John Key Interviewed by CORIN DANN on Q + A
Q + A
Episode 17
JOHN KEY
Interviewed by CORIN DANN
SUSAN Now to Wellington
to the National Party Conference, Corin spoke to the Prime
Minister John Key.
CORIN Well Prime
Minister thank you very much for joining us on Q+A. It's
interesting looking at your slogan behind us saying 'Working
for New Zealand'. Is your government working for all New
Zealanders? There is a big working poor, a group of working
poor in this country that are still doing it pretty tough
despite the fact we're a so-called rock star
economy.
JOHN KEY – Prime Minister
Yeah without doubt there are a group of New Zealanders that are doing it tough. What we do know though is if you look at children who are defined to be living below the poverty line as it's defined in New Zealand and the developed world, a lot of those families are on welfare, they're not in work. Now not exclusively, there certainly are some working poor. So one of the big things the government's trying to do obviously is transition people into work and I think that is working with 1500 people a week coming off welfare to work.
CORIN But is work enough for
them because if you look at the average wage, around 55
thousand dollars, by your own figures they're only looking
at small wage gains over the next three years. Now is that
going to be enough to cover the cost of
living?
JOHN Well firstly there's
quite a big differential obviously between welfare and
working. So being in work absolutely is a positive uplift
for their household income, but secondly you know the
government has supported and will continue to support the
redistributive programmes that we run, like Working for
Families, accommodation supplements and the
like.
CORIN But they're not going to
increase more than the rate of inflation are they? They're
just going to go up as they are.
JOHN
No, but the government would expect wage growth to
be running faster than inflation that’s been the case over
the last three years, where broadly it's been about double
the rate of inflation.
CORIN Sure,
but that’s not a huge amount though is it? It's 1 to 1½%
real wage increases. So for someone on $50,000 that is a
small amount of money to look forward to over the next three
years when they’ve got rising power prices, higher than
the rate of inflation, and all sorts of other costs. You
know they're not going to get ahead are
they?
JOHN Yeah, so I think I'd say
firstly, (a) we're very focused on their costs, and I think
if you take electricity prices as an example, yes they’ve
gone up under a National government by about 20%, but again
much much slower rate of increase than under the previous
Labour government at 72%. Secondly, people don’t always
stay in the same job, I mean of course people transition
into you know more highly paid jobs, or different forms of
employment. So at the end of the day I think what the
government can realistically do is build a solid foundation
that will see investment from the private sector and jobs
created.
CORIN So for those people,
that working poor, that group that are doing it tough around
the average wage, what are they going to have to look
forward to over the next three years though? It's going to
take such a long time for their wages to come
up?
JOHN Well firstly I think they
can genuinely look forward to a stronger economy. So you're
seeing that confidence coming back with people saying yes I
can get a job, and you see it in what the economists say are
the participation rates – how much of the workforce is
actually out there looking for a
job…
CORIN But that’s a double
edged sword isn't it, because the extra work is coming in to
the workforce, plus the immigration numbers being strong.
That means that employers can find the labour they need in
the low skilled areas and don’t have to push up
wages.
JOHN Yeah, though overall
we're still seeing more employment being created, and we
still are seeing wage increases there. Don’t forget the
government's been working hard on the number of different
factors to ease the burden on people. So for instance, the
first time we got a chance with a budget surplus being
posted for this year or in anticipation of that, we rolled
out that programme for free doctors' visits for under
13s.
CORIN So are we going to see
more of that if National is re-elected, more of that –
helping that group perhaps the lower middle class that are
simply pretty much going
nowhere?
JOHN Well I'd like to think
that we can support them. I wouldn’t make the case that
they're going nowhere. I think if you contrast New Zealand
to the rest of the world, there’ll be plenty of people
even in a country like Australia who are genuinely fearful
that they’ll either keep their job, or be quite worried
that they won’t get a job. And in pretty much every
developed country in the world there's going to be a range
of people at a range of different
incomes.
CORIN But I mean the
argument about inequality that’s raging, the best National
seems to be able to offer is well it hasn’t got any worse
under us. That’s not a very good goal is
it?
