ACT's The Letter 7 February 2006

The Haps

Putting the demonstrators in parliament has given us a quiet Waitangi Day. Labour has had its first cabinet meeting. Political parties have given their "State of the Nation" speeches. Are we headed for a recession? Can this minority government hold it together? Is Helen Clark heading to the UN?

Is the Red Light Flashing?

When a former Reserve Bank governor says the country is headed for a recession, we have to take notice. Don Brash's evidence is falling business confidence but is that a reliable guide? The previous record fall was in April 2000 and the economy has grown in every quarter since then. We think it is a warning signal to government that business is hurting.

What is happening?

Telecom who is in contact with most people reports record cell phone sales and no sign of a recession. The share market is not predicting a recession. The Roy Morgan Consumer Confidence Survey for January was up 4.7 points, and while the figure is lower than last January, 56% of New Zealanders expect to be better off this year.

Exporters are in trouble

The price of lamb is down and the fishing companies have used up all their foreign exchange cover while being hit with higher diesel prices. Manufacturers continue to struggle but it is not just the high dollar. China is starting to challenge even niche markets such as building of luxury yachts.

Will the dollar fall?

The bank economists are unanimous that the dollar is over priced and is due for a substantial correction. New Zealand has the highest interest rates in the OECD. Why should the Kiwi fall? Michael Cullen is going to come under great pressure to intervene in the exchange rate, in particular from the meat industry.

Lame Duck Finance Minister

Cullen's instinct is to leave well alone but he is not as strong politically as he was. Clark's confidence in her finance minister has been shaken. The PM believes that his chewing gum tax cuts almost lost Labour the election. For the first time there is significant lobbying going on inside the Labour caucus, not against Clark, but directed primarily against Cullen. Michael, who is going to be 63 next election, has indicated this is his last term. He does not like flying, a huge habdicap for a politician. It is the reason he gave up his safe Dunedin seat for a place on the list.

While other politicians like flying because they can get away from the cell phone, for Michael there is no respite. He is grossly over worked, being Finance Minister, Leader of the House and chief head kicker. He not only deals with issues like the foreshore but also delivers the bad news to MPs as Clark hates that job.

Remarkably many of the demoted MPs believe that if it were up to Helen they would still be in cabinet. (It reminds one of the stories of the Brown Shirts killed on Hitler's orders who gave Heil Hitler salutes as they were shot by firing squads). Mallard wants to be finance minister and Maharey wants to be deputy leader. Cullen looks exhausted and his age. His future depends on his friendship with Helen. Has Clark any male friends?

Off to the UN?

Clark has done nothing to stop women's groups from promoting her. If Labour were to trail in the polls, Clark would be the first off the ship.

Three Days in Taupo

Instead of wasting time, demanding pledges of loyalty, National need to review their parliamentary tactics. Labour is a minority party with no coalition arrangement guaranteeing a majority on any measure except supply. When Michael Cullen was told of the possibility of a select committee inquiry into TVNZ he instructed the chair Shane Jones that no inquiry be held. To the government's shock its coalition partners and the Maori party voted for the inquiry. Interestingly this was not a National initiative. What has saved Labour so far is National's Gerry Brownlee's campaign against third parties parliamentary rights. Since the election National has not been able to gain even the ACT party's support for its initiatives. The answer is obvious.

Taxpayer Bill of Rights

Rodney Hide has proposed a constitutional amendment to impose spending caps at present levels of expenditure per capita adjusted for inflation. Any increase would require 75% vote in parliament or a referendum. He calculates a family of four would be $240 a week better off if Labour had followed his suggestion. To read his full speech see http://www.act.org.nz/news-article.aspx?id=27507.

Will the poodle bark?

In a press release last week, ignored by the media, Peter Dunne announced that United Future had had an all day caucus, (all three of them), to examine "what needs to be done to make United Future a significant force". After the usual waffle about the family, and no explanation of why he is in coalition with the godless anti family Labour party, he says "achieving real tax reform is a key priority for United Future and for me as Minister for Revenue". United Future MP Gordon Copeland is determined that they will deliver. Another issue for Cullen to resolve.

Green Goss

Remember the fuss about Otago Student Magazine, Critic and its annual "offensive issue" with a "how to do it" article on drug rape? The issue has just been banned by the Office for Film and Literature Classification. And what has happened to the editor Holly Walker? She has just been appointed the Green's media officer.

Our Poll

Is Brash right and are we headed for a recession or is Cullen correct and it is just a minor slow down. We will send the poll result to the Reserve Bank. Vote at http://www.theletter.biz/vote.

ENDS

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