Q+A John Key Interview 11/8/2013

Sunday 11 August, 2013

PRIME MINISTER SAYS PERCEPTION OF NEW ZEALAND PRODUCTS AFTER FONTERRA BOTULISM SCARE IS THE BIGGER ISSUE NOT COST.

Prime Minister John Key told TV ONE’s Q+A programme that it’s too early to put a dollar figure on the cost of Fonterra’s botulism scare and that the bigger issue was “really about what is the damage to New Zealand’s reputation, both for Fonterra and for dairy products, but also for the wider products we sell into the Chinese market and other markets overseas, and that’s just impossible to quantify at this time.”

Speaking to deputy political editor Jessica Mutch in Nelson at the National Party conference, the Prime Minister says Fonterra’s shareholder fund had largely recovered “but I just don’t think that’s the broader issue.”

“I think it’s the wider issue of how are we perceived, how are they perceived, what confidence will Chinese consumers have? Because as I’ve said before, I don’t think the issue is actually so much what the Chinese government does or what a government in Sri Lanka or somewhere else does. It’s what do those consumers think,” Mr Key says.

He added he would guarantee someone would be held to account if the inquiries into Fonterra revealed a breach of the law.

“We know that Fonterra are having two internal investigations, and if I was Theo Spierings or John Wilson and running that company, that’s exactly what I’d be doing too, because they need to answer those hard questions. But MPI as the regulator needs to understand whether Fonterra fulfilled all of their obligations, whether they potentially broke any laws, you know, whether the system is in place, whether there’s a systemic problem,” Mr Key says.

He says there will be a government-led inquiry and he would have more information on that inquiry tomorrow (Monday).

Turning to future coalition partners after the 2014 election, Mr Key admitted he may need Winston Peters after the next election in order to form a coalition government.

“We might do. On the other side of the coin, you know, whether that’s something we want to do or something that’s possible, I don’t know. I’ve been pretty upfront with people in saying, look, on the one hand, you know, it could be challenging having a working relationship with Mr Peters. On the other side of the coin, if you go and ask our delegates now, they’ll probably tell you, like a lot of other National voters, quite a few of them would probably say I’d rather have a deal there than see a Labour-Greens Government.”

The PM also didn’t rule out talks with the Conservative Party’s Colin Craig.

“I mean, we will potentially sit down and have a discussion with him and potentially see whether we can work with him. And, yes, of course, there will be differences.

“I wouldn’t happen to share some of the views that Mr Craig has on some of the moral issues, but will they dominate if we get a third term of the National Government? I’d be surprised.”


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Q + A
JESSICA MUTCH INTERVIEWS JOHN KEY

SUSAN National Party members have gathered in Nelson for their annual conference. It’s been a big week with the Fonterra milk contamination story. The Prime Minister, though, remains optimistic, and he says all the polls show Kiwis want National to remain in power. Jess is in Nelson and spoke to John Key a short time ago. She began by asking him if he could give a dollar figure on the cost of the Fonterra milk powder issue.

JOHN KEY – Prime Minister
No, I can’t, because it’s simply not possible to measure the implications that might flow from this, because, really, it’s not about the actual product that was taken off the shelves. That’s something that, you know, Nutricia as the producer of that will have to work out with the supplier, Fonterra. It’s really about what is the damage to New Zealand’s reputation, both for Fonterra and for dairy products, but also for the wider products we sell into the Chinese market and other markets overseas, and that’s just impossible to quantify at this time.

JESSICA I want to talk about the damage to the brand in a moment. I do want to talk about this dollar figure. It’s been eight days now. Have you got a back-of-the-envelope calculation for this?

JOHN No, and I’m not sure we’ll actually get one in a hurry, because, as I said, there is the actual product itself, but I would have thought that that’s minute. I mean, we know that only 1 per cent of dairy products that go into China are currently being stopped, so the vast overwhelming bulk, actually, is flowing into China. And, in fact, if you just want to take proxies and you look at both the auction that was held this week for Fonterra’s products – down about 2.5 per cent, 2.4 per cent. All its shareholder fund that’s listed – that’s really largely recovered. So what those, you know, sort of financial commentators are saying is from Fonterra’s perspective, the actual cost of this bit is not material. But I just don’t think that’s the broader issue. I think it’s the wider issue of how are we perceived, how are they perceived, what confidence will Chinese consumers have? Because as I’ve said before, I don’t think the issue is actually so much what the Chinese government does or what a government in Sri Lanka or somewhere else does. It’s what do those consumers think. Now, they’ve also got a lot of data points to point to of New Zealand being incredibly safe, a good producer, for a long period of time.

