Apr 30, 2008

Wellington Supports Tunnel Duplication

It is good to see such progressive thinking from Wellington residents.

This Is Almost As Bad As The VC Theft

What the hell is going on in Defence?

Immigration Service Faces Wider Probe

Well done Clayton Cosgrove. The wider probe is needed.

Fran Takes On The Idiots

Fran O'Sullivan takes on the nay sayers on the Vector bid. Kedgley and Woolerton should be dumped by their parties. They have become real liabilities.

Those coming up with some of the far-fetched allegations, such as Green MP Sue Kedgley and New Zealand First MP Doug Woolerton, have, it seems, failed to do their homework before bursting into opposition.

Kedgley claims the new owner will ratchet up Wellington power prices to pay for its purchase.
New Zealand-based Vector arguably did that - but was slapped down by the Commerce Commission. Vector chief executive Simon Mackenzie notes the regulators will continue to exert strong pricing controls after the acquisition.

He will not directly say which other companies were in the bidding. But he says Cheung Kong came up with the cleanest deal.

Woolerton has speculated that selling the network to Li Ka-shing's company will clear the way for Chinese workers to come here under the China free trade agreement. That is frank ignorance.

If Woolerton had bothered to check with the Ministry of Foreign Affairs and Trade he would have found that the Chinese FTA applies to China's custom territories - not Hong Kong.
There is no way Cheung Kong could cite the China FTA as an avenue to bring its own workers here.

Even if China's State Grid had won the bidding war it is inconceivable that it would have been able to import mainland Chinese to take New Zealanders' jobs. The sector is not stipulated under the skilled labour provisions in the FTA.

When Is A Strategic Asset Strategic

The Herald Editorial looks into this question - when it suits the Government you dummies!!

We Guess We Should Be Flattered


Emissions Trading Plan Slammed In Yet Another Report

Brian Fallow reports on a report just out from the Sustainability Council......

It is neither fair nor efficient that households, small businesses and road users will bear 90 per cent of the cost of the Government's planned emissions trading scheme over the next five years, a report for the Sustainability Council says.

John Armstrong Interprets The Poll

John Armstrong, who will be somewhat concerned about the fact that his recent analysis has been disproved by the latest poll result, tries to interpret the Herald DigiPoll in a way that doesn't make his recent articles look absolutely stupid

The party's frustration is that this has happened after a sustained period when the Labour-led minority Government had been functioning more effectively than it has for quite some time, give or take the odd distraction.

But there has been no payoff in the polls. Sometimes a mood shift in the electorate can take time to register in the polls. Labour will be praying that this is the case. But that is really clutching at straws.

His analysis of the NZ First dilemma is similar to The Hive's

NZ First's waving of the flag of economic nationalism combined with an injudicious bit of Asian-bashing has done nothing to lift its stocks.

Winston Peters' party is registering at a paltry 1.5 per cent.

National Pulls Away

The latest NZ Herald DigiPoll will be causing consternation this morning within Labour ranks. NZ First (on 1.5%) will be even more concerned. Playing the race card doesn't work anymore - will they need real policy???

Apr 29, 2008

Further Evidence Of Weak Economy

The trade deficit for March was significantly worse than analysts were expecting. This is because the economy is weaker than most seem willing to recognise. It is good to see immediate weakening in the dollar.

Why Are Clinton and Obama So Anti-Free Trade

Larry Summers (a senior member of Clinton I's economic team) explains why in a think piece in the Financial Times. We agree fully with Summer's explanation of the cause but do not necessarily agree with the solution proposed....

But I suspect that the policy debate in the US, and probably in some other countries as well, will need to confront a deeper and broader issue: the gnawing suspicion of many that the very object of internationalist economic policy - the growing prosperity of the global economy - may not be in their interests. As Paul Samuelson pointed out several years ago, the valid proposition that trade barriers hurt an economy does not imply the corollary that it necessarily benefits from the economic success of its trading partners.

When other countries develop, American producers benefit from having larger markets to sell into but are challenged by more formidable competition. Which effect predominates cannot be judged a priori . But there are reasons to think that economic success abroad will be more problematic for American workers in the future.

Protectionism Extending To Biofuels

The same issue of the Financial Times details some equally crazy EU plans to ignore WTO rules and impose all kinds of conditionality - including adherence to ILO standards - to biofuel imports (are these people for real???).

Anxious to distance itself from charges that its push for biofuels is creating hunger round the world, the European Union is considering stringent social and environmental criteria for imports that the US and some other big biofuel producers would not meet.

The sustainability criteria under discussion would in effect bypass World Trade Organisation rules forbidding biofuel bans. By excluding those products not meeting the criteria from its biofuels target of a 10 per cent contribution to the fuel mix by 2010, the EU would deprive those products of government support, removing incentives to import them.

One option under discussion is to exclude imports from countries that have not ratified a range of international agreements on labour and environmental standards, including the Kyoto Protocol on global warming.

Documents seen by the Financial Times state that exporters would have to abide by at least 10 of 12 treaties, from International Labour Organisation accords on equal pay, child labour and the right of workers to organise, to the United Nations Convention on Biological Diversity. The US, wary of labour market restrictions, has ratified few of these. Malaysia, a big palm oil producer, would also fall short.

A second option would require producers to prove that they had complied with national laws enforcing ILO standards, that pesticide use was limited and that the local population had been consulted about biofuel plantations. Diplomats from EU member states have been unable to agree on how tough the criteria should be.

"There is a wide consensus among the member states to include environmental and social criteria for the production of biofuels regardless of their origin. However, how to implement these principles is still being debated," said a spokesman for Slovenia, which is chairing the talks.
Countries including the UK and Belgium have expressed doubts about whether the EU should stick with its biofuel targets. Environment commissioner Stavros Dimas and development commissioner Louis Michel also have doubts.

What is most frightening is that we have heard similar ideas from Labour and Green politicians in New Zealand....

Export The Cap Model?

The Inquiring Mind has an excellent piece on the editorial and front page article in today's Financial Times on another crazy idea from the French - designed of course to protect French farmers.

Exporting our Diet

Colin James looks at the implications for developing countries and the globe if the Western diet is adopted more widely. The concerns are not just about health consequences, but about economic and political implications - particularly if the result is growing resentment of the West(remember 9/11).

Plenty For The Third World To Worry About

Every day we have a read of the New Zealand and international media and chose the article that interest us most to highlight. By chance (we hope) the article that are jumping out at us relate to alarming trends that are of growing concern to the developing countries, and which should be of concern also to policy makers here. They relate to the export of the Western diet, protectionism in the trade in biofuels, export of the CAP model, and attempts in the US to limit the success of competitor economies. Why is this of a concern? Well last time we are aware of such an alignment of protectionist policy we gaave birth to World War II. We don't want a third one. Read upwards.....

Apr 28, 2008

EMA Raises Questions About Emissions Trading Bill

EMA (Northern) seems to be a bit more negative about the Government's proposed emissions trading policy than the Business New Zealand line.

Fishhooks In China FTA

Most of this article is crap (the Lockwood Smith/Tim Groser era!!!!) but the first bit - quoting the analysis of the NZ-China FTA's investment provisions by US academic Matthew Porterfield is worth a read. The Hive has pointed to exactly the same implications. We are not opposed to these provisions as we think that Governments should be forced to pay compensation when, through regulation or legislation, they wipe shareholder value off companies. Bad policy, such as that over Auckland Airport, will therefore hopefully be constrained as far as Chinese investors are concerned. We are impressed that the Government has been so bold.

Vector Sale: Greens Need To Stop Scaremongering

We have just read the Green Party's comments on the proposed sale of Vector's Wellington assets. Umm, can Sue Kedgley not remember back to the news that Wellington consumers were being charged more than they should have been by Vector - a New Zealand owned company? Why is foreign ownership necessarily bad? Is it not a good thing to have a company with real expertise owning this important Wellington infrastructure?

Herald Gives Key Broadband Plan The Thumbs Up

The Herald editorial today is positive about National's plan to expand broadband coverage.

Mike Moore Hacks Into The Greens - And Casts Doubt On Short Term Doha Outcome

Mike Moore writes an interesting piece in today's NZ Herald on food security. The "Greens" won't like it. Neither will those talking up the prospects of a Doha Round outcome this year.

WTO Talks Run Into Serious Difficulties

You heard it first from Phil Goff. The WTO Ministerial may face another delay. OK we are quoting an Irish article, but it squares with the other things we have hearing....

Williams Impoverished By Labour Presidency?

Yeah right!

Like many we raised an eyebrow when we read Michele Hewitson's interview with Mike Williams.

