Sunday 20th November, 2011

Q+A interview with National Leader, John Key.

The interview has been transcribed below. The full length video interviews and panel discussions from this morning’s Q+A can be watched on tvnz.co.nz at, http://tvnz.co.nz/q-and-a-news

Q+A, 9-10am Sundays on TV ONE. Repeats at 9.10pm Sundays, 9:05am and 1:05pm Mondays on TVNZ 7

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JOHN KEY interviewed by PAUL HOLMES

PAUL This time next week we’ll know who the new Prime Minister is, and the man leading in the polls this weekend is the National leader, John Key, who is obviously with us live. Do you know how hard it is doing that stuff when you’re sitting there?
JOHN KEY – Prime Minister
Yeah, there you go. It’s no problems.
PAUL Anyway, the week just gone – good week?

JOHN Oh, look, it’s another week, anyway. Let’s put it in those terms. Election campaigns are always a bit quirky, but the one thing that does come through – this is a campaign that’s about the economy. It’s about economic leadership and about who can provide stability over the next three years.

PAUL Let’s talk about the economy shortly.

JOHN That’s what people care about.

PAUL I understand that. Let’s talk about the economy shortly. I have to deal with the teacup tape just briefly.

JOHN Yeah.

PAUL The worry about your going to the police that people have, I think, is you’re the Prime Minister; you’re effectively using the police to suppress this information. Is that healthy in a democracy?

JOHN Well, firstly, I utterly reject that. That’s not correct.

PAUL But that’s what’s happened, though, isn’t it?

JOHN No. I mean, we believe that the information was illegally obtained. We believe that’s in breach of the Crimes Act, and therefore on that basis, I think that is the view of a number of newspapers, because they haven’t actually printed it. So in my view, we took the course of action that was required. And, look, people can say politicians are fair game Fair enough. Some people take that view, but my view, and I take that view very seriously and I’ve stood up for that principle even if I’ve been attacked by certain parts of the media for doing so, I think it inevitably leads to prominent New Zealanders and then ordinary everyday New Zealanders, and I’m standing up against that principle.

PAUL Very well. Let’ move on. Aroha Ireland, the young girl – she’s 16 now – you took her to Waitangi – says there’s nothing for her in New Zealand; she’s leaving to go and live in Melbourne.

JOHN Well, I—

PAUL So what does that tell you?

JOHN Yeah, I obviously reject that proposition as well, which is I think New Zealand has a huge future. I mean, let’s—

PAUL She feels not.

JOHN Yeah, okay, well, lots of young New Zealanders will go and take some time and go overseas.

PAUL 100,000 have gone in the last year.

JOHN And 30,000 came back. And that is an issue about our wage gap, and it’s one of the reasons why we’ve been working on that. It’s been a 30- to 40-year problem. But let’s look at some of things we’ve been doing. I mean, lowering company taxes, attracting investment, changing our tax structure – all of those things are helping. And everyone says, ‘Look, Australia’s doing well.’ Our growth rate this year is going to be stronger than Australia’s. So, Australia has a huge mining sector that helps parts of their economy. It’s massive. So, you know, I look at New Zealand and say, okay, people can be down in the mouth about it if they want, but we have water, we can produce food, we’re part of Asia, we’re a small country, we can be flexible, we grow things, we have very intelligent people, we have a ‘number eight wire’ mentality. Look at what Peter Jackson’s done with Lord of the Rings and the Hobbit. Look at the boatbuilders around New Zealand. We’re living in a world where people don’t just want to buy food for the sake of eating; they want it for health benefits. All of those things sit in front of New Zealand if we get our policies right, and again I go back to the campaign. Do we want $15.6 billion worth of extra debt from Labour, or do we want to be back in surplus by 2014, 15 under National?

PAUL Let’s talk about that shortly, but the next three years – Business New Zealand and Federated Farmers say it’s all about export growth. Do you agree?

JOHN I do. I mean, I think in the end—

PAUL And so—

JOHN we get wealthier when we sell more to the world than when we buy from the world.

PAUL That’s right, so exports have fallen in your three years of power as a percentage of GDP.

JOHN Yeah, I don’t—

PAUL They fallen.

JOHN Yeah, well, I don’t accept that proposition either. I’ll have to go and have a look at those exact numbers, but the numbers I have is export’s dramatically rising.

