Archive for April, 2011

Labour poll crash highlights leadership vacuum

The Labour Party is staring at its worst poll result since the 2008 election, but leader Phil Goff is safe – until after the next one.

TV3’s weekend poll showed National at a near-record 57.5% support and Labour down 3.8 points to 27.1%, below the psychological 30% barrier and in danger of losing nine MPs if an election was held now.

It’s leadership coup territory, but Goff isn’t going to be challenged, because there’s no credible alternative and no one wants the job anyway. The real issue is who will take his place after the November 26 election, and it isn’t as simple as some media are reporting.

There’s no cohesive plot to install former party president and union leader Andrew Little, although he’ll be in a strong position to challenge through his union power base (would the electorate tolerate a union-led Labour Party?). But Little still has a long way to go to prove himself, and the campaign he fights in New Plymouth will be closely watched. He’s taking on National’s Jonathan Young, who won the seat in 2008 with a 105 vote majority.

Little is also an unknown quantity as a debating chamber speaker and caucus manager. And if he wants the prize of being the next PM, taking over from Goff might not be the smartest move to make.

National looks like being a three-term Govt, as the three before it were, and under this scenario the next leader of the Labour Party will have to survive six years in opposition.

It would make more sense for Little to become the next deputy leader, with David Cunliffe or David Parker in charge, and wait for the main chance when a worn-out National Party has served nine years in office.

Little needs a much higher profile as a politician, and the TV3 poll showed it. When 1000 voters were asked who they thought should replace Goff, just 4.6% picked Little.
The poll also showed 40% didn’t have an opinion, another indication of the low level of public recognition for Labour’s front bench. Those who did have an opinion put deputy leader Annette King at the top of the list – she doesn’t want the leadership – followed by Cunliffe and Trevor Mallard on an equal rating, Shane Jones, Parker, Little, David Shearer and Grant Robertson who fancies his chances but also has to prove himself.

And unless there’s a big swing away from National between now and the election, Labour’s next three years could be as bad as its first term in opposition.

On current poll ratings National could govern on its own without needing any support parties to give it a majority, and Labour wouldn’t be able to keep the 43 MPs it came back with in 2008.

Goff, meanwhile, insists he can turn things around and says the soaring cost of living is going to erode National’s support.

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Hide’s future seems safe despite party meltdowns

It’s a question which has been intriguing Parliament’s press gallery for months – will National let Rodney Hide keep his Epsom seat in the November election and save ACT from oblivion?

The party disgraced itself with the Heather Roy leadership debacle and then lost David Garrett in scandalous circumstances, but John Key says his relationship with ACT has been “constructive” and it’s been a loyal supporter through the agreement it signed after the 2008 election.

Key gave a strong hint on Monday Hide will be safe, saying National will campaign for the party vote in Epsom as it’s “primary aim.” Fencing with reporters, he wouldn’t say whether National wanted to win the seat although it’s in the process of selecting a candidate. But he did confirm in the case of Hide and Peter Dunne, who holds Ohariu and is also a Minister, National wasn’t going to campaign “to knock them out of Parliament.”

Epsom is a tricky issue for National because although its voters backed Hide with strategic votes last time, there’s a move against doing it this year. Some openly say they want the right to vote for a National candidate and get rid of Hide. Key says this isn’t a problem – he wants them to back National on the party vote and they can support whoever they like with their electorate vote.

Key says “we recognise people are free to vote how they want and at the end of the day they may choose not to support local MPs.”

The question now is whether National is going to put out the quiet word to back Hide – and if it does, will its voters listen? It could still depend on what the polls say close to the election.

At present ACT is flatlining around 1% and Hideb would be its only MP. If it doesn’t pick up, National could decide Hide isn’t worth the aggro and grab the seat for itself.

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Joyce cracks down on student debtors

Students living overseas and not repaying their loans will be getting hurry-up emails from IRD this week as the Govt gets set to collect the cash through debt collection agencies if it has to.

