Kiwiblog

I take what is probably a final look at the Hollow Men e-mails in NBR 24/7 this week:

The illegal (and it was almost certainly illegal) obtaining of the e-mails, and their subsequent publication, had a major impact on New Zealand politics. They effectively forced Don Brash out of the leadership of the National Party, despite the fact National was ahead of Labour in the polls at the time.

It is very unusual for an Opposition Leader to resign, when his party is leading in the polls. And the Hager book based on the e-mails did not in fact have any smoking guns. However, Brash correctly judged that he would have been unable to make traction in the face of the book, and resigned.

If Brash had not resigned, it is quite possible National, under his leadership, would have gone on to win the 2008 general election, and while it is conjecture what policies a Brash-led government would have had, suffice to say that it is hard to imagine it being happy to borrow $240 million a week to fund interest free student loans and working for families.

And the usual conjecture on how they were obtained.

NZPA report:

Police have failed to find the source of the leaked Don Brash emails.

A police review of the investigation, involving almost 200 interviews, into the publication of the leaked emails from the then-leader of the National Party has been completed and the source of the emails could not be established. …

Almost 200 interviews were conducted with parliamentary employees, including I&T, security, messengers, cleaners and contractors, along with a number of other people, to corroborate information gathered in the original investigation.

Although no suspect leads were identified, the interviews did provide evidence of unsatisfactory security on the third floor both in terms of access to the floor and offices and to individual computers. These afforded opportunities for access to a range of documents, both hard copy and electronic.

We may never know the truth. I did ask Nicky Hager, when I last saw him, to consider revealing who did it and how, after that person/s has died, as he has a duty to history to reveal.

The Police have noted there was unsatisfactory security on the third floor. I believe the most likely way it happened was someone who does not work on the third floor, got in there and swiped the e-mails. It would have taken around two minutes to stick a flash drive in a PC and copy the Outlook file over.

Garth George’s column in the NZ Herald last Thursday was critical of the 2025 taskforce chaired by Don Brash.

The Herald (as is their right) declined [UPDATE: they now have published] to publish a response from Don, so he has offered it to various bloggers. His response is below and it is a first class fisking:

GARTH GEORGE HAS IT SERIOUSLY WRONG

Garth George was way off beam in his attack on the first report of the 2025 Taskforce.

Leaving aside the personal invective, he claims that the “biggest absurdity” in the report is the proposition that New Zealand can and should catch up with Australia. He says that “there is just no comparison between the two countries”, with Australia having five times our population, 32 times our land area, and huge resources of minerals. Well, those are factual statements about Australia, but they ignore some important facts which he would be aware of had he read the report.

First, there is no correlation between living standards and population – if there were, India would be super-rich and Singapore would be poor.

Second, there is no correlation between living standards and land area – if there were, Russia would be super-rich and Finland would be poor.

Third, there is no correlation between living standards and mineral wealth – if there were, the Congo would be super-rich and Japan would be poor.

In any event, a recent World Bank study showed that, in per capita terms, New Zealand has more natural resources than almost any other country in the world.

For most of New Zealand’s history, our standard of living has been very similar to that in Australia – sometimes a bit ahead, sometimes a bit behind. And the Taskforce didn’t off its own bat decide that catching Australia again by 2025 would be some good idea: the goal was set by the Government itself, and the Taskforce was set up both to advise on how best to achieve the (very challenging) goal and to monitor annually progress towards achieving it.

Too often in the past, governments have announced grandiose commitments to lift living standards – such as the last Government’s commitment to lift us into the top half of developed countries within 10 years – but then totally ignored those commitments, hoping that nobody would notice it. It is to the Government’s credit that they made a commitment and then established a mechanism to hold them to account.

Garth George accuses the Taskforce of recommending a whole range of things which we do not recommend. For example, he accuses us of recommending a flat personal income tax, and notes that if such a tax were established a whole range of low income people would have to pay more tax. But whatever the merits of a flat tax, the Taskforce did not recommend such a tax. What we did say was that, if core government spending were cut to the same fraction of GDP that it was in both 2004 and 2005 (29%), the top personal rate, the company tax rate, and the trust tax rate could comfortably be aligned at 20%. Under such a tax structure, all those earning above $14,000 a year would pay less income tax, while nobody would pay more income tax.

Nobody seriously argues that government was vastly too small in New Zealand in 2004 and 2005 (the end of the Labour Government’s second term in office), so why the ridiculous reaction when the Taskforce suggests reducing government spending to that level?

Mr George also suggests that we recommended abolishing subsidised doctor visits, and implies that we are advocating an American approach to healthcare. This is again utter nonsense. We suggested targeting subsidies for doctor’s visits at those who need them, either because they have low incomes or have chronic health problems.

He suggests that we favoured removing subsidies for early childhood education. Again, not true. What we said was that those subsidies – which have trebled in cost from $400 million a year to $1.2 billion a year over the last five years – should be focused on those who need them.

The recommendations of the 2025 Taskforce are actually totally in line with orthodox thinking in most developed countries, and are almost entirely consistent with the recommendations of the recent OECD report on New Zealand.

Don Brash
Chairman of the 2025 Taskforce

UPDATE: The Herald has also now run the response.

The Herald reports:

The 2025 Taskforce set up to find ways to catch up with Australia’s economic growth should be scrapped, Labour Leader Phil Goff says.

Mr Goff said today it had a budget of $447,000 over three years and had so far cost $150,000.

“The taskforce’s first report was a complete and utter waste of money,” he said.

“Why give your mates $447,000 to cook up something you say you’re not going to do … dump this soapbox for ACT and Dr Brash and save the taxpayer the unspent $330,000.”

This is a classic case of thinking tactically, not strategically. The last thing Labour should want is the taskforce wound up. Why?

It will exist for three years, issuing further reports and monitoring the Government’s progress.

If the Government does not act on any of the taskforce’s recommendations, then you are going to have this taskforce, headed up by National’s former leader, issuing damning reports about how the Government is failing to close the gap with Australia.

Goff shouldn’t be demanding the taskforce be closed down. If he was smart, he’d be offering to pay its bills himself.  He really needs to start thinking strategically.

Fran lets loose:

John Key’s celebrated faux pas at his first National Party conference as leader (“Under a Labour Government I lead … ) was portrayed as simply an inadvertent slip born out of nervousness.

But after Key’s outright panning of the Don Brash-led 2025 Taskforce report his 2007 slip-up is starting to look almost Freudian.

What I would like to know is how the Government thinks it will close the gap with Australia, if it does not adopt some of the recommendations of the 2025 Taskforce. The gap will not close by magic. Action is needed, not rhetoric.

Brash and his four taskforce cohorts: former Labour Finance Minister David Caygill, Wellington economist Bryce Wilkinson, Icebreaker CEO Jeremy Moon and Australian Productivity Commission part-time member Judith Sloan, were deliberately cute in delivering Key and English a ready rationale for cutting spending back to 29 per cent of GDP.

This after all was the level of core Government expenditure registered in 2004-2005 before former Finance Minister Michael Cullen opened the floodgates on social spending.

All it required was for Key and English to start taking the axe to some of Labour’s sacred cows, urgently review some major spending programmes, and get serious about setting measurable goals to turn this economy around.

No one is underestimating the political difficulties in making such substantial change. But unless substantial change is made, New Zealand will not catch Australia. Ever.

The 29% goal is not politically possible by 2012, but that is no reason not to have it as a longer term target. Or to have a slightly higher target. Or something. What is not acceptable is having no target. I want both National and Labour to say what their target is for spending as a % of GDP, and for them to offer different targets so we have a choice.

