Small on Labour’s interest rate policy

March 20th, 2016 at 2:00 pm by David Farrar

Vernon Small sums it up well:


Well, It seems rough to criticise an Opposition, stranded around 30 per cent in the polls, for trying to make a splash. Yet while it wins full marks for backing the battlers and exploiting the bankers’ discomfort, its brain explosions quite simply took it over the edge.

Little is having these brain explosions on a reasonably regular basis now.

Small on ACT’s tax policy

April 10th, 2015 at 2:00 pm by David Farrar

Vernon Small writes:

Sound like a good idea? Tick.

It’s fair. Tick.

It’s a tax cut. Where do we sign?

It’s a politician’s dream policy? Ah, maybe not so much.

ACT and leader David Seymour have in recent weeks hung their political hats on promoting the thoroughly commendable policy of indexing tax thresholds to inflation. 

True, it’s not exactly a Roger Douglas-esque call to arms. “Trash that wussy progressively tax and bring in a flat rate across the board!”

But for a party that must choose carefully when to kick the Government in the slats – and for one that believes in less tax and a smaller state – it is a canny option.  

I agree. It benefits basically everyone who is in employment.

ACT is right on a couple of scores, though.

If it is to be done it’s better it is done now when inflation is low and the impact on the Government’s books is small, though not cost free. English has recently lamented how the low inflation rate, and therefore the lack of extra inflation-driven tax revenue, has made it harder to reach his surplus target  

And the nice thing about a law indexing the tax rates to inflation, is that a left Government can’t use high inflation as a back door way to boost tax revenue.

10 things to watch in politics

February 10th, 2015 at 1:00 pm by David Farrar

Vernon Small lists 10 things politicians and pundits are watching:

  1. Key’s speech
  2. Little Progress
  3. The Sabin Saga
  4. Iraq and IS
  5. Andrew’s Helpers
  6. The Majority
  7. The Green Shoots
  8. The Crusher
  9. The Numbers
  10. The Look

The sad thing is that eight out of 10 of those things are process issues rather than substantive policy issues. The two two substantive ones are Islamic State and the Budget (numbers).

Vernon Small on the Labour circus

October 16th, 2014 at 10:00 am by David Farrar

Vernon Small writes at Stuff:

By rights the political debate should be focused on the Government’s handling of two things.

How does it meet its self- imposed need to do something alongside traditional allies and friends in Iraq and Syria without getting too deeply embroiled in the war against Islamic State?

And how will John Key make a dent in the number of children in poverty, given the Government’s pre-eminent focus on work as the best route out of poverty? …

But then along came Andrew Little, Nanaia Mahuta, David Shearer and the whole Labour three-ringed circus to demand its place in the limelight.

Don’t forget David Parker who wasn’t standing and then did stand.

Just what Shearer, a former leader, hoped to achieve with his frustration-download is hard to tell.

He seemed to have an irony bypass attacking David Cunliffe, his supporters, the union voting strength and even Labour’s brand – all in the name of a call for party unity.

He probably has every right to feel aggrieved at Cunliffe’s behaviour at the 2012 annual conference, though Cunliffe continues to deny any involvement in a coup or intent to undermine him.

But to argue Cunliffe should have stayed in the race for leader in order to be defeated, as part of a scenario that would take him out of contention in perpetuity?

It all smacked of a stake through the heart – of taking revenge a kilometre too far.

He was right that Cunliffe’s backers in the blogosphere were off the wall, painting anyone but Cunliffe as a dangerous conservative running dog in harness with the mainstream media.

Danyl McL also has an opinion on how the Labour-aligned blogs are doing more harm than good to the left.

Also, Labour’s Maori caucus is asserting itself as a significant proportion of Labour’s reduced 32-person caucus.

Party sources say it is seeking greater autonomy within the caucus, and is even arguing for a share of research and other resources.

Oh that would be fun. A semi-autonomous caucus within a caucus. So if they formed Government, would they also be a semi-autonomous government within the Government?


Small on Labour leadership

October 9th, 2014 at 12:00 pm by David Farrar

Vernon Small writes:

Cunliffe cannot possibly be the answer. Leading the party to a historic defeat is one reason.

Having not much more than a handful of first preferences in the caucus ought to be another.

The lack of any public (as opposed to party activist) enthusiasm for him is a third.

A return to Shearer ought to be unthinkable. He has the back story of bravery, can do the statesman thing and is formidable on foreign affairs.

But he still has not mastered the fatal hesitancy when dealing with other topics that dogged him through his leadership.

Like Cunliffe he would mark a return to the past.

Stuart Nash and Kelvin Davis have also been mooted. But they are too inexperienced and come from too far back in the caucus.

They may be the dream of a faction of the caucus, notably the ones who were enamoured of Jones, but neither is a viable choice at this stage.

So who?

There seems to be a growing expectation then, that whoever stands Robertson will win.

BUT Robertson also comes with a problem. Not his gay-ness, though for some it is a still an issue. Some in the party are concerned that conservative voters, especially Pasifika ones in South Auckland, would rebel and may even start their own party if Robertson is chosen.

New Zealanders are likely to be more tolerant than many in Labour and the unions think, but it is playing on some minds.

A bigger difficulty for him, though, is not caucus, confidence or competence . . . it’s speaking to voters in an everyday way, stripped of platitudes and bureau-speak. If a consensus does emerge it may be around him, and that may be the safest option.

Labour can ill-afford another mis-start. But he has work to do to present a coherent “vision” for the party and the country in a way that speaks to everyone.

Grant’s biggest challenge will be convincing New Zealanders that someone who has never spent a day working in the private sector (well post study anyway) can lead a Government with competent economic management.

But if we are to suffer a primary race, is there a third player who could energise it and offer a genuine alternative to a hackneyed run-off?

David Parker has been there before and pulled out, but his speech to the Labour conference was a surprise package that had many in the party sitting up and taking notice.

He manages to espouse Labour values while steering away from identity politics.

There is a lot of pressure on Parker to stand. He’s pulled out or refused twice before.

Andrew Little – a former union boss and party president – could energise the troops, would be an easy sell to the unions and speaks to the Left and Right of the party from Labour’s solar plexus.

