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On other issues, Key largely neutralized policy differences between National and Labour by adopting policies very similar to those already in place, or, in some cases, by overshooting Labour.

When Finance Minister Michael Cullen mused that New Zealand's Superannuation Fund, the laudably independent sovereign wealth fund charged with maximizing returns on investment, might be asked whether it would consider increasing the proportion of its assets held in New Zealand, Key jumped a step further to announce that National would mandate that the fund invest 40% of its assets in New Zealand.

The policy played well with economic populists but was roundly criticized by economists. While New Zealand and international media have portrayed the election as a victory for the right, the Australian newspaper The Age more accurately concluded that "it is only in what has become a nanny state like New Zealand that such a charge could reasonably be made."

Or maybe National’s intention is to compromise the fund as an independent vehicle. Cullen is apoplectic that there was no bipartisan consultation on this promise.

It is now time for Labour’s revenge on National for the infamous – and deadly effective – “Dancing Cossacks” advertisements of 1975.

The infamous attack ad on Labour’s short-lived compulsory superannuation scheme said that it would “have enough money to buy every share in every public company in New Zealand, Soon they could buy all the farms. Indeed, one day the government could end up owning everything – and you know what that’s called.”

Then the Cossacks appear.

Fast forward 23 years and, goodness, if the Labour government doesn’t just have a giant superannuation scheme larded with taxpayer funds. But everything else is different.

What are the upsides for National in this? It is populist – so much so, it could see the Nats hand in hand with Winston Peters, who promoted a similar policy your correspondent dismissed recently.

As one economist NBR spoke to said, “this is becoming a scary election.”

National will:
• Amend the New Zealand Superannuation and Retirement Income Act 2001 to allow the Minister of Finance to give a direction to the Guardians of the Fund in relation to the proportion of the fund which is to be allocated to New Zealand.
• Set the target of at least 40% of the Super Fund to be invested in New Zealand.

"In every other regard, the Guardians of the Fund will continue to invest as they do now. They will invest on a prudent, commercial basis, and by making their own decisions about what asset classes to invest in, in line with best-practice portfolio management.

"In particular, the guardians will determine the appropriate rate at which to increase their investment in New Zealand to 40%, taking into account their need to manage their overall risk profile, the availability of quality investments, and the impact of increased investment on local markets."

New Zealand First voters were more likely to believe that. . .

* New Zealand is constantly manipulated by big business (70 percent believed this);

* The All Blacks were poisoned before the 1995 world cup final in South Africa (47 percent);

* The US government knew about or planned the 9/11 attacks (52 percent);

* A secret elite cabal controls world affairs (38 percent);

* Princess Diana was assassinated (38 percent);

* World governments are hiding evidence of alien visits (35 percent); and

* Elvis Presley faked his own death (5 percent).

The three conspiracy theories on which NZ First voters were out-conspired were. . .

* The Iraq invasion was about oil and not democracy (93 percent of Greens voters believe this, and 85 percent of NZ First voters);

* Nasa faked the moon landings (26 percent of Maori Party voters consider this likely, and 23 percent of NZ First voters); and

* There is a political conspiracy to suppress rights of minorities in New Zealand (popular among 32 percent of Maori Party voters, but only 13 percent of NZ First voters).

Just 60 people said they were New Zealand First supporters, but according to the survey's creator, Marc Wilson, this figure is still sufficiently large to draw sound statistical conclusions.

Revelations the government sought costings on a universal tertiary student allowance has re-ignited debate on whether it is a good idea.

Student groups have long called for all tertiary students to get an allowance, as is NZ First and Green Party policy.

Students argue they are being over-burdened by student loans and the cost of living is high.

Tertiary Education Minister Pete Hodgson today confirmed, following a story in the Press newspaper, that he asked officials to look at how much the proposal would cost.

The Education Ministry came back with $728 million a year.

The Press said the $728m net extra cost of such a plan was based on removing existing costs of the scheme and factoring in an expected reduction in student loans.

During the 2005 election campaign Labour scored significant points with students and their parents by offering interest-free student loans.

Westpac expected interest rates cuts from September but said they would probably be fairly shallow, dropping to 7.5 percent by the end of the year.

