Saturday, January 21, 2006

John Armstrong: Out to last the distance

All right, Winston. We may not have kissed and made up under the Christmas mistletoe. But we're sorry.

You were absolutely right. We, the evil media, were totally, utterly and completely to blame for all the terrible things that happened to you last year.

So, to save you the trouble of reminding us, we accept responsibility in advance for everything that goes wrong for you this year.

Hold on. That suggests we already think things will go wrong when, of course, we're sure they won't.

Still, things did not get off to a good start this week when we rang your office to find out whether you were meeting one of the United States military's most senior commanders as he passed through New Zealand.

Given your determination to improve Washington-Wellington relations, it seemed a reasonable query.

Perhaps we should not have told our readers that your chief-of-staff initially stated there would not be a meeting, only to later tell us he was not sure.

He seemed to think this implied some confusion in your office. When we rang him the following day to ask if things were any clearer, we got a torrent of abuse instead.

That seems to be par for the course these days from your quarter, however. But then we should know by now that any question posed by the media is by definition a stupid question. After all, you've been telling us that for nigh on two decades.

And we should know by now that dealing with Winston Peters is never straightforward.

In your defence, we would not have half the fun if things were straightforward. And were you some clone of Peter Dunne - Heaven forbid - we could not spend so much time speculating endlessly about you. Just hope Helen and those polite people at your ministry are as relaxed about the way you operate.

Because they, the public, want to know whether Winston Peters will last the distance this time. Or will he pull the plug on Labour at some point?

Who knows. It is impossible to read him.

However, when it comes to surveying the year ahead for Helen Clark's extraordinary Mark III version of minority Government, Peters is the veritable cuckoo in the nest - impossible to ignore, demanding of attention and a constant distraction.

There would be less aggravation if Peters shed his defensive posture and looked like someone who actually wants to be Minister of Foreign Affairs. The early signs this year are good, but he needs opportunities to build credibility in the role.

A foreign policy crisis would be handy. A coup in the South Pacific, perhaps? Pity then that Fiji's fizzled out.

Seriously, Labour must give him space to allow him to stamp his own mark on the portfolio. That space is not easily ceded.

Peters is a conservative politician who leads a highly nationalistic party that appeals to those who want to shut New Zealand off from the world. Yet his job requires him to be the mouthpiece for Labour, which is internationalist in outlook and sees itself as a responsible citizen of the world.

So, for example, what would Peters do if Australia wanted New Zealand to take another boatload of refugees, as happened in the Tampa crisis? Sulk and bear it?

This underlying tension is why it was a mistake for Peters to accept the Foreign Affairs portfolio. He is without power. Without it, he can hardly be happy. And an unhappy Peters is a dangerous Peters.

It is one reason why the public are unsure whether the minority Government will go full-term, given all its add-ons - NZ First, United Future and, to a limited extent, the Greens - and the potential for conflict.

The other reason is that without the numbers to control Parliament or dominate select committees, Labour risks becoming a possum trapped in the Opposition headlights and increasingly easy to pick off, with its popularity slowly draining.

Rather than Peters' reliability, it is a slump in Labour's support that poses the biggest threat to the Government's stability, although not necessarily its survival.

Officially, Peters and Dunne are not part of the Government. Technically, that allows them to distance themselves from Labour's unpopular decisions. But voters will sheet home accountability to anyone associated with the Government.

Both Peters and Dunne could be dragged under by a slowly sinking Labour Party. But the conventional wisdom is neither will bail out as that would prompt an early election which would similarly destroy them.

That ignores the fallback option of abstention. NZ First and United Future could still jump ship as long as the Greens came on board in their place. Such a scenario is unlikely this year, however.

The Prime Minister's task is to persuade the electorate it is all business-as-usual.

She must project Labour as bubbling with ideas despite the party embarking on its third term in power - often the terminal stage in the life-cycle of a Government. The public's expectation that Labour will run out of steam makes it easier for the Opposition to build the perception that Clark is running a tired Administration more interested in power for power's sake.

Back from holidaying in Europe, Clark is talking up her "new agenda" of economic transformation. This extension of Labour's previous "growth and innovation strategy" has seen front-bench ministers brainstorming ideas with the chief executives of major government departments to regenerate the economy.