He is also respected in business circles and that can only be good for fund-raising.

But at this stage he would probably draw fewer first preference votes in caucus than Cunliffe.

Little could potentially win, but if has the support of just five MPs or so, then he risks also looking like a leader without his team behind him.

So the best outcome for Labour? Robertson as leader, with caveats.

Little, Parker and Jacinda Ardern providing the deputy, finance and social policy leadership.

The only thing missing from that is a prominent role for any Maori and Pasifika MPs to reflect their importance and loyalty to Labour.

Two at least must be on the front bench when the dust settles after the leadership race.

Davis and Sepuloni?

Reaction to Jones quitting

April 23rd, 2014 at 1:00 pm by David Farrar

John Armstrong writes:

Shane Jones’ shock decision to quit as a Labour MP will lead voters to draw one conclusion and one conclusion only: that he thinks Labour cannot win the September general election.

His departure is close to an unmitigated disaster for Labour. For starters, unlike the bulk of his colleagues, Jones could reach into segments of the vote – especially blue-collar males – who have switched off Labour. He was in the process of switching those traditional relationships back on.

So why did he go?

He was a major weapon in helping Labour to win back more of the Maori seats.

Perhaps of most significance, Labour has lost the one man who would have acted as the essential go-between in securing Winston Peters’ signature on a post-election coalition or co-operation agreement between Labour and New Zealand First which enabled Labour to govern.

Jones, however, may have seen himself ending up as a paralysed economic development minister in a Labour-Greens coalition which saw him having to constantly battle on behalf of any project with environmental repercussions.

Jones at best would have been the symbolic Minister with Russel  Norman having the veto.

He might not have intended it, but his leaving is also a massive blow to Labour’s morale at one of the worst possible times – just five months before election day when the party is endeavouring to motivate its membership to go door-knocking to get out the Labour vote.

The question is, why not stay until  the election?

Vernon Small writes:

 Disarray. There is no other word to describe the mess the Labour Party plunged into last night.

Not only did it have to come to terms with the loss of one of its strongest performers in Shane Jones, the party seemed to freeze like a possum in the headlights.

Press secretaries were either unable to help, unhelpful or offline, and party president Moira Coatsworth and secretary Tim Barnett initially went to ground.

Former leader David Shearer was gracious enough to confirm he knew of the resignation, but other MPs said it was a “bolt from the blue” and “gutting” before a gagging order went around the caucus.

Poor old Matt is earning his money!

If anything was designed to scream “crisis” it was this. Jones will be a serious loss to the party.

He has strong blue collar crossover appeal to Pakeha and Maori, and in the regions.

Who will now be leader of Labour’s Maori caucus? Nanaia Mahuta?

There is an upside in Labour getting Kelvin Davis back, who many people (including myself) rate. However he does not have the profile, mana or connections that Jones did.

In a Herald story:

Dover Samuels, a former MP and close friend to Mr Jones, said the Labour Party should take some of the blame for failing to keep him.

“He always pointed out to the Labour Party that if you didn’t take middle New Zealand with you you will be in the Siberian ring of the Opposition for the rest of your life. And I think, sadly, they didn’t hear that. They’ve got their own agendas.” 

Labour’s lurch to the left has claimed another victim.

Strike Three

March 5th, 2014 at 7:00 am by David Farrar

Vernon Small writes at Stuff:

Three months and three gaffes.

It is an understatement to say it has not been the greatest start to election year for Labour leader David Cunliffe.

The slip over the baby bonus, by failing to disclose in his speech that it would not be paid on top of parental leave, took much of the wind out of his January sails.

It also deflected attention from a $500 million spending pledge that Labour had hoped would set the agenda.

No sooner was the House back in February than the $2.5m property-owning man was attacking Prime Minister John Key for living in a leafy suburb and defining his own mansion as a doer-upper and his own situation as middle of the road.

The climb-down came at the weekend.

This morning he has admitted it had been wrong to set up a trust for donations to his leadership bid. (If the cost was about $20,000 for his leadership campaign, why seek donations at all?)

That from a man and a party that has attacked National’s old habit of funneling donations through entities like the Waitemata Trust and joined in the condemnation of Finance Minister Bill English using a trust structure for his Wellington pile.

Cue, too, unwelcome echoes of former Labour leader David Shearer’s memory lapse over his undeclared United States bank account.

One gaffe might be unfortunate, two careless.

Three in three months is bordering on accident-prone.

Making Shearer look like a safe pair of hands.

Kiwi Poll Guy looks at what has been happening on iPredict:

iPredict is running a contract on National winning the 2014 election.  It was originally launched on 26 October 2011, a month before the 2011 General Election, and has been floating around between $0.40 and $0.60 since then.  It’s only in the last month that the stock has moved significantly beyond $0.60, so it’s worth taking a quick look.  Full trade history is taken from Luke Howison’s excellent API interface for iPredict, and then tweaked with a bit of Excel.

As shown in the graph below, the increase in price since has been pretty constant since it was trading at about $0.45 in October 2013, about a month or so after David Cunliffe was elected leader of the Labour Party.  The average daily price hasn’t dropped below $0.60 since 8 February 2014.

And last night was at 68.5%. In four months the probability of National winning the election has increased by over 20%. That is a huge movement, and while some of it is related to the economy and National’s improved performance, a fair bit must be about Labour not looking anywhere near ready to govern.

The Dom Post editorial:

David Cunliffe has made a hash of the donations issue. He was slow to admit that he used a trust to hide those who gave to his campaign for the Labour leadership.

He was slow to admit that this was problematic. Now he says he doesn’t think ”in hindsight” the trust ”fully represents the values” he wants to bring to the job of Labour leader.

These are awkward phrases which reveal a deeper conflict. The brutal truth is that hiding the donations inside a trust opens Mr Cunliffe to charges of hypocrisy. This is partly because he belonged to the Labour-led government which specifically outlawed the use of trusts to hide political donations. And hiding election donations is against basic principles of openness.

Now he has disclosed the names of three donors but not of others who he says required anonymity. You would think this kind of thing would have set off alarm bells for an aspiring Opposition leader. Hadn’t he heard the fuss caused by other ”anonymous political donations?”