A factor which English seemed to concede yesterday by saying the 2025 goal was merely “aspirational”.

Aspirational means they did not mean it.

Problem is the top Government duo reckons its options are constrained because they don’t want to break National’s 2008 election pledge to keep Labour’s own big-ticket election bribes such as interest-free student loans and the expansion of Working for Families which Key had demonised as “communism by stealth”(before the 2005 election).

And I accept no breaking of election promises. But that doesn’t mean the other recommendations can’t be implemented, and it also doesn’t rule out National having a more flexible set of policies for 2011.

The 2025 taskforce made a total of 48 recommendations for initiatives that will help close the income gap with Australia. The media will probably only highlight half a dozen, so I thought it would be useful to list them all here, and add my thoughts to them.

1. Government operating spending (as measured by core Crown operating expenses) as a share of GDP should be reduced by 2012/13 to 29 percent, the same share as in 2004 and 2005.

I think a target of 29% of GDP for operating spending is an excellent target, and will probably do more than anything else to help lift national incomes. There is an overwhelming amount of evidence that countries with the state at 25% to 30% of GDP grow much faster than those with larger burdens.

It is worth noting that 29% is what we had in 2005, so it is not a level unknown to us. The problem is that as surplus grew, Dr Cullen grew spending even faster in his desire to avoid tax cuts.

However it is not politically possible to achieve it by 2012/13. I would think by 2017 (end of three terms) might be possible, without causing major disruption.

2. Beyond 2012/13, government spending as a share of GDP should be reduced materially further. To achieve this, the level of core Crown operating expenses per person should be capped in real terms.

I generally support a cap in crown spending in per capita inflation adjusted terms. However this may restrict options too greatly as new technologies in medicine (that are expensive) might become unaffordable.

What I would suggest is for spending per capita to increase no more than CPI+1%.

3. The Public Finance Act should be amended to require the Minister of Finance to specify publicly a medium-term target for core Crown operating expenses, either in real per capita terms or as a share of GDP. In each Fiscal Strategy Report, the Minister of Finance should be required to report publicly on steps being taken to ensure that that goal is met.

This is very sensible, and even if 1 and 2 are not adopted, we should require Governments to be transparent about their spending plans.

4. The Government should undertake an in-depth examination of the scope for further institutional changes to strengthen long-term spending discipline. Examples of such institutions could include a Taxpayer Bill of Rights and/or an independent Fiscal Advisory Council.

Agree, so long as they are effective in standing up for taxpayers, and adding to fiscal discipline.

5. Expert taskforces should be established to scrutinise each major area of government spending, with a view to proposing more effective models for delivering those services that the public sector will continue to fund.

To some degree this has already been happening.

6. Processes for evaluating government spending should be materially strengthened, including greater use of rigorous and transparent cost-benefit analysis for both new spending proposals and periodic reviews of the value that is being obtained from existing spending programmes. Enhancing the quality and rigour of such analysis should be a key priority for the Treasury.

Agree.

Specific

7. Ambitious welfare reform measures should be undertaken as a matter of priority to reduce the very large number of people of working age currently receiving welfare benefits.

I agree. At a minimum we should do what Bill Clinton, a Democratic US President, did.

8. Early steps should be taken to lower the actual and prospective costs (as a share of GDP) of New Zealand Superannuation. The eligibility age should be increased progressively, with increases linked to ongoing improvements in life expectancy, and for some years payments should be indexed to the CPI rather than to after-tax wages.

Firstly the Government has said it will not do this, and I don’t want the Government to become one of broken promises. But I certainly expect a future Government to increase the age of eligibility in line with age expectancy. I’ve not yet received the data I need to make a call on whether part of superannuation (maybe from age 65 to 70) should be linked to CPI instead of average wage.

9. Remaining KiwiSaver subsidies should be abolished.

I do support retaining KiwiSaver with matching employer contributions. That provides enough incentive for people to take it up, so direct state subsidies are not needed. I think KiwiSaver has worked well for encouraging a savings culture amongst younger NZers especially.

However again the current Government got elected on a series of promises, and as much as ACT voters may not like it, it is not going to break its word on current commitments. But such changes do not have to happen before 2011. There may be room to seek a mandate for some of these changes at the next election. If one does not get a mandate for such changes, then you will get wiped out at the election, and have them reversed anyway – a lose/lose.

10. Health:
a. A funder-provider model should be reintroduced in the hospital sector, allowing much greater
private sector involvement in the provision of taxpayer-funded services.

I support greater private sector involvement, but I don’t think the sector could handle another major reform. And again, there were specific election commitments here.

b. Universal (unrelated to income or health status) subsidies for doctors’ visits should be abolished.

This I strongly agree with. Subsidies should be targeted to those who most need it. It is ridiculous that Eric Watson gets subsidized doctors visits. And it is very inefficient to tax people to then just give them that money back in subsidies.

c. Subsidies for prescription pharmaceuticals should be substantially reduced, with those in generally good health and not on low incomes paying the full price up to a cap.

Again, I generally agree, but with a note of caution that middle income families can’t afford a big increase in the costs of medicines. But a total cap may help with that.

11. Education:
a. The substantial increases in subsidies since 2005 for early childhood education and day-care should be reversed.

Again this was an election promise, so I don’t see change there. As a general rule I much prefer spending in the area of early childhood than tertiary but I don’t know enough about whether the increased subsidies have just rewarded families already using day-care facilities, or has allowed lower income families to access day-care.

b. A funder-provider model should be adopted for the school sector, allowing new providers to enter, with all-up per student funding equivalent to that for existing state schools.

Yes.

c. In the meantime, governance and accountability structures in the school sector need to be reformed to provide better incentives for stronger performance and greater accountability for teachers, principals and schools.

Too generic to say aye or nae too.

d. Government-imposed fee caps on university fees should be abolished.

I have long advocated these should go.

e. Market-based interest rates should be reintroduced for student loans.

This won’t happen as again it was an election promise, but for the future it would be sensible to have a policy of at least charging enough interest to cover inflation. Otherwise we are effectively paying people to borrow money they don’t need.

f. Governance of the public tertiary sector should be reformed, including exploring the rationalisation of the non-university sector and the establishment of universities as independent foundations.

Possibly. Need more details.

g. A full review should be undertaken to identify, and recommend reform of, those areas in which various government education agencies (Tertiary Education Commission, Education Review Office, Ministry of Education) have become overly prescriptive, and to explore other, less intrusive, monitoring and accountability options to achieve policy ends that pass a cost-benefit test.

Again, need more details.

Taxation
12. Average tax rates should be substantially reduced, as ambitious expenditure restraint permits. Cutting core Crown expenses to 29 percent of GDP would, for example, allow the maximum personal tax rate, and the company and trust tax rates, all to be reduced to 20 percent.

The Government’s goal is to get the top tax rates down to 30%. Let’s do that first and then look beyond.

13. Serious reforms should be undertaken to reduce the high effective marginal tax rates facing many middle income taxpayers with dependent children as a result of the abatement provisions of the Working for Families tax credit scheme.

Absolutely.

14. Reductions in average tax rates should be achieved by reducing income taxes, and doing so having regard both to the importance of administrative simplicity and minimisation of tax avoidance on the one hand, and to the evidence that taxes on capital income can be particularly detrimental to economic performance on the other.

Agree.

Government assets
15. All businesses owned by central government which are operating in markets where competition is actual or feasible should be sold.

