a.m. Wednesday and Friday for sign-up meetings, with classes starting Feb. 15. Classes will be from 9:30 a.m. to noon Tuesdays one week, and Tuesdays and Thursdays on alternate weeks.

# Pataskala: 1 to 2:30 p.m. Friday and Feb. 7 for sign-up meetings, with classes starting Feb. 16. Classes will be from 11:30 a.m. to 2 p.m. Wednesdays one week, and Wednesdays and Fridays on alternate weeks.

Applicants need to bring pay stubs or other documentation of earned and unearned income such as child support or alimony. Self-employed parents may call to discuss the easiest way to document their income.

Those interested in applying can reach Judith Allee by calling (740) 522-2277 or e-mailing JudithAllee@MHALC.org.

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Government earmarks $2 million for poverty eradication

from The Cayman Net News

Minister for Human Services, Hon. Anthony Eden, has given assurances that the eagerly anticipated poverty study will be tabled in the Legislative Assembly when it is completed.

The Minister told a Cabinet press briefing last week that action would be taken immediately after its findings are known, saying that $2 million has been earmarked for that purpose.

One of the criteria to receive funding of the National Assessment of Living Conditions (NALC) study, known as the Poverty Study, by the Caribbean Development Bank, was that the document would be made public when it is finalised, according to Mr Eden.

“I would like to put at rest the idea that this is going to be something that is not going to be dealt with,” said Mr Eden. “I have commitment from my Cabinet and my colleagues, the back benchers, that they will support us in this report and it will be tabled. It will not sit on the shelf.”

Moreover, Mr Eden said Government will commit up to $2 million for improvements to social services that are recommended by the study after it is tabled in the Legislative Assembly.

The poverty study intends to assess and quantify the social and economic problems of people who are living below the poverty level, as well as determine the demographic make up of the vulnerable sectors of the population. It will also form the basis for developing social programmes and services that would be most effective in meeting their needs.

The study will give people the opportunity to relate their experiences through individual and group discussions and talk about how they are coping.

There are two phases to the study: the participatory poverty assessment and the survey of living conditions/household budgeting survey.

The participatory poverty assessment phase will involve community meetings, focus groups and in-depth interview in targeted communities.

The participatory poverty phase will focus on key areas: how people sustain their livelihoods; public services currently available and the obstacles people face in accessing them.

In addition, the participatory poverty phase will also gather information on people’s concerns, needs and priorities, interventions and actions that are needed in order to improve their living conditions.

To get the participatory poverty phase off the ground, numerous volunteers are needed to be trained as enumerators. According to Mr Eden the National Assessment Team (NAT) visited all districts from including Cayman Brac to meet 150 volunteers who are interested in becoming enumerators from 8 through 18 January.

Through this series of meetings the ideas and feedback from volunteers was sought by the NAT in how to carry out the study.

In some of the district meetings, there were some concerns raised by the community that there may be issues in getting people who they don’t know to share such personal information about their lives.

Members from the NAT team stated that they were sensitive to this issue and that careful screening and training of facilitators and enumerators and training is being done to deal with this issue and to protect the anonymity of people who participate in the study.

The information obtained from both phases of the study will be combined into one report, which will be submitted to Government and released to the public.

The large number of 150 volunteers indicates that there is a significant amount of public support behind the study and Mr Eden has high hopes that the results will help Government be more effective in providing social services to vulnerable sectors of the population.

Mr Eden added that this study will take nine months, and no study of this magnitude has ever been done before in the Cayman Islands.

“This study is not just about poverty. It is across the board as so many of my people have said. It is to chart a path as we go forward for social development in the Cayman Islands.

“We all await and look forward improve the way we do business as a government and as we provide services to the less fortunate. I keenly await the final results and look forward with my colleagues to do the necessary implementation to make life better for all residents, not necessarily Caymanians, but all residents here in the Cayman Islands,” said Mr Eden.

