Nov 20, 2008

Best Post?

A couple of readers have asked us to nominate the post that had the biggest impact. There were several but we were proud of this one from 18 December 2007 - Peter Dunne changed his position on the EFA the day it came out, and it wasn't a bad prediction on what happened 11 months later:

Dec 18, 2007

Has The Next Government Already Been Formed?
Who is opposing the Electoral Finance Bill? - National, Maori, Act.

Who is raising serious questions about the emissions trading law? - National, Maori, Act.

Have Labour's tacticians maybe blundered and forged what had previously been thought to be an unlikely alliance? - Maybe.

Might Peter Dunne be risking three years completely out in the cold if he goes ahead and supports the Electoral Finance Bill today? - Yes.

Posted by Queen Bee at 8:18 AM

Nov 15, 2008

Final Dispatch

The Hive was established in late November 2007 as a reaction to the proposed passage of bad legislation – the Electoral Finance Act. The collaborators had several other goals:
To experiment with the power of this new media tool – a blog;
To raise the standard of political debate – particularly around trade and economic policy and about the policy response to climate change;
To expose the truth about Winston Peters’ performance as Foreign Minister and the funding of the NZ First Party;
To assist the wider news media to understand the importance of some issues that had previously been misunderstood, misreported or not reported.

During 2008 we became increasingly frustrated at the way New Zealand was being run, particularly over the process around the proposed emissions trading scheme, foreign investment (eg Auckland Airport), and the squandering of billions on a poor investment (Kiwirail).

We also became concerned about the politicisation of the public service and the fear from some in the public service about providing free and frank advice to Ministers. Ministers were in some cases being told what they wanted to hear as opposed to the truth. And the public were not being told the truth because Ministers would not let officials tell the truth. The likely cost of carbon credits is a classic example.

A year after its establishment the collaborators are pleased that pretty much all goals have been achieved. They are not displeased with some recent developments also:
The decisive result at the election;
The removal of NZ First from Parliament;
The participation of the Maori Party in Government;
The election of Phil Goff and Annette King as leader and deputy leader of Labour.
The probability that Mike Williams will stand down from the Labour Party Presidency and be replaced with Andrew Little.

In sum there has, we believe, been a fundamental shift in New Zealand politics. The Hive, we believe, played a roll in achieving this shift. In the last month it moved to #4 in the ranking of NZ political blogs and was achieving an impressive daily readership of close to 3,000 opinion formers every day Monday to Friday with a daily readership at weekends closer to 1,200.

So we have decided to call it quits on The Hive. We will leave it up as it is an interesting resource for those studying New Zealand politics and history. Those studying the impact of blogs on New Zealand politics will also find this a useful resource.

The Hive has been a collaboration involving around a dozen people. Backgrounds include politicians, lobbyists, journalists and business people. Two of us are discussing a fully commercial venture (once the EFA is abolished) which will seek to continue the improvement of debate and analysis of key issues confronting New Zealand. Watch this space in the New Year.

We thank the collaborators for the hours they donated to this effort. Everything has been done on a voluntary basis, usually late at night or early in the morning.

And thanks again to our readers. Many of you contributed comments. All comments were read and had some form of impact. Thank you for being part of The Hive.

Nov 13, 2008

Not Sure Dom Post Has This Correct

There have been Ministers outside Cabinet for many years. We thought the objection three years ago was the notion of "Minister outside Government" - specifically Minister of Foreign Affairs outside Government.

This is the start of today's Editorial in the Dom Post -

National's leadership has clearly had another about-face experience. In 2005, then deputy leader Gerry Brownlee strongly criticised Prime Minister Helen Clark for allowing the leaders of two support parties, NZ First and UnitedFuture, to be ministers outside Cabinet, The Dominion Post writes.

Heather Roy For Consumer Affairs

If true this will be aa good appointment. It will be interesting to contrast Heather Roy's performance with that of her predecessor - Judith Tizard.

Goff Comments ON EFA Welcome

But we hope that Goff will adopt a similar attitude to the Emissions Trading Scheme. Yes, we know several of our regular comments contributors - including Mr Anonymous will be quick to say we don't need an ETS, but we do need one (or a carbon tax) because we do need to introduce a price on carbon - somehow. We need to incentives behavioral change. If Goff can admit the EFA was a mistake and rushed, why not admit that the ETS was similarly rushed and that some of the last minute changes were done for political reasons as opposed to being good environmental or economic policy. If Goff were to signal a willingness to explore the possibility of a non-partisan approach to improving the policy, this would be a good step forward.

Just In Case You Thought The Markets Had Bottomed

Further big falls overnight in the US. Asia has been falling the last couple of days. This from CNN:

Wall Street markets dipped sharply Wednesday weighed down by losses in Europe and Asia and recession fears.

The benchmark Dow Jones shed more than 3 percent in early trading before rallying a little, down 231 points at 8,463. The Nasdaq was also down almost 3 percent, more than 40 points, at 1,539.

In an effort to bolster economic confidence U.S. Treasury Secretary Henry Paulson said Wednesday he had seen signs of improvement in the economic situation.

