National News Brief, Thursday October 23

Lockwood Smith in trouble over "small hands" comment; Maori Party would prefer Labour to win the election; Number of New Zealanders crossing the ditch reach new high; Reserve Bank to slash OCR today; Taliban targeting Kiwi troops; and more

National's Lockwood Smith has made the "biggest blunder of the campaign so far", saying that Asians may be better suited to some horticultural work because "their hands are smaller" and that some Pacific Islanders coming to New Zealand had to be taught how to shower and use a toilet. The New Zealand Herald reports that John Key has told Smith he must forfeit the immigration portfolio in any National-led government, and John Armstrong suggests Key may leave him out of cabinet altogether. Maori Party co-leader Tariana Turia called Smith's comments "racist" and said he had harmed potential negotiations with National, but later backed down when Smith apologised, the Dominion Post reports.

The Maori Party's other co-leader Pita Sharples has told The Press that he would rather Labour won the election. Dr Sharples told a readers' forum that, "We would prefer in the first instance that Labour got the higher share of the vote, because that's what our people want... The feeling is still there Maori are joined at the hip with Labour". The party yesterday announced its Treaty of Waitangi policy, saying that entrenching the Maori seats [requiring a 75 percent majority of parliament to remove them] was a "bottom line" for the party in any coalition negotiations.

The Herald leads with news that New Zealanders are leaving for Australia in record numbers. Statistics New Zealand published figures yesterday showing that the country had a net outflow of 33,900 to Australia last year, 200 more than the previous peak in 1989.

The Reserve Bank is set to slash interest rates by one percent today, according to the DomPost. It would be the biggest move either up or down by the Bank since it adopted the official cash rate in March 1999. Economists spoken to by Bloomberg predict further cuts, lowering interest rates to 5.5 percent by March.

Contact Energy is to almost double its directors' fees at today's AGM, drawing criticism from politicians and shareholders. Prime Minister Helen Clark accused the directors of greed and likened it to the behaviour of executives on Wall St. National's John Key said the directors should "show restraint" at a time when power prices were rising. The company says the directors' fee poll hasn't been increased since 2004.

New Zealand troops returning from Afghanistan say there's "no doubt" that the Taliban has strengthened its activities in Bamiyan. While there had been no fighting, the Taliban seemed to be "targeting New Zealand forces".

A Lincoln University professor of property studies has estimated that up to 130,000 New Zealanders have slipped into negative equity due to falling house prices. Banks however say that owing more than your house is worth isn't a problem unless you have to sell.