Kiwiblog

Fran O’Sullivan focuses on Muray McCully:

Cabinet Minister Murray McCully is under strict orders from his boss to do “whatever it takes” to ensure the 2011 Rugby World Cup is an outstanding success. …

The timing of the tournament couldn’t be better for New Zealand. Amid the incessant doom-and-gloom talk, it is easy to overlook the fact that in just over two years 60,000 to 70,000 visitors will likely track here for a contest that has the potential to generate more than $1 billion of economic activity and pump more than half a billion dollars into the New Zealand economy.

That is what goes with the territory of being host country for the world’s third-largest sporting contest.

It hasn’t really sunk in how big the event has become.

The RWC organisers have so far done a stirling job by opting for 13 venues that have capitalised on their pledge to the International Rugby Board to provide a “stadium of four million people”, and ensured that virtually all regions of New Zealand have an opportunity to drive extra business.

That has gone down very well.

The rapport between McCully and Groser is palpable, with either politician easily able to represent the full range of New Zealand’s interests in their meetings with other foreign or trade ministers either at home or overseas.

For instance, it was McCully who fleshed out the timetable for the recent announcement of negotiations on the bilateral trade deal with Korea during the visit of Korean Foreign Affairs and Trade Minister Yu Myung-hwan to Wellington in January.

This is a return to normality after the embarrassing charade played out under the Labour Government when its Foreign Minister, Winston Peters, sat outside the Cabinet and not only “didn’t do trade”, but reserved the right to oppose deals like the Chinese free trade agreement which did not fit with his party’s agenda.

Even worse the Foreign Minister was running large newspaper ads trying to stir up opposition to the deal, before the ink was barely dry from the PM signing it.

Both McCully and Groser favour a shake-up at the Ministry of Foreign Affairs and Trade to ensure greater concentration on the relationships likely to bear greatest economic fruit for New Zealand and/or bolster the country’s presence on the world stage.

The foreign affairs establishment is already kicking back at plans to bring NZAid back within MFAT’s firmament and ensuring more of the aid is directly tied to New Zealand’s interests. McCully has not handled this issue as smoothly as he could. But overall he has made an impressive debut in his prime portfolios.

It’s good to have Fran writing on an issue other than why National should cancel the tax cuts

Fran O’Sullivan seems quite impressed with John Key’s willingness to consider bailing out F&P:

Key’s activist approach is a far cry from the prime ministerial style used by some of his predecessors like David Lange (Labour) and Jim Bolger (National) when they were confronted with the prospect of major Government hand-holding operations and bailouts during the fag-end of the 1980s and early 1990s.

It would be hard to imagine either Lange or Bolger lapsing into banker-speak as Key did at his press conference when he precisely defined the impact of mark-to-market rules which had resulted in F&P’s recorded debt blowing out to 43 per cent in January in response to exchange rate movements. Net debt is now forecast to reach $570 million.

It’s true Key is very smart on issues of finance, but any intervention will set a precedent that we might regret one day.

I tend to agree with the Dominion Post editorial:

Prime Minister John Key should think very carefully before he acts on his inclination to use taxpayers’ money to help Fisher & Paykel Appliances, The Dominion Post writes. There is a real risk it would be the first step on a very slippery slope.

And Fisher & Paykel executives should, if the offer is made, think very carefully about accepting it taking the Government’s shilling inevitably means allowing politicians into your business.

And this is a real issue for F&P. What if you accept some Govt money, but you still need to cut some jobs. However you know cutting jobs will make the Govt look bad, and they did bail you out. So then you don’t cut any jobs and you need a further bailout, or you go broke. Govt money always come with strings. Do you want the Govt (as in the US) telling you how much you can pay your top management?

Fisher & Paykel has not gone to the Government for help, but Mr Key is clearly contemplating using public money to help it out as a last resort. The advantage of that is it stops the company being held to ransom by financiers taking advantage of the recession to offer unreasonable terms. The danger is in deciding where to draw the line. If it is justified to use public money to save 1600 jobs, what about 1000 jobs, or 100?

And think of the protests from any company you decide not to bailout.

Mr Key should not close off any options, but picking which firms deserve taxpayers’ money should be very low on his list. He should look first at further moves that would make life easier for all New Zealand businesses by reducing their costs, and removing red-tape barriers.

New Zealand politicians have a sorry record when it comes to picking winners. There is no reason to suspect they would do any better at picking survivors.

Very well said.

In the Herald, they report support for a bailout from EPMU’s Andrew Little and opposition from the NZ Manufacturers and Exporters Association.

Will the EPMU now seek to join the new National Party?

Fran O’Sullivan again calls for the Government to cancel tax cuts:

The upshot is the construction industry got a $500 million boost this week to build roads and schools that are not even needed yet.

Not needed yet? I’m sorry Fran but you think the 18 year wait for the Kopu Bridge is not long enough? What actual roads and schools are not actually needed by the time they are completed?

As for the wider populace, all that has been on offer so far is a tax cuts programme that takes so much money out of the Government’s kitty that there is little left to spread to others desperately in need of a boost, such as pensioners, students and beneficiaries.

Good God, where do I start. First of all, National’s tax cuts have not taken any money out of the kitty, as they were almost totally funded by the changes to KiwiSaver. In fact they are a major part of increasing the fiscal stimulus because they took money that was going to be mainly locked up for decades, and instead is giving it to people now, when it is most needed.

Secondly pensioners have got a boost from the tax cuts, as their pensions are linked to after tax income.

Thirdly students have had a huge amount of largesse in recent years. And really, the thought that we’ll get through this okay by borrowing money to give to everyone not in work, to be funded by those who are in work is bizarre.

Finally why would National start their first 100 days by breaking their election promises?

Fran O’Sullivan calls for National to can its 1 April tax cuts and put the money into boosted unemployment benefits and superannuation.

It’s amazing how so many people keep calling on National to break its election promises within just weeks of the election.

Fran O’Sullivan writes in today’s Herald, criticising Israel:

The reality is Israeli excesses helped pave the way for Hamas to become a power in the first place. Israel is not alone in facing provocations from “terrorists”. But the extent of its retaliation will simply empower its enemies further as Palestinians react against the loss of life. At the end of the day, the moral arguments used by both sides to promote their excesses will not have much currency.