"Both at home and around the world we have already seen signs of improvement. Our system is stronger and more stable than just a few weeks ago," Paulson said as he updated reporters on the progress of the U.S. government's financial rescue package.

But Paulson warned that the economy remained "fragile" and said further market turmoil could be expected as a consequence of the collapse of the U.S. housing market.

Broadening the reach of the Treasury's $700 billion bailout plan, Paulson said non-bank financial institutions that provide consumer credit, such as credit cards and auto loans, would also be eligible for government financing and warned that banks and non-banks could require further capital.

"Although the financial system has stabilized, both banks and non-banks may well need more capital given their troubled asset holdings, projections for continued high rates of foreclosures and stagnant U.S. and world economic conditions," Paulson said.

Nov 12, 2008

Groser Reiterates Tough Export Goal

We are pleased that John Key is planning to take personal responsibility for our major export industry - tourism and that national is continuing to strive to boost export performance. In a speech this lunchtime on China Tim Groser said the following:

What we know is that there is a virtual circle between higher participation in exporting and higher productivity. It is no coincidence that the first comprehensive study of total factor productivity that I became aware of ten years ago – the Diewart and Laurence study completed for the NZ Treasury – showed that in a 20 year period from 1978 to 1998 total factor productivity of NZ agriculture was almost three times higher than total factor productivity for the economy as a whole – and that included the contribution of NZ agriculture.

Why? Because NZ agriculture generally regards the NZ domestic market as an abstraction. 90 per cent plus of what NZ agriculture produces is for the world market, not NZ. NZ agriculture – and that is far broader than just our farmers since it includes our marketers, our scientists and our trade negotiators are involved in a virtual circle of innovation, product excellence and expanding market opportunities, or they fall away. Our objective is to move an additional 10% of GDP into that space. Or, technically expressed in terms of the National Party External Strategies Paper, our Government will aim to increase the ratio of exports to GDP by 10 percentage points by 2020. It is achievable.

I said earlier that the Labour Government lost office because it lost touch with New Zealanders about the issues that mattered to them in their daily lives – safer streets, stronger economy, better schools, putting the word ‘winning’ back into the NZ vocabulary. I do not expect that our people will use the language I am using here. There is unlikely to be a new NGO called ‘friends of total factor productivity’.

But what is at the end of the total factor productivity sausage machine is higher real wages. That is something every New Zealander can relate to. Every New Zealander knows we have a problem here: our real wages are too low. That is a principal reason why we are bleeding people. And not just bleeding over 80,000 New Zealanders a year – but bleeding young people. 80% of the people who left NZ last year were under the age of 40. Some 30% of our tertiary educated people do not live in their own country – an unprecedented proportion. We need to get NZ back, over the next decade or two, into the top half of the OECD where we were when I grew up. Frankly, it is where we belong. Raising productivity growth is central to that. Raising our exporting performance is an absolute key. And the Chinese market is a large part of that story.

We agree with all this but note that growing our exports as a proportion of GDP by 10 percentage points by 2020 will take a major change in performance and strategy. Instead of crowing about winning an award as the best Trade Promotion Agency in the World, NZTE should be explaining why our exports as a proportion of GDP have in fact been declining steadily since NZTE was established.

Having peaked at 37% in 2001 New Zealand exports as a percentage of GDP have fallen to 29%.

The reason we guess Groser is confident about achieving this goal is that we have dropped 8 percentage points in six years, so growing 10 over 12 should be achievable. We agree the logic but stress the need for major change if we are going to achieve this worthy goal.

Something To Test Your French

From Le Figaro - in honour of Armstice Day . Sarko's boldness continues to amaze us...............

Les fusillés de 1917 «ne s'étaient pas déshonorés»
C'est le fort de Douaumont, haut lieu de la bataille de Verdun en 1916, que Nicolas Sarkozy a choisi pour célébrer le 90e anniversaire de l'armistice de 1918. Un anniversaire qui prend cet année un relief particulier : pour la première fois depuis la fin de la Grande Guerre, il n'y a plus de Poilu en vie pour témoigner.

Le dernier d'entre eux, Lazare Ponticelli, s'est éteint le 12 mars dernier, à l'âge de 110 ans. Parce qu'il pensait que cela serait «un affront à ceux qui sont morts» avant lui, il avait longtemps refusé des funérailles nationales avant de revenir sur sa décision peu avant sa mort. Un hommage solennel lui avait été rendu aux Invalides en présence du président Sarkozy. Quatre combattants de la grande guerre sont encore en vie à ce jour, trois Britanniques et un Américain.
Sous un ciel gris et venteux, le président français est arrivé devant l'ossuaire de Douaumont , construit dans les années 20 pour accueillir les restes des 300.000 victimes de Verdun, en compagnie de son épouse, Carla, qui arborait sur sa redingote grise le «bleuet de France», insigne de collectes en faveur des anciens combattants démunis. Etaient présents à leurs côtés le prince Charles, héritier de la couronne d'Angleterre et son épouse Camilla.
Ont également été conviés le grand-duc et la grande-duchesse de Luxembourg, le président du Bundesrat (sénat) allemand Peter Müller, le président de la Commission européenne José Manuel Barroso et le président du Parlement européen l'Allemand Hans-Gert Pöttering.
Les fusillés de 1917 «ne s'étaient pas déshonorés»

