The Letter

Helen Clark’s announcement on Monday that Labour would legislate to extinguish any Maori claim to the foreshore and seabed was poll driven. Labour conducts regular opinion and focus group polling and this says there is growing public reaction against the government’s race-based funding.

It is unprecedented for eight MPs, including four Ministers, to issue a press statement dissenting with caucus and cabinet. While the ninth floor spin is ‘this is MMP’, of course it is not. All are Labour MPs. It is the politics of race. The Westminster convention of cabinet responsibility is that Ministers who disagree should resign. Labour’s own caucus rules do not allow MPs to dissent from an agreed policy. The press statement is a very serious challenge to Helen Clark. The government is in effect saying there are different rules for Maori.

Monday: Helen Clark announces the government will pass a law asserting the Crown's ownership of the seabed and foreshore. Tuesday: “The land wars are over, so the consent of tangata whenua is required before customary title can be extinguished,” - Labour Maori Caucus.
Thursday: “It is also the Government’s intention to preserve the ability of Māori claimants to pursue claims to the foreshore and seabed,” – Margaret Wilson.

It is a very serious matter in a free society for government to refuse access to the courts to citizens to assert a property claim. The Appeal Court unanimously ruled that iwi had the right to make a case in the Maori Land Court. The Court did not rule that Maori have a customary right to the foreshore and felt the Marlborough case had little chance of succeeding. It is unlikely that in 2003 Maori have any ownership claims. The 1992 Maori fisheries settlement was legislated as “full and final”. Common law rights are ‘use it or lose it.’ The Appeal Court in the 1963 Ninety Mile Beach case ruled there were no Maori customary rights. The advantage of courts is there is some certainty in the end.

To legislate to assert the Crown’s full ownership is also a defendable position, it is similar to the Crown’s claim to the Queen’s Chain. Parliament, the courts, and Maori, have thought this to be the position at least since 1963.

Labour‘s present position has no moral or legal authority to assert Crown ownership but then acknowledges Maori customary rights. The Appeal Court made it clear that Maori customary and usage rights are the equivalent of ownership. An access that is not exclusive is not a right. As the government does not know what Maori customary rights are it does not know what it is negotiating and the claim has moved from being a property to a racial claim.  History is repeating itself. In the 1980s some Maori had some fishing claims to some inshore fishery. By refusing to let the court decide, the claim became a very expensive racial claim on behalf of all Maori out to the 200-mile exclusive fishing zone.  It is still not settled.

Labour has cited Lake Taupo as a possible model. The Bolger government, with no debate, ceded the lakebed to Tuwharetoa with an agreement for free public access for recreational and scientific purposes. Taupo fishermen report increasing incidents of stand over tactics by young militant Maori demanding money and vandalising boats and cars. The Crown Research Institute brought a submarine from Germany for much needed research on Lake Taupo – an active volcano and the site of the biggest volcanic eruption in recorded human history. The iwi demanded substantial financial compensation. The sub sat in its crate on the wharf and returned to Germany without getting wet.

Labour may not have a majority for its planned legislation. This is an issue that might bring down the government. ACT certainly will not support Ministers’ cheque book Treaty settlements that have no legal or moral authority.

The United Party is devastated by the passing of the Bill. United MPs were sure that the Bill would fail and confidently told their supporters that this was going to be their trophy – an example of how United was making a difference. United MPs are also shocked that Helen Clark used her office to pressurise MPs into voting for the Bill, and that every Labour Minister voted in favour including Phil Goff who used his position as Minister of Justice to move amendments. United MPs are asking why they are supporting a government that is passing measures they are so opposed to.

Last year foreign investment in NZ fell by 93% - by far the biggest fall in the OECD.

Contact Energy has just completed a multi-million dollar upgrade of its New Plymouth power station but it is sitting idle because the applications to the Regional Council for resource consent have been objected to.

The public keeps losing bicycles and the police sell them in lost property auctions. Not any more. The Commerce Commission has told the police that under the Fair Trading Act every bike should have an owner’s manual. No manual - $30,000 fine. So the lost bikes are now being sold for scrap.

The Letter

The daily humiliation for Labour as Parekura Horomia demonstrates his total unfitness for the office, exposes a deep split in Labour’s Maori caucus. As the ninth floor claims Parekura’s job is safe, his Maori ministerial colleagues leak details of the Minister of Maori Affairs’ poor health and John Tamihere makes a proxy attack on Maori’s traditional leadership.

The Labour Party captured the Maori seats with an alliance with the Ratana movement. It is a core Ratana belief that tribalism holds back Maori, and Ratana is a pan-Maori movement. Ratana set out to represent the Morehu – the landless ones. Just as a few Maori are descendents of chiefs, many more are descendents of slaves or low caste Maori whose chiefs sold their land. Labour’s Minister of Maori Affairs in the Lange government, Koro Wetere, was the first high class Maori Labour MP and as the Maori Queen’s advisor, believed in tribalism and his tribe.  Wetere made treaty settlements tribal and tribal leaders wealthy. The treaty settlements have done nothing for Morehu or “urban Maori”.

