Monday, February 27, 2006


By Ana Samways

Japanese men do not like to be seen eating elaborate cakes in public, so a sweet-maker set up what looks like a typical fast-food outlet to sell cakes disguised as hamburgers and fries. Take the Mamido burger. The "bun" is actually a sponge cake, the "patty" inside is chocolate cream and the "pickles" are kiwifruit slices.

The deep-fried fish burger features a banana shaped like a fish fillet in sponge cake. It is topped with "tartare sauce", which is actually fresh cream. And the gratin burger is a sandwich with a cream cheese and fruit filling. The French fries look like the real thing but are custard cream covered in starch powder and deep-fried.

* * *

If you've been wondering about borderline calls from cricket umpire Billy Bowden, it may be a vision issue. Returning to Auckland from Christchurch yesterday, Bowden bypassed the long line in the Koro Club check-in queue by going through the exit to the first available Air New Zealand counter. "Oops, didn't see you all standing there," he announced unapologetically to the waiting line, complete with stupid waving gestures. Those at the front of the queue were former test cricketer Gavin Larsen and friends, who didn't really mind. The rest of us nobodies did, though. We also have planes to catch, thanks, Billy.

* * *

A reader says it was thrilling to see the lovely Pippa Wetzell from One News being filmed at 5.15pm on the Bond St overbridge last Wednesday for a story on Auckland's traffic congestion problems. Not so thrilling having to manoeuvre around the news car parked in a clearway on Bond St further down the road when there were plenty of carparks across the road.

* * *

Prolific Sideswipe emailer Murray Hunter writes: "Great idea to ban putting fuel into the 20 per cent of cars with no WOF, but you would have to ban self-serve petrol stations. People without warrants would have no qualms in filling an unwarranted car, just as teenagers with no licence keep on driving."

* * *

Welsh authorities tried to fine Steve Crossman for speeding ... on his tractor. Crossman got a ticket generated by a speed camera claiming he'd been photographed doing 85 miles an hour. After he told them his tractor had a top speed of 26 miles an hour, and it would take him more than four hours to drive it from his farm to where he was allegedly speeding, camera operators admitted they had misread the licence plate on the photograph and retracted the ticket. (Source:

* * *

Statistics New Zealand may be confident its computer system can cope with the heavy usage come Census night (it was emphatic in the Business Herald on Friday) but the folk delivering the hard copy forms are insistent we take the paper "just in case the computer crashes".

* * *

Lion Nathan was not pleased to see its "Keep your back to the wall" billboard rear its ugly head in Sideswipe and would like it made clear the story was from an 2003 campaign, not its current one.

Editorial: Small is good for Kiwibank

Kiwibank was set up four years ago as a modest initiative of New Zealand Post and the Alliance Party to provide a service to small depositors who liked to do their banking over the counter and preferably with a bank that was New Zealand-owned. Taxpayers provided almost $80 million of its initial capital and that, we were assured at the time, would be the extent of the public cost.

Since then the bank has received injections of $155 million from its parent company and this month it was reported that taxpayers will continue to pump as much as $40 million a year into the operation. This is not, we are assured, a measure of failure. Far from it; the capital is needed to maintain the bank's required ratios as its loan book grows by about $1 billion a year.

Chief executive Sam Knowles says it is on a path to "become a big bank". At present levels of growth the bank would require about $20 million of extra capital every six months, he said. "Those capital needs will come down as we increase profits. There will be a time when we pay dividends but that does depend on the rate of growth."

This is exactly what was likely to happen from the moment the "people's bank" was a gleam in the eye of Jim Anderton. The bank was never likely to "fail" in a financial sense with taxpayers ultimately standing behind it. The risk was rather that it would grow like topsy, unrestrained by the normal commercial disciplines of shareholder risk and return. Its shareholder, NZ Post, has been a commercial success since it became a state-owned enterprise, maintaining a universal mail delivery service through an era that has seen the arrival and vast expansion of electronic messaging.

But NZ Post literally cannot fail; no Government will do without a physical mail delivery of some frequency to every household in the land. Electoral enrolments require it, for one thing. But the country can easily do without a state-owned banking service. It has four big privately owned trading banks that provide adequate coverage at competitive rates. Kiwibank was set up to serve only nationalist sentiment and Andertonian distrust. It would, said Mr Anderton, "keep the big banks honest".

Who will keep Kiwibank honest now it aspires to be a big bank itself? Will it use the ultimate security of taxation to crowd out the competition? Would that matter? The answer to the last question depends on the kind of economy that will best serve this society. If it is believed that public welfare is best secured by a dominant state presence in retail banking there can be no objection to the unlimited growth of Kiwibank. But the fortunes of countries that nationalised crucial sectors of their economy would not recommend state dominance.

Banks do much more for the economy than provide a secure repository for savings and a source of house mortgage lending. Banks probably make more crucial investment decisions than any other sector. Prudent business finances itself from bank credit as well as shareholders' equity partly so that its bankers might keep a useful watching brief on its investments.

