Prime Minister Wants Property Tax Breaks Looked At

Prime Minister Helen Clark wants a Parliamentary Committee to have another look at the tax benefits of owning investment properties.

On TVOne's "Agenda" today she said that she wanted the Select Committee inquiring into monetary policy to have a look at tax breaks for property investment.

She did not specify whether she meant the lack of a capital gains tax for property investment or the possibility for property investors to set their losses on property against other income for tax purposes.

But she suggested that dealing with the tax breaks could help keep inflation down which would assist the reserve Bank Governor.

"Clearly the Governor here doesn't have the tools reinforcing monetary policy in acts of parliament that other countries would expect," she said.

The Governor is required to keep inflation within a 0 -3% band and has just raised interest rates to comply with this.

But Miss Clark said she did not believe New Zealand had an inflation problem.

In a clear hint that she favours changes either to the tax regime or to the Reserve Bank Act itself she referred to the way the Australian Reserve Bank operates. Miss Clark said the Australians were required to act on actual inflation, not potential inflation as in New Zealand.

Prime Minister Hints At Logan's Departure.

Prime Minister Helen Clark has given a heavy hint that she believes Environment Ministry Chief Executive Hugh Logan should go.

On TVOne's "Agenda" today she referred to what she called deputy State Services Commissioner Ian Rennie's unhappiness that Mr Logan had not disclosed the extent of his conversation with sacked Minister David Benson-Pope to Mr Rennie.

She said Mr Rennie was very clear that he was unhappy with this and there were matters that he was reserving his judgement on, the employment of a Chief Executive of course at that point is a matter for them.

Asked by interviewer, Guyon Espiner, if she was unhappy with the way Mr Rennie had he's handled the Benson-Pope affair as well she said: "No, I'm not unhappy with Mr Rennie, I think he did his best.

Mr Espiner then asked is she was unhappy with Mr Logan.

The Prime Minister replied: "I'm unhappy that that was not disclosed."

"I'm just sorry that I wasn't told all the facts and the State Service Commission wasn't told all the facts when it dealt with Mr Logan," she said.

RAWDON Labour MP David Benson-Pope was forced to resign from Cabinet yesterday after misleading the public over his role in the dismissal of public servant Madeleine Setchell, this is not the first time that Benson-Pope has run into trouble, he was stood down from Cabinet in 2005 after allegations that he'd bullied students as a teacher, so has the government done enough to minimise the fallout from this latest affair and what other changes will it see in Labour's Cabinet. Prime Minister Helen Clark is with One News Political Editor, Guyon Espiner.

GUYON Well Prime Minister your Cabinet Minister Pete Hodgson suggests this morning that David Benson-Pope is simply a victim of corrosive political attacks, do you agree with that?

HELEN CLARK – Prime Minister

He didn’t make that statement in connection with this particular incident but rather the whole background against which Mr Benson-Pope's career has developed in the last couple of years. I think any fair minded person would see that some of that targeting through a scurrilous little magazine was completely off the edge and I think the result of that is it's put David Benson-Pope very much on the defensive in the way in which he deals with me there and that was completely counter productive in this instance.

GUYON In the end after all the detail you're cutting loose because he was becoming too much of a political liability surely?

HELEN Credibility is very very important for Ministers to be able to do their job and for the public and the media and other Cabinet colleagues and I to have confidence in people, and I think as with so many issues the key problem really isn't what happened it's that there was not the full truth told about what happened.

GUYON Okay but that was the case last time when he denied there were complaints about his former teaching career, I mean what's different this time, he misled the public then didn’t he?

HELEN I think in that case those were events of a very long time before and he appeared to be under the impression, at least in his recollection that there hadn’t been a formal complaint, now it's clear when you look at the record that there had been various correspondence and things going on so that wasn’t correct.

GUYON Is it possible he will be brought back as a Minister, I mean Lianne Dalziel you effectively sacked her for lying as well, I mean is there any road back for David Benson-Pope?