He made, by the way, a lot of money from his direct marketing company and so is surely, I said, "a rich prick" like John Key. "Not any more," he said, "I've been working for the Labour Party for 10 years." He gets $25,000 a year and gives it all back one way or another. He buys a lot of raffle tickets.

We are therefore indebted to David Farrar for doing an in depth analysis of the extent to which Williams has had his nose in the Government trough since Labour took power

And what does Mike get as a Director for each:
GNS - $21,000
Genesis - $333,000/9 = $37,000 approx (maybe more as now Deputy Chair)
ARTA - $35,000
Transit - $25,000
Waitakere Enterprise - $65,110/5 = $13,000 approx
Ontrack - $26,000
NW Airport - fees unknown

We make this recent misstep #4. Bye bye Mike. Hi Andrew...........

Clark And Goff To Go To Tokyo

Regular readers might recall our blogging on Phil Goff's attempts to get out of the trip to Tokyo organised by the New Zealand International Business Forum for 14 and 15 May. The reason being that the Prime Minister is going so Goff did not want to be a wall flower. While Phil is not plotting a coup, he might also have looked forward to a couple of days with the PM out of the country to prepare for next February (the logical time for him to move against Clark should Labour be defeated in this year's general election). Well Phil Goff failed in his attempts to get a pass for the Tokyo event. Both he and Clark are confirmed as going. Clark is not going to be letting Goff out of her sight until the election.

Apr 27, 2008

Great News On Jailed Saudi Blogger

Kiwiblog reports that the jailed Saudi Blogger Fouad al-Farhan has been released. Fantastic news. But like David Farrar we are disappointed that New Zealand did not take a stronger role in pressing for his release.

Airportgate: Has Cullen Lied Again? Or Did He just Misread His Briefing Papers?

On re-reading the Treasury advice to Cullen on the proposed Canadian investment in Auckland Airport we see that Treasury advised that a policy setting a 49% limit on foreign control would be preferable to what the Government was proposing. Hang on, isn't that what John Key proposed? But didn't Cullen tell us that the proposed National policy was going to breach international commitments? And don't we now know that the Government's policy has, according to Treasury, breached international commitments?

Airportgate: Class Action Pending?

Today's article by Fran O'Sullivan must be very worrying for Finance Minister Cullen and his Government colleagues. We think the grounds for this action are very strong. Go for it. National (with the exception of Tim Groser) don't have the balls. It is up to the shareholders.

Apr 26, 2008

Food Prices: Implications For WTO Round

A French Minister sees the current problems in global food supply as complicating the already complicated WTO agriculture negotiations.

Taking The NZ Out Of ANZAC

Following our post about ANZAC Day and the Australian politicians who seemed surprised that New Zealand celebrated it also, a Europe based reader has emailed us to say that she was watching the French news channel France 24 last night and was pleased to see that a major item was done on ANZAC Day commemorations in France. Pleased until the item ended with not one mention of New Zealand. Apparently the Day commemorates the landing of Australian forces at Gallipoli. Included in piece was an interview with Australia's Minister for Veterans Affairs who also failed to mention New Zealand.

We are sure that many French would be dismayed by this coverage, particularly those who had participated in the numerous celebrations throughout France. It is also good to know that poor journalism is not the preserve of the New Zealand media!

Thomas On Peters: Cockroach? Not Bad

From this morning's NZ Herald

If one had to nominate the nearest thing to a cockroach in contemporary New Zealand politics, I suspect many people would go for Winston Peters who's wriggled out of more tight spots than Indiana Jones and reinvented himself more often than Madonna.

Peters can be viewed as the lite version of his mentor Sir Robert Muldoon, but it's worth remembering that Muldoon was a lite version of himself until he became prime minister and gave full rein to the Mussolini within.

Given his populist tendencies and bullying posture towards the media, one can only wonder how Winston would handle the prime ministership if, through some hideous twist of fate or convergence of circumstances, it was to fall into his immaculately tailored lap.

Dumb Auckland Airport Decision Part Of International Trend?

While the papers are more interesting today we couldn't help a glance at the FT. We found the attached article in which the New Zealand Government's dumb decision on Auckland Airport features prominently...

Fairfax Poll Has National on 52%

And Labour on 34%.

Colin James On Key v. Clark

Colin James also writes on the Clark v. Key contest in today's Herald. He concludes

This week Key stole a march, and he will now bang away on that drum for the next six months, counting on hard times generating eager and hopeful buyers for his promise - and for the meat in the policy.

Clark and Co will try to get the electoral contest down from Key's atmospherics to the earthbound realities of experience and knowledge where they claim the advantage as dusk draws in on the economic boom.

For now, however, the window shoppers are quite taken with Key. This week he started the hard sell: come and feel the goods, was the invitation in his big bang.

We hope National read carefully the James and O'Sullivan columns today, both contain very helpful pointers to the strategy needed for the months ahead......

Can Clark Pare Back Key's Lead?

Fran O'Sullivan, writing in this morning's Herald, thinks that she can. Essentially she thinks that National can't rely on Key alone to win the election. National will need more policy such as that on broadband announced this week.

Apr 25, 2008

Yesterday's FT

There being nothing to read (again) today in the New Zealand media we will take apart yesterday's Financial Times. Many interesting articles. Strong Euro Hits Outlook For Manufacturing - sound familiar? John Walley where are you?

Commodities Boom Drives Up Land Values also looked interesting. It seems that while residential and commercial prices are looking increasingly bad in Europe, rural land prices are booming. Global trends are the reason. So why are we not seeing similar headlines in New Zealand? There is another article Investors Pile In As UK Prices Soar. Apparently it is largely offshore money. So why are we not enjoying the same boom in New Zealand? Nothing to do with our overseas investment regulations or our proposal to integrate agriculture into our emissions trading regime...........................


We will not try and compete with Poneke. But we will try another tack. It has been a privilege, from time to time, to be present at ANZAC Day commemorations abroad. New York, Singapore, London, elsewhere in Europe (but never in Turkey or France). Singapore was the most moving at one of the largest Commonwealth War Cemeteries (Kranji). Even though it is largely Australian, being in the middle of a cemetery containing so many ANZAC remains made the experience much more poignant than the average ceremony back home. What I like also about these offshore experiences is seeing Australia and New Zealand working as one. Usually our missions abroad take turns to organise the commemorations. Back home, we tend to forget the other partner. Indeed some years ago one of us hosted a delegation of Australian politicians who seemed astounded that we celebrated ANZAC Day too!!! So for the rest of today and the start of tomorrow, don't forget that the commemorations are going on all around the world. On ANZAC Day at least, around the world, the ANZAC spirit lives on. Wouldn't it be wonderful if we could make the spirit as real in Australia and New Zealand as it is outside our borders....

Great ANZAC Day Post By Poneke

Read it here...........

News Pretty Dire Today Also

Just in from this morning's service. But the anticipated joy of reading pages and pages of insightful analysis in today's papers is dashed pretty quickly.

There is an interesting item on Fairfax about a forthcoming acquisition announcement by Fonterra. Not much else interests us today. We will go international.

Apr 24, 2008

OCR Unchanged: Roll On October

The Visible Hand In Economics has expressed interest in our take on Bollard's announcement today. Obviously we think that it is significant that the word "significant" was dropped. Clearly Bollard remains concerned about inflationary pressures but we were struck by his emphasis on the greater than expected slowdown in economic activity. In saying this it would seem that Bollard and team are now seeing things in the same way as The Hive team.

The Hive now has greater confidence in its prediction of an October cut in the OCR as a result of Dr Bollard's comments today. We are glad also that the foreign exchange markets see the writing on the wall. The October cut will be the first in a series which will see a substantial fall in the OCR by the end of 2009.

We are not pricing in the emissions trading regime into our forecasts because we don't think the Government will get its legislation through this year. In this we differ with a number of forecasters.

Gap Bigger Than 10% in Roy Morgan Poll

Thank goodness for Roy Morgan. Apart from a well written article by Brian Fallow in the Herald (on inflation and the Reserve Bank Act) it is a pretty dire day for news.

Roy Morgan's latest poll shows National on 50% (up 3) and Labour on 36.5% (up 1). The Greens are down 2.5 to 6.5%. NZ First (so much for the race card Winnie) is down 0.5 to 3.5%. It is interesting that the National bounce has been at the Green expense, but regular Hive readers will not be surprised by this.

Goff Speech

There is a full review of Goff's speech and his performance on The Inquiring Mind. We are glad to hear that Adam had a finer food and wine experience at the Goff lunch! The Hive understands that Goff's speech has been circulated to all New Zealand posts abroad as it was seen as a good stock take of all activity in the trade portfolio area.

