Michael Bassett Article Index

This government is stuffed. Taxidermists and sycophants will continue to put a smiley face on it, and the National Opposition could yet resurrect it, but Labour looks dead in the water. It’s not just that the cabinet is shambolic with weak ministers (including Michael Cullen) in trouble, and little backbench talent to replace them. The election margin was so fine, and the ultimate coalition outcome so unpredictable, that anything could happen, any time. Behind it all is the mad MMP system, proving beyond doubt that when election numbers are tight, the economy is receding, and decisive action is required, it can’t be done. Inevitably, the public is looking for someone to blame. Ministers are determined the spotlight won’t fall on them. Having failed when they had the numbers to implement tax and regulatory reforms that experts advised would grow the economy longer term, they are now diverting attention from their mismanagement. As they trawl through reports from focus groups and internal polling, they are looking for anything that might sidetrack voters. No ministers put New Zealand first; just themselves.

Several recent circuses staged by the ministry illustrate the point.

Micro-chipping dogs won’t even begin to deal with savage beasts owned by ferals who don’t register them. Tackling that problem would require a major effort rounding up and putting down uncared-for dogs, and probably stir an outcry. Instead, micro-chipping is designed to convey the impression of action when sensible people know it will achieve nothing. The beat up on the new sharemarket darling, Rakon, is another diversion. A shock-horror story suggested that Rakon was hand in glove with American military might.

Ministers couldn’t believe their luck. Time to trot out peace agendas, dust off anti-nuclear credentials and sprinkle the media with a bit of anti-Americanism, just as they had done a few weeks earlier in support of some careless remarks from their hand-picked, and now largely invisible, Minister of Foreign Affairs. Anything goes these days. No matter that Helen Clark was telling us last year she wanted to progress a free trade deal with the Americans. Given a chance to label Don Brash pro-American (a shocking crime in this government’s eyes) the country’s trade prospects became expendable. Labour’s new line on Brash, that he is unpatriotic because he points out that New Zealand’s talents are bleeding to Australia at a faster rate, is another distraction. It shifts attention from Cullen’s lack-lustre budget. Aren’t journalists taught about political smoke screens?

The granddaddy of recent diversions is the unbundling of Telecom’s lines.

Leave aside the leak, David Cunliffe’s untoward remarks about dividends, and Telecom’s own clumsy handling of the issue. As economist Bryce Wilkinson demonstrated in the National Business Review, ministers still haven’t produced any compelling case that unbundling will produce any net public benefit. There may be such a case. But it hasn’t surfaced, and it’s clear ministers didn’t possess one when they decided to unbundle. Indeed, the leaked cabinet paper makes it clear that no official cost-benefit analysis was done. The government’s hand-picked Telecommunications Commissioner recommended against unbundling. All that ministers had to guide them when they decided to go ahead was a hunch that it might expand Broadband coverage. Has this country reached such a parlous state that a cabinet wipes more than $2 billion off the value of our biggest company on mere guesswork? Where they kill off a major slice of peoples’ retirement funds or pension investments on a whim? God help us!

As I say, we haven’t yet seen the case for unbundling. The reasons advanced, and the methods used, have been so unconvincing, even cack-handed, that they beggar belief. One has to assume that the government had another agenda. I suspect it’s all about politics. It is designed to scythe off a corporate tall poppy that has little support amongst Labour’s focus groups. Attacking Telecom appeals to the envious and the ignorant, and above all, diverts attention from the things ministers now realise they should have done years ago. Sadly, the worst consequence of all is that potential overseas investors will look at New Zealand’s economically illiterate cabinet destroying property rights without adequate explanation, let alone compensation, and invest elsewhere.

Regulation, alas, is like crime: once one gets away with it, there’s a temptation to try more. The private sector that creates 70% of all jobs should now be very scared. An even less business friendly government than Robert Muldoon’s has blood in its nostrils.