The Morehu versus the “aristocrats” has hit Labour’s Maori seats before. Winston Peters, in his 2002 pre-election speech said, “The Treaty Industry has brought the mass majority of Maori nothing. Not a snapper, not an inch of land, not a dollar in value.” Helen Clark is very conscious that she is the first Labour leader to lose a Maori seat, and fears she will do so again. Tamihere is an anathema to tribal Maori – so Clark feels she cannot replace Parekura with him.

Consumer confidence is at a ten-year high, despite the drought, SARS, the Iraq war etc. John Howard is at record popularity and Labor has just had a damaging leadership challenge. Interest rates are at historic lows. There is a school of thought that says government popularity is more affected by people’s mortgages than any other factor.  The Liberal government in Australia and the Labour government in NZ have taken diametrically different stances on Iraq. Both countries have been hit by drought (serious in Australia) and SARS. But in both countries tens of thousands of homeowners have received letters from their banks saying their interest rates have been lowered, giving in effect a tax-free pay rise. The fact that rates are lower because both Reserve Banks see harder times is ignored. People feel better which is the real explanation for both government’s high polling.

Toll Holdings has demonstrated why NZ companies fail in Australia, and vice versa – they do not understand the culture. Michael Cullen thought he had an agreement with Toll only to see Toll stand in the market against the NZ government. Clearly Toll’s Paul Little thinks that NZ is a state like Tasmania and can be easily beaten. But Dr Cullen has many more weapons – the government writes the rules. He has said if Toll wins – the government won’t subsidise the track. And Toll is going to need overseas investment commission approval. Then there is the Commerce Commission, which has for years wanted to have a crack at rail’s control of the interisland ferries. Labour can blow Toll’s offer out of the water at any time it likes. Paul Little is about to discover that Australia and NZ are not the same.

It’s not possible to run a railway without government co-operation. Three government decisions hit Tranz Rail. First, cabotage – the ability of foreign ships to pick up local cargo. Rail lost the Comalco contract – vital South to North cargo. Second, the speed restrictions in the Marlborough Sounds – lowered the ferry’s profitability and rail delivery times. And then the king hit – speed restrictions when it was hot – played havoc with rail timetables. (The buckling of lines has never been a problem in NZ – an equivalent ruling would be that because heavy trucks can aquaplane in rain, when it’s raining truck speed be limited to 40 km.) Any government safety inspector could stop rail at any time just by citing “safety” at the hundreds of uncontrolled level crossings.

The Prostitution Reform Bill is parliament at its worst - a private members bill and a free vote. The Bill is poorly drafted; even worse are the amendments. Even the Bill’s founder, Tim Barnett, is alarmed by the result. The Bill was misnamed from the outset. Prostitution in NZ is not illegal and never has been. What is illegal is soliciting, pimping and brothel keeping. Parliament realises that massage parlours are brothels and the Massage Parlours Act already sets stringent rules. The police and local bodies said in evidence that they have no significant problems with parlours, only street prostitution. The Bill seeks to regulate prostitution and introduce the OSH Act into brothels but by legalising soliciting the Bill encourages prostitution on to the more dangerous street scene. The Bill’s protagonists have so misstated the legislation’s reality that some liberals are for the first time voting for state regulation and some conservatives who do believe the State can regulate in the bedroom, as this Bill does, are voting against the Bill.  Most MPs are aware of the contradictions.

There is a proposal to move that the Bill be referred back to select committee in an attempt to have at least a coherent piece of law. Now it is a Bill that no one is happy with and the vote is very close. For more information, see

The Letter: Correction

The Letter’s legal adviser has changed his mind and decided that the Resource Management Act provisions could allow Councils to prevent small brothels from being set up in residential neighbourhoods on the grounds that they are “incompatible activity”. He repeats his advice that the Bill is a mess and contains many other contradictions such as the restrictions on prostitutes under the age of 18 – but unlike buying liquor there is no requirement to provide police with proof of age.

The Letter

The cabinet is in general agreement that Minister of Maori Affairs, Parekura Horomia, should go but is divided over whether his firing will cause more or less political damage.

“When did the Minster know that the answers to his parliamentary questions were false?”  Horomia’s answer – “Shortly after.” What does that mean? Shortly after he gave the answers? Shortly after his officials admitted to the media the answers were wrong? Or was it shortly after Rodney Hide pointed out his answers were a litany of lies? The Minister’s own cabinet colleagues have tried to find out the answers and Horomia’s answers to them are just as incomprehensible. Examples of his answers are at

When the Minster of Maori Affairs attempted to find out what was going on in Maori Broadcasting (Te Mangai Paho) the chief executive, Trevor Moeke, refused to come to the Minister’s office and explain. Moeke said that he was only accountable to the board.

Rodney Hide does not believe the Minister’s claims that his officials have misled him. It is a breach of privilege to mislead the House, but the inaccuracy must be deliberate. A breach of privilege letter has been sent to the Speaker.

