Labour set to reform monetary policy.

Labour Finance spokesperson Grant Robertson told Q+A, he would add employment to the Reserve Bank’s mandate.

'Yes, control inflation. That's important. But also monetary policy, the Reserve Bank's got a role to play in the rest of the economy, particularly in terms of jobs.'

CORIN But they do consider employment already, don't they? They go out and talk to businesses, they talk to unions, they talk to everybody already. That's part of the overall economy. And is there not a danger you're going to have them trying to go in two different directions here?

GRANT If they're already doing it, then they shouldn't be at all afraid about it going into the act, should they?

Labour Finance spokesperson Grant Robertson told Q+A ‘we can crack down on speculators right away’.

‘And we’ve been very clear that we’re going to extend the rules, that tax speculators, if they flip a property that they bought within five years. That will change immediately. We’re also going to ban off-shore speculators from buying existing housing.’

When asked whether Labour would reform industrial relations, Mr Robertson said, ‘It's about a balance. Nobody wants to see a situation in which we create an unbalanced system where we're not giving people a fair go. I think the time's come to rebalance.’

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

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Q + A 2017
Episode 5
GRANT ROBERTSON
Interviewed by Corin Dann

GRANT I think the big thing for me will be getting the Treasury officials in and saying, ‘The economy is not an end in itself. It’s about the kind of life we want New Zealanders to be able to live.’ And we’re going to start sitting down and working out every economic policy and how it benefits people on the ground in their daily lives. It’s really important that we manage the economy responsibly, that we look after every taxpayer dollar well. But in the end, that’s only useful if we’re delivering to New Zealanders a good quality of life in terms of the basics like housing and health and education.

CORIN So what are some actual concrete examples you could give me of ways that you could improve people’s lives?

GRANT Well, in housing a really simple example is to get that KiwiBuild programme underway right away. We want to build 100,000 affordable homes over 10 years. It’s going to be really important that we get the background work on that done straight away. That’s going to have a demonstrable improvement on people’s lives.

CORIN The housing affordability issue is an acute issue. So in six months, seven months’ time you’ll have that issue, if you win, on your doorstep. So the KiwiBuild will no doubt make a difference, but as you say, it’s going to take a couple of years to get up to speed. How do you make housing more affordable straight away?

GRANT Everybody acknowledges that solving the housing crisis is going to take some time; it’s developed over a period of time. So we do have to start to build houses. But on the other side of the fence, we can crack down on speculators right away. And we’ve been very clear that we’re going to extend the rules, that tax speculators, if they flip a property that they bought within five years. That will change immediately. We’re also going to ban off-shore speculators from buying existing housing. Those things on the demand side are really important in terms of controlling that demand while we get building housing up to speed.

CORIN Would you do that if, for example, the Auckland housing market plateau at the moment. And if we saw a reasonably strong contraction there, would you still do that if the Auckland housing market was actually coming off?

GRANT Yeah, look, I think we've seen over a long enough trend that we do have to control speculation in housing. And actually, that's a big issue for the economy as a whole. While we've got people focusing on making money from selling houses to each other, that means we're not investing in the productive side of the economy. If we really want to grow New Zealanders' wages, improve the economy, then we've got to turn investment to that productive side.

CORIN So why not go the whole hog with a capital gains tax?

GRANT Look, we've been really clear about that. Andrew Little was clear from the day he became leader, we need to look at the tax system as a whole. We're going to have a Tax Working Group that will look at all the structural issues in the tax system. But we believe right now we've got this Brightline test in place the government put in for two years. They were told two years wouldn't work. They were told it should be five years. We're going to do that right away, while we analyse the tax system as a whole.

CORIN You've talked about monetary policy and changing that. Why does monetary policy need to be changed? What's wrong with it at the moment?

GRANT I think if you look around the world, particularly since the global financial crisis, there have been a lot of changes in terms of monetary policy, but it hasn't had a big impact on what's actually happening in the real economy. It's really important that we control inflation. And that's what the Reserve Bank Act in New Zealand was set up to do 28 years ago. But that's not enough any more. Following on from the global financial crisis, we've got to have every part of the economic apparatus working towards our goals. For Labour, that means getting that unemployment rate down. So we want to make sure that the Reserve Bank not only controls inflation, but plays its part in growing the economy sustainably.

CORIN So what, you put employment into its mandate?

GRANT That's right. So what we want to do is do what's done in the US and Australia and other countries around the world and say, 'Yes, control inflation. That's important. But also monetary policy, the Reserve Bank's got a role to play in the rest of the economy, particularly in terms of jobs.'

CORIN Tell me how that actually manifests itself in real life.

GRANT Sure. So the Reserve Bank, when it's faced with a decision about what to do with interest rates, which affects everybody, they will look at, at the moment, whether or not they have price stability, what's happening with inflation. We're going to be asking them to also think about how we get more New Zealanders into work, how do we make sure that we bring that unemployment rate down? So if you want a real-life New Zealand example, in 2014, when the Reserve Bank Governor was thinking, 'What do I do with interest rates?' inflation was incredibly low, but unemployment was still quite high. If they've got a different mandate now to think about both of those things, then they may well have lowered interest rates rather than increased them at that point.