I agree, but note again the Government has a clear election policy. I just hope that for 2011 they have a more flexible policy. At a minimum I would like to see some SOEs take in minority private sector shareholdings, so they gain the discipline of being a listed company,

16. Local governments should be strongly encouraged to sell their trading enterprises.

Agree, but not always one size fit all.

17. To strengthen governance while businesses remain in public ownership, an independent Crown Commercial Appointments Commission should be established, to be responsible for making recommendations to Ministers for Board positions on all Crown commercial enterprises and for vetting and publishing suitability assessments of all appointees to such boards.

This seems a good idea, and should be under the OIA, so if a Minister refuses a recommendation this will be transparent.

18. The New Zealand Superannuation Fund should be wound up and its assets used to reduce gross government debt.

I agree, but again note the clear Government policy means this won’t happen.

19. Congestion charging should be introduced in central Auckland and in any other cities where a cost/benefit analysis supports doing so. Full road-user charging, differentiated by place and time of road
use, should be introduced as it becomes economically efficient to do so.

Strongly agree. Here I am with the Greens. Road users should pay for the costs of roads.

20. Rigorous and transparent cost-benefit analyses should restored to the prime place in guiding decisions on all public capital spending, including infrastructure spending. All such cost-benefit analyses for projects involving the outlay of more than $50 million should be formally reviewed by Treasury.

I would have thought this is already the case.

21. Mining:
a. A governance framework should be put in place to facilitate the best economic use of those mineral resources in which the Crown has a direct ownership interest (under both land and sea).

Not sure what is meant by such a governance framework but I support better economic use of our mineral base.

b. Mining developments on or under sensitive Crown land should generally be permitted provided that they pass a full cost-benefit analysis.

Agree, but recognizing that costs must include conservation, environmental and tourism costs. Applications should be decided on a case by case basis.

c. Development of mineral resources should be undertaken by private operators, with the Crown securing its financial interest through appropriate royalty-type arrangements.

Agree.

Regulation
General
22. A Regulatory Responsibility Bill should be enacted, based on the draft proposed in the recent report of the Regulatory Responsibility Taskforce.

Agree.

23. Property rights should be added to the list of rights specified in the Bill of Rights Act.

Also agree. It would be great to have Crown Law advising Parliament if proposed laws breach property rights of certain individuals or groups.

24. Substantially improving the quality of regulatory impact analysis being undertaken before legislation is introduced and/or government regulatory powers are extended should be treated as a matter of high priority by Ministers and central government agencies. Such analysis should be an integral part of all policy development and review processes, to ensure that the full costs and benefits, to all sectors, are appropriately and rigorously factored into government decision-making.

Agree, and I think Rodney has underway.

25. An independent Productivity Commission should be established as a centre of microeconomic and regulatory analytical expertise. The Commission should be authorised (and resourced) to undertake reviews of matters referred to it by Ministers, and of issues it identifies as requiring further in-depth analysis and research.

Have long advocated an independent Productivity Commission. The Australian one has performed well with bipartisan support.

Specific
26. A high quality independent taskforce should be constituted as a matter of urgency to review resource management law from first principles, including identifying the policy goals that should be served by such legislation and assessing the best ways of achieving those goals.

I am unsure how much this differs from the RMA reviews underway.

27. When determining the zoning of land for residential purposes, local authorities should be required by statute to take explicit account of any differences between the price of residential-zoned undeveloped land and the price of other undeveloped land in similar areas. These differences should be reported on by local authorities each year, with a strong presumption that scarcity of zoned land, as reflected primarily in price differences, should prompt action to increase the supply of residential land.

Sounds sensible. Land scarcity is what partly has led to a runway property market.

28. A system of tradable water rights should be established urgently.

Agree in principle.

29. Labour market:
a. Labour law should be amended to strengthen the freedom of negotiation between workers and their employers, including, for example, streamlining provisions governing dismissal of workers, and putting less emphasis on procedural matters.

Agree. The 90 day grievance free period for small businesses seems to be working very well with no horror stories about it.

b. Statutory provisions allowing enforceable mutually-agreed probationary periods for new employees should be extended, from the current maximum of 90 days for those working for small firms to a maximum of 12 months for employees of firms of any size.

That goes beyond my comfort level. Maybe 6 months for small firms, and 90 days for larger firms. Generally a dud employee can be detected fairly early on and 12 months seems too long to me.

c. For employees earning in excess of $100,000 per annum, employment relations should be governed by the standard provisions of contract law rather than by the Employment Relations Act.

That is what the situation was before the ECA for all non union employees. I would want to see data on how many employees over $100k are using the ERA provisions to see if there is a problem.

d. The youth minimum wage should be reinstated as a matter of urgency, and minimum wage rates should be reduced to the same ratio to average wages that prevailed in 1999.

I agree on reinstating the youth minimum wage. The abolition appears to have been a disaster with the blowout in youth unemployment through the recession. I do not support turning the clock back on the adult minimum wage but agree there should be a ratio of the minimum to the median wage.

30. Immediate notice should be given that from 1 January 2011 all remaining tariffs will be removed.

Agree, Disgraceful the Government has extended them to 2015.

31. Foreign investment restrictions should be further reviewed, starting with a strong predisposition that a much more liberal regime should be introduced.

I think this is underway and has been mainly implemented.

32. Emissions trading legislation and any future emissions reduction targets the Government adopts should be independently monitored and periodically reviewed. Such reviews should focus on monitoring the economic impact of any carbon abatement goals, and the impact of chosen abatement regimes (here and abroad) on prospects for achieving the 2025 goal.

I think this is in the ETS legislation.

33. A review of the Commerce Act should be undertaken, with a focus on restoring the primacy of economic efficiency considerations and long-term consumer interests in the design and conduct of competition policy.

Seems sensible.

34. The Government should strongly encourage the transformation of Fonterra into a conventional company structure with fully-traded outside capital, using any appropriate instruments at its disposal.

Don’t know enough to comment.

35. Zespri’s monopoly on the export of kiwifruit to markets outside Australia should be removed.

In principle I agree.

Yet to read the full paper, but the Herald reports major recommendations are:

Dr Brash revealed 35 recommendations today but the centrepiece was to reduce government spending to 2005 levels of 29 per cent of gross domestic product by 2012-13.

This could be done by:

* Reducing benefit numbers through “ambitious” welfare reform;

* Ending Kiwisaver subsidies;

* Scrapping the New Zealand Superannuation Fund and using the money to pay off debt;

* Raising the age of superannuation eligibility; and

* Cutting universal subsidies for health and education.

Of these savings, $7 billion would be used to reduce all income and business taxes to a top rate of 20 per cent.

Dr Brash said unless tax and spending were slashed the Government’s “ambitious” goal could not be achieved.

“There may be some other cunning plan, but I am not aware of it,” Dr Brash said.

He said the proposed cuts were “not a massacre”, but a winding back of spending that had not been effective since 2005.

The taskforce’s other policy prescriptions included:

* Reducing the minimum wage and reintroducing a lower minimum youth wage;

* Changing employment laws to make it easier to sack workers;

* Extending probationary employment periods to a year for all workers;

As I type this I am literally on board NZ1 to Auckland sitting by the gate in Los Angeles. The wireless can still pick up the Koru Club signal – just. Will blog my thoughts on the different recommendations on Tuesday when back home.

The Press reports:

The decision was surprising given that Attorney-General Chris Finlayson and Police Minister Judith Collins had signed a 2003 petition calling for a commission of inquiry, he said.

As did many professors of law.

Rich said the decision was “sadly predictable”.

“It’s interesting we’re spending millions on a Supreme Court building but still directing people to the Privy Council, which I doubt Peter Ellis will be able to access because of the expense,” she said.

