Sunday 14th February, 2010

Q+A’s Panel Discussions with Paul Holmes, Dr Jon Johansson, Phil O’Reilly (Business NZ) and Maxine Gay (NDU) have been transcribed below.

The full length video interviews from this morning’s episode of Q+A can be seen on tvnz.co.nz at, http://tvnz.co.nz/q-and-a-news

Q+A is repeated on TVNZ 7 at 9.10pm on Sunday nights and 10.10am and 2.10pm on Mondays.

PANEL DISCUSSIONS led by PAUL HOLMES

Response to JOHN KEY interview

PAUL So National's plans for the year, what John Key has called his government's crucial year of action, we go to the panel. We'd better deal with the uranium shares. Should the Prime Minister of New Zealand a nuclear free country, be the owner of however amount he's got of them at 13 cents, not very good shares by the sounds of things, should he be the owner of uranium mining shares.

JON JOHANNSON – Political Analyst
Well I mean he's got a blind trust right, so you know you'd like to think that he hasn’t got a clue what is included in his portfolio these days, but I think the wider question here is really about the use of overseas companies you know that may come in and do mining and that, and whether in fact a lot of this mineral wealth – you know the wealth could get repatriated with us just sort of clipping the ticket.

PAUL Well yes but the uranium shares, you know is it a bother?

PHIL O'REILLY – Business New Zealand
That was a sideshow, so really the issue here is how are we gonna make sure that the economy's more successful.

PAUL Fair enough and we'll get on to that very shortly, Uranium shares bothers you?

MAXINE GAY – National Distribution Union
Yes of course it does, he shouldn’t have them, nobody should have them.

PAUL Alright let's talk about the tax cuts he's talking about, here's what the Prime Minister said.

John Key: 'From middle to higher New Zealand in my view on a straight GST income split they’ll be much better off, or they’ll be better off or much better off. Lower income New Zealanders, those between 0 and $14,000 won't be worse off they’ll be a little bit better off but not a lot better off because they don’t pay a lot of tax there.'

PAUL So I mean that is the question Maxine isn't it, that the more tax you pay, when we get tax reductions, you know you're gonna get a better reduction.

MAXINE The Prime Minister is attempting to sell the biggest tax increase in 20 years.

PAUL He says that’s nonsense Maxine.

MAXINE Well I want to dispute.

PAUL He's talking about tax cuts Maxine, how can you say that’s an increase.

MAXINE He's talking about increase in consumption tax by 20%, so it's very difficult to see how low income people who spend 60% of their income staying alive, getting to and from work, can be compensated, so a 20% increase in consumption tax by personal income tax reduction, the money has to come from somewhere.

PAUL You're saying there's no way they can balance the GST rise against reduction for low income earners.

MAXINE Absolutely there is no way, the money has to come somewhere, it's in order to give a significant and spectacular decrease in tax to the upper income earners.

PAUL Why would he want to do that, well he wants to keep graduates here for a start. Phil O'Reilly what do you think?

PHIL This isn't just upper income, this is plumbers we're talking about, this is everybody above 70Ks on the top row, that includes many of Maxine's members I suspect so this is really about getting some fairness in the tax system.

MAXINE When Phil O'Reilly and the Prime Minister talk about wanting to do something for the workers I think it's time for the workers to be afraid, very very afraid.

PHIL The Prime Minister's also said that he's gonna look after the less well off, he made that point again this morning. Now, the truth will be in the pudding of course, and one of the political difficulties he's got is the people like us who are gonna double guess him for the next few months trying to work out what he really means, and I saw Guyon doing that today, but this is not just about the so-called rich listers, this is about plumbers and electricians all the rest, that go to Australia and don’t then deliver quality jobs in New Zealand.

PAUL Well of course it's the Rich List he's attacking is not paying what they really ought to be paying in terms of tax, and I mean Maxine go to the speech and you will see nothing but the word fairness written all the way through it.

MAXINE That argument says that if we reduce the top rate people will pay it more, that’s akin to saying if we reduce the price of cars, car conversions won't happen any more. I mean that’s a nonsense, it's a complete nonsense.

JON I agree with Phil about the second guessing business, but I walked out of that speech on Tuesday and my comment to my colleague was, that sounded like an opening bid to me, and I think he wants us to discuss this and debate this, and there's gonna be a hell of a lot of polling done by the ninth floor to find out what is actual political – you know what he's gonna be able to sell.

PAUL Jon in that first part of the speech he painted a picture of what that achieved last year, 11,805 more elective operations, the P crack down, Plunket Line 24 hours and so on, this kinda stuff. There's a perception they didn’t do a lot last year, why is that?

JON Well I think it really emanated from the budget in the fact that you know he didn’t do a big stimulus as was done in elsewhere, and I think that fuelled the perception that pretty much it was a status quo government, and I think that’s probably got to the Prime Minister and why you know in many respects this is a very elaborately constructed continuation of last year's sort of policy programme.

PAUL What do you think on the business of perhaps if people don’t really look for a job Maxine after a year, well maybe they shouldn’t be getting the benefit, maybe that’s not fair to their fellow citizens. I take it you would fundamentally disagree with that.

MAXINE Well that’s disgraceful, it's completely disgraceful, we have 7.3% unemployment and we've already had the Prime Minister's own admission that there are insufficient jobs, where's the investment strategy that’s supposed to sit behind all this, where's the industry policy that’s supposed to sit behind it.

PHIL He actually points to some of that in his speech as a matter of fact, but the media just didn’t cover any of that kind of industrial policy sort of stuff. The point I'd make is, I'd agree with Maxine a little bit on this, you need to be very careful about having a one size fits all welfare policy, just because someone's been on the dole for a year doesn’t necessarily mean that they haven't been trying, but if they haven't been trying then I think the system needs to get quite ....

