Judge our Government on “how we lift productivity,” says Finance Minister.
The Labour-NZ First Government has made some “pretty significant moves” on lifting New Zealand’s productivity already
says the Finance Minister Grant Robertson.
“We want to lift our expenditure on research and development; we’ve got a massive focus on increasing skills, which is
one of the major and most important parts of lifting productivity. And we want to get capital to those businesses that
can grow, invest in infrastructure,” says Minister Robertson.
When asked by our political editor Corin Dann if he was “crimping” on foreign investment the Minister replied saying his
Government still welcomes foreign investment where it adds to the productivity of New Zealand.
“Our concern is being when it’s just speculation in the housing market. That’s actually not helping New Zealand and not
helping the New Zealand economy,” says Minister Robertson.
“So there’s still a place for foreign investment, but equally, we do want to see New Zealanders being able to make sure
that they do invest in their own future, and we want to have some conversations with the Super Fund about the way in
which they’ll be able to contribute,” he says.
And when challenged on the new Government’s housing policy Minister Robertson says supply issues will be a carefully
managed process.
“We build the affordable houses, but we also crack down on the speculation. And I think there’s been enough discussion
about that in New Zealand over the last few years. People understand what our plan is and that in the end, it’s actually
about New Zealanders, particularly young New Zealanders, being able to get into the housing market and the security that
that provides. I think people understand that,” he says.
Q + A
Episode 34
GRANT ROBERTSON
Interviewed by CORIN DANN
CORINCongratulations on the new position.
GRANTGood morning, Corin.
CORINYou, in a way, fell into this job three years ago, didn't you? I mean, you weren’t planning to be the Finance Minister.
Are you sort of an accidental finance minister?
GRANTNo, not at all. I’ve spent three years as the Labour Party's finance spokesperson. I’ve enjoyed that; I’ve learnt a lot,
and I feel really excited about the possibilities of what we can do for New Zealand.
CORIN What sort of a finance minister do you think you’re going to be? Are you a radical? Are you a reformer? Where do
you sit?
GRANTLook, what I think is that for too long, we’ve focused on the data in the economy as the endpoint, rather than what
we’re doing for New Zealanders’ living standards. What are we doing to improve the well-being and the lives of our
people? So I think I’ll be a finance minister who’s got my eye on the outcomes. Of course we’ve got to make sure that we
keep the fiscals ticking along, that we do the right thing when it comes to fiscal responsibility, but that can't be the
end of the road. What we’ve got to do is focus on how we can use a strong economy to benefit all New Zealanders.
CORIN Are you a bigger government, smaller government?
GRANTWe’re an active government, and I think that is a fundamental difference as well.
CORINBut not bigger, are you? Because you’ve got this fiscal responsibility clause which says you won’t actually, what, grow the
government as a size per the economy.
GRANTWell, actually, it will grow a little, because the current government had planned to reduce that quite significantly,
and we do see an important role for government in helping to stimulate—
CORINFor bigger government.
GRANTWell, slightly bigger, yes, but actually, it’s more important to me that it’s a government that works alongside our
social partners, that works alongside businesses, workers and unions, iwi to make sure that we’re actually growing those
decent jobs that pay well, that we’re looking after the environment, that we’re building up the skills of our nation.
That’s an active government, and I believe that what we’ve seen for too long in New Zealand is governments that are
prepared to sit on the sidelines, see people miss out, see our environment degraded, see the value of our wages drop.
That won’t be what we’ll be; we will be there as a partner.
CORINYou will be well aware of the famous winter of discontent or so-called ‘winter of discontent’ – 1999, Labour government
that came in. Are you worried that business is going to react badly to you? I mean, what is your message to, I guess,
the small business owners, the business people in New Zealand this morning watching? Can you assure them that you’re not
going to rip up the rulebook for them?
GRANTAbsolutely. I mean, we are a party that’s committed to a partnership here with business, with working people as well.
And, yeah, I went to a Mood of the Boardroom event with, you know, 150 CEOs just before the election and heard from them
that their biggest concerns about New Zealand were about inequality. They said that we didn’t need tax cuts; we needed
to invest in social services. They were worried about multinationals not paying their fair share of tax. They’re the
same policies that we’ve got. Now’s the time for us to sit down with the business community and say, ‘How do we make
this work together? How do we grow businesses and ensure a fair share in that prosperity?’
