Sunday 15 April, 2012

Paul Holmes interviews Bill English

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Q + A
PAUL HOLMES INTERVIEWS BILL ENGLISH

PAUL Labour got lucky this month when Sue Moroney's paid-parental-leave private members' bill was drawn from the ballot. The bill would extend the paid parental leave from 14 weeks, as it is at the moment, to six months, and with United Future and Maori Party support, it would have the numbers to pass. National, however, says, ‘Can't afford it. It's too much money.’ Sue Moroney shot back that it would only be fully introduced in 2014-15, which was quite clever. Nevertheless, on Wednesday Bill English announced the government would use a rarely used veto power to kill the bill and protect the government's books in the third reading. Under MMP, he has every right to do just that, but Opposition parties are outraged, calling him undemocratic and arrogant. Acting Prime Minister Bill English joins us now from our Wellington studio, having just returned from the Australia New Zealand Leadership Forum in Canberra. Mr English, good morning.
BILL ENGLISH – Acting Prime Minister
Good morning, Paul.

PAUL Let’s talk about that Australia New Zealand Leadership Forum just for a start before we get on to other business. What do you think the main thing was to come out of it?

BILL I think the main thing was a growing respect in Australia for the economic direction in New Zealand. We’re keen to get more investment for Australians into New Zealand. It helps create jobs, lift incomes They’ve got their own political pressures over there, and they are frankly a bit more respectful than they used to be of the direction that’s been set here.

PAUL One of the topics that interested people, I understand, over there was the idea of New Zealand and Australian companies working more together to access the Asian markets, particularly China. Was that so?

BILL Yeah, quite a bit of discussion about that. I mean, Australia’s had a huge boost from the huge iron ore prices they’re getting in Australia, but they’ve got a lot of other business going on in China, and, yeah, some discussion. I think it’s more a desire than a reality. It’s quite hard, actually, to get companies to work together commercially unless they’ve got very strong commercial interests. But I think we could expect government agencies to work together a bit.

PAUL There was another— Okay. There was another suggestion, I think from Phil O’Reilly, who’s on the programme this morning, that we should, given our business environment, which some Australian businesspeople see as more favourable than their own, here in New Zealand that we should encourage Australian firms to set up here and operate out of here and export from here. Is this feasible or we just kidding ourselves? Because Australians, they think they’re the centre of the world, don’t they? They don’t need to come in here.

BILL No, I think it is feasible, and we are seeing some Australian firms or Australian-based operations doing that. And certainly the indication over the weekend is that more and more of them see our combination of no infrastructure bottlenecks, stable energy prices, pretty clear policy direction as attractive.

PAUL Yes, I mean, is this an impression you got from officials and businesspeople over there that our business environment is seen as more friendly than the Australian environment?

BILL Well, they can see it getting better fast. I mean, in Australia, parts of their economy are really under pressure at the moment. Their numbers are similar to ours, but I think attitudes here are more resilient and more positive.

PAUL Yes, meaning we’re low wage. We’re the poor cousins, so it’s cheaper to do business here. That’s the guts, isn’t it?

BILL Well, no, I think we’re increasingly better organised. They don’t have to worry about different rules in different states, they’ve got pretty clear government direction, and they like the sound of it.

PAUL How are we getting on with people leaving for Australia? Because I notice that our environment is so good that 116,550 New Zealanders have left to live in Australia permanently since you came to power. That’s the trouble with your low-wage economy, isn’t it?

BILL Yeah, and so the question is what are we doing— what are we setting about to do to change that? And we are taking a recipe from the Australians from the last 20 years, and that is considered and consistent change over time, broad public consensus for reform to improve the opportunity to invest and employ, because in the end, those people will only stay here when a business makes a decision to invest some more money and employ another person at a higher wage. That’s what changes it.

PAUL I suppose too one of the attractions for New Zealanders about going to Australia is they’ve now got an 18-week paid parental leave. And when the six-month paid parental leave was suggested to you by Sue Moroney in her bill, you gave it an immediate veto. Were you right to do that?

