Saturday, March 25, 2006

John Armstrong: No one expects an inquisition

When a politician not prone to hyperbole describes Parliament as a Star Chamber fuelled by a new McCarthyism, you have to sit up and take notice.
Jeanette Fitzsimons struck a chord on Tuesday by expressing her absolute disgust at the current bout of mud-slinging and character assassination.

Something is rotten in the state of Parliament. But the rot is not confined to throwing dirt and raking muck.

While there has been a major advance in select committees flexing their powers, the progressive debasing of some of Parliament's other mechanisms for scrutinising the Government and holding ministers to account is arguably more damaging.

The deterioration in standards is most evident during question-time - the Opposition's daily opportunity to grill ministers.

By no means are all ministers guilty of the practice. But there has been an unmistakable trend towards more and more ministers giving perfunctory replies or, in the worst instances, ignoring questions.

This week Parliament was treated to the ludicrous, yet disturbing sight of a minister pretending not to be a minister in order to duck questions about his breaching collective Cabinet responsibility - a constitutional convention which has also become a moveable feast.

The slow suffocation of question-time does not make headlines, but it is as insidious and as destructive of the institution of Parliament as personal attacks.

The current round of the latter is notable for being more sustained, the innuendo nastier and the targets - Labour's up-and-coming ministers - clearly not random.

But personal attacks are not something new. They come and go.

MPs are now taking a cold, hard look at just where the dirt-chucking might end up - as they always do when it gets to the point where nobody wins.

Sooner or later, someone is going to get hurt who should not. Sooner or later, Labour is going to retaliate big-time, instead of merely spraying hints of misdemeanours on the part of National MPs around the parliamentary chamber by way of interjection.

Sooner or later, everyone will work out there are no votes in scrambling around in the gutter because the public simply does not like it. Well, maybe not everyone.

Disgruntled Act members will give their leader a hurry-up on that score at their party's annual conference this weekend.

Fat chance he will listen. Rodney Hide is a serial scandalmonger. The more he mongers, the more people come to him with scandal worth mongering.

Hide's hounding of ministers is a major aggravation for Labour. But what angers Labour is National living vicariously off the exploits of Hide and Investigate magazine while keeping its own hands clean.

In threatening to expose the alleged misdemeanours of some National MPs, Labour is effectively telling National to put pressure on Hide to back off.

Conscious of the public's mood, National has made a peace offering to Labour by holding back from overly criticising David Parker after the Cabinet minister was rumbled for making false statements to the Companies Office and he lost his portfolios.

At the same time, National reaffirmed its right to ask questions when standards of ministerial behaviour are at issue.

There was little upside anyway in having a go at Parker. The truth is that Helen Clark sacked him. But the perception rapidly grew that Parker was an all-too rare example of a minister falling on his sword without having to be told.

In doing so, he has become a shining beacon of self-sacrifice highlighting the supposed sea of murk around him - even though he broke the law.

Fitzsimons' speech contributed to the creation of that perception. She spoke with moral authority. The Greens have never indulged in personality politics. They have watched Parliament with a mixture of horror and frustration - as have the Maori Party and United Future, who also deserve bouquets for treating Parliament with respect.

Yet, Fitzsimons' speech was also highly political. She blamed Opposition parties for Parliament becoming New Zealand's version of the Spanish Inquisition.

That is not fair. National had every right to go after David Benson-Pope after he made misleading statements to Parliament. National had nothing to do with Parker's demise.

If things have got worse in the House - and behaviour varies greatly from week to week - that is down to two crucial developments over the last decade: the advent of a multi-party Parliament and the arrival of television cameras in the chamber.

The fierce competition among Opposition parties for the attention of those cameras has exponentially boosted the scandal quotient because that makes the news, whereas debate on more weighty issues does not.

These factors have contributed to question-time becoming even more of a political circus. The hour-plus session is rarely informative. Ministers are hardly likely to parade the failings of their policies or their departments in front of the cameras.

Or their own failings. It is indefensible, but it is possible to understand why Benson-Pope's memory was so selective for so long.