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Poverty the theme of pre-budget consultation

from 900 CHML

HAMILTON (AM900 CHML) - Poverty has been a central theme, after the province's 2007 pre-budget consultations stopped in Hamilton on Monday.

Politicians representing all three of Ontario's major parties have heard requests from the local Campaign For Adequate Welfare for an increase to the minimum wage and an end to the policy of clawing back of money from social service recipients.

Poverty activists have also told the provincial politicians to be "as generous to us as you are to yourselves", a reference to the 25% pay increase that M-P-P's voted themselves before Christmas.

Catharine Fife of Ontario's Child Care Action Network has also asked that 600 million dollars be pumped into reactivating the Best Start program.

She insists that child care is an economic issue since parents who can't find quality, affordable child care have fewer options in regards to their education and career.

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Cities key to tackling poverty, climate change

from The Jamaica Gleaner

Cities around the world have also begun to take climate change seriously, many in response to the direct threat they face.

WASHINGTON, D.C.:

If global development priorities are not reassessed to account for massive urban poverty, well over half of the 1.1 billion projected to join the world's population between now and 2030 may live in under-serviced slums, according to State of the World 2007: Our Urban Future, released January 10 by the Worldwatch Institute. Additionally, while cities cover only 0.4 percent of the earth's surface, they generate the bulk of the world's carbon emissions, making cities key to alleviating the climate crisis, notes the report.

As recently as a century ago, the vast majority of the world's people lived in rural areas, but by sometime next year more than half of all people will live in urban areas. Over 60 million people - roughly the population of France - are now added to the planet's burgeoning cities and suburbs each year, mostly in low-income urban settlements in developing countries.

Unplanned and chaotic urbanisation is taking a huge toll on human health and the quality of the environment, contributing to social, ecological, and economic instability in many countries. Of the three billion urban dwellers today, one billion live in 'slums', defined as areas where people cannot secure key necessities such as clean water, a nearby toilet, or durable housing. An estimated 1.6 million urban residents die each year due to lack of clean water and sanitation as a result.

The Commission for Africa has identified urbanisation as the second greatest challenge confronting the world's most rapidly urbanising continent, after HIV/AIDS. Only about 35 per cent of Africa's population is urban, but it is predicted that this figure will jump to 50 percent by 2030.

State of the World 2007 also described how community groups and local governments have emerged as pioneers of groundbreaking policies to address both poverty and environmental concerns, in some cases surpassing the efforts of their national governments. "The task of saving the world's modern cities might seem hopeless - except that it is already happening," said Christopher Flavin, president of the Worldwatch Institute. "Necessities from food to energy are increasingly being produced by urban pioneers inside city limits."

Cities around the world have also begun to take climate change seriously, many in response to the direct threat they face. Of the 33 cities projected to have at least eight million residents by 2015 at least 21 are coastal cities that will have to contend with sea-level rise from climate change.

In the United States, over 300 cities - home to more than 51 million Americans - have joined the U.S. Mayors' Climate Protection Agreement, committing to reducing their emissions and lobbying the federal government for a national climate policy. Chicago, for example, has negotiated with a private utility to provide 20 per cent of the city government's electricity from renewable sources by 2010, and aims to become 'the most environmentally friendly city in America'. Not to be outdone, New York mayor Michael Bloomberg recently announced plans for his city to become the nation's leader in reducing greenhouse gas emissions.

While no single set of 'best practices' would enable all cities to successfully address the challenges of poverty and environmental degradation, State of the World 2007 focuses on areas where urban leadership can have benefits for the planet and human development. These include providing water and sanitation services to the urban poor, bolstering urban farming, and improving public transportation. Additionally, the report recommends devoting more resources to information - gathering on urban issues so that city, national, and international entities can better assess development priorities.

The Worldwatch Institute is an independent research organisation based in Washington, D.C. that works on energy, resource, and environment issues. The State of the World Report is published annually.

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Focus on `underclass' as Key lays out differences

from Stuff

VERNON SMALL - The Dominion Post

National Party leader John Key will call for policies to tackle a growing underclass in society that has "lost hope" when he delivers his first main speech of the year in Burnside, Christchurch, tomorrow.