This is what astonished me – that it never rang alarm bells for him, or any of his team. How could anyone in Labour think a secret trust was a good idea after they spent the last decade railing against them. Cunliffe and Presland had both railed against them personally. Either they’e incredibly stupid or their previous opposition to secret trusts was fake – they’re only against other people having one.

The Labour leader got into a similar pickle when he attacked Prime Minister John Key for living in a big house in a wealthy suburb. So does Mr Cunliffe, and once again the critics called him a hypocrite. It didn’t help that he then blustered about his house being a ”do-upper”, the worst house in the (very expensive) street.

This cuts no ice at all. Most voters see little difference between Mr Cunliffe’s $2.5m house in Herne Bay and John Key’s $10m house in Parnell. Both are by ordinary standards opulent homes owned by obviously wealthy people. Mr Cunliffe made an ass of himself by posing as the champion of the proletariat against the toff.

He needs to decide who he really is and what he stands for.

Here’s the trouble. If you need to “decide”, then it isn’t real.

Small on Robertson

August 30th, 2013 at 7:00 am by David Farrar

Vernon Small at Stuff reports:

If the party believes it can win by an incremental improvement, replacing an inarticulate but decent man with a safe pair of hands who can front John Key without making any major slips, then it will choose Grant Robertson.

If it thinks it just needs to remove the negative and turn the focus back on the policy mix and the broader front bench, aiming to pick up a percentage point or five to allow it to form a Left-wing government, in harness with the Greens on 10-14 per cent, then the Wellington Central candidate is its man.

But if it thinks it needs to take risks, that whatever the policy mix a showman, an impresario is needed, then it will opt for David Cunliffe.

If it thinks a slow and steady climb is beyond it and the Labour Party needs a jolt, a risk – even one that could backfire and kill off its chance of a victory in 2014 – then the MP for New Lynn is the “peacock or feather duster” option it will choose.

This is pretty much what I have said also. Robertson is the safer option, but Cunliffe has greater potential reward – and risk.

Mr Cunliffe has clearly made the early running.

While Mr Robertson chose a low-key launch, including an interview in a strangely empty studio, and the third wheel Shane Jones took an even more random approach, Mr Cunliffe went for the doctor.

His launch, with cheering fans, his team of supporting MPs and a tub- thumping speech, could not have made the risks and rewards of choosing Mr Cunliffe clearer.

It made a far greater impact and will have energised his supporters, including his social media crew.

But it sailed dangerously close, if not over, the line between upbeat hoopla and a cringeworthy revival meeting lacking authenticity.

What you thought of the launch probably varied by your interest in politics.

To hardcore left activists, the launch was the Messiah in action. They loved seeing the chosen one in action. And there is a fairly large segment of the NZ population that would respond to a forceful charismatic speaker saying he is going to tax the rich and send the PM off to Hawaii.

To people who are very actively involved in politics (journalists, MPs, staff, former staff) it was somewhere between cringeworthy and hideous, and as Small says shows the risk of Cunliffe.

What is unknown is how it would go down with those who are not activists or “beltway” but just families at home not too happy with the Government and wondering if there is a better alternative.

My feeling is that it wouldn’t go down that well, or at least not if done to that extreme. However a more toned down version could well resonate.

Cunliffe is many things, and one of them is intelligent and he learns from his mistakes. I doubt we’d see a repeat of his campaign launch, hence why I think he is still Labour’s best bet for them.

However as Small says, he is a risk. The infamous speech at the Avondale Markets is a reminder that he can and does over-extend.

Small on Shearer

July 29th, 2013 at 2:25 pm by David Farrar

Vernon Small writes at Stuff:

The only thing saving him is the refusal of the Shearer-sceptics to coalesce around a single alternative.

The blokish, more conservative MPs can’t yet bring themselves to back deputy leader Grant Robertson.

The anti-Cunliffe group may have been expanded by his disloyalty at the time of last year’s annual conference although, to be fair, he has been keeping his head down and playing the team game in recent months.

Former union boss and party president Andrew Little has not set the world alight, nor gathered a salon of close supporters and he is seen as unready.

So the status quo remains.

But at times it feels as if the rival factions are in some macabre version of the movie Weekend at Bernie’s lugging around a political corpse because they are afraid to let go of one arm in case he falls over and the other side grabs power.

What a great analogy!

Unless Mr Shearer stepped aside and an heir was anointed – something the wider party would likely balk at – a spill that late in the year would trigger a primary runoff that would cascade into election year, further weakening Labour’s prospects.

Yes, Mr Shearer needs to lift his game, but he is not stupid. He surely gets the sense of urgency. Whether he can change is the open question.

The sceptics also have to play their part. They must either back him or back off. At the moment they are going around in circles. “It isn’t working, we need to move, he is not up to it, but I am not voting for . . .” And so nothing continues to happen and Mr Shearer’s confidence is sapped further.

Of course, events across the Tasman show that these things can never be finally put to bed until success silences the critics.

But if Labour wants to get back in the game, the leadership circus must be brought to a climax, the sooner the better.

The next TV polls will be in September probably. That may be the crucial month.

Should public service ceos be able to be sacked at will?

March 10th, 2013 at 10:00 am by David Farrar

Vernon Small writes:

Perhaps we should thank former Ministry of Education head Lesley Longstone for only stinging taxpayers $425,000 as a severance package.

Yes it is a lot of money, especially to onlookers on the minimum wage, the average wage or even anyone outside the top echelons of pay packets.

Given the circumstances of her departure – just over a year into a five-year term and as a result of a clash of personalities with her minister – she could have asked for more. …

So given that, and the public revulsion at such pay-outs, it is time to look again at how those contracts are written.

Setting aside for now the fact it would have been cheaper all round (and arguably fairer) to have shifted Parata, rather than Longstone, it’s time to dispense with the fiction that state sector chief executives are not on grace and favour contracts – essentially at the behest of their minister.

The Longstone example makes it as clear as day that a CEO cannot stay on if they fall out badly with their minister. But the fiction forces the SSC to dance on the head of a pin over the reason why they go, and the payouts that follow are eye-watering to most people.

It is true that if a Minister loses confidence in a CEO, then one of them has to go. And in a democracy it is the civil servant, not the Minister.

