Thursday, March 02, 2006


The floating hot tub

By Ana Samways

Sideswipe's pick of the Dargaville A&P show this weekend is this hippy hot tub, which uses no chemicals, no electricity and runs on gas or firewood. It heats up in an hour and is portable. Yes, you can move it around from picturesque location to picturesque location by rolling it on your own or teaming up with one other to lift it ... and it even floats. Cool. (Source:

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Eleven Winter Olympic Events We'll Never See.

11. Yellow Snow Eating Contest.
10. Inebriated Giant Slalom.
9. Quadathlon - Skiing, Shooting, Drinking, Driving.
8. Speed Scraping.
7. Finnish Sauna Marathon.
6. Synchronised Snowman Building.
5. Polar Bear Outrunning.
4. Ice Diving.
3. Three-Man Ice Lake Skinny Dip.
2. Men's Single Dagger Reindeer Slaughter.
1. Snow Angeling.

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Gordon Eade of Papatoetoe has just had his eyes done. His doctor advised him he was allowed to do light housework (not more than turning on a light switch), no sporting activity (except Chesterfield rugby) and not to lift heavy objects. Gordon was happy enough with these rules but when told he can't fly he wondered why not. "Because, Gordon, you'll disrupt all the other passengers when your eye explodes," said his doctor.

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A story of cellphone abuse and subsequent justice posted on a Boston blog ( "... And then her phone rang again. But this time, before the second ring, the elderly woman sitting next to me leans over, grabs the woman's phone, shuts it off, closes it, and puts it in her voluminous handbag. Cellphone woman is spluttering and cursing and glaring, but Ms Elderly Cool Cucumber fixes her with a steely, schoolmarm-ish gaze and tells her, 'This isn't your home. You're very rude. You may have it when the movie is over.' I thought people were going to stand up and cheer ..."

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Spanish brewer Grupo Cerveza Alhambra is advertising its new beer can design featuring a "lip wrapper" made of tin. The brewer says this is supposed to keep the lip clean, so that you can enjoy both alcohol and good health. (In these times of pending pandemic, anything that separates what is ingested and all the nose-picking, free-sneezing non-handwashers out there, the better).

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In NSW you don't need to be armed to be charged with armed robbery. The Sydney Morning Herald explains: "Under section 97 of the NSW Crimes Act, 'armed robbery' is defined as 'robbery while armed and/or in company'. This means that if there are two of you, and you do not carry a weapon, you can still be charged with armed robbery despite being unarmed. Even if both of you are unarmed."

John Armstrong: Preparing to unleash the nuclear option

How much more punishment can the Government take before it cuts David Benson-Pope loose?

The story just will not die. Allegation continues to pile on allegation. Parliament is consumed with nothing else. Mr Benson-Pope's humiliation comes daily. Now, the one thing he cannot afford to lose as a politician - trust in his word - is under serious question.

Yet, the Prime Minister seems ever more determined to hang on to him. Her strategy involves stifling the still relatively few calls for his dumping by hanging him out to dry instead, first by forcing an apology out of him and then by giving him a public ticking-off.

But she is very angry with him. Labour is hurting - badly. That was evident during another ugly afternoon in Parliament yesterday with Labour ministers threatening no less than three times to dish the dirt on National and singling out Gerry Brownlee, another former teacher, for possible retaliation.

To respond in that fashion would be the parliamentary equivalent of a nuclear first strike - an option to be avoided. It is an unwritten convention not to retaliate in kind because that risks open slather. Who knows where that might end and everyone would be the loser.

The warning shots were fired during a dramatic question-time in which Mr Benson-Pope was described variously as a pervert, a bully and a liar by Act's Rodney Hide and National's Judith Collins - his chief tormentors.

Those epithets were immediately ruled out of order, but the minister faced a real moment of truth when quizzed about a new allegation that he entered girls' changing rooms during school camps while teaching at Dunedin's Bayfield High School.

The latest claim is serious as it alleges this happened during a camp in the year after the school's revision of its policy on pupil supervision - a tightening of procedures which had been prompted by a parent complaining about his behaviour.

Judith Collins put it to him straight. Had he ever entered a girls' changing room after the school had altered its policy in 1997? He replied that he was not aware of any further allegations in that regard, adding "I do not believe any of my actions have ever been outside the school policy at the time".

