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Q+A Panel: Response to Bill English - 17/03/13

Q+A, 9-10am Sundays on TV ONE and one hour later on TV ONE plus 1. Repeated Sunday evening at 11:30pm. Streamed live at www.tvnz.co.nz


In response to BILL ENGLISH interview

Welcome Dr Raymond Miller from Auckland University, former Greens co-leader Jeanette Fitzsimons and from Tower Investments, Sam Stubbs. Very good morning. Great to have you here. Let’s start with water and drought. Is the government, and I’ll start with you Raymond, taking leadership on this? Bill English was trying to say so, but I don’t know that I was hearing it.

RAYMOND MILLER - Political Scientist
No, I don’t think I was either. Admittedly, the drought kind of snuck up on us, to a certain extent, and I think the fact that the minister responsible for agriculture happened to be in Latin America for nearly two weeks when farmers were crying out for help suggests that the government may not have anticipated what was happening.

SUSAN And his comment from there was, ‘I can’t make it rain.’

RAYMOND Exactly. So I wasn’t reassured by what the minister had to say at all in terms of any future planning. He really put the onus on the farmers themselves, but the farmers need to have some overall policy, I think, by government.

SUSAN Jeanette, Bill English was saying, ‘We’ve been working for three to four years on this. We’ve got all these plans in place and an enormous amount of goodwill, and, in fact, we’ll be doing more than any government has ever done.’

JEANETTE FITZSIMONS - Former Co-Leader, Green Party
Look, when you look at the agony that farmers are going through at the moment with stock getting thinner and grass dying, it’s just tragic that Bill English is still in denial about what’s going on. He still doesn’t accept that this is a long-term trend with climate change, and his only solution he put forward this morning is this water plan, which is just large-scale irrigation. It’s large-scale water capture and divvying up the water among farmers that can pay for it. That’s not going to help sheep and beef farmers on hill country. It’s not going to help a lot of farmers that are not into irrigation. There are a lot of things you can do on farms - more organic matter in the soil, which organic farmers tend to do. Those farms hold up better if the humus is there. A lot more trees on farms, um, shade, extra fodder, bringing up water and nutrients from deep down. Small dams on farms, rather than massive irrigation schemes. Look, Bruce Wills of Federated Farmers has got a model farm in this respect. He’s been planning for droughts and climate change for years, and he’s got it right. I hope he manages to get that to spread through the Feds.

SUSAN Well, Sam, I mean, how much is the farmers’ responsibility? We did hear climate scientist Dr James Renwick saying, in fact, it’s still going to rain in winter. So we’re still going to have plenty of water. It’s going to be a matter of storing it for summer. Who’s supposed to be storing it and who pays?

SAM STUBBS - CEO, Tower Investments
We’ve just had a huge reminder that we’re a water-based economy, that this is our single biggest strategic resource, and anyone who uses it or needs it to run a business has got to start planning for this. And what we’re hearing is there’s going to be less of it. So there has to be this planning. It’s got to be done at every level. I think it’s very, very naïve of anyone to assume that something which our economy needs and which suddenly we’ve been reminded has become scarce now does not need central government input, local government input and individual farmer and businessperson input. And, of course, what happens now is it gets scarce, and that means it gets more expensive. And when it gets more expensive, then everyone pays a lot more attention to it, right? And it becomes political. We have just had a salient reminder now that water is a political issue as well as an economic issue. And as we get into the mixed-ownership model, where all these power companies need all this water as well, you’ve got another layer of politics being thrown in there as well.

SUSAN Well, I mean, what’s it mean for Mighty River? You know, we’re seeing the Waikato River at the moment at all-time lows. This is a business that’s based on water.

SAM And, look, when something is free and plentiful, everyone just assumes, and no one’s really very interested in it. When it suddenly becomes scarce and expensive, then you get all the stakeholders coming out, and I just think you’ve just seen the first layer of politics now with stakeholders coming out in the mixed-ownership model. You’re going to see it now as people start realising that it may be scarce over the whole country. So we’re going to see a very, very, very interesting debate developing now as everyone’s had a huge wake-me-up that this is the big strategic-

SUSAN Do you think we will, though? Or do you think it will rain and we’ll all forget about it and we’ll turn the taps on?

RAYMOND We’ve always associated drought with Australia and with parts of the United States. We haven’t very often talked about drought in relation to NZ. Of course, there was one in 2007, 2008. But listening to Professor Renwick today, we can’t be reassured that this won’t happen on a more regular basis in the future.