JON Then but you still have the problem, okay you chop a benefit at the end of the year, then what?

PAUL And at the moment we've got 72,000 what people between 18 and 24 not in training, not in work, and of course the longer you're unemployed I spose the harder it is to get a job.

MAXINE And the effect of what has been talked about today will simply increase the inequality in society and all of the problems that come with that.

PAUL Yes he was hardly the Dark Lord of Mordor on this was he?

MAXINE Well people opposed to mining might think he is, what are we going to do ....

JON My thoughts from this money-go-round really is that okay it's revenue neutral, so we're still gonna have a deficit problem and it's gonna be some years before they're chipping away at the public sector is going to make any dint on that. So you know I think they're entitled to re-engineer the tax system to make it cleaner, but I just – I think some of the assumptions there are heroic about over like the depreciation, whether they're actually going to get this 1.5 billion back, because these people can restructure their affairs.

PAUL Well we see there is much restructuring and thinking through by the government to be done before May of course.

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Response to Russel Norman and Doug Gordon interview

PAUL Alright so let's find out what the panel thought about mining in the conservation land. Does that debate show us a little bit about what this debate is gonna be like?

JON Absolutely, that was a microcosm of what's going to occur over the next few years, because people feel emotionally attached to their place and it pits two different visions of New Zealand, you know New Zealand primarily as a place to live, versus New Zealand primarily as a place to do business, and people feel very heated about it in both camps. So this is gonna be a rancorous debate and I think what the government has to do is make it very very clear to the public precisely what is being done, how they're going to weigh this trade off between the environmental as Russel points out, and the potential mineral wealth as Doug was talking about.

PAUL It's not just a green issue too, it goes to the middle classes doesn’t it, you know the Aucklanders with the house at Omaha Beach, with the place at Whitianga or Whangamata, you know who wants a mine over the back yard and great big trucks rolling up and down the road in the summer time. So it's got big capacity, big political capacity, do you think Phil?

PHIL Well one of the things that worries me about this whole debate is the absolutism of it, it's ridiculous, so we're gonna dig a hole and no tourists are gonna come, get outa here, so it's really a case of what's reasonable and how you work out that balance.

JON But we have not had the debate in this country about how resilient that brand is, and what the opportunity cost is if that brand is destroyed.

PHIL Precisely, but it's because there's been absolutism on the other side.

PAUL But we go to countries as New Zealand is, and we admire the natural beauty, we go to the Grand Canyon, we go to Yosemite, and we know they’ve got huge mining operations somewhere in that country, but it doesn’t stop us going there, what do you think, gonna be a big one?

MAXINE Well I found it interesting, particularly following Kim Hill's interview yesterday with Sefton somebody or other who has written a book called The Resource Curse, and he made the point that just because you discover oil or minerals it doesn’t actually mean that the citizens in your country are going to be better off, and in fact in many cases they can be even more impoverished. We have the equivalent of a mining industry here, we have white gold, and all the degradation that comes from that, and one of the fascinating things in Don Brash's report looking at the gaps between New Zealand and Australia, was if you took Australian mining and the mineral industry out of the GDP per capita, and you took New Zealand's agriculture and fisheries out, what you ended up with was the gaps that were exactly the same.

PAUL Alright, petroleum exports last year accounted for one billion dollars of revenue, 550 million of that was just clipping the ticket, it was royalties, I don’t see how that damages the country, but no you're right about the absolutism. I mean why can't Russel agree to perhaps looking at every case, case by case when he's assured by the Prime Minister who is also the Minister of Tourism that there'll be very strict rules.

JON You need to turn down the volume and turn down the slogans on this Paul and just have logical debate about it, we're already mining the conservation estate.

PHIL So you know the sort of absolutism of the debate really concerns me, but I'm a Kiwi too, you don’t want to go and destroy the natural environment in the way that we see in so many other countries. So this is a real New Zealand debate I agree.

JON But to have that debate you need a lot of information so people can make informed decisions.

PAUL If you look now at total revenues from mining in New Zealand being two billion a year and it could be by 20-25 250 billion, god where's the argument. Jobs.

MAXINE Well in a free market world price environment it's a fallacy to say that the citizens in that country may well be better off as a result of that, the fact of the matter is that they aren't ...

PAUL You shouldn’t be listening too much to old hippies on national radio.

MAXINE Well you and I can remember a day when we used to get free milk or subsidised milk, if the dairy farmers did okay. It's illegal to do that now, so similarly if we found oil and the world price for oil goes up it would be illegal for New Zealand citizens to be subsidised or have cheap oil, so it's a nonsense.

JON I think what the Prime Minister needs to do as Phil was saying, we need to understand what terms mean, like there's going to be you know special protections and looking at how they're going to do it cleanly and all of that, so that we understand better what is being done.

PAUL Didn’t you know old Doug Gordon's line though about how mining is in fact 36,000 people go to the Pike River Mine or something like this, so the mine can be a fascinating thing and a tourist attraction.

Now to the week ahead – what are you looking at happening this week?

MAXINE Well this week I think we'll see increasing opposition to the government's programme of tax cuts for the top end and rises .... In addition to that we're going to see ACC back on the agenda with you know the opposition to the privatisation and cuts with the rally forecast outside parliament in Wellington and the NZEI bus collecting signatures will be in Auckland to have a trial of industry standards.

JON Cos those of us not obsessed all our lives in economics the big politics this week is going to be the announcement on Tuesday about the MMP referendum and the Electoral Finance Act, and I think that’s actually going to shift our discourse off on to fundamental democratic stuff.

ENDS

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