PAUL Yeah, that’s from Export New Zealand, as a matter of fact, that number.

JOHN Well, I’ll have to go and have a look at what they’re measuring there.

PAUL Okay, but is it time to really help the exporters? I mean, does government really do enough for the exporters?

JOHN Yeah, so you sit back and say what allows a New Zealand company to compete on the world stage? I mean, firstly, it’s access to markets, so we have a programme of getting out there and getting into those markets. We’re in the process of signing an FTA with Korea. We’re doing one with India. We’ve got the same situation with Russia. The Deputy Prime Minister came back from the negotiations at APEC, which will help us in America.

PAUL What I’m saying, I suppose, is do you do enough to help the little guy get access to the big markets?

JOHN You do. I mean, look, you can always do more, but my point is you need access to markets, you need to make sure they have good science and innovation, because we can’t compete with people who pay substandard wages, right? And the third thing you can absolutely make sure you do for those little guys is keep them competitive, so again look at what we are doing. We are saying you have a 90-day probationary period. We could say, you have a minimum wage that you can afford that goes up every year but is reasonable. Labour say on that little business, there’ll be a capital gains tax, more through the ETS, a higher minimum wage, more KiwiSaver contributions. I mean, can the small business that’s borrowing against their home afford that?

PAUL And, of course, we don’t know, because we do not exist as an island, although we are islands—

JOHN Actually, I think we do know. There’s half a million businesses out there employing those 2.2 million people. Most of them had a fairly torrid time over the last three years because of the global financial crisis. They’re hanging on. Some are doing better than others, but I tell you what – you go and throw a lot more costs at them and see what happens to employment in that sector.

PAUL You see, what if— I think an international expert has said, ‘The world has never seen anything like the collapse that’s gone on and the collapse that is going on.’ If a meltdown were to really happen again, if Europe were to go bottom up, do you have—? How do you protect us?

JOHN Well, you do what we have been doing over the last three years, so you adjust. We had a zero budget going into election year 2011. That’s unheard of. No government goes into election year offering to give people no extra money. We did that to get our books back in order and pay for Christchurch. We have a plan that says 2014, 15, we’re back in surplus Labour has a plan – $16 billion more. When you’ve got a global debt crisis and Labour’s proposition for New Zealanders is, ‘We’ll put more debt, more on the credit card, and we hope we’ll work it out all out.’

PAUL At the same time, though, the mood of the boardroom, the conference this week, there was disbelief that you’re going to be able to get into surplus by 2014, 15.

JOHN Well, I’m glad you’re using the word ‘boardroom’, because they asked which party do you support for economy policies? It was 94% National and 1% Labour, so wasn’t too bad. But, look—
PAUL No, but they felt the word ‘fairy tale’ was used about getting back into surplus by 2014 and 15 By what will you be in surplus? How much?

JOHN Why would—? It’s $1.5 billion by 2014, 15. And, look, basically what happens with our numbers – we had an $18 billion deficit this year. Half of that was Christchurch. It’s $10 billion next year. We halve it again the year after that – 4.4. We’re about 1.5 in deficit, then 1.5 in surplus. And my point is why do people think that’s fairy land? Yes, okay, if Europe blows up, maybe that’s an issue, and that obviously has an impact. We’re not immune from what happens in the world, but our numbers have been adjusted to reflect that there’s weakness in Europe. They match the IMF numbers You know, there’s a lot of different factors out there, but the only thing you can do as a government – you can’t say, ‘I can control what happens in Germany or France or Portugal or Spain.’ I can do the best to make New Zealand companies competitive by giving them a platform that allows them to grow.

PAUL Yes. And will some of that be cutting the public service? Bill English said this week, the squeeze – he said that the mood of the boardroom – the squeeze is only just starting on the public sector. What did he mean by that? Then you had Tony Ryall a couple days ago saying he’s going to cut the public service numbers from 39,000 to 36,000.

JOHN Well, firstly, we’ve done that, so we came in and said, ‘We’re going to set a cap on the core state sector just under 39,000.’ We set that cap. It didn’t mean that it couldn’t go below that cap. It said that’s the maximum.

PAUL Well, the difference between 39 and 36 is 3000.

