Richard Prebble’s Letter From Wellington
The Letter strongly supports Reserve Bank Governor Alan Bollard's surprise move to cut interest rates - a signal to the market that the Bank will respond to the coming slow-down. In the last slow-down caused by the Asian crisis, both Treasury and the Reserve Bank underestimated the impact on the NZ economy. They refused to lower interest rates and the economy stalled.
To keep the economy growing requires more than an interest rate cut. Monetary policy needs to be assisted by fiscal policy. The latest Treasury report shows the tax take is 1.9% above projections. The overall increase in taxes of 10.3% in one year shows how Labour's stealth taxes are really biting.
WHY CULLEN WON'T CUT TAXES
Michael Cullen, as is his habit when Clark is away, has been making leadership speeches. The first to Grey Power sets out Labour's economic strategy. He states, "We are predicting some tough times ahead for the economy, with the drop in world prices for agricultural commodities, and the severe flow-on effects of the Iraqi war and the SARS virus on tourism and other export industries." He then complacently states, "Through prudent management we have given ourselves sufficient headroom to see the economy through the next 12 to 15 months, after which most economists forecast the world economy will start to recover." What do you mean "we", Doctor?
The speech sets out Labour's electoral agenda which is to take working families for granted, win over students (250,000 votes), social welfare beneficiaries (400,000) and superannuitants (450,000). The bribes – student loans, state houses, increasing super $15 a week, and Labour's next election's agenda - removing asset testing. Dr Cullen admits that the asset testing pledge is a big one -"huge costs [are] involved – starting at more than $100 million in the first year and rising to $345 million by 2020/21" - but omits to explain why the elderly should be exempt from the responsibility of paying for their residential costs – something that all other adults are expected to pay.
Dr Cullen outlines the challenges facing Labour. Health: "We need to get smarter at providing health care". Energy: "The very real prospect of a dry winter and the lowered estimates of the Maui Gas reserves." Transport: "A long term solution to Auckland traffic woes, finding a stable future for Air NZ.". See http://www.act.org.nz/greypower.
WHILE THE PM'S AWAY...
His second speech was to Labour's regional conference and contains an extraordinary defence of Maori sovereignty. He purports to be replying to Bill English but it's a transparent bid to Labour's influential Maori caucus, in which he rewrites history and performs remarkable intellectual flips. Cullen states that "However one tries to translate into English the Maori version" of the Treaty, sovereignty was not ceded. "That is particularly so since a reference to mana does not exist in Article 1 despite the fact that whatever notion of sovereignty existed for Maori in 1840 it must have included mana." He then says, "It will soon be subject to judicial interpretation entirely by New Zealanders, thanks to Margaret Wilson." Scary stuff. See http://www.act.org.nz/gisborne.
The business sector is worried that the country's traffic problems are damaging the economy and Labour's Transport Bill will exacerbate them. The transport problems: not enough roads, too much lengthy planning, a funding gap (a decent roading network will cost $4 - 5 billion, leaving a gap of about $2 billion to find), and rail. Labour's transport strategy does not fix any of these problems. The Bill requires more consultation (Maori etc). Labour believes the public private partnerships (PPPs) will solve the funding gap. The commercial terms are so tough The Letter believes no PPPs will eventuate.
The government has no idea what to do about the double whammy of no rain and no gas. A 10% power shortage will impact greatly on the economy.
FOREIGN POLICY ADVENTURISM
The announcement by North Korea, that, contrary to its obligation to the Non-Nuclear Proliferation Treaty, it has developed a nuclear bomb, is very disturbing. North Korea has tested missiles showing it can deliver them to Japan. Our part of the world has become much more dangerous. The Clark government in 2000 decided to recognize North Korea and has been giving the country aid. Yet another example of the folly of NZ's "independent" foreign policy.
SARS PANIC 1
The French have scored a coup as their PM courageously continued his trip to Beijing. Our Speaker in contrast cancelled a long planned trip to China, citing the SARS outbreak. NZ may never have the chance to show, at such little cost, solidarity with China. We can always get another Speaker.
SARS PANIC 2
We have been contacted by a long time NZ resident of Chinese descent saying that last week she was at the Waitakere City Council's Henderson Wave pool when a staff member came up to her and said, "You go away". "Why?" she asked, "I have done nothing wrong!" He then warned her if she didn't leave in three minutes they would call the police. He began disinfecting everywhere she'd been. Naturally she felt humiliated and tells us she hasn't been to China in years. We rang the Waitakere pool who said they had no record of the incident and claimed their reception area was their "main filtering station" for SARS!