Shares Start Down

After the first hour of trading NZX 50 is down 0.38%.

Has Winston Misled The House?

1921 (2006). Rodney Hide to the Minister of Foreign Affairs (09 Mar 2006): Following his reply to Question for Written Answer No 1164 (2006), has the taxpayer paid any airfares for the Chef employed at the Official Residence in each of the last five years; if so, how much?
Rt Hon Winston Peters (Minister of Foreign Affairs) replied: The Ministry of Foreign Affairs and Trade has not paid any airfares for the Chef employed at the Official Residence in Paris in the last five years.

On the way back to NZ the other day one of The Hive team read "Books, Baguettes & Bedbugs" by Canadian writer Jeremy Mercer. It is a book about life at the famous Paris bookstore Shakespeare & Co (ISBN 13 978-0-7538-2058-2).

It is worth a read, particularly for the evidence it contains about the poor quality expenditure and poor management controls by the NZ Embassy in Paris. It seems that the hungry writers staying at Shakespeare and Co. were being regularly fed by the Chef at the NZ Embassy, a woman called Gayle. That seems par for the course and doesn't worry The Hive that much but on page 165 of this book there is an interesting account as to how Gayle got the job in Paris.

"Back in Auckland, Gayle had cooked her way up through various kitchens and ended up at a popular downtown bistro. When she saw the advertisement for the job of personal cook to New Zealand's ambassador in Paris, it was a pinch-me-I'm-dreaming kind of moment. There was official skepticism about hiring somebody in her early 20s, and Gayle's short spiked hair didn't help the negotiations, but in the end she was hired. The job came with a plane ticket to Paris and an apartment on the top floor of the embassy."

Plane ticket to Paris? How can this be. Winston says that these were not provided. Rodney Hide, you raised the question in the first place. It might be time for a follow-up.

By the way the Ambassador at the time was one Richard Grant. Good on Richard for being so generous with your food.

NZ Houses World's Least Affordable??

Another negative story on the front page of the New Zealand Herald. Not what the PM will have wanted to read with her Weet-bix. Apparently NZ house hunters face the biggest gap between earnings and house prices. Wages are so low and house prices are so high that it takes 18 years and six months of a household's entire annual income to pay for a home, Demographia found. That measure is based on median house prices compared to median wages.

The Hive thinks that this survey result is an indictment of policy in recent years. We need tax cuts and more restraint in Government spending so that productivity can rise. Higher productivity = the prospect of higher wages.

Government Must Address Labour Shortages

We focused before the New Year on the impact that labour shortage and changed Government policy was having on the Otago fruit season. It seems that Hawkes Bay is now being impacted. Owen Hembry reviews the issue in today's NZ Herald.

Another Day Of Losses On the NZX?

We think that things may start stabilising this week (the trend will continue to be down but not so consistently down) but the NZX will be influenced heavily by international markets again this week. The only domestic shock would be the Reserve Bank decision Thursday on the OCR. We don't see any change there this time around. Whatever happens today on the exchange should be treated with caution as Wellington is closed for a holiday.

Last Few Days Of The Phoney War

Sir Ed's death and State Funeral mean that today, Wellington anniversary day isn't going to be the last day of the summer truce, as it would usually be in election year. We doubt too much is going to be said before Wednesday's Cabinet meeting, the first for the year. The Government will have to do something to try and turn things around. The news for the year has been almost uniformly negative.

We are not sure how National intends to play things, will they come on all guns blazing on Wednesday or will they wait for John Key's 29 January speech?

The Greens chose a meeting on Waiheke Island yesterday to begin the process of independent branding. We agree fully that the Labour-led Government has failed to deliver concrete policy outcomes on the environment. We are pleased that the Greens are prepared to look at detailed policy with other parties, including National. The reality is that on climate change National could actually bee closer to the Greens than current Government policy. If only the Greens were willing to stay focused on the environment and dump their radical economic agenda, they could start making real traction. It was interesting that Nandor was not at yesterday's gathering.

There are tow other big questions. When will Winston Peters start his distancing from Labour and how? He is in even deeper trouble than the Greens as far as the 5% threshold is concerned. We can't see him waiting too much longer before choosing his vehicle. Will it be migrants? Foreign investment? Or will he just focus on taking some votes away from National by intensifying the current war of words?

What Today's Primary Results Mean

The Hive view is that McCain's win is very significant. If he can win Florida he will be near impossible to beat. Huckabee had his best chance post Iowa to win today. The fact that he didn't when so many voters were evangelical Christians is very significant. The next few races will be much tougher for him. Don 't read much into Romney's win in Nevada. He was given a free pass by the others and there were lots of Mormon s voting.