Kiwibank might not challenge the dominance of the big four, all now Australian-owned, in the foreseeable future at its present rate of growth, but it needs a reminder that there is a limit to the growth it should contemplate. The more like a big bank it becomes, the stronger a future government could find the economic case for selling it. The bank has been in a bind from its beginning: it was always going to struggle to be profitable from services to small depositors. But in reaching for corporate customers it is losing its distinction and threatening to grow too big for comfort.

Brian Rudman: Ditch high rise - try an Opera House

At the risk of alarming him, I agree wholeheartedly with Auckland City Mayor Dick Hubbard that in redeveloping the 35ha tank farm, "we have one chance to get this right".

He's dead right too in saying that with this redevelopment we have one of those "one-off" opportunities cities occasionally get "to add something very special to the core makeup or character that defines them as a city".

But where he and I part company is in his enthusiasm for the ho-hum blueprint the city has drawn up.

If this is to be a defining moment in Auckland's life, we should be thinking Eiffel Tower, or Statue of Liberty or Sydney Opera House or Palace of the Arts, Valencia, rather than 16-storey office towers.

More fundamentally we should be thinking of reclaiming this land for the benefit of the citizens of Auckland, not leaving it to become an exercise designed to swell the coffers of the port company.

Any vision for this wondrous piece of waterfront land is going to be fatally blurred while the main driver for anything that happens to it remains the balance sheet of Ports of Auckland.

This land is rapidly becoming surplus to the needs of the port company.

So unwanted for its main business, in fact, that the company is busy filling in 9.4h of harbour to the east, to enlarge its container terminal.

Instead, the port company, and its 100 per cent owner, the Auckland Regional Council, want to employ the land as a means of becoming major inner-city landlords.

The ARC, in particular, wants to milk this cash cow to provide cash for its other activities - building more drains, that sort of thing.

This is the corset constricting any chance of realising Mr Hubbard's dream of "unlocking the area's potential".

The mayor rightly says we have one chance to get it right.

To ensure that, we have to start at the governance level.

We only have to drive past the Quay Park disgrace on the eastern seafront to see how ineffective planning rules and regulations can be in guaranteeing world-class results.

First we have to follow the example of many other waterfront cities and establish a waterfront authority to take on the ownership and development of those parts of the publicly owned waterfront estate surplus to the port's needs.

Some would argue for the inclusion of city council-owned property like Westhaven Marina and the Viaduct Basin, and some or all of the wharves as well.

What does seem essential is that this authority have control over the long-term planning for the whole area and that would include Queen's and Captain Cook wharves, which, according to port company plans, could still be a carpark for imported secondhand cars until 2040.

That's not the front-yard look most other "world-class" cities aspire to.

Parts of the city's vision, no one would argue with - the Wero Bridge, for instance, linking Wynyard Pt at the sea end of the tank farm with the Viaduct Basin and the CBD.

The retention of the marine industry in its own precinct is an essential adjunct to existing fishing and pleasure boat activity.

There's a northern park about a third the size of Victoria Park and a smaller "central park" about the size of a rugby field.

But the dominant look appears to be blocks of offices, apartments and shops, in parts towering as high as the city administration building.

Sort of Newmarket or Symonds St by the sea.

Certainly not the legacy I imagine the mayor was enthusing about leaving "for our grandchildren and their grandchildren". Well, I hope it's not.

Of course there's a need for some commercial and residential activity. But that's not going to achieve the city's aim of providing a place "for the people of Auckland and beyond to celebrate the city's diverse cultural expressions, love of the harbour etc etc ... "

Around the world, cities have used their redundant port areas as places to stamp their identity on a crowded world cultural and tourist map.

Magnificent destination-structures have been erected, London's wheel, Valencia's recently completed eye-catching performing arts centre, and dare I mention it, Wellington's Te Papa.

That's the sort of thing we should be aiming for, not how much money we can raise from glass towers and apartment blocks.

Auckland City wants feedback by March 17.

It will be no use you, or the grandkids, complaining later.

Jim Hopkins: Bill tinkering will be gross violation

Much as some moderns might resent it, we live in a country governed by a constitution forged long before Governor Hobson signed the Treaty of Waitangi.

Indeed, without the aims and objects of that ancient entity, we'd likely have no Treaty, or political institutions, and the principles by which they operate.

Of course, over time, those principles change. If the treaty is a living document, then our constitution is a living intangible. We do amend it, sometimes profoundly, as when we opted for MMP.

But sometimes, what's offered as a minor amendment is actually a gross violation, and one of these is about to be foisted upon us.

For centuries, the electoral pact has been unambiguous; politicians control the country and voters control the politicians. But not if the majority in Parliament get their way.

What these worthies insist is that our decision to adopt a political system designed to prevent despotism in Germany obliges them to introduce The Electoral (Integrity) Amendment Bill; a measure which, if enacted, will impose despotism by committee on MPs and voters alike, and consequently misappropriate something much more important than a leader's fund.

