date:2005-02-02T03:58:00
source:Embassy Wellington
origin:05WELLINGTON96
destination:This record is a partial extract of the original cable.
The full text of the original cable is not available.

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