There are strong arguments that can be advanced about the quality of chief executives that might be recruited, and state sector purists will choke into their lattes at any move away from the notional independent public servant.

But there are precedents. Press secretaries and political advisers in politicians’ offices are on the public payroll but are on so-called “events-based contracts”. The “events” are essentially the continuation of the MP or minister in that office but they also include a clear parting of the ways between a minister and a press secretary. Payouts are modest. …

Acknowledging – and embracing – the reality that senior public servants are to all intents and purposes there at the will of their minister is an argument that has some resonance among some MPs too, but from a different perspective.

As they see it, politicians are elected and they should expect their decisions to be implemented. Something akin to an “events-based” chief executive could eliminate deliberate attempts to frustrate the will of their minister or the Cabinet.

I can see the attraction of an events based contract for CEOs, but there is a reason I think they would do more harm than good.

They would make it too easy for a Minister to dispense with a CEO. You only want the CEO to go if absolutely necessary. And as part of that, you actually want the departure of a CEO to cause political pain for a Government – which a payout causes.

If you had a clause that just allows a CEO to be sacked with three months notice, then I think you’d see a far higher turnover of CEOs – and I don’t think that is necessarily a good thing.

I don’t like paying $425,000 out for premature termination of a contract. But education is a $10 billion budget. If we have to pay out 0.05% of the budget to get a Ministerial-CEO relationship that works, then it is worth it. Of course some will argue the wrong person went – but Ministers are accountable through elections, and National will be judged in 2014 on how it has done overall.

So what is the happy compromise that would cut back on payouts by establishing events-based contracts; acknowledge the “political” nature of some public service roles – and the need to have someone driving hard to implement government policy; but maintain a flow of contestable advice?

One option would be to insist on a competence-based (not purely political) selection process where the nominee is examined by a select committee, much as the United States does with its Senate confirmation hearings.

That would allow the government to win the day, but in the process unearth incompetence and expose any skeletons to the public eye.

I’m not sure select committee hearings would un-earth any incompetence.

If we were to have select committee hearings for government CEOs then we should go the whole hog of the US model where the Government of the day appoints the entire senior management of the government departments. Of course that has some drawbacks also!

Small gives first blood to National

January 31st, 2013 at 3:00 pm by David Farrar

Vernon Small writes at Stuff:

Chalk up the first round of the political year to National.

Not just because John Key’s “state of the nation” speech delivered some actual news, in the shape of a revamped apprenticeship scheme (albeit using recycled money), against a rhetoric-heavy but news-lite offering from David Shearer.

More to the point National has grasped the early initiative by revamping the warrant of fitness regime and signalling an end to daily postal deliveries, two decisions that take another step into the 21st century.

The WOF decision will be popular, despite the self-interested protestations of the motor trade lobby.

Associate Transport Minister Simon Bridges was on the right side of the voters, and Labour risked getting on the wrong side by not giving its unequivocal backing.

Yep it was clearly a sensible decision, and smart oppositions should know they don’t have to disagree with the Government on everything.

Where Labour does have momentum is over their popular housing policy, although Shearer missed a trick by not using his keynote speech last Sunday to flesh out more detail. …

But Labour can only ride the wave for so long. Soon it will need to bring some more specifics to the table if it wants to head off National’s attacks.

Tossing around promises to deliver affordable houses at an “average” cost of $300,00 across the country, or confident assurances that prices will come down if developers can build in bulk, can only go so far.

Perhaps its promised “housing conference” will do the trick but that is still below the horizon.

At some point – and that time is fast approaching – Labour will need to give some concrete examples. If not plans, locations, land prices and costings, then something akin to proof if it wants to wrest the initiative back off National.

I await the concrete examples with great interest.

Small says Labour leadership challenge in February if Shearer flops at conference

November 10th, 2012 at 11:50 am by David Farrar

Vernon Small writes in Dom Post:

Just short of his first anniversary as leader, David Shearer delivers his first speech to a Labour Party conference next week.

But as storm clouds gather over his leadership, it is shaping as possibly his last.

Members, activists and unionists contacted for this article said over and over that the speech at the Ellerslie racecourse conference centre next Sunday was crucial to Shearer’s grip on the leadership.

His first priority is to convince the party rank and file that “he has what it takes” – and those grassroots members will be looking for a hard-hitting address taking the fight to the Government while outlining a clear and personal view of where he intends to take Labour.

Unless he can carry that off, the groundswell in the party is set to break into the open with a push for a leadership challenge, most likely when the caucus meets in February – or even sooner, according to one business lobbyist in close contact with the party.

That’s a big call.

Personally I think Shearer will do fine at the conference, which will subdue the talk. I’ve seen him do speeches, and he has few problems there. His weakness is press conferences and interviews, which are a very different challenge.

According to a senior MP, who backed Shearer in last year’s leadership vote, most inside Labour are withholding judgment until they see his performance at the conference.

But there is wide agreement Labour and Shearer will not be able to avoid a focus on his performance, not least because key business at the Ellerslie conference centre includes a revamp of party rules.

At issue is how candidates are chosen and ranked on the list – a potentiality explosive matter inside the party given the power of its union and sector group blocks.

But delegates will also vote to give unions and members a say in leadership votes. That has previously been the sole preserve of MPs in the caucus.

The draft proposal would require a two-thirds majority of MPs to trigger a leadership vote – a move that would be seen as entrenching the leader between general elections.

A rival option – to put the leadership to a vote if 40 per cent of MPs call for it – is seen as too destabilising and the party is likely to settle on the compromise of a 55 per cent threshold.

40% is too low and 67% too high, so the compromise looks sensible.

If the new rules get put in place, and then in February 55% of caucus say they want a change, we’ll see Cunliffe v Robertson for the leadership. Possible Little could stand also – not so much to win – but to become a powerbroker.

The members seem to most support Cunliffe, the unions Little and the caucus Robertson. The union support can be delivered pretty much as a bloc, so Cunliffe and Robertson will need to make some pledges to the unions to gain the leadership.

Small on Shearer

April 20th, 2012 at 1:00 pm by David Farrar

Vernon Small reports at Stuff:

Rather than slam the Government over paid parental leave, he talked compromise. Labour would look at phasing it in or lowering the costs in “a sincere effort to move something forward”.