Anyone who has sat, semi-conscious, through a constitutional law lecture will likely recall, albeit hazily, the 18th-century British parliamentarian, Edmund Burke.

In an oft-quoted Speech To The Electors of Bristol, Burke proposed a still-resonant description of an MPs' true duty.

And inasmuch as subsequent politicians have practised what Burke preached, then so too have we, the electors in a new and southern Bristol, accepted that practise as the proper expression of our relationship with them.

In 1774, after nine years in the House of Commons as a Whig MP, Burke decided to stand for election in the wealthy port city of Bristol. During the campaign, the voters, like their counterparts today, sensibly inquired what was in it for them if they gave him a tick.

And, being a politician, Burke promised much: his time, his energy, his tireless advocacy and his unstinting commitment - everything a voter could want, in fact, except his conscience.

I will be your representative, said Burke, but not your delegate. In the most vexatious case, it will be my conscience that dictates my vote.

"Your representative owes you, not his industry only, but his judgment," Burke said, "and he betrays instead of serving you if he sacrifices it to your opinion."

Two hundred and thirty years later, that is still offered as an elegant summary of what MPs should do and where their ultimate loyalties must lie. Not to a party, not to the voters, but in extremis to their consciences. So it has been in New Zealand.

The conflict between party policy and private principle has exercised many MPs, some crossing the floor, some resigning and some being dumped.

But such dissenters have either completed their parliamentary term (Mike Minogue and Marilyn Waring being examples) or (like John A. Lee, Jim Anderton and Winston Peters) adopted new colours and taken their cases to the people.

Either way, their consciences have been their judges and the voters have been their juries. The relationship between elector and elected has remained paramount. It is the voters who have determined their fates.

Not any more. Not if the Electoral (Integrity) Amendment Bill becomes law, as it surely will with support from Labour, New Zealand First, United Future and the Progressives.

No matter that three of those parties were founded by rebels and renegades, or that (Integrity) is appropriately bracketed in a bill with none whatsoever, political expedience will prevail.

And every voter will be the poorer; a right and a relationship they've exercised since 1845 will have been taken from them by politicians evidently happy to sanction the squashing of their own consciences.

Because the Electoral (Integrity) Amendment Bill places every MP in Parliament at the mercy of their leader and his or her caucus servants.

If a leader considers an MP has acted in a way that has distorted, and is likely to continue to distort, the proportionality of political party representation in Parliament (ie not toed the line) and two-thirds of the leader's caucus (in New Zealand First's case, three people) agree with that assessment, then the disproportional one will be summarily thrown out and a more compliant soul will replace them.

No contest on the hustings, no opportunity for voters to compare the ideas of party and person, just a letter to the Speaker and the deed is done.

This shabby piece of bullying, which would likely dissuade our parliamentarians from emulating their British counterparts - who have (twice) defeated Government legislation by voting with the Opposition - is apparently essential to enhance public confidence in the integrity of the electoral system and to ensure the proportionality of political parties.

In which case, burglary should be legal on the grounds it enhances people's confidence in the safety of their homes.

Forget public confidence. This bill removes public control. And all in the name of proportionality, which, under MMP, requires a protection it was never previously granted.

But preserving proportionality is a dubious goal.

At best, it's a way of saying, "Things mustn't change, even if they have." And at worst, enshrining it in perpetuity (as the bill intends) is a contemptible nonsense when parties tell the electorate one thing during the campaign (ie that they will sit resolute on the cross benches and eschew all baubles of office) and do the exact opposite weeks later.

In that context, proportionality is just the list equivalent of a rotten borough and deserves the same fate.

Not that such matters have troubled the Parliament's majority. Last year, these fearless souls blithely bleated "aye" when the Electoral (Integrity) Amendment Bill was introduced. Clearly, they hold the electorate - and their own consciences - in such low regard they will meekly surrender the rights of both and make them party property.

Such obeisant folk might belong on a parade ground taking orders but they don't belong in Parliament. Anyone unwilling to defend Burke's dictum makes a mockery of our constitution, a quisling of themselves and a fool of the public.

Their leaders might well want more control over disagreeable members, but that doesn't entitle them to decide the fate of those we have elected.

Inconvenient it might be for those in office, but it's the people who should decide the fate of rebellious MPs, not a Star Chamber funded from the public purse.

If party leaders want to dump MPs then let them. But require a by-election if an MP holds an electorate or, in the case of list members, let the leader suffer the consequences of his or her actions by going one short for the duration of the term.

Securing the convenience and comfort of the powerful is no justification for constitutional theft. Burke would object. And so should we.

We should remind every MP where his or her loyalties live. If we don't, we will stand as poor guardians of our rights. And we will have lost something others fought much harder to acquire than we did to defend.

* The Electoral (Integrity) Amendment Bill is now before the justice and law reform committee. Public submissions close tomorrow.

