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The Letter – Monday, 15 May 2006

The Letter – Monday, 15 May 2006

The Letter – Monday, 15 May 2006

The Letter Limited -

The Haps

The Aussie budget widens the tax gap. Labour signals more regulation for telecommunications and electricity sector. No change budget predicted. Rodney Hide dances on.

A$36.7 billion tax cut

The Australian budget tax cuts mean the first A$6000 of income is tax free, Aussies will pay 25 cents up to A$25,000; 30 cents up to A$75,000; 40 cents up to A$150,00 and 45 cents over $150,000. By comparison NZ's rates are 15 cents up to $9,500, 21 cents up to $38,000; 33 cents up to $60,000 and 39 cents over $60,000. Now 82% of Australians have a top tax rate of 30 cents while in NZ 14.9 % of workers pay 33 cents. In Australia just 2% of workers pay the top rate and in NZ currently 10.8% pay the top rate of tax. The TreasurerTreasurer Costello justified the tax cuts saying "These changes will make the Australian tax system more competitive and bring Australia's upper income tax rate into line with the OECD average".

Tax by inflation

Labour has allowed inflation to push workers into higher tax brackets. With wage rises this year predicted to average 2.75%, another 30,900 workers will move into the 33 cent tax bracket and 21,150 into the top 39 cent tax rate.

Who is right?

Michael Cullen keeps claiming there is no evidence that tax rates affect economic growth, a claim his own Treasury disputes. The Australian Treasurer is predicting 3.25% growth this year, in contrast the NZ economy is stalled and growth of just 1.5% is predicted.

Cover Up

The State Services Commission inquiry is very narrow, looking only into who leaked the cabinet paper, which they already know. What the Commission is not investigating is what else was leaked to Telecom! The Letter has been told by a "usually reliable source" that two other leakers told Telecom of the Cabinet decision. Telecom has not told the State Services Commission about the other leaks and Commission has not asked.

White wash

The Commissioner's rapid report will not comment on the negligence of Minister David Cuniliffe, for taking no extra security precautions, or Minister Cullen for not having the documents marked "Budget Secret"orSecret" or Prime Minister Helen Clark for not having the Cabinet Office mark the documents "Ministers only".

Electricity Regulation

The budget will announce new regulations for electricity. The present regulations are a mess and have had many unintended consequences. One example is that line companies may only invest in "sustainable" generation. This has seen a rapid increase in wind power, which requires back up generation for windless days - just the sort of generation NZ is short of.

He was bad

Don Brash has a compulsion to explain himself that usually results in him appearing guilty. An experienced parliamentarian would have attacked Winston Peters for using stolen emails, accused the Foreign Minister and the Defence Minister Phil Goff of using anti Americanism for party politics and pointed out Labour's extensive use of overseas political consultants.

Anti Americanism

Peters, Goff and Trevor Mallard know that America did not finance or influence NZ's election. The willingness of ministers to make statements in parliament that require the American Ambassador to issue a denial wiped away, in a few minutes, any gain in the recent US/NZ council meeting in Washington.

Doing it for years

Labour has used overseas political consultants for years. John Utting, the famous ALP advisor, has given advice to Clark. Labour borrowed from the UK the slogan "Tough on crime, tough on the causes of crime". The Clinton Democrats developed the use of focus group polling, a tactic relied on heavily by Clark.

International Campaign Consultants

In America there is an election bigger than NZ's going on some wheresomewhere, all the time. This has lead to the creation of firms that just manage campaigns and have huge experience. Most consultants just work one side of the street but some like Clinton's advisor Dick Morris, a registered Republican, will work for both sides. The consultants now take their experience around the world to working on Putin's campaign for the Russian presidency. The success of the Republican party is largely attributed to Karl Rove, President Bush's consultant, now facing indictment, who developed techniques for turning out the conservative voters.

National's failure

The real story is National's failure to use campaign techniques developed by the Republicans to overcome the Clinton techniques. It has been the ACT Party that has been most willing to use international political consultants, in particular Ian Kortlang who has advised ACT on all its campaigns including Rodney's in Epsom. The real indictment of Brash is he did not follow up his email and ensure that the party hired the world's best campaign managers. Brash admitted he did not even know who was working on National's campaign. Clark is Labour's top strategist. She attends every campaign meeting and approves every decision, including hiring consultants from around the world.

Still Dancing

Rodney survived the first round but the judges punished his rumba. We were simply amazed he could do it. With the judges voting counting for half the score he will need a massive vote to continue. Rumour has it that the beehive has been texting for him, the thought of a fit energized Hide returning to parliament has got to be terrifying. Vote at 0900 89 818 or text Rodney at 8981.

Our Poll

The government's inquiry has little credibility as 95% of readers support a full judicial inquiry into the Telecom leak. This week's question. "Will Australia's tax cuts increase migration to Australia?" Vote at We will send the answers to Cullen.


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Please Note: Formerly the column The Letter was circulated by the ACT Party. It no longer is.

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