The economic focus has the benefit of being non-threatening to Labour's support partners, while it also blunts National by showing the Government is doing something to offset the slowing economy.

That ties in with Labour's desire to block John Key, National's finance spokesman, from securing his party's top job.

It is in Labour's interest to score some hits on Key over the economy, sullying him in the eyes of National MPs so the mistake-prone Don Brash stays in charge at the next election.

But it is not only Labour that is out to thwart Key, who will not mount any challenge until caucus sentiment turns against Brash - as it surely will. A rearguard action looks like being mounted within the National caucus on Brash's behalf to bolster his position and stave off a challenge.

Even so, given Brash's glaring inadequacies, you would have to put money on Key being leader by year's end.

Fran O'Sullivan: My money's on the Don

The Don may just be the first recent National Party leader to survive an election defeat and lead his party into battle again at the (disgraceful) age of 68.

Conventional wisdom - that is, the views of press gallery journalists conditioned by the National Party's well-known fondness for axing their political leaders after an election defeat - says Don Brash is already for the chopper.

Despite running National to its highest percentage showing in a general election since 1990 - 39.1 per cent - and swelling the numbers of MPs in his caucus from 23 to 48, the only factor that really counts is his defeat at the hands of Helen Clark, Labour's accomplished Prime Minister.

The putative heir apparents, Finance spokesperson John Key and former National leader Bill English will sometime this year get their allies to start the destabilising process that precedes most political coups if Brash doesn't step aside of his own volition. Neither Key nor English will leave their own fingerprints anywhere near the assassination scene.

That's the drum that a bunch of bored but influential journalists will start to pump from their PCs anytime soon.

But my money's on the Don defying conventional wisdom unless or until the political polls turn on either National or him.

Here's why.

First: Follow the money - the National Party does.

The Nats cleaned up bigtime at the recent election pulling in far more cash under Brash's leadership than other leaders have mustered. Partly that's because big business - and the bunch of offshore tax exiles that switched their funds from Act to back National - are confident that Brash will implement a forward-thinking agenda if elected as PM.

Many see a Brash/Key combo as much more powerful than Key/English or English/Key.

Second: Do the math.

Everybody else is - not just Brash, Key and English - but also the 45 other members of the National caucus.

The maxim - "the Leader giveth and the Leader taketh away" should be kept front of mind.

Brash has put National's old stagers - the 22 repeat MPs - on notice that they will have to perform to hold on to their prime spokesmanships (which usually translate to Cabinet jobs) in the face of stiff competition from the 25 newcomers. This gives Brash plenty of room to use patronage to ensure a strong support base for himself when he reshuffles his pack.

Third: Do the numbers. Note - this is not the same as doing the math. The numbers I'm talking about here are the collapsing economic growth rate, which is verging on turning recessionary, the balance of payments crisis, rampant inflation, absurdly high interest rates, Australian Treasurer Peter Costello's planned tax cuts which will entice even more Kiwis to cross the ditch. This is a vastly more favourable terrain on which Brash can set loose his parliamentary attack dogs to monster the Government than the golden weather of the past six years.

Fourth: Youth is seriously over-rated - Mick Jagger is still strutting his stuff for baby boomers and their kids.

Certainly Brash is putting it about there's nothing wrong with having a 68-year-old (which he will be in 2008, the presumptive date of the next election) lead National into its next contest.

When he first left the cushy job of Reserve Bank governor for the more brutalising world of national politics, Brash used to muse to journalistic ageists that 60 was not really all that old. After all, Winston Churchill was Prime Minister (twice) in his 70s.

Since defeat Brash has added a few more names to the ageing leaders' repertoire: Among them Charles de Gaulle, who he delights in pointing out became President of France at 68, serving for seven years in that role, and American movie star turned politician Ronald Reagan, who first became United States President at 70 and was re-elected for a second term aged 74.

I could cynically add (and did when I called him up this week) others like Pol Pot, the former Khmer Rouge leader that laid waste to Cambodia, and MaoTse Tung, depicted as a monster in 2005's biography du jour Mao, who did not behave all that gracefully in office.

But we're now in an age where retirement is increasingly just a state of mind for many boomers who'd rather keep working on to their 70s, so why not a PM?

Fifth: The in-check or political cancel-out factor.

