Richard Prebble's Letter from Wellington Monday, 09 October 2000

Richard Poole's full page advertisement has resulted in frenzied coalition attacks. Labour's polling says that the loss of skilled New Zealanders is an issue deeply worrying the electorate. Helen Clark has adopted her usual crisis management strategy: playing the man and not the ball.

The Migration Facts
Helen Clark said on the Holmes show, "fewer people left in the year to August this year than last year". If you look at net migration she is right. The appointment of Winston Peters saw a huge increase in emigrating New Zealanders, and a halt in immigration. Ergo, net migration, 1997: 14,491; 1998: -2842; 1999: -11,124; 2000: -10,032. But the election of the coalition has seen emigration figures rise. The absolute number of New Zealanders leaving is at an all time record, 1997: 58,615; 1998: 61,996; 1999: 68,003; 2000: 72,083.

Loss Of Skill
We have had migration peaks before. In the early 1980's, under Sir Robert, large numbers of New Zealanders left. What is new is who is leaving, professionals and skilled people. Last year, 19,235 skilled New Zealand left and 13,739 skilled immigrants arrived - a net lose of -5,496 people. But it's worse. We are losing trained doctors while those replacing them struggle to have their qualifications recognised. (ACT MP, Ken Shirley, has a private members Bill before the House aiming to make the recognition of qualifications process more efficient). After all, we are short of doctors, not taxi drivers.

ACT's Issue
ACT leads on the issue because it is the most important issue facing the country. ACT is constantly reviewing immigration figures and will relay news on the trends in future speeches.

Is Clark Losing Control?
The ferocity and frequencies of Helen Clark's personal attacks suggest she may be under immense stress trying to manage the coalition. A Senior Labour Cabinet minister said on the dinner circuit, "We can manage the Alliance Ministers, what we can not control are the incompetents they insist on hiring in their offices." Prophetic words. If Tony Simpson had not called Richard Poole a "half-wit", would Poole have organised the fullpage ad? If Jim Anderton had not invited himself to a Roundtable meeting, and then called New Zealand's twenty largest businesses the cause of the "largest single explosion in welfare dependency ever", would Roger Kerr have concluded that the only way to talk to the Government was through the media. If Clark and Cullen had invited the Head of the Roundtable to the October dialogue, would the ad have appeared?

GST Receipts
The Finance Minister keeps spinning that the fall in business confidence is not justified by citing GST receipts. In reality, the returns for July and August are down a massive 6.8%. Someone also needs to explain provisional tax to Michael Cullen. This year's tax is based on last year - a good year. Next year's will be based on this year- a bad year. Firms will also receive credits for the extra tax they paid - a fiscal double whammy is coming. Accountants tell ACT they have never seen such aggressive tax planning by New Zealanders determined not to pay the coalition's 39 cent envy tax. Cullen won't know about this until provisional returns are filed next April. He will get a shock, a $300 million shock.

But The Socialists Are Happy
In the last 6 months Telecom has dropped form $9.60 to $5.40. Its market capital has fallen from $16.85 billion to $9.47 billion and shareholders have lost $7.4 billion. It is fair to assume that Kiwis own half of Telecom (either directly through savings or indirectly through pension funds and super schemes). This means Kiwis have had $3.7 billion wiped from their savings. That's about $1,000 each. The Government believes their telecommunications inquiry will save consumers $300 - $400 million per year. In the last five days Telecom has fallen from $6.25 to $5.40. That has wiped off $1.5 billion in market capital. If half the loss is borne by domestic savers, this means a loss of $750 million, almost twice the inquiry's touted long run consumer savings.

MP Pay Rise
Another shock will be the Higher Salaries Commission's decision on MP pay rates. The media thought Michael Cullen's remarks about pay restraint were directed at Dr Brash's pay. It was really directed at the Commission reviewing MPs salaries. The criteria used is set out in law, and if applied correctly, could see a 9.5 per cent pay rise for MPs! Having put the Employment Relations Act in place, there is now nothing to stop such a pay shock bulleting through the economy.

Stagflation
The Letter (with all due modesty) would like to point out that it was first (18/09/00) to predict stagflation. ACT Chief of Staff, Chris Milne, revived the term (the Letter is receiving e-mails from younger readers asking what it means). Cullen is adamant it won't happen. The Letter points out it has. The economy is in recession and inflation is rising. Result, stagflation.

ERA Equals Complexity
All hiring is still suspended as the Parliamentary Commission struggles to put together an employment contract that meets the Employment Relations Act.

The old collective contracts are 20 pages. The new one will be over 50. It is the Employment Relations Act's compliance costs that will prove to be the main problem. It will cost millions to convert the 600,000 verbal employment contracts to writing.

Reaction To Chapple Report
The Chapple report that shows the gaps are closing, not widening, is causing huge ripples in the civil service. Predictably, Te Puni Kokiri, has produced a report denying it (the report is so bad the departments decided not to publish it). The grievance industry is in a complete tizz. They can't fault Chapple's research and their lucrative incomes are at risk.

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