In the UK a Minister who cannot answer for his department in parliament is sacked. NZ’s question time has been so tame that even incompetent ministers that just stick to their officials’ scripted answers have been able to stumble on. The new Westminster-style question time means the opposition can ask extra questions. Horomia’s cabinet colleagues are now spending hours each week trying to help the Minister. His answers to oral questions on Thursday were written for him but Horomia can’t even stick to the script! Then his subsequent answers to supplementaries contradicted his scripted answers.

The ninth floor spin is now, “There is no question of the Minister of Maori Affairs going.” (Translation: his replacement is being actively considered.) “The Minister speaks beautiful Maori.” (Translation: we know you don’t speak Maori so you have no idea.) “The polls are holding up, the public is bored with this matter and want the opposition to debate real issues.” (Translation: please move on.)

The Treasury inquiry into the bribery and kickbacks in Te Mangai Paho was a very narrow inquiry into the allegation against just one official and only one contract. The official resigned and refused to be interviewed. Even though they found evidence of fraud the government won’t call in the police.  Ministers are afraid that a real inquiry will reveal widespread corruption. Maori TV is hiring staff on expensive contracts but no tender has been let for transmitters. So Maori TV will not be on air this year and the budget is blown. Separate race funding in health, education, business, the arts, etc parallels the separate funding for Maori broadcasting. Maori funding administered by Maori. In most cases there is no tender, no accountability and no review of outcomes.

A small example is the separate anti-smoking programmes for Maori. After increasing cigarette tax by $120 million in Labour’s first budget, $20 million a year was voted for an anti-smoking programme and about $200 million earmarked for Maori programmes. Maori “health providers” have piled in and spent the money. Result: more Maori smokers than ever before.

Dunedin heart patients are being sent home to die because they are white. There are now standardised criteria for heart operations. Patients are given points for symptoms. Cardiac surgeons say if you receive 25 points you need an operation. In Auckland patients with 35 points get an operation. You need 50 points in Wellington, 60 points in Christchurch and 67 points in Dunedin. There are many more Maori in Auckland so the Board can afford to “purchase” more heart operations. Dunedin’s too white so patients are being refused operations.

Labour funds doctors’ visits for Maori and Pacific Island people by 20 percent more than for other NZers. E.g. a primary health organisation (PHO) receives $19 a year for most female non-Maori/Pacific Island superannuitants enrolled in the area, but $60 for most female Maori and Pacific Island pensioners. (For detail of how race-based health funding works see Heather Roy’s chapter in Liberal Thinking –

Labour’s focus group polling shows race-based funding is very unpopular. Labour ditched “Closing the Gaps” even though Helen Clark had said that it was Labour’s key policy and departmental heads were told their reappointment depended on their performance on Maori issues. The cabinet committee has been scrapped and the policy name banned – but the spending continues. Clark is considering appointing John Tamihere and completely u-turning Maori policy.

On Tuesday TV3 news claimed the ACT caucus had re-suspended Donna Awatere-Huata. The caucus did not even discuss the issue. ACT MPs have been amazed that Donna was able to get hundreds of thousands of dollars for the Pipi Trust. If an ACT MP can get so much – how much do Labour’s friends receive?

The Letter

Last week the Reserve Bank cut interest rates again. Is the bank just feeding a property price boom? The editor of the influential magazine, The Economist (31 May) says the stock market bubble has been replaced by a property price bubble that will burst. Property is the biggest business worldwide. Over 60% of NZers’ wealth is in property. Studies show that changes in property prices have twice the wealth effect of changes in shares.

Worldwide property prices have increased dramatically. In the last three years house prices in Britain have risen 55% while shares have fallen 40%. House prices in real terms in Australia, Ireland, Spain, the Netherlands and Sweden, have risen in real terms more than 50%; US house prices by 30%. The OECD exceptions are just Japan, Germany, Canada and Italy. The Economist says that US house price increases are the biggest of any previous real estate boom. In New York prices have increased 47%. House prices increased 18% in Australia last year.

Allan Greenspan, the Chairman of the US Fed, and NZ economists like Adrian Orr, say there is no bubble. Increased house prices can be accounted for by low interest rates, rising real incomes, growing population and a fixed supply of land. The Economist disputes this. If property rises are driven by supply and demand then it follows that rents would be rising in step.

The traditional way to measure the worth of shares is the price to income ratio, the p/e. The price of a share should reflect its future income. So The Economist has calculated the p/e ratio for housing by dividing house prices by rents. US house price p/e ratios are at record levels. The Economist calculates house prices in Australia to be 30% too high. The magazine points out it is a myth that property prices can never fall. There was a major price correction in NZ after the 1987 sharemarket crash. German and Japanese house prices have been falling steadily for years. Japanese prices are down by over 50% in 10 years.