Fran O'Sullivan: Anzac market hopes suffer deja vu

The cameraman lounging outside Peter Costello's office gets it about right: "I suppose we have to help the Kiwis", said the pony-tailed snapper. "Who is this Cullen anyway?" asked another.

As the only New Zealand journalist at the Australian treasurer's joint press conference with Finance Minister Michael Cullen in Melbourne, the Aussie put-downs were a case of deja vu all over again.

The bold plan to link Australia and New Zealand to form a 24 million-strong single economic market is in danger of turning into a running story of lowered ambitions. The two treasurers need to get some wins under their belts by their next annual meeting to keep business on-side.

Take the Australian common border proposal that Qantas chairman Margaret Jackson valiantly pushed last year. Wellington fears Aussie biosecurity risks. Canberra, predictably, fears undesirable humans. Europe put centuries of bloodshed and racial hatreds behind them to form a huge common market. But it's not going to happen here. Period.

Costello's single Australasian banking regulator proposal was dropped. A rear-guard guerilla campaign by the New Zealand Reserve Bank ensured that both countries will continue to retain separate banking regulators. Information will be shared. And if crises emerge, the regulators will co-operate to assure their country's respective financial stability.

Capital-raising has also been streamlined through a decision to allow companies to raise funds using a single prospectus across both markets.

But these changes are not of sufficient size or momentum to ensure a transformative effect on the New Zealand economy.

Two areas where Cullen and Costello could score are investment and taxation.

Trade experts like Melbourne-based Alan Oxley, the former Australian ambassador and chairman of GATT, can't understand "why you Kiwis haven't got at least the same deal the US scored in its FTA deal with Australia. You did CER [Closer Economic Relations] years ago. Put it to Costello," he encouraged.

"Well, Australia would like to offer New Zealand treatment as favourable as it does to the US," said Costello a few hours later.

US companies get a huge advantage when they go shopping across the ditch. New Zealand companies have to get Foreign Investment Review Board approval to buy shares or assets in businesses valued at A$50 million ($56 million) or more. US investors don't need FIRB approval unless they plan to spend more than A$800 million or buy a sensitive asset.

Australian investors face restrictions on this side. But our Overseas Investment Office tends to be laissez-faire.

Cullen says Australia will make an offer to New Zealand first. Costello says Australia will "want a quid pro quo".

At issue are some rather out-dated rules around residency. Despite this Australian companies hold some 40 per cent of New Zealand's foreign direct investment. New Zealand companies, in contrast, have frequently faltered in the Australian market, the Air New Zealand acquisition of Ansett, allowed only with restrictions that made it difficult to slash jobs, a case in point.

Costello and Cullen hope to unveil an investment proposal at their 2007 bilateral.

Mutual recognition of dividend imputation and franking credits also remains a bugbear for Australasian companies.

Cullen did push hard on this at his private meeting with Costello. But it's just not on Australia's agenda.

"If we want to keep banging our head against that brick wall - it is a fairly large brick wall from the NZ perspective - then we won't make progress on other issues," says Cullen.

Business doesn't buy this of course. Nor should it.

Costello and Cullen were challenged by senior Australasian businessmen during their luncheon to just get on with it.

What will advance is a review of the double taxation treaty. Costello wants this to match the type of deals Australia has with the UK and US.

But Cullen cautions there will be a cost to New Zealand if the non-resident withholding tax is subsequently reduced. He has given an undertaking to Costello that the NRWT - which is "high by international standards" - will be one of the issues New Zealand focuses on once the forthcoming review of business taxation is done.

Stephen Loosley: When old foes are friends

Stephen Loosley: When old foes are friends


At first glance there appears to be a clear political division in Australia between different levels of Government. For a decade, since March 1996, the conservative coalition of the Liberal and National parties has dominated federal Government in Canberra. Over the same decade, the Labor Party has emerged as the dominant player at state and territorial level. Currently, every state and territory has a Labor Government.

Superficially, the division is clear. But there are different layers in the federal/state compact which has governed Australia since 1901 and sometimes, the differences between ostensible opponents in politics are outweighed by practicalities.

This was seen most recently in the meeting of the Council of Australian Governments (COAG) in Canberra on earlier this month. COAG brings together the Prime Minister and the Premiers and is charged with working priority issues through in the national interest, especially where federal and state responsibilities overlap.

This last meeting of COAG was dominated by the politics of bipartisanship, particularly in the area of mental health. There was broad agreement between the Prime Minister and his state counterparts on much more needing to be done to tackle the problem. Partly as a consequence, Queensland Premier Peter Beattie beamed at a press conference that COAG meetings just kept getting better. So they do, if your party happens to be in Government.

For since the end of the Cold War, Australian politics, in concert with politics in the West generally, has lost almost all its ideological sting. The absence of any kind of serious political alternative to the Left of the Labor Party and the long experience of federal Government under Prime Ministers Bob Hawke and Paul Keating, has taken the ALP very much into the mainstream. State Labor Governments routinely have occupied this ground, which is one reason why Australians have so often entrusted state Government to Labor while simultaneously electing conservative Governments federally.