CORINAny formal sort of sit-down? Or are you just saying…?
GRANTOh, look, it’ll come over in a number of different forms, and we’re certainly committed to getting out early to all of
our social partners, and I think it’s really important, Corin, that we include everybody in those conversations. It’s
not just about big business—
CORIN You’re not talking about some business summit or something.
GRANTNo, not at this stage, but we are talking about getting around not just to big business but particularly to small
businesses as well, because we know that they are at the driver of a lot of the job creation in New Zealand. Equally, we
want them to work in partnership with their workers. I’ll give you one example that’s, I think, been missed out in the
last few years. We need a coordinated strategy on skills that brings together all of our social partners – working
people as well as employers, and I will be sitting down with the Minister of Employment and with the business community
and with unions to say, ‘How do we lift the skills of all working people?’
CORINAll right, some quick-fire questions, because you’re looking at a potential mini Budget. So we can expect a number of things
you’re your government is going to do in the first hundred days. Can we just run through a few of those? The five-year
bright-line test for the property market.
GRANTYup, we expect to do that in the first hundred days.
CORINSo by early next year, that will be in place.
GRANTCorrect.
CORINNegative gearing.
GRANTThat may take a little bit longer for design purposes to make sure that we get that right, but we’d expect that work to
be well underway in the new year.
CORINThe foreign buyers ban or something similar.
GRANTCorrect. That will be in the first hundred days, and you’ll hear more about that shortly.
CORINI mean, just on that, are there other mechanisms? Is that a live issue?
GRANTThe goal is, the important thing for us is – how do we make sure that New Zealanders can get into the property market?
That we don't set up a situation with people who have got no intention to ever live here or any right to live here.
CORINSo it doesn’t matter whether it’s ban or not; you’ll block them somehow.
GRANT Yeah. What we want to make sure is that there’s a fair go for first-home buyers. We’re working on the design of
that right now.
CORINIs it possible that it won’t be the straight-out ban so you can get round the trade issues?
GRANTOh, look, there are a number of options on the table that we’re looking at, and we’ll have something to say about that
very soon.
CORINStamp duty on the table?
GRANTThere are a number of options.
CORINThe tourist tax.
GRANTThat also will take a little bit longer to design. Obviously, within the coalition partners, there are slightly
different ideas about how to do this, so we’ll take a little bit of time over that, but again, early next year.
CORINThat’s not a ‘first hundred days’.
GRANTNo, it’s not first hundred days.
CORINNeither is the petrol tax, right? Is it?
GRANTNo, that’s right.
CORINOn the petrol tax, will that apply to other parts of the country?
GRANTNo, that’s not our intention. We’ve been working closely with Auckland Council—
CORINSo only Auckland can implement that tax.
GRANTThat’s correct. It’s their view that in order to get over the major problems that Auckland has in terms of congestion,
they need additional revenue. We want to give them the power to charge that as a regional fuel tax, but nowhere else at
this stage.
CORINWhy shouldn’t other regions be able to do that?
GRANT Well, partly because nobody else has asked us but also because these problems are specific in Auckland. And
again, I come back to that Mood of the Boardroom event that I went to. Congestion in Auckland, how it’s constraining
productivity – one of the biggest issues that business raised in that survey – we want to get action on that. In order
to get action on that, we need a variety of funding sources, one of which is a fuel tax.
CORINWill you consider fuel taxes in other regions if they do ask you?
GRANTIt’s unlikely. I don’t see the need for that at this time.
CORINAnd, of course, the Reserve Bank Act changes – will we see them quickly?
GRANTWe need to again, do the review, but I'm very conscious of the fact that we have a governor due to be appointed in March
next year. I want to make sure that people understand that for now, the Policy Targets Agreement stays. That’s the
agreement that we work under until a new governor is appointed. What we’re proposing to change there is in line with
what’s happening in other parts of the world – the United States, Australia. We want to see a slightly broader
objective, but we are maintaining price stability. There will still be that band for inflation within the Policy Targets
Agreement.
CORINSo you’re looking at putting in employment so that the Bank has to consider unemployment. Will there be a hard target on
that?
