Richard Prebble’s Letter From Wellington
ECONOMIC SCARS
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.
RESPONSE UNBALANCED
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?
ELECTORAL AGENDA
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.
GOVERNMENT PRIORITIES
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.
TRANSPORT WOES
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.
POWER CRISIS
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!