Q + A: Grant Robertson Interviewed by Corin Dann
Q + A: Grant Robertson Interviewed by Corin Dann
CORIN Isn’t the bank actually doing what it’s supposed to be doing – supporting the economy, which really is only just coming off the boil?
GRANT Oh, no, I mean, the bank’s doing the job that it’s charged with doing, but the real story of the announcement this week was the sharp reduction in projected growth rates – by a third in just three months. And that’s the sign of an economy that’s stuttering and staggering, and that’s the moment that New Zealanders will expect the government to step up and say, ‘Here’s what we’re doing now,’ because plan A actually isn’t working at the moment. It’s not delivering jobs, and it’s not going to deliver the sustainable growth over the coming months.
CORIN So what is it exactly that they should be doing?
GRANT Well, quite clearly we’ve got a situation where one of our most significant industries – the dairy industry – has run into some really tough times. We do know that the Chinese economy is slowing down significantly. We’re aware that we’ve got an El Nino on the way over summer – 90% chance of that. That’s going to put huge pressure on those industries. And if we’re so reliant on just the dairy industry selling largely into a market like China, then the New Zealand economy is going to struggle to generate the jobs we need. So this is both a short- and a long-term thing. It’s about stimulating work and jobs now, and long-term, getting a diverse range of industries going, adding value.
CORIN Sure. Let’s deal with those short-term issues. What are you proposing that they could do? And bear in mind it’s very difficult to time these sorts of things to boost up an economy.
GRANT Look, it is, but there is a case for being able to bring forward certain infrastructure projects, to actually get alongside regions and say, ‘What are the things that are going to help create jobs in your area?’ If we’re in the Bay of Plenty, let’s get that wharf built at Opotiki so an aquaculture industry can get going, or it might be forestry roads on the East Coast of the North Island, or it might be the City Rail Link in Auckland. Those projects can be brought forward. And we can generate work and jobs out of those. What we’ve got is a government that’s happy to sit on the sidelines, let New Zealand bob about on the ocean as things change internationally. We can’t stop what’s happening internationally, but we can prepare ourselves better, we can have those projects brought forward, and we can ensure we don’t end up with unemployment over 6%, which is both Treasury and the Reserve Bank are saying.
CORIN Is there not a risk, though, that you’re going to choose projects that aren’t worthwhile or that they aren’t ready for? There are all sorts of risks there, and by the time those projects come on stream and start generating some growth, things might have recovered.
GRANT I just don’t think we can sit back like that. I mean, the bottom line is if the government decides what those projects are from Wellington, maybe it won’t work. But if we actually get alongside the regions, who know what’s happening there, who know where the opportunities are, support local businesses, support local government and say, ‘Central government will be there as a partner.’ This isn’t about government saying, ‘This is the right industry,’ or, ‘This is the right sector.’ It’s about being an active partner in the economy. I just think Bill English and John Key are happy to sit back, think that the market will solve everything for them. The reality is a small country like New Zealand, we actually need to come together and identify those opportunities and invest in them.
CORIN Does that mean you would— and I’m interested in this – deficits. Would you be prepared to a) give the government some leeway to run some deficits over the next two years, and also commit to perhaps running deficits yourself if you need to?
GRANT Look, if that needs to happen, that may well be the case, particularly as an economy starts to decline. Our criticism of the government has been that in the last few years, with pretty good times after the earthquakes and the GFC effect had run out, has failed to run a surplus. But in the end, if the focus is on running a surplus and unemployment keeps growing and growing – as it’s forecast to do – over 150,000 people will be out of work. That’s not good enough, and we do need to invest to get those people back into work, to stimulate the economy again. But it’s not good enough to simply let ourselves drift into that situation, which is what the government’s currently doing now.
CORIN I just wonder about that issue of the unemployment rate. We are looking at ticking up, hovering about that 6% mark, perhaps ticking up a little bit higher. A big factor in that has to be the large number of migrants coming in to the country, boosting the labour market supply. That’s the advice from the bank and Treasury and these guys. That’s what they’re saying. Would Labour look at that number? What are we running at? 55,000, 65,000 at the moment, net, to the country? Would you look at reducing that to try and boost wages?