What Adam doesn't comment on was the relative performance between Goff yesterday and Key the day before. Goff could be Labour leader in 2009 making the comparison a very important one.

Apr 23, 2008

OCR Decision

We were flattered to see that The Visible Hand In Economics used the The Hive as an example of "commentators believe that the slowing pace of domestic economic activity merits a rate cut". This is true we do, but we are not expecting one quite yet, and certainly not tomorrow. If Bollard is true to form (last time he delayed interest rate increases when they were needed just prior tot he election) we will see the first cuts in September/October. However, our preference would be July. Things will be pretty grim for many small businesses and households by about then. The trouble is that the OCR is not necessarily the determinant of business and household interest rates, so there could be some lag between a cut and anything that the public will notice. So perversely, if Bollard wanted people to be feeling less pain by October/November then he probably should be cutting tomorrow.............

We are anticipating major drops in the OCR and the exchange rate in 2009.

Who Leaked The Tape

Today's Trans Tasman asks an interesting question

And where did the tape come from? Williams was in a closed session of the congress, delegates only attending. Someone has caused a lot of grief. Clark says she has “no idea.”

We can't see much of an angle there for Clark to have leaked the tape unless she wants to get rid of Williams. The price, however, is high. Evidence of real disunity in a Party pretending to portray a unified face to the world.

To add to the complexity of this equation is the fact that the tape seems to have come from the Town Hall sound system. Who was recording things? Who had access to this recording? It has to have been people very high up in the Labour hierarchy. If it wasn't the 9th Floor who was responsible? Who else wants Williams out of things fast?

All very interesting.

An Honourable Cullen Would Have Resigned Today

Remember back a few weeks? Michael Cullen tells the media that National's suggested policy for strategic assets was a non started because it would be a breach of several treaty commitments? We now know that Dr Cullen was in receipt of advice from officials advising that his own policy was in breach of several international treaties. Why would it be impossible for National to breach these treaties but possible for Labour to breach them also? What is worse is that National was only talking about possible policy. Labour has enacted its policy. We are dealing with an actual breach here. We have broken international law. New Zealand's international credibility is at stake here. If Cullen were an honourable person he would resign. If he doesn't then this is only going to be fodder for the opposition. The Minister of Finance has no credibility now. For New Zealand's sake and for Labour's sake it is time to go.

What The Clinton Victory Means

Full analysis from The New York Times - hot off the press

Clinton Wins: Low Road To Victory?

This Editorial just out from the New York Times is causing real waves in the States

The Pennsylvania campaign, which produced yet another inconclusive result on Tuesday, was even meaner, more vacuous, more desperate, and more filled with pandering than the mean, vacuous, desperate, pander-filled contests that preceded it.

Voters are getting tired of it; it is demeaning the political process; and it does not work. It is past time for Senator Hillary Rodham Clinton to acknowledge that the negativity, for which she is mostly responsible, does nothing but harm to her, her opponent, her party and the 2008 election.

If nothing else, self interest should push her in that direction. Mrs. Clinton did not get the big win in Pennsylvania that she needed to challenge the calculus of the Democratic race. It is true that Senator Barack Obama outspent her 2-to-1. But Mrs. Clinton and her advisers should mainly blame themselves, because, as the political operatives say, they went heavily negative and ended up squandering a good part of what was once a 20-point lead.

and in conclusion

It is getting to be time for the superdelegates to do what the Democrats had in mind when they created superdelegates: settle a bloody race that cannot be won at the ballot box. Mrs. Clinton once had a big lead among the party elders, but has been steadily losing it, in large part because of her negative campaign. If she is ever to have a hope of persuading these most loyal of Democrats to come back to her side, let alone win over the larger body of voters, she has to call off the dogs.

Goff Sees Prospect For Further Delays In WTO Ministerial Meeting

In his speech today to the Wellington Regional Chamber of Commerce Phil Goff became the first Trade Minister to raise the prospect of a further delay occurring in the convening of the next WTO Ministerial meeting. He talks about the meeting may not happening until June. This is in direct conflict with attempts by WTO Director-General Lamy to talk up chances of a meeting in May (could this be a sign of the continuing friction between Lamy and Falconer??).

Goff RecognisesThe Importance Of International Trade Rules

We have just read Phil Goff's speech to the Wellington Chamber of Commerce today. Two quotes relevant to our post on the importance of international trade and investment rules jump out at us - we hope Goff reminds his colleagues of these facts whenever he has the opportunity

As a small country, we rely on exporting to make a living in the world.

A multilateral, rules based system offers the best protection to our economic interests and the only option for removing trade barriers on a global basis.

Government Breaches International Commitments

New Zealand is a small economy dependent for its prosperity on international trade and upon foreign capital (which compensates for our poor domestic saving record and our current account deficit). International rules are particularly important for small countries. Without them we would be bullied all the time by the big guys. Because these rules our so important to us, it is critical that we abide by these rules ourselves and set a good example.

The Hive is therefore angry that the Government has chosen to ignore advice from officials and breach international obligations in an attempt to seek sort term electoral advantage over the Auckland airport sale decision. The only "recent" instances we can recall where the Government has knowingly breached our international treaty commitments were Nick Smith's decision to maintain the ban on domestic sales of trout - just prior to the 1999 election, and several Muldoon budgets in the 1970s - but with regard to those budgets we are not sure that the senior officials had the courage to advise Muldoon that he shouldn't be doing what he was doing, so maybe he just acted without any knowledge of the implications of what he was doing.

It will be interesting to see how National reacts to this confirmation of a breach. Tim Groser had Goff on the ropes last week in similar territory on the final day that Parliament sat before the break. In the meantime, this is an issue worthy of further analysis by the mainstream media.

We are particularly upset with Clayton Cosgrove who should have known better (we don't take Parker seriously anymore). Maybe Mike Moore can tell him how negative his action was for New Zealand's long term economic interests. Indeed we would welcome a Mike Moore think piece on this topic.

Respect For The Truth

We hope all in Government read today's Dominion Post Editorial.

Reaction Positive To Key's Broadband Vision

The Dominion Post summarises reaction to Key's speech yesterday...

National's Broadband Plan

Paula Oliver looks at the wider implications of John Key's speech yesterday.

If nothing else, National leader John Key's plan to put $1.5 billion of Government money into an ultra fast broadband network marks another milestone in his party's move away from the purist policies of its past.

Key is describing a lack of investment in New Zealand's telecommunications network as a "significant market failure" - strong words from a National Party leader.

His acknowledgement that the market hasn't worked, and won't work without a helping hand from the Government, is a big step away from the "market rules" position his party has been more widely known for.

It has been a year since Key first mused about using Government money to help kick-start broadband.

Back then he was promptly contradicted by none other than his deputy, Bill English, who ruled out widespread government investment in national broadband infrastructure because it would "crowd out" private sector investment.

Clearly Key has won that argument.

New Zealand Increasingly Marginalised?

We yesterday felt disquiet while reading a Colin James article on the Australia-New Zealand relationship. One reader (who seems to be left of centre and from Auckland) let rip at us suggesting that we were a right wing blog simply trying to suggest that the current Government is responsible for the talent exodus to Australia. However the reader completely missed the reason for our disquiet. Hopefully they will have read Fran O'Sullivan's article in today's Herald as this is on exactly the theme that concerned us yesterday. Here we are trying to establish one economy with Australia, but the other side doesn't seem to register our existence. If we become totally insignificant in Australian eyes, what does the rest of the world think?

Apr 22, 2008

BAA Not Delivering For London - Why Not Make Better Use Of Kent?

While the focus in the media is on a possible break up of the BAA following the critical report just out, we wonder why the authorities don't focus a bit more on an immediate solution - Kent Airport. It can introduce immediate competition and increase consumer options. All one needs to do is upgrade the link to existing train lines and the problem is partly solved. Infratil also has a good track record of delivering a quality airport product (unlike BAA...)

US Politics: Time To Heal The Democrat Feud?

We will know the result of the much heralded Pennsylvania primary in a matter of hours. The equation is simple - if Clinton wins by over 10 then the momentum swings her way a bit and she still has a real chance, if she wins by less than 10 nothing much will have changed, the advantage will still be with Obama but there will be stalemate, and if Obama wins it is probably lights out for Clinton. The latest poll averages suggest a Clinton win by 7, which means essentially a continuation of the current stalemate, and more blood letting within the Party.

Party elders are rightly worried about this so there is increasing talk about brokering a deal which would see Obama and Clinton forming a joint ticket - the so called dream team. The link takes you to a New York Times analysis of this issue and points out its major flaw - neither Clinton nor Obama like the idea. The electoral implications are complicated also.