Nicolas Sarkozy a rendu hommage à tous les combattants du conflit, et fait un pas vers la réhabilitation des mutins de 1917, ces soldats fusillés car ils refusaient d'aller au front.
«Je penserai à ces hommes dont on avait trop exigé, qu'on avait trop exposés, que parfois des fautes de commandement avaient envoyés au massacre, à ces hommes qui n'ont plus eu la force de se battre», a lancé le chef de l'Etat. Avant de poursuivre en dénonçant «cette guerre totale» qui «excluait toute indulgence, toute faiblesse».

«Mais 90 ans après la fin de la guerre, je veux dire au nom de notre Nation que beaucoup de ceux qui furent exécutés alors ne s'étaient pas déshonorés, n'avaient pas été des lâches mais que simplement ils étaient allés jusqu'à l'extrême limite de leurs forces. Souvenons-nous qu'ils étaient des hommes comme nous, avec leurs forces et leurs faiblesses», a poursuivi Nicolas Sarkozy .

Avant de conclure : «souvenons-nous qu'ils auraient pu être nos enfants. Souvenons-nous qu'ils furent aussi les victimes d'une fatalité qui dévora tant d'hommes qui n'étaient pas préparés à une telle épreuve».

Un peu plus tôt, à Paris, Nicolas Sarkozy avait rompu avec une autre coutume, celle de raviver chaque année la flamme du soldat inconnu située sous l'Arc de Triomphe. A la place, le chef de l'Etat a déposé une gerbe au pied de la statue de Georges Clemenceau, aux Champs Elysées.
François Fillon doit quant à lui se rendre à Rethondes, au Nord de Paris, où fut signé l'armistice mettant fin à la «der des der», alors qu'un rapport proposant de limiter le nombre de journées dédiées à la mémoire crée la polémique. Le secrétaire d'Etat aux anciens combattants Jean-Marie Bockel a estimé mardi matin sur RTL qu'il valait «mieux garder les commémorations telles qu'elles sont, qu'elles soient nationales ou pas». «Tant qu'il y aura des gens pour les faire vivre, des médias pour relayer ce qu'elles racontent comme tragédies, comme combats, nous les ferons vivre», estime-t-il.

La guerre de 1914-1918 mobilisa 8,5 millions de soldats en France. 1,4 million, dont de nombreux tirailleurs des colonies françaises d'Afrique, n'en revinrent pas. La plupart avaient entre 18 et 25 ans. En France et en Allemagne, un soldat engagé sur six a été tué. L'Allemagne a perdu 1,9 millions d'hommes, la Russie 1,7 millions, la Grande-Bretagne 760.000.

New Zealand Financial System Holding Up Well

Some reassuring words from the Reserve Bank

New Zealand's financial and payments systems have held up well in the face of extreme disorder within the international financial markets, Governor Alan Bollard said today, when releasing the Bank's November
2008 Financial Stability Report.

"While we are far from seeing the final impact of the financial and economic disruption, New Zealand's banks, and the Australian parents of the majors, are well-positioned to withstand the economic downturn," Dr Bollard said.

Dr Bollard said that New Zealand's banks have not experienced the significant financial losses affecting financial institutions in the United States and Europe.

"Also, they have sufficient capital buffers to withstand the higher loan losses that will inevitably result from the economic downturn.

"However, recent global market conditions have affected the cost and accessibility of offshore funding that our banks - and the country - rely on heavily."

Measures undertaken by central banks and governments around the world have contributed to some improvement in market conditions over recent weeks. New Zealand has also adopted a range of policy measures to help reduce financial and economic risks.

Deputy Governor Grant Spencer said the retail deposit guarantee scheme that the Government announced in October assures New Zealanders that
their deposits are safe. The wholesale guarantee scheme announced in
early November is aimed at facilitating the re-entry of financial institutions to offshore wholesale debt markets.

"These schemes are a temporary response to exceptional circumstances.
While some distortions are inevitable, the Government has tried to reduce these distortions through the use of risk-based pricing and other features. The Bank will also monitor and supervise the guaranteed institutions more intensively, and will accelerate implementation of the new non-bank prudential regime.

"Recently we issued a consultation document on proposed new standards for the banks' management of their funding and liquidity. When finalised, this policy will reinforce incentives on banks to diversify away from short-term wholesale funding and reduce their vulnerability to credit market disruptions."

Mr Spencer said banks have been constructing Residential Mortgage Backed Securities following the Reserve Bank's announcement in May that it will accept these securities in its domestic market operations. "A number of banks now have these securities in place. This will enable us to maintain liquidity in the banking system if the offshore funding channels continue to be disrupted."

Dr Bollard noted that a slowing in the economy had been reflected in an easing in credit growth, and savings appeared to be improving, particularly in the household sector. Together with the decline in the exchange rate, this is expected to improve New Zealand's external balance and reduce the need for foreign borrowing over time.

