Ever since the existence of the Echelon spy system was revealed in the 1990s, the risk of using cyber-espionage for commercial gain and trading advantages - rather than for military and security reasons - has been obvious. So it should come as no real surprise that the NSA whistle blower Edward Snowden is about to reveal information along these lines about the 5 Eyes spy network to which New Zealand belongs. These documents will show this country has been spying on some of our key trading partners. China and Indonesia are likely targets. Given that the Pacific is seen as one of our zones of responsibility, it also seems likely that we would have been spying on our friends among the Pacific Forum countries as well.

It is not simply that our spies have been moonlighting as corporate snoops, for the benefit of our export drive. That’s not big news, since the security services are virtually compelled to do so, by law. One of the GCSB’s three objectives for instance, is to “contribute to the economic wellbeing of New Zealand.” Even the very word 'security’ is defined in the 1969 SIS legislation as including anything that “impacts adversely...on New Zealand’s economic wellbeing.”

Spying on the likes of China by our security agencies is also an inevitable by-product of treating some of our most important trading partners as security threats. It would be comforting to think that - somewhere along the line - someone in MFAT might have done a cost/benefit analysis as to which perception of China is of more value to this country. Do we gain more by embracing China as a trading partner and near neighbour with whom we should be cultivating friendly relations during the 21st century? Or do we gain more by treating it as a hostile military and security presence in the Asia/Pacific region?

Right now, we seem to be treating it as both. As a result, it seems likely that our exporters are going to cop the backlash from the Snowden revelations, once they finally see daylight. Our perishable export goods will be targeted for bureaucratic delays, and some of our business executives may even be detained, if the Chinese decide that certain New Zealand companies have been a party to, or have benefitted from, any illegal surveillance activities. In the long run, such consequences may prove beneficial - if they trigger a public debate about whether we get more out of being a genuine ally of China, than a snoop on what they're doing. For now, we’re trying to have it both ways. A friendly trading partner, and a hostile sneak, largely on a behalf of the Americans. One can hardly blame China for making us pay a higher price for being so...ambivalent.

ACT and incest
Well, Jamie Whyte is certainly making his mark as leader of the Act Party. If people were having difficulty telling the shaven-headed Whyte apart from that other shaven-headed guy who used to lead the Act Party, now they know - Whyte is the guy who thinks that incest should be legal. Oh, but only between consenting adults. This begs the question. Given the power dynamics within families - and the difficulties that already exist in establishing consent (and the lack of it) with respect to sexual offending outside the family, Whyte’s proposal would seem to put a new category of people, many of them women, at risk of sexual predation by their kin. Erosion of the consent defence would be a more likely outcome of the legalising of incest than the protection of those relatively rare cases where brothers and sisters fall afoul of the law when they freely and jointly seek to pursue a marital relationship.

Is incest the end product of libertarianism in full flower? Or has Whyte taken a leaf from Colin Craig’s handbook - whereby a small and insignificant party gets the oxygen of media exposure simply by issuing a stream of controversial statements? Whyte may have concluded that there is no such thing as bad publicity, even when such proposals mainly serve to creep out the electorate. What it underlines is that Prime Minister John Key’s likely coalition buddies after this election - Craig, Whyte and Winston Peters - are a motley crew, indeed.

One final thing: as this column has argued previously, if ACT is to perform its role as a ginger group it has to come up with new policy ideas for the centre right, and not simply recycle fusty old ones like flat tax. Astoundingly, even the NZ Herald has now taken ACT firmly to task on exactly the same flat tax point in an editorial:

The flat tax idea involves the applying of one tax rate to everyone regardless of income. It is advocated on the grounds of simplicity, fairness, transparency and economic growth. Gone would be deductions, loopholes and tax shelters. There are several thorns in that rosy picture, however. In practice, a flat tax has a greater impact on low and middle-income earners because they pay much more tax proportionate to their income. This has led to the concept being condemned as a ploy to make the rich richer and the poor poorer.

Advocating the policy here will open Act to the same criticism, the more so given increasing concerns about the cost of social inequality. Already, New Zealand's tax system is more lenient than most on those who make money, a consequence of the opening of its economy to the world. A top tax rate of 33 per cent is lower than all other nations in the OECD when other income taxes are taken into account. There is no effective tax on capital gains and few exemptions to GST. That framework works well in terms of international competitiveness, but it seems the lowering of tax rates has been a factor in the gap between the rich and poor widening over the past quarter-century.

When even Granny Herald turns against flat tax and preaches against the income inequality being generated by our ‘lenient’ tax system, isn’t it time for the new ACT leadership to scratch its bare noggin and come up with an idea that’s less than 20 years old?

ENDS

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