Labour hearts sank in unison. It was not the categorical denial his colleagues had been hoping to hear. But then it is his categorical denials which have landed him in so much trouble - a point made earlier by none other than the Prime Minister.

She told the House that Mr Benson-Pope's statement in Parliament last May that he was "not aware" of any complaints against him had been an "error of judgment". It appears a complaint is only a complaint if Mr Benson-Pope decides it is.

Helen Clark remarked that most people - including herself - would have regarded a letter complaining about a teacher to be a letter of complaint. However, because he had not breached school policy or been subject to any disciplinary action, Mr Benson-Pope had not felt the parent's letter amounted to a complaint.

That was an error of judgment. But it was not sufficient reason to dismiss a minister. "That is my judgment," she thundered in conclusion, eyeballing the Opposition benches and further raising the stakes for Labour.

The response from both Mr Hide and National's Don Brash was to query why she was risking her own credibility on Mr Benson-Pope when she had previously been quick to sack errant ministers.

But she is not the only one weighing in behind him. MPs of the stature of Michael Cullen, Steve Maharey, Phil Goff and even Winston Peters have sprung to the minister's defence in Parliament this week.

If he goes, there is going to be rather a lot of egg on some rather important faces. Which makes it even more likely that he won't.

Editorial: Minister's veto power an outrage

Next week the country may witness a constitutional outrage. The decision of a court, reached with due consideration after costly and exhaustive hearings, could be summarily overturned in a decision due to be issued by a Minister of the Crown.

A group wishing to establish a boat harbour at Whangamata have spent 12 years and about $1 million to convince the Environment Court that the merits of their proposal outweighed the objections of local iwi and surfers. Last October the judges delivered their verdict. On Tuesday it may turn out that the judges and the applicants were wasting their time. The Minister of Conservation is due to decide on an application for his consent to the development and the applicants fear Chris Carter is about to decide against them.

By what principle of law can this sort of thing happen? The minister is using power reserved for him in legislation governing the foreshore and seabed, and this is not the only area of law in this country that allows a politician to veto the decision of a court. But that does not justify the prerogative.

Courts exist to see that conflicts are resolved in a way that is fair to all concerned and free from political influence. In cases such as the Whangamata marina the Environment Court heard all the admissable objections in open sessions, giving all sides the opportunity to present their arguments and face cross examination by opponents. The Conservation Minister need follow none of this procedure. When he receives an application for a permit to build on the foreshore and seabed he consults whoever he likes, as quietly as he likes, and issues an arbitrary decision.

That decision may be based on quite extraneous political considerations. Mr Carter, for example, may be anxious to satisfy iwi objections, not because he finds them any more convincing than the court did, but simply to show Maori that their interests can be protected under Labour's vexed Foreshore and Seabed Act 2004.

The Environment Court considered the contentions of iwi that the harbour would be polluted by pleasure boats, customary access to shellfish restricted and kaimoana destroyed by dredging. The court found seafood would be available 400 metres away from the area of dredging and construction, and was not persuaded the area was sacred to the tribes. Mr Carter might be obliged to give greater weight to customary claims than the Environment Court did. The Hauraki Maori Trust Board chairman has said, "His party championed the Foreshore and Seabed Act. Now let's see if it is worth the paper it is written on."

If this is the way governments intend to make these decisions then at least they should be honest about it. They should not put applicants to the time and expense of a phony trial in the Environment Court or anywhere else. The Government's legitimate interests in any resource management decision can be easily given fair consideration. In November, soon after the court issued its Whangamata decision, the marina society chairman was confident it would pass the minister's scrutiny. "The Department of Conservation has had a lot of input into the conditions for a marina and we do not see too many issues there," said Mick Kelly.

Now they are alarmed. Mr Carter has raised issues that leave the society worried about his imminent decision. They have reason to suspect he is quietly relitigating questions the court decided. The minister's consent should be restricted to see that the detailed design and construction accords with the court's terms. To do otherwise would be rank injustice.

Garth George: State of the public service reflects a nation sold short

The more I read the newspaper these days the more I become convinced that those whom we have triennially elected, both nationally and locally, to guide the nation's affairs have for decades sold us citizens seriously short.

If that were not so, why is it that almost daily we are confronted with evidence of the inefficiency, the inability to cope, in some cases the disarray of our public affairs - from infrastructure to social services?