"However, global developments have proven extremely disruptive and it will likely be some time before financial market conditions normalise.
The Bank will continue to adopt measures as needed to maintain the stability of our financial system as far as possible in these difficult times."

Lockwood Smith For Speaker

The Press reports that Lockwood Smith is being considered for the speaker role. We recommended this before the election.

Controversial National MP Lockwood Smith is a frontrunner to become Parliament's next Speaker in Prime Minister-elect John Key's new government.
The formation of a new administration is continuing apace, with a new Cabinet expected by Sunday and National's new ministers to be sworn in early next week.
The Press understands that Smith, the party's most senior MP, who got into trouble during the election campaign for saying that Asians had small hands and some Pacific Islanders did not know how to use a toilet, is likely to be the Speaker in the new Parliament.
Such a move would remove Smith from the day-to-day political fray and avoid any repeat of the loose-lipped comments he made on the campaign trail.
It would also provide him with a reward for his seniority and tap into his extensive knowledge of Parliament,

Fran Reviews APEC

Fran O'Sullivan has a good overview of the challenges facing John Key at this year's APEC meeting in Peru. We agree with Fran's points about the importance of this meeting for Key at this difficult time for the global financial system. The Vancouver Leaders' Meeting played a similarly important role at the start of the Asian financial crisis in 1997. We hope that Key does ensure that Treasury and maybe some business advisers are in Lima to learn as much as possible from counterparts in the US, Canada, Japan, Korea, China etc. Because of the importance of the GATT/WTO to our economic existence (if it wasn't for the WTO's rules we would be a much poorer country) we have a key interest in being at the centre of any process to reform the Bretton Woods system, of which the GATT/WTO is an important pillar. We can not rely on Kevin Rudd or any other Australian to represent our interests on this issue. Peru offers a chance to remind important players of the contribution New Zealand can and should play in this space. John Key and Tim Groser are better placed than most Leaders/Trade Ministers to play a leadership role on this topic given their backgrounds.

Annette King For Mayor?

Today's Dominion Post mentions the possibility. Certainly the rumour has been around for a while. This would allow the possibility for Andrew Little to gain some profile by contesting the election that might result, should Annette be able to beat either Deputy Mayor Ian Mckinnon or former Mayor Mark Blumsky, one year out from the next General Election. Should Labour lose the next election it will probably be looking for a new leader. Might Andrew be the chosen one?

Nov 11, 2008

Right Back In Control Of Labour

We enjoyed this very much.

Well done Phil and Annette!!


A number of you are inetersted in this topic today so we repeat the D-G's bio. Key details in bold. We understand that there has been a roll over. It is the terms of this roll over that are interesting..................

Biography of Juan Somavia, Director-General

Juan Somavia was elected to serve as the ninth Director-General of the ILO by the Governing Body on 23 March 1998. His five-year term of office began on 4 March 1999, when he became the first representative from the Southern hemisphere to head the organization. In March 2003, Mr. Somavia was re-elected for a second five-year term.
An attorney by profession, Mr. Somavia has had a long and distinguished career in civil and international affairs. His wide experience in all areas of public life - as a diplomat and academic - and his involvement in social development, business and civil organizations have all helped shape his vision of the need to secure decent work for women and men throughout the world. The following is a list of the many positions he held in the United Nations and other inter-governmental organizations before joining the ILO:
1990-99: Permanent Representative of Chile to the United Nations in New York;
1993-94, 1998-99: President of the United Nations Economic and Social Council;
1996-97: Representative of Chile on the United Nations Security Council, including President of the Security Council in April 1996 and October 1997;
1993-95: Chairman of the Preparatory Committee for the World Summit for Social Development, Copenhagen;
1991-92: Chairman of the Social Committee of the United Nations Economic and Social Council;
1990-91: Chairman of the United Nations Third Committee on Social, Humanitarian and Cultural Affairs;
1970-73: Executive Secretary of the Latin American Free Trade Association in Chile; Ambassador of Chile to the Andean Group; Member and Chairman of the Governing Body of the Andean Group;
1968-70: Ambassador and Adviser to the Foreign Minister of Chile on Economic and Social Affairs, responsible for multilateral issues including the ILO.
Since taking office in 1999, Mr. Somavia has taken up the challenge that the rapidly changing economy presents to the ILO. In 1999, he submitted his Decent Work Agenda to the International Labour Conference, which was subsequently endorsed by the Governing Body and the Conference. The work of the Office has been reorganized around four strategic objectives that make it possible to establish targets and indicators to measure progress and provide the basis of accountability.
Mr. Somavia began his career as an academic. From 1967-68, he was lecturer on economic and social issues for GATT's trade policy courses in Geneva. In 1971, he was appointed Professor of International Economic and Social Affairs in the Department of Political Sciences at the Catholic University of Chile, where he highlighted the ILO and its tripartite structure as a case study in international cooperation. Between 1976 and 1990, he was Founder, Executive Director and President of the Latin American Institute of Transnational Studies (ILET), during which time he undertook a number of studies on trade union and social movements in Mexico City and Santiago. From 1996-99, Mr. Somavia was Chairman of the Board of the United Nations Research for Social Development (UNRISD). Throughout his career, he has written and lectured widely on trade issues and labour and human rights and holds numerous citations and awards for his work in the areas of peace, human rights and social development.
Mr. Somavia has always shown a strong interest in development cooperation and economic and social affairs. During the late 1960s, while working in GATT, he promoted the participation of developing countries in the Kennedy Round. From 1970-73, Mr. Somavia served as Member and Chairman of the Board of the Andean Development Corporation in Caracas and worked intensively in favour of regional integration. He was also a Member of the Executive Committee of the International Foundation for Development Alternatives in Nyon, Switzerland from 1977-95 and has been on the Advisory Committee of Development Dialogue (published by the Dag Hammarskjöld Foundation) for more than 25 years.
Mr. Somavia participated actively in the restoration of democracy in Chile. Not only was he President of the International Commission of the Democratic Coalition in Chile but also founder and Secretary-General of the South American Peace Commission (1986-90). For his contribution to peace and human rights, he was awarded the "Leonides Proano Peace Prize" by the Latin American Human Rights Association.
Mr. Somavia has been involved in business, financial and civil society organizations for many years. As Executive Secretary of the Chilean-Argentinian Chamber of Commerce he strengthened ties between the business communities in both countries. From 1976-82, Mr. Somavia was Coordinator of the Third World Forum, a network of African, Asian, Latin American and Caribbean social actors. He was also a member of the Board and Vice President for Latin America of the Third World News Agency, Interpress Service (1976-82) based in Rome. Together with Gabriel Garcia Marquez, Nobel Prize winner, Mr. Somavia represented Latin America as a Member of the MacBride Commission on International Communications (1980-82). Finally, he has served as Chairman of the United Nations Committee of Paliamentarians for Global Action.
Born on 21 April 1941, Mr. Somavia's early schooling took place in Chile, the Netherlands, Belgium, the United States and Ecuador. In 1958, he returned to his country to read law at the Catholic University of Chile. After graduating in 1962, he continued higher studies in economic development at the School of Law and Economics at the University of Paris. Mr. Somavia was made Laurea Honoris Causa in political sciences by the University of Turin in November 2001 and awarded a Doctorate Honoris Causa by the University of Paris I Panthéon-Sorbonne in May 2003.
Mr. Somavia is married to Adriana Santa Cruz and they have two children.