Comparing house prices to rents from 1975 to 2002, rents have increased 772% and house prices, 712% - no bubble. But since 1994 rents have increased 10% and house prices 43% - a bubble (but Labour’s state house rent reductions are part of the reason). The house price to income ratio says property is overpriced. From 1992 to 2002 house prices have increased 69% and wage and salaries by 19%. Auckland house prices from 1994 to March 2003 have risen 80.3%, compared to 17.8% increase in nationwide wages (no data for Auckland wages exists). What’s very worrying is the record level of household debt in this country – it has risen from 64% of GDP in 1990 to 117% a year ago. The increase in house prices seems to have eased; the real question is, will property prices fall? For more data see

In the middle of Niu FM’s broadcast on 3 June 2003 it went off air. The station discovered that the government had switched the frequency to premises in Ponsonby where it started to broadcast, using some of Niu FM’s staff it had persuaded to break their employment contracts. Today, in the High Court, the Pacific Island community-owned radio station 531 PI is attempting to get an injunction against the Crown to return their radio frequency.

Labour decided to finance a network of Pacific Island FM stations. The National Radio Pacific Island Trust was set up with Labour’s political appointees. A tender for the supply of PI FM stations was issued and a community-owned Pacific Island radio station 531 PI won the tender. The trouble started from day one as the government-appointed trustees realised there was nothing to now justify their existence. In December the government secretly registered a company in the station’s name Niu FM Ltd! Despite the claim by the government that there were ‘irregularities’, the auditors say there is no money missing. What has really outraged the Labour government appointees is that 531 PI has appointed Arthur Anae, a former director, successful PI businessman and National MP, as station manager. That’s when, with ministers’ approval, the Crown decided to simply steal the frequency. Why is it outrageous to suppress the media in Tonga but not in NZ?

The Auditor General wrote to the Speaker last week advising him that he was declining Donna Awatere Huata, Winston Peters and Rod Donald’s request that he investigate how ACT runs its out of Parliamentary offices. After looking at ACT’s arrangements the Auditor General concluded that the funding was within the rules, which was what The Letter predicted.

Richard Prebble and the ACT MPs are tomorrow launching ACT’s latest book Liberal Thinking. You’re invited to attend the book launch at 5.30pm, Portrait Gallery, Bowen House, Wellington, Tuesday 10 June.  It’s new ground for ACT as the book seeks to set out what classic liberals think and then apply this to different issues. The book is available in all good bookshops from 23 June. Liberal Thinking will also be available along with other ACT publications at
Richard Prebble will also be conducting book signings at the following places and times:

Wednesday June 11

10:00 am
University Book Shop,
Canterbury University

11:30 am
East on High Books,

Thursday June 12

1:00 pm
Chapters & Verses,
272 Stafford St,

3:00 pm
Paper Plus,
181 Thames St,

Friday, June 13

11:00 am
Preston’s Paper Plus,
234 George Street,

12:30 pm
Books and More,
Golden Centre,
251 George Street,


The Letter

The Green Party conference at Karapiro was potentially the Party’s most important since they split from the Alliance. The Party that had expected to be in government with Labour finds itself irrelevant and facing electoral defeat. The Green politicians are still keen on office and can see opportunities: move to the left and take the Alliance’s electoral support; modify their anti-GE stance and become Labour’s only option. The Greens agree the United Party is finished. How could Peter Dunne allow his “biblically based” Commission for the Family become the politically correct Families Commission?
The Green position has been that once GE is in the environment, it’s the end of the world - so the Party has pledged it’s a non-negotiable bottom line. The Greens had promised extra parliamentary protests when the moratorium is lifted in October. The Party leadership went to the conference with a new strategy – oppose GE but still let us be in coalition with a GE supporting Labour Party. Can a Party that compromises on GE credibly be called Green?

Jeanette Fitzsimmons has promised her husband to retire at the next election. The greens’ constitution demands gender-balanced leadership. Problem: none of the women MPs are Green. There is Sue Kedgley who is batty about battery hens, Sue Bradford who is a red, and Metiria Turei is an anarchist/Maori sovereigntist who makes Tariana Turia look mainstream. The next candidate on their list is Catherine Delahunty, a real Green. The Caucus has been trying to persuade Ian Ewen-Street to take a long honeymoon with his new love and let Delahunty into parliament. He’s resisting - so parliament may win over love for Jeanette also.

If the left can’t form a government, can the centre/right? Winston Peters has not lasted as a minister more than two years on two occasions. NZ First’s irrational immigration views are unacceptable to ACT. An even bigger problem is Winston’s populist approach to big government and big spending. However National, ACT and NZ First do agree that the Treaty industry is out of control. A coalition where ACT, not NZ First, was in second place ensuring sound economic policies and NZ First was handling the Treaty issues, is a formula for stable government. Richard Prebble’s speech is on

It is expected that the Reserve Bank will cut interest rates yet again this week. The latest economic data shows a $1 billion dollar drop in earning from the farming sector last year – hard spring, drought and falling milk prices. The Australian, British and the US Fed are all expected to lower interest rates. But should NZ? Inflation is under 3% but only because the price of imports are falling. Strip out the imported prices and domestic inflation is at 3.5% and rising. The critical shortage of skills is seeing wages rise faster than inflation. If the Kiwi falls (as the Governor wants) the strong internal inflation will be revealed. Inflation is easy to create and very hard to eliminate. 

