Fran O'Sullivan: Crisis calls for war Cabinet

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The collapse of the New Zealand dollar has burst the air of surrealism clouding the election campaign.

At issue now is not just who wins the election but whether they have the brains, know-how and sheer chutzpah to avoid a full-on currency crisis.

The NZ dollar is already worth 40 per cent less than its peak value in US currency just months ago. The "smart money" got out when the dollar was peaking around the US80c mark.

Now that AXA and other funds are freezing redemptions - while the Reserve Bank and Treasury try to come up with a Government guarantee scheme to keep financial pipelines open - the crisis has entered a new phase.

The upshot is there will be huge pressures on the next Government. Looking over the political candidates, my judgment is that neither main party has sufficient high-quality, financially-numerate MPs to form the "wartime style" Cabinet which will be necessary to steer New Zealand through a lengthy period of instability.

The logical answer is for National and Labour to form a grand coalition in the country's interest instead of flaying about trying to meet the unreal demands of minor parties.

There are stellar players in the senior ranks of both parties: Labour has Helen Clark (unparalleled experience at the international political level), Michael Cullen (he is managing the vital shift to a saving culture), Phil Goff (good foreign affairs and trade track record) and David Cunliffe (former investment banker).

National has John Key (former international markets manager), Bill English (former Finance Minister and Treasurer), Tim Groser (former WTO negotiator) and Chris Finlayson (legal brain).

If those eight people formed a high-level bipartisan attack team to drive a response to the international financial crisis - rather than tear each other apart while the economy worsens - they would quickly find they had more points of agreement than is obvious on the campaign trail.

If that is just too hard a task for the politicians to consider in the heat of an election campaign, the least they could do is start thinking about appointing an independent Council of Economic Advisers to champion NZ's real interests after a post-election Government is formed.

The Scottish Government did just that last year by appointing 11 people from the senior ranks of business and economics to a council which is claimed to sport "the most formidable intellectual firepower ever to have tackled Scottish economic underperformance".

This is a smart way of making sure the best brains are applied to major national issues - not just current officials and politicians.

An NZ Council of Economic Advisers could draw on:

* Graham Scott: Former NZ Treasury secretary now advising a multitude of countries on government management.

* Don Brash: Former Reserve Bank Governor who ran the central bank during the DFC and BNZ bailouts and the Asian financial crisis.

* Sandy Maier: Former Citigroup boss, led negotiations with Japanese creditors to DFC and organised the wind down.

* Roderick Deane: Deputy Reserve Bank Governor during the 1984 currency crisis and subsequently chair of several major NZ companies.

* John (J. T.) Macfarlane - former boss of Deutsche Bank (Japan) now chairing the Australasian operations.

Between them this quintet would bring enormous experience and insight to the issues currently facing the New Zealand financial system. They have already been crisis hardened through their own experiences.

By calling on them to (again) serve their countries, the future Government could draw on their perspectives and their contacts in the international financial world.

There are plenty of stellar players on the trading front who could amplify NZ's trade diplomacy - former WTO Director-General Mike Moore for starters, who should be put to work instead of staying on the sidelines firing potshots at political successors.

Former Ministry of Foreign Affairs trade diplomats such as Phil Turner (Fonterra), Stephen Jacobi (NZ-US Council) and Charles Finny (Wellington Chamber of Commerce) - all of whom are active in 'track two' diplomacy - could be deputed to assist the drive to keep markets open in a protectionist environment.

Then there is Julian Robertson, the engaging chief of New York's Tiger Fund - who predicted the current crisis way back.

Robertson is passionate about NZ, spends time here and would be honoured to be asked.

By bringing such people together with the top politicians and senior officials, New Zealand would be sending the world a message it was serious about tackling its structural issues, rather than continuing on a path that could lead to this country becoming a basket-case.

- NZ Herald

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