Q+A: Prime Minister John Key interviewed by Corin Dann

Prime Minister John Key admits homelessness has risen on his watch.

"Do you accept homelessness has risen on your watch?" ONE News Political Editor Corin Dann asked on TV One’s Q+A programme. Mr Key agreed, but also defended his government.

"Yes, there are more people but equally we are also implementing a very significant plan," he said.

"There's no question that if house prices rise and if pressure goes on rents it has a significant impact on those most marginalised, not just those who are homeless."

'Winning ugly is better than losing tidy' – John Key on the Australian election.

The outcome of Australia's election is important for New Zealand, and on the basis that the Coalition get there Malcolm Turnbull's biggest challenge is not election night, but about getting on and delivering results, says Prime Minister John Key.

"We need Australia over the next three years to be a strong and vibrant economy, they're our biggest trading partner, it's important to us,"

Q+A, 9-10am Sundays on TV ONE and one hour later on TV ONE plus 1. Repeated Sunday evening at 11:35pm. Streamed live at www.tvnz.co.nz

Thanks to the support from NZ On Air.

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ENDS

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Q + A
Episode 917
JOHN KEY
Interviewed by Corin Dann

CORIN The Prime Minister is with me now for some reaction to this Australian result. This is a nightmare result for a country like New Zealand; our biggest trading partner. Years of uncertainty with Prime Ministers, and yet it continues.

JOHN Yeah. It certainly shows you it’s a challenging time in Australia, I think, and there’s quite a contest about who has the right to govern, but ultimately, whoever wins – and let’s make it on the basis that the coalition seem to believe that they can get there. I don’t know enough about the marginals to tell you that’s absolutely right – but on the basis that they do, they’re going to put their best foot forward because we need Australia over the next three years to be strong and vibrant economy. They’re our biggest trading partners. It’s important to us.

CORIN Your mate Malcolm, he’s got no mandate. I mean, he wants to implement a whole bunch of reforms. He can’t do that. Australia is gridlocked again.

JOHN Well, that’s not necessarily the case. A, it depends on what happens in the Senate, so there’s capacity to actually pass legislation, but, look, like every government, you go to the polls, you put your best foot forward, you put your case forward about leading the country, and then when you get the responsibility, it doesn’t matter how tight that result is. In the end you’ve got to get on and do your best for your country, because that’s what New Zealanders, and in their case, Australians expect.

CORIN We’re looking to Australia to try and get better deals on citizenship rights, trade, whatever. Malcolm Turnball – if he is the Prime Minister – is going to be in a much more reduced position to offer us anything. He’s going to be worrying about his own back.

JOHN He’s going to have a reduced majority. That looks pretty clear on the basis that he can get there, but, look, in the end, it’s a bit like a Rugby World Cup. You know, winning ugly is better than losing tidy. We happened to win the 2011 Rugby World Cup by a point. We don’t remember that; we remember that we won. And so on the basis that the coalition get there, their challenge won’t be worrying too much about election night 2016; it’ll be getting on and trying to deliver results which mean they can get returned in 2019.

CORIN We have seen strong heartland results for independents in Australia. We’ve seen Pauline Hanson. She may get two Senate positions under this. Are we again seeing the rise of protectionism, nationalism? These trends which we’ve seen with the Brexit and with Trump flowing into Australian politics – are you worried about that?

JOHN I think it’s in every country to a degree, so it’s not new. For instance, it’s in France. Le Pen’s been there for a very long time.

CORIN But it’s on the rise, isn’t it?

JOHN There are different reasons in different places, and so you wouldn’t want to read too much in it. I mean, Winston Peters isn’t so much that he has that anti-immigration message, anti-trading message; has had that message for a very long time. I don’t think you can translate what happens in Australia or necessarily in the United Kingdom to what’s happening in New Zealand.

CORIN But why not? When we look at the inequality statistics out this week, when we see the top 10% of richest New Zealanders owning 59% of the wealth. That is an increase from 54%. And it’s getting worse in New Zealand. Why isn’t it right?

JOHN Firstly, that is one way of looking at those particular stats. There are a number. In fact, Stats New Zealand themselves said be very careful about comparing one against the other.

CORIN You can compare households, but that’s the wealthiest New Zealanders.

JOHN Yeah, but, I mean, if you look over the last decade, you know, income equality’s been about the same. You know, that’s some sort of change, but that’s because housing prices have probably been rising. It’s likely--

CORIN Can I just stop you there, Prime Minister, because it seems at the moment every time a statistic comes out that your government doesn’t like, you want to fight it, you want to argue it, you want to find another way of spinning it. And the problem with that is we have, this week, for example, your unemployment rate was reduced down by Statistics New Zealand.