WTO Setback More Serious Than The System Is Letting On

The feedback we are receiving suggests that the setback in the WTO agriculture negotiations last week was more serious than peoiple are admitting to. Chances of a May Ministerial meeting are now looking extremely slim. There also seems to be growing tension between Director-General Lamy and some of the negotiating group chairs. It will be very interesting to hear what Phil Goff has to say tomorrow morning.

National's Broadband Policy

Key's speech

Rod Drury's account

David Farrar's account

The Inquiring Mind is leaving us dangling but it is great to see Adam eating for blogosphere

The Hive welcomes this policy initiative and looks forward to other parties matching, if not improving on this proposal. We see better broadband as essential to our economic future and to improving our productivity growth rate. Better productivity growth=higher wages.

Update Adam gives us his account plus a review of the food and wine at today's lunch on The Inquiring Mind. For the record we prefer the food and wine at level 28 Majestic Centre to Te Papa. The view is also one of the best in New Zealand. Adam's comments on John Key, the person are also worth reading.

We have also been struck by TV3's attempt to sensationalise and try and create a focus on alleged policy flip-flops as opposed to analysing the potential impact of this policy announcement.

Big National Policy Announcement Today?

What National policy going to be announced today? Big John Key lunch on today at Te Papa......

The Australia Relationship

Colin James writes a disturbing column today with plenty of food for thought.

This Is Crap Cullen

Of course you can cut tax rates in October. Just don't blow the expenditure out at the same time and you won't have an inflation problem. Tax cuts will be a great help in our battle to attract and keep talent in New Zealand and grow productivity.

Another Public Service Scandal?

The Government will want to shut this one down fast. What better way than an enquiry.

National Should Lay Off Williams

Why put on the pressure for Williams to resign? Nation should be smarter. Williams is so discredited that National should be welcoming the fact he is still Labour Party President!

WTO Agriculture Talks Run Into Trouble

Maybe the obvious setback in the WTO agriculture talks last week is the reason for the pessimistic messages that we have been receiving at The Hive. Thanks to Reuters' Jonathan Lynn for this update...

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Apr 21, 2008

Lamy Continues To Talk Up Propsects Of WTO Breakthrough

Trade Minister Phil Goff is giving a major speech on trade policy in Wellington on Wednesday. It will be interesting to see how positive he is about a breakthrough. WTO Director-General Pascal Lamy is meanwhile travelling the world talking up progess and the chances of the long expected and much delayed WTO Ministerial meeting happening in mid-May. There are a number of people telling The Hive that this is all spin and that the chances of real progress occuring is slim. We hope they are wrong as there would be nothing better for the current challenges being faced by the world economy than a further does of liberalisation.

Gloves Starting To Come Off In Wellington Central Race

Stephen Franks blogs about an unintended consequence of Grant Robertson's song writing activities....

Does Williams Enjoy The Support Of The Party?

The PM this morning essentially said that Williams should keep the Presidency as long as he has the confidence of the Party. Well does he? Who leaked the tape? Labour is far from the unified Party that the spin doctors like to portray. The Inquiring Mind has an interesting post on the leadership and takes a particularly close look at Andrew Little.

Exodus Continues

The net outflow of New Zealanders to Australia continues to grow. This will not stop until taxes are cut substantially and wages grow relative to Australia. To achieve this we need a huge improvement in productivity. This requires much better infrastructure roading, electricity and fibre going to more places than the Wellington and Auckland CBDs. And interest rates also need to come down so that firms can start investing more in technology.

Even A Wally Can Tell That F&P Did Not Close Because Of The China FTA

John Walley, representative of a strange mix of dinosaur manufacturers largely based in Christchurch, has issued a statement on the F&P closure.

What interests us here at The Hive is the failure of most to recognise the real hypocrisy in the F&P criticism of the Thailand FTA. Where did F&P first move to when they decided to begin manufacturing outside of Australia and NZ? Thailand. Why? So they could import to Australia and New Zealand duty free (both Australia and New Zealaand had FTAs with Thailand). It is a bit like Winston Peters denying MFAT money when he was Treasurer - forcing MFAT to withdraw the posts in Brisbane and Melbourne, and now crowing over the fact that he has just given the money back now he is the Foreign Minister.

More Competition In Mobile Market?

We hope this all comes to pass. Stuff carries this item on Telstra Clear's latest plans...

F&P Seeking To Divert Attention?

So says The Herald editorial....

Young On Williams

We agree with Audrey writing in today's NZ Herald

If a scale of consistency were applied to political resignations, Mike Williams would have been gone before breakfast this morning.

But this doesn't mean that Labour will do the right thing.....

TV3 Poll Tells Different Story

Interesting contrast between the ONE News and TV 3 poll results. TV3 suggests that there was a bounce. Better news also for the Greens and NZ First than ONE News but the Greens appear to be on a downward trajectory.

Apr 20, 2008

Questions Raised By FT Editorial

We quote from yesterday's Editorial in the Financial Times, London

Remember the green old days? They seem like only last year. In fact they were only last year: according to one long-running opinion poll, concern for the environment among consumers reached a peak in January 2007. Since then it has all but disappeared.

It is not hard to see why. Those were the days when the formidably named duo of Gore and Stern were rewriting the politics of climate change. Sir Nicholas Stern (now Lord Stern) offered a heavyweight analysis of its economics. Former US vice-president Al Gore campaigned with his documentary, An Inconvenient Truth, earning both an Oscar and a Nobel Prize. Heady days indeed for environmentalism.

What a difference a year makes. Hillary Clinton and Barack Obama have taken Mr Gore’s place in the hearts of the Democratic faithful, while Britons look to the Treasury for a response to the credit squeeze, not a view on carbon emissions. Given the price of oil and petrol, energy security has replaced the environment as a key concern.

Hang on - can this be true? Are we not being told that we must rush to be a perfect model lest we suffer a consumer backlash in Europe (particularly the UK) where the environment is the most important issue in consumer and retailer minds? The FT seems to be challenging the assumption.

For the record, and lest the Greens etc. accuse use us of quoting some Tory rag just out to delay decisions or action the rest of the Editorial is a call to action

Interest in green issues will ebb and flow, but while climate change remains a threat, it will return to the agenda again and again.
That is why companies that have adopted green initiatives must stick to them for their own good. Consumers may have other worries right now but, when environmental concerns resurface, they will remember the companies that abandoned their principles. While consumers are fickle, companies cannot afford to be; life is unfair.
Of far more concern is the response of governments. Their whimsical changes of direction are worse than useless, achieving many of the economic costs of emissions regulation with few of the environmental benefits.
The UK government spews green-trimmed red tape while subsidising domestic fuel. The European situation is no better: the European Unions emissions trading scheme, which should have been a model of how to reduce emissions efficiently, has exemplified only confusion. As for the US, this week President George W. Bush effectively
kicked the post-Kyoto negotiations into touch by proposing an emissions target so timid and so distant as to be ridiculous. Nothing serious can now be achieved on climate change until his successor is in place.
None of this bodes well for the planet. Effective policy on climate change need not be draconian – indeed, it should not be – but it must be credible. In a world where politicians are even more whimsical than the electorate, that credibility will remain elusive.

ONE Colmar Brunton Poll Result

Poll conducted evenings on 12-17 April 2008:

National - 54%
Labour - 35%
Green Party -3.7%
NZ First -1.5%
ACT NZ - 1.1%

Preferred PM
John Key - 35%
Helen Clark - 29%
Winston Peters - 4%

Very bad news for Labour, NZ First and Greens. No bounce from the China FTA for either Labour of NZ First.

Labour: Will A New President Help?

We make it three strikes for Mike Williams. We can't see him surviving long having being caught lying by TVNZ. Well done One News. Decisive action by the PM in accepting Williams' resignation and installing a new President may be positive in terms of maintaining morale within the Party and in showing the media that she is prepared to show strong leadership.

Matt McCarten Wants New Powerbase

Not content with his new super union Matt McCarten wants a 250 member Parliament for Auckland.............

According to Matt we must be a vested interest in wanting one council. We think we have fewer vested interests than anyone, as far as Auckland is concerned. Let the reform run.

So why is the debate about the future of Auckland centred on city boundaries? We are being offered two options, one led by vested business interests and the other by vested interests of local politicians.

The option advanced by Auckland's business and right-wing elite is a gobble-up of the whole region into one undemocratic entity. This new pro-business city would be overseen by a cabal of super councillors (the fewer the better).

Bill Ralston On Labour

Labour will lose the next election because of its arrogance and inability to focus on what is important.