Australians are very deliberate voters. Where state and federal politics are concerned, they make choices based on different portfolios of issues.

National security has dominated Australian national politics since federation. The political party which demonstrates a greater capacity and commitment to guaranteeing the nation's security in a time of external threat or crisis, carries the electoral day handsomely.

This has been true of both sides of politics, as reflected in Andrew Fisher's election on the eve of World War I, where his campaign was based on the simple premise: "We're in this war to the last man and shilling". Of more recent times, John Howard's declaration that Australia would decide just which new arrivals would be accepted and under what circumstances they would be accepted, resonated clearly with voters.

To national security may be added the national responsibility for economic governance. Again, the political party which best reflects Australian aspirations and is perceived to have the policy mix to deliver prosperity, routinely finishes on the treasury benches in Canberra.

At state level, Government is entrusted to the party best perceived to deliver services, in health and education, in transport and law enforcement.

The Council of Australian Governments might better be called the Coalition of Australian Governments. Federal Opposition Leader Kim Beazley was clearly irked by the obvious camaraderie of the Prime Minister and premiers. Who could blame him? His state Labor colleagues were clearly comfortable working with a conservative Government in Canberra. Equally, the Prime Minister appears not to be losing too much sleep over the parlous position of his party in the states.

The non-ideological nature of political contest means that Governments confront similar dilemmas in Canberra and the states and are equipped with similar policy tools. Market orientation is common and the arguments are at the margins.

What the bonhomie in Canberra at COAG demonstrated is that most of Australia's political leaders are as comfortable with the current federal/state divide in responsibility as are the voters. Forthcoming elections in South Australia and Tasmania seem unlikely to change this division.

There are exceptions to this general rule, of course, as is reflected in the states' High Court challenge on workplace relations, or over the division of Commonwealth grants. But broadly, political colour means far less these days than political office. That's a reality in most Western countries, but nowhere is it so sharply defined as in the current federal compact applying in Australia.

Who's in charge

The Commonwealth Government controls foreign affairs, immigration, telephone services, defence.

The State Governments regulate education, health, the environment, and the operation of emergency services (police, fire, ambulance).

In power

* Federal Government: John Howard's Conservative coalition of the Liberal and National Parties.

* State Governments: All are controlled by the Australian Labor Party.

About the writer

Stephen Loosley served as federal president of the Australian Labor Party and was elected to the Australian Senate in 1990.

He served as chairman of the joint standing committee on foreign affairs, defence and trade. Currently, he is the chairman of the Committee for Sydney, the premier business advocacy group, and is the principal strategic adviser for Babcock & Brown, Sydney. He is a fellow of the Centre for Independent Legal Studies (Salzburg) and of the Australian Institute of Company Directors. He serves on numerous boards including the boards of the partnership executive of the National Rugby League and the editorial board of the Australian Institute of International Affairs.

Andrew Weeks: Generosity key to Red Cross helping when disaster hits

Among the urgent things of life, such as taking the kids to soccer practice and getting to work on time, it's easy to let the important slip to the bottom of the list.

Household emergency plans sit firmly on the wrong half of the list for most people. There are so many other things to do and, besides, disasters don't happen in New Zealand, do they?

Wrong. Disasters can happen anywhere and to anyone, even in New Zealand. They are not the preserve of Third World countries.

Hurricane Katrina showed us that help is always needed in a major disaster, even in a First World country. Look at the North Island floods. New Zealanders are generous when other countries are hit by disaster but they also need to be able to help themselves.

Let me pose some important questions. How would Aucklanders cope if an earthquake or volcanic eruption hit the city? Do they have a plan to ensure their children get home from school? Will returning home from work involve walking a long distance? If their homes are damaged, do they have somewhere else to go?

This week is New Zealand Red Cross Annual Appeal Week. Newspapers and television commercials will remind us all that disasters do not discriminate.

The campaign is intentionally provocative. People being hurt, injured, and even killed is the reality when disaster strikes. People may have to survive for up to three days on their own, and it could be months before they can live in their houses again.

This week, New Zealand Red Cross wants to raise awareness about disasters and disaster preparedness. As well as raising funds for domestic and international activities, we will be distributing Civil Defence emergency plan brochures that we helped to launch in Auckland last year.

The brochures advise what civilians should to do if disaster strikes.

Regardless of the disaster and where it happens, Red Cross will be there to help. A federation with 183 societies, Red Cross is the world's largest humanitarian organisation. In famine, war and natural disaster, Red Cross works with Civil Defence and government officials.

The Red Cross uses donations to maintain its infrastructure, ensuring emergency preparedness and response in regions throughout the country are in good shape.

Some of the money collected contributes to international programmes, particularly in the Pacific, and for funding the costs of sending delegates to international responses.

Donations can be made by calling 0900 Red Cross (0900 73 327) to make a $20 gift, by using the appeal envelope or by visiting the link below.