JESSICA But it’s not 100 per cent pure any more, is it? Do we need to get rid of this branding?

JOHN Not in the slightest. I mean, 100 per cent pure was established as a marketing tool for tourism.

JESSICA So we’re not 100 per cent pure?

JOHN Well, it’s a marketing tool for tourism for promoting New Zealand. It’s not something that you can just say we’re 100 per cent pure in every little bit of New Zealand. And even by definition, you know, once man started inhabiting New Zealand, then there is some form of pollution from people burning fires to driving cars. That’s not really the point. I mean, you can—

JESSICA Isn’t that exactly the point, though? 100 per cent pure – we play on this throughout the world. It’s now damaged. It’s now tarnished. Can we repair it?

JOHN Yeah, okay, but it’s a marketing campaign, and I could name you dozens of them. You know, Loreal – because you’re worth it. Okay, well, that’s the same thing, isn’t it? I mean, that’s—

JESSICA But it’s a New Zealand branding we’re talking about here.

JOHN Yeah, but what’s happening is our opponents for whatever particular reason or people that want to create mischief, and that could be anything from a British tabloid through to someone who’s an environmentalist who’s got a particular barrow to push, they will focus on the 100 per cent, and few of us are 100 per cent in anything we do in life. So the bottom line is but does it speak to the sort of general experience that people have when they come to New Zealand? The answer to that is yes. I mean, you know, you and I were recently in Seoul together, and I suspect, like me, when the plane landed in New Zealand as we flew in, you looked out and saw these amazing green pastures and beautiful countryside and clear air when you got off the plane. And that’s what a tourist that comes to New Zealand feels like, let alone when they get down to Milford Sound—

JESSICA So you’re saying it’s generally 100 per cent pure? That’s what we should be going on now?

JOHN I’m saying it’s a marketing slogan, and within any marketing slogan people accept that that is trying to sort of encapsulate what they will feel when they are here. It’s not an absolute thing. It never has been. But, actually, when we look at the surveys that tourists that come to New Zealand fill in – and as Minister of Tourism, I see those – on the question of the environment and whether it lived up to their expectations, we generally—

JESSICA But this brand has been damaged, hasn’t it?

JOHN It’ll be damaged if people want to play around with it. There’s nothing new there. I mean, in fact, actually, the funny thing about 100 per cent pure is it’s been an enduring brand. There’s been lots of people that have had goes over the years, and as I tried to point out yesterday and I have before, actually, it’s the envy of tourism industries around the world. It’s been a good way of describing New Zealand. We shouldn’t be so precious about it that we get so worried because The Daily Mail writes something. If we were worried about The Daily Mail—

JESSICA I mean, it’s The Daily Mail. It’s also the Chinese who have called it a festering sore. We’ve had all sorts of criticism.

JOHN Yeah, but that’s going to be people who might have their own particular reason. I mean, from memory, the British tabloids hate the All Blacks doing the haka. Well, I don’t think too many people watching this show will be cheering on The Daily Mail or the tabloids for that.

JESSICA Let’s talk about accountability here. The Chinese Embassy have said that they want heads to roll over this. Are you going to guarantee that this will happen, that someone will be held responsible?

JOHN Well, I’m going to guarantee accountability. And to get accountability, you actually—

JESSICA So heads will roll?

JOHN Well, I’m going to guarantee accountability, it’s dangerous to say, you know, ‘Because I’m doing that, this— X, Y and Z will happen.’ Some of those things will depend on what actually has occurred and whether it’s been a breach of the law. So, for instance—

JESSICA So how will these people be held accountable, then?

JOHN Well, there’s a number of processes that will have to occur. We know MPI— Sorry, we know that Fonterra are having two internal investigations, and if I was Theo Spierings or John Wilson and running that company, that’s exactly what I’d be doing too, because they need to answer those hard questions. But MPI as the regulator needs to understand whether Fonterra fulfilled all of their obligations, whether they potentially broke any laws, you know, whether the system is in place, whether there’s a systemic problem—

JESSICA And to work all of this out we need a ministerial inquiry, don’t we?

