Monday, December 25, 2006

Xmas Pressie

A reading from the Book of Trev:

Muldoon was not a historian, and the election was to be held on July 14th which was Bastille Day. It was an unfortunate omen for the National Goernment. Even Jim McLeay was staggered by it I think, and I don't know how far history will reveal Muldoon ever consulted with his Caucus before he made the decision to ask parliament to be prorogued. In a famous television interview, he said that he had caught the Labour Party on the hop and it didn't give them much notice.

It was true that we did not have the people on the electoral rolls at that time, but the party worked very hard indeed in both the central and local levels. By the time the election came round, we had our people well and truly upon the electoral roll. It was a defeat for Muldoon and the Labour Party formed the Fourth Labour Government in New Zealand. During the 1984 campaign, David Lange had as his minder his very good friend Joe Walding. Joe was an astute politician and I think Lange leant very heavily on Joe's judgement on matters in 1984. It is useful to compare the 1984 election with the 1987 election when Joe was no longer with us, he having died while our High Commissioner in London in 1985.

Without that guidance, Lange made a complete mess of the 1987 campaign. He offended some women dramatically on a television interview while he was on tour in the South Island. I think it was at Rangiora. In my own electorate, I had gone to considerable pains to prepare the way for Lange at the Palmerston North Teachers Training College in the morning, only to have him in the afternoon verbally abuse some student again on television over his shirt or some other trivial matter. These were two major television blues that forced the Labour Party to spend around half a million dollars on TV adverts in addition to what we expected to spend, in order to cover his misdemeanours in this regard.

I think that's where the rot really began between him and Douglas, because the 1987 election was really won by Roger Douglas in the fact that that people had faith in those policies. I don't think Lange and his supporters ever really forgave Douglas the fact that the electorate thought he was the person that was important rather than David Lange.

However, we did win the '87 election and by an increased majority. For the first time North Shore, the national stronghold, looked like becoming Labour as indeed did Remuera. It is somewhat ironic that the Labour Party after Douglas and I had left tried to distance themselves from the policies of the '84 - '87 Labour Government, when indeed it was those very policies that had met with such electoral success. That still seems to be the position that the Labour Party of today wishes to so distance itself and cannot face the fact that for the first time since the original Labour Government, we were returned for a second term in office.

The Labour Party is not good at handling success. After all it did not have a great deal of practice at it, and it is far better at rationalising its defeats. I once remember advising young John Kirk, who was interested in politics, that it didn't really matter what party you were in as long as you got sufficient power to put in your ideas you thought were best for the country. My advice was that even if he was going to stand for National, as National members really had three times the chance of power compared with the Labour Party member. That at any rate is the historical evidence.

Caucus and myself never got on well together. I was very cynical about the quality of the members that democracies so often vomits to authority over us. Although the Labour Government of 1984 and 1987 to '90 had a very high intellectual capacity and had a lot of members with degrees from the university, another amazing proportion of the caucus wouldn't understand a balance sheet if it was placed in front of them. People in the caucus who were dictating as it were the Government's economic policy, or supposed to, tried to look learned about matters upon which they had not the slightest knowledge or understanding.

I have always been reminded of the passage of Alice in Wonderland about the dodo in the caucus race. You started the race when you wanted to, you stopped when you wanted to, and everybody in caucus got prizes that Alice was supposed to donate. Lewis Carroll had a great deal to commend him with his view of politics. Of course it becomes quite apparent that if you are intolerant and don't like caucus, they don't like you. It wasn't long before this relationship developed between myself and the majority of members of the Labour Party Caucus. I thought that quite a lot of them were nothing but fools but then again the National Party had its fair share too.

I may say having a look at the present generation of politicians that caucus might have seen academically of genius quality compared with what MMP has placed in authority over us. You see, generally I am not in favour of democracy. It is a myth that people elect members of Parliament. They do not. Members of Parliament are chosen by very small numbers of people in their respective parties, the average person having nothing to do with it. Those parties stand these candidates and the people vote for the party and those people become members of Parliament.

To assert that they are either worthy of people's vote or that they will reflect that vote in Parliament is of itself an absurdity. They will not. There is a view adopted by Lenin and Stalin. That to its perfection, the party is the be all and end all and that members should just do as the party tells them. I, of course, never subscribed to that point of view. I do not now under MMP. It is manifest that a lot of other people have left the parties that voted them into power to follow their own bandwagons.

The Labour Party Economic Committee while in opposition had already formed its policy on quite a great many matters. These included devaluation of the NZ dollar. By July 14th 1984, it was apparent the country was bankrupt and that we could not meet our overseas debts and commitments as they fell due. Muldoon had performed abysmally in economic terms and had got the country into a terrible mess. Never in the future should a Prime Minister be also Minister of Finance. These are the only two people in Government that have anything like strong power, and they should never be held in one person's hands. They should counter-balance each other.