SUSAN One to 50 turns to one to 25 or maybe even one in five [years].

RAYMOND That’s right, so we have to change our mindset. It’s not just in the farming communities. We also have to play our part in the cities as well.

SUSAN All right, let’s move on to Solid Energy. Interesting - I wonder if I’d heard a hint there - I’ll take this to you, Sam - from the minister. He was talking about the SOE model. He talked about the Crown having to learn lessons after Solid Energy. You know, is there an issue actually with the model and accountability, because everybody does that [demonstrates banging knuckles] and blames the other guy?

SAM Yeah, look, and look at what Churchill said. ‘Those who forget the lessons of history are doomed to repeat them.’ Right, look at Solid Energy. In 1999 this company lost $87 million. Don Elder was actually hired and given a three-year mission to wind the company up. Get rid of the company. We don't want it on the government's books. The taxpayers in NZ shouldn't own this. And here we are again. The company makes money, the dividends are attractive, it's politically very difficult to put people out of jobs - selling off the family silver. There’s a huge political tension when you get businesses which should be in the business of making money and go through economic cycles. And, in this case, this is a hugely volatile industry - coal. Companies go bust all over the world all the time in this industry.

RAYMOND And that's why I can't understand, Susan, that the government has really hung the previous management and directors out to dry on this one. The government must bear some responsibility. Let's look at it. 2008 when National came into government, we were entering a recession. Clearly, the demand for coal was going to be reduced over time from places like China. Yet, it demanded a dividend. It also advised them or told them to actually borrow. The government has some responsibility for the- You can't just wash your hands on it and say, ‘They’re not responsible.’ In fact, they are. When you talked earlier about the blame game, there is a sense in which governments very often will blame everyone else for the problems, apart from themselves. And, really, in this case, I'm a great admirer of John Key’s leadership. He has been remarkably popular over time, but there is this tendency to blame everyone else but yourself.

SUSAN Jeanette, one of the things they blamed was renewables, and there was a big number of floating around about what had been lost in renewables. Are you buying that argument?

JEANETTE What they lost in renewables was tiny compared to what they lost on coal. Even leaving out the lignite projects, which is at least another $50 million, they lost three and a half times as much on the coal projects as they did on the renewables. The renewables are just the fall guy, the scapegoat. In fact, Solid Energy had a glimmer of a good idea. I've heard now both Don Elder and Bill Luff say, ‘Coal is a sunset industry.’ Well, they’re right. And recognised that, and they said, ‘Let’s diversify.’ They did it really badly.
SUSAN They’re not alone in that, are they? I mean, you look at the US. They dropped $500 million on a solar energy plant in California. They're not alone on losing money on renewables.

JEANETTE Right, well, you can do renewables badly and you can do them well, just like any other project. But, actually, the government pulled the rug out as well. When they invested, there was a biofuel obligation on oil companies. The National Government pulled that out and they dropped the subsidy. When they invested in the wood-pellet plant, there was plan to be a decent price on carbon, which would have made wood pellets competitive. There is no decent price on carbon.

SUSAN So the government has changed the plan?
JEANETTE The government has completely move the goalposts. And now, of course, you hear Bill English say, ‘Well, of course private shareholders would run this better than the government.’ Just like Mainzeal, like Bridgecorp, like Nathans, like Hanover. You know, the private business obviously does better, doesn't it? (CHUCKLES)

SUSAN The Budget - one quick comment, Sam, on that. We’re hearing they’re going to spend a bit of money. The word I didn't hear was ‘jobs’.

SAM Yeah, look, I think this government really has set some very, very, very strong and very understandable general policy directions. I'm not expecting anything wild out of this Budget in terms of change, because, of course, what they would say is the big focus they've had over a long period of time will be job creation over time. So I think you got the message there - this is a tinkering Budget.

RAYMOND This will be a tinkering Budget. It’s not going to be a very generous Budget, I don't think. That's more likely to come next year, because next year is election year, of course. But this year, I think, and particularly given the Christchurch earthquakes, given the drought, there are plenty of reasons why the government doesn't want to start throwing money around. On the other hand, one can't expect they are going to do anything major in terms of reducing government spending in areas like students, for instance, student fees and so on.

SUSAN Very good. We’ll be back with the panel later in the programme.


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