JOHN Yeah, 5.2%. It’s great.

CORIN We’ve got poverty action groups coming out saying this is your government, you know, manipulating the figures, which personally I think is ridiculous. That’s their statisticians. But the point is people are arguing that because you argue the statistics every time.

JOHN We don’t do that. We just try and put a bit of context around it because like anything, a statistic can be created and manipulated in any way you want to spin that, and so my simple point is just to say, yeah, it’s broadly consistent with what’s been there. It doesn’t mean that there aren’t issues or you don’t need to address them. If you take housing, and I’d say what’s driving that income asset size is house prices. And so that leads you right back to the point that one of the big drivers has got to be to ensure as many New Zealanders as possible that want to buy a house can by a house.

CORIN But it’s a fundamental point. If the statistics for the richest New Zealanders shows it is increasing under your watch, that is absolutely crucial because you’re not improving it, not for New Zealanders.

JOHN We’re not arguing that minor point, but what we are saying is there are three different ways of measuring it; there’s three different stats, and if you look at all of them in totality, we’re just simply saying you need to look at all of those. And your point’s absolutely right. Statistics New Zealand brought down the unemployment rate to 5.2%. We didn’t go out there and make a big song and dance about that either.

CORIN My point is people aren’t going to believe what you say. They’re not going to believe politicians. And it comes back to this idea around complacency and arrogance that people are starting to lose faith in what politicians are saying.

JOHN I don’t think that’s right. For a start off, if you look at our numbers, our numbers aren’t moving in your TV ONE poll or anything else. There’s always been a healthy degree of scepticism by the New Zealand public about what politicians say when it comes to stats. Because as you know if you watch question time, which you do every week, the Opposition will always bend a stat one way or a quote one way and we’ll do another.

CORIN I’ll give you another example. The 90-day working trials, quality statistics from Motu, one of New Zealand’s premier research institutes, done work for Treasury, saying the 90-day trials haven’t really made much difference. You come out and say, ‘Oh, no, anecdotally I’ve talked to café owners and it’s working fine.’ What are people supposed to believe?

JOHN Well, for a start off, okay, let’s just argue that Motu’s research is absolutely, categorically correct. If that was the case, then MBIE and Treasury would change their advice to the government. They’re not. The second thing is that it is right when you go round and talk to these small employers. They do quote very extensively that they use the 90-day period, and it has given them confidence in what they do. And I think that’s common sense. And actually, the Motu research itself says in a couple of big industries where it’s been used extensively, it’s been quite successful. So we’re just simply saying it was one addition to flexibility in the labour market to give people a chance. New Zealand is a country of small businesses. I honestly think, and you can argue I’m wrong, but I honestly think if you had three employees, having the chance to take on one more in a 90-day period--

CORIN That’s fine. We’ll have a look at another couple of examples of where your government could be accused, I guess, of being arrogant. Bill English with his veto of the Paid Parental Leave Bill getting the numbers wrong quite significantly about how much extra it would cost. I mean, he’s the Finance Minister. He shouldn’t be getting those numbers wrong. Paula Bennett also saying 3000 new beds for the homeless. Matter of fact, they weren’t new beds. These are important issues. Why is your government getting them wrong?

JOHN In amongst a multitude of both advice that ministers get and claims or statements that they make, of course you can always get a few things wrong. I’ve got a few things wrong. But that’s not a sign of arrogance that the Finance Minister vetoes the bill. What he’s saying is we’ve extended paid parental leave from 14 weeks to 18 weeks. We’ve made it more generous and--

CORIN But that’s not the arrogance. The arrogance is him just blatantly getting the numbers wrong saying it was going to cost $270m a year when it was, in fact, over four years.

JOHN Okay, but sometimes in the heat of all the things that go on, you sometimes a bit forget— or at least you get the calculations wrong--

CORIN The only time you’ve ever used the financial veto?

JOHN Well, okay, but again, the veto’s been used extensively, and the veto was given to the Minister of Finance by parliament in the most democratic way of doing that.

CORIN But sorry, Prime Minister, that’s not my point. My point is that surely there’s no room for error on that when he’s using that veto to criticise Labour’s numbers. I’m not talking specifically about the issue. It’s the perception here.

JOHN But people make mistakes or at least don’t necessarily always say the full set of words. I mean, I could go and look at all of the Opposition claims. We don’t hold them to account every five minutes on them because in the end, I’d be debating the minutiae as opposed to debating the point. The fundamental point is, in our assessment at the moment, we’ve come a long way extending paid parental leave and widening out the terms, and we want to do more. We just don’t have any more cash at the moment.