Israel does often over-react but it is easy to criticise imperfect reactions from the “armchair” so to speak.  But when the Red Cross is concerned, we should be also:

Even the International Committee of the Red Cross says: “The Israeli military [has] failed to meet its obligation under international humanitarian law to care for and evacuate the wounded.”

That is not good.

What will matter is the consequences that result from the Gaza War. If Israel’s onslaught destabilises the Middle East further how much longer will it be able to count on the United States for unwavering support?

In this case though, there has been considerable support for Israel’s right to try and stop the rocket attacks. Russia and China have been muted – not just blaming Israel. The EU and most western states have been careful not to just blame Israel or call on them to stop unless Hamas will agree to stop also.

Even in Canada, the new Liberal (centre-left) party leader is taking a balanced view:

Liberal Leader Michael Ignatieff says Israel is justified in taking military action to defend itself against attacks by Hamas from the Gaza Strip.

“Canada has to support the right of a democratic country to defend itself,” he told reporters in Halifax on Thursday after speaking to a forum of business leaders on the economy.

“Israel has been attacked from Gaza, not just last year, but for almost 10 years. They evacuated from Gaza so there is no occupation in Gaza.”

And I can only quote approvingly from Chris Trotter:

To the Israelis, however, a more persuasive precedent might well be found in their own history. After all, in ancient Judea, wasn’t it the Jews who found themselves in exactly the same position as present-day Palestinians: under the heel of a brutal army of occupation? Was not the Great Jewish Revolt of 66-73AD, and the second, far more destructive Jewish-Roman War of 132-35, the intifada of their time?

And what was the outcome of those revolts? Massive retaliation: countless deaths, towns destroyed, lands seized, and, in the wake of that final, cataclysmic defeat, the “ethnic cleansing” of Judea – the 1,900-year Jewish Diaspora.

“Impossibel!” you say. “Unthinkable!” Not really. What, after all, was the policy of the Allied Powers regarding the German speakers of Eastern Europe at the end of World War II – if not “ethnic cleansing”? The intractability of the problems caused by ethnic Germans living amongst Poles, Czechs, Hungarians and Rumanians led to the wholesale uprooting of entire communities. Families which had lived in the same towns, farmed the same land, for hundreds of years were simply put on trains and “resettled” in the West. Under the auspices of the “Big Three” – the USA, the USSR and the British Empire – Eastern Europe was ruthlessly, and very effectively, “cleansed” of its German-speaking population.

The Germans, of course, had sent six million of Europe’s Jews in the opposite direction, to an altogether more permanent kind of “resettlement”.

And can anyone seriously doubt that, should Hamas “win”, their “final solution” would be any different?

The Herald has a solution to the Israel problem – to effectively get rid of Israel, by supporting a full Palestinian Right of Return.

I’m all in favour of peace for land, and Israel going back to its 1967 borders. But it would be suicide for Israel to agree to a full right of return – this would turn Israel into an Arab majority state – either initially or over time.

The Herald says:

Change may require something as drastic as reconsideration of Israel’s need of a Jewish majority, the reason for its resistance to a full Palestinian right of return. Israel fears for its religious character if it ever makes that concession but Judaism was freely practised in the Islamic empire that preceded today’s warring states.

I’m not sure if this is stupidity or naiveity of the worst kind. The world has changed, in case the Herald editorial writer has missed it. And after the Holocaust, persuading Jews that they should give up majority control of a country to become a minority again is well near suicidal.

The so called right to return is a play to destroy Israel from within. There may be a case for compensation as part of a peace settlement, but a full right to return (which the Wikipedia article shows is both hypocritical and unheard of in international law) is just nonsense – especially when you consider this would be giving a right of return to thousands of terrorists whose only aim in life is to destroy Israel.

On a similiar issue Fran O’Sullivan notes a different tone from the NZ Government:

Just simply a few bland words by McCully to newswire agencies lamenting the Gaza strip onslaught and endorsing the United Nations’ call for an immediate ceasefire. Notably, his words were devoid of the usual harsh condemnatory judgments against Israel that had become a trademark of the Clark Government.

Good. While Israel is far from without blame, the one sided condemnation of Israel only was tiring. Fran then notes:

National’s fellow travellers have already complained of bigotry after a Herald “letter to the editor” writer made the linkage between Key’s Jewishness and the Government’s new stance.

It is a nonsense to allege bigotry in this instance.

In a multitude of post-election articles in Israeli and Jewish newspapers elsewhere, there had been a clear expectation that the advent of the Key Government would lead to a more “balanced” relationship between Israel and New Zealand.

The Jewish community has publicly singled out several National Cabinet ministers who are “friendly to Israel”: Key himself, McCully, Tim Groser, Jonathan Coleman, Wayne Mapp and Attorney-General Chris Finlayson.

I stand by the bigotry claim. As Fran notes there are many Ministers “friendly to Israel”.Are they all Jews? No, of course not (and neither is Key in terms of religion). Centre-right Governments tend to be less willing to bash Israel than centre-left ones – and that would have been the case I suggest, regardless of if Key was PM or not.

NZ peace groups are now calling for a boycott against Israel and the Palestinian Human Rights campaign has sent an open letter to Key and McCully calling on them to “declare your positions of principle regarding Israel’s military occupation of Palestinian land”.

So far, there has been no official response.

I imagine the response would be that NZ’s position remains that it wants a peace settlement that involves land for peace.

The traditional Christmas/New Year holiday period is an easy excuse. But British PM Gordon Brown is not asleep on this issue, neither is Australian Acting PM Julia Gillard who has pledged an extra A$5 million ($6 million) aid to help Palestinians get access to food and medical supplies.

New Zealand has been urged to follow suit – but so far nothing has eventuated…

This is not a good look – but one which is quickly remedied.

Fran may have a point here, but of course Australia is far more globaly focused with its ad than NZ. We have a Pacific focus. But on the assumption there is an appropriate budget available, it would be good to help with aid. Regardless of who you blame for the conflict, there are a lot of innocent families suffering.

Fran O’Sullivan looks at the recent National-ACT agreement. She covers some of the tensions around spending reviews, but notes that is not the big issue. The big issue is:

Where Act has scored is in getting an agreement out of National to make a concrete goal of closing the income gap with Australia by 2025. This will require a sustained lift in New Zealand’s productivity growth to 3 per cent a year – something that has so far eluded this country.