Clinton can be well pleased with her win, particularly her ability to mobilise and
secure the female vote.

But what do the experts say? We are so lucky with our time zone. The Sunday morning edition of the New York Times is just out.

The McCain win is analysed by Michael Cooper and Megan Thee. Hillary's win is analysed by Jeff Zeleny and Jennifer Steinhauer. And Adam Nagourney analyses thee overall state of play.

McCain Has Won South Carolina

John McCain has won the Republican South Carolina primary 33% to Mike Huckabee's 30%.



In our view, this makes McCain the clear front runner in the Republican race. More analysis this evening.

Early Lead For McCain In SC

Why is South Carolina seen as so important for the Republican race? Ever since 1980, the winner of South Carolina has been the Republican nominee for President. This was where the McCain campaign faltered last time he was looking strong. He really has to win this time.

So what are the early results from today's vote showing? Just 1% of votes are in, but it is looking OK for McCain. In line with the polling he has the lead - 38% to Huckabee's 23%. Romney is third on 18%.

Update 2.19pm McCain still leads on 36% after 21% of vote counted. Hickabee is second on 28%.

Update 2.42pm things are getting closer - McCain on 34%, Huckabee 30%. Romney now in 4th place. 40% of votes in.

$47 Million On Spin???

There is no waste in Government and it would be impossible to make changes without impacting essential services such as education and health. Yeah right.....

Have a read on how vote health and education is being spent. Well done Sunday Star Times for running this story front page.

Clinton and Romney Win Nevada

With around 70% of the precincts reporting CNN and others have called wins for Hillary Clinton and Mitt Romney in Nevada. The Democrat race is the more important as it was harder fought. Clinton was on 51% to Obama's 45% when we last checked. Still no votes in from South Carolina. There seems to be a controversy there over the failure of voting machines in some areas.

Clinton In Early Lead In Nevada

With 35% of precincts reporting Hillary Clinton has 50% of the vote compared to Obama on 45%. We will update throughout the day on the Nevada and South Carolina results (none in from SC yet).

Concerned About Security Of Electricity Supply This Winter?

You should be. One of the very significant events that took place last year, that was again largely missed by the media was Transpower's shutting down of Pole 1, the system serving one of the two cables that carry electricity between the North and South Islands. It is little wonder that this was pretty much missed, Transpower chose to announce the shut down on the day that the Government made its major announcement on its policy response to Climate Change.

A good article in today's Herald on Sunday analyses the significance of this issue. It is worrying stuff.

This article also raises serious concerns about Transpower's management.

Taiwan Watch: Honduras The Next To Wobble?

Honduras is the latest Taiwan "ally" to be looking shaky. This from the AFP.

Kitty Hawk Shaddowed By Chinese Sub

Interesting new reports emerging on Kitty Hawk's trip up the Taiwan Strait in November.

It is for reasons such as this that The Hive watches this part of the world so closely....

Nevada and South Carolina

As Democrats and Republicans head out to vote on Saturday (once they wake up), this Reuters article summarises the state of play.

Biofuels: Are They Really The Answer?

New Zealand and the EU are back peddling fast on their mandatory biofuel use policies. This article gives some background on the reasons. Watch this space. There is much more embarrassment for David Parker and Helen Clark to come on this topic.

Will The Bush Stimulus Package Work?

Economists are divided. Have a read of this morning's New York Times.

The Hive believes that Helen Clark will regret deeply the delay in meaningful tax cuts here. She should study this article.

McCain In Lead In South Carolina Clinton In Nevada

The Reuters/C-Span/Zogby opinion pollsters have turned their attention to the next two primaries.

In South Carolina John McCain (29%) has a healthy lead over Huckabee (22%). Romney is well back in third (15%).

In Nevada things are closer for the Democrats. Clinton is leading Obama 42% to 37%.

Can Wellington Teach Auckland A Thing Or Two?

Noelle McCarthy suggests in today's NZ Herald that the answer is yes.

Electoral Implications Of Economic Slowdown

John Armstrong explores the implications in today's NZ Herald. The Hive sees these implications as very significant. We don't want to be too gloomy, but the economy is going to much more challenging, and the lot of the average New Zealander much grimmer, than Helen and her team were predicting when they went away for their summer breaks. What is worse is that much of the problem on the high interest rates/ high inflation front is their fault. How will they be responding? Will they really be wanting to make things even worse by proceeding to increase costs further to lead thee world in combating climate change?

Greenspan's Divinity In Question?