Phil Goff’s picture, hand in hand with Arafat, was shown around the world. Goff knew when he requested his meeting with Israeli PM Sharon that the meeting would be cancelled if he then sought to meet with Arafat. The Munich Olympic terrorism was planned and executed by Arafat’s movement. He has done nothing to stop the suicide bombing. Goff, who spent six months as a student on a Kibbutz in Israel has not explained why he has chosen to make this gesture of defiance to Israel and the US. It is impossible to see how NZ’s interests have been advanced.

Associate Maori Affairs Minister John Tamihere has been predicting a dozen Maori seats, saying the Maori population will reach 28%, 749,000, in 2021, and a million by 2051. Yeah right, and Christian Cullen is a Maori. Claiming every one with any Maori blood is Maori is harmless when it’s rugby, but not so when it is used to pick those who govern us all.

The Government’s spin in Te Mangai Paho is that there is nothing wrong with the policies and procedures but they were not followed. That’s like saying there is nothing wrong with law and order except some people break the law. Actually, the report shows the procedures are not ok. Thousands of dollars were taken without a contract, agreements, or services. That’s called theft. Why hasn’t the Government called in the police? Employees, including the chief executive, are working, handing out $48 million of taxpayers’ money, without having a written employment contract. Illegal. Rodney Hide has more to come.

Documents released under the Official Information Act show officials advised against Labour’s new dog laws. The Minister was told, “Inform the public that there has not been an increase in the number of dog attacks and that the incidence of dog attacks, under the current Act, is decreasing.” Officials advised that identification of dog breeds is “problematic” and “Customs would not be able to identify and prevent the importation” of specific breeds. The UK Dangerous Dogs Act 1991 “has had no effect on the incidence of dog bites.” The ad hoc Ministerial group on dog control recommended against the new measures. ACT will post the documents on this Thursday. 

The Letter

Parliament has begun a two-week recess with the government ministers struggling at question time and Helen Clark going AWOL. A Free Trade Agreement in ashes, Waitangi Tribunal inventing new grievances and corruption in Maori radio. The latest TV One poll wipes out Labour’s coalition – with the Greens at 3% and United at 1.8%

Labour is so worried about Clark’s inability to handle question time that Michael Cullen as Leader of the House has begun lobbying United and the Greens for a sessional order to limit question time to one hour. This would enable Ministers to give long answers to patsy questions, raise spurious points of order and limit real opposition questions to less than 20 minutes a day.

The US’ “no” to New Zealand and “yes” to Australia is the biggest foreign policy setback since Britain joined the EC. Over $1 billion a year has been lost. In February Helen Clark told Parliament the US agreement was her No. 1 priority and was achievable. How was it lost? Goff and Clark convinced themselves that the US ring fences trade from foreign policy. It was the claim that trade was ring-fenced rather than the “Al Gore” statement that has made it impossible for the US to grant NZ an agreement. Labour talked us out of a deal.

The Waitangi Tribunal finding that Maori have an ongoing “Treaty Interest” in petroleum is a radical extension of the Treaty. The Tribunal found that Maori should be compensated for the opportunity costs of assets such as petroleum where they are of “disproportionate value”. No matter that in the 19th Century no one knew the value, or even that oil was there when Maori land was alienated.   The logic of this Treaty jurisprudence is Maori have a claim for all gold, coal and minerals ever mined. Maori are now asking to be compensated for the economic benefits of colonisation! Treaty Minster Margaret Wilson refused to rule out the claim saying, “She would be a fool to do so”. ACT’s Stephen Franks has observed, if it’s not in the “national interest” to have claims on oil, why is it in the “national interest” to have claims on the foreshore, radio spectrum, flora and fauna, Queen’s Chain, homes for Taniwha, etc, etc.

After four years in government Labour’s solution to the energy crisis is an energy tax. Building standby capacity will surely inhibit the market from investing in new generation. The domestic consumers have been deprived of choice – we must pay an extra $40 a year to guard against a one in sixty-year event. At a much lower cost, all of NZ could be metered with the latest real time, remote reading meters so we could choose either high bills or cold showers once every 60 years.

After the latest reshuffle, the Clark Ministry is now the biggest ever. It’s like the Mexican army; there are more generals than privates. There are now only eight Labour MPs, Lynne Pillay, Winnie Laban, Darren Hughes, Russell Fairbrother, Dave Hereora Nanaia Mahuta, Ashraf Choudhary and Mark Gosche, who receive just a backbench salary, all the rest get extra pay – a record 44 MPs out of 52. There are 20 Cabinet Ministers ($162,000 plus expenses) seven Ministers ($143,900 plus exps) one Undersecretary ($112,400 plus exps) Three Speakers (Speaker on $162,600, Deputy, $116,600 and Asst, $98,200), Whips ($124, 950 and $102,900). Then chairs of select committees ($8,200 extra) and deputy chairs ($1,000 extra). The perks of office are worth as much as the pay. David Cunnliffe, the new Minister (who’s created history by being the first Minister to be thrown out of Parliament on his first day) is entitled to free Wellington accommodation, self-drive cars, Ministerial office and staff and the ultimate status symbol – LTD chauffeur driven limousine.