Reality is both Key and English want the top job and it's in neither of their interests to get the guns out before they are assured that, firstly, the Don is dead meat, and, secondly, enough of the troops will back them.

A failed coup would simply curtail either man's political prospects for some time.

Sixth: The polls are still favourable.

Brash admits that he did fully intend to stand down as political leader if he lost the election.

But he's since changed his mind.

He argues that he only went after English's job in the first place because National was below 20 per cent in the polls and the leader's own rating as preferred PM had dwindled to single figures.

Brash says if that happens again under his leadership he will stand down.

Don't bet on it - The Don has enough of the National brand bred into his bones now. He'll only go if pushed.

Meantime, you can bet there will be no repeats of those election turnoffs such as being filmed climbing arthritically in through the top of racing cars.

The Don does now know some of his limits - one thing he can't do is Mick Jagger's strut.

Editorial: Keep alcohol sponsorship for sports

People fear what they do not understand and many do not understand advertising, especially brand advertising. Public health officials seem endlessly susceptible to the suggestion that limiting liquor advertising will reduce consumption of the product, particularly by young people. There have been several attempts in recent years to legislate against alcohol promotion and another bid seems to be looming.

Brand advertising, the genre that gives so much money to sport and culture, is essentially defensive. It does little more than keep a brand in the public eye so that the name remains familiar and its image strong. Consumers subconsciously trust familiar brands and prefer to buy products that others do. If a brand fades from frequent view people will quietly stop buying the product. Big breweries know this, health bureaucrats apparently do not.

The Government's latest review of advertising regulations is quite likely to result in closer control, according to Associate Minister of Health Damien O'Connor. "It is very ambitions to think the industry can run a self-regulatory regime over something where there is so much money involved and the pressures are so great," he said, referring to sports sponsorship.

Organisations such as Auckland Tennis, New Zealand Golf, the New Zealand Rugby Union and America's Cup syndicates must wince at this sort of talk. It is not very long since they had to stop selling naming rights to Rothmans, Benson and Hedges and the like. Now they could be set to lose the likes of Heineken, Steinlager, DB Draught as well. Tobacco and alcohol have natural associations with leisure and pleasure. If alcohol sponsorship of sport was also to be banned, what would replace it?

That question could cause taxpayers to wince. If the abolition of tobacco advertising called for a public fund of "smokefree" sponsorship, how much greater might the need be if liquor brands were banished?

And to what purpose? Forbidding alcohol advertising and sponsorship would not make much impression on its use overall. Breweries might save some of the expense of brand maintenance, since there would be no need to do it if no one was allowed to do it. Beer, which has been the main alcoholic product promoted through sports sponsorship, might lose some market share to wine and spirits but consumption overall is unlikely to drop.

Advertising prohibitionists are aiming their blunderbuss at a very distant target, that of teenage binge drinking. Breweries sponsoring sport stand accused of promoting an immature attitude to their product.

How fair is that charge really? Beer has a certain bloke appeal that its marketers have a right to invoke, just as wine and spirit sellers will promote the social character of their products.

Health campaigners might not much like the beer culture or the very male and politically incorrect character of much of its advertising, but that is no reason to assume a ban will reduce binge drinking.

All liquor advertising must tread a fine line between promoting the product's social appeal and encouraging excessive use.

Regular official reviews and the threat of regulation probably help to remind the advertisers of the balance they need to strike. They could probably do more to make their messages promote moderation and maturity and perhaps this latest review will spur them to do so.

But sponsorship bans should be ruled out of consideration.

Attitudes to alcohol will never be changed by keeping its labels out of sight, but could be improved through its healthy association with sport. Let sponsorship continue.

Paul Thomas: Carefree slide into extinction

Now they tell us: having children is bad for you.

A survey of 13,000 adults has found that parents experience significantly higher levels of depression than non-parents.

According to the author of the study, a Florida University sociologist, it conclusively disproves "the strong cultural assumption that parenthood is the key to lifelong personal development and happiness. The worries associated with being entirely responsible for another human being appear to outweigh the benefits."

Well, when you put it like that, it makes sense. Think of all that anxious pacing around the boundary waiting for little Johnny to have his turn at bat. You'd love to see him get a decent score but the chances are his innings will be an anti-climax if not a fiasco.

