John Armstrong: Disappearing jobs not how Labour wants to start year

Beef jerky may be low in fat and high in protein. But short of forcefeeding the populace with the stuff, there is not much the Government can do to save the disappearing jobs of some of those workers who make it.

This was not quite how Labour planned to kick off the political year - digesting job losses at its first Cabinet meeting .

However, the wiping of 102 jobs at Jack Links beef jerky plant in Mangere, along with a rash of redundancies elsewhere, the squealing over the high dollar and the slump in business confidence has suddenly thrust the long dormant debate about economic policy to the top of the political agenda.

And it is likely to stay there. Given the economy has long been forecast to slow, Labour anticipated that would happen. The party's "new agenda of economic transformation" was the first thing the Prime Minister raised when interviewed by the Herald last week following her return from her overseas holiday.

But Labour's worry will be that things may be deteriorating faster than predicted - the doom and gloom increasing the opportunities for National to redefine the debate about economic direction on its terms. To make things worse, the loss of jobs at the beef jerky plant is embarrassing because it was a shining example of the capacity of Jim Anderton's "jobs machine" to lure foreign investors to set up shop in New Zealand. It was almost as if Helen Clark could foresee this week's headlines when she identified "moving the New Zealand economy upmarket" as the critical issue for Labour's third term in power.

The search for fresh ideas to power her "new agenda" has seen front-bench ministers brainstorming with chief executives of Government departments.

While this exercise has yet to bear fruit, it may be more important at the moment that Labour is seen to be at least doing something.

At stake is Labour's hard-won credibility as a safe pair of hands when it comes to economic management - a reputation it was not prepared to endanger last year by joining the rush to slash taxes.

Setting the pattern for this year, Finance Minister Michael Cullen and his National counterpart John Key are already locked in war by press statement, with National pointing to the job losses as evidence of Labour's squandering of the "golden years" of economic growth to make New Zealand businesses truly competitive.

In fact, Helen Clark's talk of economic transformation is an extension of Labour's longrunning "growth and innovation strategy" which began with a hiss and a roar, but has lost political momentum partly because, as Clark freely admits, the strategy was "not well communicated".

That did not matter when the economy was charging ahead at full steam. It does now - and Clark is indicating far more effort will be put into selling what Labour hopes will be a new and "unique model" of economic development such that people will say "Yes, that's the way to do it".

Meanwhile, National has launched a two-pronged attack. It is using the beef jerky plant's difficulties as a reason why it is better to have lower taxes for all than "corporate welfare" for a few in the form of handouts to foreign investors. At the same time, it is blaming Dr Cullen for expanding Government spending and driving up interest rates which, in turn, have made the exchange rate uncompetitive.

Given the Reserve Bank is responsible for shifts in interest rates, the arguing is somewhat irrelevant. But that will not stop it. Someone must be to blame for the high dollar and resulting job losses. National's task is to pin as much of that blame as it possibly can on Labour.