Labour has more ministers than jobs. Dover Samuels, Harry Duynhoven and Phillip Field have no primary responsibilities (so can not be asked any parliamentary questions!) and they are listed as Ministers of State.  It’s less humiliating than Damian O’Connor whose portfolio is Minster for Racing, and less perplexing than Tariana Turia’s job as Minister for the Community!

It’s institutional racism. Maori MPs can now speak in Maori and have their speeches translated. The translation time is added to the Maori MPs’ speaking time. Result: a Party like ACT loses its right to speak. To read the speech Heather Roy was prevented from delivering see

Rodney Hide: “How, then, does the Minister square his reply to question for written answer No, 257, in which he stated: ‘I am advised by my officials that there have been no payments of cash by Maori Sportscasting International to any employees of Te Mangai Paho’, with an email dated 15 October 2001 from Maori Sportscasting International to Te Mangai Paho’s radio manager, Mr Tame Te Rangi, which states: ‘Your payment for services will be placed into account this day. Hemana will have with him on his arrival the petrol vouchers/cash/copies of commentators’ instructions.’?”
Minister: “It would appear from what the member is saying that I have not been provided with the full information…”

In the election returns of the Green Party is confirmation that the Party is bankrupt. Some $34 thousand dollars is listed as ‘disputed’ bills i.e. the Greens could or would not pay. See


The Letter

After cabinet the Government will announce its plans to regulate the electricity industry by levying each generator to provide dry winter capacity. All regulation produces unintended consequences. This regulation will remove the possibility of a market solution while distorting the energy sector further. What is wrong with the energy sector is there is not enough market.

The Government failed to adjust the tax brackets for inflation in the Budget. It’s nine years since the $9,500 bracket was established! Fiscal creep has increased income tax $500 million since Labour was elected. In contrast the government has decided to index the funeral benefit to the CPI. They are taxing us to death but at least they will bury us – its’ not for love they do it but to prevent the stink.

The Budget provided $6 million for Treaty education. The socialist engineers believe that if only we were educated about the Treaty we would see it their way. Labour’s problem is that they claim the principles of the Treaty are whatever the Waitangi Tribunal says. No $6 million campaign can alter the fact that the Treaty industry is cargo cult politics.

Want to let Michael Cullen know what you think about no tax relief for businesses and working New Zealanders? Your views on government spending on America’s Cup challenges, Maori TV, Treaty education, etc? Instant democracy. ACT MPs will deliver the results of an Internet petition tomorrow before the Budget is voted on.  Log on now and sign the petition at

Helen Clark has had the worst performances in question time by any PM since Bill Rowling was unable to handle Muldoon. Each week it’s a new failure and last week was the most serious yet. The government had dropped from the Resource Management Amendment No. 2 Bill the term “ancestral landscape” when it was realised it covered any land once owned by Maori – i.e. every part of the country. [Readers will recall that The Letter pointed this out months ago.] Clark then told Paul Holmes and parliament that the select committee was to blame. Clark was forced to make a personal explanation that she as Minister of Culture had written to the Minister of Conservation requiring the term to be added to the RMA. Clark now excuses herself saying she signs hundreds of pieces of paper. Clark as Minister of Culture signs very few Ministerial legislative instructions. Clark was scathing on Jenny Shipley who could not remember what was said at a private dinner party. This week Clark has promised to release all the documents between herself and the Ministry of Culture regarding the RMA so there is more to come.

Clark walked off the stage and refused to answer any more questions at the traditional Auckland Chamber of Commerce post Budget lunch. Some 500 Auckland business people paid to hear Clark’s post Budget views – a dull, uninspired speech. Then came question time. The first two questions were innocuous. Question three: “My question is in two parts. The Labour government rightfully believes that tax cuts deliver prosperity…because you have given Maori enterprises a tax cut...Why not give all New Zealand enterprises the same opportunity to prosper? Part II: Do you and the Labour government subscribe to the basic principle that all New Zealanders are equal before the law…and one class of citizenship? ” Helen Clark waffled saying that would be the ideal. The questioner said, with respect you have not answered the question. The audience agreed and began heckling. Clark replied that he should refer the question to ACT!  The next question asked what the government was going to do about consultation with Maori blocking needed energy projects and was government going to do anything about the energy crisis? Clark answered, “Yes,” and walked off. The business audience made very clear its disapproval of the PM’s performance.

Every year the Electoral Commission publishes political party donations. Usually the media write anti-ACT stories – this year, silence. Last election ACT donations over $10,000 totalled $88,971.24 ($50,000 anonymous.) National got $528,167.71 ($200,000 anonymous). Labour $671,719.00 ($446,681 anonymous). The Engineers’ Union gave $70,000 and received back a so-called trade union education grant of $482,000 (a real scandal). ACT is funded by many small donations. It’s Labour that’s the Party of wealthy lobbyists. See for donation details.