Surely that indicates a large degree of incompetence, short-sightedness, prodigality, lack of focus and indecisiveness - in short an almost total absence of vision - on the part of parliamentary and local politicians stretching back over numerous electoral cycles.

Not to mention, of course, the lackadaisical attitude of civil servants, who seem always to take months to achieve what equivalent managers in private business would have done in days. And who seem far more interested in what they can't do for those whom they serve than in getting on with what they can.

Why is it that over two decades of unprecedented national economic growth and prosperity so many things - from roads to health services, to education, to prisons, to police and armed services, to the justice system, to accident compensation, to welfare services - have not kept pace with public needs?

And that in spite, too, of whopping increases in income and other Government taxes and duties, in local body rates and in both local and national user-pays charges, all of which were inflicted upon us purportedly to deal with those needs. Yet they remain unmet.

Meanwhile, private business, largely freed from the shackles of state control, has grown and prospered, albeit that much of the prosperity has bypassed us into the pockets of overseas shareholders.

Nevertheless, if private business - including service and utilities industries - has been able to keep up with, and even lead, the increasing requirements of its more demanding customers, why have not public services been able to do the same?

That question almost answers itself, doesn't it? And it has begun to make me wonder - at the risk of causing John Roughan and Fran O'Sullivan to choke on their morning coffee - whether, in fact, those who supported the privatisation policies of the likes of Sir Roger Douglas and Ruth Richardson weren't right after all.

Would our prison system be the fiasco it is today if the privatisation process had been extended rather than canned? My recollection is that the private contractor who was chased out by this Labour Administration was doing a good job.

Would our education system be in the state it is in if the freedoms of choice given to parents and school administrators under bulk-funding hadn't been revoked by the control-freak socialists among Helen Clark's loyalists?

The same goes for our health services. Bulk-funding of those services would revolutionise our general practices, hospitals and their ancillary services overnight. Getting rid of the lay bureaucrats and returning governance to the medical professions would push it along nicely.

Would we be paying inflated and unfair accident compensation premiums if competition still reigned and elements of the insurance industry continued to compete for employer and worker business?

Would a private insurer charge me a substantial sum every year as both employer and employee, if you please - because I spend a few hours each week at my computer in my study at home writing this column - and the chance of an accident is nil?

It seems to me that the more services the Government can unload to private operators, the more cheaply and efficiently they will be carried out.

But it won't, because losing control of anything is for those who today "run" the country looked on with the same horror that they would contemplate losing an arm or a leg. Politics, by my definition, is simply the exercise of power and the retention thereof.

Which is another reason our Government and local body-run services are in such a parlous state: rarely is anything planned more than three years ahead and the planning is aimed, first and foremost, at getting whoever is in power re-elected.

That's sad but true, for there must still be some who enter Parliament with a desire to serve their fellow man who must find it galling that politics comes first, second and third and the welfare of the country a distant fourth.

Consider a longer term (Britain's five or the four of the United States) for Parliament and local government? Gives you the heebie-jeebies just to think about it, eh?

Some of the blame, of course, must fall on us as electors, for it seems to me that we pay far too little attention to the quality of the candidates and too much to the parties they represent.

But even if we did, there is a real sense in which we have no say at all in who represents us in Parliament, for it is the apparatchiks of parties who select candidates for electorates (as in Dunedin South), and the parties themselves who appoint those on their lists.

So what do we do about all this? How do we get local and national governments that will fulfil their fundamental obligations to the populace, that will keep up with the play and always do what is best for the people?

The short answer is that I'm damned if I know. But there has to be a better system than the one we have.

Jim Eagles: Asian airlines flying high

If you want great service when you're in the air, travel by an Asian airline. And avoid North American and European airlines like the plague.

That view - which I've had for some time - has been endorsed by the latest Skytrax Airline Excellence Awards, announced last week, which were once again dominated by Asian carriers such as Thai Airways, Cathay Pacific and Malaysia Airlines.

Like any awards these are bound to be a bit subjective, but Skytrax provides a reasonable indication of which airlines do a good job and which are best avoided.

Thai headed the list for 2006 having been judged to provide the best cabin service overall. Skytrax marketing director Peter Miller said the airline's "onboard service standards are returning to the leadership levels enjoyed by Thai many years ago".