Consensus, he said, was his first instinct.

It is a style Mr Shearer is making his brand; a reasonable man talking in a measured tone that rejects the politics of charisma.

This is one reason I like Shearer. I do think he is a reasonable man.

To the political media present – and in a warning to Labour, only three reporters made the short hop from Wellington – it was about as dull as a leader’s speech can get.

With the Government on the ropes over issues from the pokies deal with SkyCity to Crafar farm sales and asset sales, the soft-shoe approach is not without its critics.

There is no crisis yet, but there has been some internal arm-wrestling.

Chief of staff Stuart Nash has quit after just a few months in the pivotal role, mostly for personal reasons – a new baby and the commute from Napier. But insiders say he was ill-suited and clashed with chief press secretary Fran Mold over strategy. She pushed for a (relatively) higher profile, arguing the Greens and NZ First leader Winston Peters would fill the vacuum if Mr Shearer left one.

Finding the right replacement for Mr Nash is crucial, especially with the key party secretary job expected to be vacant soon when Chris Flatt leaves.

There is no clear favourite for either job, although policy guru Jordan Carter is tipped as secretary, while the Wellington rumour mill favours Wellington lawyer Alastair Cameron as chief of staff.

Both are closer to deputy leader Grant Robertson than Mr Shearer.

And arguably also closer to Cunliife.

It is too early to say Shearer will be rolled, but it is obvious from reading around the left-wing blogs that there  is significant discontent amongst the activist base – especially in Auckland.

What is interesting is that the Auckland activists are trying to lump Robertson in with Shearer, so that if Shearer falls, Cunliffe will be able to win a leadership battle against Robertson.

Cunliffe has come back from his leadership loss revitalised and has been impressing many in Labour. I think Robertson would still beat Cunliffe in a contest, but the “Anyone but Cunliffe” faction has diminished in recent months.

If there is any change, I would expect it to occur either late 2012 or at the latest February 2013. If Shearer makes it past that, then I think it would be too late for a change.

Small on Maori Party stand off

February 1st, 2012 at 9:00 am by David Farrar

An insightful column by Vernon Small:

    Which brings us back to the current stand-off.

    Yes, it’s about asset sales, the Treaty and the Government’s poor timing in the week leading up to Waitangi Day.

    But it is also, and mainly, about the Maori Party’s positioning.

    Goaded by Mr Harawira, and needing to deny it is National’s poodle, the party has come out swinging – and not for the first time in recent days. …

    Well, last year the Maori Party argued it needed to be at the table with National to be effective.

    But Labour, Mana, the Greens and NZ First feasted on its votes, despite its public stand over Auckland council seats and the foreshore law.

    Mr Key has shown the way forward in the current stoush; a clause that makes the Crown’s Treaty obligations clear while leaving private investors out of the mix.

    It remains to be seen whether the Maori Party will reluctantly claim that deal as a partial victory or continue to pound the table.

    However, the appearance of disunity is not necessarily instability – though it is no surprise Labour is talking that up.

    It will likely take a lot more goading from Mr Harawira before Dr Sharples and Mrs Turia finally push back their chairs and leave.

Things would be much more difficult if National had one fewer seat, and could not govern without the Maori Party. National should hope that its MPs in marginal seats are all in good health!

Vernon Small on Kiwibank

November 23rd, 2011 at 1:09 pm by David Farrar

Vernon Small writes:

I am as mad as hell and I’m not going to take it any more.

Ok, that might be going a bit far.

I admit I’m not one to get especially outraged by political spin – or to be surprised that an election campaign will bring out the worst lies, half-truths and statistics.

But with just three days to go, here are the top five things I am sick of hearing from politicians, press releases or “loyal” supporters.

1) National will sell Kiwibank

No it won’t. Certainly not in the next three years – quite the reverse. in fact if it has any intention of winning in 2014 it would be nuts to even try, and frankly it is a bit soon to be fighting the 2014 campaign.

This is Labour’s latest lie. This is despite John Key saying National will never sell Kiwibank while he is Prime Minister. Labour can’t win on the truth.

The other four things Vernon is sick of hearing is:

  • The after-tax wage gap with Australia has closed
  • The number of people leaving for Australia is/was better/worse under Labour/National
  • There is a $16 billion hole in Labour’s fiscal plans
  • Labour will only borrow an extra $4b
  • Winston Peters’ voters are dying out

I’m pleased to see that Vernon’s estimate of extra debt under Labour is close to mine. I make it $12b and Vernon says “about $10-12b”.

Of course that is just Labour’s extra debt. You have to add on the billions to appears Greens, NZ First and Mana also.

Hager’s book

September 2nd, 2011 at 9:11 am by David Farrar

Two different takes on Nicky Hager’s latest book. John Armstong writes in the Herald:

Those who think Nicky Hager is just another left-wing stirrer and dismiss his latest book accordingly should think again.

Likewise, the country’s politicians should read Other People’s Wars before condemning it.

Whatever Hager’s motive for investigating New Zealand’s contribution over the past decade to the United States-led “war on terror”, it is pretty irrelevant when placed alongside the mountain of previously confidential and very disturbing information his assiduous research and inquiries have uncovered.

With the help of well-placed informants and thousands of leaked documents, Hager exposes the cynical manner in which the Defence Force has purposely misled the public by omission of pertinent facts and public relations flannel.

This is particularly the case with regard to the “candyfloss” image the military has built around the deployment of New Zealand soldiers in the Bamiyan province of Afghanistan.

That image is of our soldiers acting more like peacekeepers armed with nothing more dangerous than a shovel.

The last couple of paragraphs do resonate with me to a degree. People forget that Helen Clark sent soliders into both Iraq and Afghanistan. With the exception of the SAS deployment (which she simply wouldn’t talk about), they were portrayed as just being engineers and builders who happen to be soldiers. Their role we were told was purely to help the locals, and nothing to do with those nasty wars.

Fair enough. But the Defence Force has sought to paint this deployment in a completely different light. Hager has cut through that pretence with the evidence to prove what has always been surmised – that the real reason for such deployments was not to help the inhabitants of Bamiyan but to impress the hawks in Washington.