* Andrew Weeks is the director general of New Zealand Red Cross

Bennett Richardson: Economic growth at any price?

Japan is a country that has long prided itself on economic egalitarianism. During the nation's post-war boom, politicians ensured that the miracle economy was peopled by a society where "everyone was middle-class". Equality was so imbued that Chinese exchange students studying in Tokyo are said to have joked that a year abroad in Japan carried with it the distinct possibility of being converted to Communism.

But painful restructuring aimed at ending 15 years of economic stagnation is creating a split in Japanese society into what the local press call the "winners and losers" of the new economic reality, in a trend that threatens the social balance.

Surveys taken this year by major national newspapers show more people perceive a growing income gap and hold fears for the future. An Asahi Shimbun poll showed that 74 per cent feel the income gap between rich and poor is widening. A Nihon Keizai Shimbun survey revealed that 37 per cent of Japanese consider themselves to be lower class compared to just 20 percent in 1987.

Sales of luxury cars and condominiums are booming as the small group of "winners" conspicuously splurge, while a larger group of "losers" are stuck with low-paid, part-time jobs that disqualify them from housing loans.

The issue has become a political football. Prime Minister Junichiro Koizumi has said that he doesn't see the emerging gaps as a problem, which has given the Opposition ammunition to criticise his reforms. Even some politicians in the ruling coalition Government argue that wide disparities will sap social vitality and push Japan down the path toward becoming a rigid class society. Polls already show that a majority feel the nation is in the process of becoming the kind of place where a child's future occupation and income will be dependant on opportunities afforded mainly by their parents' income.

Masaaki Takahashi, an analyst at Tokyo's Daiwa Institute of Research, compares the trend to the game of "toss-the-coin" in which the loser forfeits the coins.

" People with more at the start win over the long term because they can continue playing even if they lose a few times. Although the game is fair on a one-on-one basis, those with more money are able to monopolise the play overall."

Recent economic indicators in Japan have been impressive. The Nikkei 225 rose 40 per cent last year. But analysts say the growing segmentation of Japanese society into low, middle and high class can be seen in income figures, employment trends and even health statistics.

The number of earners in the lowest wage bracket of under 2 million a year ($24,800) has crept up to around 19 per cent of the population today from 16 per cent in 2000, while those with no savings at all to their name has ballooned to a quarter of the population from just 12 per cent six years ago, according to the Bank of Japan.

The increase in low income earners despite a recovering economy can be attributed to a large group in their 20s and 30s stuck in part-time jobs. Although unemployment is falling, part-timers make up more than a quarter of the Japanese workforce. Many opted for such jobs after graduation to delay entry to the strict culture of traditional Japanese firms, but have ended up branded as unemployable full-time. Research shows that the bulk are unable to land regular jobs later, are less likely to marry, and have little chance of owning their own homes.

At the opposite end, a small group are earning more than ever in salaries tied to performance. A report by the National Tax Administration found the top income taxpayer in 2004 was a fund manager estimated to have earned around 10 billion ($124 million), marking the first time tax rolls had been topped by an ordinary salaried worker.

Traditional systems such as lifetime employment at one company and seniority-based wages have been progressively abandoned. Companies such as Nissan Motor have radically altered their wage structure in the past few years after coming dangerously close to collapse. In an about-face from the traditional Japanese pay system based on length of time with the firm, Nissan now selects high-potential employees in their 30s for more responsibility and higher pay. Other large Japanese firms, such as Hitachi and Panasonic-owner Matsushita Electric Industrial, have recently abandoned seniority-based wage systems in favour of performance-based pay scales.

Those who are doing well in the new economy are not lost for choice in how to spend. Japan boasts hundreds of luxury apparel outlets, including the largest Louis Vuitton, Prada and Chanel stores in the world. A survey by the Japan Travel Bureau predicts a record 18 million Japanese will take overseas trips this year, and even more in the future as the baby boomer generation retires and travels more.

Regional disparities exacerbate the gaps. The undisputed engines of the current economic renaissance are Nagoya, with its concentration of Toyota-related businesses, and the area around Tokyo. Despite a shrinking population nationwide, Tokyo is growing by 100,000 people a year as workers seek better job conditions. Evidence is also growing that wage disparities are affecting health in Japan, especially among the young.

A key indicator of sound health in a country that is largely homogeneous racially, is average height, affected by things like lifestyle and nutrition. Despite the lack of opportunities for exercise, and the stress of living in large cities, statistics show the average heights of teenagers in relatively affluent urban areas have outpaced heights in rural areas, says Jean-Pascal Bassino, a research fellow studying inequality at Tokyo's Hitotsubashi University.

Many now blame the growing income and social gaps on the deregulation and market liberalising policies of Prime Minister Koizumi and his chief economic architect, Heizo Takenaka. Just as New Zealand went through growing pains with Rogernomics, so Japan is now faced with growing social disparity.

