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www.mccully.co.nz 12 May 2006

www.mccully.co.nz 12 May 2006

(#246) A Weekly Report from the Keyboard of Murray McCully MP for East Coast Bays

“The Stain Still Remains”

In the early phases of last year’s election campaign, the Labour Party was desperate. Confident that they would have an easy ride to victory, the polls were showing anything but that. So the decision was made to play the anti-American card. Bovver boy Trevor Mallard was dispatched to make a number of shrill, almost hysterical claims about the role of sinister American bagmen secretly in control of the National Party.

Stung by the criticisms, the US Administration put a halt to any thawing of relations with New Zealand. And our friends in that part of the world, feeling betrayed, were forced to shut up shop. That New Zealand Ministers cared so little about the US relationship that they would invent spurious bagmen, and use a friendly nation for a cheap political beat-up, caused serious offence. It has taken time and effort to get things back on track.

Months of patient work later, there have been signs of progress. The National Party has signalled bi-partisanship in the quest to repair the US relationship. The improvement of relations with the most powerful nation on Earth - our second largest trading partner - is simply too important to fall victim of domestic politics. There have been signs of progress. Most visibly, overt signals from Assistant Secretary of State Christopher Hill that he is pushing the case for change in Washington. On Tuesday of this week, New Zealand newspapers carried the most positive statements yet from Mr Hill.

How extraordinary that Mr Hill’s constructive efforts should be reciprocated, on the very same day, by a New Zealand politician resurrecting and re-heating Mr Mallard’s most unfortunate and damaging American bagman claims. How absolutely extraordinary that the politician responsible should be our very own Minister of Foreign Affairs.

US diplomats are usually, well, diplomatic, when confronted by such insults. Silence is normally the order of the day. But on this occasion the US Ambassador Bill McCormack spoke up to make a simple point: allegations of the Mallard/Peters variety are deeply hurtful to the US because long after the claims have been proven to be baseless, the “stain” on the US reputation remains.

The Cost?

So how much of a setback for the improving relationship will be caused by Mr Peters’ act of international vandalism? The truth is, it is simply too early to tell. But Secretary Hill and others like him, who have stuck their necks out in an attempt to move a previously immovable administration, will hardly feel greatly encouraged in their efforts.

The recent visit to Washington of senior National and Labour politicians, accompanying high-powered NZ business leaders, at least got some wheels turning in a positive direction. Government officials have been eager to portray this week’s botch-up as purely a domestic political scrap. But that simply won’t wash with the Americans. The level of hurt and anger caused by the original Mallard excursion had been communicated to our Government in the very plainest terms. That Mr Peters should choose to raise the matter again on the very day that Secretary Hill had made such positive noises will be seen as deeply destructive. And that is a conclusion that is very hard to argue with.

The Cause?

It’s hard to say how our Minister of Foreign Affairs could have become the perpetrator of such an act of sabotage. In part, the answer will lie in his inability to get his mind above the political sewer which, for years, has been his natural habitat. In part, the answer may lie in the political tug-of-war that is being played out between Peters and Phil Goff, the real Minister of Foreign Affairs. So remote from the real action in his portfolio has Peters become that he may have glossed over the impact his actions would have.

For a man who, on his appointment, declared his number one priority to be the improvement of NZ/US relations, the blunder is extraordinary. High up in the US government there was already deep scepticism about the Minister of Foreign Affairs Outside the Government. But his positive comments about the US relationship had at least earned him a suspension of any harsher conclusions. The effect of this week’s destructive effort will be to have rendered Mr Peters at best impotent in the quest for better relations. Gradually, the opportunity he had to write at least some small legacy as a Foreign Minister is now receding.

Baubles for the Boys?

The worldwide headquarters of mccully.co has previously opined upon the strange decision of Mr Peters to accept office. Claiming the bauble factory for himself, but leaving his increasingly miserable troops baubleless was a politically curious decision. But this week, we are pleased to report, Mr Peters has acted to dispense, if not a Ministerial post, then a nice little taxpayer-funded junket for a week in the Fiji sun. The elections are being held in Fiji this week. New Zealand had to send a team of observers. Mr Peters has so far neglected to release details of the New Zealand delegation. So the worldwide headquarters is very pleased to be able to remedy his omission.

There is, shall we say, a certain flavour about the team of observers. Included we have Doug Woolerton MP (recently retired NZ First President), Susan Baragwanath (number 8 on the NZ First List, picking up a consolation prize for just missing out on the last NZ First seat), and David Major (policy advisor in the office of the Right Honourable Winston Peters). Get the picture?

No, it’s not quite like a Ministerial portfolio or an ambassadorship. But if your Leader has, in his eagerness to grab control of the bauble factory for himself, overlooked the small matter of his loyal troops going baubleless, then surely a week long taxpayer-funded holiday in the Fiji sun will suffice as partial recompense?

The Leak “Enquiry”

The Budget leak which promptly peeled $1.8 billion off Telecom’s share price is the biggest breach of Budget secrecy in living memory. And our Prime Minister has responded with the most limp-wristed enquiry process of all time. A State Services Commission official will look into which of his Ministerial bosses flagrantly breached Cabinet Budget secrecy. Which tells us a very great deal about what Helen Clark imagines she has to fear from a proper enquiry.

Minor (by comparison) breaches of the rules (conflicts of interest, inappropriate spending etc), have in the past been investigated by independent heavyweights. Retired High Court Judge Sir Rodney Gallen, Douglas White QC, Kit Toogood QC - these are the sort of heavy duty names fronting previous enquiries. But now, to investigate the granddaddy breach of all time, we have a legal staffer from the State Services Commission. All of which speaks volumes of our Prime Minister’s level of concern about what might be found. And of the very very obliging nature of State Services Commissioner (previous head of the Department of Prime Minister and Cabinet and long-time mccully.co devotee), Dr Mark Prebble.

Brain Drain to Become Torrent

Already we had been losing 660 New Zealanders a week to Australia, lured by higher wages and lower taxes. And Tuesday night’s Australian Budget upped the ante big-time. The top tax rate in Australia is now payable only by those earning over $150 000.

Faced with such a challenge to our capacity to retain capital and skill, what would you imagine a sensible, responsible government would do with a New Zealand budget to be presented next Thursday? Well we know what Helen Clark and Michael Cullen did do: they promptly ruled out tax cuts in this country.

So New Zealanders earning over $60 000 a year currently pay 39 cents in the dollar. Their Australian counterparts from July will pay 30 cents. So New Zealand will go on leaking capital and skill at an accelerating pace. The gap in relative average net incomes - already 33% - will grow bigger. And Helen Clark and Michael Cullen think that’s okay.


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