Inflation would also remain a problem for years to come.

"We accept that inflation may moderate in 2009 on lower oil prices, but it will be resurgent on 2010 and will average above 3 percent for the foreseeable future."

The survey indicated that the central bank could start cutting rates at its July 24 meeting, and contradicted the Reserve Bank's forecast that the economy rebounded modestly in the second quarter, said Deutsche Bank chief economist Darren Gibbs.

With companies' intentions to raise prices at the highest level in nearly 20 years, there was likely to be no relief for the bank on the inflation front, but the Reserve Bank had been willing to look through very poor near-term inflation, Mr Gibbs said.

"Regardless of whether the bank begins easing policy in this month or September, we continue to think that the market is underestimating the amount of easing that will ultimately be delivered once the easing cycle gets under way," Mr Gibbs said.

General business confidence improved a touch -- to -54 from -56 in the previous quarter -- but most other aspects deteriorated, including falling business investment.

TV3 also polled voters about tax cuts. It found 34.3 percent thought the level of personal tax cuts was about right; 45.6 percent thought they should have been bigger and 9.8 percent disagreed with cuts while 10.3 percent did not know.

Asked if National if elected would deliver bigger cuts 48.2 percent believed it would while 39.4 percent did not think so, 12.4 percent did not know.

Of those polled 61.2 percent did not think the budget including tax cuts would make any difference to them; 25.9 percent thought they would be somewhat better off and 4.1 percent said significantly better off. The poll found 5.3 percent thought they would be worse off, and 3.5 percent did not know.

Asked about whether voters approved of the budget and how it would effect them and the country 9.7 percent strongly approved, 34.7 percent said they somewhat approved, 23.4 percent had no feelings either way, 16.4 percent somewhat disapproved and 10.1 percent strongly disapproved, 5.7 percent did not have an opinion.

Meeting those targets will be hard. New Zealand already uses a wide range of hydropower and renewable energy to cut carbon dioxide use. For the agricultural gases, new kinds of fertilizers might help, but only to a point. For the rest of the cuts, farmers will have to persuade cows and sheep to emit less – or have fewer cows and sheep.

The cost, for farmers and industry alike, is likely to be prohibitive. The New Zealand Institute of Economic Research, an independent consulting firm, recently estimated that the government's plan would result in 22,000 job losses by 2012, or 1% of today's employment. That translates into NZ$4.6 billion ($3.6 billion) annually in lost GDP, or a NZ$3,000 cut in each household's annual spending.

This analysis assumes that as greenhouse gas fees make Kiwi industry less competitive globally, businesses and jobs will move overseas. The government disputes this conclusion, mainly because its own analyses assume New Zealanders will be willing to take lower wages. That's debateable, to say the least.

That aside, give the Kiwis credit for honesty. Having signed up for Kyoto, they're actually talking about shouldering the costs of meeting their commitments. Whether or not they end up regretting it, other countries will now have a chance to see what the anticarbon crusade does to an economy.

Treasury sought advice from Crown Law to ensure all budget documents complied with the Electoral Finance Act, Finance Minister Michael Cullen said today.

National deputy leader Bill English said this just showed how confusing the new law was if the finance minister needed to get legal advice to check whether the budget documents were an election advertisement.

Dr Cullen's admission came during parliamentary question time when Mr English asked Justice Minister Annette King whether Dr Cullen had asked her for advice on whether budget documents would comply with the Act.

Ms King -- who shepherded the legislation through its final stages in Parliament -- said the minister of finance had not sought her advice.

Research shows that KiwiSaver is merely a money-go-round. Over half of the savings are funded by taxpayers, in the form of the $1000 kick-start subsidy, matching contributions of up to $1040 per year and foregone tax revenue from ESCT (employer superannuation contribution tax) exemption. Most of the remaining savings are employers’ contributions and money that members would have saved in other forms.

Only 9-19 per cent of KiwiSaver balances are estimated to be from reduction in consumption.

That much “new” saving is hardly enough to cover the administration and compliance costs of implementing the scheme, and the deadweight loss due to taxation.

The Green Party has accused the Government of running a "cruel and deliberate" benefit system that forces desperate people to find work.