JOHN Yeah but again if you look
at other countries in the world we can see some evidence
where income inequality's been getting worse. My main point
over the last 20 years really is that I don’t think on
that measure it's got worse. But what I do think is the
much more pertinent question to ask is income sufficiency.
Do people have enough to live on? Well I certainly know if
they don’t have a job it's very very
frugal.
CORIN But do they have enough
to live on?
JOHN I'm not saying
they're racing ahead, but what I would say is if they're
moving into work they're in a lot better shape than they
were.
CORIN How would you cope on
$55,000 a year with all your rent and all those sorts of
costs rising? It's pretty
tough.
JOHN It is, but let's think
about it in these terms. If you earned $40,000, so below
the average wage, which was running in the mid 50s, if you
earned $40,000 you have three children and you live in
Auckland, let's say for want of an argument, how much does
your next door neighbour have to earn to get exactly the
same level of after redistributive income, how much do they
have to earn if they have no children. The answer is
$73,000. So as a country we're quite generous, with a
family with three and earning $40,000, their after tax
income is the same as the one earning
$73,000.
CORIN Sure, but you’ve
talked about tax cuts, and you’ve talked about that it's
that group that would benefit wouldn’t it? So how would
that look? What sort of tax bracket would you aim
at?
JOHN Well I think the first thing
I'd sort of cautionally say is we haven't designed a tax
package yet. We have said there is a bit of free room there
which we could possibly use to give back to New Zealanders
…
CORIN And it's your promise that
it's that group that would benefit?
JOHN
Oh I think logically it would be low to middle
income New Zealanders, but the only thing I would say is
I've been at the forefront with Bill English of designing
tax packages both in Opposition and in government. They're
hugely expensive.
CORIN But it's not
going to be much at the end…
JOHN
It's not very much no.
CORIN I've
talked to business ahead of this interview about what they
want. They want a corporate tax cut. Is that on the
agenda?
JOHN Not today, but I
wouldn’t rule it out at some time in the
future.
CORIN In the next three years
if you're re-elected?
JOHN Well again
we haven't designed our tax package, but what I do know is
that corporates want to be competitive, and when they are
competitive they're investing, when they're investing
they're creating jobs. Now I think at 28% which is our
current corporate tax rate not bad as a level, and business
aren't really hammering me for that. What I will say
business is saying is we do want more flexibility in
employment law. We certainly do want reform of the Resource
Management Act, so we're focused in other
areas.
CORIN Would you go further on
employment law, the employment law that’s stalled, would
you actually push that further if you're
re-elected?
JOHN Don’t think so,
but I'd like to get what's stalled actually through the
parliament…
CORIN The other issue
they raised with me was the aging population. They said
okay John Key's not gonna budge on going to 67, because he's
made a promise you know that’s it. So what are you going
to do, because there is a problem looming
there?
JOHN Yeah, I mean I think it's
worth putting a bit of you know perspective around that,
which is to say that we have about 600,000 New Zealanders
aged over 65, and we can all see that it's going to a
million over time. But it's not going to hit us in day one.
Secondly we have one of the cheapest retirement
plans…
CORIN But you're kicking it
down the can to the next guy aren't
you?
JOHN Well not really. What I'm
saying to you is that I think there are a range of times
where people might want to retire, but legitimately in some
occupations that actually will be 65. For one in four
workers they're staying in the workforce anyway aged above
65. So it's not like they're getting kicked out of the
workforce.
CORIN The environment is
an issue that’s starting to come back post global
financial crisis. A big issue with Obama and John Kerry and
those things. Your government is obviously very keen to see
dairying grow, intensification of dairy farming, more water
storage, more dams. The Ruataniwha Dam decision is a shot
across the bow though isn't it, that says actually we can't
intensify farming much more than this because the run-off of
nitrogen is going to be a major problem. What are you going
to do about that.
