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Q + A Panel Discussions

Q + A
Panel Discussions
In response to PHIL HEATLEY

PAUL Time to welcome the panel now this morning – Phil O’Reilly of Business New Zealand; Sue Kedgley, former Green MP; and Associate Professor Claire Robinson from Massey University. Well, so it’s a $4-billion contribution to the GDP at the moment. They want it to go up to perhaps 12 billion. Why not do it?

PHIL O’REILLY – Business New Zealand CEO
Well, exactly. Why not do it? And the reality is that what they need to do is bring the public with them. They’re doing a poor job of that, as the last government did. So really what you’ve got to do is speaking about those intergenerational benefits that Phil Heatley was talking about, schools and hospitals and so on, he’s talking about that in far too shallow a fashion. We really need to have a decent conversation in New Zealand about what benefits accrue to not just us but our children and our children’s children.

PAUL We’ve got to remember they’re not talking about mining— they’re not talking about mining the conservation estate, though. This is the thing. They’re talking about extending oil drilling, for example, into our 13 basins—

SUE KEDGLEY – Former Green MP
The problem is that what he didn’t mention is that what we’re looking at is deep-sea oil drilling into deeper and deeper waters, and that is incredibly risky. And we simply do not have the capacity in New Zealand to manage a deep-sea oil spill, so why would we allow—

PAUL They do it all around the world.

SUE Why would—? Well, we’re an island nation. If we had an oil spill such as happened in Mexico, it would ruin our nation. Why would we take a risk if we do not have the capacity? It is— Yeah, the East Coast drilling is going to be deeper than the Gulf of Mexico. If we had a—

PAUL (laughs)

SUE If we had a deep-sea spillage and we know we can’t manage it, so why would we allow that? So not if the risks outweigh the benefits.

PAUL Yes, Claire Robinson.

Dr CLAIRE ROBINSON – Political Analyst
Well, it’s interesting subject for a number of reasons. One, you know, economically, I think as Shane said, we’re not getting a great deal of profit coming back to New Zealand from any of these industries. Most of the profit goes offshore—

PAUL What are you talking about? We get 42%. Well—

CLAIRE We get jobs.

PAUL But they’re the ones spending the money, Claire. We have 42%.

CLAIRE Yeah, but we don’t get—

PHIL It’s our fourth-biggest export. That’s a big—

CLAIRE Yes, but we could be earning a hell of a lot more from it, and what we do is we say, ‘Oh, great, we’re going to get 7000 or more jobs from it.’ You know, these are not particularly high-paid jobs that we’re getting.

PHIL That’s not right either.

CLAIRE We’re not very ambitious in terms of these things. We could be looking a lot more. But I think politically it’s very interesting because it is a subject that the Greens are going to have— are essentially going to run the agenda on. Both National and Labour are very much about economic growth, jobs, profits, but the issues that Sue is raising, which are the, sort of, the scary ones, the more emotional ones, they’re the ones that are going to really come up to the top of the pile.

PAUL I think what you’ve got to remember too about the big international mining companies is they don’t want their rigs going belly-up either. They don’t want major fires.

SUE Well, BP didn’t want—

PAUL They didn’t want their investment— No, well, that’s right.

SUE They didn’t want what happened in Mexico. And the other issue the Minister isn’t mentioning with fracking, ‘Oh, look, we’ve been doing it in Taranaki,’ well, that was 20 or 30 wells. What is being proposed here is a massive expansion. The government has permitted something like 4 million hectares for fracking, so there’s a massive expansion. We don’t know whether it’s safe. We don’t have national conditions. We’re leaving it up to councils like Gisborne which say they don’t have the resources and the expertise. Can’t we learn from Pike River? Can’t we learn from Rena?

PAUL Let’s talk about fracking shortly because I still want to talk about— I mean, I thought Phil Heatley made a very good point. As you say, the export of oil has suddenly become our fourth-biggest earner. When did that happen? How did that happen? And for many many years, you’ve had this dairying and tourism living beautifully alongside oil mining—

SUE Shallow oil mining.

PAUL But nevertheless, they can live together in Taranaki. Isn’t that the lesson?

PHIL And that’s the nature of the debate we need to have in New Zealand. It cannot be one or the other. And I kind of— I get upset about this idea that the economy needs to be balanced with the environment. In fact, we need to make sure both are doing better. And when we did the Green Growth Advisory Group report for government last year, we made that very point to them. So some of that oil money, for example, should be used to improve our biodiversity in New Zealand overall. I think if you said to New Zealanders, ‘As a result of drilling for oil, your grandchild is more likely to see a kiwi in the wild than you are today,’ that would be a great outcome for New Zealand—

PAUL And if we want better schools— God, if we want better schools, want better health care, we want better— and we want paid parental leave, the money’s got to come—

SUE And what will Phil Heatley have to say if in 10 years’ time we have an oil leakage on the scale of the Gulf of Mexico—?