Ouch.

“In the court of public opinion, Peter Ellis has already been pardoned.”

On most controversial cases, there are different views on guilt vs innocence. The Ellis case is remarkable in the huge number of people who view his convictions as unsafe. I don’t think I know anyone at all who thinks the convictions should stand.

The case was a fundamental demonstration of the justice system failing to correct itself, she said. “Every country has found a way to deal with those injustices.”

And this is where I think the Minister made the wrong decision.  Of course the officials were always going to have dozens of reasons to say don’t upset the status quo. But the reason we have a Minister in charge, not officials, is for the ability to look at the wider picture.

Brash said he was surprised at the decision because the request was presented with such strong arguments and the 2003 petition had been signed by major figures.

“The New Zealand justice system has let Peter Ellis down and it should have been New Zealand that sorted it out.”

Had he won the 2005 general election, a commission of inquiry would have been ordered, he said.

I really recommend people interested in this case read the Lynley Hood book. If you do you will, like Don Brash, be convinced that the current convictions are very unsafe.

I had to laugh at Labour List MP Carmel Sepuloni trying to insist on Breakfast TV that it had been a great week for Phil Goff.  It was like a finance company spokesperson trying to insist they were sound.

Where do I start. First the Herald reveals that Phil Goff did not tell them the sob story he fed to them, owned a total of three properties, and it was not the case of someone with no assets being forced out of their family home. It was just a case of someone being unwilling to sell their property investments for a loss. I hope this story appears in as prominent place in the print edition as yesterday’s story.

Now even before this episode was exposed, Guyon Espiner blogged:

Labour’s ill-judged foray into the benefit policy debate – offering the dole to anyone who losses their job regardless of their spouse’s income – is a strategic blunder which ignores these basic facts of political life….

Labour now claims it isn’t going to allow the dole to be paid to anyone, regardless of income. But that’s a back down because that is exactly what they were saying on Monday.

You could sense the desperation on Monday after the story was broken in the Herald. Goff had clearly blurted out the story too early because Labour party officials and MPs were scrambling to fill in the details as other media worked to follow up the story.

On Tuesday Goff was desperately trying to claim that he was talking about the principle of middle income people not missing out on welfare and not the details. All the more reason then for not announcing the plan until the details are worked through.

Guyon makes it fairly clear Goff personally blundered by making policy up on the hoof. Guyon also covers their banking inquiry:

I see Labour is having another go. Having failed to win a proper select committee inquiry into whether the banks’ interest rates are too high, they are teaming up with the Greens and Jim Anderton to hold their own “inquiry” – one with no standing, no authority and no power.

Essentially they’ll be sitting in a room, preaching to the converted. Looks like a gimmick to me. Looks like Labour hasn’t fully realised it was turfed out of power.

Indeed.Hat Tip: Keeping Stock

John Armstrong writes this morning:

This has been an especially awful week for Phil Goff. It is not just that the Labour leader has made two blunders – the first being a policy mishap and the second being caught out by failing to reveal pertinent information. It is that a pattern of bad judgment calls is starting to emerge. That will be causing his colleagues some serious concern.

The problem for his colleagues is the lack of options. After 2011 there will be options, but there are not yet.

Twice within the past two months, Goff has sought to cause National discomfort only to end up pinging himself by failing to disclose facts which ended up being revealed by his opponents to his embarrassment.

The first example was Neelam Choudary, the Indian woman who alleged former minister Richard Worth sexually harassed her. She turned out to be a Labour Party activist.

The latest example is a Helensville man, Bruce Burgess, who seemed the perfect example of the kind of middle-class distress Goff had been talking about when he floated a shift in Labour policy so the dole would be paid to redundant workers for up to a year regardless of the income of their partners.

There is a warning in Armstrong’s writing. Having twice sat on highly relevant information, the gallery is going to be far more suspicious of any information from Goff in future. His effectiveness will be reduced due to this.

Goff is kidding only himself if he thinks this new information would not change people’s perceptions of Mr Burgess’s predicament.

Labour knew Mr Burgess owned the properties. It should have dropped his case immediately it knew that. However, presumably Goff was blinded by Mr Burgess being one of John Key’s constituents. The Prime Minister had done nothing to help him. Goff could see the headlines before they appeared. Through his own fault, they have ended up being the wrong ones.

The information totally changed people’s perceptions. Just as Choudary’s identity did also. I actually felt a bit guilty, at the time, for blogging yesterday on the Burgesses as I felt sorry for them being on the verge of losing their only home. While still sympathetic they are in tough times, the fact they have two other properties means they do have options – far better options than most families.

If he fails to win in 2011, Goff knows his party will look for someone else to lead them into the next election. If he keeps performing in the fashion displayed this week his colleagues might start asking themselves whether they should not look elsewhere before then.

I think Goff is safe until 2011, again due to the lack of alternatives.

Duncan Garner also blogs:

Labour sat on the fact he owned three homes. To Labour it was irrelevant to its case – that hardworking Kiwis are missing out under National.

How many Kiwis can cry poor with three homes? It’s a bad look Labour – and I suspect you know it.

Can you imagine how Helen Clark, as Prime Minister, presented with this sort of information – would have acted?

She, and/or Michael Cullen would have not only crucified Burgess – but she or he would have damn well made sure John Key was cut into three pieces,

So Labour needs to go away and look at what it’s doing.

It needs to take a breather. Goff has been too damn keen this week. He’s cocked up. He’s acted like a cut snake.

And finally we have Colin Espiner:

Labour’s also attacking the appointment of former National leader Don Brash to the new productivity taskforce, calling him a stalking horse for privatisation. Goff says it will lead to a renewal of ideas soundly rejected at the 2005 election.

Actually, as Key pointed out in the House yesterday, National wasn’t “soundly rejected” at the 05 election – it only lost by the narrowest of margins. And it was probably the Exclusive Brethren that spooked voters more than National’s privatisation agenda.

Indeed. Mps who call Don “Lord Voldemort” may want to reflect on the fact he got only 2% less than Helen Clark in 2005, and that their references to him as such actually alienate a large segment of the population. Anyway back to Goff:

Goff had another terrible day in Parliament today after the case of poor old Bruce Burgess, a constituent in John Key’s electorate no less, who having worked hard all his life now couldn’t get any assistance from the state after losing his job.

Labour shopped the story to the Herald this morning, which ran it without question. Trouble was, poor old Bruce owns two rental properties besides his lifestyle block in a leafy part of Helensville – in other words, he has assets of at least a million dollars. Now, that doesn’t mean he isn’t suffering, but that wasn’t the picture presented to the public by Goff or the Herald this morning.

Also, according to the Government, Bruce is eligible for $92 a week state assistance – something that wasn’t pointed out earlier either.

Once again, an issue that should have run in Labour’s favour ended up backfiring badly.

So this is what Carmel Sepuloni calls a great week for Phil Goff. I’d love to see what she calls a bad week.

I blogged on the 8th of July some basic steps that I believed the Police should have done in investigating the stolen Brash e-mails:

1. Compile a masterlist of every document referenced in Hager’s book
2. Sort them into groups – e-mails, faxes, etc
3. For the e-mails record down when each e-mail was received, and when it was deleted if it was. This will provide a window of time as to when the theft occured.
4. Also for each e-mail record who has access to it. Who was cc’d or bcc’d it. Who had access to a printed copy.
5. Look for common patterns in access, to try and narrow down which e-mail account or accounts were probably accessed
6. Look at the date of the final document used in the book. It is likely the theft took place soon after that.
7. Obtain staff lists for National during that period. Look especially at anyone who joined just before the thefts occurred.
8. Obtain swipe card records for the Leader’s Office for the period just after the final documents cited.