Hopefully it is a mixture of both, but I’ve never doubted that Clark sending troops to both Iraq and Afghanistan was about keeping the US and to a degree the UK happy.

Vernon Small has a different take at Stuff:

A speed read of Nicky Hager’s latest book shows his usual impressive access to detailed documents and meticulous sourcing.

The insiders’ claims about ministers being kept in the dark may be true; the SAS in particular is obsessive about secrecy to the point that even a description of the ceremony farewelling Corporal Doug Grant was refused.

But the lens Hager uses gives a different view of New Zealand’s base at Bamiyan than one gleaned from a week-long visit there last month.

For instance, he claims that, despite media visits and hundreds of soldiers passing through the base, the military managed to keep secret the fact that they shared the Bamiyan camp with a United States intelligence base.

In fact, I, and other reporters before me, were introduced to US intelligence and communications staff at Bamiyan and at other Kiwi forward bases and ate and chatted with them. The stars and stripes flies alongside the New Zealand flag at Bamiyan to advertise the US contingent.

I’ve said before that Hager has good research skills, but his failing is he sees (or portrays) everything as a conspiracy or deep dark secret.

It was not a surprise that New Zealand is plugged in to the US-Nato intelligence and communication system across the war-torn country. It is something this reporter was specifically briefed on, although with a request not to publish details for operational security reasons.

Suffice to say that, from my observations, the information Kiwi troops glean is far more extensive than anything that flows the other way. Was the CIA there? I don’t know, and Hager only surmises.

The links tell New Zealand forces where other coalition forces are operating and let them call in US air support, both key factors in a multi-national force. Problems getting air support were highlighted in the report on the attack that killed Lieutenant Timothy O’Donnell.

Sounds reasonable to me.

Hager also points to a lack of understanding among the public about the Kiwis’ role in Bamiyan; that coverage was all airbrushed PR spin showing “friendly New Zealand soldiers handing out gifts to smiling children, building schools and wells”.

He may have had a case in the early years.

But for almost three years now, after the 2009 attack on the base at Do Abe and the first Kiwi casualties caused the military to upgrade its armoured vehicles from Hiluxes to LAVs, there has been no shortage of coverage highlighting the risks and the dangers.

Far from trying to cover that up, the soldiers on the ground I talked to were eager for the New Zealand public to know they were fighting in a dangerous war zone.

I think this is right. Early on things were somewhat sugar-coated, but I think in recent years we’ve come to understand better how the Bamiyan mission is not some safe engineering operation.

Small on mediaworks

April 22nd, 2011 at 9:06 am by David Farrar

Vernon Small writes in in the Dom Post:

I come to defend Steven Joyce, not to bury him. In the fracas over the Government’s decision to let radio companies pay for their licences over five years, rather than pay $96 million up front, he has taken more than his fair share of unfair criticism.

Oh dear. I expect Vernon will now be pilloried on certain left wing blogs.

Suggestions that Mr Joyce, the communications and information technology minister, had some sort of conflict of interest in helping out the Brent Impey-led company (that Mr Joyce established) survives only till you know that Mr Joyce and Mr Impey are . . . errr . . . not close.

Mr Impey, with Canwest, led a successful “unfriendly takeover” of MediaWorks in 2001- that is, one bitterly opposed by Mr Joyce.

I was unaware of this, and not seen this in any other media. It is a good story that adds new facts to an issue.

The minister initially opposed any deal with the commercial radio sector. To protect himself further, he also sought advice from the Cabinet Office and was told he did not have a conflict of interest. It might have been wiser politically for him to step aside anyway, but that is miles away from any wrongdoing.

Those who have never actually worked in business (like most Labour MPs) have no real idea of what does and does not constitute a conflict of interest. They think that any affiliation or association what-so-ever means you must recuse yourself. This is not so. This would see the Minister of Finance unable to own a home, or the Minister of Agriculture unable to be a farmer.

Of course, it fits Labour’s narrative of a Government pandering to the few not the many, feathering the nest of its rich mates and acting as lobby-fodder for business.

But is Labour saying it wants a hands-off approach to business, whether or not that involves job losses?

WE SHALL never know what would have happened had MediaWorks been denied the payment relief and asked to stump up the full $42m at the end of 2009 – as advertising rates were falling, the economic outlook was bleak and banks were ultra-cautious about lending.

If one or more major media companies had failed, more than 1000 jobs could have been on the line. …

Mr Joyce is also blunt about the political fallout if the Government had said “get stuffed” and one of the big companies had collapsed. Once it was known the Government had rejected a deal at commercial interest rates with all the frequencies held as collateral, ministers would have been pilloried as hard-hearted, far-right, hands-off ideologues.

Is there a single person who doesn’t think Labour wouldn’t have done exactly what Vernon writes above, and lashed the Government for destroying jobs if it had refused the deferred payment scheme, and a major broadcaster collapsed?

Small on Labour

March 29th, 2011 at 2:02 pm by David Farrar

Vernon Small also provides advice for Labour:

Phil Goff’s leadership may not be on the line today at the shadow cabinet meeting in Dunedin, but no change is no longer an option.

That’s also a big call.

Looking again at the wider leadership team including Annette King and David Cunliffe and making a change there may be the answer.

Helen Clark did it in 1996 to shore up her leadership.

At the time her rivals did not have the numbers to roll her, but she recognised the concern in the party at its poor poll rating and knew she needed to act.

The result was her deputy and finance spokesman David Caygill hit the cutting room floor in favour of Michael Cullen, creating the leadership team that was so effective for Labour during nine years in office.

Politically that might work, even though it would be quite unfair. Goff is the one who has ballsed up so badly, and I don’t think King has done anything much wrong – we don’t know what she advised Goff. And the fact the incident happened at her house is not a reflection on her. There’s nothing wrong with having a colleague stay with you – in fact probably saves the taxpayer money.

But Annette is very loyal to Labour, and it is possible she could walk, to save Goff.

There is clearly a split between Goff and the party or at least president Andrew Little over the handling of the issue and the lack of communication. It goes deeper than the papering over of the cracks that occurred late on Sunday when the two finally talked about the issue.