PAUL Well, that is exactly so. That is exactly so.

SUE Here destroying, ruining our nation?

PAUL And if the clean, green goes down the dunny, we’re down the dunny, aren’t we?

PHIL This shouldn’t be about fear. This should be about proper risk assessment.

SUE This is risk.

PHIL Proper risk assessment rather than just shouting about it.

SUE Well, a rudimentary risk assessment would suggest that if you cannot manage a clean-up of a deep-sea oil spill, you wouldn’t allow it to happen. That’s a simple cost-benefit—

PAUL Yeah, but you can also make the point that they do eventually clean it up and that in the Gulf—

SUE After $50 billion.

PAUL Well, that’s right.

SUE 50,000 people involved, 10,000 vessels – do we have that capacity here in New Zealand?

PAUL No, but what the Gulf does show us—

SUE Obviously, we don’t.

PAUL is the regenerative power of nature, if I can be extraordinarily controversial on that, I suppose. Anyway, what about this fracking business? There’s a lot of hysteria associated with it. I’ve seen the piece about– I think on Sunday a couple of weeks ago where a fellow turns on the tap in the suburbs of Dallas or Fort Worth— no, Austin, I think, or Fort Worth, one of the Texan cities, and it bursts into flames out of the tap.

CLAIRE The interesting thing about fracking – Gareth Hughes from the Greens – again, last week he said that it had the potential to be the anti-nuclear agenda or issue of the 21st century. And I think potentially he’s right because it is very emotional. People can get very hysterical about it, and it really hits those spots that we’re scared about – earthquakes and poisoning our aquifers. So, again, politically, it’s a great issue for the Greens because they can go all guns blazing and say, you know, this is a risk to New Zealand.

SUE And thanks heavens we’ve got the Commissioner for the Environment, because we need an independent investigation—

PAUL Yes, see, but we had the Minister this morning appreciating her work very much.

SUE Yeah, which was good.

PAUL But I mean—

SUE But why isn’t he waiting?

PAUL And, I mean, his coming on this morning begins a conversation.

SUE Why aren’t we waiting until the Commissioner has reported?

PHIL Won’t it be nice to have an evidence-based debate on this, rather than having people shouting and screaming about the issues? And that’s where I think the Parliamentary Commissioner for the Environment can make a contribution.

SUE Absolutely. Well, let’s—

PHIL And the government should have a look at it.

PAUL You’ve got to remember too with our seabed, we’re the fourth-biggest country in the world. You know, it doesn’t have to be down the end of the street – fracking.

SUE The point is why with the fracking, why wouldn’t we just wait? The Commissioner’s going to report at the end of the year. She will be able to— she’ll tell New Zealanders does she think it’s safe, does she think there are adequate conditions, does she think that, you know, instead of leaving it up to individual councils, we need a national standard—

PAUL It is a worry. It is a worry.

SUE All of these things.

PAUL It is a worry that there are so many moratoria right round the world about fracking.

SUE Should we do it in a seismic-prone city?

PAUL But he also had that quote, didn’t he, where someone’s acknowledging there’s a lot of hysteria in the debate as well. We’ve got to have the debate without shouting.

PHIL And so what we should be doing is coming up with a New Zealand solution. It’s the same point that Sue makes about the deep-sea drilling. What’s the New Zealand solution to minimise risk here, rather than just saying we want to be Texas or we want to be Australia? It’s about saying, ‘We’re New Zealand. What are we going to do about that?’ And given the scale of that resource – potential resource – you can’t think it’s beyond the wit of mice or men to come up with a sensible solution to minimise that risk.

PAUL That other business, the percentage of revenue from the earnt dollar by the big mining companies – I think in many countries it’s over 60c. We’re settling for 42 or 43.

PHIL That’s because Norway’s like right on Europe’s doorstep, so it’s easier to get it out and then transport it into those markets. The problem that New Zealand has is we’re a long way away. Now, you can listen to the oil companies about that, and they’ll tell you it’s very fair and, you know, they should be paying less. Then the government will say they should pay more. So that’s why that review’s going to be quite important about the truths on that.

SUE The point is that what we’re looking at here is deep-sea drilling – very very risky – into deeper and deeper areas of the sea, deeper and deeper into the ocean – deep sea.

PAUL All right, we’ll have a talk about that, then, won’t we? I mean, I’m sure they’ll have a talk about that.

SUE Well—

PAUL I’m sure they’ve heard you.