The history again shows that Muldoon would not countenance when we became Government the devaluation of the dollar by 20 percent. His outgoing Ministers later convinced him that this had to be done and it was done at the very last moment. Producer Boards and a great many people had kept their money overseas knowing our dollar had to be devalued, and many people had great windfalls following the devaluation. However, without it, we simply couldn't have survived as a nation.

In the Labour Governments, the cabinet in elected by the caucus and the Prime Minister allocates the portfolios. I was so naïve that I considered that ability had something to do with selection to the cabinet. That delusion was shattered and crumbled away to dust when Lange walked into the cabinet room immediately after the election and said he had to have a cabinet containing two Maoris and two women. This positive discrimination was part and parcel of the Labour Government performance over the next few years, and still is.

I was not elected to cabinet, although I did survive some of the votes. I thought then and there that I may as well get out of Parliament. I hadn't quarterised my income to come in as a backbencher and be cannon fodder. I actually stopped at the Rotorua Post Office on the way home from fishing at Tauranga to send a telegram of resignation to the Prime Minister. At the last moment, I changed that and suggested that I become under-secretary to finance with a special relationship to Inland Revenue. Roger Douglas, as Minister of Finance, had to have an under-secretary and he knew he was in for considerable tax reform. I think I got the job because I understood taxation which other people in caucus did not.

It was the greatest bit of fortune that has ever come to me in my life. I would rather in retrospect have been under-secretary of finance to Roger Douglas than I would have been Minister of Pies & Ice-cream in the cabinet. There were several reasons for this. The first was financial. Under the Higher Salaries Commission, Ministers and under-secretaries were paid one hundred odd dollars tax-free a day for the time they were not in Wellington. The idea was that they were doing their job elsewhere. I thought this was ridiculous but it rendered my under-secretaries' pay up with a cabinet minister. I didn't have to go down to Wellington on Monday and was paid this $100 for fishing and shooting. That later, on our own instigation, was altered and is not the position now. That was the ridiculous nature however of much of the way of fixing salaries for ministers and under-secretaries in those days. As under-secretary, I also had full access to the LTDs and all the status of other ministerial perks.

Helen Clark was I think unfortunately not made an under-secretary. She represented the left wing of the party and had a direct access to it. She was and is a terribly formidable political opponent to have. I think that from the day Lange did not make her an under-secretary, there was animosity growing. I accept it was not without reasons.

That night I took the LTD and took Helen Clark, who was very upset, out to dinner. I took her to a movie and then escorted her, as a gentleman should, back to the door of her flat in a dubious part of Brooklyn. As we got out of the car, she invited me up for a cup of coffee. I said I had better not come. We had had too much to drink, I thought she looked perfectly handsome and that I might try to get into mischief. I said I thought of her as a daughter. Helen laughed as she went in the door and reminded me that she was older than my wife.

My office was only about twenty yards from that of Roger Douglas and we were in constant communication with each other. Working for Roger was a joy. Once he delegated things to you on the condition that you kept him informed of what you were doing, he did not meddle or override what you were doing. I got on with the job of being Minister of Revenue, not of tax. we decided that revenue was the proper thing for government, rather than just the imposition of taxes.

We were dedicated to the reform of the tax system by changing to much more reliance on indirect taxation. Two top committees chaired by accountants, namely Ross and McCaw, had at various stages reported to Governments that this change should occur. In effect, that we should have a tax on expenditure. The National Government and previous Labour Governments had not had the political courage to make these changes, which were obviously beneficial. We knew that it would be difficult to sell what we called a Goods and Services Tax (some called it God Save Trevor) to the Labour Party Conference and to the party generally.

The argument was that such a tax would be regressive and impinge upon the working class people who speant most of their money on neccessities more than on the upper-class. Douglas, Treasury and all our economic people took the view that this was not so, that the regressive nature of the tax was minimised and indeed, discounted by income support mechanisms. Benefits to those most affected would rebut entirely the regressive nature of the tax.

We also knew that it would be difficult to launch GST through the Labour Party Conferences unless we had shown some sign that we were tackling benefits that had grown up under Muldoon, funded by the higher taxation rate of 66 cents in the dollar. Many corporate people, and indeed right down to the smallest employees, were getting benefits for motor cars, mortgages, tickle sheets, credit cards and all sorts of things, rather than being paid money which was taxed. we therefore began to institute a Fringe Benefit tax. Ideally, this should have been upon the employee who ultimately gained the benefits but, being a Labour Party, we couldn't do that. we therfore decided to tax it in the hands of the employer. The measure was not designed to get a great deal of income, but was designed to stop the perking nature that had become a feature on employment contracts and to show our Labour Party Left that we were serious about taxation reform.


Hippy Xmas