Why Were They So Desperate To Keep The Hydra Alive?

This made us feel ill. From The NZ Herald

Labour and New Zealand First got $100,000 donations from fishing and racing industry heavyweights the Vela brothers in the 10 days before the election.
Both parties yesterday disclosed donations of $100,000 from Resource Finance, a company set up by brothers Peter and Philip Vela in 1999 and registered to the Velas' business address in Hamilton.
It follows controversy over donations from Vela companies to NZ First dating back to 1999 that the party did not disclose.
NZ First was cleared of wrongdoing by police, the Electoral Commission and the Serious Fraud Office but was told to update its returns.
Under new Electoral Finance Act rules, donations worth more than $20,000 have to be disclosed within two weeks.
Labour president Mike Williams said Peter Vela contacted him to offer the money. Mr Williams had not known about the donation to New Zealand First.
"He was very definite about wanting to make a contribution, and I accepted."
Mr Williams said there were no conditions to the donation, and he had explained to Mr Vela that his name would become public.

Labour got the money from Resource Finance on October 31, the same day it also received $60,000 from the Engineering, Printing and Manufacturing Union.
Labour told the Electoral Commission of the EPMU donation on November 5, but did not tell it about the Vela donation until yesterday, two days after the election but still within the disclosure deadline.
Mr Williams said this was not an attempt to keep a potentially controversial donation out of the public eye until after the election.
He said he had not known about the EPMU donation, which would have gone directly to Labour's head office rather than to him.

Can't Believe The Pace Of Change

This is so like 1984. The end of a totally domineering regime. Generational shift, and an economic crisis to boot.

What is different is Helen Clark. She did the honourable thing for her party and country, unlike Muldoon who refused to cooperate during the changeover and who stayed on to be a disruptive influence within his part for far too long.

The front page of the NZ herald today reminds us all how much things have changed in just three days. Three days ago it was possible for vested interests to pay large sums of money to Labour and NZ First, knowing that there would be policy favours in return and knowing that there would be support at the highest level to keep the secrets buried.

While we don't want to dwell in the past we think it essential that we learn from what has taken place in the last 10 years. We need some form of commission to investigate corruption. We need to know what really went on in the Ministry of Fisheries over hoki and scampi quota allocation. we need to know why NZ First kicked up such a fuss, and then went totally silent, indeed made it their task to neuter an enquiry that they had fought hard to have set up. And we need to have a full investigation into the funding of the racing industry, and the impact that the policies that Winston Peters forced through had on horse valuations .

If the Helen Clark led hydra had won this election and if Winston peters had been returned to Parliament we would have seen many of our best and brightest packing their bags and heading for Auckland Airport.