Globalisation: Get Used To It

Fran O'Sullivan looks at the Fisher and Paykel closure today in the HOS. It, along with the ANZ job movement to India, are symptoms of a wider phenomenon - globalisation. We need to get used to it, but as Fran points out, if Government had listened and cut the growth in expenditure, we might not be experiencing the downside so quickly....

No Time For Silly Songs

It is not news anymore but we did like Fran O'Sullivan's article yesterday on the misplaying of the Labour Party Congress...

Murdoch To Retire

MFAT CEO Simon Murdoch announced his retirement Friday. He will leave in March 2009. We will have to watch moves to get a replacement appointed before the General Election.

Technical Difficulties

We apologise that we have been off line for 24 hours. We have been having broadband access issues for some weeks and they seemed to come to a head this week. To think that this suburb hosts a major education institution! We need much better fibre links to the suburbs in Wellington.

Apr 19, 2008

WTO: Ministerial Planning Progressing

It seems that plans for a WTO Ministerial Meeting on 19 May seem to be firming up. We hope thaat people make refundable bookings.....

MFAT Funding Increase

Murray McCully posts on this yesterday. We are sure he won't mind us quoting in full

This week’s announcement of a $621 million boost to the Ministry of Foreign Affairs and Trade budget leaves an important question to be answered. The funding package is essentially the same proposition put on the table last year and deferred for further study. Even in the healthier economic climate of 2007 the bid raised eyebrows over its scale and questionable justification. In the straitening economic times of 2008, with middle New Zealand households under pressure to meet increased mortgage, petrol, and food costs, new government expenditure on such a scale, especially on bureaucrats, will be a hard sell.
Papers released relating to last year’s bid make it clear that both the Treasury and the State Services Commission had serious doubts about the proposals and opposed the expenditure. So the question that now needs to be answered is just what sort of case was presented by the Minister and his Ministry to win Dr Cullen’s approval? Did they furnish detailed reports showing clear evidence of New Zealand’s trade or security interests being compromised by a lack of resources, and present such a compelling case that Dr Cullen simply couldn’t say no? Or did Mr Peters simply tell Dr Cullen that approving the bid in order to provide the material for a bit of Election Year swagger was part of the price of doing coalition business?
The proof, of course, will lie in the paperwork, all of which will now be required to be disclosed to the Foreign Affairs Select Committee when it examines the estimates immediately following the May 22 Budget. National Leader John Key has made it clear that an incoming National Government will cap the number of bureaucrats at the current 36,000 with any increases in any department being met by reductions in another. It is against that background that the MFAT increases will be examined. And what might have looked like effective ministerial advocacy last year could appear more like insensitive and unjustified empire-building this year. The paperwork will tell the story.

Baygate: Auditor General's Decision

Craig Foss has two posts on this.

Apr 18, 2008

Super Union

It is interesting that the new super union that we drew attention to last weekend, but which a number of commentators on The Hive and Kiwiblog said was a non-event and no threat to Labour, is the lead story in today's NBR. Included in the article is the comment which many disputed in our article "there is some nervousness in the Labour Party about the impending merger." What an understatement! Anyway great article Ben Thomas. The point about the source of organisation and activists for the party campaigns is particularly well made.

Congestion Charging - Not Anytime Soon

Interesting article today on congestion charging on the Dominion Post front page. Note the comments from Wellington Mayor Kerry Prendergast. We look forward to reading the comments from Upper Hutt Mayor Wayne Guppy when he realises that this will in effect increase the amount his constituents are contributing to the cost of upgrading the Wellington transport network.

We think a modest charge is sensible but there is no way this is going to happen anytime soon.

Cullen: Closures Not To Do With FTA

Michael Cullen has entered the debate over the link between the Thailand and China FTAs and the closure of some of Fisher and Paykel's operations. This is an interesting article in the NZ Herald. Cullen righly questions the importance of a 5% tariff for F&P. But Bongard seems to be denying Phil Goff's version of F&P's position on the China FTA when F&P were last consulted. Was this consultation done by Goff or officials?

Congestion Charging - True Test Of Public Opinion?

Page 3 of today's Dominion Post raises a serious question about the quality of journalistic standards in the paper. 5 Wellingtonians are interviewed about congestion charging. 2 are employees of the Chamber of Commerce located right next door to the Dominion Post. The Chamber is, aside from anything else, a vested interest when this issue is concerned). Clearly the journalist concerned didn't want to stray too far from the office - maybe it was raining .......

Who Do You Believe The Banker Or The Union Leader?

ANZ National say all staff affected by yesterday's announcement of back room jobs moving to India can be redeployed. This is questioned by Union leaders. We can't reach judgement but we do know that in Wellington alone ANZ has plenty of vacancies - mainly in IT.

World Trade Growth Rate Slowing

The WTO has reported that world trade growth slowed in 2007. It is also predicting an even slower growth in 2008.

THE World Trade Organisation says protectionism might increase as world trade growth slows in the wake of economic uncertainties.
World trade growth could drop to 4.5 per cent in 2008 -- 1 per cent lower than growth in 2007, said the WTO in its latest World Trade 2007, Prospects for 2008, released overnight in Geneva.
"The prediction is based on a number of downside factors," said WTO chief economist Patrick Low. "It's based on today's information, but there are downside factors which may well influence this estimation in the months to come." Mr Low said some effects of the financial crisis had not filtered into the real economy in many parts of the world.
He referred to inflation, business uncertainty and the continued rises in commodity prices.
The pace of growth in global trade had already contracted by 3 per cent to 5.5 per cent in 2007 from 8.5 per cent in 2006, he said.
The rate of contraction was faster than the WTO had forecast in April last year when it predicted growth of 6 per cent for 2007.
The rapid slowdown, it said, reflected the sharp economic deceleration in key developed countries amid global financial market turbulence.

WTO boss Pascal Lamy is concerned that this slowdown could result in a rise in protectionist trends.

"These are uncertain and troubling times for the global economy," said WTO director-general Pascal Lamy.
Mr Lamy said that, so far, the combination of financial market turmoil, significant price surges and the slowdown of developed economies had not yet led to a disruption of trade.
"But protectionist pressures are building as policymakers seek answers to the problems that confront us," he said.
"We must reinforce our global trading system with rules that are more transparent, predictable and equitable."
He said a reinforced trading system was an essential anchor for economic stability and development.
"The best way to achieve this is to conclude the Doha Development Round. The time for posturing and delay has ended."

WTO Agriculture: European Farmers Express Alarm

The WTO Agriculture negotiations must have made progress. The EU farm lobby is stirring into action.

Apr 17, 2008

NZIER Slam Emissions Trading Scheme

Economic analysis of the proposed emissions trading scheme and alternative approaches
The New Zealand Institute of Economic Research (Inc) says it is well advanced with a study of the likely costs to the New Zealand economy of the Emissions Trading Scheme on which the Finance and Expenditure Committee is hearing submissions.
If the draft Bill becomes law in its present form, firms which emit carbon dioxide gas into the atmosphere will have to surrender an entitlement to offset the emission. Under the draft Bill ultimately all firms will have to purchase these entitlements at prices which are not yet known but are unlikely to be low.
Dr Brent Layton, Chief Executive of NZIER, says there is strong interest and support from New Zealand business in NZIER’s study, whose findings will be made available to the Select Committee.
Dr Layton said that one of the issues NZIER has been focusing on is the costs and opportunities New Zealand firms and farms are likely to face in reducing emissions. For many these costs will be significant.
"There is no doubt that by the time the emissions trading scheme envisaged in the draft Bill comes fully into effect, New Zealand business will have a very large annual cost to cope with, and the country’s economy will suffer. Our exports will be less competitive, household incomes will be reduced and transport and electricity costs will increase markedly."
"We have been working with various industry groups for some time, checking assumptions and putting together the most accurate possible picture of what the current scheme is actually going to cost New Zealand to try to conform to its Kyoto obligations."
"A central issue we have been exploring is whether it is more damaging to the economy to load costs on to various industry groups as envisaged in the Bill, or whether a better answer for the country is for the Government to purchase the necessary credits offshore and spread the load through the taxation system, with an accompanying, but less drastic emission trading scheme to encourage practicable emission reductions within New Zealand. With the help of business we developed an emission trading scheme and strategy for introduction a year ago. It was not perfect but it would have avoided most of the pitfalls we have discovered in the current Bill."
"There will be a cost to New Zealanders as we play our role in reducing the world’s output of green house gasses. We think it makes sense to work out the way which damages our economy and standard of living the least."
"There would be no sense in damaging the New Zealand economy and our international competitiveness, which is inevitable if this Bill becomes law in its current form, if we could make a greater contribution to reducing the world’s green house gas emissions at lower cost by going down a different route. That is another of the key issues we are focussing on in our study."