However, he escaped punishment. He has not necessarily lowered the benchmark for what is acceptable. The benchmark will be lowered only if the next minister who misleads Parliament is not punished.

Benson-Pope is also the product of a climate where some ministers do not even bother to make any effort to answer Opposition questions. The rules are lax. The Speaker is relatively powerless. The minister can fulfil standing orders by "addressing" the question in the most vaguest of terms.

It is one thing to fudge answers. It is another to effectively treat the questioner's right to ask a question with contempt.

This is a source of great frustration on the Opposition benches - and a major factor in inciting the kind of disorder which helps give Parliament such a poor reputation.

National puts the deliberate obstruction down to a mixture of ministerial arrogance and bureaucratic secretiveness.

In an unusual move, National's shadow Leader of the House, Gerry Brownlee, this week pleaded with the Government to address the standard of replies, both to spoken and written questions.

Labour is unlikely to oblige. It lives in morbid fear of history repeating itself and that it will suffer the same fate as the third-term National Government between 1996 and 1999.

That administration fell victim to charges of sleaze and croneyism. Labour believes the current dirt-digging is designed to have similar effect.

While there is some co-operation between party whips to try and calm things down, all bets are off when the attacks in the chamber once more get personal. Parliament's standing suffers accordingly.

Editorial: NZ must stay attractive to migrants

It would be wrong to be too fretful about the flight of New Zealanders to Australia. People are always attracted to bigger and brighter lights, like those of Sydney and Melbourne, or to a better climate, like that of Queensland. Nonetheless, this week's three-part Herald series revealed some new and potentially disturbing developments in this long-running trend. The flight of New Zealanders is not only on the rise again but this time it looks like a long-term exodus. And this time it is occurring despite this country's long spell of economic buoyancy.

The latter point is particularly significant. Migrants typically say they are crossing the Tasman for good, but many return in relatively short order. It remains to be seen whether the present net outflow, which has doubled in the past two years, will be any different. But never before has this level of departure accompanied a period of prosperity and low unemployment.

Some of the upswing is due to the onward movement of immigrants who have failed to find jobs in their professions here. Australia is a land of opportunity for them, and for highly skilled New Zealanders. But now it has also become increasingly attractive to the lowly paid, those who feel they are struggling to get by in this country without working excessive hours.

Their flight, often taken reluctantly, reflects in turn the fact that real incomes in Australia are, on average, 32 per cent higher than here. Higher wages and superior allowances are a pull factor that have become irresistible to many. If that situation is to change, it is obvious that the difference in real income between the two countries must be reduced.

There is no overnight solution. The gap is symptomatic of long-term structural problems, mostly related to New Zealand's persistently lower levels of labour productivity. This country has not been as smart or as efficient as Australia at using labour and capital, and has been further hindered by a lower rate of capital accumulation. New Zealanders invest too much money in non-productive areas, notably housing, and not enough in capital markets.

Both the major political parties recognise the need for higher productivity per worker. The Government has even made it a centrepiece of its third term. So far, however, its response has been timid: the faint-hearted Kiwisaver scheme to provide a stronger investment base and less costly capital by encouraging a savings habit, a bit of tinkering with rates of depreciation, and much work by reference groups. What the Government must do is provide a robust framework for solid investment, innovative thinking, skilled labour and astute decision-making.

Part of this involves the improved teaching of skills. It also involves appreciating the importance of investment in research and development. And of recognising that, in the final analysis, the answer lies in the hands of the private sector. The Government should be intent on removing any obstacles to that sector's pursuit of higher productivity. In that context, the establishment of the equivalent of Australia's Productivity Commission, whose task is to identify barriers to productivity growth in every industry sector, could pay rich dividends.

This focus is not just about slowing the exodus across the Tasman. It is about a long-term growth in living standards for all New Zealanders. We will never stop people shifting to Australia, just as we will not prevent the drift to Auckland from Waiouru, Waitara and Wairoa. But we must remain attractive to those who wish to bring their talents to this country. Given the international competition for skills, that is what we should fret about.

Fran O'Sullivan: Peters must get real on US and Pacific

Foreign Minister Winston Peters got the headlines he wanted this week - fulsome appreciation for New Zealand's role in the Pacific from a visiting US official.