"A major theme will be tackling the growing emergence of an economic underclass," Mr Key said yesterday.

"I think it's a very important issue which affects all New Zealanders, either directly or indirectly."

Party strategists said some solutions would be included in the lunchtime speech but it would also set out a work programme for the party to develop policy in what have traditionally been areas of Labour Party strength.

It would show that National did not see the state as the only answer, but also saw a role for the private sector and voluntary organisations.

Most of his speech is likely to cover his concerns about the interrelated problems of long-term welfare dependency, crime, illiteracy, poor parenting, drugs, malnutrition and social exclusion.

Mr Key, who grew up in a state house in Christchurch suburb Bryndwr, clearly wants to link the neighbouring suburb of Burnside with National's strain of "compassionate conservatism" while further distancing himself from the "wedge" politics that had characterised former leader Don Brash's scene-setting speeches at Orewa.

The speech follows Mr Key's revamp late last year of National's policies on nuclear ships, race relations, welfare and climate change to make them more appealing to urban liberals and women, where National has been heavily out-polled by Labour.

A large contingent of National MPs is expected to attend the speech, which is seen by the party as a way to put a more modern face on National, mirroring its younger leadership team.

It would not put the heavy emphasis on individual responsibility that might be expected from a National leader, one strategist said, but would stress ways the Government and the community could help lift people out of the underclass.

The issue was illustrated by news of three "no-go" streets in Hamilton, where gang violence has prompted New Zealand Post to suspend mail deliveries, and concerns that Los Angeles-type gangs are marking out blocks of streets in South Auckland which they try to control.

Party faithful will provide the audience for the lunchtime speech, at a more media-friendly time than the traditional early-evening speech to Orewa Rotary.

Christchurch was chosen in part to distance Mr Key from the legacy of Dr Brash's addresses at Orewa, particularly his 2004 speech on race.

NZ First leader Winston Peters has taken over the vacant speaking slot at Orewa.

Mr Key's speech will be followed by a three-day National caucus retreat in Gisborne, expected to focus on constitutional issues such as the role of the Treaty of Waitangi, the foreshore and seabed law - including whether to back to the select committee stage the Maori Party's bill repealing Labour's controversial law - and a revised position on the abolition of the Maori seats.

Finance spokesman Bill English is expected to give an economic overview.

Labour will hold its three-day caucus retreat in a fortnight at the prime minister's Wellington residence, Premier House.

Parliament begins sitting for the year on February 13.

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First Nationwide Estimate of Homeless Population in a Decade Announced

from The National Alliance to End Homelessness

Approximately 744,313 people homeless on a single night.

Washington—There were 744,313 people homeless in January 2005 according to Homelessness Counts, the first national assessment of the number of homeless people in over a decade. The report was released today by the Homelessness Research Institute of the National Alliance to End Homelessness. This estimate, a compilation of point-in-time counts collected by local Continuums of Care, provides data on every state and community in the country. The data included in the study represent a point in time; therefore the estimate only presents a snapshot of the homelessness problem in the Unites States. Many more people experience homelessness over the course of the year. Despite its limitations, this estimate establishes a baseline for the nation to assess not only whether the number of homeless people is actually increasing or decreasing—something we have had had little objective data on to date―but also for communities to analyze their progress, uncover trends, and to formulate solutions that address the needs of homeless people.

“A national movement to end homelessness is underway. Establishing a baseline estimate of how many homeless people there are in the nation is important to measuring progress,” said Nan Roman, President of the National Alliance to End Homelessness. “This report shows that despite some progress far too many people remain homeless in the United States. The solution to homelessness is housing. Increasing the availability of affordable housing to very low income people will prevent homelessness and will empty our nation’s shelters.”