Perhaps hobbled by nerves and pads three sizes too big for him, Johnny will be run out by half the length of the pitch. Or he'll be on the wrong end of a dubious decision from an umpire who just happens to be the bowler's father.

Wherever the little ones are doing their cultural or sporting things, this pattern - nervous anticipation, unsatisfactory outcome, deflation - is being repeated. And it doesn't necessarily end there because the fall-out from that third ball duck or botched piano recital or elephantine pirouette may linger, in the form of a wretched child, for the rest of the day.

Having a gifted child is arguably even worse since the higher the expectations, the lower the depths of disappointment. And we're all familiar with that walking, talking time-bomb, the fanatically supportive parent.

These are usually men and women whose own youthful endeavours were notable for enormous enthusiasm and a dramatic absence of talent. Having spent a couple of decades brooding over their failure to make a splash, they're now determined that their child will be the star they never were.

Despite the avalanche of advice, the countless hours of practice, the private lessons from age 3 and the state of the art gear, the poor child will never be quite good enough. How could they be? How often does a Bradman, a Pele, a Fonteyn come along?

Meanwhile the parent becomes ever more maniacal, hurling tirades at officials and judging panels, removing the child from schools and clubs where the fast-tracking isn't fast enough, devoting every spare minute to administration to smooth the prodigy's progress. And we haven't even got to the teenage years yet.

For parents of teenagers the potential for angst is almost unlimited. For a start there's the drama and financial cost generated by peer pressure. Then there's the never-ending battle over the teenager's academic progress or lack thereof and the associated nagging fear that you might be lumbered with an unemployable misfit who has no intention of ever leaving home.

There's a whole sub-category of anxiety related to the social scene, some of it contradictory: you want your growing lad or lass to be socially adept and popular but not too socially adept and popular. To paraphrase Saint Augustine: give me grandchildren - but not yet.

You want them to make the most of their youth but are painfully conscious that there's a fine line between exuberance and recklessness. You sense danger everywhere.

This is the parental burden: love breeds anxiety. If you love someone, you're concerned for their well-being whether they're hitch-hiking to Mt Maunganui, trekking in the Andes or scootering to the corner dairy. The true meaning of this survey, it could be argued, is that the secret of happiness is to eliminate love from your life.

I don't know where these 13,000 adults came from but my impression, based on observation and experience, is that parents willingly embrace their burden of anxiety and regard it as a small price to pay.

But perhaps I'm not seeing the big picture because the statistical evidence suggests that more and more people in the Western World agree with the premise that a happy life is a childless one.

Mark Steyn, a brilliant columnist of the conservative gadfly persuasion, has argued for some time that the greatest threat to the West comes from falling birth rates and that on present trends, jihad or no jihad, Western Europe will be predominantly Muslim well before the middle of the century.

In the Wall Street Journal this month, Steyn pointed out that the West is running out of babies faster than it's running out of oil since only America among the Western nations has a birth rate above what he calls the replacement fertility rate - what's needed to maintain the current population - of 2.1 children per woman.

Extrapolating from this, by 2050 there will be 100 million fewer Western Europeans - as opposed to residents of Western Europe - than there are now. "We are living through a remarkable period," wrote Steyn: "The self-extinction of the races who, for good or ill, shaped the modern world."

We may be on the verge of extinction but we're happy. And isn't that what really matters?

John Roughan: Killing time in the city

It came as quite a revelation to me that Queen St had trees. Reading of the campaign to save them my first thought was, what trees? Where? I must have been in the street just about every week for the past 30 years and I'd never noticed them.

Back from holiday I took a walk and it's true. Above the parapets the place is positively leafy. If as I suspect, most of us have never noticed, does it matter that the foliage will fall for the sake of the street's latest makeover?

Normally I'm one of those anguished to see a thriving tree toppled anywhere. I think I saved a gum from a savaging last weekend. It is growing on a neighbour's property and towers beautifully above our front yard.

Sitting there on Saturday morning my wife overheard some ominous conversation next door and noticed through the fence a stocky little man with a chainsaw. By the time I came on the scene, she was having a terse discussion about precisely how much of a tree you can take down without a permit from the council.

The neighbour, who has just moved in, had been told he could remove 20 per cent. His contractor, who had nothing on his van to say he was an arborist, wasn't much interested. He had his ladder against the tree, the powersaw in his hand and was itching to get started.