CORIN I don’t want to labour this point too much longer, but there’s other examples. Take, say, the MFAT leak inquiry dismissed by, I think, Paula Bennett as the interpretation wasn’t quite the same as some journalist. Commentators have described it as one of the most damning reports that they’ve seen, from the Ombudsman.

JOHN The only comments I saw from her rightfully so said that was an inquiry, legally, and therefore absolutely by law required to be done independently by the State Services Commissioner, and her point was the Commissioner needs to speak to the report, not the government because it’s done under the State Services Act by the Commissioner. She’s simply saying it’s somebody else’s report. It’s like the Reserve Bank bringing out its monetary policy statement. It’s not for the minister of finance, necessarily, to critique that; it’s for the Reserve Bank to do that.

CORIN Let’s move on to the issue of immigration. Kerry McDonald, who’s a preeminent New Zealand businessman – for many years Comalco managing director – he wrote in a piece on his website just recently. He said immigration, and I quote, ‘The high rate of immigration is a national disaster.’ He said, ‘It’s lowering the present and future living standards of New Zealanders by serious adverse economic, social and environmental consequences.’ Now, this isn’t Winston Peters saying this; this is a respected economist and businessman who’s worried about immigration not because of who’s coming here but because we aren’t able to cope with the numbers.

JOHN Okay, well, I don’t think that the evidence bears that out. So for a start off, if you look at average wages in New Zealand, over the last 10 or so years, or the eight years that we’ve been in government, the average wage has risen $11,000 and wages have been rising faster than inflation.

CORIN So what does that make the average wage?

JOHN Uh, well, $58,000, I think.

CORIN So still about $20,000-odd below where we are in Australia for the same rate.

JOHN Yeah, okay, but again we’ve been trying to close that gap over a very long period of time after wages. That happened and blew out over, again, decades. So it takes some time, but I think most New Zealanders would say we’re making some progress there. And, by the way, if we weren’t, to put to your point, it almost doesn’t matter what the politicians say; it’s what do New Zealanders think? And what we know is New Zealanders are not leaving like they were, and they’re actually returning because they see opportunities, not because politicians say come back. It’s because the opportunities are there for them to have that employment.

CORIN But on the flip side of that, Treasury, again, says in a recent report that there are signs that immigration keeps wages lower, that the profile of the people coming in tends to be those in low-skilled areas, and it’s filling jobs that New Zealanders could fill and that it’s keeping wages down. So the wage increases would be higher.

JOHN I don’t think there’s any doubt that we would like to see even more New Zealanders who could come off a benefit and go into employment. We agree with that, and we’ve been pushing that. One of the reasons, actually, we ran—

CORIN But they’re just facing competition from migrants coming in. It’s easier to get a migrant to do it.

JOHN I don’t think that’s quite right. I think it depends on a lot of factors. So for instance, some of the work can be seasonal, and so someone comes in, for instance, on a working holiday programme, which we have reciprocal rights for; we don’t want to rip those up because they’re part of our FTAs. Or, for instance, they come as part of RSE, which is almost a foreign policy thing where we bring in workers from the Pacific. But they often come in both for seasonal issues or location issues. So if you take Queenstown – go and ask any operator in Queenstown in the height of the season, they just cannot get workers. Now, there are people unemployed in other parts of New Zealand, and you might rightfully say pick them up and make them go to Queenstown, but it’s not quite as simple as that when their family infrastructure and all those things are there.

CORIN But I guess the bigger point here is – is your government using strong immigration numbers to prop up an economy that is suffering from a dairy downturn to get you through past the next election with higher house prices? That’s the accusation.

JOHN Okay, and the answer to that is, “No.” Let’s just go back and look at those numbers again for a few seconds. So, 2011, 2012, 40,000 New Zealanders net went to Australia, all right? This year we think it’s 1712 so far of Australians have come to New Zealand or New Zealanders returning. So that’s the big chunk of the change.

CORIN But hang on. But if you look at the numbers, you know – the 120,000-odd in total that have come here – it’s only about a quarter that are returning New Zealanders.

JOHN Okay, that’s right, because some come in and some go out. But my point is that major significant change has been that. The number of people getting residency in New Zealand, if you go back to when Winston Peters was Foreign Minister in 2006, it was in those early 50s. It was about 53,000. Today it’s about 45,000.

CORIN You don’t want immigration to fall, though, do you? I just want to say something. I saw you in a speech after the Budget, and you were speaking to a big room of businesspeople – some of the biggest business minds in the country – and you stood up and you said, “Don’t worry about Treasury’s figure or estimation that it will go back to the trend of 12,000.” You were confident it was going to be a lot higher than that.