JOHN Yeah, so
Ruataniwha is an interesting decision, and it's Board of
Inquiry that’s made that decision, so I don’t want to
cut across you know what I think is a draft determination at
the moment. But what I would say is there's quite a bit of
debate about the science that’s actually been applied by
the Board of Inquiry. Vis a vis, because don’t forget
it's the Hawkes Bay Regional Council that’s actually the
applicant for the decision.
CORIN So
are you going to fight the science on
this?
JOHN No, what I'm saying is
that the Board of Inquiry is applying science which is at
least disputed I think in the application made by the Hawkes
Bay Regional Council, but what I'd say in terms of the
broader issue…
CORIN The science
doesn’t fit your model does it? Because you need to grow
the dairying?
JOHN Well I think
there's be a lot of people who might contest whether
that’s right or wrong in that particular instance. What I
am saying though is that you're right. We do see increase
in dairy as a big opportunity for New Zealand. We also know
absolutely that we need to be mindful of balance and in face
improve our environmental outcomes. And water's at the
forefront of that. But it's not like the government's been
silent on that issue for the last three or four
years.
CORIN But would you overrule
if the Board of Inquiry – if it all goes through and there
are limits on nitrogen that had ramifications across the
whole country, would you overstep that?
JOHN Well that’s not our aim of
doing that. What I would say though is we need to find a
way, and make sure through science, that’s accepted and
through our practices that we can have the best of both
worlds, increasing dairying output at a time where we’re
improving our water quality. As I said the government
hasn’t been silent on that issue because we know to New
Zealanders that’s very important. We're doing everything
from working with Fonterra who have fenced 22,000 kilometres
of waterways, having the Land and Water Forum actually
working very closely with all a variety of groups. You are
seeing an improvement in water quality in various areas.
We've spent about a quarter of a billion dollars cleaning up
waterways.
CORIN If I could move on
to just briefly on the issue of coalitions and partners and
those sorts of things. I want to talk about Colin Craig but
the reality is you're going to need to work with Winston
Peters after this election if you're going to win aren't
you?
JOHN Potentially, I can't rule
that out. I mean I have done what I think has been affirmed
actually by the TVOne poll, which is three quarters of New
Zealanders, irrelevant of who they're voting for, think it
actually makes sense for a political leader to say here are
the parties that we could work with. Because you know you
do want to know what the combinations are roughly
like.
CORIN Sure, but the issue with
Winston Peters is how will you work with him? You’ve
ruled him out twice. He's spent the last three years
attacking you on everything he possibly can, I mean
attacking your credibility. How do you then put him into
potentially the position of a Minister?
JOHN I suppose anyone that’s been
a student of New Zealand politics would say situation normal
for Winston Peters. I mean he attacked Jim Bolger, he
attacked Helen Clark. I remember being in the Opposition
back in 2002, and Winston Peters being in full
flight.
CORIN So you believe him it's
all a game?
JOHN Well I don’t want
to speak for Winston Peters. I think there's a legitimate
question actually to be answered about whether Winston
Peters would want to abstain or work with a National
government. I genuinely cannot answer that question. I
know that historically he's tended to say he'll have at
least discussions with the biggest party, but that doesn’t
mean that he actually has that
discussion.
CORIN Would you put him
in a Cabinet?
JOHN Well it's already
impossible to have those discussions today, because we
don’t know what the outcome of that
….
CORIN I mean he was very good in
Foreign Affairs, most people thought he did a good job in
that role.
JOHN I think the real
point here is, I do believe that the least overwhelming bulk
of New Zealanders who are going to vote for a particular
party want National returned, that’s certainly what the
polls show, and I think on the basis that they accept under
MMP I've got to find a way of navigating through what is
unlikely to be a situation where we could govern alone, then
I have to do what any other political leader does. I mean
David Cunliffe won’t be anything different, he'll be
sitting there saying what are the combinations I can put
together to form a
government.
JOHN It's what we're
required to do, short of saying to the electorate we're not
mature enough to try to find a way through and you have to
go back and have another election, which I think New
Zealanders don’t want.
CORIN Prime
Minister John Key, thank you very
much.
ends