KEY POINTS:
The phony election war has claimed its first casualty with the resignation of State Services Commissioner Mark Prebble timed to take effect on June 30, one year before the end of his five-year contract.
Prebble's resignation, predicted in my top-10 stories for 2008, has been presented as for the good of the commission, clearing the way for his successor to bring fresh ideas and fresh energy to the job.
The commissioner says his decision to step down results from a series of minor health issues which had affected his own work rate.
Prebble is renowned for the prodigious energy he has brought to the senior roles he has performed within the public service.
But the report his deputy issued just before Christmas, on Cabinet Minister David Parker's decision to promote a Labour Party activist as key departmental spin-doctor on the Government's climate change programme, made Prebble a lame duck. He would have been the subject of sustained political attack by National in Parliament for issuing an obvious whitewash when Parker's actions had crossed the political interference line.
The Government's decision to issue a bare bones statement thanking Prebble for his service under the name of the mid-ranked Parker speaks volumes. Parker is also State Services Minister.
But the commissioner is appointed by the Governor-General on the Prime Minister's recommendation.
Helen Clark may have been able to persuade Prebble, who after all is also a former head of her own department, to serve out his full term if she had felt his continuance was integral to the smooth running of the public service.
But Clark and her key strategist Heather Simpson would have marked Prebble down as a risk factor.
The timing of the State Services Commissioner's resignation following on from the pre-Christmas apology by Cabinet Minister Trevor Mallard for slagging off the reputation of contractor Erin Leigh, clears the decks so that Clark's plans to run a relentlessly positive agenda into the election cannot be easily upset.
Not so easily swept from the political chessboard is the impact on New Zealand of the shocks affecting the United States and other international markets.
Both Clark and Finance Minister Michael Cullen have endeavoured to position the New Zealand economy as resilient and hopefully immune from the factors that are affecting the US: high indebtedness, the sub-prime mortgage market fallout, massive trade and balance of payments deficits.
But there is an element of wishful thinking and outright spin at work.
Yes, New Zealand's Crown accounts are in good shape as Cullen boasts - unlike the US Government which has a huge debt exposure.
But this is offset by the big exposure on the private debt side. How long will it be before the 100 per cent mortgages trading banks are now offering to first homeowners turn out to be sub-prime? A housing market correction will put such homeowners into a negative equity position.
But instead of taking corrective action now to bolster New Zealand's position, Cullen expects us to take comfort from his assurance that the Government is now in a position to respond to any undue weakening in the economic outlook in the event that that is judged appropriate.
Clark says the Government's response won't be to cut superannuation as National did at the time of the East Asia Crisis (the situations are not directly analogous).
But instead of politicking over such a serious issue, it would be helpful to know if Cullen and Clark do have a plan. Would they use government funds to shore up the risk to mortgage-holders if a credit crunch sends interest rates spiralling?
Would they remove GST from food and petrol to ease pressure on over-stretched household budgets? Would they make a one-off tax cut such as a special dividend from the Budget surplus that had enabled the Government to reduce its own debt at the expense of taxpayers' ability to do the same on their own accounts?
Would they bring the Budget and tax cuts programme forward? These may not be the answers but given the risks that Reserve Bank Governor Alan Bollard has now identified, it would be reassuring to know the Government has asked the Treasury to explore options.
Bollard yesterday pointed to demand and cost side risks to the operation of monetary policy: the oil price surge, the commodity boom, the synchronised global housing boom, the shock to personal consumption from the run down in household savings across the advanced economies, and efforts to mitigate the risks of climate change.
Bollard's message, judged important enough to issue in a separate paper, was a sobering one.
It demands a sober response from Government.