Now we will see a much smaller exodus. There will be a few Winston funders heading to joining Ross Meurant offshore, and we suspect that Helen Clark and Heather Simpson will be offshore pretty fast also. Helen might be sponsored by the Government to depart. Heather will be off to the ILO or some other job within months. Indeed we don't rule out a reunion of H1 and H2 in Geneva sometime within the next 12 months. Watch this space.

When the histories are written one theme will be the tragedy of this last 3 years for the Labour Party. We believe that Helen Clark has been in active negotiation over a job outside New Zealand for over a year and that it was never her intention to see the next three years out. If Clark had stood down a year and a half ago and handed over to Goff and King, Labour would have been competitive at the election. People wanted change, but if this had been delivered before the election, they might have been willing to look more at the issues. Goff and King would have been able to have some say over who was selected to run this election also. Now they have inherited a caucus full of Clark sycophants. There are some excellent people - such as Grant Robertson, but they could have done much better. As the Herald Editorial notes today, Goff has no obvious successor in the current caucus. Some speculate that Andrew Little might be the man of the future, but he is showing some reluctance to associate with the mess that is now Labour. Moreover, with Annette King staying on, the obvious Parliamentary entry point for Andrew (Rongotai) is closed off. We can't see him wanting to move to Mt Eden.

We will post further on some of these themes, but felt the need to get them out of our system!

Shift To The Right Continues

It looks as though the right wing faction of the Labour are about to clean up the top jobs with news that a Goff/King ticket looks likely to be unopposed. Hardly generational change but the two are amongst the strongest performance in the Labour caucus.

We hope that this move to the right will mean that we can move to more of a political consensus on areas of policy such as energy and climate change. It would send a strong signal to business and the world of Labour can support improvements to the ETS when they are proposed by the Key Government. That suggests that Labour should be a full part of the decision making process on these changes. Offers by National to work towards a consensus on climate change were rebuffed by the previous Government which somehow thought that they could win more votes by painting National as soft on climate change. We hope National will put annoyance over this issue to one side. This should not be a partisan issue. But changes do need to be made to the policy. Far too many changes were made at last minute without consultation.

Nov 10, 2008

Rudd Pumps $6.2 Billion Of Australian Taxpayer Funds Into Auto Industry

We congratulate the Australian taxpayers for their generosity. The auto industry would not have been our preferred charity, now would we have allocated such a large sum, but what the hell. Rudd wants to be loved. If France can subsidise its industries why can't Australia??

What is a bit of a shame is that so little of this package is actually being spent to "green" the industry. Reading the spin you would have thought that every cent was going into the greening.

This also removes one of the comparative advantages that Australia had remaining after the global financial crisis began. Pretty much all OECD Governments had been forced to spend billions bailing out banks. Australia and New Zealand put up some guarantees, but no money - indeed the guarantee schemes might actually generate revenue. Now Australia has gone and blown $6.2 billion to keep the auto industry going.

This from The Australian

THE federal government's $6.2 billion automotive industry package will support jobs at a time of a global financial crisis and into the future, Prime Minister Kevin Rudd says.
The nation needed a green-car industry that would create high-paid, high-skilled green jobs for the future, he said launching the government's new car industry plan in Melbourne today. The plan sets aside $500 million - double the amount recommended by the Bracks review - for a green car innovation fund. It also confirms a reduction in the automotive tariff to 5 per cent will go ahead as planned in 2010. “In the time of global financial crisis the government today has taken further decisive action to support Australian industry, to support Australian jobs, because we believe this industry has a future,” Mr Rudd said. “We take decisive action to build an international, competitive green economy for the future. “Australia needs a green car industry that manufacturers the fuel efficient, low-emissions vehicles of the future and creates the well paid, high skilled green jobs of the future.” The choice was not between having a growing economy in the short-term and a green economy in the medium to long-term. “We can work effectively to develop both, and that's what a large part of today's package is all about. The automotive industry was part of Australia's future, Mr Rudd said. Building a low-emissions economy was the next step in the government's response to the global financial crisis. “By implementing a green investment strategy today we can transform our industry and create green jobs for tomorrow,” he said. “It's a future in which we should have absolute confidence - fuel-efficient technologies, low-emissions technologies, better designed and safer vehicles.” Australia could be world leader in green car technology, Mr Rudd said. The automotive industry faced a whole new set of market, economic and environmental changes and challenges. “The domestic market for cars has become more fragmented. Australian car makers do battle in a very crowded field, with 60 other car brands, Mr Rudd said. “Consumer preferences have shifted away from sedans, to both smaller vehicles on the one hand and four-wheel drives on the other.” Higher petrol prices had driven consumer demands for more fuel-efficient vehicles, he said. Mr Rudd said the automotive industry had a key role to play in climate change and faced a complicated set of industry challenges. “Some might say it's not worth trying to have a car industry, that is not my view, it is not the view of the Australian government and it never will be the view of any government which I lead,” he said. “I don't believe that car making is yesterday's business or something better left to the Germans and the Japanese. “But I also don't believe that industry policy is about 'saving' the automotive industry, it's about helping to transform the industry to meet the challenges of the future. “It's not about passive assistance, it's about active support for innovation and change.”