JOHN We will need— Yeah, absolutely. The Government will need to run an inquiry. The challenging bit here is getting that right, so I am getting advice. I’ve been getting advice over the course of the weekend.

JESSICA So when will we hear about that?

JOHN Monday I reckon we’ll be in a better position to at least give you some guidance, but I don’t—

JESSICA So you’ll announce it on Monday?

JOHN No. I don’t think on Monday I will be able to announce it, because there’s a real range here that, you know, could, in fact, take place. And over the course of this government, we’ve almost seen that range – everything from, you know, an inquiry that took place, for instance, into the leaking of GCSB, right through to Royal Commission—

JESSICA But just to clarify, we will have a ministerial inquiry and you’ll announce more details on Monday?

JOHN We’ll definitely have an inquiry led by the Government, and I think by Monday I’ll be in a position to give a bit of guidance of where we’re going. But the actual terms of reference – who’s on it and the form of that inquiry – I just need to get a bit more advice, and I just don’t feel comfortable that I’ll be ready by Monday.

JESSICA Mistakes like this don’t get much bigger. How did this happen? How did you let this happen?

JOHN I think that’s really the big question that we’re trying to answer. I’m not sure ‘how did we make that happen’ is necessarily fair.

JESSICA We as New Zealand and the relationship with Fonterra. How did it happen?

JOHN Well, I think that’s the big question, isn’t it? I mean, what went wrong, why and who is responsible for that? There are lots of theories floating around. There’s always lots of backchat about what might have taken place and who might have dropped the ball or why. You know, I’m not a farmer, and I’m not a scientist, but I myself sit there and say, okay, well, there were some tests being carried out not only in May when it was produced in 2012, but in March of 2013 that certainly showed, as I understand, high levels of bacteria for what is actually a really small amount of product. I mean, 38 tons of whey is less than a lorry-load.

JESSICA And that’s the whole point here, isn’t it? It’s the way that it’s been handled. This has got to have been frustrating for you.

JOHN It’s frustrating because Fonterra is the poster child for New Zealand’s exporting, whether we like that or not, as I am to think for the most part they’re a great company and they’ve done a lot of good things. But they are really significant, so they’re the largest dairy exporter in the world, and they’re a significant player in every market that we—

JESSICA But aren’t they looking arrogant at the moment?

JOHN I don’t think so. I think they will of themselves have to go away and reflect on exactly how—

JESSICA So you think they’ve handled this well? You don’t think they’ve been arrogant?

JOHN I didn’t say that. I mean, what I said is it’s not always easy. I mean, on the one hand, for instance, Theo Spierings was criticised because he didn’t go to China after the DCD incident, which actually in fairness to Fonterra wasn’t actually their fault but was a by-product of other things happening for environmental reasons. On the other side of the coin, this time he dropped everything and went to China, and then the question was, well, should the chairman have fronted up and all of those different things. I mean, they as a company probably are feeling pretty bruised as well as, you know, I’d say, worried about what’s particularly happened, because they’ll want to understand whether any more risks that could happen again. So they’ve got a lot of soul-searching to go through. But on the other side of the coin, you know, in my experience, where in politics things do go wrong and there are mistakes and human error does occur, the one lesson I’ve learnt is that a) be honest with the public – tell them what’s gone wrong as quick as you can – b) do everything you can to fix it, because they’ll forgive you once; they won’t necessarily forgive you multiple times, and third, we just need to be absolutely sure they’ve fulfilled their legal obligations.

JESSICA I want to move on now to a housing announcement. We’re here at the National Party conference. In about half an hour’s time, you’re due to make an announcement around first-home buyers. What can you tell us?

JOHN Well, just that there will be some more support for first-home buyers. It’s part of that commitment that I’ve given to first-home buyers in a world where they may well be restricted—

JESSICA What will that support be?

JOHN It’s in the form of financial support. I probably won’t give you exact details now, but there is some sort of financial support encompassed with what we’re doing with KiwiSaver, so it’s broadly in that area. And, look, the main point here is I don’t—

JESSICA How generous will that be?

JOHN Well, I was going to say I don’t want to overstate things. I think it’ll be important to those people that access it, but it’s one part of quite a big puzzle. Because, in fact, actually, housing is a perennial issue that we have. Whenever the economy is strong and people are feeling more buoyant or interest rates are low, housing presents itself as an issue. And even though Labour talk really tough on this issue, actually, their record for the nine years that Helen Clark was Prime Minister was abysmal.