Phil Goff Did Not Know What Hit Him

11. TIM GROSER (National) to the Minister of Trade: Does he agree that the Doha round negotiations are likely to enter a decisive phase in the next month or two, and that all serious participants are likely to be asked to confirm or improve market access offers, or “concessions”, that are currently on the table?
Hon PHIL GOFF (Minister of Trade) : The Government regards the conclusion of the World Trade Organization (WTO) Doha round as its key priority in trade negotiations. Progress has been made and is being made through the Geneva process, but there are still areas around which agreement has not been reached in agriculture, and there is still a significant distance between the parties in the non-agriculture market access area. We would hope that negotiations might reach a decisive phase next month with the production of texts from the negotiating committee chairs and also a “green room”, but there is as yet no certainty about that. As in any negotiation, of course, all parties will need to show some flexibility if the round is to be successfully concluded.
Tim Groser: Has the Minister seen the joint letter of 11 April from the Australian Trade Minister, Simon Crean, and his US counterpart, United States Trade Representative Susan Schwab, entitled “Doha Dealbreaker”, which states: “It is essential that major decisions on agriculture and industrial goods be accompanied by positive commitments on services.”, and that “Over the next few weeks … we will be looking for key WTO members to signal their commitment to make significant improvements in their services offers.”; and can the Minister confirm that this letter cites transportation services amongst a list of key sectors?
Hon PHIL GOFF: Yes. I have rather anticipated the member by having the Wall Street Journal article in my hand; in fact, I think that is where he drew his question from. Services, very clearly, are important. I have had the opportunity this week to discuss both with Peter Mandelson, European Union commissioner, and Susan Schwab where the round is at. New Zealand has been a positive player in the area of services. For example, we have supported the January 2008 text on services. New Zealand’s role is regarded as being positive, and no country makes the claim that New Zealand has unfair restrictions on services when compared with the much more restrictive processes that exist in almost every other place.
Tim Groser: Can the Minister explain to the House, given the political decision to decline the Canada Pension Plan Investment Board’s foreign investment application in precisely those transportation sectors, how New Zealand can possibly maintain, let alone improve, its offer of complete liberalisation for airport operation services and airport management services, as offered to all WTO members and set out in WTO document TN/S/O/NZLRev1 of 17 June 2005?
Hon PHIL GOFF: What I can confirm is that when John Key was asked a question on television about this he declined to answer no fewer than seven times, and this response was punctuated by “Um … er … ah.” I can confirm that when National members had the opportunity yesterday to call for an urgent debate in this House, they failed in the courage to do so.
Tim Groser: How would the Minister reconcile moving backwards on this important services offer with the likely general requirement that he may be faced with personally if he represents New Zealand in a couple of months at the much-heralded ministerial meeting, when everyone else is moving forward with improved market access and he will essentially be obliged to withdraw one of the key aspects of New Zealand’s offer?
Hon PHIL GOFF: As the member probably knows, what he has just claimed is utterly inaccurate. New Zealand will move forward on its market services offer, but, as the member will know from the 2003 Cabinet guiding principles, that offer will not require any changes to be made in New Zealand’s existing regulatory settings. We will make a good offer but it will not be at the cost of changing what we regard as necessary to protect this country. That offer will be welcomed. As the member knows, our investment regime is far more liberal than that of almost any other country that will be entering that round.

Is FTA Policy A Factor In Fisher And Paykel Decision?

Phil Goff says no.

“I do not believe, however, that free trade agreements by New Zealand, such as that with China, are a key factor in the decision to relocate.
“Indeed, in discussions with the company in March last year, Fisher and Paykel management told us that the FTA with China ‘was not going to make any difference to Fisher and Paykel’s production and sourcing plans’.
“The free trade deal maintains trade remedies such as anti-dumping and includes a Rules of Origin approach based on a change of tariff classification as requested by Fisher and Paykel.
“The fact is that labour cost advantages in developing countries such as Mexico and Thailand will exist whether New Zealand seeks free trade agreements or not.
“And there is no future in New Zealand competing with the world by lowering wages and cutting workers’ conditions, just as there is no future in New Zealand in a globalised world putting up high tariff barriers at huge cost to the consumer.
“I welcome the fact that Fisher and Paykel are committed to continuing the high value add aspect of engineering and design work in New Zealand,” Mr Goff said.

Baygate: Why Are OIA Requests Being Delayed?

Disturbing post from Craig Foss.

Fisher And Paykel Adopt New Global Manufacturing Strategy

The high dollar hits another victim. Dunedin is the victim. But the new strategy could see Fisher and Paykel become a truly global player. It seems that the company was less than happy with the Thailand and China FTAs.

Government Unlikely To Stop Vector Sales

The DominionPost reports that the Government is unlikely to stop the Vector sales. we hope that they are correct.

Impact Of EMS On Agriculture A Heavy Blow

Brian Fallow has another article looking at the impact of the proposes EMS on the agriculture sector.

The conclusion, entirely unsurprising, is that the new carbon cost reduces profits significantly, unless farmers are shielded from it - as they will be at first but subject to a rapid phase-out - or unless meat and milkfat prices are a lot better than last year.

Here Is Some Good Advice

Brian Fallow covered yesterday's Select Committee hearings on the Emissions Trading Bill. It seems MPs were given some straightforward but good advice:

The Chambers of Commerce has some straightforward advice for MPs considering the emissions trading scheme legislation: Throw it out.

Read the rest of the article here.....

WTO: Services Lobby Ups Pressure

(Geneva, Switzerland) The Global Services Coalition today insisted that services must be seen as one of the three key market access pillars of the Doha Round of global trade talks, along with agriculture and non-agricultural market access (NAMA). The Coalition emphasized that, at this critical juncture in the negotiations, when real movement may be within reach, it is indispensable that the three pillars are inextricably linked.
"Services, along with agriculture and NAMA, have been part of the Single Undertaking from the outset of the Doha Round," said delegation leader Sergio Marchi, Chairman of the Canadian Services Coalition and former Canadian Ambassador to the WTO. "It is vital that WTO members accept the close linkage among the three pillars, and understand that an ambitious outcome in services is necessary in order for the Coalition and its members to support the conclusion of the Round."
The Coalition also expressed strong support for the "signalling exercise" - an ongoing process of bilateral meetings and discussions among senior officials and ministers - to encourage key countries to improve their services offers so as to demonstrate the potential benefits available from concessions across all three pillars of the Round.
In its meetings in Geneva, the Coalition urged that WTO Members use the signalling exercise, and the Ministerial level Signalling Conference that will follow it, to make clear that they are ready to make significant improvements in their services offers. The Coalition has said repeatedly that such improvements should include both the binding of existing levels of openness, and new liberalization.
The Coalition welcomed the decision of WTO Director General Pascal Lamy to convene, chair and report on the Signalling Conference on services. This conference will have the same level of political importance as the ministerial green rooms meeting on Agriculture and NAMA , and the unambiguous commitment of the Director General will be a tremendous asset for its success.
The Coalition also called for a services text, to provide political guidance on the level of ambition for services. However, the Coalition warned that the Signalling Conference and the text were not ends in themselves, but simply means by which to work toward the objective of substantial services offers, with the maximum number of bindings and new offers in as many of the key service sectors as possible. "That is the ultimate goal," said Marchi. "We hope that the Signalling Conference and the services text will reaffirm that goal clearly, so that WTO members can quickly do the necessary work to produce commercially significant new services offers. Whatever their stage of development, their economies will benefit from ready access to efficient modern services."
The Global Services Coalition has been, and continues to be, a staunch supporter of the Doha Round. A successful conclusion to the Round, especially at this period of economic uncertainty, will send a very positive signal to the the global economy. By reducing trade barriers to services, goods, and agriculture, the Round will promote global economic growth, and will demonstrate that WTO members are determined to shun protectionism.
The Global Services Coalition is comprised of the service industry associations of Australia, Brazil, Canada, the Caribbean region, the EU, Hong Kong, Japan, New Zealand, Taiwan, and the United States.

WTO: Non-Agriculture Deal Possible

Some optimistic noises from the Chair of the NAMA negotiations in Geneva... Lets hope he is right.

Apr 16, 2008

Winston's Speech Highlights Absurdity Of Last Week's Positioning

Winston Peters today delivered a major speech on New Zealand's foreign policy. He announced the new funding package for MFAT during the speech. The speech is a mixture of hypocrisy and admission - admission that trade is an integral part of our foreign policy, admission that countries of lower per capita income than New Zealand are legitimate FTA partners, and hypocrisy for complaining about budget cuts and post closures in the 1990s when for some of that period and some post closures Winston was controlling the purse strings. It will be interesting to see how the MSM treat this speech.

