News Worthy
15 June 2007 - No. 113

The invisible hand
Codes of conduct are now in fashion. In some sectors they may have merit but often they are cast in aspirational terms simply reflecting extant legal obligations.

So it is with the actions of the minor parties on Tuesday to sign and table a “code of conduct” for Members of Parliament.

The code covers:

- Working for the public good

- Showing respect for Parliament

- Not accepting inducements

- Not advancing private interests

- Avoiding conflicts of interest

- Ensuring proper use of public resources

What the drafters of the code seemingly ignore is that there are already specific Standing Order provisions to cover the substantive issues which the code deals with. The Standing Orders cover maintenance of order in the House, declaration of financial interests and detailed contempt provisions covering bribes and inducements.

The Code of Conduct is political window dressing without point or merit.

Casino Royale
When a small central bank like New Zealand confronts the currency dealers of the world, the end result is likely failure for the central bank.

Today’s foreign exchange market is a truly worldwide, 24 hour a day trading zone, with most of the currency trading amidst the currency dealers in London, New York and Japan. The only time that currencies stop trading is on Friday when Japan closes its business and then there is a one day window before Europe steps in on Monday morning to open for business.

Daily exchanges are worth approximately $1.5 trillion (US dollars).

It was a startling move by the Reserve Bank Governor to dump the New Zealand dollar to drive our currency down. This is the first time that the Bank has intervened in the foreign currency market since the dollar was floated in 1985 and allegedly it could have involved selling between $300 million and $500 million in New Zealand dollars in exchange for foreign currencies.

The NZD currently trades over 25% above purchasing power parity, the highest deviation since the float. However, assessed singularly against the terms of trade, the NZD is in a range of 5-10% "over-valued". If one incorporated other factors such as the housing market boom and higher-than-average NZ-global interest rate spreads, then it's not hard to see why the NZD is so richly priced.

America’s Cup
The decision by NZ Trade & Enterprise to support the America’s Cup with taxpayer funding of $33.75 million has seen a great outcome with Team New Zealand winning the Louis Vuitton Cup in five straight wins.

The Team New Zealand base has been set up to provide a hospitality centre to meet and greet those who can advance the interests of New Zealand on a global basis. A series of events have been held and are to be held which profile all that is good in this country.

In an Export Year marred by the high dollar and a seeming reluctance by NZTE to set in place evaluative measures to judge the success of the various export programmes (in stark contrast to the stance of AUSTRADE) maybe the America’s Cup partial sponsorship will be the highlight.

Political Quote of the Week

"Change is the law of life. And those who look only to the past or present are certain to miss the future." - US President John F. Kennedy

Dr Richard Worth
National Party MP

ENDS

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