I'm passive-aggressive in these situations. As the cowboy climbed the ladder I planted myself firmly in his view, folded my arms and watched without a word.

Turning his back, he jacked his appendage into life and attacked the limb of the tree that extended closest to his clients' house. Soon it dropped on their lawn with the thud that seems to shake the planet.

That was enough for the neighbour. Conscious that we were watching he lost interest in the project. But up in the boughs the cowboy was having the testosterone rush. Once you've felt the throbbing penetrative power of the thing you can't just stop.

With my eyes boring into his back he remained perched in the tree half pleading with the neighbour to let him dismember this branch and that. I couldn't hear the replies. It sounded like one of those one-way discussions that dissipate frustration.

Eventually he restarted the machine to slice away a dead twig or two before accepting defeat. Preparing to descend he gave me the benefit of his philosophy.

"This is a park tree not a household tree," he said.

I listened.

"Big trees just cause problems for people."

There was nothing I could say to that.

"Life," he added, "is stressful enough these days without letting trees add to it."

Where, I wondered but didn't ask, did he live? Probably one of those suburbs where any plant that grows to human height is "getting away" and no bush breaks the roofline of the bungalows.

Most of the population lives in places like that. He had probably given me an insight to their psyche. Big trees do seem to make some people uncomfortable. Personally the only stress they cause me is when people come into the neighbourhood and set about clearing their section. The trees are the neighbourhood's main attraction; why did they move in?

Maybe, like me in Queen St, they take the greenery so much for granted they wouldn't notice it unless it was removed.

The Christmas controversy has interested me less for the trees than for what is says about the futility of the consultation procedures used by public bodies.

As Geoff Cumming reported in the paper last weekend, the Auckland City Council had followed the consultation procedures religiously before anyone woke up to what would happen.

A concept plan for an inner city upgrade was published as long ago as April 2004. Press releases were issued, notices printed in the council's newsletter and posted on its website. The council formed a streetscapes reference group, met "stakeholders", held a workshop, set up displays, consulted its urban design panel, sent out brochures with rates and interviewed 179 pedestrians.

Those who noticed the trees were to be replaced urged that the replacements be natives. The council agreed and the plans progressed happily for another year before the Herald highlighted the tree replacement and all hell erupted.

Don't you just feel for the planners? Nor do I.

The consultation methods of public bodies are not like the market research done by business. Commercial services need to make sure people will like what they want to do otherwise they lose money. So market research sets out to discover what people really want. Public bodies set out on consultation with a purpose quite different.

Their procedures are fundamentally intended to leave people content with what the public body wants to do, and probably will do with minor concessions. As the local body scholar Graham Bush told Cumming, objectors make the mistake of supposing hear means heed.

Councils typically present their plans in the most anodyne terms. The plan for the Queen St facelift originally mentioned only "more trees and landscaping". Later it allowed it would be "planting native trees along the street". Had the planners stated their intentions plainly from the start they would have discovered what most people really think of removing healthy trees.

Trees have a value that is more than aesthetic; they are living expressions of time in one place. Whether a tree has grown where it stands for 20 or 200 years it represents the remorseless, glorious chemistry of life. To kill all that time in two minutes should always hurt the human soul.

Brian Gaynor: Opportunities are knocking in India

China and India, with a combined population of 2.4 billion, are the world's emerging economic powerhouses.

China has outperformed India in terms of economic growth but this hasn't been translated into sharemarket returns. The Bombay Stock Exchange's sensex index soared 42.3 per cent in 2005 whereas the Shanghai Stock Exchange composite index fell 8.3 per cent.

In the five years ended December 2005, the Bombay market rose 137 per cent whereas Shanghai fell 44 per cent.

Although foreign investors can get access to better-performing Chinese companies through the Hong Kong sharemarket, India has proved to be a far more attractive proposition from an investment point of view. This is understandable as investor confidence is enhanced by the country's British-based legal and administration system, democracy and free and robust media.

As India is expected to be one of the world's most dynamic economies over the next 10 to 20 years, there should be plenty of profitable opportunities for overseas investors.

Where do these opportunities lie and how can New Zealand investors gain exposure to one of the world's most exciting economies?

India's recent history is relatively straightforward. The country gained independence on August 15, 1947, and Jawaharlal Nehru was the country's first prime minister until 1964.