JESSICA I want to talk about your record, though. In terms of the housing—

JOHN I’m happy to talk about our record, actually, Jessica.

JESSICA But in terms of this announcement that you’re going to make this morning, are you going to say that you’ll match the savings that first-home buyers will make? Will it work like that, similar to KiwiSaver?

JOHN It’s not as generous as that. I think what I’d say is it’s going to allow people who want to access their KiwiSaver with support from the Government an easier thing to do. I think it will help some first-home buyers, and I think—

JESSICA How many? Can you say?

JOHN It’s in the thousands, but it’s—

JESSICA More targeted in Auckland?

JOHN Yes, it— Well, certainly, the scheme will work much more efficiently in Auckland. I mean, because, realistically, the big housing pressures are Auckland and Christchurch for different reasons, not so much, actually, around the rest of the country, although over time it might flow. But it is— if you think about what we announced yesterday in terms of the Resource Management Act, I mean, a lot of people would say, look, it’s thoroughly technical, quite dry stuff, and, actually, if you read through the Cabinet papers, you’ll probably find that it’s quite technical and dry. But that matters more – a lot more – than the average buyer would think. And it actually matters a lot more both to the environment and the economy than people think.

JESSICA To get these policies through, though, you’re going to need support now and potentially after next election.

JOHN Yes.

JESSICA Realistically, ACT, United Future and the Maori Party might not even be here next election, and you need friends. You’re going to have to rely on Winston Peters, aren’t you?

JOHN Well, that’s a sort of grisly outlook, because I’m a bit more confident than you that some of our existing coalition partners will make it.

JESSICA So who will make it back?

JOHN Well, hopefully all three of them. But, look—

JESSICA Not on current polling, though, to be fair.

JOHN Yeah, I mean, look, the funny thing is I always think with the polls— I mean, I think they’re broadly about right. They move round a wee bit, but they’re broadly about right. And they’ve actually been incredibly consistent for National over several years.

JESSICA So do you need Winston Peters, though?

JOHN We might do. On the other side of the coin, you know, whether that’s something we want to do or something that’s possible, I don’t know. I’ve been pretty upfront with people in saying, look, on the one hand, you know, it could be challenging having a working relationship with Mr Peters. On the other side of the coin, if you go and ask our delegates now, they’ll probably tell you, like a lot of other National voters, quite a few of them would probably say I’d rather have a deal there than see a Labour-Greens Government.

JESSICA That’s such a change, though, from what we heard from you last time, because you ruled him out. So basically you’re changing your principles because of changing poll numbers.

JOHN No. I mean, we might rule him out again. In fact, actually, it’s probably not going to be— I mean, I can’t foretell what it’s going to look like in 18 months’ time, but it’s eminently possible that we’ll be in a very similar polling position that we were the two times before that. There are different factors in there. I’m just saying that, look, in the end, it’s not a, you know— it’s not a dictatorship. What might suit me and I might think is right is not the way we run National Party policy around the place. What happens is we talk to the senior team, we talk to the board, we talk to others, we take a few soundings, but the other—

JESSICA Soundings with Colin Craig as well?

JOHN Well, we’re obviously going to have discussions with a variety of different people that could partner up with us. I mean, in the end, MMP, whether we like it or not, is a system designed to bring coalition government about, because it’s only ever once delivered an outright majority in Germany.

JESSICA With Colin Craig, though, I mean, he talked about promiscuous New Zealand women; he’s very anti gay marriage. Can you really sit down with him and work out some kind of deal? Would you work with him?

JOHN Potentially.

JESSICA What does that mean?

JOHN Well, it means exactly what I said. I mean, we will potentially sit down and have a discussion with him and potentially see whether we can work with him. And, yes, of course, there will be differences, but— and they might be on a different set of issues, but, actually, we have differences with the way, you know, United, ACT and the Maori Party think. In fact, the Maori Party’s probably voted less with us than Labour has, but we’re still worked very effectively with them over the course of the last, you know, nearly five years. So we don’t agree with, by any long stretch of the imagination, a lot of the stuff the Maori Party talks about, but we can still work effectively with them in government. I wouldn’t happen to share some of the views that Mr Craig has on some of the moral issues, but will they dominate if we get a third term of the National Government? I’d be surprised.

JESSICA We’re looking forward to seeing how that all plays out. Thank you very much for your time this morning, Prime Minister John Key.

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