It is an ambitious target.

To get some focus on this ambition a “high-quality” advisory group will be formed to probe into the real reasons behind New Zealand’s decline in productivity performance, investigate the kind of institutions that Australia sports to drive its superior performance and report annually on progress made towards the 2025 goal.

Frankly, this is the real winner in the National-Act agreement.

The advisory group should move quickly to examine the runs on the board that the Australian Productivity Commission has notched up. The commission undertakes exhaustive investigations into various sectors, interviewing the key players before coming up with in-depth recommendations. It has been a powerful force in driving efficiency into Australia’s economy over the past 15 years.

If such a commission is set up here, it would be great to do it in such a way, the Goff led Labour Party would support it. That doesn’t mean that you agree to implement whatever they come up with, but that you don’t undermine and ridicule them if they ever propose something unpopular.

We saw this with the NZ Institute. They were a darling of Labour, and then they dared to suggest we should be a “fast follower” in terms of climate change responses and the wrath of Helengrad descended on them, and they were marginalised.

Both National and Labour need to realise that if they set up a NZ Productivity Commission, it will sometimes recommend stuff they don’t like. And the challenge for them will be to disagree with the message, but not shoot the messenger.

Some useful comments from John Armstrong and especially Fran O’Sullivan on Labour’s attempted H-Fee smear. It is worth remembering that this was a smear thay had been pushing for over a year, with Ministers in the House going on about it.

Armstrong writes:

Labour did trip itself up this week, the cynicism and arrogance of power coming back to bite it with a vengeance. That was most obvious in Labour’s latest attempt to dredge up something, anything, in John Key’s foreign exchange dealing past which might make voters question whether National’s leader has the integrity worthy of a prime minister.

Labour believes it is perfectly within its rights to probe Key’s character. That may be so. But New Zealand voters have huge difficulty with investigations into MPs’ pasts and private lives. Some discretion is required on Labour’s part. Yet, it clumsily seems to think it can fool the public that it is performing a public service that gives it the latitude to parade the flimsiest material as proof of Key’s unfitness to govern.

When it turns up nothing – and no less a figure than the party’s president is doing the digging for dirt – Labour looks as if it is driven by a fatal mix of arrogance and desperation. Hardly a good look in the penultimate week of an election campaign.

Labour (and many others including myself) were appalled when the Exclusive Brethren hired a private detective to investigate the Prime Minister. Labour are acting no better than the Exclusive Brethren when they have their party president flying to Australia and hawling back 20 kgs of papers in an attempt to smear Key.

O’Sullivan points out how truly desperate Labour must have been to try this:

Labour Party president Mike Williams must have been tired and emotional or greatly deluded to believe he was finally on the track of a “neutron bomb” which would blast National leader John Key’s election campaign into smithereens.

The upshot of Williams’ lunatic attempt to try and link Key with the notorious 1988 H-fee scam – when no such evidence has been uncovered – is that Labour is now (rightfully) scrambling to fight off accusations that it is more interested in launching smears against its opponents than fighting a fair election at a time of extreme international financial turbulence.

The Prime Minister’s pathetic attempt to distance herself from Williams’ ham-fisted behaviour lasted a mere 24 hours before she was forced to confirm the Labour Party paid for what she initially described as his “private mission”.

Have no doubt if the smear had worked Clark would have fronted it.

It is unfathomable that Williams and Labour’s taxpayer-funded “researchers” thought they would drive home a connection putting Key at the centre of this white-collar crime by uncovering evidence that had eluded the Australian National Crimes Authority’s forensic investigators.

If evidence existed linking Key to the transaction he would either have faced charges, or been subpoenaed to give evidence in the subsequent court cases against Jarrett and Hawkins. He wasn’t.

This is the part that made me realise how desperate Williams was with his Keystone Cops routine. Williams thought his collection of amateur detectives would find evidence that had been overlooked by the Serious Fraud Office and the Australian National Crime Authority’s foresnic investigators.

The Herald rates the debate. First Audrey Young:

The debate brought out the best in John Key. He looked human, he talked about real people, real redundancies and up against the policy supremo, he more than held his own. She was awful to begin with, talking mainly in theories and statistics. Berating him over the Springbok tour was a mistake.

She was more convincing when talking up her leadership record. She had by far the best campaign launch on Sunday but he wiped the floor on the debate.

Then John Armstrong:

While there was little to separate the pair in a pretty even contest, John Key has to be declared the winner of tonight’s debate. …

In a tight battle, he even scored points at Clark’s expense. She was as rock solid as always, but predictable.

Key will have consolidated support for his party. National’s wobbly election campaign is back on track.

Fran O’Sullivan was the only dissenter:

Gripes aside: Clark scored best on the issue du jour – the international credit crisis. She has a post-election plan. Key doesn’t.

Key was initially ineffectual letting Clark walk over him (shades of Don Brash). He recovered and successfully challenged Clark’s rhetoric on climate change and crime.

Then we have NZPA Political Editor Peter Wilson:

John Key might not have been around politics for long but tonight he matched Helen Clark’s formidable abilities and vast experience as the National and Labour leaders went head to head in the campaign’s first TV debate.

Fran O’Sullivan notes that while Michael Cullen and Helen Clark have been falling over themselves to keep Winston happy, Phil Goff has been hapily overseas working on the US trade agreement.

Up until the last couple of weeks I would have said that Clark, even if she loses, would manage her own departure and delay it long enough for Cunliffe to have the numbers to beat Goff.

But if Labour loses, there could be a significant internal backlash against Clark and Cullen for their appalling judgement over Peters. Some of those Labour MPs were very unhappy about being forced to vote for Peters.

This gives Goff an opportunity to force a leadership ballot earlier rather than later, and campaign on a ticket of needing to remove those associated with the defence of Peters.

I blogged last week on the new copyright law, and how the provision about ISPs having to terminate Internet access for repeat infringers was causing huge problems.

The good news is the Government seems to be listening. IT Brief reports:

The government has bowed to unprecedented ICT industry pressure, announcing a four-month moratorium on Section 92A of its new Copyright (New Technologies) Amendment Act.