GRANTNo, we’re not intending there to be—
CORINA 4% goal, right?
GRANTYeah, that is our goal as a wider government, but I'm realistic about what the role of the Reserve Bank is in achieving
that goal. What we want to make sure is that the objectives of the Bank reflect that overall view of the economy, that
this is about the well-being of New Zealanders; it’s about sustainable development.
CORINSo just give people a sense of – how will that help? I mean, will it mean they pay lower interest rates at some point?
GRANTPotentially, it could. What it means is that when the Reserve Bank is making its decisions about the official cash rate,
when it’s thinking about monetary policy, of course it thinks about managing and controlling inflation, and that’s
vital. But also, it thinks about other goals in the economy, such as making sure that we maximise employment. This is
done in the United States; it’s done in Australia in another form. We’re actually just bringing our monetary policy up
to speed to make sure it’s contributing to the wider outcomes we want in the economy. It’s a reform, but it’s one that I
think people can have confidence in, because it does work in other jurisdictions.
CORINHow does it fit with your minimum wage policy? There is a danger that that will push up inflation. I mean, you are going
to lift wages through the minimum wage. That will push other wages up, presumably. You’re going to have pay rounds;
you’re going to have teachers. There’s going to be some wage pressure coming through. Surely that’s going to counteract
any move by the Reserve Bank.
GRANTI think if you can look to history, we’ve seen the minimum wage go up when Labour was last in Government by a dollar a year, and we were able to manage those expectations at that time. This is actually
about making sure New Zealanders get a fair share in prosperity, and I think one of the things we saw in the election
campaign and over the last three years is expecting people to raise a family on $15.75 an hour is unrealistic. We want
to lift that, but we’re going to do it in a steady way, and we’re offering certainty here, Corin – that’s the advantage
of the coalition agreement. We’ve given the $20 target to come into force by April 2021. People will be able to see that
progression and plan for it.
CORINFair share, and I think everyone gets that in terms of living on the minimum wage and the difficulties that that brings,
but that is not a strategy or a recipe for lifting New Zealand’s productivity, is it? You can’t just magic up wages and
expect us to be a wealthier country.
GRANTAbsolutely not, and that will be one of the main things I want our Government to be judged on, is how we lift
productivity. And we’ve made some pretty significant moves on that already. We want to lift our expenditure on research
and development; we’ve got a massive focus on increasing skills, which is one of the major and most important parts of
lifting productivity. And we want to get capital to those businesses that can grow, invest in infrastructure. Now, if we
get our infrastructure right, if we get Auckland moving, reduce that congestion, if we make it possible for people to
start businesses in the provinces, knowing that they’ve got a good rail line that will get them to a port, knowing that
they’ve got good broadband – that will lift…
CORINAll right. Can I pick you up on a couple of points you’ve just made? R tax credits – you’ll do that?
GRANTCorrect.
CORINDoes that Callaghan Institute go?
GRANTNo. The intention is not for it to go, but we want to get a better balance between the grant-based system that Callaghan
covers and the certainty that a Research and Development tax credit provides. Both of them have a role to play, but….
CORINPresumably they’re getting a lot of money at the moment. That’s going to have to come down.
GRANTWell, we’ll take a look at that. We certainly want it to be used effectively, but what we heard from the business
community, particularly during the election campaign and before, is that an R tax credit gives them the certainty that they can invest in innovation and that they will receive that credit back for
it. The grant-based system needs to be looked at. It’s still got a role to play, but clearly it will be a reduced role
alongside the industry.
CORINYou said then, too, getting capital to business, getting money to businesses, but your Government’s looking at crimping
foreign investment, making it more difficult for foreign investors to invest here. Are you saying that you’ve got to
find ways of getting local capital to businesses, and how would you do that?
GRANTWell, we still welcome foreign investment where it adds to the productivity of New Zealand. Our concern is being when
it’s just speculation in the housing market. That’s actually not helping New Zealand and not helping the New Zealand
economy. So there’s still a place for foreign investment, but equally, we do want to see New Zealanders being able to
make sure that they do invest in their own future, and we want to have some conversations with the Super Fund about the
way in which they’ll be able to contribute.
