Bran Flake

It was the public relations coup of 1998. With television cameras and reporters on hand, Dick Hubbard, cereal manufacturer, announced to his assembled staff he would send them to Samoa for a holiday. A few months later he launched "Business for Social Responsibility" — an organisation with touchy-feely slogans, around 110 members, and a vague commitment to promoting "social responsibility in business." The mainstream media — Television New Zealand's 60 Minutes and the Herald in particular — lapped up every meaningless cliche which spouted from Hubbard's mouth. At North & South magazine Hubbard was a serious contender for the New Zealander of the Year Award. Here at last, gushed the anti-capitalist journalists, was someone who cares about something other than profit, unlike the nasty, unfeeling Business Roundtable (BRT). Within months Roger Kerr, chief executive of the BRT would be challenging Dick Hubbard and his BSR to come out from behind the rhetoric and be specific about just what, exactly, Hubbard saw as the proper role of business. More grist for the media mill and great PR for Hubbard (the good guy) being attacked by Kerr (the baddy).

All this was free advertising for someone who doesn't advertise his products on principle, he says, because he has "concerns about the morality of some advertising ... it can distort people's perceptions of what's appropriate and as an individual I feel very uneasy with some of the sophisticated advertising I see." Hubbard says he is not totally anti-advertising, but "for our company a high profile is not appropriate" — a puzzling remark from someone who willingly devoted considerable time to a 60 Minutes documentary filmed in his factory. Advertising, says Hubbard, is okay for educated, rational people who have the ability to make up their own minds but some people don't have the same ability to choose, "and get trapped," he says, into buying goods which are bad for them.

Like vitamin-added cereals, perhaps.

Dick Hubbard, as chairman of the now defunct Food Standards Committee (a government-appointed body which used to decide what we should and should not be allowed to eat or drink), fought long and hard to uphold the ban in New Zealand of adding vitamins and minerals to the food supply. Hubbard began his stint on the FSC in 1982, six years before he began his own business, Hubbard Foods, which manufactures breakfast cereals. However, he remained on the Committee until it was disbanded about three years ago. Hubbard insists, however, that he "did everything in my power to bring about the food standards regime that now operates so successfully between Australia and New Zealand" — that is, harmonisation of food standards between the two countries, whereby manufacturers are permitted to restore to breakfast cereals any minerals and vitamins lost during processing (restoration) but not add any extras (fortification).

This statement Hubbard made in April 1998 is not consistent with statements made in a letter written by him, as chairman of the FSC, to then Minister of Health Michael Bassett in 1986, warning him that the restoration argument was specious: "The starting point is extremely arbitrary, as it is based on vitamin and mineral levels in whole raw grains, and these are never eaten in this form. There is always some loss of vitamins and minerals in whatever form or preparation. Therefore, by restoring vitamins and minerals to whole grain levels, one actually increases overall consumption levels."

Hubbard's FSC was responding to a push from Australian cereal manufacturer Kelloggs for exemption from NZ's food regulations so it could add vitamins and minerals to its products manufactured at its only NZ factory in Otahuhu. All its Australian-made cereals were legally "restored" with vitamins and Kelloggs argued it was not cost-effective to continue to produce additive-free cereals solely for New Zealand. Time ran out for Kelloggs in New Zealand. Thanks largely to pressure from Hubbard and the FSC the Australian company was not granted permission to manufacture and sell in NZ its vitamin-enriched cereals and in October 1986 the Otahuhu factory closed.

But Kelloggs would not give up, and continued lobbying for changes to the New Zealand regulations so cereals restored with vitamins and minerals could be sold here, as they were in Australia. At this stage Hubbard stated that harmonisation of the regulations meant not having identical rules, "accepting philosophical differences" between Australia and New Zealand and that it was "not unreasonable for either country to continue to have different regulations." For instance, unlike New Zealand, Australia would not allow de-ionised fruit juices, and would not change the rules to accommodate New Zealand exporters. Hubbard to Bassett on 28 July 1986: "I believe it is totally unjust and illogical to make a special case for an Australian company in these circumstances that flies in the face of logic and common-sense. I wish, therefore, to record in the strongest possible terms the total opposition of both myself and my committee to this submission of Kellogg and to the proposal to change the regulations to accommodate this company."

There has never been much competition in the breakfast cereal market in New Zealand. Sanitarium takes up most space on the supermarket shelves, followed by Kelloggs and Hubbard Foods. While there is no doubt that Dick Hubbard genuinely wishes to control what we eat, is it entirely coincidental that the FSC's banning Kelloggs' products would be beneficial to Hubbard Foods? Dick Hubbard denies this, saying he abstained from voting when there was a conflict of interest and kept his role as businessman totally separate from his role as chairman of the FSC.

In the event the FSC's concerns were over-ridden, the law was changed and the harmonisation of food standards between the two countries, which Hubbard now says he fought strongly for, was introduced and the FSC made redundant. Not, however, before another incident regarding Kelloggs brought the food fascists out in force.