IRD says more than 88,000 students are living overseas with a total loan balance of $2.3bn. Of this, $195.7m was overdue for repayment at the end of last year.

Tertiary Education Minister Steven Joyce is going to tighten up the system, which he says is too lax and sends the wrong message.

He’s also going to reduce the amount people over 55 can claim through student loans and he’s clearly had enough of people who borrow to learn to be pilots and then don’t get jobs flying anything.

John Key says the interest-free component of student loans won’t be changed although he still believes its bad economics. Labour introduced interest-free loans to pick
up the student vote and Key says 580,000 now have them. He’s backing Joyce’s moves and says those who stay in NZ pay off their loans a lot quicker than those who leave.

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Economic debate: Can Govt control inflation?

So how much of the latest CPI lift (up 4.5% in the year to March) was within Govt control?

The NZ Herald reported the PM as acknowledging people were “feeling the pinch” as prices rose at their fastest rate in two years led by fuel costs, something he said his Govt could do little about. He obviously meant the Govt could do little about internationally set prices such as oil.

Not so on the home front. The statistics show central and local Govt fees and charges rose 6.8% in the March quarter from a year ago. This helped push non-tradeable
inflation to a record 5.2%.

Obviously the Govt could take a hard look at the taxes, fees, charges and so on which fuelled this particular rise.

What Can Labour Offer? If a Govt can do nothing – or nothing much – opposition politicians would be wasting their breath telling us what they would do.

Labour leader Phil Goff said details of how his party would tackle the wider issue of inflation would be revealed in its taxation and savings policy closer to the election.

Finance spokesperson David Cunliffe talked of increasing the minimum wage and removing GST from fruit and vegetables. He also described the Key Govt’s economic performance as “lacklustre,” although the opinion polls suggest it has more lustre than anything his party has promised.

Labour has talked, too, of monetary policy changes aimed at lowering the exchange rate to help lift our export income, although this would make imports more expensive, including the oil price which feeds through to every product we buy.

No Action Pending. Any notion Key thinks his team can do little about inflation was dispelled by his Breakfast interview, when he said the Govt couldn’t control things like violent fluctuation in food or petrol prices, but it could “take the pressure off the system” by – for example – controlling its spending. He didn’t say so and probably won’t, but he could also increase taxes to further take spending power out of the economy. By tightening fiscal policy he could weaken the economy more than otherwise would happen and reduce inflationary pressures.

On the down side, however, businesses would feel the pinch and jobs would be lost. Rob Muldoon more dramatically imposed a wage/price freeze back in the early 1980s.
The results were disastrous. It’s not a question of what a Govt can do – it’s a question of what it should do.

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Concern mounts at CRI merger

Reports the Govt is planning to merge Crown Research Institutes are worrying the Association of Scientists who say they’re already suffering from previous budget cuts. The institutes are under review, which usually means a cost-cutting exercise is underway and the Govt said last year the infrastructure around them needs to be fixed. This usually means […]

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Government business: Smoking and MUVs

Tobacco Check. The Health Sponsorship Council requests proposals for a continuous monitoring of tobacco controls managed on behalf of the Ministry of Health. It says the past 12- to 18-months has seen many tobacco control activities. The tobacco control sector needs to know the impact of various activities on the knowledge, attitudes and behaviour of […]

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Sick economy needs urgent surgery

Wind back to the 2008 election campaign and the early months of John Key’s new Govt, when it held genuine aspirations for NZ’s future and a strong, vibrant economy delivering higher standards of living.

Fast forward to today, as it faces the biggest budget deficit in the country’s history, slow and fragile economic growth and a soaring cost of living driving thousands of families to food banks and despair.

Little is now heard of job creation programmes and strategies to boost business output.

Instead, Finance Minister Bill English is preparing a “zero budget” with new spending for health and education scraped away from other departments.