I've always had good service on Thai, so if it's got even better that's great news.

Malaysia was champion in the economy class - where most of us travel - with China Airlines and Asiana Airlines providing the best business class and first class on-board service respectively.

I've never flown China or Asiana but I'd certainly agree that if you're going steerage then Malaysia is a good choice.

Cathay's airport lounges were tops and Japan's ANA provided the best airport service overall.

Middle Eastern airlines showed they continue to aspire to the highest standards, too, and Emirates offers the best inflight entertainment - and if you've tried it you'll know it offers a fantastic range of films, games, etc. Gulf Air had the best catering, and Qatar Airways got an award for consistent excellence.

The quality of airlines from the Middle East and Asia is further confirmed by the fact that Skytrax grades only four airlines as worthy of five stars: Cathay, Malaysia, Singapore and Qatar.

European airlines received a couple of consolation prizes, with Air Berlin offering the best service of any low-cost airline, and Aeroflot recognised for making the biggest improvement. But neither of those is likely to get five-star status any time soon.

The awards for regional airlines were also dominated by Asian carriers. Bangkok Airways got the prize for providing the best service overall and India's Kingfisher Airlines was judged the best new airline.

The only airline from the Pacific to have its prowess recognised was Air Tahiti Nui, which got a special award for on-board service excellence for a small airline.

Air Tahiti Nui already provides a service from Auckland to Japan, the United States and France via Tahiti and is about to start a direct flight from Auckland to New York.

I haven't flown the airline yet but that award from Skytrax suggests Tahiti Nui is well worth considering as another option if the timetable suits.

Air New Zealand and Qantas, which most of us still fly, didn't feature in the awards, but Skytrax still rates them fairly highly.

Both get four stars overall - an honour granted to around 10 per cent of the airlines rated - putting the Australasians in the same company as Emirates, Gulf Air, Royal Brunei, Thai, Japan Airlines, KLM, British Airways, Air France and Air Tahiti Nui.

That rates Air New Zealand and Qantas ahead of the likes of Air Pacific, Aer Lingus, Air Canada, LAN, Aerolineas Argentinas, pretty well every US carrier - one exception is Midwest Airlines which gets four stars as a low-cost carrier - and about 200 others.

Compared with Qantas, Air New Zealand suffers from the fact that it doesn't provide first class any more, an area where the big Aussie scores five stars, though for long-haul business and economy class both airlines get four stars overall.

Air New Zealand's new business-class seating scores five stars, as does the attitude of the airline's staff in business, while Qantas rates only four stars in both areas.

In the important area of economy, Air New Zealand's seats are rated more comfortable than those of Qantas, the meals are rated the same, and Air New Zealand wins again in service efficiency.

Interestingly, Qantas does particularly badly when it comes to staff language skills, where it rates only two stars ... well, they are Australians.

My impression is that the standard of service provided by Air New Zealand and Qantas in economy class has declined over the years - hardly surprising given the way costs and fares have been cut - but if you're flying only transtasman it hardly matters.

And, fortunately, with more airlines flying into New Zealand, including several of those rated by Skytrax as among the best in the world, travellers do have greater choice at the margins.

As far as I can see, none of the airlines rated as meriting only two stars overall flies into New Zealand.

And in case you're interested, the two airlines which got just one star from Skytrax were Afriqiyah Airways and Air Koryo. You have been warned.

* You can check the Skytrax ratings of airlines on The 2006 awards, which can be tricky to track down, are at

Richard Randerson: Peace and empathy hallmarks of faith

It is well known that New Zealand does not rank highly amongst Western countries in terms of attendance at religious services of worship, although the last census showed that 65 per cent of us still regard ourselves as being connected with one religion or another.

But Jesus once said "you shall know people by the fruits they bear", suggesting that it is not in terms of religious observance that one's faith is measured, but rather in terms of the fruits of that faith, such as compassion, justice, forgiveness, reconciliation or peace.