SUE Yes. (laughs)

CLAIRE A bit like Taranaki.

PAUL And just a very quick word. The politics – is this a hot potato for a government?

CLAIRE Well, yes, it is.

PAUL As long as we’re not talking about Schedule Four?

CLAIRE Yeah, I think this government is going to continue along this track. I mean, it’s shown that it’s firmly in support of increasing oil and gas exploration anyway. It wants the profits out of it. Labour is going to find it very difficult because they also want the profits out of it. So politically, the mileage is going to be gained by the Greens.

PAUL We’ll leave it there.

Q + A

PAUL So, what do the panel make of that? Claire Robinson, Phil O’Reilly– I was going to say Claire O’Reilly. Phil O’Reilly, Claire Robinson and Sue Kedgley. Was he precipitant on his veto? What do you think?

CLAIRE Well, the difficult issue here is that procedurally Parliament cannot make a Budget decision on behalf of a government. Only governments are allowed to make decisions about Budget, so procedurally, legally there is no way that Parliament can make this decision, so they have to do the veto.

PAUL Well, I suppose—

SUE No, no, it actually— I believe it was a clear abuse of executive power. That veto is intended as a last resort for irresponsible amendments. It’s not intended where you have a bill that looks as though it’s going to get majority support of Parliament, political parties haven’t a chance to—

PAUL Yeah, but he knows the numbers—

SUE We do not know—

PAUL You could say that he’s being fair by signalling—

SUE No, no—

CLAIRE The veto can be called when there is going to be a significant effect on the Government’s finances.

SUE But it isn’t—

CLAIRE This is going to be. But politically— politically, it’s really important that it is raised, and so it does get to go through the processes of Parliament so that at some point, any government, and it could be a Labour government, will then get to say, ‘Okay, in terms of our priorities, which one do we choose? How do we spend this money?’

SUE I think that to do it before the bill has even been considered in Parliament – now, I know with the typical thing with a private member’s bill I know because I had one myself, you put it in Parliament, it takes years, there’s compromises along the way. Sue Moroney has indicates she’s prepared to have compromises. It may be that they would say, ‘Let’s phase it in more slowly.’ What it is – it is an abuse of executive power, and what it’s showing—

PHIL Sue knows very well why it was done.

SUE What it’s showing is that we really are becoming an elected dictatorship.

PAUL All right, all right. Let Phil— Sue.

PHIL An elected dictatorship? Clean it up, Sue.

SUE We are.

PHIL The short point is Sue knows very well why the Government had to veto this, and it was because it would have got ahead of steam publicly and there would have been enormous pressure on the Government to spend that money. That’s the problem. And it’s quite a political issue that Labour put up. Now, what the
Government did was absolutely right, to say, ‘Sorry, we can’t spend that money now,’ despite the fact that the policy’s a very good idea, actually.

PAUL No, well, you see, in the Herald—

PHIL What they didn’t do is they didn’t explain it very well to the public. Bill English just explained it now, didn’t do a great job on the day, and that’s why I think we’ve had this debate. So I think poor politics is played by the Government.

PAUL Yeah, but I think— You know, Sue, I think you might be overexaggerating the problems people have with that veto, because if there’s one thing about the financial meltdown, people have a fear of debt now. There’s an international fear of debt, and you’re saying straight away we’re not going to do it.

SUE No, but the problem is—

PAUL That’s the politics—

SUE In the same week, he’s then given, as you’ve pointed out, a subsidy to farmers, we’re building uneconomic motorways at a time when traffic volumes are falling. I mean—

PHIL There’s a billion dollars a year for students.

SUE Tax cuts for the rich.

CLAIRE But this is all— This is also—

SUE I mean—

PAUL All right.

CLAIRE This is also their prerogative as being a government, and any government is allowed to do that. They can decide. They, only the government, decides how it’s going to spend the money. Parliament doesn’t make that decision for them, only governments do. You can disagree with the decisions they make.

SUE No, the way it’s being done—

PAUL Can I move on? I want to move on from this veto thing. Because the paid parental leave itself, I think only the United States is below us—

SUE That’s right.

PAUL in terms of time allocated for paid parental leave. A friend of mine has just come back from the UK. She got six months off, 90% of pay.

PHIL And what’s happening to the UK public service and UK spending right now? Not going too well, which goes to this point about responsibility in the way you do things, because I think that most employers would support the idea of extending paid parental leave for all of the reasons that the research suggests.


PHIL Employers will have a problem, though, with affordability if it’s going to mean that that puts the rest of the economic agenda at risk.

CLAIRE Except don’t forget it’s—

PAUL Well, employers are—

CLAIRE It’s not employers that pay. It’s the government that pays.