HELEN Well Lianne Dalziel took her chances what 18 months later when the Cabinet was re-elected after we came back into office in 2005 and when we elect a Cabinet after an election anyone of course can stand and anyone that the caucus has faith in can be re-elected, so there's always the possibility that that can happen if people are seen to have paid sufficient price and penance if you like.

GUYON A lot of people have paid the price, I think you're looking at ten ministers now who have essentially gone for bad behaviour, are you picking the right people?

HELEN Well there's a whole range of factors around that, in some cases people stood aside while issues were dealt with like poor Harry Duynhoven who didn’t realise that in activating his Dutch citizenship he was inadvertently in breach of a law.

GUYON You've had one just about facing corruption charges, you’ve had people go of lying, drink driving, I mean there's a whole string of things, surely when you came in in 1999 you would have been pretty surprised to fast forward to here and have ten ministers resigning under those sorts of circumstances.

HELEN You know what's different – we actually have applied a standard. I've been in New Zealand politics for a long time and I have seen ministers who should have gone, sit there, and be totally defended by the government of the day. I don’t think that’s right and I do draw a line.

GUYON Did you hang on to David Benson-Pope too long?

HELEN Well he came through the last set of issues with difficulty and one would have thought people would learn from that particular experience, when this one began I wanted to get all the facts out on the table and I'm just sorry that I wasn’t told all the facts and the State Service Commission wasn’t told all the facts when it dealt with Mr Logan.

GUYON Okay he's gone, that obviously creates a vacancy in the Cabinet, is it simply a matter of rejigging that or are you going to make a more broader Cabinet reshuffle?

HELEN That’s an issue for reflection, I've dealt with the Mr Benson-Pope issue intensely over the course of about 24 hours from late on Thursday when I realised the extent of the deception if you like and through till last night, now at the same time I'm carrying out a full public programme of engagements and dealing with a lot of other issues so I will address it in the fullness of time is the short answer.

GUYON As a political necessity you’ve avoided reshuffles haven’t you really in your tenure as Prime Minister, is there political necessity for a bit more momentum to bring some people in, some fresh faces in?

HELEN Well the issue is whether this calls for a significant action or a reallocation of portfolios, we do clearly need a permanent minister so I'll be reflecting on the options.

GUYON Two names that are singled out in the media a lot, Shane Jones and Maryan Street, are they people that are going to be promoted?

HELEN I'm not going to single out any names because actually there are a lot of talented people who would like to have a chance and it's entirely up to them to have aspirations but I don’t think it's credible for me to start picking names out of a hat here.

GUYON Okay let's deal with some names who are already there, is there anyone else in Labour who can be the Finance Minister?

HELEN That’s a leading question too because it would imply that I'm thinking of change. What I'm saying is that I will reflect on all the options in the fullness of time.

GUYON Just finally on that, Phil Goff, is he being underused in the Labour Cabinet do you think?

HELEN He's very fully used actually and incredibly hard working as our people are.

GUYON This whole David Benson-Pope saga has raised the neutrality or otherwise of the Public Service, I mean do you think that that is – do we still have a politically neutral Public Service?

HELEN Of course we do, and from my own part I think it's very important that it stays that way, I wouldn’t have a clue what the political feelings are of the public servants who work directly to me, I don’t want to know, I expect that they will act professionally, and I like to think I act professionally.

GUYON But hasn’t the State Services Commission effectively put in a sort of a marriage test to public servants in the wake of this Madeleine Setchell affair?

HELEN Well I think their key job now is looking at how this was handled in the Ministry for the Environment, I personally think it would be over the top to be starting to ask for registers of interest. This was raised back in the late 90s by Christine Rankin now firm National Party acolyte when she was head of the Department of Work and Income, and it was scoffed out of court then and it really shouldn’t come back. Where there's an issue around conflict of interest I think which might be worth looking at further is where there might be commercial conflicts and we stand up internationally as one of the least corrupt and most transparent countries in the world and it's important it stays that way.

GUYON How do you think the State Services Commission has handled all this, are you happy with their handling of this?