New Funding For MFAT

Perhaps to distract attention from his criticism of the China FTA Winston Peters has today announced a big increase in MFAT funding over the next five years. This includes new posts in Sweden (as we reported last week) and MFAT led Consulates in Melbourne and Brisbane.

Fact check - who was Treasurer when MFAT was forced to close the consulates in Melbourne and Brisbane last time around because of budget cuts? Winston Peters. He giveth what he has once taken away......

We welcome the extra resource for MFAT which performs a valuable, but not much understood role. Here at The Hive we have sought to increase understanding of this role.

Is The Wellington Electricity Network A Strategic Asset?

We may be about to find out...

The Dominion Post reports on the final bids for the Vector network, including one from China (two if you count Hong Kong as China).

Inflation Heading For 4%?

This from James Weir in the Dominion Post...

PM Pays Tribute To Jim Sutton

The one person missing from the delegation that went up to Beijing for the FTA signing was former Trade Minister Jim Sutton. He worked hard to get the Government to agree to the FTA negotiation, hooked the Chinese into the negotiation and also pushed through the agreement to recognise China as a market economy. All brave stuff at the time. It was therefore great to hear the PM last night at the celebration bash in the Beehive acknowledge Jim Sutton's role. Goff belatedly followed suit, which was also good to hear.

We did not notice Winston in the crowd, but it was a very full room....

What Are The Implications Of The China FTA For Our Investment Regime

We hear that Fran O'Sullivan was seen talking to Auckland Univiersity and international economic law expert Jane Kelsey in Hong Kong the other day. Kelsey was aparently already onto the consistency of recent decisions by the NZ Government and our WTO obligations. Fran O'Sullivan doesn't report on this but she does have a look at the implications of the China FTA for our investment regime.

It's a bugger's muddle about to be made even more complex by the "national treatment" and expropriation settlement provisions in the China free trade agreement.
The relevant clause speaks for itself.

"Each party shall accord to investments and activities associated with such investments, with respect to management, conduct, operation, maintenance, use, enjoyment or disposal, by the investors of the other party treatment no less favourable than that accorded, in like circumstances, to the investments and associated activities by its own investors."

In certain circumstances this could set the scene for compensation to be paid to Chinese investors if the Government shifts the regulatory landscape for reasons other than "may be reasonably justified in the protection of the public welfare, including public health, safety and the environment".

One trade expert I canvassed put forward these three hypothetical "what if"' scenarios.
What if the Government had turned down the Auckland Airport bid after the FTA had come into force? Any Chinese investors would have had many millions of value wiped off their shares.
There would be a clear potential for a case for compensation under the Investor State dispute settlement provisions.

What if the Government decides next year that Vector is a strategic asset and can only be sold to New Zealanders?

This would be a breach of the National Treatment provisions of the FTA because, at the time of the agreement coming into force, no determination had been made that Vector was a strategic asset.

It was not a non-conforming measure until after the agreement came into force.

What if the FTA had been in force on January 1 this year? The Government could not have stopped the Auckland Airport sale to Chinese interests if they wanted to buy. The OIO regime existed prior to the agreement so will still apply. It is only where changed policy is involved or where there is no policy that the agreement will kick in.

Time for more clarity please.

Time To List Strategic Assets

Fran O'Sullivan has been busy. She has another column in the Herald today, this one looks at our investment regime. She calls for some certainty over what is deemed a 'strategic asset'.

All investors - New Zealanders and foreigners alike - should be pressuring Finance Minister Michael Cullen to designate forthwith the list of strategic assets that the Government wants to maintain within New Zealand control, or, subject to additional covenants before allowing control to pass overseas.
Right now New Zealand's hard won reputation as a "fair dealer" towards foreign investors is in jeopardy as the Government - with the aid of New Zealand First - sets about re-erecting Fortress New Zealand by using the results of political polls to determine which bids get over the line rather than rational criteria.

The least Cullen could do is give investors the courtesy of spelling out which assets will henceforth have to stay under effective Kiwi ownership control.

This is an important issue as the global credit crunch has increased the price of debt funding.


No sensible investor knows whether the Government has simply been whipping up anti-foreigner sentiment for electoral reasons as was clearly the case with the doomed Dubai and Canadian bids for Auckland Airport, or whether it has genuinely reached the view on the basis of observed practices that it's time to place a cache of New Zealand assets in the "strategic" camp and protect them against foreign control.

This is an important distinction.

Cullen's stance that there is no need to isolate which assets fall within the new category of "strategic infrastructures on sensitive land" - a "trust us" approach - leads investors to the belief that the Government has no intention of making a rational assessment of overseas investment applications.

We don't know either if Cullen's refusal to stipulate an asset list is because he genuinely wants to play his cards close to his chest, or if he is simply going along with the anti-foreigner sentiment to keep other players like New Zealand First close until after the election.

Government Disregard For Shareholder Rights

The same Editorial looks at Auckland Airport

Unfortunately, the concept has suffered because of the Government's cavalier disregard for shareholder rights in its thwarting of the Canadian Pension Plan Investment Board's bid for 40 per cent of Auckland airport. That, however, need not be a fatal blow. A National government that promoted utility sales and pledged not to indulge in such hamfisted action could restore confidence quickly.

Mr Key has, to some degree, fudged National's intentions by declining to say what would happen during a second National term. He referred only to seeking a mandate from the public for any change of policy. That, again, smacks of safety-first politics.

This was momentarily abandoned following the Government's blocking of the bid for Auckland airport when Mr Key noted, quite appropriately, that future investment in New Zealand and confidence in the sharemarket would be affected. He also said a National government would, on Overseas Investment Office advice, have let the Canadian bid proceed.

That represented a refreshing willingness to stand up for what should happen. For once, Mr Key was not a slave to election-year politics and the notion of sleep-walking to victory. He should be similarly bold about the real merits of asset sales.

Herald On Asset Sales

The NZ Herald Editorial today looks at the National Party position on asset sales.

Mr Key is tip-toeing around the issue because he clearly sees no public relish for asset sales. Rather than startle the horses, he seems happy to bow to the prevailing mantra that state control is good and privatisation or corporatisation is bad. He is not prepared to advocate the selling of assets and to explain the benefits. That is unfortunate because, as Mr Key well knows, there is a strong case to be made.

This is not about ideology. It is reasonable to ask whether it is sensible for the Government to own the likes of vehicle testing stations, farms, coal mines and courier businesses. But most of all, this is about such businesses operating more efficiently and providing a better service to the public. Part or full privatisation brings a discipline, transparency and customer focus that is absent when a business is underpinned by taxpayer funding.

This is also about questioning whether Government ownership of three-quarters of the electricity sector - with Contact Energy sitting awkwardly off to one side - is a successful formula. Ongoing concerns over power supply suggest that is far from the case, and that Genesis, Mighty River and Meridian cannot be said to have passed the public service performance test. This, more than sale receipts and retiring public debt, must be the main motive for disposing of state assets. It is also the reason why Mr Key should abandon his timidity.

Winston Makes Us Look Ridiculous

Fran O'Sullivan has returned from China and come out swinging! She looks at the situation Winston Peters' bagging of the China FTA deal has put New Zealand in in the eyes of the rest of the world. It is a perspective that is often forgotten by the New Zealand media. Her column also looks at the two faces Labour leaders put on - one for the world, the other for New Zealand.

Apr 15, 2008

Petrol Prices Fuel Inflation

The Reserve Bank can take some comfort from the latest inflation figures. Take fuel out and things are getting back under control.

Winston Has Serious Doubts About National

And we are sure National has no doubt about Winston....

Anyway, some more gems from Winston First speaking in Tauranga. We like Key's response.

United Future's Star 16

United Future has unveiled a list of 16 Parliamentary hopefuls. We only know two on the list, no doubt because we are so out of touch...

Cold Shower Anyone?

We hope that the current rain falls in the right places.

Meanwhile, in case it doesn't, you might like to see what in prospect. This from James Weir...

Carbon Charge Is Plane Silly

Jim Eagles isn't going to buy carbon offsets when he flies. His article explains why. He has an alternative strategy which makes alot of sense to us:

Rather than paying up to offset any greenhouse gases emitted by planes I fly in, I plan to do my best to fly on airlines which follow international best practice, thereby both reducing my carbon footprint and in a small way encouraging other airlines to do better.

It so happens that there Air NZ has a very good case. It has a young and fuel-efficient fleet. It has used new techniques, such as weight reduction, flying patterns and greater use of ground power, to achieve significant reductions in carbon emissions. And it is part of an international effort to develop a sustainable aviation biofuel.

