The Letter – Monday, April 10, 2006

The Letter – Monday, April 10, 2006

The Letter Limited - www.theletter.biz

The Haps

The Chinese Premier comes to visit. Cullen is on the way out. The falling dollar is impacting on the economy. Parliament is in recess for 3 weeks.

Good week for Clark

Helen Clark prepared us for Cullen's departure. She had the sort of week she lives for, entertaining the Chinese Premier. Clark was happier in the company of a communist apparatchik than with the previous week's visitor UK's PM Tony Blair. While Blair challenges the NZ government's worldview, China welcomes our anti Americanism and offers us what the US will not, a free trade agreement.

Does it matter?

There is growing pessimism that the Doha round will fail. France, currently paralysed by strikes and street demonstrations over a minor reform in labour laws, is not going to be willing to tackle EC subsidised agriculture. NZ is such an open economy that even a successful Doha round will not have a major effect on our economy. China joining the WTO has had a greater effect on trade with NZ than the proposed FTA. It is because an FTA will have a relatively minor impact on both countries that we expect an agreement to be reached. NZ trade policy is now about defending our gains from the Uruguay round rather than achieving any new breakthrough.

Rapid turn around

Commentators are saying that the fall in the dollar will take time to impact. We disagree. Today the NZ economy is so flexible the currency change is already affecting both exports and imports. We know of one manufacturer that had been working a three-day week and is now in full production, going from zero exports to 200 containers to the USA in March. Imports of Japanese cars are down significantly. These developments will rapidly impact the deficit despite the negative influence of higher oil prices.

Third World

Exports are being held back by lack of infrastructure. Comalco, the country's biggest manufacturing exporter, is still working reduced hours, due to the electricity shortage. A sign of industry's lack of faith in the government's new regulatory approach to electricity is the number of Auckland companies installing emergency diesel generators for the blackouts they now expect.

Bad Week

Michael Cullen has indicated that this is his last term. (You read it first in the Letter.) The Labour caucus is unsettled as Trevor Mallard, Steve Maharey and Phil Goff maneuver for support to replace him as deputy. Shane Jones also fancies his prospects. Mallard has made no secret of his desire for the finance portfolio. Cullen is now finding that loyalty to Clark is not reciprocated. As a lame duck his power is slipping away. He is overworked and he has no faction supporting him. With Jonathan Hunt in England he is very lonely. Like Clark, we would not be surprised if Cullen does not deliver all three budgets.

Homeless

91% of readers believe David Parker should not be restored to Cabinet even if the Companies Office decides not to prosecute. This leaves Parliamentary Services with the problem of where to put him. One option is to locate him in an office in Bowen House which is currently used by government backbenchers as their "caucus" room. Backbench MPs don't want to give up their room for him and are resisting the move. So much for solidarity.

Into the toilet

While our government maybe a promoter of all things for women it does not extend to their workers. Parliamentary Services have decided that while renovations take place the 14 women on the 1st floor of Bowen House no longer need a toilet on that floor but the 11 male staffers do. The women have been told to use the public toilet on the ground floor or staff toilets on the 4th floor - let's hope they don't get caught short!

The Polls

Except for the Maori Party, the latest polls were uniformly bad for third parties. The polls show that when you put Winston in government, he disappears. The Outdoor Recreation Party, having gained no MPs, has split with United Future. Peter Dunne expresses no concern that a party that once polled well has disappeared. Dunne has destroyed more political parties than any other politician in NZ's history - we have lost count of his kills. While Rodney Hide is digging himself into Epsom and has had a successful party conference, with Don Brash as leader of National, there is very little air left for ACT.

Missing Donald

The Greens would be expected to be the beneficiary of Labour's poor polling but Nandor Tanczos has smoked too much pot and is no replacement for Rod Donald. The Greens acceptance of ministerial staff to work on policy has had unintended consequences. The extra staff and funding, which the Auditor-General has ruled cannot be used for party work, are distracting Green MPs from being an effective political party. (Thinking about it, maybe that's what Labour intended).

Green House Gas

The Greens' extra staff have put out a worthy policy paper on how to meet our Kyoto obligations. Labour, since abandoning a carbon tax, has no policy and is finding it very difficult to put a coherent one together. NZ's carbon emissions are rising rapidly and unless they can be reduced the Kyoto penalties will be significant. The uncertainty over government's response is seriously affecting private sector investment decisions thereby making the electricity generation shortage worse.

Our Poll

Cullen's days are numbered. Who would you prefer to see in the finance role? Your choice is between Goff and Mallard. (Saying John Key is not accepted). Vote at http://www.theletter.biz/vote we will send Clark your views.

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