Communications minister David Cunliffe revealed the back-down during the InternetNZ TVNZ7 Internet Debate held on Tuesday night, saying the delay would give the industry and content providers time to come up with an alternative approach to controlling copyright on the internet.

The debate incidentially went really well I thought. Possibly could have been a bit shorter, but we had a good mixture of politics and policy. There was some generally good natured sparring that kept it interesting, but also some useful and interesting policy discussions around broadband, copyright, filtering etc.

From a technical point of view it was pretty seamless as we took questions from journalists, from the studio audience, from the online chat channel and also video questions through Skype. The InternetNZ staff and TVNZ staff and contractors did very well making it happen. Several people said they would like to see more debates with that interactive format.

Damien, Russell and Fran were all good at challenging the MPs, quite aggressively at times.

The funninest part for me was Maurice WIlliamson saying he had no idea why he voted for the new copyright law, as it is such a stupid law. I thought Maurice did very well, but in fact all four MPs did well with strengths in different areas.

You can view the video of the whole thing at debate.net.nz.

Anyway back to copyright. The Dominion Post also reports:

Paul Moreno, a spokesman for Justice Minister Judith Tizard, said a delay to regulations required to put the cut-off clause into force was being considered, and that the delay might be “endless”.

“Judith is of the mind that Internet access is almost a human right now, similar to water and electricity.”

But Ms Tizard then appeared to toughen her stance, stressing that the Government was concerned to protect copyright holders.

And it is important to protect copyright holders. But look at the gap between the possible interpretations:

Ms Tizard would not say whether the intention was that the cut-off threat should apply only to people who had been repeatedly convicted of copyright offences, or to those who had been accused of infringements by bodies such as the Recording Industry Association – indicating it had been left deliberately unclear.

“The intention of this provision is to provide a framework for the ISP industry and rights holders to develop an efficient and effective mechanism that is workable for both parties.”

Telecommunications Carriers Forum chief executive Ralph Chivers said if the former definition was used, that might be one solution.

But Recording Industry Association chief executive Campbell Smith said that would not be acceptable as it would require copyright holders to sue infringers to prove their guilt. “That is just impractical and ridiculous. I don’t think that is what was intended.”

Instead, ISPs should cut off customers who infringed copyright after notifications from rights holders, he said.

Losing your Internet access on the basis of unproven accusations is not a goer for me.

Fran O’Sullivan takes a look at who is driving the campaign strategy in each party.

But at the tactical level, some decisions are backfiring. Clark says the election is about “trust”. She reinforces that message by using “dog whistle” tactics which could have come from the Crosby Textor campaign textbook she usually decries.

Yep.

In the past she has deputed senior politicians such as Trevor Mallard or Phil Goff to be the party’s attack dogs and rark up her opponents, but this time she is getting into the gutter.

Leading the descent downwards.

National does not have an uber-fuhrer as strategist. What it has is a strategy team which has been meeting on a daily basis “for months now”.

Strategy by committee – hmmmn.

Party insiders expect author Nicky Hager, who wrote The Hollow Men, to try to drive a public wedge between English and Key by dropping more damaging emails during the election campaign.

No doubt.

Some clued up National MPs are even using digital tape-recorders to record their public utterances so they have a log of what has been said in case they are subject to a re-run of the secret recordings at their own annual conference.

A very good idea.

Maori MP Hone Harawira is the party’s campaign manager and also in charge of fund-raising.

A smart choice – lots of street smarts.

So many articles, so where to start. First is the Herald editorial on racing:

When Winston Peters was appointed Racing Minister in 2005, he was warmly welcomed by leaders of the industry. “He’s going to be good for racing,” said high-profile breeder Sir Patrick Hogan. Even he, however, may not have realised the degree of beneficence.

To the contrary it is possible the degree of beneficence was precisely known!

Then we have Fran O’Sullivan who calls Peters a coward basically:

If Winston Peters was man enough he would apologise to leading New Zealand political journalists for the outrageous way he attacked them for questioning whether Labour’s major donor Owen Glenn had contributed anonymous funds to New Zealand First.

New Zealand now knows the vile allegations and innuendo that Peters accused journalists of spreading early this year were not that far off the mark. But Peters’ continuing reliance on bravado and counter-punches instead of confronting the real issues means his political reputation is punctured.

Peters actually suggested the NZ Herald had fabricated the e-mail from Owen Glenn.

It’s abundantly clear that Peters’ political interests and those of his party have been served by plenty of cash from wealthy donors, contrary to the public picture he has painted.

The claims he made early this year that New Zealand First had had no big-business backing since its inception have been exposed as fatuous.

Indeed, it is quite possible the NZ First receives a greater proportion of its income from big business than any other party, if you include the Spencer Trust and Brian Henry in the mix.

The cost of the Selwyn Cushing lawsuit has been estimated to be $445,000. Where did the money for that come from?

But unfortunately the Peters donations furore does obscure the real scandal the NZ First leader continues to duck. The party’s refusal to send a cheque to the Crown for the $158,000 in unlawful spending at the 2005 election is breathtakingly cynical.

Doling out this money – which rightfully belongs in taxpayer’s coffers – to a swag of unnamed charities doesn’t cut it for a politician who made his name on challenging commercial malfeasance. He should not be let off the hook.

Indeed. And now John Armstrong:

He answered questions with questions. He deemed questions which he considered outside the committee’s terms of reference to be irrelevant and therefore not to be answered.

It was less the Spanish Inquisition and more like A Game of Two Halves.

As always, everyone else made allowance for Peters’ verbal pugilism – just as the teams on the television sports quiz tolerate Matthew Ridge’s exhibitionism. MPs are so accustomed to Peters’ stroppiness that no one on the committee would have found his behaviour out of the ordinary.

Yet any member of the public delivering the string of insults to committee members which Peters did would have been called to order.

Peters claims of a Spanish inquisition just shows how unused he is to the idea of accountability. He has for 15 years run his party without question. He has secret trust funds which his staff solicit money for, and his party president and deputy leader know nothing about.

He was not bound by the normal laws of politics. He freely broke them without penalty. That has changed – dramatically so in the last month as NZ First has been found to be as solicitous of donations from the wealthy as other parties that it so long accused of being venal and corrupt.