Kelloggs, shock horror, in 1990 were alleged to be bringing products into New Zealand which contained added vitamin C and colouring substances! Fruit Loops, Frosties, Nutri Grain, Corn Flakes! Someone, obviously from the cereal industry, wrote to the Senior Health Protection Officer of the then Auckland Area Health Board and complained. The Free Radical was able, under the Official Information Act, to obtain a copy of this letter but the letterhead and signature have been deleted. Needless to say Dick Hubbard denies writing it, as does Sanitarium, but this anonymous telltale wrote: "This presents an undesirable situation, and provides unfair trading against locally produced material manufactured to comply with the requirements of Reg.48 of the Food Regulations. We request this situation be redressed."

As a result, a shipment of Kelloggs' product was seized on the Auckland wharf and held for three months. Then Katherine O'Regan, Associate Minister of Health, came in on the act and in her typical candyhead fashion, seized on the fact that, gasp, other foods might have vitamins and minerals in them — Vegemite, pasta, Milo, baby formulae. Lindsay Perigo interviewed her on his breakfast programme on Radio Liberty:

O'Regan: ... If you want to eat pasta, you want to know that it's just ordinary pasta — not with all the extras in it.

Perigo: But I might want all the extras, that's the point.

O'Regan: Well you can go and buy them if you want to. But under these new proposed standards it will allow people to fortify pasta. So you'll be able to have it Lindsay. You won't have to, but people can have it in.

Perigo: Oh, it will allow people to? That's very generous of you, but I mean, my whole point is what business is it of the state to say whether or not pasta manufacturers can fortify their pasta?

O'Regan: Well we've had for many years ... right across the world there are standards that we have to comply with, and the major one ...

Perigo: Who says we have to? ... Wait a minute Minister. I'm not saying that I do want the fortification, I'm saying that I want the choice. It's between me and the manufacturer of the cereal.

Two days later Perigo launched into the issue again, in his morning editorial:

"In issue nine of The Free Radical I placed the following entry in the Horror File. It was taken from the Independent of the 9th of December last year: 'Associate Health Minister Katherine O'Regan is on the verge of banning 50% of New Zealand's cereals for being too good for you. Next to go could be Milo, Vegemite, Marmite and baby formulas.' The New Zealand government says vitamin and mineral fortification of foods shouldn't be allowed. My comment at the end of the entry was, 'The Minister of Vitamins proves that she should take some.' The proposed ban was deferred shortly after in response to widespread ridicule and behind the scenes lobbying ... My point is the government has no business getting involved in this matter at all. Those who don't want them can buy unfortified cereals or make their own. I don't know and I don't especially care whether fortification is beneficial or not. The Minister for Vitamins believes it isn't and further believes it could be positively toxic, as do several officials in the Ministry of Health ... I say it's none of their damned business; one's personal diet is one's own affair. And we must be extremely vocal in telling the health nazis to go jump in the lake, otherwise they will start behaving more and more like real Nazis."

But behind candy-headed Katherine were the machinations of the FSC. In a report written by Dick Hubbard while he was chairman of the committee, which is undated but written after the regulations were changed, it's clear that Hubbard approves of government intervention in our diets:

"I believe that there is a very strong argument for vitamin and mineral preparations to be bought under the control of food regulations. The New Zealand Committee is also acutely aware of the fact that where vitamins and minerals are allowed to be added to food it is for all intents and purposes impossible to reverse the policy unless a very real toxicological threat can be demonstrated. This is unlikely to be the case and therefore permission to add vitamins and minerals is essentially a one way street."

Hubbard went on to state that the FSC was also concerned about Australian proposals to use the food supply to administer compulsory medication — across the Tasman considerations were given to adding Thiamine to alcohol. However, according to Hubbard the addition of iodine to salt in New Zealand was okay because it was a "spectacular success in eliminating goitre problems." Also, the "compulsory addition of vitamins and minerals to margarine is low key in both our countries, largely un-noticed and is quite controllable." Hubbard came to the conclusion, and he stressed this was a personal view, that there was a strong case for either:

"a. The compulsory requirement to add vitamins and minerals to a specific food group where a specific deficiency concern exists to a reasonably sized sub-group of the population.

"b. The restriction of all claims about the presence of all vitamins and minerals to ingredient lists and nutrition panels. Compulsory addition must give greater control over any potential deficiency situation, allow more precise sub group targeting and removes the question of marketing advantage and marketing leverage."

In other words, let's make it compulsory for all manufacturers, on the grounds that some of the population will benefit, so one producer won't have a competitive advantage.

It's all very well for Dick Hubbard to oppose advertising one's product, it's quite another thing for him to advocate legally restricting advertising claims by a competitor. As Hubbard said in the interview for this article, "Never underestimate the power of advertising."