As far as I know, the original inquiry did none of this. Don Brash has a complaint with the IPCA over the inadequacy of the investigation.

Tracy Watkins from the Dom Post reports that the Police appear to have reopened their investigation, which is an implicit acknowledgement of the failings of the original investigation:

Police have been interviewing parliamentary cleaners and security guards after reopening their investigation into the Don Brash email files.

A team of up to four police officers has been involved in the investigation which is understood to have been reopened several weeks ago after Police Commissioner Howard Broad put one of his top officers, assistant commissioner Steve Shortland, in charge of reviewing the Brash file.

MPs and parliamentary staffers are expected to be interviewed as well. It is understood the Independent Police Conduct Authority is also investigating after a complaint from Dr Brash.

I’m not sure whether the investigation will reach any conclusions, as the theft happened around four years ago, but it is pleasing to see they are at least trying.

Rodney Hide has announced:

The Minister of Regulatory Reform, Rodney Hide, said the 2025 Taskforce was charged with recommending ways to improve productivity in order to close the income gap with Australia by 2025.

“The establishment of the taskforce was a key component in the ACT-National confidence and supply agreement, reflecting the importance we place on working to close the income gap with Australia,” Mr Hide said. “That income gap is one of the reasons we lose so many talented, hard-working New Zealanders every year.”

The Taskforce will provide an initial report in October 2009. Mr Hide said that report will identify the policy settings and changes that will deliver the productivity growth necessary for a stronger, more prosperous economy. Further progress reports will then be provided in 2010 and 2011.

The five-member 2025 Taskforce will be chaired by Dr Don Brash.

“Dr Brash is ideally suited to this role, with his wide experience of economic policy,” Mr Hide said. He was Governor of the Reserve Bank for 14 years, and an important motivation for his entering politics in 2002 was the widening income gap with Australia.”

The other four members are yet to be selected. Mr Hide said ministers are considering potential candidates with strong expertise on the New Zealand economy and public policy.

I have no doubt Don will identify measures that will increase productivity growth. And I have no doubt that because it is Don, Labour and the Greens will oppose it automatically. Their wails have already begun.

The big question, is will the Government act on the recommendations of the Taskforce? Closing the gap with Australia was a major major plank for National at the last election. I think voters will understand that dealing with the effects of the global recession has been the immediate challenge, but certainly will want to see a firm work programme by the time of the next election. The gap won’t reduce by itself.

Fran O’Sullivan writes:

The Government will soon launch a Productivity Commission designed to run its ruler over key sectors in the NZ economy and advise on initiatives that might ultimately help bridge the income gap with Australia.

The proposal for a Productivity Commission has grown out of the post-election agreement National and Act made for a “high quality advisory group” which would be tasked with the challenge of investigating how NZ would close the income gap with Australia by 2025.

I think a productivity is one of the most important things we can do, for increasing long-term growth. The Australian equivalent is one of the reasons they have done better economically – for them reform is not just something that happened in the 1980s, but has been an ongoing work programme under Hawke, Keating, Howard and now Rudd.

One of the first initiatives for the new Productivity Commission should be to examine why New Zealand has so many ports.

Ports productivity is a major issue – for both exporters and importers – given NZ’s distance from markets. Just two NZ ports have agreed to transparently provide benchmarking data to overlay on the Australian Productivity Commission’s benchmarking studies in this area – other ports declined to participate.

Given the fact that Australia is New Zealand’s biggest export market, it is important to get ports’ efficiency increased.

That does sound like a good first project.

It is still unclear who will chair the commission.

Minister for Regulatory Reform Rodney Hide favours former Reserve Bank Governor and now company director Don Brash.

Economically my views are very close to Don Brash. From an economic point of view, I think he would do a great job.

But, and this is a big but, the sucess of the Australian Productivity Commission is that it has been supported by both the Coalition and the ALP. Sure they don’t agree with every recommendation, but they recognise its importance and don’t try and demonise and undermine the Commission.

Getting NZ Labour to support a NZ Productivity Commission will be difficult enough. However Goff and Cunliffe are more moderate than Clark and Cullen, and I hope they will be constructive towards it. Just because it will sometimes recommend unpalatable reforms is not a reason to silence or marginalise it.

And this is where politically having Don as inaugural Chairman may be inadvisable. It would almost guarantee Labour’s opposition to it. And in most cases I wouldn’t care about that. But I have heard multiple times that the success of the APC comes down a lot to the bipartisan support for it.

The Australian Productivity Commission’s work programme gives some insights into the type of issues that the New Zealand commission could be invited to examine.

The Australians are examining the relative performance of the public and private hospital systems looking into comparative hospital and medical costs for clinically similar procedures.

It is examining Australia’s anti-dumping system, executive remuneration, the contribution of the not-for-profit sector and gambling.

They all look interesting topics. I would be most interested in a study of gambling from an economic point of view.

The Police Complaints Authority is investigating the adequacy of the Police investigation into the Don Brash e-mails. As far as one can tell from the released file, the Police did nothing beyond chatting to half a dozen people.

From what I can tell, there was no forensic examination of the evidence – something that should have been the first step taken by the Police. What do I mean by this – I mean an investigation of what actual documents Nicky Hager gained a copy of.

Hager helpfully supplied around 1,000 references in his 350 page book. The very first step of a semi-competent investigation would be to examine the documents referenced. Here is what I would have done:

1. Compile a masterlist of every document referenced in Hager’s book
2. Sort them into groups – e-mails, faxes, etc
3. For the e-mails record down when each e-mail was received, and when it was deleted if it was. This will provide a window of time as to when the theft occured.
4. Also for each e-mail record who has access to it. Who was cc’d or bcc’d it. Who had access to a printed copy.
5. Look for common patterns in access, to try and narrow down which e-mail account or accounts were probably accessed
6. Look at the date of the final document used in the book. It is likely the theft took place soon after that.
7. Obtain staff lists for National during that period. Look especially at anyone who joined just before the thefts occurred.
8. Obtain swipe card records for the Leader’s Office for the period just after the final documents cited.

I’m not saying this would work out who did it. I’m saying this is the minimum first steps you would expect in a competent investigation – work out what documents were stolen, work out who had access to them, work out whether they were in electronic form or also existed in hard copy, and work out when they were probably stolen. This is basic stuff.

By failing to do this the investigation was, in my opinion, doomed to fail, Asking half a dozen people whether or not they will tell them who gave them the e-mails was never going to find anything. A proper detailed forensic approach to the investigation could well have led somewhere, or even provided clarity as to whether the theft came about from a one off access to someone’s inbox, or whether it was more systematic than that.

I am going to be very interested in the report and findings of the Police Complaints Authority.

The Herald reports:

Former National Party leader Don Brash has welcomed a high-level review of the police investigation into how his private emails ended up in a book. …

Commissioner Broad said continued questioning of the police role could undermine public trust and confidence in the force.

He ordered a full review of the case, including the recent release of the highly edited file, to be conducted by Assistant Commissioner Steve Shortland of Auckland, with an independent adviser working alongside him. …

Dr Brash said he was happy with the steps being taken.

“I am very pleased at the police commissioner’s reaction,” he said.

“One of my major concerns was that the way the investigation was initially conducted suggested either incompetence or political bias and I think that’s dangerous for the police and not good for the country.”

Dr Brash said the senior appointment backed by the independent adviser to review the case went a “very long way towards satisfying my concerns”.

