Panel Discussions
Hosted by Greg Boyed

In response to TONY RYALL interview
GREG BOYED
Welcome to the panel. This week, Dr Raymond Miller from Auckland University. Good to have you along. Matt McCarten, head of Unite Union. And Herald on Sunday columnist and political consultant extraordinaire, as well as NBR columnist, Matthew Hooton. Morning to you all. First of all, Greek elections tonight. Is this a time to be selling assets or selling anything at all, Raymond?

RAYMOND MILLER - Political Scientist
Well, let me say first of all I think the government has a mandate to do this. They went to the last election with this as one of their chief policies. They were able to form a government. That gave them a mandate. The alternative would be to have government by opinion polls or by citizen-initiated referendums. So they have a mandate to do this, but this is a big challenge. We don’t know what’s happening with the international economy. There seems so much uncertainty around what the minister said today. First of all we talked about, ‘Well, we may or we may not do this.’ Obviously they want to avoid a fire sale. Secondly, they weren’t sure about whether they would have some loyalty scheme as part of it. And thirdly, they don’t really express clearly what they’re going to do with the profits they’re going to gain. It seems as if they’re going to go into some consolidated fund and be used for whatever reason.

GREG The other thing, Matthew, this is the first IPO this year, which says something about the climate of investment, doesn’t it?

MATTHEW HOOTON - Political Consultant
Well, you could look at that the other way - that those who are looking for an IPO might have one. I think what is interesting about this type of sale is it’s very similar to that one that was used by Winston Peters when he sold Auckland International Airport. And, as Treasurer, he sold that asset in a similar way, and he welcomed and issued press statements and welcomed people’s capitalism. And, as Raymond says, the government does have a mandate for this. I mean, not only did the government campaign on it; the main Opposition party campaigned strongly against it and had its worst showing for most of its history, for 100 years. So there’s no doubt there’s a mandate, and the method of sale is the one developed by Treasurer Winston Peters when he sold Auckland International Airport.

GREG Matt, would it be fair to say, given the look on your face as well-

MATT McCARTEN - Unite Union
Yes, I’m just waiting for my chance. I don’t have a mandate.

GREG Is there any way of looking at this that New Zealanders are now starting to really, really understand what this is actually going to mean? We heard protestors from the get-go, but now it’s rarking right up.

MATT Governments and parties run on a lot of issues. This government in Parliament gets it through this week by one vote. John Banks’ vote. Does he really have a mandate? I don’t think so.

GREG He did.

MATT But it went through Parliament by one vote. But let’s put that aside, right? There is a referendum underway. You know, the polls are two thirds. When we talk about the people who own it at the moment, the shareholders are the New Zealand tax payer, the citizens of New Zealand. They don’t want to sell it. But, anyway, they intend to go through it. Actually, the price is going to go up. That’s what people are starting to work out now. Once you buy them, they’re sold off in private hands. Their only job is to make money. Not social concerns. Everyone here knows when you go onto a board of directors in any company, your only job is to make money. And if you had to borrow it to buy shares, you want a return.

GREG But this leaves investors, doesn’t it, caught between a rock and a hard place. If they’re going to invest in a power company, they want it to make money. For it to make money, it’s going to have to up the price. Is that something most New Zealanders really equated in their minds?

RAYMOND Yeah, I think that’s right, and also, of course, if they have a loyalty scheme, that’s a disincentive for some people to actually buy into it, because they don’t want to have to hold onto it for five or 10 years. They would want to be able to sell for a profit whenever they wish.

GREG On the subject of this loyalty scheme, my understanding is that if you buy 15 shares, after a year if you hang onto it, you get another share free. Is that really sort of a real loyalty scheme that’s going to be keeping anyone hanging on?

RAYMOND I wouldn’t have thought so, and I thought the minister was rather unconvincing on this whole issue. He kept saying, ‘Well of course we’ll retain 51%.’ Of course they will, but what about the 49%?