JOHN I just think it’s unlikely it will go to 12,000.

CORIN But it was like you wanted immigration to go up, because you were telling them, “Don’t worry. The demand in the economy is going to stay there. That’s what’s keeping New Zealand afloat.”

JOHN No, but what I like about the fact that migration is strong is because it reflects, I think, returning Kiwis and a vote of confidence in New Zealand, and that we have an open economy. And personally, I actually think that New Zealand’s much more successful country for that.

CORIN No, I disagree with you there. So the issue is – can New Zealand cope in terms of schools, infrastructure, roads? And the argument is we are not coping with that. We are not ready for that population growth. It means that the people living here, their living standards don’t increase.

JOHN Okay, well, firstly, I don’t agree with that. I think we can build roads and schools and hospitals, and we are. Secondly, Budget 2016 was considerably bigger in its new budget allowance – 1.5 billion as opposed to a billion – to reflect the growing pressures and demands from a growing population. Thirdly, I remember when I was leader of the Opposition, people used to get up, and the big debate in New Zealand was, “If you want to visit your grandkids, go to the departure lounge, because you better go and see them in Australia. Will the last person out please turn the lights off?” So now we’ve got an economy which is attractive to people, and people– a lot of New Zealanders coming back. But equally, we’re not going to stop Australians coming, because we have free movement in labour markets; we’re not going to stop people who come as either refugees or part of the Pacific Quota and things that we have; we’re not going to stop people on a working holiday programme. We certainly don’t want to stop students, because we’re educating them.

CORIN There’s one big problem with all of this, and really, that is housing. You haven’t dealt with the housing crisis. So when you’ve got this rising population, and you’ve got a housing crisis in New Zealand, how can you allow those two to be together? You haven’t fixed it.

JOHN Okay, so I think there’s a few things. Firstly, to put a bit of context around it, in cities around the world where there’s demand for housing, you’re seeing very similar characteristics. So whether it’s Los Angeles, Sydney, London, Dubai – you name it – those characteristics have been the same. I saw a speech from Justin Trudeau, the Canadian Prime Minister, talking about exactly the same issue in Vancouver, in Toronto. The second thing is it’s not true that we aren’t addressing it. We have quite a comprehensive plan, and if you look at it, everything from the level of construction activity, the number of houses coming on stream, there are 24,000 more people—

CORIN No one disputes that you’re doing a lot of work. You’ve got a lot of consents coming on. But the argument is it’s not working. So do you need to throw up the white flag now and actually call a summit here and ask for New Zealanders to come together? Because what you are doing, which is a considerable amount, is still not working.

JOHN No, I think the argument isn’t that it’s not working; the argument from some people would be, “It’s not working fast enough.” And our point would be we are ramping that up as rapidly as we can. But even if you turn around tomorrow and have a summit and say, “We should build X number more houses,” that doesn’t resolve the issues of making sure the RMA permits that, making sure the land there permits that, making sure you have the workers to do that. If you look at the level of construction activity, we’re on an 11-year high. We have more people in the construction industry than ever before. There is a huge amount of product coming on stream. So, yes, we’ve had to build that up.

CORIN So do you have any more ideas?

JOHN Well, you might have to wait and see today. But the point is that if you go and have a look at 2011 or my early years, actually, as prime minister – ’08, ’09, ’10, ’11 – we didn’t discuss housing. Why? Because you had a global financial crisis; you didn’t have the demand; there wasn’t the confidence from people. In fact, actually, developers were going broke as opposed to the other way.

CORIN We weren’t also discussing homelessness, were we? We weren’t also discussing that. And that has risen under your watch.

JOHN Yes.

CORIN How does that make you feel personally when you hear story after story of people living in cars, of people dying – homeless people dying in recycling outfits? How does that make you feel?

JOHN Well, absolutely driven to do more and to help those people. There’s no question, and we accept the view, that if house prices rise and if pressure goes on rents, it has a significant impact on the most marginalised – not just those that are homeless.

CORIN Do you accept homelessness has risen under your watch?

JOHN Yes, there are more people. But equally, we are also implementing a very significant plan there. So, again, 135 people a week are going to social housing initiatives. In the Budget, we had initiatives there long before the media actually started talking about the homeless factor. In fact, a year or so ago, Paula Bennett basically had a summit on a programme on exactly that issue. So there are many initiatives there. We accept those issues, but again, we just have to continue to focus to do more on it. I accept that.

CORIN Prime Minister John Key, thank you very much for your time.

JOHN Thank you, Corin.

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