BILL Oh, yes, we were, but the veto doesn’t apply until the end of the third reading. Look, we understand the pressures that are on families. And despite the fact that we’ve got one of the highest levels of debt – external debt – in the world, we’ve just done a 5% increase to the Working for Families payment on the 1st of April. All families on Working for Families got a 5% increase in those payments, we spent an extra 200 million or 300 million over the last three years on providing more early-childhood education hours, and we’ve been able to protect family entitlements, despite the largest deficits we’ve had in a generation.

PAUL Yeah, I accept this, but I’m talking about the politics of this veto, and I wonder is that the New Zealand way? Because the moment this bill came out of the ballot, you slapped it back with this ‘no, we’re going to veto it’. And most people thought that in New Zealand, we have conversations, Mr English, we discuss ideas, we vote on them, our representatives in the Parliament vote on them, and that’s that. Is a veto like this the New Zealand way? It’s almost presidential what you did.

BILL Well, no, it’s just what’s built into the system to protect the integrity of the Budget process. I mean, that’s a fairly technical issue. The fact is there will be a conversation. No one’s prevented from discussing this. We welcome that conversation. It’ll go through the parliamentary process. We can’t veto it until it actually gets to the end of the process, where it would start incurring expenditure. But the reason for the veto is just the matter of prudent management and orderly government. The last government used it about 30 times. It’s not a rare event at all, and it’s designed precisely to keep some order in the management of government finances.

PAUL Labour used it, of course, on amendments to bills, didn’t it, not just to blanket veto an idea. Do you actually believe in paid parental leave? Do you see its benefits?

BILL Yes, we do see its benefits.

PAUL Right.

BILL And that is why we’ve—

PAUL How long do you see as the realistic ideal for paid parental leave for a mum?

BILL Well, look, in the end, that’s a choice for mums and dads. I think most people—

PAUL It sounds like it’s going to be a choice for you. You’re the one throwing round the veto.

BILL Well, no, it’s a matter of, Paul—

PAUL You see, you’re not allowing the choice, Mr English. You’re vetoing the damn thing the moment it came out of the ballot.

BILL Yes, and that is to— Look, we have to be determined. We are one of the most indebted countries in the world. If you want the future of this nation subject to Labour and the Greens trying to buy votes with lolly scrambles, then we will get in a lot of trouble. So we’re using the veto so we’re clear—

PAUL Maybe so. Maybe so, but the politics of it is you’ll look mean. They might look profligate—

BILL Well, we—

PAUL but you’ll look mean.

BILL Well, I think— No, these— I think these are the trade-offs, Paul. As I explained, despite having large deficits, we’ve protected all family entitlements, we’ve just spent over $100 million on increasing Working for Families payments for 400,000 families in New Zealand who need that money.

PAUL I’ve got you. I know that. Look, I grant you all of that, but let’s continue this. Can we just talk, because I’m a bit confused, and I think everyone else is confused too. How much does paid parental leave cost us at the moment?

BILL I’m advised about 150 million.

PAUL And so what are you advised going up to six months would cost us per year?

BILL Well, if you double it, it’ll cost about double, and that’s the estimate that the Labour Party put on it before the election when they put this policy up.

PAUL But Moroney’s been very responsible in the sense she said, ‘We don’t want it until 2014-15.’ Now, by 2014, you’re going to be in the black, aren’t you? You’re going to have the books balanced at least. You’ll be able to find the money—

BILL Well, let’s just— Well, that’s yet to be seen, because we’ve got a Budget to announce in another month or so. And, look, when we get to surplus, the Labour Party and ourselves have both committed to put the first couple of billion into the super fund so that we can finance our long-term retirement for all New Zealanders. And there’ll be all sorts of pressures, and, of course, the pressures on families will be one of those pressures, and we will weigh that up at the time.

PAUL I wonder, though, if your initial reaction indicates that you’re thinking upside down, with respect, Minister. Your own science advisor, Dr Peter Gluckman, says this— Sir Peter Gluckman says, and this was in this report last year into kids, ‘Strong attachments between parents and babies in their first months help children’s development all the way into their adult years, and the money spent on babies is more effective than money spent on youth mental-health intervention later on.’ Is this not an opportunity to really start going in Gluckman’s direction – Moroney’s bill?