HELEN Well I'm very unhappy that the State Service Commission was not told the full story because we're entitled to rely on report as the full story.

GUYON Who are you unhappy with there?

HELEN Well I'm unhappy that when the State Services Commission compiled the report which was released on Friday a week ago that Mr Logan did not disclose the extent of the conversation with Mr Benson-Pope, a lot of things would have been a lot easier if that had happened.

GUYON So does Hugh Logan have a future do you think as Chief Executive of the Ministry to the Environment?

HELEN When the Deputy State Services Commissioner spoke yesterday he was very clear that he was unhappy with this and there were matters that he was reserving his judgement on, the employment of a Chief Executive of course at that point is a matter for them.

GUYON But you were clearly unhappy with the way he's handled it as well?

HELEN No I'm not unhappy with Mr Rennie, I think he did his best.

GUYON Mr Logan though, you're unhappy with that?

HELEN I'm unhappy that that was not disclosed.

GUYON When we look at the independence of the state sector perhaps near the top of that is Alan Bollard in the Reserve Bank which is you know a very independent body, has that been compromised at all by talk of intervening and stopping Alan Bollard raising interest rates?

HELEN No, and the proof of the pudding would be it didn’t stop him, so look there's a lot of mixed views about this, I've seen some columnists say of course the Minister of Finance is entitled to think about these issues and speak about these issues that’s what we pay him for, on the other hand there will be those who say that monetary policy is solely the preserve of the Governor, so no one else can every say anything. Well that’s clearly a ridiculous position, as Prime Minister I've opted not to keep a running commentary on monetary policy because I don’t think it's productive.

GUYON Do you think we have an inflation problem in New Zealand?

HELEN No I don’t think we've got an inflation problem right now.

GUYON We've raised the rate four times this year.

HELEN It's because the Governor is taking the view that he's required to look at the medium term and when he looks at the medium term he thinks that he might see himself going outside the zone he's been given.

GUYON This is the whole problem isn't it? I'm Prime Minister of New Zealand you think there is not an inflation problem, we've got a Reserve Bank Governor who's hiked the rates four times and it's killing the export sector.

HELEN He's looking at the medium term, now some commentators will say to you that if you look for example at the Australian Reserve Bank and I think this was the point of Woolf Shoefish last Saturday in the Dominion that they tend to react to actual inflation not potential inflation, so there's the difference.

GUYON Is there anything more we can do – I know Dr Cullen just alerted us to the fact that we have this section and Winston Peters has talked about re-writing the Reserve Bank Act, I mean are these just kites being flown here or are you contemplating anything to change the way that we deal with inflation?

HELEN Something that’s actually been in the act from the time it was passed in the 1980s obviously isn't flying a kite it's actually a fact, but it would need rather extreme circumstance for it to be activated.

GUYON I wonder if one of the things you are considering in this whole issue is cracking down on the tax breaks that exist for property investors. The Reserve Bank submission yesterday to this whole issue was saying that the tax treatment favoured that, are you looking at axing those tax breaks for property investors?

HELEN The whole issue's been thrown across to the Select Committee which is looking at monetary policy and clearly the Governor here doesn’t have the tools reinforcing monetary policy in acts of parliament that other countries would expect. Now it was Ruth Richardson's gift to us that the losses being ring-fenced became an issue in our law, it's one of the things the Select Committee should look at.

GUYON What do you think?

HELEN Well see here we're coming to one of the weaknesses in the MMP system that it does become quite hard for tough decisions to be taken which may be in the public interest, and there tends not to be any majority for trying to reinforce monetary policy with certain tools.

GUYON So you're essentially saying you'd like to do it but you haven’t got the numbers?

HELEN Well I think it's an idea worth looking at, a lot of ideas are worth looking at but if they're not going to be able to be passed through parliament you don’t look at them for terribly long.

GUYON So that’s where you leave it, have you actually thought we don’t have the support for this it's off the agenda?

HELEN As I say with MMP and a very fractured parliament like this it's not easy to get tough decisions taken by parliament.

GUYON Alright there we'll leave it, thank you Helen Clark.

