KEY POINTS:
Listen up now, Prime Minister - you have a big role to play to ensure Alan Bollard's price-cutting bandwagon gets some traction.
The Reserve Bank Governor's jaw-boning to errant Kiwi companies to get prices down will go nowhere unless your Government quickly comes off the sidelines and pays due homage to the "monetary policy needs mates" mantra.
Bollard sure ruffled some powerful feathers with his clarion call to Kiwi firms to play their "proper part" in New Zealand's recovery. But he let your Government off the hook by not making it absolutely clear that the State, as the major employer in this country and owner of a swag of commercial enterprises, should take the lead by exercising wage and price restraint itself..
The central bank Governor's warning that some businesses could jeopardise the economic recovery if they don't restrain their price hiking instincts is long overdue.
The central bank has been cutting interest rates at a phenomenal rate, but inflationary pressures will put a brake on Bollard's monetary easing programme unless restraint is applied soon in some critical sectors.
If this occurs you will face more demands on your Government to up its planned fiscal stimulus to globally comparative levels to try and resuscitate the economy. Bad call.
It's worth repeating Bollard's jaw-boning in case it escaped your attention:
"We would hope that the electricity industry does not take advantage of its market position and keep increasing rates, that local authorities realise they need to set rates increases below inflation for a change, that the construction materials industry respond to much weaker demand, that the food industry react to lower international commodity prices with price cuts, that petrol companies keep cutting forecourt prices, that the transport industry pass on fuel price cuts, and that the banks pass on interest rate cuts."
Right now the business community is thumbing its collective noses at Bollard. You've read the self-interested whinges questioning his "full understanding of the oil industry", the need for power companies to "perform as a business" to ensure security of supply, the claim that the food industry is "highly competitive", and that banks' abilities to fully pass on the Reserve Bank's interest rate cuts to their customers is still subject to the vagaries of the global credit crunch. In other words: "Get stuffed, Governor."
But you could quickly put an end to these collective vapours if your Cabinet kicked off the price-consciousness drive.
First, show a lead by putting a brake on the recent pay hike for your Ministers - or better still take a major pay cut - then issue a direction to freeze the pay of top public servants until they get state spending well on the downward path.
If you think this is harsh, take a look at what's going on in your old industry - the finance sector. While you are at it, pick up the phone and call all those CEOs preparing staff for "the departure door" to take a major (and public) pay cut of their own to show they are sharing the pain. Nothing angers staff more than the notion (fair or otherwise) that axe-wielding executives are being bonused on the amount of cash they are saving shareholders.
Second, direct all companies under state ownership (either directly or indirectly) to stop profiteering at consumers' expense and get prices down. The state owns three of the four major power generators: Meridian Energy, Mighty River Power and Genesis Energy.
It is a simple matter to issue a shareholding directive to the boards of these State-Owned Enterprises to freeze price increases or drop them.
I can hear you say prices will go up anyway when the emissions trading scheme comes into force. But your basic message here is that you will funnel the expected windfall to fund green measures such as insulating our cold homes, not make another State tax grab.
Third, threaten all local authorities that your Government will force any council that doesn't keep rate increases under inflation to be merged with a more efficient neighbour. Fourth, welcome Chinese construction firms to join the bidding way for the Government's planned new infrastructure programme and watch how quickly the Kiwis get competitive.
While you are at it don't simply waste our money by using taxpapers' funds to build bridges to nowhere. Direct funds to ventures that will help New Zealand's transition to a greener economy.
Fifth, tell Fonterra a pollution tax is on the way. You will not tolerate the company bilking local customers for cheese and milk while their errant farmers continue to stiff the taxpayer for the dirty rivers clean-up bill.
Sixth, use the Government's purchasing power to get transport fuel prices down. Seventh, tell the banks their Government guarantees will go west if they don't pass on Bollard's interest rate cuts to mortgage customers.
Prime Minister, your Government has been under fire this week for ramming through legislation without subjecting new laws to full parliamentary select committee scrutiny. Frankly, you missed the boat.
If you want to play tough, better to take on the big boys and get them into line. You'll win far more friends than slashing workers' rights.