Using that criterion, New Zealand does rather well. Over the past 30 years, this nation has displayed leadership that has reflected a high standard of ethical policy-making. With influence disproportionate to our size we have been to the fore in key areas such as:

* developing a growing sense of partnership between indigenous and settler peoples under the Treaty of Waitangi

* standing back from the nuclear arms race at a time when it was not popular to do so

* more recently standing back from conflicts which lack ethical base or international endorsement

* yet not being isolationist, but committed to peace-making globally

* responding generously to human need at home and abroad

* being clear in our opposition to apartheid and any form of discrimination, and working to build an inclusive multi-faith and multicultural society

* placing a high value on the leadership of women

Other nations might have a higher degree of religious observance, yet would fall short of New Zealand in terms of adopting the kind of policy settings one would expect faith to lead to.

I believe that ethically based policy arises out of a healthy spirituality, both individual and national. For many, one of the key spiritual sources in this regard is to be found in the Creation stories in the opening chapters of the book of Genesis in the Hebrew scriptures. It is sad to see fundamentalists locked in combat with scientists attempting to prove that the biblical stories of Creation are scientifically based. They make a fundamental category mistake, and miss the far greater significance of those stories in terms of theology.

The Creation stories offer a vision of life which is in essence relational. We live first in relationship to God, so that our own identity and well-being is assured in the knowledge that God loves us. We live in relationship with all people, respecting every person as a member of one vast human family in which the well-being of all depends on the well-being of each. From this concept of family stem all our endeavours for reconciliation, justice, peace and the well-being of all.

We live also in relationship with all creation. The universe and planet Earth are a gift to be appreciated, nourished and sustained so as to provide life for future generations. Human beings are not the sole beneficiaries of Earth's resources so that we act selfishly or exploitatively with regard to those resources.

Currently at the Britomart Transport Centre in Auckland there is a striking display of billboards from all over the world with the theme of Co-Existence. One is called "Human Beans", and has a bean pod with four beans - black, yellow, brown and white. Linked quotations go with each display.

On one Albert Einstein is quoted ... "A human being is part of the universe, but experiences himself, his thoughts and feelings, as something separated from the rest ... This illusion is a prison for us, restricting us to our own personal desires, and to affection for only the few people near to us. Our task must be to free ourselves from this prison by widening our circle of compassion to embrace all living beings, and all of nature."

On another poster Archbishop Desmond Tutu is quoted ... "We have come to a time in the history of the world where we need to rediscover the path to peace, and the path to peace can never be war. This pathway is lined with the concept of co-existence and co-inhabitance of the world."

Such words are particularly appropriate at this moment in history when the boundaries between nations, cultures and religions are breaking down, and we are coming face to face with histories and traditions of which we know little. To embrace a spirituality which nourishes within us compassion for others, and a commitment to see justice and peace prevail for all peoples, is of great importance.

In 1988 the Royal Commission for Social Policy received a submission from a Wellingtonian, Cathy Benland, a Quaker woman who wrote on what she called the S-Factor - Taha Wairua. The S stands for Spirit, and Cathy sought to collate those elements which most Kiwis would regard as lying at the spiritual heart of their existence.

The list included:

* freedom of conscience and belief

* a sense of the sacredness of one's own self and body, and that of others

* a sense of relationship among human beings

* belonging to a family, community or whanau

* tenderness and compassion to the weak and needy

* love for the earth, its rivers, mountains and bush, and its various life forms

* a feeling of awe in the face of the mystery of existence

If aspirations of this kind are the source of our national life, and our global participation, then I believe we are living the essence of what it means to be spiritual.

* This article is taken from an address at the National Inter-Faith Forum in Wellington last weekend by Bishop Richard Randerson, Dean of Holy Trinity Anglican Cathedral, Auckland.

Michele Hewitson: Curling cool and inoffensive

Curling. Now there's a nice, non-offensive, family-friendly spot of telly viewing.

I have enjoyed watching the Winter Olympics. Yes, even the curling, which, had you suggested in advance I might spend quite a bit of time on the couch watching, would probably have caused my lip to do its own spot of curling up at the edge.

Well, it is odd, isn't it? Especially in the context of the Winter Olympics which is, except for the drudgery of cross-country skiing (and they say golf is a good walk ruined), all about being higher, faster, zanier, more daring than the last nut to do the luge. Or that bonkers skiing up the slope thing without skis, then doing quadruple backward flips with your ankles crossed. Something like that. It happens so fast it's hard to see.

But curling is the sedate sport. Despite the frantic sweeping on the ice, the stone makes its languid way down to what looks like a giant bull's-eye. I have no idea of the rules, but it was nice to watch, in a lazy sort of way.

