Deborah Coddington: Telecom inquiry raises far more questions than answers

Friday was the day we were meant to see $2 billion wiped off Telecom's share price. In Thursday's budget, Finance Minister Michael Cullen was planning to announce the Government's decision to force Telecom to unbundle the local loop but Michael Ryan, a messenger in the Department for Prime Minister and Cabinet, leaked crucial information to Telecom and forced the Government to jump the gun.

Thanks to the State Services Commission conducting its inquiry in secret, we don't really know what led to this extraordinary leak.

It's well known around Parliament that the messengers are the trustworthiest of all employees in the place. Gosh, with all the information that they're privy to, they'd bring the place to a standstill if they leaked top secret stuff only one day a week.

So why did a lowly messenger, whose behaviour was described by the Prime Minister as "gross and disgraceful dishonesty", make the decision - not once but twice - to breach confidentiality and leak the Cabinet agenda?

The terms of reference for the inquiry were alarmingly narrow. For example, was Telecom asked if it received this information from any other sources? Were the phone logs of staff in the offices of Communications Minister David Cunliffe and other ministers examined? Was there something the Prime Minister did not want to find?

But the public were not allowed to know the questions asked or answers given. We know only the conclusions, one of which was that Ryan was motivated by a "misguided sense of friendship".

Which makes you wonder whether the Prime Minister wasn't quite as upset as she appeared to be at the inquiry's result. We still don't know the extent of Telecom's relationship with the Government. Opening access to Telecom's network isn't a Budget matter; it hardly came from Treasury.

Labour sources suggest that seniors in Cabinet didn't want underling Cunliffe to take the kudos for staring down New Zealand's biggest company and saw the decision as a great chance to spice up a boring Budget.

Especially after Australian Treasurer Peter Costello delivered his tax cuts to workers across the Tasman and Kim Beazley, leader of the Australian Labor Party, said they didn't go far enough.

This conveniently reheated the tax cut cookies John Key and National had allowed to cool since New Zealand's election campaign.

And it led to some interesting exchanges in question time as Don Brash attacked Cullen over New Zealand's trailing a sad 22nd on the international scale of competitiveness, while Australia is sitting pretty at six. Cullen said the main difference is that "Australia digs itself up and exports itself to China and Japan. Unfortunately, we do not have the gas and coal supplies to do that."

That prompted Brash, not normally known for his wit, to ask if the Government's bold strategy for "clawing back the gap between after-tax incomes in Australia and New Zealand" is to wait for Australia to run out of gas and coal.

In truth, the worst thing for National would have been for Cullen to stand up on Thursday, in his day-glow tie and new bouffant hair-do, and give tax cuts to Kiwis. This was an election Budget for Labour - not just for its delivery of campaign promises - but in terms of preparing for a fourth term. Not for nothing has Cullen already signalled the review of corporate tax rates might force a lowering of income tax rates. Watch this space on Labour's election pledge cards in 2008.

Rich Kiwis who pay the top tax rate are, under Labour, anyone earning $60,000-plus - not even twice the average wage. It's true we have one of the lowest top tax rates in the world but it kicks in at the lowest threshold.

Elsewhere in the OECD, you have to earn 5.4 times the average wage before you're considered rich enough to make the high tax bracket.

But for now, we may not buy a gym membership, a mountainbike, take up golf or horse-riding to get slim because the Minister of Health wants to take $76.1 million of our money and spend it on a campaign to "fight obesity".

You can almost hear the ad agencies rubbing their hands with glee as they prepare to pitch for lucrative contracts.

Cullen looked unwell on Thursday night, perhaps because he realises that, sooner or later, he'll have to drop his stubborn refusal to lower taxes.

But his ideology is not simply fiscal prudence. It's rooted in the culture of the interventionists - ordinary folk are too stupid to make their own decisions.

We may not keep more of our wages because it will burn holes in our pockets. We might buy instead of save; choose stuff we don't need to impress people who don't care.

Instead, Nanny State will spend it for us, on things that Nanny thinks are good for us.