CORINSo you would like to see the Super Fund increase the amount that it puts into New Zealand?
GRANTI think I certainly would like to see the Super Fund invest more into New Zealand. It’s done some, and I know the Super
Fund itself is looking into opportunities here. It has to get a good rate of return; we all understand that. But if
we’ve actually got the incentives right in the economy, that we are investing as a government in our infrastructure, we
think that will encourage other investors as well to move away from that speculative part of the economy into the
productive part.
CORINWhen you were in Opposition, you talked about the whole issue about surpluses and this debate about you being able to
meet your targets, etc. You talked about cutting some areas. Defence – will we see cuts in Defence spending?
GRANTWhat we’ve committed to in the coalition agreement is to look at the way Defence does its procurement. I’ve had a
concern, and I know the New Zealand First Party has had a concern, over a long period of time, that we aren’t
necessarily getting value for money in what we do for procurements. So the first stage of the exercise is to look at
that. There’s a Defence capability plan that’s out there. We want to review that in the context of getting value for
money.
CORINAny other things you can give us that will be up for the chop?
GRANTWhat I’ll be asking all of the ministers in our Government is to look at where they can achieve productivity gains,
where they can be more effective and more efficient, where there are spending plans underway that don’t line up with
both Labour’s plan and what we’ve agreed in our coalition agreements. That piece of work has to be undertaken now, and I
will be asking ministers to do that seriously.
CORINThe Deputy Prime Minister, Winston Peters, in his speech when he announced the Government who he is going with, he was
very gloomy about the outlook. You must have had a Treasury briefing by now on the state of the economy and the
forecasts. Did that square up with what Winston Peters was saying?
GRANTThere’s a variety of views when it comes to the economy, and certainly if we carried on allowing the economy to be only
driven by population growth and speculation in housing, then I would have some real concerns. But I am optimistic about
the future of the New Zealand economy if we get our settings right, if we get our investment and infrastructure going
well, if we lift our productivity, if we make sure that we are investing in people and skills, I think we will be able
to ride out whatever headwinds there might be ahead of us.
CORINHow will you measure the economy and economic success? In opposition, you really hammered the issue of per capita
growth. Will that be your yardstick?
GRANTThat’s one important yardsticks, but I want to go much further than that. I think it’s time that we measured our economy
for how it lifts the living standards.
CORINDo you want a happiness index, do you?
GRANTI want to do some work on alternatives to Gross Domestic Product. I think GDP is quite a good measure of activity in the
economy, but it’s not a good measure of quality. So I want to make sure we have measures that are about how we lift
living standards. And we’ve been quite specific about this. We’ve said that we will amend the Public Finance Act so that
we actually have to talk about reducing child poverty.
CORINCould you imagine a happiness index one day? Is that how you’d see it?
GRANTI don’t know about a happiness index, but I certainly want to work on, and Treasury’s started some of this work, on what
we call a living standards framework. How do we actually improve the social, economic and environmental outcomes of-?
CORINBecause none of that matters when it comes to your Budget.
GRANTIt will, Corin.
CORINGDP growth matters in terms of how much you have to spend, though, isn’t it?
GRANTCorrect. And having a strong economy will always be the basis of what we do. But as I said in the start of the
interview, I want the success of our government to be measured not just by a figure like a GDP growth figure, but
actually by the outcomes we achieve in lifting people’s living standards.
CORINOn housing – I mean, a lot of talk about the Auckland housing market coming off the boil and now starting to come down a
little bit. How worried are you, though, about the confidence affecting housing? Regardless of whether the prices– you
know, they come off and it affects the confidence in the economy. Is that a risk?
GRANTThe way that we want to do our housing policy is a careful and managed way of making sure that we address the supply
issues; we build the affordable houses, but we also crack down on the speculation. And I think there’s been enough
discussion about that in New Zealand over the last few years. People understand what our plan is an that in the end,
it’s actually about New Zealanders, particularly young New Zealanders, being able to get into the housing market and the
security that that provides. I think people understand that.
CORINGrant Robertson, thank you very much for your time.
Please find attached the full transcript and the link to the interview
Q+A, 9-10am Sundays on TVNZ 1 and one hour later on TVNZ 1 + 1.
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