He was prepared to stop pressing for a commission – for now. He said the independent observer needed to be politically neutral and independent.

It will be interesting to see who is appointed.

Just received this PR:

DON BRASH
Media Statement

Thursday 21 May 2009
FOR IMMEDIATE RELEASE

BRASH REQUESTS COMMISSION OF INQUIRY INTO POLICE EMAIL INVESTIGATION

Former Opposition Leader and Reserve Bank Governor Don Brash has today written to Prime Minister John Key and Police Minister Judith Collins formally requesting a Commission of Inquiry into the conduct of the New Zealand Police in relation to their investigation into the theft of his emails and other correspondence, and their subsequent behaviour.

Dr Brash has proposed to the Prime Minister and Minister that the Commission inquire into and report upon the integrity of the police investigation into the theft, and their behaviour since publicly announcing the investigation was closed; and satisfy itself that the police acted at all times professionally and without political bias or interference.  It could not and should not seek to reopen or reactivate the investigation into the theft itself as that could be seen to cut across the role of the police or the role of the courts in determining criminal or civil liability.

“This is not about Don Brash.  There are important issues relating to every New Zealander’s privacy and the integrity of our political system that deserve resolution,” Dr Brash said.

“Everybody has a right to expect their correspondence will not be illegally intercepted or read by people it is not intended for.  That includes private individuals but it also includes political parties, business groups, trade unions and NGOs, all of whom need a degree of privacy in planning and discussing their ideas and strategies.

“In a democracy, everyone therefore has an interest in being assured that the police take such issues seriously.”

Dr Brash said that appeared not to have been the case with his correspondence.

“The heavily-censored information that was released to me and some media last week has added significant weight to my concern, held since I was briefed by police in mid 2007, that the investigation into this matter lacked any sense of urgency or diligence.

“Senior journalists who have reviewed what information has been made available have gone further, with the political editor of state-broadcaster TVNZ reaching the conclusion that it is suggestive of a ‘whitewash’ and ‘cover-up’ and the political columnist at the New Zealand Herald describing it as ‘a farce’.

“Others have contrasted the lack of urgency and diligence in this case with the heavy-handed approach to, for example, the Campbell Live case, where police obtained a search warrant for TV3’s premises following a re-enactment of an interview with a medal thief by broadcaster John Campbell.

“A contrast has also been made with how the police and indeed the intelligence services would respond – and should respond – to a breach of security involving the correspondence of the Prime Minister and how they responded to a case involving the Leader of the Opposition.  That contrast is not healthy in a democracy.”

Dr Brash said the police’s conduct since closing the investigation – or declaring it ‘inactive’ – was also of concern.

“The police’s behaviour has been highly unusual.  For example, despite promises in April 2008 that I would shortly receive the final report on the investigation, which I was then told was in draft form, I have only now – a year later – received heavily-censored information that is entirely without substance and which is dated January 2008.  I have also been told by friends and media who have sought information on the inquiry that the police have behaved with an extraordinary determination to keep all details of the investigation out of the public domain.

“I do not know why the police have behaved this way but it raises unhelpful suspicions about incompetence, lack of professionalism, political bias or a combination of all three.”

Any suggestion of political bias had to be addressed seriously, Dr Brash said.

“When she took office, Police Minister Judith Collins told the New Zealand Herald that she wanted to ‘make sure that [politicisation of the police] is only a perception’ and that she wanted to ‘get rid of that perception … because it’s not good for the police or for the country’,” Dr Brash said.  “I agree with her, which is why I have suggested that the inquiry be required to satisfy itself that no such politicisation affected the handling of my case and the subsequent unusual behaviour.”

Dr Brash said he believed the inquiry should be led by someone with an impeccable reputation for political evenhandedness so that it would not, itself, be seen as a form of politicisation.

Commissions of Inquiry are relatively common in New Zealand and can be established under the Commissions of Inquiry Act 1908.  That Act enables them to inquire into any matter of major public importance or concern to the government-of-the-day.  A Minister may propose an inquiry to Cabinet after consulting with the Prime Minister and the Attorney-General.  A Commission of Inquiry into police conduct was established in 2004 to carry out a full and independent investigation into the way in which New Zealand Police dealt with allegations of sexual assault by members of the police and associates of the police.  More recently, Police Minister Judith Collins considered launching an inquiry into allegations that police had been spying on peaceful protest groups.

END

By asking for the inquiry to be into how the Police conducted their inquiry, rather than into who stole the e-mails (which is a criminal matter), this allows it to be allowed within the guidelines in the Cabinet Manual.

I certainly hope the Government does agree to such a Commission of Inquiry. With a totally neutral and independent Commissioner (as Brash has said is needed), it will either expose problems within the NZ Police as to how they conducted this inquiry, or it will reassure the public that the Police did everything they could.

One part is worth repeating:

“Senior journalists who have reviewed what information has been made available have gone further, with the political editor of state-broadcaster TVNZ reaching the conclusion that it is suggestive of a ‘whitewash’ and ‘cover-up’ and the political columnist at the New Zealand Herald describing it as ‘a farce’.

And this is not the first time. The 2005 over-spending investigation (headed by the same officer) remains as an even worse investigation, where multiple errors of fact and law were committed – the worst being the failure to recognise the over spending was a strict liability offence – the law stated explicitly that over-spending must be prosecuted, even if unintentional (not that it was).

UPDATE:

Phil Goff has said John Key must take action:

Key must take action on Brash emails

Prime Minister John Key must put an end once and for all to years of speculation surrounding the source of the leaked Don Brash emails. …

“John Key opened the prospect of a Prime Ministerial investigation at this week’s post-Cabinet press conference. I ask him to make good on that,” Phil Goff said.

“There has been much rumour and innuendo, mostly from National Party sources, about who leaked the emails. John Key now has the opportunity to end this speculation.

“One of the quickest ways John Key can do this is to ask the police to release the unedited file of its investigation.

“Labour would welcome that. We have said from the outset that we had no knowledge of where the emails came from. We would like to know as much as anyone else who was responsible for the leaks. …

“Labour is calling for openness and transparency. John Key should ask the Police to release the information on this case in its entirety.”

I am not sure the exact action Goff is asking for can be done, and am not sure it would be adequate. I don’t think the PM can tell the Police how to intrepet the OIA.

But Goff has more generally said he supports some sort of inquiry. That means if National agrees to one, then presumably Labour won’t criticise its cost?

At the weekend I blogged agreement with Fran O’Sullivan that the Police inquiry into Don Brash’s stolen e-mails was a disgrace (and headed by the same officer who cleared Labour of ther $400,000 overspend in 2005 despite it being an offence of strict liability!).

However I disagreed with her that John Key and Judith Collins were somehow being unhelpful by not ordering an inquiry, pointing out the Police Act explicitly prevents the Minister of Police from giving directions over the investigation and prosecution of offences. You can be sure if that clause did not exist there would be new inquiries into Labour’s 2005 overspending!!

Whale Oil originally agreed with me, but now has done a backflip, saying that in a word first, he is wrong. He says:

In fact, Fran was right and I was wrong.

According to the Cabinet Manual and the Department of Internal Affairs’ very useful document “ Setting Up and Running Commissions of Inquiry“, any Minister, including the Police Minister, can set up a Commission of Inquiry. Commissions of Inquiry can inquire into any matter of major public importance or concern to the government of the day. Any Minister may propose an inquiry, but must consult the Prime Minister and the Attorney-General first, prior to submitting the proposal to Cabinet. Before giving its approval, Cabinet should seek advice form the relevant Minister’s office, the relevant department, DPMC and the Crown Law Office. …

PS. Over at Kiwiblog, Farrar made the same mistake. Will he admit he was wrong, and join WOBH’s call for an inquiry?