MATTHEW Well, I don’t think they’re going to need a loyalty scheme, um, because, yes, there’s the 51% which is going to be held by the Crown. Another 10% will probably be bought by ACC, which is the government. Another 10% will probably be bought by the Cullen fund, which is the government. There’s the earthquake fund that will want to buy some shares. There’s Waikato Tainui that has a relationship with the Waikato River which it will want to buy. I mean, you get to sort of 80%, 90% quite easily of either government or Maori groups will end up owning these shares.

RAYMOND They’re hardly Mum and Dad investors.

GREG Exactly, Raymond. Is that just not going to happen?

RAYMOND It’s been marketed as for Mum and Dad investors. People at home are looking perhaps and thinking, ‘God, I could buy a few shares. I’ve got a few thousand dollars to do this sort of thing.’ But if big investors, institutional investors, are going to move in and take their 10% one after the other, then it leaves very little for ordinary New Zealanders.

GREG It’s hard to imagine, isn’t it, in the current climate, companies internationally going, ‘Oh, look. New Zealand power companies. The government’s going to have 51% stake, but I’m going to sink my money there.’

MATT They’re not going to buy into it. And there’s two points, right? Whether the government has 51% is going to make no difference because, as said before, and I just want to make it clear, even if you’ve got a 51%, the director’s job is to make money for the minority. That’s their only job. And so it doesn’t matter when the government appoints more or whatever. The other thing is why do we have to sell it when it’s making money? Cos they haven’t got enough taxes. And why haven’t they got enough taxes? Because I had my tax cut. So the people who have been getting tax cuts are the wealthiest New Zealanders. Got the spare cash, and now they’re buying the assets which the rest of New Zealanders already owned.

GREG Tony Ryall said that the trade-off here is that lower prices will keep it Kiwi owned. They can’t guarantee it. They can’t guarantee anything, but they certainly can’t guarantee lower prices, can they, Matthew?

MATTHEW Well, no. But then price is not a function of ownership, because we saw massive increase in power prices over the last decade, and they’ve been 100% Kiwi government owned. So-

MATT The companies that made them make money.

MATTHEW There’s absolutely no evidence that private companies are going to increase prices faster than state-owned ones.

MATT Name one state asset which has been sold-

GREG Actually, I’ll just stop you there because we’re finishing. But apparently there is. It’s apparently on average 3c more per kilowatt hour than SOEs. I had to get that in there before the ad break, and I did.

PANEL DISCUSSIONS
HOSTED BY GREG BOYED

In response to WINSTON PETERS interview

GREG BOYED
Now to our panel. Dr Raymond Miller, Matt McCarten and Matthew Hooton. First of all, Raymond, he’s not ruling in working with anyone, he’s not ruling out working with anyone. But his policies pretty much rule out working with anybody, doesn’t it?

RAYMOND MILLER - Political Scientist
Well, this is vintage Winston Peters. It’s kind of us versus the rest. In fact, perhaps me versus the rest, because he’s taken this role now for decades. He’s very careful about future plans, because he draws support from both National and Labour. He doesn’t want to say, ‘I’m going to do a deal with Labour,’ because he knows he’s going to alienate a lot of prospective National voters. So what he’s doing is he’s saying, ‘No, no.’ He’s hedging his bets. Now, the interesting thing about the 65 year retirement age is, of course, that he’s banking on perhaps National having to agree to extend the retirement age at some stage in the future. So he’s going to be the politician who’s not only representing the 65-plus, but now he’s moving down a generation to people in their 30s and 40s who are worried about retirement, and Winston will be the person who says, ‘Look, I’m the calming influence. I’m the status quo politician. 65 it is.’

GREG On the subject of numbers, Matt, the 66% to 68% income side of things, that’s just seen as unfeasible by most people.

MATT McCARTEN - Unite Union
Yes. It depends on how you look at it. Can I just say, if NZ First sits at 65, which it will, it will actually help them. I don’t think for a minute that anyone here believes that the next government is going to support raising the age if NZ First is in Parliament, because they’re going to need it. But, anyway, on sustainability, you know, yes, there’s a question. Everyone is focusing on the age. You know, is anyone addressing the fact that people like Winston are superannuates at the same time as collecting an MP’s salary? He’s 67, so he’s been collecting the pension for the last two years. Now, has anyone addressed that, about how we have this double dipping? You know, the workforce, a lot of the white collar workforce, are working into their 70s. But they’re still getting their super. Does that get addressed?