That Peters fed the line to US Assistant Secretary of State Christopher Hill in the first place was not lost on political reporters present at their brief "standup".

The Foreign Minister had, after all, used his first formal foreign affairs speech and subsequent interviews to underline that he sometimes felt the US did not fully appreciate the role this country plays in ensuring stability in the neighbourhood.

But that was weeks ago. It would have been much more impressive if Peters had emerged from the bilateral meeting having persuaded Hill to co-announce a joint Pacific initiative - not just platitudinous comments designed to pump up our Foreign Minister's ego and assuage his extreme sensitivities about his role.

The Peters appointment has led to mixed messages about New Zealand's relationship with the US.

The New Zealand First leader is much more obviously pro the United States - and other traditional allies - than many in the Cabinet. But he has repeatedly accused journalists of misquoting him when his reported comments on the US relationship are later considered by influential Cabinet ministers to be in advance of the Government's position.

Helen Clark and Phil Goff - the Minister who chairs the Cabinet's foreign relations committee - want to ensure that Peters works inside Government policy when it comes to dealing with Uncle Sam, not fly solo.

It is Trade Negotiations Minister Phil Goff - not Peters - who Clark has asked to represent her Government at next month's United States New Zealand Partnership Forum in Washington DC.

Peters is right to place more emphasis on the Pacific and New Zealand's role in endeavouring to ensure stability in an increasingly vulnerable region.

The economies of many of these small Pacific Island nations are vulnerable as the forces of globalisation pit more efficient agricultural producers against theirs. But the truth is New Zealand's status in the Pacific is declining as big powers such as China, Japan, France - and now the US - muscle in.

Chinese Premier Wen Jiabao's upcoming Pacific economic forum in Fiji has upset the traditional power balance by undercutting the Pacific Islands Forum, to which Australia and New Zealand belong, as the prime regional economic forum.

Speculation that another Fiji coup was in the making, on top of the recent Solomon Islands troubles, difficulties in Vanuatu and ongoing issues with Papua New Guinea is what's really driving renewed US interest in New Zealand's Pacific role - and whether we are up to containing Beijing (although Washington does not use those words).

Hill had no doubt been primed by his State Department officials over our Foreign Minister's sensitivities to criticism and the political necessity to score his own public endorsement to help Peters underline that he is making a difference by persuading the US to re-rate its relationship in terms of New Zealand's Pacific role.

But Hill's decision to repeatedly reaffirm this position at his subsequent press conference bordered on farcical.

In truth, Hill's formal press conference was a pretty desultory affair. Anyone wanting to get an insight into just how the US views its East Asia challenge - and New Zealand's role in the region - would not have gleaned much from Hill's public comments.

What we do know is this: US concerns over China's rapidly spreading influence - and the role Clark is carving out for this country in the emerging East Asian political architecture - means New Zealand is seen more sharply by Washington.

Officials later pointed journalists to a statement Hill made to a sub-group of the House International Relations Committee on "East Asia in Transition: Opportunities and Challenges for the United States." It is telling.

Hill talks about how the US challenge in East Asia and the Pacific is to open markets, facilitate trade, promote transparency, fight corruption and support efforts to combat poverty and promote sustained growth.

The US is reaching out and forging free trade agreements with dynamic regional economies. New Zealand's absence from the US list is pointed, although Hill tried to offset the obvious snub at his press conference by pointing out the economic upside to a New Zealand trade deal for the US was slight.

The US needs to look harder at this country's strategic utility if it is concerned about Pacific alignments.

Just one "Cabinet" ranking official from the Bush Administration - Agriculture Secretary Mike Johanns - has visited New Zealand.

Chinese President Hu Jintao visited 18 months ago. Early next month, Premier Wen Jiabao will also visit - the seventh member of the Chinese Politburo to come here in the past few years. China is also negotiating a free trade deal with New Zealand. These are the hard messages Peters needs to get across - not simply poodle-faking.

John Roughan: Humanity the loser in Shakespearean tragedy

Watching a promising new Cabinet minister skewered on the spit of public life this week was to witness a Shakespearean tragedy come true. Fate was cruel, honour on all sides elusive, the penalty excessive, humanity the loser.