BILL Yes, so we’ve— Well, we’ve taken that opportunity, and I’m surprised that Labour and the Alliance— Labour and the Greens didn’t support us on this. We’ve looked at the most vulnerable mothers and babies in New Zealand, and that is the young mothers under the age of 18. There’s 2600 of them, and at the moment, they up until recently, they’re just left to sink or swim. Children having children with no— not necessarily any support. Some have it; most don’t. Subject to all sorts of pressures, creating all sorts of intergenerational problems. Now, the Prime Minister announced in August last year and then we put in the detail this year a package of measures to help those mothers and babies because we believe they’re the most vulnerable members of our society. If we’re going to crack the cycles of dependency, that’s where we need to crack it. So before we—

PAUL Got you. Got you. Understand that, but when it comes to paid parental leave, haven’t you sent the wrong signal politically, really, not just to the Parliament but to the country, the moment Moroney’s bill comes out of the ballot, we’re going to use a veto?

BILL No, I don’t— We haven’t sent the wrong signal. What we’re demonstrating is that we’re balancing the determination to get New Zealand out of its significant debt problem, because if we don’t do that, everyone’s entitlements are at risk. Look around the world, seeing what’s happened to the entitlements of those countries where they don’t have their debt under control, they’re all being cut.

PAUL Yeah, the trouble with that reasoning is— the trouble with that is, if I may so, you managed to find 80 million to allow the farmers to continue polluting, you managed to find 800,000 to bail Wanganui Collegiate. When it comes to working mothers having babies, nothing extra – veto.

BILL No, that is—

PAUL ‘We’ll veto it.’

BILL No, that is simply wrong, Paul. Just wrong. In the last few years, we’ve put an extra 200 or 300 million into early-childhood education. That is precisely to provide more hours for working mothers. We’ve just spent over 100 million increasing by 5% the Working for Families payments. So it’s not correct to say we’re not focusing on this area. We certainly are. We’re spending considerable money on it, but every time we make those decisions, we have to find the money somewhere else, and that’s the weakness in the Labour bill. They want to be able to spend the money, but they don’t want to take responsibility for where the money comes from.

PAUL Can I just ask you something else?

BILL We’re not willing to borrow it.

PAUL Can I just ask you something else to do with the arithmetic of paid parental leave? The Families Commission back in 2010 said, ‘Paid parental leave will pay for itself over the course of a working woman’s life because it keeps women in the workforce paying tax.’ Do you agree with that?

BILL Well, look, you know, we’re all subject to the pressure. We all have to think through the pressures here. One the one hand—

PAUL Well, that’s a long-term thing, I know, but—

BILL No, but what I just want to explain – on the one hand, we are spending quite a bit of extra money on early-childhood education, which is all about women getting back to work as soon as possible. And all the official advice has been that that’s a good thing. On the other hand, you’re getting the advice that says women should be at— could stay home if they make the choice with their babies for as long as possible. The fact is we’re funding both. We’re making sure that both of those are getting well funded, despite the fact that we’ve had large deficits. We’re just getting a bit ahead of ourselves, I think, here, Paul. All those arguments have merit.

PAUL I’ve got you. Now, can I just finish by asking you is there room for compromise? Is that veto that you’ve come out with saying that? Is that absolute? Is there room for compromise? If you start to see things picking up by 2013-14, might there be some room for compromise to extend another four weeks and so forth? Could you have that dialogue with Labour?

BILL Well, if the economy picks up and we get back to surplus sooner, then of course there’s room for discussion about all those things that people want us to have more of, but fundamentally we need a growing economy with less debt. We’re achieving those things at the same time as supporting our families by increasing their Working for Families payments, increasing their early-childhood education and maintaining the paid parental leave. I think we’ve got the balance about right.

PAUL Just very lastly, would you have made this decision, this veto if the boss had been in the country last week? Did you check with him? (laughs)

BILL I certainly discussed it. I certainly discussed it with him. But I think the point here, Paul, is the government finances will get in a mess if we allow Parliament to go around spending up large with no responsibility for how to manage where the money comes from—

PAUL Thank you, Minister. A good point. And there I have to leave it. Minister Bill English, Minister of Finance, Acting Prime Minister.

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