CORIN So all that you can ultimately do with this new mandate is have a slightly higher interest rate or a slightly lower interest rate?

GRANT Well, that's the Reserve Bank's job. That's what they do. Nobody's saying that the unemployment rate is controlled only by the Reserve Bank. What I'm looking for, because this is important to Labour — it's in our DNA, we want people in work — I want every bit of the economic apparatus working towards that. So we're going to have a load of policies around regional development, research and development tax credits, trying to make sure we get more people in work. I just want the monetary policy part of the equation going towards that as well.

CORIN But they do consider employment already, don't they? They go out and talk to businesses, they talk to unions, they talk to everybody already. That's part of the overall economy. And is there not a danger you're going to have them trying to go in two different directions here?

GRANT If they're already doing it, then they shouldn't be at all afraid about it going into the act, should they? What we're saying is our job as the government is to be absolutely clear with everyone who works in economy about what we want. For the Labour Party, getting more people into work and reducing the rate of unemployment is a core economic goal, and we expect the Reserve Bank to play their part in that. This is not unusual. The United States does this already.

CORIN No, I accept that. But unemployment, it's hovering around the 5% mark. What exactly are they doing wrong at the moment?

GRANT I think it's wrong if there are tens of thousands of New Zealanders who could be in work who aren't working. We should take that seriously.

CORIN But how will having slightly lower interest rates actually put people into more work?

GRANT Because that will encourage people to invest more in the productive side of our economy. We know that. We know that if people can get that money and then build their businesses up, that means they'll employ more people.

CORIN In 2013, when you campaigned to be leader, you talked about, 'It's time to throw out the neoliberal agenda.' Would you describe this change to monetary policy as 'throwing out the neoliberal agenda'?

GRANT I’d certainly describe this change as one that puts the goals of a progressive Government a Labour Government right there in the face of the Reserve Bank and that’s important.


CORIN Because your critics from the left will argue that you've now constrained yourself to spending limits of the government, that in fact, really, you're not going to throw any of the neoliberal foundations out at all, are you?

GRANT What we're saying is that the focus of government has to be on the kind of lifestyle we create for New Zealanders. I think the problem with the neoliberal agenda is it's based on a false view of trickle-down economics, that somehow or other people will benefit if those at the top get the most.

CORIN But you're not going to change any of that. There's still going to be an independent Reserve Bank, you're still going to have a Fiscal Responsibility Act, you're still going to have all of those pillars.

GRANT There's nothing that isn't progressive about being fiscally responsible. Let's think about what the last Labour government did. The last Labour government was able to keep debt extremely low, to have unemployment very low, to be very disciplined and deliver major social programmes like 20 hours' free early childhood education, Kiwisaver.

CORIN What about — and I know there are some in the senior parts of the union movement in New Zealand who would like to see this — where you move to industry-wide negotiations? Not quite a return to the awards system, but where, say, bus drivers have a minimum standard. Do you see some merit in that?

GRANT Look, there'll be announcements made before the election in this area. What I can say is we want to strengthen the right to collective bargaining, because we do believe that's a way of creating—

CORIN Pan-industry? Across industries?

GRANT I'm not going to make those announcements today. What I am saying is over the last nine years we've seen the rights of workers to bargain decrease, and wages are not keeping up—

CORIN If you're going to reform industrial relations, how would you describe it? A pretty major piece of reform?

GRANT We're the Labour Party, Corin. We're about making sure that people get a fair deal in the workplace. We've always been that way. It's about a balance. Nobody wants to see a situation in which we create an unbalanced system where we're not giving people a fair go. I think the time's come to rebalance.

CORIN Just to clarify on the 90-day trial period, because I think the last policy was that you would keep it but it would be adjusted. Why would you keep that if you’re, as you say, the Labour Party, it's not liked by unions.

GRANT Look, there have always been trial periods available under employment law. The concern that the Labour Party has had is that people could be dismissed without any feedback or any recourse. And we've been very consistent in saying we don't think that's fair.

CORIN What’s your message to the small-business owner, and there are a lot of them in New Zealand, who have just heard you say they might have to pay a higher minimum wage that could come out of their pocket? They may also face stronger union bargaining in the future under Labour. What is your message to those small-business owners who might be a bit worried this morning, hearing this?

GRANT The consistent message we've had from small businesspeople is they are looking for the support from government to help them grow. And I think it's really important that we make sure if we're going to improve productivity that we actually get more resources, more support for capital growth into small businesses. They're also looking for a better-trained workforce, and we're saying very clearly that we're going to support more skills, we're going to support more training. We're also going to get alongside them in terms of reducing compliance costs to make sure that they've got more time to focus on this.

CORIN So they've got nothing to fear?

GRANT Absolutely not. And the small businesses that I work with are actually the one, Corin, who pay their staff really well already. They are not the ones who are the focus of minimum-wage increases. It tends to be the big multinationals who aren't paying people well enough.

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