VZCZCXRO2392
RR RUEHNZ
DE RUEHWL #0809/01 3130453
ZNR UUUUU ZZH
R 090453Z NOV 07
FM AMEMBASSY WELLINGTON
TO RUEHC/SECSTATE WASHDC 4883
INFO RUEHNZ/AMCONSUL AUCKLAND 1543
RUEHBY/AMEMBASSY CANBERRA 5032
RUEHDN/AMCONSUL SYDNEY 0604
RHHMUNA/CDR USPACOM HONOLULU HI

UNCLAS SECTION 01 OF 02 WELLINGTON 000809 
 
SIPDIS 
 
SIPDIS 
SENSITIVE 
 
STATE FOR STATE FOR EAP/ANP 
PACOM FOR J01E/J2/J233/J5/SJFHQ 
 
E.O. 12958: N/A 
TAGS: PGOV PHUM NZ
SUBJECT: PM CLARK PROMISES TAX CUTS, CLIMATE CHANGE LEADERSHIP, AND 
CONTINUATION OF INDEPENDENT FOREIGN POLICY 
 
¶1. (SBU) Summary.  During the November 2-4 ruling Labour Party 
annual conference, PM Helen Clark's keynote speech emphasized 
sustainability and Clark's determination that New Zealand will be a 
leader, not a follower, in the climate change arena.  She promised 
tax cuts at the next budget ahead of the 2008 election.  In a thinly 
veiled swipe at the U.S., Clark warned that New Zealand's 
independent foreign policy would become a dependent policy under a 
National Government.  The media and the opposition National Party 
expressed skepticism as to whether meaningful tax cuts will be 
delivered and openly questioned Clark's integrity on the matter. 
The conference was also marred by loud protests by opponents of the 
recent police terror raids.  End Summary. 
 
Labour Hoping for Boost in Polls 
-------------------------------- 
 
¶2. (SBU) Emboffs attended the ruling Labour Party's annual 
conference in Takapuna, Auckland, November 2-4, 2007. Labour Party 
MPs and delegates met to discuss policy and party strategy in the 
lead-up to next year's election and hear speeches from party leaders 
and invited guests.  The mood of the delegates was generally upbeat 
despite the Labour Party trending 10 points behind the National 
Party in the latest political polling and recent unfavorable press 
over a ho-hum cabinet re-shuffle and senior cabinet minister Trevor 
Mallard's scuffle with a National MP. 
 
Sustainability:  Clark's Vision for New Zealand 
--------------------------------------------- -- 
 
¶3. (SBU)  Clark's keynote speech outlined Labour's vision for New 
Zealand beyond the next election.  While Clark talked about the core 
Labour Party values of social justice and fairness, she framed her 
speech within three broad and interlinked themes:  sustainability; 
national identity, and economic transformation.  A key pillar of the 
speech was the government's emerging climate change platform.  Clark 
linked it to all three themes and asserted that going forward being 
the world's first carbon neutral country, sustainable and green will 
forever be part of New Zealand's national identity.  Furthermore, 
being green will inevitably lead to economic transformation as more 
home-grown businesses develop eco-friendly products and more New 
Zealanders save money on lower power bills and minimize waste. 
 
New Zealand to be Green Leader, Not Follower 
-------------------------------------------- 
 
¶4. (SBU) Clark also maintained that New Zealand should aim to be 
global leaders in climate change and sustainability efforts.  Using 
New Zealand's history of being a world leader in suffrage for women, 
social security, workers' rights and being nuclear free as examples, 
Clark asserted that New Zealand should similarly strive to be world 
leaders as a truly sustainable and carbon neutral nation.  She 
indirectly disputed criticism from the New Zealand Institute, a 
leading New Zealand economic think-tank, that New Zealand risked 
damaging its international economic competitiveness if it got too 
far ahead of the rest of the developed world on climate change.  The 
NZI instead recommended that New Zealand be a climate change 
"fast-follower," moving along with, or even a bit behind, other OECD 
economies' environmental efforts, rather than leading. 
 
¶5.  (SBU) Clark's remarks during a small reception for members of 
the diplomatic corps observing the conference were also heavily 
focused on climate change, rather than on social or economic issues. 
 During that reception, her criticism of the NZI was much more 
direct.  In surprisingly strong terms, she discounted NZI chief 
executive David Skilling's "fast follower" argument, displaying 
clear sensitivity to any criticism of what she may well consider her 
most important political legacy. 
 