Compared with 2008 and the promise of brighter futures, the current scenario is a bleak replacement. The Govt did save NZ from the sharpest edges of the international recession, and it has started to rebalance the economy, as it said it would. This worked better and more quickly than had been anticipated, and English now acknowledges lower household spending
has slowed the recovery.

But it was events beyond its control which have had the most impact – the two earthquakes which struck Christchurch, causing damage which will cost billions to repair and is pushing borrowing even higher – collapsing finance companies drawing down taxpayer-funded safety nets, and droughts and blizzards which damaged production.

Anxious to avoid a downgrade from the international rating agencies, the Govt must present a credible debt repayment programme and a timetable for returning to surplus.

On Tuesday, English told reporters he is confident his budget will satisfy the agencies.

Labour says Key now leads a slash and burn Govt – a more accurate description of it is one which is wielding scalpels. Labour also says Ministers have no plan for economic growth, and when it puts this question to English and John Key there are no compelling answers other than rebalancing the economy will, eventually, deliver a brighter future.

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Greenpeace scores propaganda victory

The Govt’s inability to frame an aggressive mining policy, coupled with tough environmental safeguards, has left it looking weak and spineless in the face of Greenpeace’s disruption of the seismic survey commissioned by Brazilian oil giant Petrobras in its Raukumara Basin permit.

Greenpeace scored some free propaganda hits, while from within the coalition, the Maori Party was critical of “Libya tactics” being used against the protesters and ACT leader Rodney Hide accused the Govt of allowing “eco-terrorists” to disrupt lawful activity.

The Govt, which came to office determined to seek economic transformation through development of potentially vast oil and gas resources, now risks international oil explorers deciding it is all too hard, and heading off to more welcoming territory.

Greenpeace exploited fears of a Deepwater Horizon disaster plus the old scenario of foreigners scoring oil riches at the expense of the “poor, brown” indigenous people, and when the Govt talked of using the Navy to remove the “peaceful” protesters evoked images of Colonel Gaddafi firing on his own people.

The Govt’s mis-steps included its own hubris in failing to consult appropriately in the first place with local iwi over the award of the petroleum exploration permit, and to frame appropriate marine pollution safeguards for the exclusive economic zone.

Some critics go further and argue the Govt could have forestalled the scenario which gave Greenpeace so much mileage if it had framed a petroleum exploration policy which all NZers would see as yielding benefits to them, as well as to international oil explorers.

This could have been done through a state-owned vehicle, a revived Petrocorp for example, given a statutory free-carry through any Crown Minerals permit issued to explorers.

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Key hopes to woo Sarkozy

John Key’s first foray into European affairs will be a test for his diplomatic skills. His meetings with the French Govt are actually more significant than the British, because France is the current president of both the G20 and the G8.

Also, Key enjoys frequent contact with the UK’s David Cameron and his Govt and there are few policy differences.

Unfortunately the EU will still be on holiday in the course of his visit (the week after Easter is a holiday for much of the EU in Brussels), however, such is the current state of EU politics France is now deeply influential given recent electoral setbacks to Angela Merkel in Germany and the ongoing financial crises in Greece, Ireland and Portugal.

On the face of it, NZ and France get on extremely well. The relationship is balanced, say officials, boosted by an enthusiastic French ambassador to NZ, Francis Etienne, and close links with the French military based in Noumea. NZ and France work closely in the Pacific as France calibrates its future moves over independence for New Caledonia.

France also attaches much symbolism to the NZ war effort, notably as the centenary of the First World War approaches.

The G20 and G8 are important for NZ. Key will be watching for any indications that Europe might slip into a new protectionism as both groups juggle financial crises. The EU remains NZ’s second most important trading partner after Australia but this throws up a new challenge.

President Sarkozy, PM Francis Fillon, Foreign Minister Alain Juppé and Economics Minister Christine Lagarde are well aware of the recent pronouncements by NZ Ministers of a new focus on Asia and China in particular – and will be anxious to test whether NZ remains committed to Europe.