If Peters tries to take the moral high ground again, then laughter is the only appropriate response.

The Dim-Post also sums things up well:

What is interesting about this arrangement is that Brian Henry is a scion of the famous Henry family who, along with the Fletcher’s and the Todd’s, were one of the wealthiest and most influential industrial dynasty’s in New Zealand history. Wikipedia has an extensive entry on the family.

So this is yet another case of Peter’s benefiting from the largese of the super-rich, a group he still claims to be waging a one man war against. There’s no way of knowing the value of Mr Henry’s legal services to Peters over the years but it seems reasonable to assume the amount runs to many hundreds of thousands of dollars.

Winston Peter’s claims to have been the prey of a conspiracy of secretive, elite businessmen but with the New Zealand First leader recieving clandestine donations from Owen Glenn, the Vela family and Sir Robert Jones and free legal services from an industralist heir it looks more and more as if Mr Peters is a member of a covert super-rich conspiracy rather than a victim.

What more can one say?

Oh I do love journalists who do research. Fran O’Sullivan has found these quotes:

Where’s the audit trail? Precisely into which account went this cheque?”

“On whose behalf was the cheque to be held and what happened to this money? Is there any significance that … was in serious financial trouble?”

“Why is the Serious Fraud Office taking so long to find the answers to these questions?”

“I say the whole thing stinks.”

Fran tells us that we might expect these to be quotes from Bob Jones or Rodney Hide asking about the investigation of NZ First finances. But in fact they are quotes from the Rt Hon Winston Peters in 2002 demanding the SFO get to the bottom of National’s funding.

Fran notes:

This is the real reason why Peters should be judged guilty by his political peers of the “H” word – hypocrisy.

By failing to publish a clear audit trail showing just how Sir Robert’s $25,000 donation found its way from the Spencer Trust into NZ First’s coffers, or the way in which the amount was disbursed on NZ First’s behalf, Peters invites a tsunami of disbelief which might easily be turned back by a simple disclosure.

As to whether the SFO will investigate:

The SFO, which is now deciding whether it should formally investigate Hide’s complaint, will tread carefully.

But it must be consistent.

It launched a formal investigation into National Party donations in 2002 after a former official – assured of anonymity – revealed the party still had unanswered questions over discrepancies between the amount its fundraiser had expected from Fay Richwhite interests and what arrived in the party’s accounts in 1996. …

The SFO ultimately cleared the National Party of any wrongdoing.

If Peters, his party and his lawyers have nothing to hide they should demand answers to the questions.

Otherwise they lay themselves open to new claims that “the whole thing stinks”.

The SFO decision will be pivotal.

As I have blogged previously, New Zealand is campaigning for a spot on the UN Human Rights Council – an institution rapidly becoming as discredited as its predecessor. We should be running a mile from it, rather than cosying up to the dictators and abusers who make up a significant proportion of its membership.

Fran O’Sullivan notes that we appear to be refusing to condemn Iran’s nuclear programme, so that we do not get offside with the Islamic states whose support is needed to get elected.

The unfortunate upshot is a perception that neither politician wants to speak frankly about Iran in case New Zealand’s UN campaign is jeopardised by the Organisation of the Islamic Conference which is one of the dominant forces on the rights council.

The council – which includes a number of serial rights abusers – has been criticised by the Economist for making a fetish out of one-sided Israel bashing. Its Islamic members have succeeded in passing a resolution saying free speech could be limited out of respect for religions and beliefs.

There is an unfortunate pattern emerging. If New Zealand puts its trade interests centre-stage, but only plays a strong bat on democratic infringements when they involve small basket-cases like Fiji, what do we stand for?

If National gets elected, they should drop our bid to be on the Human Rights Council, and concentrate on UN institutions which are not as discredited.

Fran describes the vision John Key and Bill English are spreading to business audiences:

Picture a New Zealand where profit is not a dirty word and where those who make it are not called “rich pricks”.

Picture a New Zealand deeply focused on international competitiveness, where risk-taking is again exciting, where young people are enticed to stay and with a greater discipline on government spending so the private sector can play a bigger role in the country’s fortunes.

Picture a New Zealand where rolling tax cuts, possibly even indexed to inflation, become the norm just like in Australia.

Sounds a good start!

English met visiting Australian Finance Minister Lindsay Tanner and Infrastructure Minister Anthony Albanese at last weekend’s Australia New Zealand Leadership Forum. He reckons the programme the new Australian Labor Government has up its sleeve would be regarded as extremist in New Zealand.

The fact that Australia’s Labor is pursuing big public/private sector partnerships and kept the increase in government spending to a mere 1 per cent in its debut Budget shows how out of step New Zealand’s Labour-led Government has become with international norms, leading New Zealand into a cul de sac, he says.

People have no idea how true this is. Not all left wing Governments are like this one.

Within Australian senior circles, the NZ Treasury is seen as something of a wallflower – a department that is publicly whipped into submission by Cullen whenever it has promoted obvious economic boosters like personal tax cuts.

Sadly a fair degree of truth in this.

Consider the Peters factor. English is crystal clear that the monetary policy targets agreement between the Government and the Reserve Bank should not be altered again if National wins the election (Peters wants changes). He’s also indicated National will not buy into Labour’s “what Winston wants Winston gets” approach.

Taking English’s messages at face value, it seems National retains considerable hostility to Peters.

Would Labour’s Helen Clark be prepared to concede the prime ministership to him?

This refers to Winston on Agenda giving the example of George Forbes in 1932 becoming PM even through his party was not the largest one making the Government. Winnie sure doesn’t lack ambition.

Fran O’Sullivan sees the significance of the Reserve Bank announcement:

… the central bank has also issued forecasts that predict a more negative economic outlook than the Treasury forecasts on which Cullen justified the size of his tax cuts.

This gives National the necessary political cover to argue a more serious tax-cutting programme would simply provide the necessarily larger fiscal stimulus to offset the more negative outlook without tempting the inflationary dogs.

Exactly.

However I would sound one note of caution. While the Reserve Bank forecasts indicate further tax cuts are possible without pushing interest rates up, there is still a potential fiscal problem. The weaker economy could turn Dr Cullen’s wafer thin surrpluses into deficits and further tax cuts without some reduction in expenditure would be a concern. One can go into deficit for short periods of time, one needs to make sure any deficit is not structural, if you have one at all.