I don't know David Parker but he didn't look like a villain to me, not even when he couldn't give a straight answer to John Campbell on TV3. Parker looked and sounded like an earnest young lawyer-businessman who entered politics with the best of intentions.

I would guess he does everything with good intentions, including answering a routine question on a Companies Office return in a way that was not strictly true.

His partner in a small collapsed company had not been consulted about dispensing with an audit, a decision that had to be made by shareholders unanimously. Parker said he wrongly "ticked a box". Campbell pointed out that it was not quite as passive as that. A date had been entered.

Well, okay, he stood there blinking in the headlights. If he is as clever as they say, he seemed modest about it, and dazed no doubt at his rapid rise and fall.

It wasn't very long ago that he was a novice candidate standing for Labour in a safe National seat. To his surprise, probably, he won it. Last year the seat went back to National but he was safe on Labour's list, its rising star.

I don't know Ian Wishart either, but he doesn't strike me as a hero. Perhaps he should. Journalism holds no practitioner in higher regard than the dispassionate investigator.

And not many are truly dispassionate. The journalist investigator has no authority to compel co-operation. He relies mainly on the word of someone with an axe to grind. Too often he is disinclined to examine the motives of the hand that feeds him.

It is always safer to go after someone who seems guilty to begin with. Watergate, the crime that started the cult of investigative journalism, was the classic in that respect. Richard Nixon and some of his leading acolytes looked and sounded like crooks even before reporters got on their tail.

Wishart at least cannot be accused of picking a likely target. His hatchet job on David Parker would have required a suspension of human sympathy that must be as difficult as it is unpleasant. I hope the job carries plenty of professional satisfaction because it cannot give anyone much joy.

I do know Rodney Hide, who also was said to be digging around in Parker's business and no doubt preparing to give him a grilling of Benson-Pope proportions when Parliament resumed on Tuesday.

Hide is neither hero nor villain either. He is a politician prepared to do whatever it takes to keep himself and his small party in the game. He plays hard but he is not vicious. When he had Benson-Pope twitching on the ropes he gave him an escape route.

Hide would have tormented Parker for a day or two and Parker was prepared to face it. But Helen Clark was not.

Some time on Tuesday morning, as Parker was girding himself for battle, he was visited by her goons. He went down to the House stripped of all portfolios, denied the dignity of defending himself.

Helen has never been a hero in my book for this antiseptic approach to politics. It is the politics of political science, in which electoral safety is the sole measure of policy, leadership is pandering to public perceptions and no loyalty is owed to troopers who put a foot wrong.

It is a style of politics not merely inhuman to the ministers she casts aside for the slightest indiscretion but which deprives us all of a measure of justice, it seems to me.

Justice in politics is best decided not in courts but in the tension between people in power and people in Parliament and the press who hold them to account. That, at heart, will be the reason police are reluctant to prosecute political offences, especially by the Government.

People in power face far more effective punishment at the ballot box. But political justice requires both sides to defend their corner if we are to observe some reasonable standards of conduct and fair consequences.

Justice was done to my mind on Monday when Parker resigned from the lawyerly post of Attorney General. His less-than-scrupulous care with Companies Office requirements was, as Stephen Franks wrote in the Herald the next morning, the sort of thing "thousands of ordinary business people" have probably done.

But lawyers know they cannot do that, said Franks. "The profession is privileged to be the gatekeeper. Our certificates are taken as near conclusive proof of facts under scores of acts and regulations. The price is scrupulous care with the veracity of our certificates."

The Prime Minister could have left Parker in his other posts, energy and transport, where he had already produced the fruit of political innocence by releasing the Ministry of Transport's road charging proposals for dealing with traffic congestion.

But on Tuesday the Prime Minister succumbed to critics. She ought to realise that political commentary is congenitally incapable of a proportionate response. Any dishonesty is intolerable in print. In trying to keep a sense of perspective here I am in danger of excusing what he did.