Homelessness Counts highlights a number of staggering facts:

* 56 percent of homeless people counted were living in shelters and transitional housing and, shockingly, 44 percent were unsheltered.
* 59 percent of homeless people counted were single adults and 41 percent were people living in families.
* In total, 98,452 homeless families were counted.
* 23 percent of homeless people were reported as chronically homeless, meaning they were disabled and had been homeless for long periods of time or repeatedly.
* Alaska, California, Colorado, Hawaii, Idaho, Nevada, Oregon, Rhode Island, and Washington were the states with the highest ratio of homeless people per capita.

Congressman Barney Frank (D-MA), Chair of the House Financial Services Committee, joined the National Alliance to End Homelessness in releasing the report.

Homelessness Counts compiles and analyzes data from local communities nationwide. Continuums of Care (CoCs)—the HUD devised jurisdictions that oversee homeless services—are required to count their homeless populations every other year in January. Data for every state and community, as well as an explanation of the methods used to collect the data, are included in the full report.

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Saving the world with a cup of yogurt

from CNN Money

Nobel Peace Prize winner Muhammad Yunus, the father of microcredit, has a new idea. It's called social business enterprise, and the first step is a yogurt factory in Bangladesh. Fortune's Sheridan Prasso reports.

By Sheridan Prasso, Fortune

(Fortune Magazine) -- Along a dirt road in Bangladesh's green, fertile heartland, 140 miles northwest of Dhaka, workers in flip-flops are hauling bricks, pouring cement and hammering boards. The object of their labor: a small yogurt factory being built by Danone, the French food company, on the outskirts of Bogra.

It may not look like much, but the one-story building behind a wrought-iron gate is the epicenter of a Big New Idea - one that Muhammad Yunus, the winner of last year's Nobel Peace Prize for his pioneering work on microcredit, thinks can revolutionize a world still being transformed by his first big idea.

"I hope it will be an important landmark in the annals of business," Yunus says a few days later in Dhaka, at the opening ceremony for the factory in early November. "The concept it represents is very powerful."

That concept is called "social business enterprise." It may not be as concise or as self-evidently defining a term as microcredit, but Yunus believes it represents the evolution of his old idea in a new direction. Yunus's first idea started with lending $27 out of his own pocket and a belief that the poor, particularly poor women, could be empowered as entrepreneurs if only they had the means to start their own small businesses.
Tools for better living

The institution he founded to fund them, Grameen Bank, took three decades to receive worldwide recognition but has now transformed thinking in the banking, development, and nonprofit worlds - attracting the political left to the idea of poverty alleviation and the political right to the idea that entrepreneurialism, rather than charity, is the solution.

Even before winning the Nobel Prize, the self-effacing and charismatic Bangladeshi economics professor was becoming the equivalent of a rock star. He counts Bill Clinton among his close friends, has been hosted by princes and queens of Europe and was offered a private plane to Chicago to appear on "The Oprah Winfrey Show."

Replicas of Yunus's program have spread to nearly every part of the globe, including Africa, Latin America, even Harlem. The resulting $9 billion microlending industry, which has drawn names that include Citigroup (Charts), Deutsche Bank (Charts) and the Bill & Melinda Gates Foundation, hinges on the belief that people do not need the threat of seized assets to have an incentive to pay back loans. Grameen boasts an audited repayment rate of 98 percent, far higher than the industry standard for loans to those who have collateral.
Combatting poverty

But microcredit is only half of what Yunus wants to leave as his legacy. Social business enterprise, he says, is next. The idea marries the interests of corporations with economic development in a way that has never been tried before.

Companies would draw on microcredit-funded businesses to incorporate nonprofit models into their bottom-line operations, seeking not just revenue but social returns, and returning the profits to the communities where they operate. "If we can create this," Yunus says, "the world will be a much better place."

To put it simply, Yunus believes not that Adam Smith's concept of profit-motivated, free-market capitalism is flawed, but that it is too limited. The conventional thinking that capitalism breeds wealth creators and competitors who spread that wealth by creating jobs and opportunities for the good of societies has not worked out very well for the majority of the world, Yunus says.

