US embassy cable - 05WELLINGTON96

C O N F I D E N T I A L SECTION 01 OF 02 WELLINGTON 000096 
 
SIPDIS 
 
DEPT FOR EAP/ANP 
NSC FOR GREEN 
 
E.O. 12958: DECL: 02/01/2015 
TAGS: PGOV, PHUM, PREL, NZ 
SUBJECT: NEW ZEALAND PRIME MINISTER CLARK IN STATE OF THE 
NATION: "NO WORRIES"; MEDIA REACTION MUTED 
 
REF: WELLINGTON 78 
 
Classified By: ACTING DEPUTY CHIEF OF MISSION KATHERINE B. HADDA, FOR R 
EASONS 1.4(B,D) 
 
 1. (C) Summary:  In her opening speech of the year, PM Helen 
Clark launched the opening salvo of her election campaign. 
She indirectly countered Opposition leader Don Brash,s 
welfare policy speech (reftel) by outlining childcare and 
other policies she defined as the best way to encourage women 
to return to the workplace.  While the Prime Minister 
affirmed her interest in a US FTA, in almost the same breath 
she took a swipe at the National Party (and no doubt at the 
Embassy and other U.S. officials) by reiterating her 
Government's support for NZ's iconic anti-nuclear 
legislation.  Labor productivity and economic growth were a 
common thread throughout the speech, with special focus on 
the "ownership society" and increasing productivity to OECD 
standards.  PM Clark pointed to Asia as the way forward for 
NZ economically and politically, but aside from declaring 
interest in FTAs did not go into detail on the country's role 
in the region. 
 
2.  (C) Opposition party MPs, who like the rest of New 
Zealanders knew most of the content of the heavily-leaked 
speech before it was delivered, immediately criticized the 
Labour Government as complacent, greedy, and out of touch. 
But reflecting the speech's failure to break new ground, an 
internal rift in the Opposition National Party dominated the 
next day's headlines, relegating Clark's presentation and the 
opposition response to a media byline.  End Summary. 
 
Foreign Policy Pro-NZ or anti-US? 
--------------------------------- 
 
2. (C)  While Clark's State of the Nation address focused 
almost exclusively on the domestic agenda, Clark made a point 
of celebrating NZ's independent foreign policy, with its 
focus on human rights, disarmament and peacekeeping.  As part 
of this "independence," Clark again utilized her party's 
misquote of National Party leader Don Brash by declaring that 
NZ's iconic "nuclear-free status won't be gone by lunchtime 
with a Labour-led government."  Consistent with the GoNZ's 
recent foreign policy focus, Clark called for a continuation 
of NZ's dynamic trade agenda, together with a call for 
increased (and unspecified) engagement with Asia.  Making 
clear that the GoNZ's priorities were to continue its robust 
pace of negotiating free trade agreements (FTAs,) Clark 
pointed proudly to positive developments in FTAs with 
Thailand, China, Singapore and Chile, ASEAN and Malaysia. 
Clark noted "we remain ready to enter negotiations with the 
United States.  The mutual benefits of an FTA between us are 
clear." 
 
Policy Highlights 
----------------- 
 
3. (U) Domestically, Clark hammered home Labour's 
achievements in economic growth, health, education, and 
reduction of crime.  While leaving major policy announcements 
for the 2005 budget and future election pledges, Clark 
delineated eight "key areas of activity and policy 
development," largely listing on-going GoNZ programs and 
previously announced initiatives.  The areas included: 
lifting labor productivity, lifting participation rates in 
the workforce, infrastructure development, new savings 
initiatives, Maori development, a dynamic trade agenda, 
increased engagement with Asia and building national identity 
and pride. 
 
Securing NZ's Economic Growth 
------------------------------ 
 
3. (U) Labour productivity and economic growth were a common 
thread throughout the speech, with a special focus on the 
"ownership society."  While driving home NZ's low 
unemployment, high economic surplus and strong GDP growth, 
Clark outlined policy areas designed to expand and secure 
recent economic benefits across a broader portion of society. 
 Striking back at Opposition leader Don Brash's criticism of 
Labour's welfare policies (reftel), Clark pointed to Labour's 
changes to the Superannuation scheme and mortgage insurance 
programs as first steps in encouraging increased savings 
rates.  She hinted at future policies designed to "encourage 
a co-coordinated lifetime approach to savings."  To lift 
labor productivity Clark announced continued investment in 
skilled migration and a proposal to encourage expatriate 
NZers to return home. 
 
4. (U) In her most controversial policy, Clark announced a 
need to increase women's participation in the workforce, 
which currently lags behind OECD averages.  Here Clark 
highlighted the Working For Families package in the 2004 
budget, with its paid parental leave and additional childcare 
subsidies, as offering assistance to working mothers.  By 
stressing that such assistance would also enable mothers 
receiving state benefits to return to the workforce, Clark 
also took an indirect jab at Brash's welfare critique. 
Admitting that childcare was not the only obstacle to 
returning to work, Clark also pointed to the GoNZ's program 
to address pay equity issues in the public sector.  United 
Future leader Peter Dunne, whose party is in an alliance with 
Labour, called this policy "neo-Soviet," asking why women 
should sacrifice quality of life for the good of national 
productivity. 
 
Rebuttals: Overshadowed By Scandal 
---------------------------------- 
 
5. (U) Opposition leader Don Brash gave an articulate 
rebuttal to Clark's comments, claiming that this was a 
classic tax and spend government.  He condemned Clark for 
merely "outlining what the Government will do with taxpayer's 
money."  Brash reiterated National's mantra of personal 
responsibility, and summarized his recent policy statements 
on welfare, race relations and economic development.  Despite 
his detailed response, Brash's remarks were completely 
overshadowed in the next day's media reports by his decision 
to remove MP Katherine Rich's from her welfare portfolio, 
after she publicly disagreed with aspects of his recent 
welfare speech. 
 
6. (U) ACT Party leader Rodney Hide provided the sole foreign 
policy commentary of the day, rebuking PM Clark for her 
statements on the FTA, noting that Clark would "stand ready" 
to negotiate an FTA until "hell froze over" since she didn't 
like the Americans.  Noting Clark's decision to begin her 
speech with references to NZ's post-tsunami aid package, Hide 
reprimanded Clark for not mentioning the US' substantial 
support to the affected region.  He also bemoaned that her 
speech and the remarks of other opposition MPs had failed to 
mention the successful elections in Iraq, which were a great 
step forward for democracy in that country. 
 
Comment 
------- 
 
7. (C) Comment:  Clark is sticking to her trademark approach 
) a gradual development of policies, with no surprises - but 
it appears she may have erred on the side of caution.  While 
media reporting on in the past week was substantial, with all 
key elements of the speech leaked early, reporting on the 
State of the Nation speech was minimal.  National's "sacking" 
of Katherine Rich dominated public discussion.  Proving the 
adage that no coverage is bad coverage, Brash has taken a 
page from Clark's "solidarity" playbook and used the 
opportunity to demonstrate that sometimes a strong leader has 
to take a stand, and not allow internal dissent. 
Swindells