By VERNON SMALL Deputy political editor
One a penny, two a penny, hot cross Cullen.
Finance Minister Michael Cullen is nobody's bunny, so it is easy to imagine his mood as he was faced with the prospect of Jim Anderton, as Acting Prime Minister, slagging off the Reserve Bank for lifting interest rates.
He was hopping mad, and very keen to protect his portfolio's turf.
So it was that on Wednesday morning (after overnight contact between Cullen and his associate, Trevor Mallard) a lightning-fast "no comment" was issued on behalf of the Government in response to the bank's anti-inflation move.
Anderton wisely took the hint and stayed mum.
For Cullen, the thought of Anderton renewing his criticisms of the Reserve Bank must have been a nightmare.
On a whistle-stop tour of Hong Kong, Japan and New York schmoozing investors and rating agencies (and getting a strong message about the importance of the bank's independent anti-inflation stance), Cullen had to contemplate those same people reading about Anderton strong-arming Don Brash only hours after listening to his soothing presentations.
Hence the rapid deployment of "acting finance minister" Mallard.
On the record, Cullen was all calm understanding.
"If Anderton wants to express views, he is perfectly welcome to do so. I understand his need to brand himself in terms of being the minority partner within the coalition," he said on Tuesday after Anderton's "warning" to the bank of the harmful effects of a 25-point rate rise to 6 per cent.
But while Anderton's silence after the bank's move was a boon for Coalition unity, the Anderton and Alliance agenda will linger and strengthen.
Through the static, Anderton's positive view of the new policy targets agreement, which Brash and Cullen signed before Christmas, was barely heard.
But he was right behind the agreement. He predicted (wrongly) that on Wednesday we would see "the first signs of the constructive contribution that change will make to economic development."
An interest rate rise, he had said, would reduce employment and slow urgently needed economic growth.
But if he can live with the policy targets agreement, then by implication he cannot accept Brash's implementation of it.
To Anderton, increasing interest rates would create unnecessary volatility in the currency and growth - things which the bank must seek to avoid under the agreement.
So if the bank makes a move that is "unwise" in Anderton's eyes - as it did - then either the agreement is wrong or Dr Brash erred.
That explains why on Wednesday Anderton was happy to point to Cullen's earlier statement that the Governor, while independent, was accountable for the consequences of his decisions.
The upshot of all this would not be a clash between Brash and Anderton, as some media were forecasting, although that may be a symptom of the problem.
More fundamentally, Anderton and Cullen are on a collision course over Brash's competence, his interpretation of the policy targets agreement or, in the absence of accord on either of those, the policy targets agreement itself.
That is potentially more politically and economically destabilising than fleeting market perceptions that Anderton may undermine the bank's independence with his comments, or the completely unsurprising news that he had been "ignored" by the bank.
Cullen himself has no real problem in principle with criticising the Reserve Bank. He said as much in January, when he questioned its timing and forecasting after it raised rates immediately before Statistics NZ released a benign inflation number.
But he is clearly reassessing the wisdom of too-frequent public criticisms after adverse overseas reaction to his comments in January.
As long as the bank hangs tough against political interference, there is no danger of long-term international confidence in the New Zealand economic story being eroded.
(In that context, Act leader Richard Prebble's claim that Anderton's comments would make the bank more likely to raise rates to avoid the perception of political interference is off the wall. If the bank is independent it is surely independent of silly overreactions against - as well as in line with - politicians' jawboning.)
The possibility of a bust-up between Cullen and Anderton over the Reserve Bank might sound like a convoluted way to build a theory of potential divisions within the coalition.
But consider the Alliance's dilemma.
Buried in a coalition and struggling for an independent profile, it is barely holding its head above the 5 per cent water line in recent opinion polls.
One of its main "selling points" to its own constituency and to the left of Labour was its ability to keep Labour "honest."
That message is losing its potency as Labour remains transparently "honest," fulfilling the limited promises on Helen Clark's pledge card, under-promising and over-delivering.
If it can't sell a role as Coalition policeman to voters, the Alliance needs to rebuild its message, refocusing on the principles at the core of what it means to be "Alliance."
Along with opposition to asset sales, nothing has been more fundamental to the Alliance than a deep suspicion of the Reserve Bank Act's impact on the economy.
It is the icon of the new right agenda which Anderton and his backers so completely condemn.
As part of the party's rebuilding strategy, Alliance strong man Matt McCarten is planning to move his office to Auckland to put greater distance between the party proper and the compromises and collective responsibility of the Coalition cabinet in Wellington.
He says that will give him and the party the increased "space" it needs to rebrand and rebuild.
If Anderton's future attacks on the bank and its handling of monetary policy are muted, there will be a ready-made alternative stream of criticism from the north, this time to keep the Alliance "honest."
Easy target Anderton can't pot
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