Carbon Price Collapse: Is An ETS The Best Way Forward

A reader just forwarded this article from The Australian.

Carbon crash hits Europe's emission trading scheme
Carl Mortished November 06, 2008
WHILE you were distracted by crashing banks and clashing US senators, you may have missed a small environmental earthquake.
The price of carbon has collapsed.
In only three months, life has become a lot cheaper for polluters. The financial cost of warming the planet has plummeted in Europe's emissions trading system (ETS) and the effectiveness of such a volatile market mechanism in curbing carbon is being questioned.
You may recall that the ETS is a mechanism to encourage businesses to reduce their carbon output. Europe's larger companies are allocated permits to emit CO2, and these allowances, called EUAs, can be traded on exchanges.
Companies that emit less CO2 than their allocation can sell EUAs for cash, but inefficient polluters must buy EUAs or face financial penalties.
The idea is that a shortfall in EUAs allocated by governments will cause the carbon price to rise, stimulating investment in carbon reduction.
It's a market solution to pollution, but this carbon market is showing a distressing tendency to behave like most financial markets -- hysterically. In July, the right to spew out one tonne of CO2 from a chimney would have cost a power generator E29.33, but yesterday it could be bought for only E18.25 ($34.14).
The sudden collapse of the carbon price mirrors the rout in the wider commodity markets. Carbon peaked in July, its price summit occurring within 10 days of the peak in the crude oil price.
Since then, everything from steel to potash has been tumbling and you might think it unsurprising that carbon has tracked the general retreat. Hedge funds and other financial investors dabbled in EUAs as they fiddled with palm oil and soya.
The rush to convert hedge fund investments into cash and US Treasury bills has resulted in rapid closure of positions on various carbon exchanges.
Obviously, the credit crunch has little to do with underlying demand for EUAs in a market artificially created by regulators in Brussels. However, economic downturn and recession will affect the carbon market.
Less industrial and transport activity implies fewer emissions, so the shortfall between actual emissions and allowances will shrink, reducing demand for EUAs, thereby causing the carbon price to fall.
Some analysts reckon the carbon price has fallen far enough, even allowing for a recession. IDEAcarbon, a rating agency, has halved its estimate of the allocation shortfall from 206 million tonnes of carbon to 98 million tonnes in 2008 and 83 million tonnes in 2009.
The point is that there will still be a shortfall. Societe Generale reckons EUAs will find a floor at E15 per tonne before rebounding next year into the low E20s per tonne.
Maybe so, but the ETS is making a mockery of Europe's stumbling attempts to lead the world with a market-based carbon strategy. It is causing irritation and frustration to the armies of advisers and investors who seek to cajole utilities into big investments in carbon reduction.
James Cameron, the director of Climate Change Capital, a financial adviser and fund manager, said: "The whole purpose of the ETS is to take carbon out. It's not there to benefit funds or to support trading."
It's those "speculators" again -- the ones that pushed the oil price up the hill to $US147 a barrel and then let it roll back to $US60.
It is a terrible irony that one aim of creating a carbon market was to provide a measure of certainty to the energy industry in estimating the future price of carbon for the purpose of planning investments in new power generators.
Estimates of the price at which carbon capture and storage technology might be economically viable vary between E40 and E60 a tonne. Suffice it to say we are nowhere near these levels.
More political action is needed, Cameron says, with smaller carbon allocations by governments to industry, which would entail a much bigger shortfall in EUAs and a much higher carbon price.
It is a moot point, however, whether there is political appetite in Europe for such a burden. The European Commission is already struggling to create a coalition of the willing to do battle with carbon emissions, and Italian Prime Minister Silvio Berlusconi has made clear his preference for a gentle regime.
It's a measure of the speed at which politics moves in response to market prices that the green agenda has almost vanished from media political chatter.
Carbon's falling price spells companies going bust, the loss of jobs and the shredding of political reputations. Over the next year, no politician with re-election hopes will back a policy that would triple the price of carbon for industry and raise consumers' energy costs. There is a wider question about the ETS that must be addressed, and that is whether it is a sensible mechanism to regulate carbon.
Price volatility, whether in oil, gas or coal, is a huge burden for the energy industry. Violent movements in price cause financial damage and promote short-termism -- the sort of thinking that is anathema to the climate change lobby.
If there is to be any prospect of a serious cut in carbon, there must be stability in carbon pricing. Although a financial market gives useful price signals, it cannot provide stability.
Only a stable regulatory regime can provide certainty, but that means carbon taxes and a policy leap that no one is yet willing to make.

National's 10 Point Plan

W are largely happy with National's 10 point plan for immediate action, but we hope repeal of the Electoral Finance Act is not overlooked....