JOHN That’s right, so we’ve come down to 36,500 now, and we’ve now said that’s the new cap going forward. And again, it’s a bit of a sinking lid, so it may go lower, but my point there is, firstly, one, as a taxpayer, you want to make sure that your tax dollars are well spent. Secondly, we can construct things better. We’ve put together – it’s not called the Ministry of Primary Industries – but we’ve put together MFish and MAF together. The savings that have come from that and the operational efficiencies that have come from that are more significant than everyone thought.

PAUL At the same time, though, you had Bernie Monk representing the families the other day, saying, ‘It is shocking that one year on from Pike River, you still have only one underground mine inspector in New Zealand.’

JOHN Well, that’s a—

PAUL You can get below optimal levels, can’t you?

JOHN That’s a complex issue, so firstly, the one mine inspector – there’s a very small number of mines – that came out of the old rules and regulations that have been there for some time, but all I can say is there’s a Royal Commission of Inquiry. When that Royal Commission reports back, if we are the government, I’d give those miners and New Zealanders my word I’ll take that Royal Commission very seriously.

PAUL Let us talk about Christchurch. The impression is – and I know there was some anger expressed yesterday in Christchurch – the impression is the rebuild has stalled because there’s no insurance.

JOHN Well, insurance is a factor in Christchurch – let’s understand that.

PAUL Well.

JOHN So, firstly, just to put a little bit of context around Christchurch – it is the fourth-largest insurance claim in the world since 1970, so only the ’94 Californian earthquake, ’95 Kobe, and the most recent tsunami and earthquake in Japan are bigger. 400,000 claims. The earth is still moving there a bit, so insurance is a factor for some people, so is the time EQC’s taking, so are some of the council issues—

PAUL Look, I know it’s a hell of a problem, but we’re looking for solutions. If you want governance for the next three years, Fletcher Building’s Jonathan Ling was saying you’ll have to be the insurer. You’ll have to be the insurer – the government. Hundreds of consents are ready to go, but they can’t get insurance. Then on the other hand, I’d say to you, well, why would anyone rebuild in Christchurch? I’m sorry, don’t mean offence to Christchurch, but nine quakes over three points on the Richter Scale this month.

JOHN Yes, but what’s happening there is obviously– and I’m not a geologist, but there’s seismic activity, and when we look at what’s called the decay curve – how large are those movements – they’re starting to rapidly reduce. So my point is you’re going through some activity in Christchurch which may not repeat itself for 2000 years. In terms of rebuilding, for the most part, where land can’t be rebuilt on, like the red zone, that’s because it’s liquefaction prone. But for the other parts of Christchurch, you can build there very effectively. You may need to change your building code and your foundations—

PAUL Would the government undertake to be the last-resort insurer? Would you?

JOHN Well, I have said, look, if insurance can’t be provided, of course we need to see Christchurch rebuild, and we’ll look at that. We already have in a way kind of effectively own the AMI because of our implied guarantee or at least structure. But the point is I don’t agree with the proposition that insurance won’t come back. You’re already starting to see Lloyds doing some things. Interestingly enough, IAG has now returned. They’re in Hurunui and Ashburton. They’re starting to close in on Christchurch. And I think over time you will see insurers coming back. Lots of people still do have insurance, so if you’re insured, say, with IAG and your house is in the red zone and you move somewhere else, you can get insurance. So, yes, it’s a complex issue, but we’ve got to work through it.

PAUL Can I move on just quickly to a couple of yes-nos, if you’d let me. Could you consider – would you move super to 67?

JOHN Well, no.

PAUL Asset sales – partial asset sales – four power companies and Air New Zealand. Could there be more?

JOHN Not in the next term.

PAUL Would you seek a mandate before you went further?

JOHN Yes. We’d never be going further than the 51%, though. We want to retain majority.

PAUL No, I mean numbers of companies.

JOHN Yeah.

PAUL Yeah. What is your feeling about Mr Peters possibly coming back into Parliament, Prime Minister?

JOHN That’s a matter for the voters, but I don’t think it’ll happen.

PAUL And why should a young man living in a state house in Burnside vote National? Very quickly.

JOHN Because we want a brighter future. I mean, the truth of it is, look, we are aspiration for New Zealand. We believe in a country where there’s equality of opportunity. I grew up in a state house. I got a decent education. I lived in a society that gave people a go, and that’s what we’re about. We’re a very centrist, moderate and balanced government. In three years, we’ve proven that we can handle things and take people with us.

PAUL Mr Key, leader of the National Party, thank you for your time.

JOHN Thank you.

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