GREG Are we spending a lot of time and energy, Matthew Hooton, on this age? As Matt just pointed out, it’s not an uncommon scenario, when that number isn’t actually as important as the likes of Winston Peters are making it out to be.

MATTHEW HOOTON - Political Consultant
Well, the proposal that’s on the table from one of the government’s coalition partners United Future is that they look at a flexi superannuation system, where if you’re a manual worker, you can retire earlier at a lower rate. And if you’re a white collar worker, you retire later at a higher rate. And, interestingly enough, that is on the government’s agenda to have a discussion document on that topic. It’s a promise to their coalition partner United Future. So there is going to be a debate on this.

MATT Well, you’ve got Peter Neilson who is going to be on soon to discuss this, right? But also the other thing that has not been discussed is all this is actually an agenda being pushed by business interests on KiwiSaver to get rid of superannuation altogether.

RAYMOND But I think, Matt, I mean, the issue is not 65. I agree. The issue isn’t the retirement age, as such. But the government has tended to ring-fence this issue and say, ‘Let’s not talk about the future.’ When in fact Canada, Australia, the United Kingdom, many countries, are addressing this issue. What are we going to do about an ageing population? How are we going to support it?

MATTHEW Well, we’re not going to do anything about it, because Winston Peters will almost certainly hold the balance of power.

GREG All right. We will be back with you in a moment.

PANEL DISCUSSIONS
HOSTED BY GREG BOYED

In response to PETER NEILSON interview

GREG BOYED
Raymond Miller, Matt McCarten and Matthew Hooton are back with me now. First of all, Winston Peter’s plans, such are they are, do they help the super debate in any way, shape or form?

MATT McCARTEN - Unite Union
Well, they stake out a political position for him, which is a good one because people want the security. All the discussion about changing the ages and the previous guest we’ve just had now is what makes people unsettled. And so the whole thing with super was to make it guaranteed, and that’s why he’s doing it.

GREG Politics aside, what do we make of his plan?

MATT Winston’s? Well, it’s probably unsustainable.

GREG No, the one we just heard.

MATT Oh, this guy here. Well, he’s just pitching. I mean, this is just actually a grab to turn the super we’ve got now into a private-

GREG But it’s a plan. It’s a start of a plan.

MATT Since he was the Associate Minister of Finance in the Labour Government in Roger Douglas’ time when they tried to push it with the surcharges and everything else which Labour was supporting, what we’ve actually got now is a privatised scheme which they’re saying is 10%, which is actually a tax rise which will go into it, and they want to make it compulsory. He’s not saying it now, because it’s not the political thing. But that’s where this right wing and this lot are going to. They’re going to make superannuation - not make it tax funded; they’re going to turn it into private hands and have a compulsory levy on every worker in this country.

GREG To be fair, though, Matthew Hooton, they said 1% a year for anyone who’s under 40 up to 10%. Having said that, 10% on top of your tax, that’s a lot of money.

MATTHEW HOOTON - Political Consultant
Yeah. Also the plan is too far out. They’re talking about making substantial changes after 2050, but the Treasury’s forecasts say that there’s major problems starting in the 2020s, and we reach Greek level debt in the 2030s, 2040s. So I don’t think talking about 2050 is that useful.

GREG Raymond, are we tinkering where we shouldn’t be tinkering, or should we just go compulsory saving? Let’s forget all this faffing about and make a compulsory super thing and be done with it.

RAYMOND MILLER - Political Scientist
Well, that’s one solution. I just think there is so much more debate that needs to go on. I think the government needs to engage the public over the next few years so that we have some clear sense of direction. I think it has to be addressed, though, for the future. It can’t be left aside at this stage.

MATT Super is already compulsory. It’s called taxation. That’s actually what pays. What they’re doing is 10% more on top of your taxes now, plus the students, the young ones, are expected to pay 12% on education loans. So actually what we’re doing is it’s almost a generational theft. Let’s put it all on the young ones and make compulsory, and private is going to run it. At the moment, we’ve got a tax payer superannuation. If it was actually just concentrated on that, it would be sustainable.