And indeed, a recent UN study concluded that the richest 2 percent of the world's adults, mostly Americans, Europeans and Japanese, own more than half of global household wealth.

So why isn't it working? Why do three billion people - almost half the world's population - still live in poverty? The answer can't be blamed entirely on inefficient markets, corruption and dictatorships: Even the U.S., the wealthiest country in the world, has 36 million people living below the poverty line. Yunus invites anybody who is listening to think bigger about the concept of capitalism itself.

While Yunus didn't invent the notion of nonprofit enterprise or of doing business for social good - Harvard Business School added a course called Social Factors in Business Enterprise back in 1915 - it is a concept, like climate change before Al Gore, in need of a frontman. Yunus is becoming that person, articulating his vision in ways CEOs understand.

"Many of the problems in the world remain unresolved because we continue to interpret capitalism too narrowly," Yunus told an audience at Oxford University last year. "We have remained so mesmerized by the success of the free market that we never dared to express any doubt about it."

Well, actually, Karl Marx once did, and that didn't end well. But Yunus isn't calling for capitalism's abolition; he's calling for its enlightenment.

What if we lived in a world where companies didn't measure their performance only in terms of revenue and profitability? What if pharmaceutical companies reported on their bottom lines, along with those familiar figures, the number of lives saved by their drugs every quarter, and food companies reported the number of children rescued from malnutrition?
From microcredit to microcapitalism

What if companies issued separate stock based on social returns, and people could buy the shares of those that saved more lives than others, or sell the shares of energy companies that polluted more than their competitors? What if, by raising "social capital" and investing it in sustainable businesses without a profit motive, companies could reach into new markets, expanding their core businesses at the same time they improved lives?

That's the world Yunus envisages. "It could be a very big idea," says a fellow Nobel laureate, the economist Joseph Stiglitz, who has been hearing Yunus talk about his new endeavor for years. The question, he says, is how to implement it.
The yogurt experiment

At a lunch in Paris, in the fall of 2005, Yunus invited Danone CEO Franck Riboud to come to Bangladesh and build his first social business enterprise. Riboud listened, then agreed. The yogurt Danone would make would be fortified to help curb malnutrition and priced (at 7 cents a cup) to be affordable. All revenue from the joint venture with Grameen would be reinvested, with Danone (Charts) taking out only its initial cost of capital, about $500,000, after three years.

The factory - and ultimately 50 more, if it works - will rely on Grameen microborrowers buying cows to sell it milk on the front end, Grameen microvendors selling the yogurt door to door and Grameen's 6.6 million members purchasing it for their kids. It will employ 15 to 20 women.

And Danone estimates that it will provide income for 1,600 people within a 20-mile radius of the plant. Biodegradable cups made from cornstarch, solar panels for electricity generation and rainwater collection vats make the enterprise environmentally friendly.

International organizations such as Unicef believe it may be such a revolutionary means of improving nutrition through a sustainable business model that it is watching closely - and may seek to replicate around the world.

For Riboud the enterprise is about expanding into new markets with nutrition-enhancing products. "It's really a growth strategy for our company," he says over a bowl of onion soup in a Dhaka hotel. "We are convinced that in this world, when you are a consumer-goods company and the country is a developing country, it would be crazy to think only about the peak of the pyramid."

But it's clear also that Riboud agrees to a large extent with Yunus's worldview. "Is the classic economic model working?" he asks. "No! But I told him, 'I don't want to make charity.' The strength is that it is a business, and if it is a business, it is sustainable. Your shareholders are happy."

And, Riboud adds, they can see social benefits, something he says may ultimately be reported on Danone's bottom line along with the revenue from its Dannon and Stonyfield yogurts and Evian and Volvic mineral waters. "We're saying that profit maximization is not going to be the only way to measure value," says Emmanuel Faber, Danone's former CFO, who now runs Asia-Pacific operations for the company and who arranged the lunch between his boss and Yunus. "There is a whole emerging area of picking stocks for social impact."

Ideas along these lines are being discussed within corporations such as GE (Charts), Unileve