Interesting Op-Ed in today's New York Times by Paul Krugman. He has a look at the current problems confronting the US economy and while doing so points the spot light on former Fed Chair Greenspan (and on Bush):

What should have been done differently? Some critics say that the Fed helped inflate the housing bubble with low interest rates. But those rates were low for a good reason: although the last recession officially ended in November 2001, it was another two years before the U.S. economy began delivering convincing job growth, and the Fed was rightly concerned about the possibility of Japanese-style prolonged economic stagnation.

The real sin, both of the Fed and of the Bush administration, was the failure to exercise adult supervision over markets running wild.

It wasn’t just Alan Greenspan’s unwillingness to admit that there was anything more than a bit of “froth” in housing markets, or his refusal to do anything about subprime abuses. The fact is that as America’s financial system has grown ever more complex, it has also outgrown the framework of banking regulations that used to protect us — yet instead of an attempt to update that framework, all we got were paeans to the wonders of free markets.

This article that is due to appear in the New York Times Sunday Magazine by Roger Lowenstein is in similar space.....

More On The Governor-General

At least one blog is this morning continuing to take issue with our concern over the political tainting of Government House as a result of Rob Taylor being appointed the new Official Secretary.

Can we draw reader attention to the Introduction to the Cabinet Manual. This was written by Sir Ken Keith, who knows a bit more about matters constitutional than most. It is titled ON THE CONSTITUTION OF NEW ZEALAND: AN INTRODUCTION TO THE FOUNDATIONS OF THE CURRENT FORM OF GOVERNMENT

Amongst other things Sir Ken reminds us:

The Queen reigns . . .
That basic equation and the democratic character of the main conventions appear clearly in relation to the powers of the Queen and Governor-General under the law. Thus they may appoint Ministers and other holders of important offices (such as the Judges, the Defence Chiefs, the Ombudsmen, and the Controller and Auditor-General), they may dismiss them (following certain procedures), they may summon and dissolve Parliaments, they may assent - or not - to Bills passed through the House, and they may agree - or not - to proposed regulations and Orders submitted to them by the Executive Council and Ministers.
. . . but the government rules . . .
The Queen and the Governor-General are free to take those steps as a matter of law. But, as a matter of convention, they do so only on the advice of the Prime Minister or Ministers who have the support of the House of Representatives - that is, on the advice of those who are elected by the New Zealand voters, and who belong to a party which has a majority in the House; or who are part of a coalition which has a majority; or who, as a minority, are accepted by the House as able to sit on the Treasury benches. There must always be a ministry (the government of the day) to advise the Queen or Governor-General.

. . . so long as it has the support of the House of Representatives
That convention of course incorporates its own limit - one that conforms with democratic principle. If the government loses the support of the House, or if the Prime Minister loses the support of the governing party, then the ministry or the Prime Minister is likely to change: another party or combination of parties may now have the support of the House, or the governing party may have chosen a new leader. Or the Governor-General may face a more difficult situation because the position within the House or the governing party is unclear.

Situations like this were rare in New Zealand under the first past the post electoral system, but have been less rare since the introduction of the proportional representation electoral system. The essential principle in such situations is that the Queen, as a constitutional monarch, or the Governor-General, as her representative, acts in accordance with the advice of the Prime Minister or Ministers who have the necessary support of the House of Representatives. Where that support is unclear, the Governor-General relies on the elected representatives in the House, and especially the party leaders, to clarify whether a party or grouping of parties has the support of the House and should now be appointed as the government (or continue as the government), or whether fresh elections will be required. In the meantime, the incumbent government continues in office, where necessary acting in accordance with the convention on caretaker government.

We hope that we never face this situation, but we are concerned about the possibility that later this year or after the election "the Governor-General may face a more difficult situation because the position within the House or the governing party is unclear. " Yes the GG will in these circumstances rely "on the elected representatives in the House, and especially the party leaders, to clarify whether a party or grouping of parties has the support of the House and should now be appointed as the government (or continue as the government), or whether fresh elections will be required". But we would be a whole lot happier if we had confidence that no one partisan was going to be closely linked to this process of clarification and ultimately, decision making. Unfortunately we can not have such confidence with someone like Rob Taylor in this role.

The Cabinet Manual 1.7 states quite clearly "The office of Governor-General is apolitical. By convention, the Governor-General avoids becoming overtly involved in the "party politics" of government, despite having an integral place in the formal process of government." We think it most unfortunate that the Government has just tainted the apolitical office by this appointment.

Another Bad Day For The NZX?

The NZX 50 has started today badly again. A few seconds ago it was down by 1.3%.

Update at 1110 - it is now down by over 2%.

This explanation from the NZ Herald:

The tone of the local market was set by another ugly session on Wall Street, which key indices slumped two to three per cent.

