KEY POINTS:
Sooner or later Michael Cullen will have to stop hiding behind Alan Bollard.
For the last few years, any suggestion that the Government might cut taxes or dip into its surplus has been met with the same excuse from the Finance Minister - that an increase in spending will stimulate the economy and force the Reserve Bank to raise rates again.
But this raises the question of who actually runs the country: the Minister of Finance or the Governor of the Reserve Bank?
If Cullen and the Government see a policy they believe will benefit New Zealand, they should implement it.
If they believe, say, that tax breaks to encourage investment or employment will help lift New Zealand's productivity and prosperity in the future, they should cut taxes.
Or if a big spend-up on infrastructure will deliver essential services down the track, then they should spend up.
That's Cullen's job.
What's not his job is to make Bollard's job easier.
It is Cullen's responsibility to set fiscal policy and Bollard's job to respond to it - just as he'd respond to other factors beyond his control such as high oil prices or booming global commodity prices.
Bollard has been lucky that the Government has been running a tight fiscal policy for the past six years - that is, helping to cool the economy by taking more money out than it was putting back through spending or tax cuts.
But Treasury has forecast that increased Government spending on health, education and transport will stimulate the economy over the next three years.
Unfortunately, that's just bad luck for Bollard.
Even more stimulus will be provided by the $1 billion tax package due to be implemented from April next year. Details won't be revealed until the Budget, but the Reserve Bank can see the long-term benefits of business-tax reform, stating in this week's Monetary Policy Statement that the business-tax package "is likely to stimulate corporate investment by reducing the effective after-tax cost of capital".
"In the long-term, this should increase the sustainable level of production within New Zealand, but in the short-term it may put further pressure on resources".
Cullen acknowledged this week that this "it will upset Alan" excuse has a use-by date.
"The Government can't be expected to continue to run ever-higher levels of surplus in order to underpin monetary policy. There comes a point where that becomes politically unsustainable," he told the Business Herald.
That misses the point that the Government shouldn't be trying to underpin monetary policy in the first place.
Chicken and Pizza
Restaurant Brands must be feeling particularly unloved and unwanted at the moment - and so it should be.
The fast food franchise yesterday dropped out of the NZSX-50 index and this week said it's still looking for a buyer despite having been effectively up for sale for the past couple of years.
Restaurant Brands began life as a listed company in June 1997, when it issued 85 million shares at $2.20 each.
From the outset its performance was disappointing. In its first year it missed its sales targets by a mile - selling $206 million worth of chicken and pizza in its 1998 financial year against the $255 million forecast in the prospectus. Net profit came in at $8 million, compared with the prospectus forecast of $14 million.
The shares haven't done much better. After hitting a high of $2.44 a few days after listing, they've never regained their listing price and were sitting at $1.08 yesterday.
Nothing seems to go right for this company. Now that the refurbishment of its KFC stores has succeeded in turning around its chicken franchise from its sales drop two or three years ago, it's in trouble on the pizza front.
Pizza Hut saw declining same-store sales in 2006, and as Domino's maintains its aggressive pricing and Hell Pizza teams up with Burger King in New Zealand, the market will if anything get tougher this year.
In the year just finished, Restaurant Brands expects a net profit "before non-trading items" of a bit over $6 million - way less than half what it was expecting in its prospectus more than a decade ago.
Hindsight makes the $1.65-a-share takeover that private equity fund CVC Asia proposed in June 2005 look very attractive.
That deal fell over after CVC and Yum - the US owner of Pizza Hut and KFC - failed to reach agreement on extending the franchise.
In September last year Restaurant Brands and Yum signed a new 10-year franchise agreement which should have provided enough certainty to allow someone to take it over.
As a listed company, Restaurant Brands has been a disaster. The sooner it disappears from the stock market, the better.
* Christopher Niesche is business editor of the Herald.