"This ignores the fact that people are on benefits because the work simply isn't there, or because they are sole parents, or because they are sick, injured or impaired," MP Sue Bradford said today.

"If Labour has any genuine concern about the deepening poverty of beneficiaries, they must take action in the upcoming budget."

Ms Bradford was commenting on a Ministry of Social Development report, published by the Sunday Star-Times, which showed beneficiaries are worse off in relative terms than they were after National slashed payments in 1991.

Social Development Minister Ruth Dyson reacted by saying beneficiaries were getting more money and support than ever before, and it was misleading to simply compare benefit levels with wages.

"The fact that wages have risen faster than the rate of inflation does not make those on benefits worse off," she said.

Ms Bradford said the report was "damning confirmation that Labour's welfare policies condemn many beneficiaries and their families to a life of debt, deprivation and despair".

It was clear Labour believed the best way to motivate beneficiaries into paid work was to keep benefits so low that people were desperate to find work whatever situation they were in.

"The minister can no longer pretend she doesn't know what is happening when her own department says that many beneficiaries are living far below the Government's own poverty lines," she said.

"Fast rising food, fuel, transport and accommodation costs are now making a bad situation even worse."

The numbers of New Zealanders leaving this country to live in Australia continued to rise in March, while the number of Australians visiting here short term was also up.

Figures published today by Statistics New Zealand (SNZ) show that a net outflow of 3100 permanent and long term (PLT) migrants left this country for Australia in March, up from 2800 in March 2007. The 83,500 PLT arrivals in the year to the end of March was up 1000 from the March 2007 year, while the 78,800 PLT departures was up 8400.

The resulting 4700 net migration was down from 12,100 in the March 2007 year, SNZ said. The net PLT outflow of 29,900 to Australia in the March 2008 year was the highest net outflow to Australia since the July 2001 year.

Agreements to disagree pacts between coalition partners are devices that directly weaken the convention of collective responsibility. In an era of MMP politics this has to be expected, however reluctantly one says this.

But what made Mr Peters’ situation an unacceptable breach of the convention was the fact it occurred in his own portfolio. It is to be hoped that this sort of contempt for the constitution never happens again

Mr Kerr blamed the size of New Zealand's government as a major factor inhibiting productivity and per capita income growth.

OECD figures showed government expenditure at all levels in Australia was 34 percent of GDP , compared to 43 percent for all levels of government in New Zealand, he said.

Australia had also improved its rankings for economic freedom, which encouraged entrepreneurship and growth .

Australia was ranked fourth by the Wall St Journal for economic freedom compared with sixth for New Zealand . In 1996, New Zealand had been fourth equal and Australia was ranked 17th equal.

"Recent IMF research has concluded that Australia's superior productivity performance is largely explained by its economic reforms, particularly in the labour and product market areas," Mr Kerr said.

"It is therefore mystifying that recent productivity research by the New Zealand Treasury did not focus on the impact of New Zealand's economic reforms on the productivity improvements of the 1990s, and the impact of policy reversals and increased government spending, taxation and regulation on the much lower productivity growth rates in the current decade."

There’s one footnote to FTA. The two internationalists, Clark and Goff, know that back in New Zealand, there are politicians who are less expansive in their views on free trade and other cultures.

They are ready to stir up xenophobia to take advantage of the electorate’s insecurities, and boost their polling chances.

Your correspondent refers, of course, to Michael Cullen. The finance minister this week will be waiting with baited breath for the decision of his junior ministers (David Parker and Clayton Cosgrove) on whether the Canadian Pension Plan Investment Board can buy 39.5 per cent of Auckland International Airport shares.

Cullen was the driving force – or at least, the public face – of government opposition to the possibility of the Canadians acquiring a “strategic asset” like the airport.

He fronted the decision to amend the Overseas Investment Agency’s test to make the Canadians' bid for 39.5 per cent of the airport (now only 24.9 per cent of votes) more difficult.

Why does Dr Cullen oppose the Canadian deal so vehemently?

Perhaps one concern is Canada’s poor record on human rights: the country only passed entrenched human rights legislation in the late 1970s.