Those are serious steps which will reduce the amount of damage done to the planet without imposing any unnecessary burdens on travellers.

Encouraging that sort of behaviour by airlines makes a lot more sense than forking out $4.50 conscience-money every time you make a business trip to Wellington.

What Is The Downturn Going To Mean For The Election?

Colin James has a look at this in his column today in the NZ Herald. We don't actually think this downturn is going to be that long lasting and certainly won't dominate the next Government's term - something James sees as possible. That said we are in for less buoyant times 2009-2011 than Labour has enjoyed throughout the three terms that it has served. 2008 is going to be the test and the recession will be biting pretty hard in November (it is a pity Labour is so far behind in the polls as right now (or just after the Budget) would probably be the last chance to have the election without the recession....

Any way back to Colin James

The interpretation Labour likes is that if times get tough, people will look for a security blanket, that Labour's core competence is helping people through hard times and that Labour has an advantage in that John Key has yet to prove himself and Helen Clark and Michael Cullen are a proven pair.

The interpretation National likes is that squeezed households need relief and National is the major party people believe will cut taxes more and ease their paths out of their personal credit crunches - and that it all went wrong on Clark's and Cullen's watch.

The worry for National is that the downturn might bite hardest on its watch if it leads the next government, that it gets thereby a reputation for austerity and that voters tip back next election (as happened to Labour in 1957-60).

Of course, a re-elected Labour-led Government would face the same music but a fifth term is a huge ask anyway. (Hence already some in Labour are envisaging the "sixth" Labour government, implying the current fifth one is near the end of its life.)

There are some side issues, like the role of foreign banks and foreign investors. The decision by David Parker and Clayton Cosgrove on Friday to block the bid for Auckland airport by the Canadian Pension Plan hooks into the inward-turning instinct harder times activates in some people.

Winston Peters remains fully attuned to that, as he showed last week in his positioning on the China free trade agreement. "Foreigners last" is a good line when there is hurt at home. The Greens and the Maori party can also rouse their core constituencies, who range from suspicious to hostile in their attitudes to foreign economic influences. The parties' manoeuvrings make great spectator sport. Trouble is, the spectators are also players.

Crunch Week For WTO

This Reuters report suggests their are some grounds for optimism that a deal this year my be possible in the WTO. It also summarises where activity lies this week. While news appears good on agriculture, the non-agriculture area has proved just, if not more, contentious over the last few years. And no progress has yet been achieved on services.

Apr 14, 2008

Will The Food Shortage Help Or Hinder The WTO Round?

Two conflicting stories today - The Melbourne Age seems to suggest help

The surge in world food prices is accomplishing what seven years of trade talks haven't: knocking down import barriers.The Doha round of global trade negotiations has been stalled since 2001 because developing nations have refused to lower import tariffs that protect their farmers and rich countries won't give up farm-price supports. Now, import duties are being slashed from Brazil to Burkina Faso in response to prices that the World Bank says have risen 83% the past three years; subsidies in the US and Europe are falling.

But this report from Reuters (and the wonderfully named Missy Ryan) suggests hindrance

A new world trade deal, more than six years in the making, finally appears to be within reach, but it may not ease raging global food costs that have protesters pouring into the streets from Egypt to Haiti.On the contrary, many experts expect a new global pact would actually lift food prices slightly, at least at first.

What Do Obama And Marx Have In Common?

A similar view on religion being the opiate of the masses?

A hard hitting analysis from William Kristol in the New York Times (we are not neo-cons and don't like them much, but sometimes Kristol is worth a read...):

My occasion for spending a little time once again with the old Communist was Barack Obama’s now-famous comment at an April 6 San Francisco fund-raiser. Obama was explaining his trouble winning over small-town, working-class voters: “It’s not surprising then that they get bitter, they cling to guns or religion or antipathy to people who aren’t like them or anti-immigrant sentiment or anti-trade sentiment as a way to explain their frustrations.”

This sent me to Marx’s famous statement about religion in the introduction to his “Contribution to the Critique of Hegel’s Philosophy of Right”:

“Religious suffering is at the same time an expression of real suffering and a protest against real suffering. Religion is the sigh of the oppressed creature, the sentiment of a heartless world, and the soul of a soulless condition. It is the opium of the people.”

Laila And The Gambler

There has been much talk about Laila on The Hive in recent hours. Here is some more - we simply quote from Audrey Young:

Laila Harre on Nine to Noon (Politics 11.10) this morning dismissed my story as mischievous, a beat-up and bullying by the Herald, rather than acknowledging that the act may be having many unintended consequences.

Laila supports the act and hated the fact that the Herald campaigned against it. She does not acknowledge the faults in the act and condemns the messenger.

Mathew Hooton provides a wider context.

Laila also made an interesting criticism of the Labour congress and the fact that four women MPs were filmed singing an adaptation of a Kenny Rodger ballad about John Key. Laila thought it looked unprofessional and maybe she is right. But it wasn't exactly planned. They were dragged up on stage because Clark was running late. They had sung it for the first time the night the night before at Molly Malone's pub in a fundraiser for the Wellington Central candidate, Grant Robertson. I got a call from Grant this morning to claim credit (or blame) for penning the words: The full version is here, to the tune of "The Gambler".

"John Key- The Gambler"

On a warm summer's evening in a party going nowhere
Bill met Key the Gambler; slippery and sleek
When Bill saw that Don's wanderin days were over
he and John got together, and put the Doc to sleep
Key said, Bill I've made a life out of gambling people's money
not caring where it came from, or who would lose their job
so if you make me leader, I promise to be funny
and I'll be ready every day, to flip and flop

You've got to know not to trust him (not to trust him), not to believe him (don't believe him)
know what he tells you, won't be the truth
we can't let him run the country, cos he's just not able
you need more than a cheesy smile, to rule the roost.

Now little John boy knows the secret to surviving
Is not telling anyone, what he really thinks
So hell just say whatever, Murrays written for him
But when you're swallowing dead rats- you begin to stink
and, sitting in the darkness, of his Parnell mansion
John asks the question, can I get away with it?
Cos if you've not no policy, and if you've got no vision
People soon enough work out that you're full of ..

You've got to know not to trust him (not to trust him), not to believe him (don't believe him)
know what he tells you, won't be the truth
we can't let him run the country cos he's just not able
you need more than a cheesy smile, to rule the roost.

(repeat chorus)


Good Political Management

Very good to see Helen Clark take control and slap her Party President down. His brain fart cost Labour almost as many votes as the ill thought out singing quartet. Unfortunatley the quartet is so well recorded now that it is going to dog the Labour Paarty for the rest of the year. This seems to be strike # 2 for Prez Williams. What is going to happen at #3?

Food Issues

The Inquiring Mind is keeping the good work up on this issue.

Fall In Retail Sales Confirms Gloomy Picture

The fall in retail sales announced by Statistics today stands out in contrast to the survey of services activity that also came out today. This suggested that retail was the stongest performer! Of course, both could be right, in which case we are in real trouble. We hope that Dr Bollard had a good read of these results (and that he enjoyed his coffe this morning at Rise). While inflation is still a worry, most of the inflation is occuring in areas where purchasing activity won't be influenced that much by interest rates remaining high -- eg fuel.

Key On Agenda

John Key's interview on Agenda yesterday is well worth watching. We think he did very well. No major stumbles and he handled some very tough questions on a range of topics.

Cullen On Clark's Innings

Interesting variation in the delivery and written versions of Cullen's speech yesterday when it can to beach cricket. Does anyone else think the comment about Helen batting well but the people are wanting someone else to have their turn significant?

He was meant to say this

We face a mood which I have likened to a game of beach cricket. The surveys tell us that some people think it’s only fair somebody else has a bat.

Why in his delivery did Cullen refer to Helen as opposed to the Party? And why did he not just read what was written?

Interesting Expose By Audrey Young On Herald Front Page

Clear evidence that Labour sees the public service as an extension of the Party machine:

The Labour Party is planning to use the resources of Government departments to campaign this year on its flagship policies, confidential strategy notes from the weekend Labour Congress in Wellington show.

In a private session on the election strategy, run by president Mike Williams, delegates were advised to distribute pamphlets on KiwiSaver produced by the Inland Revenue Department and on Working for Families produced by Work and Income.

They were also advised to tell voters when handing out the pamphlets that National voted against both measures.

Distributing Government department material explaining how new policies work is not unlawful.
But such publicity has never before been directly tied to political campaigns, and in the context of the new Electoral Finance Act, the move could be seen as inappropriate use of Government publicity.