But I disagree with Whale. Neither the Police Minister nor the Prime Minister can set a Commission of Inquiry. The Cabinet as a while has to agree.  Fran said “It is within Key’s powers to direct an independent review of the police investigation” and it simply is not. The PM is not the Cabinet, and Cabinet have been known to over-turn PMs (except Muldoon). Lange for example often lost at Cabinet.

You can argue that Fran was right in saying [Police Minister Judith Collins] “has not asked for a review” but this implies her status as Police Minister allows her to do so. It does not. Sure she can ask the Cabinet for a commission of inquiry, but if you take it literally, and member of the public can ask for a review. The implication was that Collins had some special power to get a review. She does not.

Now people may say, why not a full Commission of Inquiry? Well 4.83 of the Cabinet Manual says:

While it is appropriate for inquiries to investigate instances of impropriety, they should not cut across the role of the police or the role of the courts in determining criminal or civil liability.

Now you could argue for a Ministerial inquiry – but they have no powers to compel witneses to tell the truth, so would be useless.

So I stand by my original post – neither Key nor Collins have the power to inquire into the Police investigation. I have little doubt both would love to know who stole the e-mails.

Nicky Hager has said that he got the information from six National party sources, all concerned about the party under Brash. I have always thought that beyond improbable. No one from National would choose to give e-mails to Hager, as oppossed to say the media. And while one can never rule out one disaffected staffer, the fantasy of six people all leaking to Hager is well a fantasy.

But here’s a challenge to Nicky. If he stands by his story, why doesn’t he agree to do a Deep Throat and pledge he will reveal how he got the e-mails in x years, or have the so called sources reveal it in their wills. Then one day the truth will be known.

Fran O’Sullivan writes:

Police HQ have repeatedly thumbed their nose at the former political leader by assigning a hopelessly inept cop (when it comes to prosecuting politically aligned crimes) to take charge of the investigation. The top cop was allowed to get away with tarrying for the best part of a year before getting down to business, then refusing to release the full file of his on-again off-again investigation.

The investigation was almost as pitiful as the investigation into Labour’s 2005 overspending.

Brash has had no help from Prime Minister John Key. It is within Key’s powers to direct an independent review of the police investigation. But though he was the direct beneficiary of Brash’s downfall he is reluctant to give the case oxygen.

Ummn which power is this?News to me that the PM can direct a review of a police investigation.

Brash has had no help from Police Minister Judith Collins either. Collins was Brash’s close political chum during the dying days of his leadership when it seemed as if he might just survive. But she has not asked for a review.

In her well intentioned sympathy for Don Brash, Fran has over-reached. I refer people to the Policing Act 2008, specifically s16(2):

The Commissioner is not responsible to, and must act independently of, any Minister of the Crown (including any person acting on the instruction of a Minister of the Crown) regarding—

(a) the maintenance of order in relation to any individual or group of individuals; and

(b) the enforcement of the law in relation to any individual or group of individuals; and

(c) the investigation and prosecution of offences; and

(d) decisions about individual Police employees.

The Minister can not interfere, and in fact it would be highly undesirable for Ministers to get involved in a case involving their former Leader.

If Ministers could get involved, then I am sure they would love the Police to redo their investigations into Painertgate, the 2005 overspending and the stolen e-mails.

To get some idea of how bad the Police investigation into the Brash e-mails was, just watch Guyon Espiner on Breakfast this morning. Guyon said:

• In my opinion, it’s a disgrace
• Almost nothing in there
• Contrasts Police refusal to release most info with the full release in other sensitive cases such as Paintergate
• Labels what the Police have released this time as a “cover up” and a “whitewash”
• Looks like Police did not want to find out
• Says file shows they only interviewed around half a dozen people

That is a damning indictment from the TVNZ political editor.

The Dom Post reports:

Police national headquarters confirmed this week that the file’s release was imminent, after fighting its disclosure for more than a year.

A Brash ally, government relations consultant Matthew Hooton, has been battling police for more than a year over their refusal to release the file. He took the case to the ombudsman.

Mr Hooton was yesterday cautious about the police about-turn. “We may be pleasantly surprised, but our understanding is that the file will be so heavily censored as to be meaningless and we expect the matter will return to the ombudsman or even end up in the courts.”

Dr Brash said police had told him they were about to release the file and had sent him a “heavily censored” version.

This is ridicolous. Why won’t they release the full version, rather than one with 90% redacted?

Hooton in NBR states:

The file will be so heavily censored it will largely be blank and will contain no new information.  This pseudo-release follows an Official Information Act (OIA) request my government relations firm lodged on May 27, 2007.  Under the law, PNHQ had 20 days to respond.  In fact, getting to this point, two years later, has required enormous effort by my staff and pro bono assistance from Kensington Swan.

Lest anyone think police files can’t be released, the “paintergate” press conference, at which PNHQ announced Ms Clark would not face forgery charges, suggests otherwise.  Then, PNHQ staff told journalists that if they scribbled down an OIA request, the file would be released, uncensored, the same day.

I think Mr Hooton and Kensington Swan need to press on – even if it means court action. Hell I can think of a lot of people who might donate to help cover the costs.

Let the truth come out.

Most of the focus yesterday was on Dr Cullen’s appointment. There were some other interesting ones.

The Dom Post reports that Don Brash was appointed to the Transpower Board and Judy Kirk to chair the Lotteries Commission.

Transpower is a good choice for Don. It’s the only SOE that he doesn’t believe should be sold off at some stage

The Lotteries Commission is the traditional repository for senior party officials, and Judy has six years of board chairmanship skills to bring to it so her appointment is no surprise and I would say uncontroversial. I would caution though that National should never get to the stage they did in the 1990s where every single member of the Board was a senior National official. That was an awful look.

I have blogged in some detail in the past on Government Appointments. The summary of my advice was:

1. Never have those with political connections forming a majority or even close to a majority on a board.
2. Unless someone was already a professional company director (or widely seen as possessing similar skills), they should not be appointed to more than a couple of boards.
3. Appointees must bring genuine value to a board – their appointments must be based on merit, even if they have political connections.
4. The more important a board, the more critical it is that the apointees be top class.

Another interesting aspect is that Phil Goff a couple of weeks ago, unwisely complained that National was engaging in a witch-hunt against Labour Party supporters. His whinging was because Tony Timms and Polly Schaverien were not reappointed to Meridian Energy Board.

The appointment of Cullen should show how stupid his whining was. But to further highlight how off the beam he was, I quote from Simon Power:

“Joanna Perry (Genesis), Polly Schaverien (MetService) and Ian Donald (Transpower) have been elevated to deputy chair,

So Polly Schaverien has been elevated to MetService Deputy Chair despite being a former Labour Researcher and Mallard staffer. So again where is this witch hunt Goff complained about?

The Dom Post reports:

Former National Party leader Don Brash has hit out at police stonewalling over the release of files surrounding one of the great political whodunits.

The mystery has only deepened as police stymie all attempts to disclose the file into the publication of Dr Brash’s private emails.

In the latest letter rejecting a request to release the file under the Official Information Act, police have cited the need to protect confidential informants. They have also insisted that the investigation remain open, despite a statement a year ago by outgoing police inspector Harry Quinn that the investigation was closed.

If the file is closed, it should be released. Simple.