This in turn reflects a debate within MFAT and the Govt over whether NZ could risk a focus on Asia and Africa at the expense of Europe – or whether it should spread the risk.

Trade Minister Tim Groser is unenthusiastic about a comprehensive agreement with the EU (some say he has been burned by his experiences with the WTO), but others maintain it might be the only way NZ can maintain a foothold in a rapidly changing
Europe.

Key would want to gauge French reactions to a CA. France has also taken a robust stance on Middle East and African affairs, leading the charge in Libya and using its military forces to effect in the Cote d’ Ivoire.

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National retains poll position

The latest One News Colmar Brunton poll shows National still holding a 20 point lead over Labour, and if it turns into an election result it could rule on its own.

At 54% – up three points since mid-February – National would have 67 seats in Parliament. Labour managed a one point improvement to 34% which is worth 42 seats, the same as it has now.

Labour is taking comfort from coming through the Darren Hughes debacle unscathed, and leader Phil Goff ’s rating in the preferred Prime Minister stakes is up four points to 11%.

But John Key is still an untouchable 55% and nothing seems to diminish his popularity.

Labour hopes a new campaign against asset sales and the rising cost of living will turn the tide but voters appear unmoved.

And the poll also showed the number of undecided voters falling three points to 9%, which isn’t good for Labour’s chances of achieving a big swing.

The same poll showed about half of Labour’s supporters either don’t know or are unsure about who should lead the party.

Of those who did have an opinion, 30% backed Phil Goff and potential contenders were barely on the radar.

David Cunliffe rated 3% and David Parker 0.8%, which supports Trans Tasman’s reported conclusion their profiles are so low most people don’t know who they are.

Goff, having survived the two most difficult weeks since the election, is now safe as leader through to the election. Caucus has closed ranks as a matter of urgent necessity and MPs know they have to stay that way.

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Capital talk: Live from the Beehive

Damien O’Connor’s unfortunate comment about a “gaggle of gays” running Labour’s list selection process is seeping into the debating chamber. National MPs, careful not to mention the gay part, are having fun referring to the opposition as “the gaggle over there” which doesn’t amuse the gaggle at all… Labour’s Ross Robertson has always signed himself […]

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Economic debate: How to rebuild a city

A surprisingly generous 40% of taxpayers surveyed by UMR flagged their willingness to temporarily pay more taxes to help rebuild Christchurch. They favour an earthquake levy on those of us with incomes above $48,000 rather than increased Crown debt or big spending cuts. 29% would prefer spending cuts, 22% preferred more Govt borrowing. But the […]

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Delicate diplomacy ahead for NZ

Violence in Afghanistan, where UN workers were killed in Afghan protests over the burning of a Koran in the US, could make the task of transition to peace harder. Bamian province, where NZ’s provincial reconstruction team is located, has been nominated as one the first to enter the transitional phase, and an ISAF conference in […]

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EU optimistic about Doha

European Trade Commissioner Karel De Gucht paid a visit to NZ, representing the EU at the Christchurch Memorial Service and going on to Auckland for talks with Trade Minister Tim Groser and business leaders. De Gucht says there’s a chance this year of concluding the 10-year-old Doha Round of WTO negotiations, which includes liberalisation of […]

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Any bets on harbour crossing?

Was it a coincidence the Govt released costings for another Waitemata Harbour crossing just as Ministers were emphasising the challenges they face in cutting costs and rebuilding Christchurch without a downgrade from international credit rating agencies? The NZ Transport Agency has come up with $3.9bn for a bridge and $5.3bn for a tunnel – figures […]

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Spending squeeze hits defence projects

The squeeze on Govt spending has stalled two defence projects – a new pilot training programme for the RNZAF and new inshore maritime patrol aircraft. The first concerned providing advanced fly training for students after basic training and would have included simulators as well as a replacement for the Beech King Airs currently flown. The […]

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