Tax Cuts Confirmed for Pre-election Budget 
------------------------------------------ 
 
¶6. (SBU) Clark also confirmed that the next budget will produce 
long-awaited tax cuts.  Since taking office in 1999, the Labour 
government has been extremely reluctant to cut personal tax rates, 
despite years of large budget surpluses.  This has cost Labour over 
the years as it subsequently found itself repeatedly accused of 
overtaxing New Zealanders.  The National Party, whose policy of 
broad personal tax cuts is extremely popular with voters, and many 
political commentators have repeatedly poured scorn on Clark and, in 
particular, her Finance Minister, Dr. Michael Cullen, for what they 
regard as unwarranted parsimony. Ironically, Clark's tax cut 
announcement at the conference  was greeted with warm applause by 
the attending party delegates, most of who were from left-wing 
backgrounds, mostly out of relief that this longstanding political 
issue and vulnerability will be addressed before the next election. 
 
WELLINGTON 00000809  002 OF 002 
 
 
Throughout her conference speech she derided National as a 
"one-trick pony," that its only policy is tax cuts - and that Labour 
will be the party that delivers those cuts. 
 
¶7.  (SBU) Clark credited DPM Michael Cullen for providing the 
economic policies that have produced the surpluses to underwrite any 
tax cuts, and claimed that formal advice characterizing the 
surpluses as "one-offs" had been too conservative.  She noted that 
had Labour been provided correct advice earlier, the tax cuts 
promised now would have come earlier.  National and other media 
analysts have dug deeply into their files and pulled quotes from as 
early as 2000 to illustrate that Clark's remarks do not match 
historical record.  When Parliament reconvened on November 6, 
National Party leader John Key confronted Clark with some of her own 
words - which characterized tax cuts in earlier years as the 
"promises of visionless and intellectually bankrupt people." 
 
Terror Raid Protest Mars Conference 
----------------------------------- 
 
¶8. (SBU) The conference was marred by a number of protestors voicing 
opposition to the recent police terror raids.  The protesters were 
confined to a small area outside of the conference venue, but were 
nonetheless very vocal and received wide media coverage.  (Note:  In 
full view of the media, one protester was struck on the head by a 
visiting Labour Party delegate and trade union leader as heated 
words were exchanged outside of the venue.  End Note).  Clark made 
only a brief reference in her conference address to the terror 
raids.  The ongoing investigation restricted how much she could say 
on the subject, and she limited her remarks to defending the police 
and calling for ethnic tolerance. 
 
New Zealand's Independent Foreign Policy in Danger 
--------------------------------------------- ----- 
 
¶9. (SBU) Clark briefly discussed foreign policy; she focused on New 
Zealand's Pacific neighborhood as well as its proud peacekeeping 
record.  She did not elaborate during her reception for diplomats, 
instead concentrating on her climate change legacy.  Also, both at 
the end of her speech and during the diplomats' reception, she made 
a point of defending Trevor Mallard, the minister who took a swing 
at an opposition MP just off the floor of parliament.  While 
sensitive to suggestions that she let Mallard off with a slap on the 
wrist, Clark has continued to defend the embattled MP as someone who 
has contributed much to the Party over the years. 
 
¶10. (SBU)  More significantly, Clark warned Labour delegates that 
New Zealand's independent foreign policy would become a dependent 
foreign policy under a National government.  While unable to accuse 
National of intending to roll back New Zealand's anti-nuclear 
legislation (as National's foreign policy paper explicitly says the 
legislation will remain untouched under National), Clark 
nevertheless tried to tar the National Party as beholden to foreign 
(i.e., U.S.) interests. 
 
Comment 
------- 
 
¶11. (SBU)  Since the convention, the skepticism leveled at Clark's 
tax cut declaration by political opponents, the media and the public 
has completely overshadowed Clark's lofty vision of New Zealand's 
environmental future as a climate change leader.  Repeated cycles of 
budget surpluses followed by qualified refusals by Cullen to 
significantly lower the tax burden has left many Kiwi middle class 
taxpayers embittered.  Even when Cullen did adjust the tax brackets, 
the adjustments proved so minor as to further irritate the public. 
As a result, the public regards Labour as a tax tease.  Many New 
Zealanders do not believe that they will receive any meaningful tax 
relief at the next budget, even if it comes in an election year. 
The mistrust was strengthened by a comment made by Cullen preceding 
Clark's announcement, when Cullen downplayed expectations and 
cautioned that any tax relief is likely to be small. 
 
¶12. (SBU)  Comment continued:  The next major polls will come at the 
end of November, at which point we will see if the Labour Party gets 
the much-needed bounce in the polls that it hopes with the tax cut 
announcement.  End Comment. 
 
McCormick