MPs are complaining that they can no longer buy NZ-made apple juice from the lunch bar in parliament. Bellamy’s has signed a contract with a multinational soft drink company to provide only soft drinks like Coke. Not a word of protest from the useless Green Party.

The recent increase in the excise duty on sherry and port (to “save young people”) was a confidence motion where Labour needed the vote of the United Party. United voted one short. Rumour has it one United MP refused to vote for the measure saying it was just a tax grab.

The latest cabinet reshuffle has made the Clark Ministry the biggest in NZ’s history. Most Labour MPs now have an extra salary, car, etc. Three MPs have been named Ministers of State meaning they just get the money and no job description.

The ACT parliamentary unit has a vacancy for a press secretary. The job involves handling press and media for ACT MPs. Media experience is an advantage but we will consider an applicant with journalist school and life experience. Ability to write well is a requirement. Apply electronically with a copy of your CV
to ACT's Head of Staff at

The Letter Budget Special

The Letter Budget Special
15 MAY 2003

The Budget reminds us of the Sherlock Holmes story -
Inspector Gregory: "Is there any point to which you would wish to draw my attention?"
Holmes: "To the curious incident of the dog in the night-time."
Inspector Gregory: "The dog did nothing in the night-time."
Holmes: "That was the curious incident."
What's curious about the Cullen Budget is there is nothing to revive economic growth, tackle Auckland's traffic, combat the energy crisis or the compliance costs for business, in fact any of the real issues. So if you're busy you need not read on.

Labour 's credit card pledge was "No rise in income tax for 95% of taxpayers". As the Budget did not adjust the income tax brackets, now 95% of all taxpayers pay more tax than when Labour came to office. The Parliamentary Library economists calculate that to fully adjust for inflation the $9,500 threshold should have been adjusted in the budget to $13,200 (a 38%) increase; the $38,000 threshold to $41,800 (a 10% increase) and the $60,000 threshold should be raised to $65,000 (10% increase). The failure to raise just the top threshold means that 270,000 workers are now in the 39-cent tax bracket - ie 18% of fulltime workers. Helen Clark can't have been conscious when she signed the pledge card.

A Labour strategy has been to repeatedly announce the same spending announcement. In December 2001 Annette King announced $400 million "new" money for health each year for the next three years. The budget re-announced it. The trickery is greater. In fact $120 million was never "new" money. Annette King lost out in Labour's first two budgets and health spending was cut - so it's just catch-up money. The crisis in hospitals' deficits will continue. $165 million of the $280 million is "ring-fenced" for primary health. Hospital boards will continue to cut waiting lists by simply taking thousands of patients off the waiting lists and putting them in "active review". It's NZ's greatest state secret how many patients are on active review.  They are not counted. Any bureaucrat that did a count would be fired!

Another loser. Real police spending is falling. Real per capita spending on police under Labour has fallen from $216 per person to $214.

The motorist is a real loser under Labour. In 1999 petrol and road user charges raised $1517 million, $1194 million went to Transfund for roading and Government took the rest - $323 million. This year petrol and road users will raise $1910 million, Transfund gets $1464 and the government takes $446 million!

ACT New Zealand has managed to obtain a copy of the Treasury beneficiary number forecasts that this year for the first time have been omitted from the printed Budget Tables. But they forgot to take the numbers off the Treasury's website. When we look at the numbers, it is easy to see why Labour didn't want to publish them.  The Budget claims that Labour's economic policies will create jobs but the Treasury doesn't believe it - as the unemployment benefit is predicted to rise by 6,000 over the next two years. What's even more disturbing is the rise in disguised unemployment.  Unless Treasury's predicting that the SARS epidemic is going to sweep through New Zealand, it's not possible to account for the fact that Treasury says that within three years, the number of people on the sickness benefit will have risen 34 percent from when Labour came to power.  When Labour took office, there were 32,800 on the sickness benefit.  Now there are 38,000, and Treasury says that there will be 44,000 in 2006. A similar, inexplicable trend exists in the invalids' benefit.  There were 52,700 New Zealanders on invalids' benefits when Labour was elected.  There are now 68,000, and there will be 82,000 in 2006.  That's a rise of 55 percent.
Perhaps the reason the Government didn't publish the benefit number predictions is because the Domestic Purposes Benefit numbers are due to rise by 3,000 over the next three years.  This is despite - or perhaps because of - the United Party's Commission for the Family.  The benefit table is on ACT's website:

Having spent $27 billion on education, Labour has just noticed kids can't read. No worries - help is at hand. Trevor Mallard, Minister of Education, has announced the Budget will spend $15 million over four years to appoint 15 new literary development officers.