"Wage inequality is a perfect example of the unavoidable trade-off of fairness for economic efficiency that occurs" under the type of neo-liberal policies that Japan is pursuing, says Toshiaki Tachibanaki, a professor of economics at Kyoto University.

"We are at the point where we need to decide if it is a good or bad thing."

* Bennett Richardson is a Tokyo-based writer whose work has appeared in numerous Asian and US financial newspapers and magazines. He has a special interest in Japanese modern history, politics and economic policies.

Trevor Mallard: Think smarter, grow richer

New Zealanders have always managed to hit the mark when it comes to bright ideas, and finding creative and innovative ways of doing things - we've seen it in fashion, film and music.

This week in Auckland, it's the turn of some of our top business thinkers, innovators and exporting experts and companies to showcase the way forward to a stronger, export-led, innovative economy.

Newthinking06 is a week of biotech, information technology and creative events beginning today, aimed at promoting knowledge-based industries - based on the power of ideas and international connections.

New Zealand tops international tables for ease of doing business, entrepreneurship and economic freedom, yet we have some way to go to move up the OECD wealth table.

Certainly, our economic performance is related to our physical constraints - distance from key markets and small size.

But it is also to do with our attitudes. As a nation, we need to start valuing our businesses (in particular our exporters) and stop being bashful about the creation of wealth.

We need to back our business stars, and be proud of them, just as we take pride in our film, arts and sports stars.

The need for a change in attitude is also one for business, which needs to get more comfortable with the concept of adding value and building international networks.

The Labour-led Government is committed to working with business to achieve these goals.

To create higher standards of living for all, our country needs more firms that are innovative, can compete at the leading edge in offshore markets and grab the attention of the world's consumers.

New Zealand's future will be determined by the way in which we commercialise our innovations and take them to the world.

If we are to fast-track our economic growth, adding value, international networks, innovation and technology are the way ahead.

A New Zealand Trade and Enterprise survey of exporters, conducted when the high dollar was starting to bite, showed that companies exporting higher-value products were faring better than those at the commodity end of markets.

Too many of us are afflicted by "old thinking".

The label "New Thinking" arose out of NZTE's programme to promote this country as innovative and technologically savvy, as well as clean and green.

Now New Thinking is now being used to brand stands at trade fairs, in marketing and in the media. It is a powerful framework for reshaping the way we are seen internationally.

The phrase New Thinking also applies to a challenge facing us all. If we want to lift our economic performance, we need to do some new thinking about what and how we export.

If we don't build more high-growth, internationally competitive exporting companies, we won't achieve economic success.

While the rest of the OECD has moved most of their exports into faster-growing markets for more lucrative, value-added goods, ours remain skewed towards commodities that are more vulnerable to fluctuating exchange rates, prices and downturns.

Now we are trying to catch up. Commodity-based exports will make a contribution and already there is success in adding value to commodity-based goods. But, alone, they'll never deliver the above-average growth needed.

If we become a producer of high-value exports, businesses will be in the position to be the price-makers, rather than the price-takers.

The organisers of events at newthinking06 - NZBio, Incubators New Zealand and KEA New Zealand, all supported by the Government - can help attendees understand the issues and plot ways forward.

The week will also be used to acknowledge outstanding performances during the past year by business incubators, biotechnologists and Kiwis promoting New Zealand abroad. Accentuating the positive is a big part of New Thinking.

In the past four years, NZTE's business incubator programme has invested $13 million in small, high-growth potential companies, most with a technology at their heart.

Last year, there were 17 incubators containing 157 companies which, on average, increased their turnover 111 per cent. They employed more than 700 people and earned revenues of more than $27 million.

Our four-year-old beachheads programme has been hugely successful in kick-starting company launches into offshore markets. The key feature of beachheads is their ability to quickly lock member companies into local networks overseas and connections that would otherwise take years to develop.

Some 70 technology-focused companies are spread across six beachhead offices in the United States (Silicon Valley and Fort Lauderdale), Britain (London), Dubai, Singapore and Japan (Tokyo). By this time next year, I expect to have 120 companies on board.

These programmes are key platforms that are designed to help our companies on to the world stage of business.

Frank Brenmuhl: Rules a good way to strangle cash cows

This is a wake-up call to decision-makers. I want them to realise how much dairying adds to the economy and to understand that many people's incomes and livelihoods depend on this industry.

Above all, I want these urban-based decision-makers to stop seeing dairying as - pardon the pun - a cash cow that needs more rules and regulations.

Many pressures on dairy farmers today stem from central, regional and local government complying with the desires of an urban electorate largely ignorant of rural issues.

A recent Environment Court mediation process highlights this, with Federated Farmers again defending the right of farmers to farm.

In this particular case, we were defending the right to farm animals of dairy origin.

Selwyn District Council had proposed a rule that would exclude all animals of dairy origin from a 20m strip bordering any waterway for any new or expanded dairy farming operation.