United States stocks dropped heavily as data showing a plunge in regional factory activity and news of a hefty loss by brokerage Merrill Lynch fanned worries about the economy.
Merrill Lynch & Co Inc fuelled more concerns about the health of the financial sector when it reported about US$16 billion ($21b) in mortgage-related write-downs and adjustments in the worst quarter in the company's history.

The Dow Jones industrial average ended down 307.03 points, or 2.46 per cent, unofficially at 12,159.13.

The broader Standard & Poor's 500 Index plunged even more heavily, down 39.91 points, or 2.91 per cent, to finish unofficially at 1333.29 while the technology loaded Nasdaq index fell 47.69 points, or 1.99 per cent, to close unofficially at 2346.90.

Is The UN Really Interested In Supposed NZ Human Rights Transgressions?

Or have some activists stirred things up and arranged for a letter to be sent to the Government? This is an issue which could do with some stronger media scrutiny. It seems to us to say more about the problems being faced by the UN system than it does about New Zealand.

And while looking at this issue the media might like to do some digging on who from New Zealand has been attending UN meetings on indigenous people affairs, who has been funding the travel to these meetings, what the NZ non-Government attendees have been saying about New Zealand at these meetings, and what these attendees get up to in North Africa on the side trips they seem to have a record of taking while at these meetings in Geneva.

On the particular issue at hand - the so called "terror raid controversy" this post made an interesting read.....

The Role Of The Governor-General

Our concern at the politicisation of the office of the Governor-General by the appointment of a partisan Official Secretary at Government House has certainly stirred the pot. On the right we have people talking Coup d'etat and on the left we are being called ridiculous and being told we don't understand our constitutional law, that it is all set down in the Cabinet Office Manual, the GG has no discretion etc.

Well we don't like being told that we don't understand constitutional law or that we don't know the contents of the Cabinet Office Manual. In fact we know this very well. And it is for this reason we are concerned. We quote (from the manual):


EXERCISING THE POWERS AND FUNCTIONS OF OFFICE
1.7 The office of Governor-General is apolitical. By convention, the Governor-General
avoids becoming overtly involved in the “party politics” of government, despite having
an integral place in the formal process of government.
1.8 In exercising the powers and functions of office, the Governor-General, like the
Sovereign, acts on the advice of Ministers. This advice is tendered either within the
forum of the Executive Council, or directly to the Governor-General by the Prime
Minister or another Minister of the Crown. By convention, the Governor-General will
act on the advice of Ministers unless the government of the day has lost the support of
the House of Representatives.
1.9 Similarly, the Governor-General will act on the advice of the Prime Minister so long as
the Prime Minister appears to command the support of the House.
1.10 Only in a very few cases may the Governor-General exercise a degree of personal
discretion, under what are known as the “reserve powers” (and even then convention
usually dictates what decision should be taken).

Now do you see our reason for concern??

And since when does expressing concern about the politicisation of the public service and breaking with convention make one "right wing"?

Nandor Watch: When Will He Be Leaving?

TV news last night reported that Nandor has yet to decide whether he will see the current Parliament out. This leaves open the prospect that we could see Green co-leader Russel Norman in Parliament before the election.

Nandor Will Not Be Standing In 2008

Green list MP Nandor Tanczos announced today that he will not be putting his name forward as a candidate for this year's election. There was no indication that he might be leaving Parlaiment before the election to allow the entry of Green co-leader Russel Norman into Parliament to help boost his and the Green's exposure prior to the election. There was a strong rumour doing the rounds on this at the start of the year.

Rob Taylor Appointment Fact Not Rumour

An announcement was apparently made late yesterday. Lack of references in the media are a concern to The Hive. We have obtained the following text of the announcement:

Appointment of Official Secretary, Government House

Rob Taylor has been appointed Official Secretary, Government House. His appointment was announced today by the Clerk of the Executive Council, Diane Morcom.

Rob Taylor is a career diplomat. He has worked for many years in the Ministry of Foreign Affairs and Trade (MFAT), most recently as Consul-General in Los Angeles. Earlier assignments have included a period as Senior MFAT Private Secretary in the Office of the Minister of Foreign Affairs and Trade, a period as High Commissioner to Vanuatu, and postings to Samoa, Saudi Arabia and Iraq. He has a background in charitable organisations, including Riding for the Disabled, IHC and Oxfam.

Rob Taylor will take up the position of Official Secretary at the end of March 2008, on secondment from MFAT. He replaces Adrian Simcock, who resigned in November for health reasons.

The Hive remains deeply concerned about the appointment.

Inflation Higher Than Expected, NZX Keeps Heading Down

Not what investors really wanted to hear. Inflation for the December quarter was higher than forecast. Inflation for the year now running at 3.2%.

How has the equity market reacted?