Labour is in full fund-raising mode, made difficult by the current controversy. Its activists on websites and blogs are openly questioning the party’s direction and Mr Goff’s judgment. Its union backers and foot soldiers need to be motivated but are in danger of being demoralised.

Business as usual is simply not an option.

Meanwhile in a seperate galaxy, located well beyond the Andromeda Galaxy, Stuff reports that “Phil Goff has said the Darren Hughes affair has ‘strengthened’ his leadership”

You can’t make shit this good up.

Image courtesy of Iidiot/Savant.

The rise of Robertson

February 4th, 2011 at 10:00 am by David Farrar

Vernon Small writes:

The meteoric rise of Wellington Central MP Grant Robertson to Labour’s front bench will further fuel speculation that he could be a future leader of the party.

I’ve long said that I think Grant will become Labour Leader, and indeed probably even a Labour Prime Minister.

I don’t think he will be the next leader, but the one after that. He is young enough to be able to wait his time.

However, asked about his leadership ambitions before yesterday’s reshuffle, he said: “Every politician has got ambitions. Every politician … wants to be a minister but it is also really important to take one step at a time and not get too beyond yourself.”

Which is saying of course he wants to be Leader/PM, but one step at a time. Quite nice to have an MP not deny he has ambitions – after all most of them would like to be PM.

Small on Goff’s Gaffes

December 9th, 2010 at 4:00 pm by David Farrar

Vernon Small writes in the Dom Post:

Only the God of politics could have delivered Don Brash walking a plank when his party was preparing to dump him. It took the same divine intervention to make John Key say he was going to lead “a Labour Government” when some hardliners in his party were worrying his compromising style would create a “Labour-lite” administration.

The same evil deity had his sport with Labour leader Phil Goff this week. First it made him refer to his finance spokesman David Cunliffe as David Caygill – reminding anyone who can remember that far back that he was part of the 1980s Labour Government and the legacy that Labour has been so keen to distance itself from.

Then he shot himself squarely in the foot by saying at least he had not said he would be the leader of a Labour government.

Well, if you say so, Phil.

And that quote also made Page 2 of yesterday’s Dom Post. It has not been a good week with a no confidence letter from Te Atatu, a speech that flopped, two gaffes and now Manurewa at civil war and a possible by-election.

If Mr Goff wants to increase his extremely slim chances of an upset at the next election, the process is all too slow and too late.

Of course, the received wisdom is that oppositions should keep their policy powder dry till close to the election when voters are focused, the media are more even- handed between the government and the opposition and your best ideas cannot be stolen by your rivals.

But these are not normal times.

Mr Goff is a decent and able politician.

But he is up against perhaps the most popular prime minister in his lifetime. If he and Labour seriously think that in a presidential-style campaign he can shade Mr Key they are dreaming.

If they think he can be sold as the experienced solid alternative – when Miss Clark failed on that score – they have not been watching the crises Mr Key had to negotiate in his first two years as prime minister.

It amazes me how badly Labour under-estimate John Key. You think they will have learnt by now. National never liked Helen Clark, but they always had a healthy respect for her political abilities. Labour seems to believe their own (plagiarised from right wing blogs) slogans.

Labour’s slim hope is that National will lose the election through a series of unforeseen errors or disasters or a severe downturn in the economy.

And that is not impossible. Unlikely, but can’t be ruled out.

Goff needs to do a re-shuffle to have a better chance of victory. The entire front-bench are Ministers thrown out at the last election. Goff needs to promote to the front bench and second row new MPs such as Robertson, Hipkins, Nash, Curran, Twyford and Shearer etc.

Dom Post rates the first two years

November 27th, 2010 at 1:28 pm by David Farrar

In today’s Dominion Post, Vernon Small and John Hartevelt rate the high achievers and the casualties of the first tow years of the Government.Note the comments below are my extracts of what Vernon and John said – they are not my personal views.

Top of the Class

  1. John Key 8.5/10
  2. Simon Power 8.0/10 – they suggest he moves to Education
  3. Steven Joyce 7.5/10 – possible Finance Minister in the future
  4. Gerry Brownlee – has risen from defeat to become one of Govt’s best assets – they say he may be in line for deputy PM
  5. Tim Groser – 6.5/10 – a good example of why you have List MPs, doing an excellent job in trade


  • Richard Worth
  • Bill English over his housing allowance
  • Melissa Lee over Mt Albert
  • Aaron Gilmore over his CV
  • Pansy Wong over her travel


  • Anne Tolley 4.5/10 – valiantly trying against the powerful education unions
  • Rodney Hide – 4.0/10 – his imploding caucus
  • Georgina te Hehheu – 2.5/10 – what does she do?
  • Pansy Wong – 2.0/10 – even before she quit, they say she had sunk without trace

Rising Backbenchers

  • Craig Foss – favoured to narrowly beat his Hawke’s Bay colleague into Cabinet
  • Hekia Parata – a strong showing in Mana, and in her previous career
  • Chester Borrows – a solid Chairman of Justice & Electoral Committee
  • Amy Adams – has shone in the House

The Success Stories

  • The tax switch
  • A stable Government
  • Law & Order

Disasters and Pressure Points

  • The economy
  • The environment
  • Natural disasters

Feel free to comment on whether you agree or disagree, any additions you would make, and where?

The most obvious omission to me is Tony Ryall in the top of the class. I doubt a single MP would say he is not up there.

Small on Key

June 3rd, 2010 at 1:00 pm by David Farrar

Vernon Small writes:

It is hard to know whether to laugh, cry – or maybe cross your legs – when the prime minister is prepared to reveal off the cuff at a press conference that he has had a vasectomy.

Like his “joke” about being on the menu at a Tuhoe dinner, it has gone around the world, but this time he hit the right note.

It is testament to his extraordinary confidence and openness – unless you are so cynical as to think it was planned – that he is prepared to take such risks in the interest of a self-described “self- deprecating” joke.

His skill and wit may not be as sharp as David Lange’s, but he has the same ability to beguile his listeners. Unlike Lange, he rarely if ever turns his wit on others in a cruel way.

Which is one of the reasons he is very popular. I’ve never detected in Key the contempt and hatred for his opponents, that often exists amongst Prime Ministers.