Nehru admired the Soviet Union's economic policies and built a huge wall around the economy. This included the nationalisation of key industries, the suppression of the private sector and the introduction of a huge number of controls and regulations.

His daughter, Indira Gandhi, Prime Minister for most of the 1966 to 1984 period, and her son, Rajiv Gandhi, Prime Minister from 1984 to 1989, continued these policies.

The 1970s and 1980s were a depressing period for India as the Congress Party's socialist policies crushed the economy. The country was characterised by grinding poverty, overpowering bureaucracy and a stagnant economy.

Illegal money changing - the purchase of US dollars on the black market - was one of the few ways that enterprising individuals could make money.

The turning point came in 1991 when Rajiv Gandhi was assassinated during the general election campaign. The Congress Party won the election on a huge sympathy vote but immediately faced a financial crisis as the country's foreign reserves had plunged to just two weeks' worth of imports.

This allowed the new Finance Minister, Manmohan Singh, the former Governor of the Reserve Bank of India and the present Prime Minister, to introduce sweeping economic reforms. The crisis facing the new Indian Government in June 1991 was similar to the situation facing the newly elected Lange Government in July 1984.

The response of Singh was almost exactly the same as Roger Douglas in New Zealand seven years earlier.

The Indian economy has been transformed since 1991 although the country remains extremely poor by Western developed standards. There is enormous poverty in the cities and countryside and the roads are clogged with cows, goats, individuals on foot, camel-drawn carts, human rickshaws, bicycles, motorcycles and the famous Indian long-distance trucks.

But, just outside the cities, modern office blocks are appearing and the occasional shopping mall, selling well-known international fashion brands, is springing up.

India is on the move but it still has a long, long way to go.

The two main Indian stock exchanges, Bombay and the National Stock Exchange of India, have performed extremely well because Indian business leaders are creating shareholder wealth and they are particularly good at shareholder communications.

India is attracting a huge amount of direct and portfolio investment money from overseas.

In recent weeks, Oracle has said it will increase its Indian workforce from 8600 to 10,000, Microsoft will invest a further US$1.7 billion ($2.5 billion) in the country and go from 4000 to 7000 employees and IBM plans to raise its Indian workforce from 27,000 to 38,220.

Tony O'Reilly's Dublin-based Independent News & Media - largest single shareholder in APN News & Media, publishers of the New Zealand Herald - has bought a 26 per cent stake in Jagran Prakashan, India's largest Hindu language newspaper publisher.

The Irish company is expected to quadruple the value of its investment when Jagran Prakashan launches its IPO in the next few weeks.

The Indian stock exchanges had a net foreign inflow of US$10.7 billion in 2005 and US$540 million in the first 12 trading days of 2006. Oil & Natural Gas Corp, the country's largest listed company, doesn't attract much foreign investment because it is still 74.1 per cent owned by the Government and isn't listed on a United States stock exchange. As the accompanying table shows, the company has a market value of $56.4 billion compared with $11.5 billion for Telecom, the NZX's largest company.

Reliance Industries, which has two million shareholders, is a widely diversified company with interests in gas, oil refining, textiles, financial services and insurance, electricity and telecommunications. This week, the company began the process of demerging its telecommunications, coal, financial services and gas activities into four separate listed companies.

National Thermal Power Corp, which is 89.5 per cent owned by the Government, is one of the world's largest thermal electricity companies but Tata Consultancy Services, Infosys Technologies, Wipro Technologies and Bharti Tele-Ventures, which attract the most overseas interest, represent the modern face of Indian business.

Narayana Murthy and Nandan Nilekani founded Infosys in 1981 and they have nearly as much status in Indian society as cricketer Sachin Tendulkar. The Bangalore-based company, which has 50,000 worldwide employees, is one of the leaders in India's offshore outsourcing of software services with less than 2 per cent of its revenue derived from the domestic market.

Foreign investors are particularly keen on Infosys and it is 57.8 per cent owned by non-Indian institutional and individual investors.

Most economists have a positive long-term view on India and the country's businessmen have shown that they can create substantial shareholder wealth. As investors should have some exposure to emerging markets, India is a good place to start.

The problem is that New Zealand's bizarre tax laws make it difficult to invest in emerging economies.