So it was Hubbard's personal business beliefs, he says, which he prints and puts in his cereal boxes, which inspired him to set up the Business for Social Responsibility and inevitably led to conflict with Roger Kerr and the Business Roundtable. Roger Kerr has tried repeatedly, in public, to get Dick Hubbard to say exactly what he means by the social responsibilities of business. If he means public companies, says Kerr, then being charitable with other people's money is theft. And Kerr is correct. It's one thing for a private company to throw money away on every good cause; it's quite another for directors of public companies to do anything other than increase the profit for shareholders.

Hubbard, however, says he's not just talking about giving away money. He says it was because Roger Kerr had, in effect, told him to put up or shut up that he publicly announced his workers' free holiday to Samoa (which as well as the direct expenses, cost him $40,000 in Fringe Benefit Tax — at least another full-time job — money he was happy to pay, he says, because FBT stops unscrupulous corporate people eroding the tax base and having the advantage of paying less tax than is appropriate). "Sponsorship," says Hubbard, "is not true social responsibility. You're giving money to get something back in return. Social responsibility means different things to different people. You have to look at the bigger picture, not just at maximising profits of shareholder wealth. You have to relate to the community, recognise that a number of groupings have a stake in the business and not put shareholders on a pedestal. There are your staff, your customers, your suppliers and you have to factor in their concerns. There's a moral dimension, not just a legal dimension.

"It means being responsible towards your employees — they have a stake in the business too." (Tell that to the 40-something workers who lost their jobs when Kelloggs closed their Otahuhu factory.)

Arguing with Hubbard about these abstracts is well-nigh impossible. He cites as an example Stephen Tindall, of The Warehouse, who rejected a pay rise when profits were down, because, according to Hubbard, he wanted to signal to the community a moral issue. The public applauded this, says Hubbard, and streamed back through the doors of Tindall's stores causing profits to rise. Hubbard's rather simplistic view ignores the fact that much of The Warehouse goods were shoddy, fell to bits, and turned customers away, a fact that Tindall himself recognised and publicly announced would be rectified. Also, what "community" other than present and future customers would be at all interested in Tindall's public display of altruism? Tindall's motives were no doubt genuine but the only possible consequence was increased profit.

Hubbard is concerned about Roger Kerr's using the vitamin and mineral debate to "attack my integrity." In an article in the Independent Kerr wrote: "What is also unclear is how far Hubbard agrees with the norms of competitive free enterprise. Prior to his present campaign he spent many years resisting harmonisation of food standards with Australia which had the effect of increasing competition for his products in the New Zealand market." Hub bard replied in a letter to the editor that he "did everything within my power to bring about the food standards regime that now operates so successfully between Australia and New Zealand." As this article has shown, Hubbard would have preferred more stringent regulations to what was eventually passed.

Hubbard insists he did not set up his BSR as a public alternative, and therefore sympathy arouser, to the BRT. "I would think around 85% of the population hate the Roundtable and rightly or wrongly hold it responsible for the country's woes. But from my point of view it would be morally wrong to exploit that." The fact that the mainstream media also loathe the BRT has not done Hubbard and his colleagues a lot of harm. He counts Stephen Tindall, and the public company Fletchers as sympathetic to his philosophy, and other members, he says, consist of private companies, lawyers and accountants. He's a Christian — that is, believes he has a moral duty to help others — and is "pro government looking after people who can't look after themselves." Backed into a corner over tax, he admits he does agree with the initiation of force if it is for the public good: "There's a moral dimension to tax as well as a legal dimension."

The differences between Hubbard and his BSR and Kerr and the BRT are not so chasmic as most would think. It's all a matter of degree. Roger Kerr has publicly stated that he would not call taxation legalised theft — he'd just advocate tax being less a percentage of GDP than Hubbard. Hubbard says if there was more morality in business then there would be less need for government to intervene, but what does he mean by morality? Roger Kerr has said that business should stick to business — increasing profits and shareholder wealth — and government should get out of the way and not interfere (but not totally — keep the Reserve Bank, for instance, and prohibition of drugs trade). Hubbard is contemptuous of the corporates which lobby governments for favours — crony capitalism — a practice Roger Kerr himself would not condone but which some members of the BRT are very skilled at. However, Hubbard should look closely at some of his own supporters — Hugh Fletcher continues to look longingly back at the pre-1984 Polish Shipyard Economy days, when Fletchers made considerable millions due in no small part to government protection of New Zealand manufacturers. Is this what Hubbard means by "spiritual rewards"? Roger Kerr calls for Hubbard to clarify his position on the norms of "competitive free enterprise" yet Kerr himself would not grasp the principle of true laissez-faire capitalism, in its pure form (which has never existed).

Hubbard supports anti-competitive regulations controlling food additives and marketing, to quell advertising claims. Kerr supports the Commerce Commission which polices regulations banning competitors from talking to each other about prices. Both these men would use the gun, they'd just aim at different targets.

That is, when they're not firing at each other, and missing the point entirely.

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