It’s pretty basic politics. But the debate needs to move on to a higher plane. If National leader John Key retains the courage of his convictions – a quality that eluded his predecessor Don Brash – he should go further and reclaim lower taxes as the necessary element in building an internationally competitive economy. Not simply some version of tax-relief or middle-class welfare only dished out when the economy is in the soup.

This is the key point. Tax cuts should not be seen as just a different form of welfare. Splitting up the same sized cake is not going to solve our problems – it is growing the cake.

There is no real doubt that a smaller state as a percentage of GDP, leads to higher economic growth. The empirical evidence for this is massive and over many decades in many countries.

However of course there is a trade off as to the ability of the state to fund various services. That is why you don’t have the state at 5% of GDP. Getting the balance right if the challenge.

Key is a natural tax-cutter – by heart a fan of the Irish model of using low tax rates to attract foreign direct investment. Particularly for greenfields investments where the investors get a lower tax rate for investing in new enterprises that provide more jobs for our skilled people.

With unemployment forecast to rise substantially over the next few years, a serious programme based on competitive company taxes could provide another counter-cyclical stimulus. Particularly if National devised some mechanisms for foreign investors to take advantage of New Zealand’s China free trade agreement.

The luddites are against foreign investment, but they really need to look at Ireland to recognise what it can do in terms of increasing jobs and economic growth.

Fran O’Sullivan points out that the value of the Government’s stake in Air NZ is now only $912 million – less than the $1.034 billion the Government paid for its 76% stake, including a later rights issue.

The share price is now only $1.14 and was $3.12 a year ago. A sensible shareholder would have looked to sell down some of its stake to realise a profit on the purchase. But hey when you get to spend other people’s money you don’t worry about that so much.

Does anyone want to argue that 76% is the right stake for the Crown to own, instead of say 51%?

If we had sold 25% at the peak, then the $840 received would have almost covered cost of the remaining 51%.

So the 76% stake is now $1.6 billion less than a year ago. And add on the $1.5 billion going on Dr Cullen’s trains and you see where all the money is going.

There have been many articles on what Phil Goff was up to with his comments on Alt TV, and there appears to be an merging consensus (which I stated was my opinion early on) that his comments were not directed at Helen, but at other post-election contenders for the leadership – especially David Cunliffe.

Now a Goff vs Cunliffe contest for the leadership could be fascinating. Neither man is universally popular with his peers, but both are respected for the jobs they have done in their portfolios. Whether there would be a third contender remains to be seen.

So what was said over the weekend. First the Dom Post editorial on Saturday:

Announcing the beginning of the Siege of Helengrad on a television channel that believes it needs to titivate the news to attract viewers is a strange move for would-be Labour leader Phil Goff, The Dominion Post writes.

It’s almost as strange as his admission in the same venue that “sure, we might lose the election”.

Traditionally, politicians wait till the votes are counted before conceding even the possibility of defeat, but Mr Goff has not got time to muck about with the niceties if he wants to be Labour’s next leader.

That’s why it’s doubtful either statement was a Goff goof.

There have been claims that it’s all down to media mischief-making, but they are about as credible as the claims of those who say they watch Alt TV’s naked news to keep abreast of current affairs.

It was not a gaffe. Goff has spent ten years saying he has no ambitions to be leader, and when you change the tune to be no ambition until after the election it means something.

Mr Goff is a man of long experience and it is foolish to believe he unintentionally flashed his intentions.

He is used to the convoluted logic and necessary evasions of politics, and well versed in their practice. After all, he is the man who, as trade minister, has to convince his foreign counterparts that even though New Zealand’s foreign minister fulminates against free trade agreements, the Government that Winston Peters represents overseas is actually very keen on them. …

Instead, the only conclusion that can be drawn is that Mr Goff has taken a leaf out of Lewis’ book.

He has decided to begin his own leadership fan dance, revealing enough of a glimpse of his ambition to take over from Helen Clark to indicate his interest and titillate his supporters. …

Or, as Lewis would undoubtedly observe, it’s all about Flirty Phil Goff from Mt Roskill deciding he needs to be out there swinging his tassels before Delicious David Cunliffe from New Lynn has even tied on the G-string.

Goff seems to have detected a 9th floor led campaign for DC to be her natural successor. He is of course not happy having been so quiet and loyal for the last 12 years, and having seen off Maharey and Mallard.

Fran O’Sullivan also writes on the issue:

Goff knows that Clark does not want him to inherit her mantle as Labour leader. The Prime Minister has been less than discreet in signalling her preference for a generational switch to take place after her 15-year reign as Labour’s leader ends. Those who have been treated to her gossipy confidences believe she favours Cabinet rising star David Cunliffe to take over from her in a carefully stage-managed post-election transition of power.

That sounds like some well placed sources.

Goff would have heard the gossip. He would also have felt rather miffed that his loyalty to Clark – which has not been in question since he and Cullen led a deputation asking her to stand down as Labour’s leader in 1996 – has not being openly returned.

Goff-watchers believe he lacks the bottle to openly challenge Clark, even after an election defeat.

This is Goff’s problem. If Labour loses (and it may not of course) and Clakr steps down immediately then Goff has to be the favourite. But what if Clark stays on as Opposition Leader for a year, and then stands down. By then Cunliffe (or others) may have gained enough support to beat Goff in a ballot.

It occurs to me that if it is Goff vs Cunliffe for the leadership, then the winner would be sensible to make the other their Finance Spokesperson. The two of them together would actually be a pretty strong team, and would give Labour a decent shot in 2011 (especially with Cullen’s poison pill budget).

Fran O’Sullivan says to enjoy your tax cuts while you have them:

Enjoy your tax cuts – you will probably pay for much of them through fiscal drag.

That’s the reality for many higher income earners as Finance Minister Michael Cullen “all but” admitted to me on Friday.

Over the past eight years, he has pocketed close to an extra $2 billion in fiscal drag, based on figures provided to me by his office.

This year it will probably be about another $250-$260 million, which will go a good way towards funding the shift in the top tax threshold from $60,000 to $70,000.

