TAMIHERE - TIME'S UP?

Labour has gone from expressing confidence that Tamihere will be cleared to saying he will win a by-election. Tamihere himself claims that 24 hours before the golden handshake story broke, he discovered that he did not support Labour's foreshore bill. Yeah right! It is already outrageous that Tamihere is being paid his $195,000 ministerial salary, plus perks, while relieved of his portfolios. Now he is defying cabinet solidarity; constitutionally it's even harder to justify the payment.

GOING TO GET WORSE

The Letter has been told of serious allegations still to come.

To date it seems:

1. After publicly saying he would not accept a golden handshake he lobbied for and got $195,000.

2. No tax was paid; legally it's Tamihere's responsibility. With penalties he now owes $100,000 plus.

3. Tamihere received a $22,000 "bonus" from the Trust but there is no board minute authorising the payment.

4. The taxpayer funded Waipareira Trust paid over $18,000 of Tamihere's election expenses but it was not recorded in his election return. Filing a false election return is not just a minor matter, it's a corrupt practice that bans one from being an MP but now it's out of time.

5. Westland - a Waipareira investment - gave him a car after he was an MP - and paid its insurance (not recorded on his Ministerial return).

(Depending on the date of the ownership transfer, the car may have needed to be recorded as a "gift").

Clark has forgiven this MP's former drink driving convictions, fraud charges as a lawyer, and several speeding tickets in his self-drive; is it a case of two laws? The Letter believes that Pita Sharples - Maori party co-leader - will easily beat Tamihere in either a by-election or, if he survives, the next election.

THE TIDE'S GONE OUT

The immediate result is the government has not got the votes to pass the foreshore legislation. No significant Maori group or leader supports the law. How could they? The law, in effect, says Maori cannot go to court to get justice on a property claim. Labour, who was panicked into the legislation (it will be years, if ever, Maori win any claim in court), may be relieved to see the bill defeated.

OVERSHOOTING

The Australian election has brought home how sensitive the electorate is to interest rates. No other OECD country has increased interest rates five times this year and is proposing two more this year and perhaps another next. The Governor himself in evidence to the Finance select committee said that growth had peaked, house prices were weakening, growth and inflation would fall next year. The Bank admits the impact of an interest rise takes up to 18 months.

Cullen's concern is the Bank will overshoot. If this happens, foreigners who own property (Aussies have been buying Auckland apartments like kiwis buy Queensland property) will sell. The Kiwi will fall. The predicted soft landing could become very hard indeed. High interest rates and a falling property market will devastate Labour in the mortgage belt. Brash's refusal to criticize the Reserve Bank (he believes as a former governor he should not criticize his successor) has let the government off what could be a devastating economic attack. Labour's increased spending is adding to inflation. It is The Letter's view that the Bank underestimates the effect of immigration, which has fallen from 41,150 (net) in 2003 to 19,290 for 2004 (net August year) and, based on current migrant flows, 12,000 is a good estimate for next year. This will have a very significant impact so the Bank's latest interest rate rise was not needed.

AUSSIE ELECTION

A reader has referred us to this interesting analysis of Howard's win in the Australian elections - http://www.act.org.nz/australian

PREBBLE ON TAX

John, not Richard. Prof John Prebble is tonight giving an interesting lecture, "Income Tax Fictions and the Siberian Dilemma" arguing that income tax is a fundamentally flawed tax. Details at http://www.leanz.org.nz - Prof Prebble says income tax is based on fictions, i.e. lies, that there is an economic difference between capital and revenue and that it is possible to attribute a geographic source to any form of income. This is why the Income Tax Act is so arbitrary and so enormous - around 3,000 pages. Governments are forced to rely on "Danzig decrees" - the Nazi German criminal code catch-all - "Un-German activity". Prof Prebble argues that defenders of the rule of law should launch their assault on the income tax itself.

FUEL AND FAMILY

It pays to listen carefully to Michael Cullen's parliamentary answers. Partly because unlike other ministers he does answer questions, but also because his answers can signal significant policy. The doubling in fuel prices has doubled fuel taxes. Cullen's answer indicates that not only is government reviewing the April fuel tax increase but is looking for legislation to adjust fuel taxes by regulation. In a further answer he indicated that government is having another look at the family package announced in the budget. Howard showed how popular spending targeted at families could be. Early election? For the parliamentary answers see http://www.act.org.nz/earlyelection

THIS WEEK'S POLL

Last week's poll had 71% of respondents picking Bush as the winner. Readers have asked what point is there in a poll about who will win the US election?" The Wisdom of Crowds by James Surowiecki argues that collectively we are better at predictions than experts. Roger Kerr gave an interesting speech at the ACT regional conference about this, see http://www.act.org.nz/wisdom. This week, should Clark fire Tamihere? We'll send them both the result. http://www.act.org.nz/poll .

ENDS

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