Labour boasted that it had a spending cap. In Dr Cullen's first Budget he boasted, "The $5.9 billion spending cap we have imposed on ourselves remains in place." This Budget has no spending cap and in an obscure passage: "the likelihood of sufficient fiscal headroom in Budget 2004 for some significant initiative beyond the amount presently allowed."  One has to go to page 21 of the Economic and Fiscal Update to find "would allow for policy changes of under ½% of GDP in each of the 2004, 2005, and 2006 Budgets." Enquiries in the Budget lock-up reveal that this is an extra $500 million new spending each year.

Treasury forecast average growth of 2.5% a year over the next ten years.  Under what Helen Clark calls the "failed policies of the past" New Zealand grew 3.6% in the 1990s.

The Letter

This year’s phrase is “smart growth”. It’s cargo cult economics – the idea that governments can pick some easy way to achieve prosperity. Cullen has been, as finance ministers always do, lowering expectations. But with a massive $4 billion surplus the budget has room for significant giveaways. ACT is pressing for a reduction in the tax rate. The IRD has been doing work on small business tax compliance costs. The average small business “works” for the government many hours a week just on compliance. There are rumours that Cullen may announce measures that would reduce small business tax compliance costs. As NZ has an imputation system, tax on companies is just a withholding tax. To really reduce the cost of investing and growing the country, the individual income tax must be lower.

Not only is there enough money to reduce company and personal tax to 23 cents there are many measures that cost nothing: Open ACC to competition; RMA reform; Slash red tape; Reintroduce external exams; More labour market flexibility; More private sector in energy. Cost – virtually zero. Benefit – enormous.

ACT has surveyed 80,000 businesses and 400, 000 households. The result shows that the one third of the community who pay significant income tax strongly believe their tax is excessive and unfair. ACT is presenting the case for a tax cut on Wednesday and will post the results on the website

72% of all surveyed opposed paying $5 million to the America’s Cup campaign. Just 17.5% were in favour. $35 million is now the cost. The government having got involved now finds it can’t get out, as ACT predicted. Why would a sponsor put in money if the government will do it for you?

Helen Clark boasted to the press gallery that she would not be easy meat in parliament last week but collapsed into babble on the first question. Labour Ministers cannot handle repeat questioning. Trevor Mallard, acting Minister of Energy, got so confused he forgot that Labour is blaming Max Bradford for the energy crisis and blamed Richard Prebble – who has not been a minister for 12 years and has never been energy minister.

In urgency on Wednesday Parliament the government increased the tax on alcoholic beverages between 14 and 23% proof. It was to stop youth drinking said Jim Anderton. The opposition pointed out that the alcopops the young like are only 5% proof. United’s Judy Turner and Green’s Rod Donald told the house they had pressed Labour for the tax increase. The Liquor Lobby had told the MPs that 14 yr olds were drinking gin at 23% alcohol, ie just below the tax rate for gin. No proof of this claim was made. The real situation is that NZ firms have been producing local spirits like “Mississippi Moonshine” at 23% proof that have taken significant market share off the imported scotch, London gin and Jamaica rum. All the tax increase achieved was to protect the sales of imported spirits. Labour Ministers were incredulous when the minor parties supporting the government, United, Greens and Jim Anderton’s Progressive asked for the tax increase – but they took the extra tax (Labour needs the tax on sherry to pay for the next America’s Cup campaign).
MPs feel great sympathy for Mark Gosche who resigned from cabinet because of his wife’s illness. Lobbying is now intense for his job. Under Labour’s rules Helen Clark nominates a replacement. Gosche was Labour’s only Pacific Island minister. That could see either Phillip Field or Winnie Laban promoted. Both MPs do not belong to Labour’s important factions – the Women’s or the Maori Caucus. The smart money is on Tariana Turia, and Judith Tizard – both women Clark likes. The vote could be tomorrow, as Clark does not want another week of lobbying. By appointing an associate minister Clark creates an opening. The Labour whips want Clark to make Deputy Speaker Ann Hartley a minister to remove an embarrassment.

Questioning from ACT’s Ken Shirley has shown that the army’s new LAVs do not fit into a Hercules aircraft unless the armour is removed! A recent article in the The American Spectator completely vindicates ACT’s concern about the $800 million purchase. It’s worth reading:

In the Dominion Post 7 Oct 2002 Jona-than Milne reported ”United is looking for something between the Law Commis-sion (at $4 m pa) and a small ministry (starting price $6 m pa)”. This item led Peter Dunne to write a testy letter to the paper (14 Oct): “What he (Jonathan Milne) writes is incorrect…He dredges up figures of millions of dollars to fund the commission, figures of which I am unaware…After many years in political life, I do not expect columnists to write only admiringly about politicians, but I do expect honesty, integrity and the abil-ity to stick to the facts”. In a pre-budget announcement it’s now revealed that the Commission for the Family will receive $28m, $7m a year! Silly us. We thought Peter Dunne was com-plaining because Jonathan Milne’s figures were too high. (An apology is called for Mr Milne.)

Russia adopted in 2001 flat tax at 13%. Since then the Russian economy has grown at 10% a year and interest-ingly, inflation-adjusted income tax revenue has grown 50%. (See