GRANT Look, what we’ve said at the last election and we stand by it is we do need to be able to regulate the flow of migration into New Zealand so that the economy can cope with it. And right now, today, in the last quarter, we had negative GDP per capita. In other words, the economy wasn’t actually keeping up with migration, wasn’t actually keeping up with population growth. So we do have to take that seriously. It’s about getting the right kind of migration into New Zealand, obviously making sure that it doesn’t just go into Auckland, that there are opportunities outside in the regions for people to go to. But, look, we have to be serious about this. Wage growth is very, very low at the moment, and that is actually making life tough for a lot of New Zealanders, particularly if you’re trying to buy a house. And we’ve got a situation now where Auckland is one of the most unaffordable housing markets in the world, and the government sits back and its best advice is ‘be careful’. That isn’t good enough.
CORIN I’ll get to the housing in a second. Just quickly, are we at that threshold where we need to reduce that immigration number? It’s become too high, given the fact the fact that we’ve got rising unemployment – yes or no?
GRANT Look, at the moment I think we’re getting close to that point. The main thing is to make sure the flow of migration is supporting the kind of skills gaps that we’ve got. What we’ve allowed to happen in New Zealand is actually to import people into areas where we should have been training them in the past. We’ve got to be much more active about getting our education and training system right to deliver the skilled workers that people need. Right now, we still need those people here because we’ve got skill gaps, but certainly it is putting downward pressure on wages, which long term isn’t good for New Zealand.
CORIN On the issue of housing, the Reserve Bank Governor said we’re in dangerous territory. I wonder, other than your Kiwi Build policy, which we know about, what else could you do- what would you do now if you had the opportunity to rein in that Auckland housing market? And I wonder, in particular, that bright-line test – the two-year restriction that the government’s brought in around capital gains – would you increase that out further? Five, 10 years? Bring in a proper capital gains tax?
GRANT Look, we are, as everybody knows, reviewing the policy around capital gains tax at the moment, and the bright-line test hasn’t even gone through Parliament yet. We’ve got to look at both sides of the equation. I mean, the supply side is vitally important. We are tens of thousands of houses short on what needs to be built in Auckland at the moment. The government is the one organisation that can really stimulate the growth of that housing. That’s what Kiwi Build was about – tens of thousands of extra houses coming on board. But we’ve also got to look at the demand side of the equation, and we’ve certainly said in terms of foreign speculators, we are not going to allow foreign speculators to buy into the existing housing stock. If they want to get there, they have to build. So it’s got to be both sides of equation. Certainly, speculation generally needs to be discouraged. We want to see a lot more investment in the productive side of our economy, rather than into housing, and we will have policies to do that.
CORIN If I could just ask you before you go – of course, Jeremy Corbyn has won the leadership of the Labour Party in the UK with a very left-wing platform – nationalisation, all sorts of quantitative easing, money printing for people. Do you see him having an influence on the New Zealand Labour Party? Bringing you further to the left?
GRANT No, I don’t think so. You can’t really compare two countries like that with quite different sets of circumstances. I mean, Jeremy Corbyn is to be congratulated. I think what he’s really done is put forward a platform that people have clearly attached themselves to. They find that they can believe in him. He’s giving them a sense of hope. The exact policies might differ from country to country, but being able to say clearly, ‘This is where we stand – on the side of people in the UK,’ in the case of Jeremy Corbyn, I think he’s given people something direct and clear and clear to believe in. And that’s probably the lesson for us – to be able to go to the electorate in 2017 with bold, direct and clear policies, and we will do that.
CORIN In your view, is he electable to be Prime Minister?
GRANT Look, I’m a long way from the UK to be able to judge that. I think the contest he will have now is to draw his party together. This is a pre-MMP Labour Party, in a sense. It’s got all the range of different views inside it. And he will have a big challenge to bring it together. I suspect his legacy will be to shift the centre of gravity of the British Labour Party to the left. The long-term thing will be can they come up with a suite of policies that are both believable and hopeful.
CORIN And is that a good thing him taking the party further to the left? Do they need to go there after the years of Blair and co?
GRANT Again, that will be up to people in the UK to judge, but it’s quite clear that Labour Party members in the UK believe that he is talking in a way to them – and I guess they hope to the electorate – that is direct, that is about those core issues of anti-poverty measures, anti-austerity measures. They will be challenged to get that message out to the rest of the public, but he does have the mandate of his party to do that.
CORIN Grant, thank you very much.