Richard Prebble's
Letter from Wellington
Monday, 03 December 2001

Economic Reality Setting In

Three reports during the past week have cast doubt on the direction of the New Zealand economy. Macquarie Bank notes that year-on-year export growth has been steadily falling all year, from 30.5% in January to 0.2% in October. October year-on-year imports rose 2.9%, contributing to a $267m trade deficit for the month. The bank comments: "We would expect the trade position to deteriorate over the coming year - notwithstanding the low NZ dollar - given weak global growth and declining commodity prices."

The Reserve Bank Governor recently quoted figures in a speech that cast doubt on the claim that commodity prices are the best for many years. Prices only look good in NZ dollar terms. When put into US dollars the current commodity prices are barely above average. (see figure 5 at http://www.act.org.nz/rbnz)

A third set of figures, from Westpac, warns of a downturn in the primary export sector during the next 12 months, due to the global economy going into recession. A sober interpretation these figures is that all we've been seeing for the last two years is the effect of a massive devaluation of the NZ dollar. The favourable effects of devaluation have occurred and now we're going to experience the other side - the reality that NZ is a poor country.

Devaluations by themselves have never kick-started an economy - otherwise, Latin American countries where currencies are in free-fall would be booming.

Caution Needed on Kyoto

A report just released by the NZIER projects serious damage to the NZ economy if the Kyoto Protocol on global warming is ratified. Our GDP in 15 years time will be 18% below what it would have been without the proposed greenhouse gas emission policy, the report predicts. "Overall, our analysis shows that the NZ economy will adjust to climate change policies primarily through shutting down or reducing production in emitting sectors, rather than by substituting inputs," the report says. (see report at www.act.org.nz/kyoto )

Breach of Privilege?

Winston Peters wants a judge to investigate allegations that the army leadership has attempted to blackmail Ron Mark over his military file. But there's a better option. Any attempt to intimidate an MP in the discharge of his or her duties is contempt of the House.

The Speaker and all MPs would treat seriously any evidence of such wrongdoing. Winston should write to the Speaker with his evidence, citing a breach of privilege. Of course, that would mean evidence - and no easy grandstanding in the absence of evidence.

Bathgate-gate II

Susan Bathgate bowed to the inevitable and resigned last week from the ERA just ahead of John Upton QC's report going to Cabinet. The report was into whether there were grounds to investigate the withdrawal of Bathgate's warrant following Rodney Hide's complaint.

Upton's report was a hard-hitter with even the ERA coming out in support of investigation. Bathgate wanted to tough it out - she's come this far. But a deal was brokered that would see her keep her other part-time warrants and the report secret.

Questions remain. If she's not fit for one warrant, why is she keeping the others? And if it's good enough for Bathgate to stay on her other warrants, why can't we see the Upton report? Rodney Hide will be testing Parliament's support for Bathgate through a notice of motion this week.

Alliance woes II

Jim Anderton's woes are Helen Clark's woes - and they're not about to go away. Matt McCarten has control of the Alliance council - and the ordering of the list. The real power is with the council and with Matt.

One option is for the Alliance's Labour loyalists to just fold in with Labour and take a chance on Labour's list. That would leave a far-left party headed by Laila Harre and backed up by Willie Jackson and Liz Gordon. The PM views the prospect of that development with foreboding. Then there are the Greens. Labour Ministers think them wacky and don't want a bar of them. And Jeanette Fitzsimons now says the Greens are re-thinking whether they're willing to be a junior partner in a Labour-led coalition. The Greens and Labour are poles apart on some crucial issues.

So Labour needs Jim Anderton and his bullied caucus for a stable government - and Labour MPs know it.

Health System in Crisis - Bring in the Private Sector

Labour Party sources are reported as saying the government intends to put up to $400m more into health in election year. But why have they waited until the situation has reached crisis point? The last two Budgets have seen the lowest health funding in many years. On a per capita, inflation-adjusted basis, the health sector this year received less money.

ACT favours greater use of the private sector in health. Let's put private enterprise to work on waiting lists.

Bye-Bye Graham

Labour's Graham Kelly, MP for the safe Porirua seat, has announced he'll stand only on the party list at the next election. He says he can't properly do his job as a constituency MP because of his onerous duties as chairman of the foreign affairs select committee. The fact is, he's been pushed. Labour list MP Willie Laban has been gaining support from the Samoan community in Porirua to take over Mr Kelly's electorate. The Labour hierarchy, to prevent a squabble, has offered Graham a high place on the list.

The Letter is sorry to inform Graham that the creation of two new constituency seats - both Labour - means there'll be two less Labour list MPs. Labour holds so many constituencies that it can only expect about 12 list places. So Graham's promise of 11th on the list is not as good as it sounds, especially if there's the normal swing against an incumbent government.

Early Election?

For many years, MPs have booked their flights home for Christmas by finding out when Jonathan Hunt has made his booking. MPs note that next year's Speaker's tour was scheduled for the Easter break in March but has now been delayed until June/July. What does Jonathan know? Should we pull out our snap election programme?

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