Justice is not always found in verbal exchange; it can lose a case in logic but win it in the human heart. My guess is most people understood Parker's offence and sensed he had paid an excessive price, as his colleagues did when he took his seat on Tuesday to a standing ovation. Later in the week even Helen Clark raged at the injustice of it all. Wishart, she said, was "a creep".

"If you want to meet the Wishart test of public life you'd better be one of the Vestal Virgins."

Well said, but why didn't she say it on Tuesday? Wishart was doing his job, she should have done hers. She is raging at an injustice she was in a position to stand against, and didn't.

Like the leading characters in Shakespearean tragedies, she lacked the courage when it mattered.

Paul McIntyre: Kiwis fly the flag at bank

New Zealand's long-term management grip on Australia's biggest banker, the Commonwealth Bank of Australia (CBA), firmed on Thursday when former ASB and Air New Zealand boss Ralph Norris carved up his senior management ranks.

The shake-up has resulted in former New Zealand hockey player Stuart Grimshaw emerging as the most likely successor to Norris whenever he decides to quit.

The 44-year-old, who started his banking career with the ANZ in 1983, a year before representing New Zealand in hockey at the Los Angeles Olympics, was one of two internal candidates in the running to take the chief executive's gig at the CBA before Norris got the nod six months ago.

The other internal frontrunner, Mike Katz, was effectively shunted by Norris on Thursday, although no one is officially saying that. Rather, Katz is leaving to pursue other interests.

But the investment community is convinced that Grimshaw is earmarked for the top job. There is one proviso, however.

Grimshaw must revive CBA's giant but chronically under-performing premium business services division before he can hang out with David Kirk, CEO of publisher Fairfax, at a Sydney sports bar and talk shop about playing sport for their country and telling a bunch of cantankerous Australians what to do.

Grimshaw now has control of about a third of CBA's banking income from operations which include the bank's premium retail, corporate and institutional banking divisions.

What's going for Grimshaw in this role is that he has been there before when he was sent to Glasgow by the National Australia Bank in 2000 to head up its Clydesdale and Yorkshire Bank units.

It was there that Grimshaw flagged his intentions to aggressively target high-net-worth individuals. And Kirk will be pleased that Grimshaw likes sporting analogies, using one in a newspaper interview when he first started in the UK about his hockey-related injuries.

"My thumb was broken in 10 places when I started one of my roles in banking," he told the Scotsman. "I was the most highly qualified guy in the place but I couldn't even sign a letter for weeks."

Grimshaw's hockey days may now be over but his competitiveness obviously remains to have survived the bank's notorious culture of tension in the senior ranks. The investment community is only too aware of the in-house bickering which has permeated top CBA management for years, a reputation which Norris sought to eradicate by telling his top team to bury the backstabbing.

This week, he went further by reshuffling the entire team and seeing off the guy who under previous CEO David Murray was heir apparent - Mike Katz. Katz was the second highest paid executive at the CBA, pocketing a $2.78 million package last year. But he won't be in any rush to find a new job - he's sitting on close to $5 million in CBA options.

One of the surprises for analysts in the Norris management shake-up this week was the lack of new blood, which many expected to come from his old New Zealand stomping ground at the CBA-owned ASB. Perhaps he didn't need to with a Kiwi ally in Grimshaw.

Still, the hard yards are ahead of both men. Norris got board approval for the changes following a two-day love-in last week in the wine growing region of the Hunter Valley. He also took CBA's board through his strategic blueprint for the bank, which will be unveiled next week to investors. It will cover four key areas: improving the performance of business banking; customer service; technology spending and operational excellence.

Norris stated the obvious this week in outlining the different approach he is taking at the CBA to what was required at Air New Zealand.

"We don't have a broken business model," he said on Thursday.

"We have basically a good business and it's about making a good business better."

And if all goes according to plan, Grimshaw could be well on his way to the top. There's a few banking on that one.

Brian Gaynor: We're going broke but nobody cares

The major event this week was the dreadful result from New Zealand Incorporated.

The country reported a current account deficit of $3.9 billion for the December quarter, compared with $3.2 billion for the December 2004 quarter.

The 2005 calendar year deficit was $13.7 billion, representing a whopping 8.9 per cent of gross domestic product.

