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ACT's The Letter 1 August 2005

ACT's The Letter 1 August 2005

The Haps

The election date is announced. Parliament finishes on Wednesday. The polls all show Labour back in front. Labour announced interest free student loans. The Governor of the Reserve Bank predicts inflation will be over 3%.

Long Campaign

The election campaign is on. All the media (except for TV3, who are excluding some parties from their leaders debate), will now be attempting to give fair coverage to all the parties. No government has gained votes during election campaigns for 30 years.


The swing around in the polls indicates that support is soft. Two polls taken just 20 days apart, in John Tamihere's seat, showed Pita Sharples 40% ahead in the Maori TV poll yet in the Marae digi poll Sharples was just 3% ahead, within the margin of error. What is causing the massive shifts in support?

Poll driven attacks

The personal attacks authorised by Labour's campaign committee and approved by Clark, which are being described by commentators and centre right voters as absurd, are laser strikes. Brash is paying for his contradictory statements. The shift started before the public attacks.

Submarine warfare

Labour has a far better database of voter profiles than National and greater experience of how to use it. Their computer database has the names, addresses and occupation of every voter in the country, (available off the roll), their gender, (done by matching first names) and their age, available only to political parties, (allegedly to enable party scrutineers to check for illegal underage voting).

They match census data of income with voting records of the nearest polling booth to predict likely voting intentions. Both ACT and National can do this. Door canvassing shows the system is reasonably accurate. If a voter lives in Otara, is aged 28, and gives their occupation as cleaner, they are likely to be a Labour voter. A voter aged 55, living in Pakuranga and giving an occupation of manager is likely to vote National.

Direct mail

Having profiled voters, Labour is able to write individually tailored letters, with different messages for different voters. National, who have just installed this technology, do not have Labour's experience.

Labour MPs have hundreds of thousands of files on individual voters who over successive elections have been canvassed. If you told a Labour canvasser, or a bogus one, pretending to be a polling company, you were concerned about crime; your direct mail letter from Clark would be about crime. Labour is pouring out letters and calling voters they know can be shifted with tailored messages and it is working.


Labour is allowing only one more question time. Roger Sowry a former deputy leader, and other retiring MPs give their valedictories on Tuesday. Parliament's longest serving MP Richard Prebble gave his valedictory last Thursday. Go to www.act.org.nz/valedictory. On Wednesday night he also gave a retiring speech to the media. This speech which gave some stories about the press gallery and the election was not given out to journalists who did not come (why give pearls to swine?). Go to www.act.org.nz/media.


National's promise to make student loans tax deductible is poor tax policy. Labour's Islamic promise to make the loans interest free is a reckless bribe. Both promises are under costed as they make the heroic assumption the inducement is enough to win students votes but not their financial planning. Students will massively increase their borrowing and reduce their repayment.

Why Bribe?

Politicians bribe voters with their own money because it works. John Howard showed in the Australian election that reckless spending promises condemned by economists from the left and the right can win votes.

Howard won because he persuaded the electorate that Labour's more moderate proposals would increase home mortgage rates. Australia now has higher interest rates and a slow down. The outcome of this election will turn on whose policies homeowners think will increase interest rates.


Reserve Bank Governor Bollard has a crucial role to play in keeping inflation down. It is his duty to keep inflation below 3% yet he expects it will break the threshold. Commentators all predicted the Governor would not increase interest rates so close to an election.

Why? A truly independent Governor would. Wage increases this year are averaging nearly 5% well above inflation. A falling exchange rate will see the cost of imports rise. The fuel increase is now being incorporated into the nation's prices. The Bank's predicted slow down has not occurred, or not enough to check wage and price rises. Words but no action did nothing to lower inflationary expectations. A Reserve Bank that was serious about inflation would increase interest rates again.

A sound economics party?

Last week we asked whether you wanted lower tax rates or tax rebates. 98% of Letter respondents opted for a tax cut. With the old parties both offering bribes there may be room for a party just offering to support sound economics.

This Weeks Poll

It is time to predict. This week's poll is not who you want to win the election but who you think will win. The wisdom of crowds says crowds can be more reliable than experts or polls. Neither Labour nor National will win enough seats to govern alone - it will be a coalition. National/ACT, National/NZ1, Labour/NZ1 Labour/Greens, Labour/Greens/ Maori party/.

We have not included United or the Progressives because those parties are just the electorate MPs and not significant in coalitions. What is your pick? We will compare your wisdom with the outcome. Vote at www.act.org.nz/poll


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