If the $60,000 “rich prick” threshold had been inflation adjusted it would already be at $74,800 (and it moves to $70,000 only this October). When the threshold moves to $75,000 in March 2010 the fiscal drag would have it at $79,400 and in March 2011 when it hits $80,000 the fiscal drag would have it at $81,600.

So Fran is right. The change to the $60,000 threshold doesn’t even compensate for inflation. Someone earning $60,000 in 1999 and having had their salary go up by the rate of inflation every year would have paid $25,100 of extra tax from 2001 to 2008.

And even from 2009 to 2012 they will pay an extra $12,500 of tax just for having been pushed into the “rich prick” top tax rate, even though they are earning no more in real terms than they were in 1999.

But the Finance Minister suggested those earning more than $80,000 (8 per cent) would basically fund their cut through the fiscal drag effect.

Cullen’s “admission” came after the Wellington Regional Chamber of Commerce’s post-Budget luncheon. He noted the top tax threshold was now cutting in at such a low level, it was even catching nurses and teachers – not his original intention.

Yes only classes of non Labour voters are meant to be targeted by it.

With 55 per cent of the total income tax of $26,373m paid by those earning more than $60,000, and 29 per cent by those earning $100,000 plus, calls are likely to increase for more cuts at higher income levels over time.

Those nasty “rich pricks”who fund the health. education and welfare systems can and are going to Australia.

Firstly I note that David Parker has responded to the claim that the Government could make up to $80 billion from the Emissions Trading Scheme:

By 2030, when farmers and the smokestack sector would also be paying for 100 per cent of their emissions, and with a carbon price of $100 to $200 a tonne, the Government would make an extra $5 billion to $10 billion a year.

In effect that represented a substantial change to the tax system, which should be debated up-front and not introduced as the unintended consequence of an environmental bill.

A spokeswoman for Climate Change Minister David Parker said that if such a scenario was emerging, changes would be made during the scheme’s five-yearly reviews.

Now let us think about it. Parker is aying if the ETS makes too much money for the Government, they would change it. You mean, like if one had say $40 billion of surpluses over half a decade, you would reduce taxes? Yeah Right. If the ETS does turn into a cash cow for the Government, who really think they would ever give any of it back?

John Armstrong looks at rhetoric and reality:

As it is, Clark’s confirmation this week of that delay raises questions aplenty about Labour’s rhetoric surrounding carbon neutrality – which requires as much carbon be extracted from the atmosphere as is being pumped into it – and the Government’s actual record. …

The rhetoric had New Zealand becoming the first country which functions on a truly sustainable basis – “not by sacrificing our living standards, but by being smart and determined”.

Such language offers the illusion that meaningful reductions in greenhouse gas emissions can be achieved relatively painlessly without changing lifestyles. It is a nonsense, of course. But it is politically appetising nonsense, nonetheless.

This is the part which I have most objected to. The dishonest con job that one can simply cut carbon emissions and not have it done in a painful way.  The pain may be a necessary sacrifice if emissions need to be capped and reduced, but don’t try and con people that you can be carbon neutral and have the same standard of living.

Armstrong concludes:

What was going to be a major plank of Labour’s re-election campaign is now gathering dust – just like the “Champions of the Earth” award now sitting on some shelf in the Prime Minister’s office.

Indeed.

Fran O’Sullivan meanwhile has a way forward:

But by delaying the transport sector’s entry to 2011, Clark basically creates a problem for the next Government to address.

If the international economy is still sour there will be no political incentive to deal with the real problem, which is how to get New Zealand’s greenhouse gas emissions down to a sustainable basis.

The odds are that the next Government will face similar consumer fears when it comes to the entry of stationary energy into the emissions trading scheme in 2010.

This suggests that Labour and National – which will be the key drivers for New Zealand’s political future – should be talking.

If there is too little time to get a sensible outcome from the legislation before the election the two parties should agree to roll it over for the future Parliament to decide.

That will give New Zealand time to assess Australia’s forthcoming scheme and make sure that the Kiwi scheme stays compatible with our future economic competitiveness.

I think it would be madness to have the Select Committee report back on a NZ scheme, when by waiting just a month or two longer we can see details of the Australian scheme.

Fran O’Sullivan writes:

The Sydney Morning Herald’s Matt O’Sullivan joked “you only get one Helen Clark in your life” as he told the story of how Toll’s Paul Little stitched up the Kiwi Government for a whopping $665 million to buy back the nation’s trains and rail ferries.

Yes, we are no doubt the toast of the Australian business community for donating so much money to
them.

The reality is that Little’s $665 million Government-backed cheque is three times the valuation that Toll put on the trains and rail ferries when it launched its takeover for the financially stressed Tranz Rail in 2003.

Toll also gets to keep Tranzlink, the company’s NZ-based rail and road forwarding business, together with warehousing and contract logistics operations and gets a six-year rent-free period on its existing premises.

This is where they are very smart. They will still make money from sending freight over rail, and they know the Government will not put prices up because they want more use of rail.

It gets the profit-turning part of the business and despite the fact it was required to pump $100 million into new rolling stock under the agreement it reached with the Government in July 2003, much of what the Government has now bought on the taxpayers’ behalf is a mere hotch-potch of assets masquerading as a business.

I wonder who will be silly enough to accept appointment as a Director.

Surely the Government – as owner – would want the national railway to at the very least break even? The proposed state-owned enterprise may not have to post a dividend and commercial returns to shareholders (like Toll has to) but the reality is that unless some strong financial disciplines are instituted it will simply be another sump-hole for taxpayer funds for years to come.

The dividend policy, if there is one, will be interesting.

The problem is that this is really an election year move by the Labour-led Government to try and make ownership of state assets a campaign issue.

If the Government was truly serious about strengthening the role sustainable transport will play in a carbon-constrained future it would not have stymied plans for regional councils to apply local fuels taxes to fund projects like the $500 million proposal to electrify the Auckland suburban rail network.

As it is it has mopped up an out-of-date railway with taxpayers’ cash – but effectively put a blocker in the way of proposals that would get more people out of cars.

Not a very bright outcome really.

Very astute. Helen giveth to the environment on one hand and taketh on the other.

Fran O’Sullivan calls on Michael Cullen to intervene to make sure the suite of climate change measures being worked on  does not seriously damage the economy:

Finance Minister Michael Cullen now has all the ammunition he needs to force an urgent rethink on New Zealand’s controversial suite of climate change policies before the economy suffers serious damage.