I also have an inexplicable passion for watching the ice skating. Not the speed stuff, which is just daft outfits out of some bad sci-fi movie, but the pretty, twirling girls who go round and round in sparkling sequins and trashy-looking little frocks like ballerinas on music boxes. And they do it on ice! Amazing that. And they all look like such nice girls.

Admittedly, it was more fun when you had bad girl Tonya Harding, with her tears and running mascara and her mad, out of control plotting and hating. But still, the girls make it look so easy, you think, oh I could dance on ice like that.

This is nonsense, of course, but surely anyone could be a brake.

This is the term for the heftier types who act as just that in those peculiar adaptations of the sleigh as they hurl down an icy track at speeds over 100km/h.

A brake would be a good thing to aspire to. It's a great job title, for one thing. For another, surely the more you eat the better. It's a nice thing when telly is aspirational.

It's a nice thing when telly is nice. There's far too much of that nasty, offensive stuff on the telly.

I'm not about to bang on about THAT apparently offensive telly episode other than to say: If an apparently offensive telly episode screens in a forest and nobody watches it, is it still offensive?

I'm offended every time I see that stupid and sexist ad involving trolley dollies and a flight safety sequence in which one of said dollies removes her bra.

Or the one where the in-flight entertainment involves two sheilas in very short uniforms spanking each other. How dreary. What's it for anyway? Deodorant? It stinks.

So I'm highly offended by that ad. I change the channel whenever it comes on.

Something else that pongs is something called How Clean is Your House? If I wanted to watch filthy people live in squalor I'd go back flatting. I watched one episode just so I could get well and truly offended. I was. So now I don't watch it.

I've never watched a thing called Shock Treatment although I've seen a promo which seemed to be suggesting that Mikey Havoc would be getting an enema. No doubt there are some people who would think that there could be no more deserving person, but I didn't want to watch it.

I'm offended by the title, although I might watch if any of the attention-seeking types who constitute this country's dreary roster of celebs were actually given shock treatment. But that really would be offensive. Wouldn't it?

Peter Whitmore: Give governor more muscle to reverse national debt slide

Our record annual trade deficit of $7.1 billion for the year ended January is one more wake-up call that something needs to be done. And urgently.

The steady loss of wealth we have suffered over recent years from routinely importing more than we can afford has now turned into a haemorrhage.

Not only are we losing our assets, our self-sufficiency and financial independence, but we are also moving closer to a crisis.

Since the Reserve Bank Act came into effect in 1990 the Government has basically washed its hands of managing this area and has left everything to the Governor of the Reserve Bank. He, however, has only been given a mandate to control inflation. He has neither the tools nor the authority to deal with the balance of payments situation.

What he can do is to hold inflation down by increasing interest rates. Unfortunately, when he does this, it becomes more attractive for foreigners to invest their funds in New Zealand and the resulting inflow of overseas funds pushes up the value of our dollar. This makes imports less expensive and our exports less competitive. These price signals are diametrically opposite to those needed to reduce the trade deficit.

Out-of-control inflation through failure to properly regulate the money supply is a terrible evil. It is quite different, though, from inflation caused by the price of imports rising when the value of our dollar falls.

If we are importing more than we can afford then, in our relatively open market economy, we need to have this clearly signalled to us through an increase in the price of imported goods. Only then can we make sensible purchasing decisions.

The same goes for our exporters. Holding the New Zealand dollar artificially high to combat trade-related inflation stifles export growth at the very time when we desperately need to earn additional export dollars.

The most obvious way to address this situation is to remove trade-related effects from the Reserve Bank's inflationary targets.

The value of the dollar could then be allowed to fall back to a more natural value. This would cause a significant inflationary bump as imports rose in price, which in turn would lead us to reduce our spending to a more sustainable level.

There would undoubtedly be some short term hardship as we finally allowed for a correction after 15 years of inaction in this area. There would also be the risk of re-introducing ongoing inflation and the Reserve Bank would need assistance from the Government in combating this.

However, whatever problems the adjustment brings are likely to be minor compared to those that await us if we do nothing.

The above would be a first step, but I believe we should be proactive, bring to an end the era of only managing inflation and expand the Reserve Bank's mandate to include responsibility for balance of payments management, as it used to. We then need to develop a policy and give the Reserve Bank the tools to achieve it.