PAUL But the employer has to pay for the training of the person who comes in to fill in for the person who’s at home being paid by the government.

CLAIRE Yes, exactly. Yeah.

SUE But, I mean, I think that, you know, unfortunately, what the Government has done is actually give this what they call legs. You know, it’s actually going to create more debate, more interest. It’s actually backfired on the Government.

PAUL Especially when you look at 116,000 people going to live in Australia, and they’ve got 18 weeks paid parental leave.

SUE Well, exactly, and particularly—

CLAIRE Well, I don’t think that they go for the 18 weeks’ paid parental leave.

SUE I mean, how is the Government going to claim—? How’s the Government going to claim that it’s family-friendly when it’s vetoing even the debate and discussion. I mean, we might—

CLAIRE It’s not vetoing the debate or discussion.

SUE Well, it is—

CLAIRE No, it’s not.

SUE effectively saying that we’re not even going to have a serious discussion.

CLAIRE No, no, no. It’s allowing—

SUE And as I say, well, no, because if it hadn’t done that, we could’ve gone in there, over several years debated, compromised—

PAUL Well, they may still do it. He left that open. He left that open, didn’t he?

CLAIRE It’s still going to happen.

SUE Not really. He’s sort of said— Well, and anyway—

PAUL But, you see, Margaret Thatcher would say this kind of attitude is family-friendly because the household’s not spending more than it earns.

SUE Hang on a minute. Why is it that the only job that is not paid in our economy is when you look after your own children? Why are we talking about it as though it’s some benefit? I mean, why is it that we don’t encourage mothers and parents to stay home with their children?

PHIL Should we have a sensible policy debate about it, how we would sort out the—?

PAUL You’re getting far too much talking, and when you last did that, I had a personal – what do you call them – formal complaints.

SUE Is that right?

PAUL Yeah. (laughs)

PHIL The debate that we need to have is about should we, for example, subsidise wealthy mums or should we give that to very poor mums looking after kids at risk?

PAUL Which is what he was also saying.

PHIL That needs to be part of this debate.

PAUL Got you. We’ll leave it there.

Q + A

PAUL So, back to the panel – Claire Robinson, Phil O’Reilly and Sue Kedgley. Now, the Productivity Commission released its report on, was it, housing this week. So housing affordability is a big issue. What’s the solution, Phil O’Reilly?

PHIL One of the solutions is to make land more available. That’s only one of the solutions.

PAUL Auckland Council says they already have.

PHIL Oh, well, let’s see how that plays out, because what’s been happening over the years is that councils have tried to concentrate land in and as a result made land more expensive, and that actually gets in the way off affordability. But it’s important we think about the package of things that the Productivity Commission talked about, because they also talked about better planning requirements, some of the issues around the fact that we like to have bespoke houses in New Zealand – we don’t tend to build lots of houses looking all the same – and then thinking about the social-housing sector. So all of those things need to sit together, but what’s very clear is we do need to say let’s make more land available, let’s have better planning decisions around that land, because that will improve housing affordability.

PAUL When we— Just to clear something up for people at home – when we say councils have got to make more land available, does that mean they’ve got to put the piping and sewerage in in certain areas or something like that?

PHIL And we pay for that through our rates and development contributions and so on.

CLAIRE I tell you, the other issue, Paul, is that most of this is happening around Auckland. Now, the problem— one of the problems is that we don’t as a nation have a population policy. A lot of other countries have population policies which say that they want to build up population areas throughout the country. Now, we don’t have that. We allow everybody who wants to come to New Zealand to go to Auckland. If we somehow managed to divert people through the rest of the country, we wouldn’t have this pressure on Auckland.

PAUL There is a perception that if you want to get ahead, you have to live in Auckland. I mean, the problem really is Auckland.

SUE Well, yeah, but—

PAUL It should be in the centre.

SUE But the real underlying problem is that houses are going to be unaffordable as long as we don’t have a capital-gains tax on investment property. That is the real fundamental issue.

PHIL It’s been rejected by the Productivity Commission.

SUE And they’ve chosen to reject it and instead coming up with these sort of loopy ideas that we should encourage more and more sprawl in cities like Auckland. Now—

PAUL What Claire is saying is should we incentivise people out of the cities.

SUE Oh, I think it’s an excellent idea. I think we could say to migrants, for example, you’ll get more likelihood of being accepted if you’re going to live outside of Auckland. But Auckland is already one of the most sprawling car-dependent cities in the world. All around the world, people say if a successful city is a compact city with good public transport, a liveable city, it’s not some sprawling Los Angeles.

PAUL There I’ve got to leave it. I thank you, the panel, Phil O’Reilly, Claire Robinson and Sue Kedgley.

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