One in the eye for the doom merchants

Michael Cullen with two apprentices, Matthew Ross and Emma Rees - and no dipstick. Picture / Wairarapa Times-Age

Finance Minister Michael Cullen is famously smart. Visiting a garage in Masterton for a photo opportunity this week, he refuses a local photographer's request to pull out the dipstick of the big black Holden diesel Rodeo he is inspecting with two apprentices.

He is too suspicious of headline writers to fall for that one and jokingly forbids reporters even to mention it.

Dr Cullen's visit to the Wairarapa on Thursday in the parliamentary recess is part of his ongoing campaign to counter the "doomsayers".

His campaign was delivered a gift in Sam Morgan's $700 million sale of Trade Me online auction house and naturally seized upon it.

"Forget the [negative] surveys - this is business confidence," he trumpeted on Monday, after hearing of the sale to Australian media group Fairfax.

On Tuesday it was "a stunning vote of confidence in the fundamental strength of the New Zealand economy".

By the time he got to the Wairarapa, the message was more Cullenesque: "That should make the doomsayers return to their dark caves," he told a business breakfast in Masterton.

And: "Rome is not burning and we are not fiddling."

So thrilled was Dr Cullen by the sale that he spoke affectionately about arch-critic economist Gareth Morgan, Sam's father, predicting that the motorcycle enthusiast would be investing in an expensive new machine from the cool $47 million he had made from investing in his son's business.

What's more, Dr Morgan agrees with Dr Cullen about the Trade Me deal being a vote of confidence in the economic future.

"If you thought something was going down the gurgler, you certainly wouldn't put your balls on the line," he said yesterday. "So I think it is fair to say that."

Dr Cullen, having predicted an economic downturn for so long, especially in the election wars over affordability of tax cuts, can hardly be unhappy that it has finally arrived.

His immediate task is to do what he can to ensure the downturn is contained and that the country does not talk itself into a recession (officially two consecutive quarters of negative growth) and to shepherd the country to a slower rate of growth. Perhaps some gloom without the doom.

"It seems that because it has been quite some time since the economy slowed, some of us have forgotten that economies are subject to cycles," he said in Masterton.

"It is easy for us to mistake a slowdown for a recession.

"Fairfax would not have wagered that amount of money if the medium to long-term prospect for the economy were not excellent."

He says the current downturn is like no other in recent history because it is not highlighting any serious structural problems in the economy.

"What it is highlighting is the underlying resilience in our economy and hence our capacity to bounce back."

Not everyone in the audience is convinced that Dr Cullen has the right prescription.

Chris Lewis, a farm manager with Baker and Associates, is the only one to take on Dr Cullen. He suggests Labour's promise to increase the minimum adult wage to $12 by 2008 will squeeze small businesses, not least the farmers paying farm workers, usually for a 55-hour week.

Mr Lewis disputes Dr Cullen's view that it will affect mainly low-paid staff in service industries such as rest home workers and cleaners.

"You're talking to rural Wairarapa here."

A slightly testy Dr Cullen said that with 3.6 per cent unemployment farmers could not compete in the labour market if they were paying wages as low as $10 an hour.

"You're dead right there," says Mr Lewis.

"I think we have to change our mindset away from continually trying to make us a low-cost economy to making ourselves a higher value economy," Dr Cullen said.

"That's where the Australians have done better than us over the last 20 years."

The experience and expectations of Pat Long, the owner of Wagg and Harcombe Holden dealership he visits after his speech, are a closer fit with Dr Cullen's message of resilience.

Since as far back as the election last year, Mr Long has noticed a slight downturn in all aspects of his business - service, sales and parts - but he is not expecting it to be serious enough to lay off staff.

And with three dealerships - others in Pahiatua and Dannevirke - he says he is confident that he will be able to weather whatever else comes by moving some of his 47 staff around from one place to the other, depending on need.

Dr Cullen leaves the black charger for his beige Mitsubishi rental car and drives out to his final stop on the outskirts of Masterton.

It is a huge shiny new, high-tech winery, Matahiwi Estate, geared mainly to the export market and which has immediately become one of the largest wineries in the Wairarapa.

Owner and former international investment banker Alastair Scott and winemaker Jane Cooper sit down the minister with a cup of tea and pastries to discuss the progress of the business to date and their plans for expansion.

The discussion is interrupted briefly when Dr Cullen gets a message to ring the boss.

The visit ends with a discreet tasting of a 2005 sauvignon blanc and a 2004 merlot, in good heart and with a little more ammunition with which to face the economic doomsayers - the dipsticks of Dr Cullen's world.