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Was There Ever A More Incompetent Government?


Wednesday, September 26 2001 Richard Prebble Speeches -- Governance & Constitution

Speech to Rahiri Club, North Shore

Fairway Lodge, Auckland

Wednesday, 26 September 2001 at 10.30am

Thank you for the invitation to speak to you today. This week is a parliamentary recess. The Labour Caucus is gathered in Premier House, supposedly to hear how Helen Clark plans to win next year's election. It is said a week is a long time in politics.

I suspect that Helen Clark's assumption that the next election is a sure thing has now disappeared. The 11 th of September, (it was the 12 th in New Zealand), has changed how we see the world forever. We now all know that a civilian aircraft can be turned by suicide terrorists into a flying bomb. The vibrations from those blasts are still ringing.

Helen Clark's statements that we live in a benign world now sound absurd. Both our leaders - Helen and Jenny - misread the significance of the events. I am still amazed that Helen Clark could watch the pictures of the aeroplanes flying into the World Trade Centre, witness the collapse of the twin towers and then four hours later get on a flight to Rome, expecting her official trip to continue.

According to her publicity about her trip, our Prime Minister believed that Prada's success in the America's Cup meant a visit to Italy was timely. Italian officials were amazed that a New Zealand Prime Minister wanted to talk about a yacht race! The Italian government was just voting to invoke the NATO alliance, that the attack on America was an attack on Italy.

Our Prime Minister had to come home because the socialist hui she was scheduled to go to in Sweden, was cancelled. As a result, our Prime Minister was out of contact that week and ended up being held captive by angry Ansett workers.

New Zealand should have responded to the terrorist attack. But as nothing can be done without Helen, all that New Zealand did was send a letter of sympathy. Yasser Arafat decided it was better to give one pint than eight, and donated blood.

Events of the last two weeks have shown how isolated we now are. When I was first an MP, New Zealand was an ANZUS ally of America and we sat at the council table. We were proud that New Zealand had a voice in international affairs that was, for our size, very significant.

What has been significant these past two weeks is that the phone has not rung. The United States has totally ignored New Zealand.

Well, not quite - here is what Mark Steyn from the Spectator newspaper wrote: "Down south, although New Zealand hasn't been an active member of ANZUS for years, Prime Minister Helen Clark thought that America's request for support would be a good time to let the world know that they were withdrawing from the Alliance entirely. She said she didn't expect the US to come to New Zealand's defence and explained that the country now considered itself in the same position as Sweden or Finland".

The ACT Party's view is that New Zealand is still legally a member of ANZUS. The Prime Minister should have done what John Howard did in Australia - put down a notice of motion in the House of Representatives invoking Article IV of the ANZUS Treaty.

America has said that they will reassess their relationship with nations based on their response to the events of September 11.

Our Prime Minister has gone from renouncing ANZUS to the next day proposing to send the SAS to Afghanistan - from one extreme to the other.

It came as a considerable shock to the military to learn that the Prime Minister was proposing to offer the army. How, they wondered, were our soldiers to get there? We have not exercised with the US for over a decade, so are they to learn on the job? Our equipment, signals and procedures, are not co-ordinated with the US.

It shows the folly of not exercising in peace time with likely allies in war. This first was of the 21 st century may turn out to be a long one. Our armed forces are, in the words of the Auditor-General, dysfunctional. It's a war that New Zealand is not equipped to fight.

The second issue that has taken the government time is the Air New Zealand/Ansett collapse. This is a crisis of the government's own making.

There is no taxpayer money in Air New Zealand. The government's only involvement comes from the Kiwi share that gives the Crown veto rights. When the board advised the coalition in March that it needed to re-capitalise, the government should simply have said - " you bought it, you fix it!"

It turns out Ansett's assets are over $2.5 billion dollars. An early rescue package would have worked. Instead the government just dithered.

No one in the present government has ever run a business, employed anyone or even run a household.

We have a government of academic ideologists. Forty-nine percent are ex-teachers, 45 percent are former trade union officials - some have been both.

The Ansett collapse will have long-reaching consequences. The anti-Kiwi campaign in Australia is doing real damage. The number of tourists coming here from Australia this summer will be low.

When I was Minister in charge of Air New Zealand, I realised the airline had a big impact on our national mood. When the airline did badly ' such as cabin crew strikes - it affected the whole country.

When the airline did well ' such as introducing air bridges, Koru Clubs, air points, meals and flying on time - we all felt good.

The failure of our national airline has caused an anti-business back lash. While the board is not blameless, the problem they had not factored in was that our government could not make a decision.

The government has had a reputation for being decisive - firing Ministers like Dover, Ruth Dyson and Phillida Bunkle. Now we realise these were - to use Helen Clark's own words ' no-brainer decisions. When it comes to the economy and commerce, the coalition Ministers are just out of their depth.

Both ACT and National went public over three months ago. We said - " the situation is urgent. Let Singapore Airlines lift its shareholding." We wanted to let Labour know that if the Alliance and Greens were holding them to ransom, they could count on our support.

The third event that is destabilising the Beehive is the meltdown in the global economy. The world economy has been slowing for some time. Japan has been in recession for a decade. The United States industrial sector has been stalled for over a year.

The German economy is also slowing. Taiwan, Hong Kong and Singapore are in a deep recession.

Until September 11, the United States consumer was still spending. That spending has stopped.

It's most serious in New York. Five Broadway shows have closed. Tourism is down 80 percent. There is no way New Zealand will escape.

Tourism is this country's biggest employer. Tourist operators already report whole tours have been cancelled.

During the Gulf War, tourist number from America and Europe were seriously down. Now we have also tourism from Australia affected by the Ansett collapse.

New Zealand missed the boom so we missed the boat. But we will not miss a world wide recession.

The Reserve Bank Governor's decision to cut interest rates was timely and correct. Dr Cullen's statement that he will begin Depression-type public works was a panic response. Dr Cullen claimed he was trying to promote confidence - the effect will be the opposite.

Increasing government spending no longer works to prevent recessions. First, we are in a global economy. When government spending rises, imports increase.

With a floating exchange rate, the dollar rises, cutting export earnings and causing a current account deficit.

Increasing government spending into a government deficit is inflationary. Interest rates rise, reducing economic activity.

Investors are sophisticated. They know that the government has no surplus so when they hear Dr Cullen say he is going to increase government spending, they lose confidence.

We had a surplus before Labour increased spending and proposed the superannuation fund. This is Dr Cullen's idea to invest surpluses in overseas shares, for retirement. But there are no surpluses. Every cent of the $6.1 billion dollars to be invested over the next four years is to be borrowed. If the scheme was operating last week it would have lost $2 billion.

Who doubts that the government would have used it to bail out Air New Zealand and lost another $1 billion?

If borrowing for retirement was sensible, we would all save on our credit cards. The proposed fund means we are not in good shape to ride out a global down turn. The coalition should cancel the scheme now.

So two weeks ago, government MPs thought they would be meeting today to plan a victory. Now they know they are meeting to see if they can ward off a defeat.

A three-year term is challenging. There is no room for error. The three events I've described and the government's dithering, mean they are history.

We have discovered that it's a fair weather government. The first real threat and they are paralysed by indecision.

I cannot remember a more incompetent government.


For more information visit ACT online at or contact the ACT Parliamentary Office at

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