The Letter – Monday, 15 May 2006
The Letter – Monday, 15 May 2006
The Haps
The Aussie budget widens the tax gap. Labour signals more regulation for telecommunications and electricity sector. No
change budget predicted. Rodney Hide dances on.
A$36.7 billion tax cut
The Australian budget tax cuts mean the first A$6000 of income is tax free, Aussies will pay 25 cents up to A$25,000; 30
cents up to A$75,000; 40 cents up to A$150,00 and 45 cents over $150,000. By comparison NZ's rates are 15 cents up to
$9,500, 21 cents up to $38,000; 33 cents up to $60,000 and 39 cents over $60,000. Now 82% of Australians have a top tax
rate of 30 cents while in NZ 14.9 % of workers pay 33 cents. In Australia just 2% of workers pay the top rate and in NZ
currently 10.8% pay the top rate of tax. The TreasurerTreasurer Costello justified the tax cuts saying "These changes
will make the Australian tax system more competitive and bring Australia's upper income tax rate into line with the OECD
average".
Tax by inflation
Labour has allowed inflation to push workers into higher tax brackets. With wage rises this year predicted to average
2.75%, another 30,900 workers will move into the 33 cent tax bracket and 21,150 into the top 39 cent tax rate.
Who is right?
Michael Cullen keeps claiming there is no evidence that tax rates affect economic growth, a claim his own Treasury
disputes. The Australian Treasurer is predicting 3.25% growth this year, in contrast the NZ economy is stalled and
growth of just 1.5% is predicted.
Cover Up
The State Services Commission inquiry is very narrow, looking only into who leaked the cabinet paper, which they already
know. What the Commission is not investigating is what else was leaked to Telecom! The Letter has been told by a
"usually reliable source" that two other leakers told Telecom of the Cabinet decision. Telecom has not told the State
Services Commission about the other leaks and Commission has not asked.
White wash
The Commissioner's rapid report will not comment on the negligence of Minister David Cuniliffe, for taking no extra
security precautions, or Minister Cullen for not having the documents marked "Budget Secret"orSecret" or Prime Minister
Helen Clark for not having the Cabinet Office mark the documents "Ministers only".
Electricity Regulation
The budget will announce new regulations for electricity. The present regulations are a mess and have had many
unintended consequences. One example is that line companies may only invest in "sustainable" generation. This has seen a
rapid increase in wind power, which requires back up generation for windless days - just the sort of generation NZ is
short of.
He was bad
Don Brash has a compulsion to explain himself that usually results in him appearing guilty. An experienced
parliamentarian would have attacked Winston Peters for using stolen emails, accused the Foreign Minister and the Defence
Minister Phil Goff of using anti Americanism for party politics and pointed out Labour's extensive use of overseas
political consultants.
Anti Americanism
Peters, Goff and Trevor Mallard know that America did not finance or influence NZ's election. The willingness of
ministers to make statements in parliament that require the American Ambassador to issue a denial wiped away, in a few
minutes, any gain in the recent US/NZ council meeting in Washington.
Doing it for years
Labour has used overseas political consultants for years. John Utting, the famous ALP advisor, has given advice to
Clark. Labour borrowed from the UK the slogan "Tough on crime, tough on the causes of crime". The Clinton Democrats
developed the use of focus group polling, a tactic relied on heavily by Clark.
International Campaign Consultants
In America there is an election bigger than NZ's going on some wheresomewhere, all the time. This has lead to the
creation of firms that just manage campaigns and have huge experience. Most consultants just work one side of the street
but some like Clinton's advisor Dick Morris, a registered Republican, will work for both sides. The consultants now take
their experience around the world to working on Putin's campaign for the Russian presidency. The success of the
Republican party is largely attributed to Karl Rove, President Bush's consultant, now facing indictment, who developed
techniques for turning out the conservative voters.
National's failure
The real story is National's failure to use campaign techniques developed by the Republicans to overcome the Clinton
techniques. It has been the ACT Party that has been most willing to use international political consultants, in
particular Ian Kortlang who has advised ACT on all its campaigns including Rodney's in Epsom. The real indictment of
Brash is he did not follow up his email and ensure that the party hired the world's best campaign managers. Brash
admitted he did not even know who was working on National's campaign. Clark is Labour's top strategist. She attends
every campaign meeting and approves every decision, including hiring consultants from around the world.
Still Dancing
Rodney survived the first round but the judges punished his rumba. We were simply amazed he could do it. With the judges
voting counting for half the score he will need a massive vote to continue. Rumour has it that the beehive has been
texting for him, the thought of a fit energized Hide returning to parliament has got to be terrifying. Vote at 0900 89
818 or text Rodney at 8981.
Our Poll
The government's inquiry has little credibility as 95% of readers support a full judicial inquiry into the Telecom leak.
This week's question. "Will Australia's tax cuts increase migration to Australia?" Vote at www.theletter.biz/vote http://www.theletter.biz/vote.. We will send the answers to Cullen.
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