New Zealand has reported a current account deficit for 32 consecutive years and has the third-worst deficit, on a percentage of GDP basis, among the 30-country Organisation for Economic Co-operation and Development. It ranks ahead of only Iceland and Portugal.

Australia also has a current account problem, but its deficit represents only 5.9 per cent of GDP.

New Zealand seems to be heading down the same path as GDC Communications, the former high-flying listed technology company that was placed in receivership this week.

The only difference is that GDC has no more borrowing capacity and has sold most of its assets while New Zealand has substantial borrowing capacity and a huge number of assets available for sale.

New Zealand's international balance sheet shows that we have borrowed and sold assets to finance our huge deficits. The country has $232.6 billion of international liabilities, comprising $164.8 billion of borrowings and $67.7 billion of assets owned by overseas interests. The $136.5 billion international balance sheet deficit represents a frightening 88.7 per cent of GDP.

Australia's international balance sheet deficit represents 60.4 per cent of the country's GDP.

New Zealand's share price, the kiwi dollar, rose after Thursday's announcement but fell back to its pre-announcement levels once investors had a chance to study the figures.

Most investors realise that over the longer term share prices always reflect the performance of the entities they represent. This is the reason why most forecasters believe the kiwi will fall further.

The current account comprises four items: trade, services, investments and transfers.

The country's trade balance has gone from a surplus of $400 million in 2002 to a deficit of $3.9 billion in the latest year. There are a number of reasons for this including buoyant import growth, higher oil prices, falling agriculture commodity prices and our poor non-agriculture export growth performance.

World Trade Organisation figures show that New Zealand's exports are growing more slowly than the world average and we are still highly dependent on primary exports.

Since 1980, the country's share of total world exports has fallen from 0.27 per cent to 0.22 per cent while our share of world agriculture trade has grown from 1.30 per cent to 1.55 per cent. Unfortunately, international agriculture exports are growing far more slowly than non-agriculture trade.

WTO statistics show we remain heavily dependent on primary exports as they represent 59.7 per cent of the country's total exports compared with 71.8 per cent in 1980.

Over the same 25-year period, the Southern Hemisphere's two other major agriculture countries, Argentina and Australia, have reduced their reliance on the primary sector from 71.6 per cent to 49.6 per cent and from 44.8 per cent to 25.6 per cent of total exports respectively.

The New Zealand agriculture sector continues to perform extremely well, but it is becoming increasingly difficult for it to carry the rest of the country, particularly when a high percentage of the urban population has embraced a borrow-and-spend philosophy.

The other major contributor to the current account problem is the investments deficit, which has grown from $6.9 billion in 2002 to $10.8 billion in the latest year.

The investment figures reflect the difference between what we earn from our offshore investments and the earnings and interest attributable to foreign investors in New Zealand.

Overseas direct equity investors do very well in New Zealand. This group achieved an after-tax return of 10 per cent on their investments in 2005 whereas New Zealand's direct offshore equity investments achieved a miserable return of 0.9 per cent.

This latter figure reflects the poor performance of The Warehouse, Telecom and others in Australia.

The other big contributor to the investment deficit is the interest payments on our offshore borrowings. Much of this borrowed money is invested in the residential housing market and is a major contributor to the country's burgeoning current account deficit.

The major difference between New Zealand and GDC Communication is that the latter ran out of assets to sell whereas New Zealand still has plenty of companies, land and other assets available for sale.

Unfortunately, the bigger the deficit the more we have to borrow and sell. Based on the 2005 current account deficit of $13.7 billion, we now have to sell 20 Trade Me organisations every year to bridge the gap between our international payments and receipts.

But the more we sell, the worse it gets because the earnings and dividends accruing to overseas owners adds to the current account deficit in future years.

The net earnings of the four major foreign-owned trading banks, ANZ National, ASB, Bank of New Zealand and Westpac, contributed an estimated $2.5 billion to the 2005 deficit. This figure does not include the interest payments on money borrowed from the banks' Australian parents to lend to New Zealand residential property investors.