We have an unrealised capital gains tax on all overseas investments, with the exception of seven exempt grey list countries. As India is not a grey list country then any direct investment from New Zealand is subject to an unrealised capital gains tax.

An investment in an Indian company through a fund manager in a grey list country is not subject to capital gains tax and thus our tax regime encourages individuals to invest in non-grey list countries through overseas-based pooled funds.

Many British or US-based funds invest in India, and the US$415 million JP Morgan Indian Investment Trust is one of the more popular and successful. The trust's share price has risen 65 per cent in the past year and 321 per cent since the start of 2003.

Infosys is its largest holding, representing 8.2 per cent of the trust's assets and it has stakes in Bharti Tele-Ventures (4.6 per cent), Wipro (4.1 per cent), Reliance Industries (3.6 per cent) and ITC (3.2 per cent).

There are too many different ways to invest in India to be covered in this column. Investors who want exposure to India and other emerging markets should contact their broker for advice on the most appropriate investment vehicle.


* Disclosure of interest: Brian Gaynor is an investment strategist and analyst at Milford Asset Management.

Paul McIntyre: Most stations losing audience share while pay gains

If the summer TV ratings season is anything to go by, Australia's three commercial broadcasters will need more hype than ever to make 2006 look even marginally positive for their audience numbers.

That yapping dog called Pay TV has after nearly 10 years in the Australian market started to bite. This summer pay has seen huge audience gains at the expense of the Seven, Nine and Ten networks - pay viewers are up 27 per cent nationally during prime time and the biggest news so far over the Christmas break is that in Sydney, Pay TV has actually outrated the commercial broadcasters in audience numbers.

It's an ominous sign for Nine, Seven and Ten if they don't pull out some of those big-hitting shows when the official ratings season starts next month.

Outside of the spluttering audience performance of free-to-air TV since November, there's plenty of other news orbiting the TV sector.

James Packer's school buddy David Gyngell - he's the son of Bruce Gyngell, the first face on Australian TV in 1956 - who quit as chief executive of the Packer's Nine Network last year, looks to have landed a gig with British broadcaster ITV, based in Los Angeles.

Despite decades of close ties between the Packer and Gyngell families, Gyngell junior copped the ire of the late Kerry Packer when he quit as Nine's boss last May, publicly bagging the "multi-layered management systems" at parent company PBL.

Gyngell remains close with James Packer and there was some conjecture that he might return to Nine after Kerry's death last month. But apparently not, with news of his LA gig emerging this week - details are still scant but it may involve Gyngell running the US arm of ITV's production company Granada.

With Gyngell out of the running for a return to Nine, speculation this week swung to just who would take over the reins permanently from stand-in chief Sam Chisholm.

The latest candidate is Eddie "Everywhere" McGuire, Nine's hugely ambitious on-air sports and game show host who juggles his TV work with numerous private business interests and the president's chair at the Collingwood Football Club in Melbourne.

McGuire is certainly managed closely by the Packers - last June he was holidaying on their ship anchored in Monaco and was spotted several times around the French Riviera showing the signs of a bottle or two of French wine in his system.

McGuire has been lobbying strongly for Nine's top gig although it would be seen as a somewhat risky move. Nine continues to play down the urgency of filling the top job at the network as Sam Chisholm's two-year stand-in contract doesn't finish until May 2007. In that time, though, Chisholm has some work to do.

While still the top-rating network through the official 2005 ratings season, Nine lost audience share and the trend has continued through Christmas. Its prime time audiences are off another 7 per cent over summer, despite a very popular one-day cricket series.

Nine can console itself that it is not alone - Network Seven's rampaging 2005 has come to a screeching halt with its summer audience figures lineball with last year; Network Ten is down 3 per cent; and viewing numbers for the public broadcaster, ABC, are down 15 per cent.

Of course, while the Packer-controlled PBL outfit won't be happy with the current trajectory at Nine, its 25 per cent stake in pay TV outfit Foxtel is starting to look good.

Critically for the three commercial TV networks, though, all are down in two key advertising demographics in which pay TV is showing very solid gains - those aged 25 to 54, and the under-40s.

Nine is certainly leading the downward charge in prime time for the under-40s with a slump of 13 per cent. Seven is only just behind with a decline of 9 per cent while Ten is off 4 per cent. Pay, on the other hand, is up 31 per cent.

