Richard Prebble's Letter from Wellington Monday, 18 December 2000

A growing economy is like a rising tide - it lifts all ships, was Richard Prebble's message to a breakfast meeting last week. Richard reviewed the highs and lows of the parliamentary year, Labour's keenness to change its spots and ACT's plan for a prosperous New Zealand. The speech can be viewed at: http://www.act.org.nz/cgi-bin/act/search?t_id=all&c_id=all&ind=1&art_id=2075

A Lesson In Political Realities

Labour is now in full U-turn mode. After the strongest honeymoon ever in public opinion polling, Labour proceeded to increase income tax 18 per cent, legislate away ACC choice, freeze tariff reductions and repeal the Employment Contracts Act. The result? A technical recession, the worst growth in the OECD and a collapse in confidence and investment. A U-turn was vital.

The Realities From a public relations viewpoint the U-turn has stopped Labour's poll slump. But this is only a short term solution. As the Reserve Bank reports, the average Labour voter is worse off now then they were a year ago. Labour voters did not vote for a year of consolidation. And while the union leadership may be willing to sign contracts that do not compensate for inflation, the rank and file are becoming increasingly restless. Next year the unions will encounter far more militancy, especially from state and health workers. Clark will also find it hard to hold to the U-turn. Maori MPs are conscious that Labour lost all of the Maori seats once, and could easily do so again.

The Junior Partner The U-turn has left the Alliance stranded. The party is losing numbers, it has no money, no brand and the Greens are consuming its electoral base. The Alliance's 14 non-negotiable policies have become just one - not even on the original list - a small Post Office savings bank. While Jim is revelling in the power and prestige of Deputy Prime Minister the Alliance's internal rumblings are growing stronger. Laila Harre's paid parental leave could be a coalition watershed issue.

Winston Rides Again

As the Letter predicted, Winston is again eyeing the Maori seats. Earlier this year Winston attacked Maori seats saying they should be abolished. His support remained firmly below five per cent. So now he is working to repeat the strategy used by NZ First in 1996 to clean sweep the Maori seats. First: Link up with another Maori MP. In 1996 it was Tau Henare, in 2002 it will be Hon Dover Samuels. Second: Carpe Diem. Clark's decision to boycott Waitangi, and ban the governor-general and Navy from attending, has given the day to Dover and Winston. Third: Attack the closing the gaps strategy. New Zealand First MPs have reminded parliament that Dover was sacked because Clark said he could not implement the closing the gaps strategy. Helen Clark personally took charge of the issue, but now she wants to bailout. If Dover was sacked because he could not implement closing the gaps, what of the PM's credibility if she fails? It was Helen Clark who lost Labour the Maori seats in 1996 and she is in real danger of doing it again.

Old Habits Are Hard To Break

The government has launched another stealth attack on property rights. ACT Deputy Leader, Ken Shirley, has come across a copy of the proposed Crown Minerals Amendment Bill No 3. The Bill will amend Section 111 of the Crown Minerals Act 1991 so that there is no right to renew mining licences. Not only is it legislative theft it will nullify a recent High Court decision. Under the Crown Minerals Act 1991 a privilege holder under the Mining Act 1971 retains all rights held under the former Act. Justice Heron recently confirmed this principle in a case brought by Glen Harrow Holdings Ltd. He determined that a licence holder under the Mining Act 1971 has the right to be granted a new licence, not just the right to apply for a new licence. The proposed amendment will exterminate that right. The proposal may seriously threaten the viability of New Zealand's $1,894m mining industry. ACT believes property rights are fundamental. The government's proposal, when coupled with its eagerness to appropriate West Coast timber rights, destroys any PR myth of a business friendly government.

The Economy

The Letter believes economic growth is stronger than officially forecast. Treasury and the Reserve Bank always underestimate climate effects and agriculture is having a good year. But there are serious storm clouds. Investment this year has been woeful and business is cautious. Any growth will quickly hit serious constraints. New Zealand is still losing 200 people a day, and the changes to Australian immigration rules will see a continual migration this summer. Government surpluses are likely to be less than predicted and demand for extra spending greater. The Aussie, Japanese and US economies are slowing down. An external shock could off set any sustained recovery. With inflation likely to hit 4 per cent and place pressure on interest rates, 2001 won't be easy.

ACT And NZ First In Agreement

In the last session under urgency Dr Cullen's Superannuation bill received its second reading. The Government may be in trouble. National pointed out that superannuatants are better off under an inflation adjusted pension. Jim Anderton finally admitted that tax based super is unsustainable. ACT and NZ First made it clear that savings in individual accounts was a condition of support. The Greens abstained.

New Zealander Of The Year

ACT MP Muriel Newman's hard work has been recognised in a national poll. Muriel's championing of issues like shared parenting and Family Court openness have won her much support in the Herald's New Zealand Man and Women of the Year award. With just under two weeks of voting left she is a definite contender for overall honours.

Thank You And Merry Christmas

This is the last Letter for 2000. Thank you for your readership, feedback and support. We wish you the very best for Christmas and a happy and prosperous new year. We'll be back on the 8th January.

Letter from Wellington is faxed and emailed weekly. To subscribe, or contribute, call 04 470 6624, Fax 04 473 3532, e-mail act@parliament.govt.nz Post to: ACT Parliamentary Office, Parliament Buildings, Wellington.

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