The latest current account figures are even more worrying than the record deficit of $1.4 billion, representing 13.4 per cent of GDP, in the December 1975 year. Thirty years ago, the trade deficit was the major contributor to the current account deficit, but imports declined between 1975 and 1979 as consumer spending contracted and oil prices eased.

An investment-led current account deficit is much more difficult to fix because foreign investors are not going to sell their companies back to New Zealanders and the repayment of our offshore borrowings could lead to a collapse in the housing market.

The most effective way to correct the current account problem is for the country's share price, the kiwi dollar, to fall.

The dollar has held up longer than expected because overseas investors have been attracted by our high interest rates. High dividend yields also attract investors to listed companies, but their interest dissipates when these companies are perceived to have fundamental problems.

The same seems to be happening with the kiwi. Our high interest rates attracted investors but the huge current account deficits are having a negative impact on dollar sentiment.

The next current account figures, which will also be fairly bleak, will add to this negative sentiment.

A lower dollar will reduce import demand and boost the export sector, but substantial progress will not be made until there is more investment in the non-agriculture export sector and we abandon our borrow-and-spend mentality.

One of the more frustrating aspects of New Zealand's latest poor financial result is the almost total disinterest of the country's directors, our members of Parliament. They seem to be far more concerned with speeding motorcades, the behaviour of a teacher 20 years ago and signatures on pro-forma company documents.

Maybe our MPs are a reflection of us. We are more interested in detail discussions on trivial issues that are quickly forgotten whereas serious economic problems, which will affect generations, are rarely mentioned.

Christopher Niesche: Government action needed

Telecom's announcement this week that it plans to offer a super-fast internet service by Christmas has been greeted with a predictable response.

The company only introduced the new service to convince the Government that it's doing a good job providing broadband to New Zealand, Telecom's competitors say. The argument goes that introducing faster broadband now is nothing more than a ploy to ensure the Government doesn't force Telecom to open up its lucrative phone network to competitors - the much talked-about local loop unbundling.

The critics are right, but why this surprises and outrages anybody is a mystery.

Telecom seems to be suffering a hangover in the public mind from the days when it was owned by the Post Office and existed for the national good.

But it's been a listed company for 15 years and has shareholders who want it to maximise profits. If the Government wants to do something that will reduce those profits, then Telecom's duty to shareholders is to try to stop it.

When, for instance, Sky TV introduces a new programme or service, people don't accuse the company of cynically trying to attract more viewers to increase profits.

The difference, of course, is that Telecom is in charge of some important national infrastructure assets. (Though some might argue that by delivering Super 14 games to New Zealanders' living rooms, Sky TV is also in charge of important national infrastructure.)

Telecom's new service - known as ADSL2+ - is the next generation of broadband. It will provide internet download speeds of 24 megabits-a-second, around 12 times faster than anything it offers at the moment.

While the service will be a huge improvement on what's available, there are some caveats.

Telecom hasn't yet disclosed what it will charge for the service. Nor has it said what the data caps will be.

There's also the question of what price Telecom will charge its competitors for access to the new service.

Broadband is an enabler of economic growth, a fact the Government finally caught on to this year.

A study by the Economist Intelligence Unit and IDC New Zealand, released earlier this month, found that a rapid uptake of broadband over the next 25 years would add $13 billion to the country's gross domestic product.

Unfortunately, New Zealand lags much the rest of the developed world in broadband uptake and the services on offer; something the Government wants to remedy.

The new service will improve the performance somewhat, but won't lead to the sort of competition among internet service providers that would see any dramatic improvement.

The Government is conducting a review of how to improve the country's broadband performance and, in response, Telecom will do everything it can to retain control of its phone lines.

In fact, the company spends so much time and money briefing competition lawyers that there's a joke that it's more like a law firm that happens to have a copper wire telephone network attached than an actual telecommunications company.

Telecom's determination to fight tougher regulation shows up in the composition of its eight-member board: Three lawyers, but only one director - Michael Tyler - has any significant technical expertise in telecommunications.

The Government will need to force Telecom to offer better deals to its competitors or to open up its network to competition.

The impetus for better internet service won't come from Telecom and no one should expect it to.

Telecom has too much to lose. It has to come from the Government.