KEY POINTS:
The two men vying to be Finance Minister through looming hard times confronted each other at breakfast yesterday but neither really emerged a clear winner in one of their last campaign battles.
Finance Minister Michael Cullen and National's Bill English both strongly defended their policy plans before a business audience at the Herald's Mood of the Boardroom breakfast and it was an analytical Dr Cullen who took on the bosses.
"This is no time for the financial top end of town to be giving one-sided lectures to governments around the world," Dr Cullen said after the results of the Mood of the Boardroom survey strongly favoured National.
"At a time when the Gordon Gekkos of the world are being propped up and often taken over by the Gordon Browns of the world ... " Dr Cullen added pointedly.
With business confidence plunging and politicians becoming resigned to the fact that the post-election period will be very hard to financially manage, the election campaign has taken on a surreal feel in the past fortnight.
Dr Cullen said the retail deposit guarantee scheme announced at Labour's campaign launch was the second worst option available to him because he did not like such guarantees.
"Guarantee schemes are fraught with moral hazard, they are fraught with perverse outcomes at the margins," he said.
"What we've done is the second worst option - the worst option was to have done nothing and seen the potential for a run on retail deposits in New Zealand."
He revealed that a scheme for wholesale deposits is almost complete and is likely to lead to an additional liability in the order of $150 billion. With the retail deposit scheme, that made the overall liability twice the country's gross domestic product.
Mr English opened his speech with a very political attack on the leadership of the Labour Party.
"If you wanted an indication of whether the current Government is qualified to manage the financial crisis, just look at the front page of the New Zealand Herald today," he said, in reference to a story about Labour trying to link National leader John Key to a 20-year-old white collar crime.
"When you thought the leadership of this country was considering what was needed to get New Zealand through a recession and get the economy rolling again, what they've been doing is hatching a dirty little plot."
Mr English and Dr Cullen both appeared to concede that after the election, whoever won government would likely discover that the fiscal outlook was worse than they had seen in the pre-election update.
Dr Cullen is planning a December mini-Budget and has not yet said what will be in it. Mr English said that if National found the books were worse then his party was unlikely to move away from the plan it already had.
Mr English found himself defending National's policy to have 40 per cent of the New Zealand Superannuation Fund invested locally, and in taking a swipe at it Dr Cullen also indirectly criticised Labour's ally, the Greens.
"I'm sure the Greens would like to be able to use the super fund to direct investment into areas which are probably, not to be too unkind, a relatively lower rate of economic return," he said.