We are living in a fool's paradise, spending more than we earn and funding the difference from borrowing and asset sales. It is time to admit that we have a serious problem and to take prompt and effective action to address it before matters deteriorate further.

* Peter Whitmore has a background in engineering and economics and manages an Auckland-based publishing business.

Brian Fallow: Inflation fighters get better news

The news has been better lately for the inflation-fighters at the Reserve Bank.

Two surveys this week - the National Bank's business outlook and the Reserve Bank's own survey of expectations - record a drop in inflation expectations, which had been on a rising trend over the past couple of years.

The exchange rate, long impervious to mounting evidence of weakness in the economy, has fallen from 70USc in mid-January to a little over 66USc. It is widely believed that the bank would like to see monetary conditions ease through the exchange rate first.

Even the hideous state of the external accounts - the annual trade deficit hit a record $7.1 billion - testifies to the openness of New Zealand markets, which is structurally important from the standpoint of keeping inflation in check.

In a paper for a central bankers' conference late last year, Reserve Bank economist Bernard Hodgetts reflects on how the dynamics of inflation have changed since an inflation target for monetary policy was adopted in the late 1980s.

Comparing the decade before inflation was brought under control in the early 1990s with the period since then, Hodgetts concludes that "inflation has become more muted in its response to what we traditionally regard as its immediate determinants - the exchange rate, import prices, wages, oil prices and some measure of excess demand in the economy".

A key factor in that has been the move to lower and more stable inflation expectations.

Expectations of inflation two years ahead have remained relatively stable during the latest economic cycle. They have trended up as inflation has risen, but much less steeply, and the most recent reading was a turn for the better. "This seems to have made the task of countering a pick-up in inflation associated with the economic cycle a little easier than might have been the case if expectations had been more responsive to a lift in inflation," Hodgetts said.

But he warns that despite the bank's confidence that expectations have probably become more stable and less prone to being disturbed by temporary perturbations to inflation, "we are still some way from showing that empirically".

The bank was extremely wary of simply assuming that inflation expectations were "anchored" and taking risks with monetary policy based on that assumption.

Governor Alan Bollard said in a speech last November he would not stand in the way of a falling dollar, even though it would temporarily push up inflation.

Indeed, in several comments in recent months he has done his best to jawbone the dollar down, even sending officials to Tokyo to warn of the risks of uridashi issuance, one of the biggest sources of demand for the kiwi.

At first glance, this is odd, since a lower exchange makes imported goods including oil more expensive and inflation is already above the top of his 1 to 3 per cent target band.

But the bank has been saying for some years now that it has a more medium-term focus in running monetary policy. So it is less concerned about the short-term price impacts of a weaker or stronger currency than with the effects the exchange rate has on stimulating or constraining economic activity a couple of years ahead and, therefore, the overall balance of supply and demand in the economy.

This was part of a broader repositioning of the Reserve Bank in the latter years of Don Brash's tenure as a kinder, gentler central bank.

In essence, it was saying that if people promised not to get spooked by swings in the inflation rate, and remained confident that it would keep inflation under control, the trade-off would be less of a roller-coaster ride in economic growth and in the interest rate cycle. Hence the importance of inflation expectations.

Hodgetts cites research which suggests the exchange rate has a weaker and slower impact on consumer prices than it did before the dollar was floated and inflation brought to heel. "In a floating exchange rate environment if businesses consider exchange rate fluctuations as temporary, they may well choose to absorb exchange-rate related changes in costs in [their] margins rather than risk losing market share by moving prices."

Then there is the China effect.

The price in foreign currencies of imported manufactured goods has fallen by an average of about 2.5 per cent a year since 1997. Before that the trend had been for manufactured imports to get more expensive in world price terms.

It is no coincidence that this trend to imported disinflation has coincided with a rise in the share of imports coming from China.

Finally, wages seem to have become less important as a driver of inflation. While wages led prices in the 1970s and 1980s, the relationship reversed in the 1990s, with wage movements tending to follow inflation rather than the other way around.

Indeed wage rises, adjusted for productivity, were often lower than inflation over much of the last decade, Hodgetts said, and rarely exceeded it significantly.

In addition to the shift away from centralised wage bargaining to individual and site-specific agreements, there has been a shift to longer-term settlements spanning two or three years. That reduces the likelihood that temporary blips in inflation get passed through to wages.