The Dominion Post asked for a copy of the police file a year ago. Police sought several extensions of the deadline and then said the request had been lost.

Hmmn. That makes me very curious.

Don Brash does an excellent rebuttal in the NZ Herald to a call by Bryan Gould for more regulation. Some extracts:

But Gould implies that the crisis was caused by “free” and unregulated markets, especially in the financial sector. This is quite simply nonsense. Banks may be relatively lightly regulated in New Zealand (where there is no banking crisis), but they have been highly regulated in the United States and Europe for many years.

Worth thinking about. And then talking about the US regulations:

In many ways, this intensive supervision by official agencies made matters worse by leading bank customers to assume that banks were effectively “guaranteed” by Government, thereby enabling banks to operate with levels of capital well below those regarded as prudent in earlier decades. Perhaps even more serious, intensive supervision led some bank directors to suspend their own judgment, and believe that they were behaving prudently provided they were observing all the rules.

Often a problem – a minimum standard becomes a target.

Gould seems not to have noticed that the crisis emerged not in the essentially unregulated hedge fund industry, or even among private equity funds, but in the most highly regulated part of the financial sector, namely banking.

Yep.

Gould argues that “Government involvement in the management of the economy is essential”, implying that that has not been the case in recent decades. Again, that could hardly be further from the truth.

Government taxation and spending make up some 40 per cent of total economic activity in most developed countries, and in all developed countries regulations of one kind or another tightly control what businesses can do.

It’s not exactly libertarian heaven with the status quo.

Gould in any case asserts that fiscal policy is more important than monetary policy. I would not want to get into a debate about which is more important – both are important. At its most basic, monetary policy is essentially about preserving the purchasing power of money.

Unless that is achieved within some tolerable limits, money can’t fulfil its important roles as a unit of account, a basis for transactions, and a store of value – just ask the Zimbabweans!

When people argue for a bit more inflation they are arguing for a bit less purchasing power.

With the benefit of hindsight, monetary policy was probably too loose in recent years, in some countries at least.

This is the irony – interest rates were probably too low, causing too many people to borrow.

We also know that, in the nineties, the United States Government started putting pressure on American banks to lend to borrowers of quite marginal creditworthiness to prove that they were not discriminating on the basis of race.

It is often the best intended policies that have the worst results.

The Press reports that Justice Minister Simon Power has been urged by his former colleagues Katherine Rich and Don Brash (and author Lynley Hood) to launch a commission of inquiry into the Peter Ellis case.

They ask Power to consider appointing an Australian judge to reconsider the case, believing it would be difficult for a New Zealand judge to approach it without prior knowledge or involvement.

The trio also ask that a judge be given the power to recommend a pardon for Ellis if he or she found that a miscarriage of justice had occurred.

Rich said an inquiry into the Ellis case was essential. “Two former prime ministers, 12 law professors, 10 Queen’s Counsel and thousands of other petitioners have already expressed their concerns. This case will not go away until a final review is done.”

Phil Goff expressed support for an inquiry in Opposition, but did little in Government but rubberstamp what the Ministry of Justice advised. This is a real opportunity for Simon Power to show some leadership.

I am not normally a sceptic of juries finding people guilty. I think they got it right with Watson, Bain, Lundy, that antiques dealer etc etc. In fact normally I think juries find too many people not guilty.

But with Peter Ellis, I am aghast at how he was found guilty. I have read many many articles and the Hood book on the case, and each time I am staggered at how flawed the process was.

Simon Power has a great opportunity to restore faith in the justice system. I hope he takes it up.

Don Brash writes an op-ed in response to Finlay MacDonald’s call for politicians, not the Reserve Bank, to be in charge of determining interest rates. Brash responds:

He then goes on to argue that “plenty of people” see this act “as a relic of failed economic dogma, well past its due date for reform”, although he mentions only two people by name – Jim Anderton and that well-known economist Winston Peters.

Need more be said.

He links the Reserve Bank Act and similar legislation elsewhere to the current financial crisis.

Whatever the cause of the current crisis, nobody that I know of seriously suggests it was caused by our Reserve Bank, or other central banks, focusing monetary policy on keeping inflation under control by keeping interest rates too high. Indeed, there are many observers who believe that the trigger for the current crisis was interest rates in the US being kept too low for too long, with the result that banks were encouraged to lend to a large number of borrowers of very marginal creditworthiness.

Excellent point.

First, the central banks of virtually all developed countries – certainly the United States, the United Kingdom, Canada, Australia, and the countries of the European Monetary Union – have removed monetary policy from the day-to-day influence of politicians. Why? Because experience over decades has shown that politicians have a tendency to manipulate monetary policy for their own political advantage, to the economic cost of their countries.

I can’t comprehend why anyone would want Rob Muldoon setting interest rates again.

Fourth, nothing about New Zealand’s experience since we reached price stability in 1991 suggests that focusing monetary policy on keeping average prices stable damages growth or employment. We’ve had some of the best growth in our history over the past 16 years, and, until recently, we had the lowest level of unemployment in the developed world.

Exactly. Emperical evidence is overwhelming that you can have low unemployment with monetarist policies. Likewise overwhelming evidence that you can eliminate protectionist trade barriers and have low unemployment.

Fifth, while dropping interest rates can stimulate economic activity in the short-term, all countries have learnt from bitter experience that, in the longer-term, using interest rates to try to get faster economic growth results only in damage to economic growth, as inflation makes it harder to interpret the price signals coming from the market. Sustainable economic growth ultimately depends on increasing output per person employed in other words, on productivity and tolerating higher inflation does nothing to achieve that goal. If it did, Zimbabwe (with high inflation) would be enjoying fantastic economic growth and high living standards, and the United States (with low inflation) would have poor growth and low living standards.

Whatever the problem is, high inflation is never the answer.

Deborah’s column has a few things in it I can’tr resist responding to:

More puzzling than Helen Clark’s refusal to sack Peters is Key’s rush to judgment, ruling out working with NZ First before the committee’s report was tabled.

Key’s no crystal-ball gazer; he can’t know for sure NZ First won’t be back in November.

No. As he has said he would rather remain in Opposition than rely on Peters, as he can’t be trusted. It is called a principled decision. To be fair, it is also probably a recognition that such a Government would only last weeks or months anyway.

Contrast this with the National Party campaigning for convicted paedophile Peter Ellis’ innocence when he’d been found guilty by every court in the land.

How this is even relevant, I don’t know. But it is not National campaigning – it was Katherine Rich and Don Brash. But asking for a Royal Commission into the Ellis case (something I support) is not about campaigning for a paedophile – it is about campaigning for a better justice system.

Several years ago a National insider who quit the leader’s office told me if the party ever dies, trace the DNA back to McCully.

“He’s a trench fighter, and all his decisions are made according to what’s good for him. He was behind Jenny [Shipley] rolling Jim [Bolger], then he pushed Jenny over.”

This is why I responded, because I know this is false. McCully was not supporting Shipley. Far from it – he was a member of the Bolger team trying to defeat her coup. This is a matter of fact – many witnesses would testify to this.

A current National staffer says he overheard MPs discussing what they’d do about Peters if he held the balance of power after the election, and McCully expostulated; “The f***** wants my portfolio.”

This seems unlikely to me. Up until the donations scandal this year, National were actually quite keen to do a deal with NZ First. I know this, because it worried me. It was very well understood that Peters would keep Foreign Affairs and McCully was very relaxed about this state of affairs. This was common knowledge.

Peters has no-one to blame but himself. National were all set to do a deal with him if he made it back. But during the course of the last seven months, he has shown himself to be a man who can not be relied upon.