GREG Ok, let’s move away from super. Back to Winston. Is he again going to be a power broker come 2014? Because he’s playing a very close-carded chest game right now.

MATTHEW Yes, and I think he will get over the 5% threshold. But even more than that, I think it’s likely the MMP threshold will be reduced to 4%, and I think that both he and the Conservative Party would get over 4%. So it does look as if there are the numbers for a John Key Government. Say National at 41% of the vote. Winston Peters on 5% of the votes. Conservative Party on 4% of the vote - that’s a government. And I think it’s most likely that that’s the next government at present, because I think there would be major problems with Winston being the third wheel on a Labour-Green Government. I mean, the first thing is he and John Key seem to agree on superannuation. John Key can make him deputy prime minister, give him a knighthood. But also I think that he has major difficulties. He’s a supporter of mining, for example, and is he ever going to agree to be the third party in an anti-mining coalition? I don’t think so.

GREG Sir Winston has a certain ring to it, wouldn’t you agree?

MATTHEW Well, that’s what he wants. He’s into that sort of thing.

GREG Does he need to broaden the party’s appeal? Because for most people, it’s Winston Peters and some other people. And he admits that, to an extent, that’s why they were in the wilderness leading up to the last election before the tea cups.

RAYMOND Look, it’s never going to be anything other than a niche party, in my view. He appeals to a particular section of the community who feel that National and Labour don’t fully represent them. The other thing is, of course, his party sits at around 1%, 2% between elections. Nothing is straightforward with Winston, so it’s very hard to predict what he’s going to do. But he does exploit an election campaign, as we know what happened a few months ago.

GREG Matt, more broadly speaking, this past week, 10 days, for the government, it’s probably been the worst you could script.

MATT I would say so. I mean, I think it’s the first time we’ve seen them sort of mismanage on such a large scale. I think it’s all own-goal stuff almost exclusively. And so this is the first time. Maybe Key was out of the country for too long. But I think it’s actually got people thinking now, and I think they’re going to start watching. I think it’s been going on for a little while, but I think this week it’s dropped. The polls have a 4% drop.

RAYMOND You know, people are saying, ‘Well, it’s second term. This is what happens to governments in their second term. The wheels start falling off.’ I think the problem is political leadership, quite frankly. During his first term, John Key had a remarkable instinct for reading and acting on the public mood. We’re seeing a much more ideological government in the second term. They’re other people who are almost too clever by half who don’t have anything like the sort of appeal that John Key has as a kind of personable, open prime minister.

GREG By that are you talking about Hekia Parata, Judith Collins, people like that?

RAYMOND And Steven Joyce and, to some extent, Bill English.

MATTHEW I think the idea the Steven Joyce is ideological is ridiculous, and the idea the government is running an ideological programme is wrong as well. One of the things the Prime Minister has said is that the reason they’re falling in the polls is because they’re doing difficult, bold reforms at the moment, and they planned to do them in their first year of their second term before consolidating. But, for the life of me, I don’t see the bold, ideological reforms.

GREG What about the way they’re rushing things through? The Sky City deal is the one that sticks out.

MATTHEW That’s been negotiated for more than a year now.

GREG But when you’ve got the Auditor General on your case or about to get on your case-

MATT Well, out of all the issues, it’s smells. Gambling, you know? And there’s this relationship, and people start to wonder, ‘That’s right. National always has its conferences and its celebrations up at Sky City.’ So it starts to smell about the relationship.

GREG Well, they get their parking validated, I hear. Who’s benefitted this week from all of this from the other side of the fence?

RAYMOND Well, I think the Greens. Because the problem for Labour is whenever you talk about asset sales, they can be reminded of what happened in the 1980s and so on. So Labour is always vulnerable. But the Greens have got this ability because they’ve never been in government, they’re not accountable in the sense that other political parties are, they’ve got a strong leader in Russel Norman. We don’t hear much of Metiria Turei these days. That, I think, gives the Greens a sharp edge that they’re able to use and exploit successfully.

GREG All right, to all three of you, Dr Raymond Miller, Matthew Hooton and Matt McCarten, thank you very much.

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