Perhaps it is the Canadians continued oppression of their French-speaking minority, and refusal to grant the outlying province of Quebec greater autonomy.

Or perhaps, to paraphrase Enoch Powell and more latterly New Zealand First’s Peter Brown, Dr Cullen fears that opening the door to Canadian investment will lead to cultural disharmony and “rivers of maple syrup” in the street.

And the question still hangs in the air Will the Wellington electricity lines owned by Vector be regarded as a similarly strategic asset if the state-owned grid operator of the Labour government’s new BFF, China, eyes it for purchase as reported this week?

The problem business has is this: to an economically illiterate voter each one of the measures that contributes to the economic slowdown appears reasonable in itself. Measures that sound like they might produce higher wages NOW; firm regulation to punish rapacious telcos NOW; putting more checks and balances in the way of development through the resource consent process NOW; all have knee-jerk appeal. We haven’t quite reached the level of ignorance that applies in Germany and France where recent surveys revealed that only 36% of people actually support private enterprise, while many more claim to believe in a woolly form of socialism. But this government has done nothing to increase the public’s level of understanding of what is likely to lift growth, because to do so would open their own conduct to greater scrutiny. Economic ignorance hobbles every politician who might present policies to accelerate growth. The problems may be clear to us, but it will be extremely difficult to get them across to the public.

However, when your party's polling around 1%, such disputes become rather academic. Sir Roger's return has prompted levels of publicity that the party hasn't seen since 2005. (Articles about Hide's dancing, swimming or sky-diving don't count).

Prebble wanted to move beyond the Rogernome base. Now, the party could double or even treble its MPs by simply securing that base again, so the focus of the parliamentary party is clear: Douglas' surprisingly durable vision (he has been waiting for 30 years for the country to agree with his idea of compulsory individual superannuation savings) and Hide's libertarianism.

And five MPs could give Act a powerful position after the election, especially if other small parties continue to struggle.

If Act can capitalise on the attention and its polling improves, it will be at National's expense. It will produce another annoyance for John Key: at the very time when he is keenest to look as mainstream as possible, the prospect of a National-Act government will be raised, and he will be asked which Act policies he could live with.

And Labour will stop talking nice about Act as a 'party of values' and National as a 'me too' party, and will go back to its old tack: it'll say that when John Key looks into the mirror, a Labour politician of the 1980s looks back.

Business lobbyists are seen as shadowy ghost-writers of policy. The wealthy who donate money to National do so for self-serving reasons.

As John Roskrow of the Institute of Policy Studies told a meeting of business leaders organised by the Business Roundtable last year, corporate donations have largely evaporated in Australia, because of the developed consensus on macro-economic matters and business regulation. That's true here, too.

There are few favours left these days that big companies could buy with a cheque.

Not only has Labour revealed itself to be just as secretive about donations as its competitor, it has also highlighted one reason National uses anonymous donors.

It's always been assumed by detractors that the anonymity protected the businesspeople from the glare of public scrutiny.

In fact, the anonymous donor list also protects National from being embarrassed over the oddballs that give it money.

Labour likes to hint that Key will change tack completely once in power.

Activists' comparisons with the 1984 (Labour) and 1998 (National) governments are wrong on several scores.

A famous text by Berkeley political scientist Aaron Wildavsky, on the art and craft of policy analysis, is called Speaking Truth to Power (incidentally, a title borrowed for a University of Auckland compilation on public intellectuals). Oh that our guardians of public finances could be shining lights for doing that.

It is no wonder that almost all of the researchers in Treasury have either left or taken secondments so that they spend as little time as possible at No 1, The Terrace. What’s the point, when research is systematically ignored or distorted by politicians?

What’s the point, when senior management check which way the wind is blowing before taking a position and will even disassociate them self from research done in their own department.

Having a compliant rather than an independent, research-led Treasury is hugely costly to New Zealand. Unlike in larger countries, there are few other sources of evidence-based advice on which to set economic policy.

The Reserve Bank has independence, but its mandate covers only very narrow parts of the economic policy debate.

The universities, meant to be our critic and conscience of society, are too busy cuddling up to government because of the way that their funding independence has eroded under so-called charters and investment plans.