"Wage inflation still accelerates following periods of labour market tightness but less dramatically and with a somewhat longer lag than was previously the case."

Helpful as that is, Hodgetts said: "We have remained wary of the potential for wage inflation to reassert itself as a direct driver of inflation."

In other respects, the Reserve Bank's task has not got any easier.

Large tracts of the economy are undisciplined by international competition and impervious to the exchange rate. Inflation in that non-tradeables sector, which includes housing, is much more closely related to the output gap - the extent to which demand has outstripped or fallen behind the economy's capacity to meet that demand.

Westpac economists argue that the cyclical inflation problem has been narrowly concentrated. Most of the consumer price inflation in the past year, or three years, has been from petrol, housing, central and local government charges and electricity.

Of those four areas, the only one that the Reserve Bank can "get at" with its sole instrument, the official cash rate, is housing. And that takes a lot longer than it used to with the prevalence of fixed-rate mortgages.

The use of exchange rate hedges and the pain and comfort thresholds business balance sheets need to cross before investment and employment decisions are changed have also tended to lengthen the lag between what the Governor does to the official cash rate and its impact on the real economy and then, with a further lag, on inflation.

The Westpac economists believe the lag between monetary policy and inflation is about two-and-a-half years.

Today's out-of-bounds inflation rate is the result of Bollard testing the speed limit of the economy back in 2003, they argue, accusing him of erring the other way by losing patience and hitting the brakes again late last year.

The Reserve Bank of Australia's less heavy-footed approach looks good by comparison.

Talkback: PR more than just perception

By Peter Boyes

At a recent PR industry meeting, the question of what the letters PR really stood for cropped up like the proverbial bad penny this issue seems to be in New Zealand.

Ask most clients, indeed ask most practitioners, and their response is likely to be press relations. It's the fault of our own industry PR, because of the visible aspect of what we do and how we agree to be measured, still focuses on the media exposure of clients and clippings measurement.

In Europe and North America, it is generally accepted we are in the business of perception management or realignment and, by and large, the best measurement should be the degree of profitable return generated by our activities.

As PR practitioners, we seldom make the case that, just as in other areas within the marketing mix, planning and evaluation methods have been developed beyond "clippings-counting", which allow us to make the link between investment in public relations and meaningful business outcomes.

At the very least, our audiences must do something measurable in response to our clients' messages. Generally, this means there must be a PR-to-sales connection.

To keep it simple, most clients expect their PR consultancy to deliver their key messages to their target audiences. They expect this to lead to a changed perception and they expect this changed perception to lead to a profitable business outcome.

The tools are there to show that in terms of return on investment, PR not only delivers a superior return but a cost-effective lift to other forms of marketing.

And it is not a complicated exercise. Most of us already define our clients' communications objectives before we begin to develop a PR programme.

All that is needed in addition to this is a measure for planning, evaluating PR data and integrating it with other business information, such as the Impact Score developed by US marketing research agency Delahaye.

Increasingly, corporate research measures advertising and public relations and the levels of interaction and impact the two disciplines have upon the other.

Delahaye reports that when US telecoms giant AT&T analysed a customer-perception lift during a time of relatively low advertising expenditure, it found the positive feelings being expressed about the company were being generated by PR activity and that all other forms of marketing were buoyed by the positive PR. Advertising, out-bound telemarketing and in-bound-telemarketing were each more effective as a more conducive environment was created through the news media's coverage of AT&T.

A year later, AT&T marketing mix analysis, a statistical method which matches customers' behavioural data (such as a supermarket scanner or other purchase data) to marketing activities taking place at a given time in a given market, showed the number of new long-distance customers attributed to advertising was equal to the number delivered through public relations. But a PR campaign cost a sixth of what the advertising did.

When we look at the relative performance of our individual public relations campaigns, the number of clippings is quite low on our list of measurement criteria. Time and again, the best returns are from campaigns that have lower reach but are more specifically targeted at those people important to our clients.

Any company's reputation is shaped and tested by the perceptions held by a certain group of key people inside and outside it.

But, most importantly, the perception of corporate reputation is based on delivering what has been promised - whether our client's performance meets expectations. And there again, the best measurement of that is the degree of profitable return generated by their activities.

* Peter Boyes is the managing director of BKAPR, part of the BKA communications group.