Cullen doesn’t say so in public. But it’s well known he has growing concerns over the zealous approach his Cabinet colleague, David Parker, continues to take to climate change in the face of obvious policy defects.

New Zealand is already heading towards economic recession. Increasing power and fuel prices further to curb the country’s growing greenhouse gas emissions issue – while farmers make the problem bigger by continuing to expand agriculture emissions – is sheer madness.

Households, already suffering from rising mortgage costs, fuel and food bills, will not vote for a government planning to increase their financial pain next year by introducing a scheme which will impact on their budgets, while farmers escape their share of the cost burden until 2013.

I am not just saying this to make trouble, but I do speak to quite a few people working in the industries trying to get changes and almost universally they are full of praise for Cullen’s understanding of the issues and problems, and equally full of disdain for David Parker who is described in terms best not repeated.

There is also looming trouble with power shortages:

Adding to the political angst will be the mounting problems caused by the lack of rainfall this summer.

The heat can only intensify if ordinary householders are slapped with escalating power bills this winter – or electricity cuts – as power suppliers ration dwindling electricity supplies.

Yesterday’s announcement that the major NZ-based manufacturer Rio Tinto, which owns the Tiwai Pt aluminium smelter, is cutting back production in the face of potential brownouts – wood pulp producer Pan Pac may follow – has brought home the absurdity of Parker’s other key decision to enforce a 10-year moratorium on new base load thermal generation.

There is a now a risk that major local businesses, which are not location-dependent, will shift production offshore unless the Government puts security of future power supply back at the top of its priority list. All this suggests that the Government needs to get to grips with cold reality.

New Zealand does need to address climate change issues. But not in a lopsided fashion where ordinary folk – and smaller businesses – feel the brunt first.

The Government has made it to hard to construct new power generation, that it will not be the rain alone to blame if ther are shortages.

Fran O’Sullivan looks at the decision by F&P to shift its Dunedin production line overseas.

Chairman Gary Paykel has had plenty to say, largely behind scenes, about the difficulty of running internationally competitive manufacturing export businesses from countries that pay First World labour costs, are distant from the world’s major consumer markets, have outrageously uncompetitive transport costs and, in particular, are slammed by a crazy monetary policy which, in New Zealand’s case has had our dollar rubbing up at US80c for far too long.

There seems a degree of inevitability.

But despite his warnings and those of other manufacturers the Government did nothing major to offset the situation, despite labelling 2007 Export Year. It could have explored a special tax rate, as suggested by New Zealand First and United Future, to gear business towards increasing its export footprint offshore from manufacturing bases here. But didn’t.

It could also have cut Government spending, as the OECD suggested, to take the pressure off monetary policy. But didn’t.

The New Zealand dollar has appreciated 27 per cent against the greenback in the past two years. Investors are sucked in by interest rates that dwarf those in other OECD countries as the Reserve Bank tries to squeeze out inflationary pressure.

The Government can not stop individual manufacturers making decisions as to what is best for them. But they can play a significant role in setting an environment which is friendly for businesses to prosper.

New Zealand manufacturing is not dead – far from it. Statistics New Zealand’s manufacturing survey for the December quarter showed total manufacturing sales increased 8.3 per cent and manufacturing volumes rose 3.4 per cent.

But the ability of manufacturers to withstand higher compliance costs, such as the KiwiSaver superannuation phase-in, will get tougher if the exchange rate persists at current levels.

Every extra cost is what may push an employer and manufacturer past the tipping point.

But the reality is that Fisher & Paykel’s move is also a consequence of globalisation. The New Zealand Institute’s David Skilling has promoted the necessity for more businesses to go offshore and relocate closer to markets.

Skilling’s weightless economy is predicated on the notion that if New Zealand keeps the brains trust here – the designers and engineers who create the products and the company headquarters – New Zealand will benefit.

That is the likely best future for us. China is becoming or has become the world’s manufacturer. We need to specialise in areas where we have a comparative advantage.

Denis Welch blogs his reaction to Labour’s song:

I do wish they wouldn’t sing at Labour Party conferences. Not in public, anyway. One glimpse on the television news of Ruth Dyson, Maryan Street and friends singing an anti-John-Key parody of “The Gambler” onstage at the latest conference was enough to have me hiding my head under the sofa cushions. Not only was it embarrassingly in-house, it exposed Labour as caring just a bit too much about Key. Boy, they must be scared of him. If they are so scared, they should find subtler ways of demonizing him.

Fran O’Sullivan gets musical in response:

“On a chilly autumn morning in a Government going nowhere, Helen met Michael the Gambler; caustic and grim.

“When Helen saw that people were suffering, stung by rising food prices and not able to pay their bills,

“The PM said, Michael, you’ll finally have to empty all your tills.

“Michael said, Helen, I’ve made a life out of gambling other people’s money, not caring where it came from, or who would lose their job.

“But this year I’ll let them keep back some of their taxes. I promise not to be churlish – I know there’s an election coming and I’ll be ready every day, to flip when you say flop.”

Chorus (sung by Fisher & Paykel choir):

“You’ve got to know not to trust them, not to believe them, know what they tell you, won’t be the truth,

“We can’t let them run the country, cos they’re just not able … “.

And if you think that is bad, you really don’t want to hear what was played on Classic Hits FM. Anyway Fran pulls no punches:

This bastardised Rogers’ ditty is not particularly nice.

But what else does the Government expect after the pathetic sight of three caterwauling female Cabinet ministers tunelessly hammering out their own bastard version of the Rogers hit to slag off John Key at the Labour Party congress?

The three ministers: Ruth Dyson (labour), Maryan Street (housing) and Steve Chadwick (conservation and women’s affairs) will be in the front-line as New Zealand families continue to be hit by the rising cost of living and the loss of more jobs overseas, while the persistently high New Zealand dollar robs most exporters of their profitability.

But instead of using their party congress to tackle major systemic issues like food security and New Zealand’s monetary policy regime, they burst into trivia.

A party’s election year congress is not a minor event. It is probably the third most important event for a party after the campaign opening and closing.  It is an opportunity to get you campaign messages away. Instead all people will now recall is the song and the fire alarm.