The Letter
Monday 22 March 2004
INTERESTING WEEK
The next election campaign has already begun. Despite MMP, the electorate realises there’s still a fundamental choice
between voting Left or Right. Winston Peters’ decision to support Helen Clark's Treaty Royal Commission has aligned New
Zealand First with the Left. Peters has moved Left because he hated Ruth-Richardson’s policies and sees Don Brash as
being similar. He is convinced the country will never vote for Brash. Peters, like Clark and the commentators, has
fundamentally misread the electorate. The latest TV One poll put NZ First 4%. Brash has ripped away his blue rinse vote,
so NZ First is now just a Maori party. Brash’s challenge that National will win Tauranga must be a possibility. On the
Left are Labour, the Greens, NZ First and (but we aren’t sure if anyone cares) United. On the Right are the parties
standing for equality before the law: National and ACT.
THE LINES IN THE SAND
The devil on the foreshore issue is in the detail, with the political parties confusing the issue by using the same
words and giving them different meanings. The term “crown ownership” is an example. Labour's “public domain” has the
same meaning – so Winston Peters’ support for a Royal Commission, provided Labour uses the term crown ownership, is not
a significant change. “Customary title” is another term being used for different concepts. In common law, a customary
title is a very poor form of property and must be continuously exercised in order to retain ownership. As the Court of
Appeal pointed out, it will be difficult for Maori to establish any customary title to the foreshore.
Margaret Wilson is proposing to create a new type of customary title, based on ‘ancestral connection’ and ‘mana’. Wilson
herself expects the new title to cover most of the foreshore. The Maori Land Court has rejected the concept of a
customary title based on ancestral connection saying, such a title was based on greed.
Labour must now be regretting not taking ACT’s advice and just allowing the law to take its course.
THE BUDGET
The 2004 Budget looks to be an election year budget. With a $6.911 billion surplus, and a falling poll rating, Labour is
looking to giveaways to win back support. $2 billion of the surplus is already pledged to the Super Fund. This leaves $3
billion to play with. Cullen will project new expenditure out over 4 years, giving him billions to give away. We already
know what he won't do: he won’t cut the top tax rate, even though 20% of all full-time workers are now paying it.
(Labour's promise was that only 5% of taxpayers would pay the 39-cent income tax). We also know the company rate won’t
be cut. Cullen says company tax is just a withholding tax. Labour will redistribute income using family support, with
some families getting increases of $50 a week.
Labour thinks voters aren’t grateful for tax cuts – which they see as just keeping their own money – but are grateful
for family support, childcare and the accommodation supplement, which are seen as coming from Government.
TAX
National believes it can win an election on the race relations issue, and doesn't want to give Labour any other issue to
fight the election on. Electorally this is clever, but a National government elected not to lower the marginal rate of
tax would be unable to introduce the policies needed for growth.
MARGINAL TAX
The marginal tax rate is important. Tax is the penalty we pay for working, investing and increasing productivity. We can
only encourage the good things like productivity, investment and jobs by cutting the marginal tax rate. Because of our
imputation system it’s true that, for many, the company tax rate is a withholding rate. It follows that the 39% tax rate
is the investment rate. National now needs ACT to get a good vote so that the next government is able to introduce sound
economic policies necessary for investment, growth and jobs.
GOSS
The Beehive is looking for more press secretaries. The fall in the polls, plus the new Ministers, has led for a demand
for new PR personnel. The press gallery reports that almost every journalist has been approached. Journalists can read
polls too, and joining an outgoing government doesn’t appeal. New Fisheries Minister David Benson-Pope is desperate. His
problem is twofold: he’s incompetent and nasty – some say he's nuts. People don't mind working for incompetent Ministers
(most of them are). They don't mind working for competent Ministers (a few are). They’ll even work for competent, nasty
Ministers (a number spring to mind). But no one wants to work for an incompetent, nasty Minister.
BENIGN ENVIRONMENT
Despite having troops in Afghanistan and Iraq, our PM assures us that we are not at risk of terrorism. But Government is
now preparing to spend millions on new security measures – not for you, but for MPs. It is proposed to close all
entrances to Parliament for the public. The front steps will only be used on ceremonial occasions.
A new secure entrance way will be built between the Beehive and Parliament building. All visitors will be required to go
through airport-type X-ray screening.
Similar screening will be introduced for Bowen House.
Just thought you’d like to know your MPs are safe.
POLL
In last weeks poll only 5% of Letter readers favoured a treaty royal commission. This week’s question: should government
repeal the 39-cent tax rate? We'll send the result to both Dr Cullen and Don Brash. Vote on www.act.org.nz/poll.
ENDS