1. Meet leaders of Act, United Future and Maori Party over next two days, with first caucus meeting tomorrow morning.
2. Get economic briefing mid-week from Treasury and Reserve Bank.
3. Legislate by Christmas for further tax cuts. Next tax cuts to be on April 1 next year, then two more rounds on April 1, 2010 and 2011.
4. Instruct by Christmas that breast cancer drug Herceptin be available for 12-month course.
5. Call in public service chief executives, instruct them to undertake a review of all spending with a focus on finding savings. Establish "razor gang" type group to oversee review.
6. Request full December fiscal update from Treasury.
7. Legislate - if necessary - by Christmas for transitional package to help people who lose jobs in economic downturn.
8. Quickly introduce bill to reform Resource Management Act, aim to pass it within six months.
9. Prioritise law and order legislation for first readings.
10. Send Emissions Trading Scheme back to select committee, pass revised version within 9 months.

ETS Architect Jumps Ship

Dave Brash, David Parker's right hand man on the design of the Emissions Trading Scheme has resigned from MfE and has joined the New Zealand Transport Authority as Group Manager Partnerships and Planning.

What does this say about Dave's faith in the ETS?

The resignation was in well before the election by the way.

Perceptive Comment from Australian Opposition

A little snippet from the Dominion Post

Australia's federal opposition says new Zealand's strong policy on climate change was a driving fcator behind Labour's loss. The coalition's infrastructure spokesman Andrew Robb said New Zealand had moved too far ahead of the rest of the world too quickly.

We agree

Key Confirms Offer of Top International Posting For PM

From Tracy Watkins on the front page of The Dominion Post:

Mr Key, 47, made it clear a top international posting was Miss Clark's if she wanted it, saying there was a precedent and that her international standing merited such a move.

What Is Wrong With The Herald?

Not available again today in Wellington!!!!

There used to be no troubles getting the hard copy Herald in Wellington CBD by 0730. Now you are lucky to have it by 1030.

Luckily today, the Dominion Post is an interesting read.

Fitzsimons And Norman Look Sad

The Green co-leaders have just been doing an interview with the Herald's Audrey Young. Agent 69 says they look very sad. So they should. They are the big losers. By foolishly tying themselves to Labour they have lost any influence. They were polling close to 12% but only got 6% on the day. Why? Because of Comrade Norman's far left agenda. Jeanette wins votes for the Greens, Norman loses them votes. If they were a true "Green"" Party as opposed to a mixture of Green and Far Left policy they would have done much better.

Interesting Meeting In Koru Lounge

We have an agent placed in the Koru Lounge this morning at Auckland Airport.

She reports that Goff, Cunliffe and Shane Jones are meeting. Shane is very busy on the phone. Could he be Goff's numbers man?

Cunliffe will be pledging full support to Goff.

We will report any further news from Agent 69.

Why We Think Helen Clark Should Be Made Ambassador To Washington (or UN)

  • She will do an excellent job;
  • She will enjoy it;
  • She will be a star performer on the Washington Diplomatic circuit;
  • She will do a much better job at forging links with an Obama Administration than would Don Brash;
  • We disagree with those (you know who you are) who say her hubby will be a liability. We are not sure he would want to go, but if he did he would be able to further his academic research in the US in a way that would be both useful for him and New Zealand. He will be fine at cocktail parties and Diplomatic dinners (those questioning his abilities at yesterday's BBQ have not seen him in action - we have);
  • If Helen's long term plan is to find a position with an international organisation, then she will be better placed in Washington to pursue these opportunities than from the back benches of the New Zealand Parliament. Of course New York would be even better in this regard. Has there been an announcement on Rosemary Bank's replacement? Rosemary is talking about a departure reasonably early next year which would be a good fit............

In summary, this appointment would be good for Helen, good for new Zealand and good for the world.

Vernon Small Says That It Is Goff

Vernon Small has very close links to Labour. He is also saying it looks like Goff as the next Labour leader. This is his speculation on the Deputy.

We think that the best choice for Labour is Street. Smart and hard working she provides gender balance, factional balance, geographic balance, and will also appeal to the rainbow faction. Small could easily have found Party members saying "white heterosexual males from West Auckland".....

Labour will probably seek a balance of left and right as well as taking gender, ethnicity and geography into account. That means Mr Goff and Mr Cunliffe - "white males from West Auckland", as one party source put it - may not provide the right mix. Others said a Goff-King ticket would be logical but would raise eyebrows because they were both from the Right "faction".

Insiders pointed to former Labour Party president Maryan Street, Climate Change Minister David Parker, Building Issues Minister Shane Jones or one of the left-leaning Christchurch MPs, Lianne Dalziel or Ruth Dyson, as other options. A "wild card" could be well-performed Tainui MP Nanaia Mahuta.

Parker For Deputy??

Go for it Labour. Don't look at the fact he lost his constituency seat last time and this time had a humiliating personal result. And don't listen to those from the business community who say Parker was captured by his officials and vested interests early on, and who say he refused to listen to those wanting to make the ETS work. And don't listen to those in your caucus, or Jim Anderton, who were uncomfortable with the way in which the ETS was rammed home without design flaws ironed out, and without a second round of consultation. And ignore The Hive which long predicted that Parker would be instrumental in causing Labour to lose the election through his handling of the ETS. Go for it....

Cunliffe Rules Out Leadership Bid "this time"

Sensible and mature move David. You would make aa very good Finance spokesperson, and maybe one day Finance Minister.