Brash in line for top National role

By VERNON SMALL deputy political editor

Former Reserve Bank Governor Don Brash is likely to become National's finance spokesman after the election and is seen as front runner to become finance minister in a future National government.

Dr Brash ended 14 years as governor of the central bank yesterday, saying he had accepted an invitation from National Party president Michelle Boag to stand for Parliament. Market reaction was muted.

National leader Bill English said finance spokesman David Carter would keep his job until the election, but the party would use Dr Brash's talents "where appropriate".

"Dave Carter's the spokesman. He's doing a good job. That's how it will be," he said.

Asked if that would apply after the election, he said he would make that decision at the time.

But he agreed Dr Brash had the potential to be finance minister.

He had a good grip on the economy and would be a member of the "finance team" during the campaign. But he had switched to politics to "spread his wings" in other policy areas as well.

Commentators are already predicting that Dr Brash will eventually displace Mr Carter.

Bank of New Zealand economist Stephen Toplis said National had felt there had been a gap since Bill English gave up the finance role.

"Now the hole has been filled," he said. "While Brash is unlikely to take a portfolio before the election, he must be considered a dead cert to take on a finance spokesmanship after the election."

Dr Brash is paid $496,500 a year as governor. He will make $95,100 as a backbencher.

He said yesterday that he had been approached to stand by four political parties over the years.

Ms Boag asked him a few days ago, indicating he had a good prospect of a "reasonable" place on National's list. She had given no guarantees.

Dr Brash then talked to Mr English and told National he would accept shortly before making his resignation known to Finance Minister Michael Cullen at 8.45am yesterday.

Government sources criticised him for giving National Party leaders such market-sensitive information.

"It would have been more appropriate to tell Dr Cullen and the markets before telling insiders in National," one said.

But Mr English said Dr Brash was one of the most scrupulous people in public life.

"You are talking about a matter of maybe hours, maybe minutes," he said. "There is no doubt about Dr Brash's integrity and proper behaviour."

Dr Brash said his decision to quit was not motivated by public attacks on the bank's recent interest rate rises, nor by any tension between him and Dr Cullen.

He had opted to be a list-only candidate because it was too late in the day to secure an electorate place.

He was in "for the long haul", not just for this election.

Dr Cullen praised Dr Brash's contribution to price stability.

"Assuming Dr Brash is sufficiently highly placed on the National list to make the cut, I look forward to facing him across the House," the minister said.

Dr Brash's contract was due to end next year, and it was generally accepted that he would not seek another term.

A spokesman for Dr Cullen said the Government was "amused" that Ms Boag saw the recruiting of Dr Brash, 61, as an example of the "successful rejuvenation of the party".

New Zealand First leader Winston Peters said Dr Brash had "come back out of the closet" and had always been National.

He had advocated "failed monetary policies that have seen New Zealand's position in the world continue to decline".

Act leader Richard Prebble said Dr Brash was one of the world's most respected central bankers.

"His resignation is a vote of no-confidence in the economic direction taken by the Labour/Alliance Government."

Dr Brash, who was appointed by Labour in September 1988, stood unsuccessfully for National in a byelection in East Coast Bays in 1980, and again at the 1981 general election.

He was beaten both times by Social Credit's Garry Knapp.

Dr Brash said he chose to re-enter politics because he believed the country's most important challenge was to lift economic growth and he wanted to make a wider contribution than just monetary policy.

"If we don't get growth, then none of the other things we want will be achieved or sustained," he said.

But Dr Brash would not be drawn on his view of previous finance ministers, the present Government's policies, or specifics such as the launching of Kiwibank.

He was generally comfortable with National's economic policy, announced on Monday, but had no input into it and did not know all its details.

He hoped National would win the election, and thought its chances were "reasonable".

As well as economics, Dr Brash said he was keenly interested in education.

The Government needed to get more people into work, address "soul-destroying" welfare, attack crime and abuse, and deal with growing divisiveness over the way Treaty of Waitangi issues were approached.

Reducing taxes could spur economic growth if the cuts were properly structured.

National has announced plans to cut the top personal rate and the company rate.

Dr Brash said his recent decisions to lift interest rates had not been political. But the Government is understood to be disappointed with his view of the country's long-term sustainable growth rate, which makes it hard for the Government to reach its 4 per cent target without Dr Brash lifting rates to curb inflation.

Deputy Governor Rod Carr will be acting governor until Dr Cullen appoints a successor on the recommendation of the Reserve Bank's board.

Dr Cullen said he did not expect to change the Reserve Bank Act or the policy targets agreement, which requires the bank to keep inflation between 0 and 3 per cent.