This rule was aimed at the dairy industry because of a submission from Fish and Game that echoed its campaign attacking dairying.

The proposed rule was not about managing the effects on the environment, water quality or intensification of land use. It was simply a desire by the council to appease Fish and Game.

At the Environment Court mediation, the council was supported by Environment Canterbury, the Department of Conservation and Forest and Bird. The fact that farmers pay taxes to pay for the actions of DoC and rates to pay for the actions of the regional and local councils, was not lost on us.

Landowners are being forced to defend themselves and their property rights in court against the ignorance, greed and resources of the state.

When this happens in Zimbabwe, we call it state theft. What should we call it here in New Zealand; state theft?

DoC is funded to participate in the RMA process, even though its land and activities are exempted by the Act and go "unregulated" by councils.

Throughout the plan development process, DoC pressures councils to regulate how farmers farm their land. If DoC fails to persuade the council, then taxpayer funds are often used to appeal the plan.

But wait, it gets worse. An appeal to the Environment Court also means costs for councils. So ratepayers must pay to defend their right to decide on local issues in their plans.

This often results in farmers losing the use of land or property rights and no compensation is paid. Is that not theft?

But it's not just DoC. It's also Fish and Game. Like Doc, Fish and Game is the responsibility of the Minister of Conservation.

For some time, it has been building funds far in excess of its operating costs and refusing to discharge its obligations to control game birds that feed on pasture grown by farmers.

At what point will it be held to account for failing to do the things it was set up to do, and so reduce the cost to farmers of paying for the hobbies of others?

That said, I'm advised that Fish and Game has in recent times adopted a more sensible and less antagonistic approach in its public comments on farming and waterways. I hope to see similar progress in the management of Canada geese.

Recent scientific evidence about dairying is certainly very encouraging, as it suggests that dairy farming is not damaging the environment in the manner stated by Fish and Game. That's a win for farmers and recreationalists.

Everyone leaves a footprint on the environment. The question is whether the cost of that footprint is acceptable.

New Zealand has enjoyed an economic growth rate of 3.6 per cent over the past six years. The bounty of this has been increased equity for property owners, increased employment and higher wages.

This would not have happened if the dairy industry had not increased milk production by 33 per cent during this period.

The primary sector contributes about 16.5 per cent of GDP, up from 14 per cent in 1986, with the dairy sector making up about a third of that

* Frank Brenmuhl is chairman of Dairy Farmers of New Zealand. This is an edited version of the speech he gave to the organisation's council meeting in Christchurch last week.

Christopher Niesche: Kiwi's dive to be hard and fast

When the dollar starts to drop, it will sink like a stone.

There'll be no gentle and ordered decline. Before we know it the kiwi will be back under 60USc.

The kiwi dollar is a minnow on global currency markets and can easily be pushed around by giant international investors - and they're about to push it down.

Around $1.5 billion of kiwi dollars is traded on currency markets each day. But this is barely a drop in the ocean when compared with the US$600 billion worth of currencies traded around the world, according to the Bank of International Settlements.

What this low volume of trade means is that when large numbers of international investors start selling the kiwi all at the same time, they flood the market and there's no one to buy it. The dollar will sink quickly and it could happen any day now.

Global hedge funds are planning to sell huge amounts of the currency and, when they really get going, there'll be nothing to stand in the way of the kiwi's fall.

Hedge funds are essentially aggressive investment funds that can make short-term, highly leveraged investments for huge profits.

The funds try to make money on the falling kiwi by borrowing New Zealand dollars, then selling them in the foreign-exchange market. After the kiwi has fallen (they hope), they buy back the same amount of New Zealand dollars they sold, but it costs them less, so they pocket the difference.

For instance, if a hedge fund sells $100 million worth of New Zealand dollars - and trades that size aren't unusual - and the kiwi drops 3USc, then the fund makes US$3 million, minus some interest costs.

That's pretty good money for a trade that might only take a few weeks and it's easy to see why the hedge funds are piling in.

They're seeking to cash in on the trend of the falling kiwi and, in doing so, will ensure the kiwi will fall faster and further as they continue to sell the currency.

The fall has been a long time coming. For the past couple of years, the local dollar has been one of the world's most overvalued currencies because the slowing economy wasn't strong enough to justify its high level. But demand for the kiwi has been underpinned by Japanese and European investors buying New Zealand dollar bonds - uridashis and eurokiwis - to get access to the high interest rates available here.

A couple of weeks ago, however, weak jobs and retail figures finally gave foreign investors the evidence they were looking for that the New Zealand economy was slowing enough to let Alan Bollard start cutting interest rates, probably later this year.

Lower interest rates mean investors get a lower return for their kiwi dollars and so are likely to sell the currency and put their money somewhere else.

The kiwi won't fall in a straight line. It will bounce up and down, but much more down than up.

And with a couple of steep drops, the dollar will almost certainly be much nearer its long-run average of 58USc by the end of the year.

* Christopher Niesche is business editor of the Herald.