These figures include three one-day cricket matches on Nine but no Australian Open tennis on Seven - last year the tennis served as a huge opportunity for Seven as Lleyton Hewitt and Alicia Molik marched through the final rounds, generating record ratings in Australia.

But whether the tennis and cricket can save the broadcasters this month or not, the figures to date are not flash.

Pay TV traditionally performs better in the warmer months as the free-to-air networks save their best programming for the official ratings period. But pay's ratings romp over the eight-week Christmas TV break has been noted by advertising buyers.

"It continues to highlight the trend that subscription TV is attracting more and more eyeballs and is increasingly putting its hand up as a real and viable option for advertisers," says MindShare media investment director Geoff Clarke.

Richard Inder: A grain of truth hides in farming analogy

Act leader Rodney Hide this week asked us to imagine that New Zealand was a listed farm park as he declared appeals for cool heads on currency markets as "perverse".

It is a fertile analogy and Hide's view has a grain of truth, but only a grain.

The story goes something like this: On the fertile flats, the farmer grazes a dairy herd, while on the rolling hills and the steppes of the craggy back blocks, he grazes sheep and cattle.

The farm's staple income comes from selling cheese, butter and beef and sheep meat in Smithfield Market, the town on the opposite side of a deep lake that encircles the picturesque property. But it also makes a handsome income offering jetboat rides on the braided river that flow through the property to the lake, and from selling fish from farms on the shore front. (The title over the foreshore and lake bed was clearly set out in the title as the property of the farm.)

Shares in the farm surge, mostly amid enthusiasm for its high dividend. This is a legacy of the farm's sharemarket listing, when investors demanded quick distribution of profits to offset the risks of a venture that depended on undifferentiated commodities.

The chief executive decides the shares are over-valued. He goes to the farm's major investors and declares the dividend will not be sustained, that the shares do not reflect the farm's prospects and that they must fall. Investors would be wise to cash in.

Hide's implication is that the chief executive (the Labour Government) would be sacked. Shareholders would view such pronouncements as evidence that management lacked ambition. They would argue that, instead of bellyaching, the CEO should keep his mouth shut and use the highly-rated shares to make acquisitions that will position the company for the long term.

In one sense Hide is right. Michael Cullen and Alan Bollard's mission to Japan does send a poor signal to international markets. It tells them we are mainly a producer of undifferentiated commodities; that New Zealand is not a source of products that will, in the future, be the source of wealth: technology, media and science.

However, Hide's analogy is not entirely apt. The price of a company's shares has no bearing on the competitiveness of its products. Only if a company paid its employees with shares and offered them generous options would it make a start (and a small one at that) at approaching the awkward situation New Zealand now faces.

The country is mostly (and sadly) a producer of undifferentiated commodities. We should aim for a stronger currency over the longer term, but the kiwi dollar is renowned for its extreme cycles. This makes such a transition to a high-value economy all the more difficult.

The currency is hurting and Cullen and Bollard are right to ask for a robust analysis of our prospects.

Will it work? Probably not by itself. But it is a strong signal among a legion of indicators that our currency will eventually fall against its peers. Several more indicators, like straws on a camel's back, and the kiwi dollar could head back to fair value.

* * *

Former chief executive Sam Magill's sale of his shares in Feltex last week should not inspire great confidence in the prospects for the troubled carpet company.

He can be forgiven the disposal on emotional grounds. The criticism of his leadership, from this columnist and others, as well as the behind-the-scenes manoeuvring at the company, are sure to have left a sour taste in his mouth.

He also may have just needed the cash.

But still, if there was anyone aware of the prospects for the company and the likely gains from a merger with Godfrey Hirst, it is Magill. It is fair to say, therefore, that Magill does not see a compelling case to hold on to Feltex's shares.

Meanwhile, Hirst's move is puzzling.

If it retains its ambitions to take over Feltex, it would be better to sit and wait quietly on the sidelines, bluffing the market that it is not interested. The shares would then have a greater chance of approaching a value that reflects the carpet-maker's prospects. Hirst could then enter talks on a stronger footing.

As it is, Hirst has set a floor underneath the share price. Its acquisition suggests it remains interested in the business. As a result, the shares will be driven by estimates for the prospect of a merged entity.

Such an action must raise questions over Hirst's judgment.