It must be the cruellest cut of all for Labour that, at a time when the Government is on the back foot over so many issues – from the impact of the Budget on middle-income families to mining on conservation land to the seemingly transparent “blind trust” Mr Key’s lawyers have constructed for him – he can still ooze such easy ordinariness.

His approach – apparently instinctive – is not, as many would have it, simply a willingness to take calculated risks. It has now become an integral part of “brand Key”: ability mixed with the everyday; a man who can run the country and – that most valuable of attributes for many Kiwis – not be up himself.

I recall a few months after the election a couple of gallery journos saying how Key hasn’t changed at all since becoming Prime Minister. They were expecting him to do so, but he hadn’t.

If the normal rules of politics apply, Mr Key’s greatest asset will in time, as voters tire, become his greatest weakness. What is charming will become glib, what is light-hearted will become clownish and a light touch will become lightweight.

There is a risk there, but Key can also do serious. At business meetings especially I’ve seen him talk about business and economic issues with a level of detail I doubt any other PM could ever meet.

Small on Inflation

May 24th, 2010 at 2:23 pm by David Farrar

Vernon Small critically looks at Labour’s claims on inflation:

Labour’s Phil Goff and his inner circle had settled on attacking over the forecast spike in inflation, figuring there was a ready market for suggestions the tax cuts would be swallowed by rising prices.

But the case Labour has tried to make risks backfiring, because frankly, the evidence looks a bit fishy.

I had planned to write along these lines, but glad Vernon has done it for me.

The Treasury forecasts that inflation will surge to 5.9 per cent next year before falling back and staying at 2.4 per cent for three years; well within the Reserve Bank’s 1 per cent to 3 per cent band. It also notes that “underlying” inflation would remain relatively subdued and have a limited impact on interest rates

Next year’s spike includes 2 per cent from the rise in GST, which is compensated for by tax cuts and increases in superannuation, benefits and support for others on state-supported incomes.

More than compensated for.

It also includes a contribution of 0.5 per cent from the rise in tobacco excise (that Labour enthusiastically supported in Parliament)

Which will only affect smokers, and for those whom quit smoking will save them money.

and another 0.4 per cent from the fuel and power prices associated with the Emissions Trading Scheme, which Labour would implement with bells on, pushing inflation much higher. (In any case, the inflationary impact of the ETS was already included in the December half-yearly update.)

Now this is crucial. Quite a few people are unhappy at the impact of the modified ETS scheme, which adds 0.4% on 1 July to overall costs through higher petrol and power charges, but what Labour have not mentioned is their unmodified ETS would add 0.8% to inflation. They had passed a law which would have doubled the price increase due to the ETS.

Take those and the impact of GST away, and underlying inflation next year would be about 3 per cent, close to the top of the Reserve Bank’s 1 to 3 per cent band, but not so unusual.

The other thing Labour has not mentioned is they have constantly called for more government spending. This would mean a higher deficit and more borrowing, which would be inflationary. So their crocodile tears over inflation are less than convincing – their stated policy is to spend more, and to have an ETS which doubles the impact on power and fuel prices at 1 July.

On the other side of the ledger, as the economy improves, the Treasury expects wages to increase by 2.6 per cent next year (the year Labour chooses, because of the unflattering comparison with the 5.9 per cent inflation spike) and then rise by 3.5 per cent, 3.7 per cent and 3.9 per cent in subsequent years, while inflation is tipped to stay at 2.4 per cent.

These are just forecasts, and should be taken with the usual shaker of salt. But if you take one year into account you should be prepared to take them all.

On that basis, wages could well outstrip inflation in the next four years, and beat underlying inflation by even more.

As is generally the case.

Does Labour really want to argue that, as well as compensating for any GST rise, the Government should offset all the effects of inflation? That was above 3 per cent in 2001, 2006 and 2008 – when Labour was in power – and there was no similar call then.

Personally I would be delighted if Labour adopted a policy of giving people tax cuts every year to compensate for inflation. But somehow I don’t think they intend to.

Labour heads left

May 6th, 2010 at 9:10 am by David Farrar

Vernon Small reports:

The Labour Party is opening the door to policy change, including taking GST off food and clamping down on foreigners buying farms.

Phil Goff is trying to go to the left of Helen Clark. Taking GST off food is a daft idea. Mind you McDonalds will think it is a great policy.

And it is vital we must stop farmers from being able to sell their farms. Imagine if a foreigner buys a farm. One minute it is sitting there in the Waikato, and suddenly the foreigner has packed the farm up and moved it overseas. The dirt, the grass, the cows, the sheds – all gone. Just a big chasm left in the earth.

I wonder if Winston will sue Phil for stealing his policies? I mean they already share major funders, so sharing policies is next logical step. Maybe their shared name can be Labour First.

The Cullen Fund

April 17th, 2010 at 9:48 am by David Farrar

Vernon Small at the Dom Post reports:

Halting contributions to the Cullen superannuation fund has cost the taxpayer more than $30 million.

If full contributions had been maintained, it would have earned almost $50m more, calculations based on the fund’s returns to the end of January show.

Even accounting for the extra borrowing costs the Government would have faced to keep up contributions, that would still have netted taxpayers about $1m a week during the past eight months.

First of all, it has not “cost” the taxpayer anything. The taxpayer may have been able to make a gain of $30 million if it had borrowed more money, for the fund to invest. That is certainly true, but it is a potential gain only.

You can not automatically assume that any additional investments would have achieved the same return as the existing investments. An extra $2 billion may have been invested in a stock that did not do so well, or may have meant a higher average price for buying such stock.

It is fair enough to talk about a potential gain or that was missed, but that is not the same thing as stating that potential gain as a loss let alone a cost. That is a sloppy short cut.

Also it is worth reminding people that reward is always linked to risk. One could borrow $10 billion a year to invest in stocks, and probably get a good return on them. But it would also be risky.

What we don’t know if whether or not we would have got a credit downgrade, if the Government decided to continue to borrow money to invest. And if we had, then that would have had a very real cost on every New Zealander.

It is also worth noting that over the entire life of the fund, the rate of return is still below the risk free rate of return. The NZ economy would be hundreds of millions of dollars better off if the fund had never been set up, and the money used to repay debt.