*********

RAWDON Now we're joined along with Guyon Espiner by our panel Jenni McManus and Richard Griffin. Richard can I come to you first, you're a former Press Secretary what advice would you be giving to the Prime Minister today?

RICHARD GRIFFIN – Political Commentator

Well this Prime Minister doesn’t really need a great deal of advice on how she performs, any ruffled waves are generally put to rest when she's there but behind her there's this huge tempest that keeps going on, she doesn’t need any advice what she probably needs to advise her caucus and particularly some of her ministers is if you're going to be in politics the dynamic between the media and the public is a critical part of the exercise. No point in David Benson-Pope, and I'm not trying to personalise it, being an effective minister whatever that means unless in fact he's able to engage with the media and engage with the public via the media, he's never been able to do that. On top of that he uses sophistry and bad temper to try and assuage the questions that he really should be answering, in that sense it's not a difficult equation, any Prime Minister and I imagine this one's already done it should be sitting down with critical cabinet ministers who have to engage with the media and say look this is the way you do it, you don’t have to be liked but you have to be respected, don’t use subterfuge, don’t use sophistry, and for godsake understand half of politics or at least a third of politics is about theatre. David Benson-Pope never learned that and sadly there are others in that cabinet that haven’t either.

RAWDON And Ms Clark said that was due to the high standards which she's set in her cabinet.

RICHARD Well look she can only work with what she's got, and in a sense you can take a horse to water and we know sometimes you have to drown them and in this case he's been drowned.

RAWDON Jenni we heard inference there that there was someone else to blame, somebody who hasn’t yet been sacrificed on this one and that lies at Mr Logan's head, I felt that was the intimation being made by the Prime Minister there.

JENNI McMANUS – Senior Journalist, Sunday Star Times

Well one thing I think that has come out of this is that the State Services Commission has to tighten up it's pre-selection processes for when it's employing people. I mean if the proper pre-selection has been done this would never have happened I don’t think. This woman disclosed, she disclosed to the relevant people, she disclosed in a timely fashion a possible conflict of interest, if the proper security checks had been done this would never have happened because on normal commercial standards and on normal political standards I would have thought she would never have been employed, the risk is too high.

RICHARD I can't buy that, I honestly can't, a similar argument's been made to me during the week but I can't see any reason why commonsense and trust can't be part of this equation.

JENNI Well I think that commonsense and trust tell that it can't.

RICHARD In a small community like Wellington and particularly in a small community where people are sposed to be engaged in communications who they're sleeping with should not necessarily be relevant if you trust them as professionals.

JENNI Yes but you don’t know how far you can trust.

RICHARD Hugh Logan should have taken a little more interest in the exercise then, but I still don’t accept the premise.

JENNI Well precisely, I mean if you're an employer sleeping with the enemy is not on, you don’t hire your competitors.

RICHARD These are public servants and I know sustainability was going to be a big part of Labour's campaign but we don’t need someone inside to tell us that, I would have thought someone who's professional, who can do the sustainability argument, who can work with the minister, it doesn’t matter who he's sleeping with or who she's sleeping with, it really this is just a side track …

RAWDON Are we just too small a nation to even start to ….

RICHARD Yes we are.

JENNI I don’t think so, I really don’t think so, if they'd imposed normal commercial … on the hiring process which I think they should have done this wouldn’t have happened because she would never have been hired.

RICHARD So by the same token who can we accept – Steve Hurring shouldn’t be in the minister's office because his wife is going to be running the trade union and if you think the trade union is necessarily part of the Labour Party political process you're dreaming, so let's have a look at Steve Hurring who presumably was responsible for a good deal of this, should he be dumped out or should he have ever been there in the first place.

JENNI Well I don’t know enough about his relationship to make a call on that.

RICHARD A Labour Party activist whose wife is going to be running the Trade Union Movement in this country, does that compromise him or what?

RAWDON Guyon I just want to ask your assessment of what you’ve learned this morning.

GUYON Well I think that’s a very interesting discussion about you know how possible it is to have a neutral public service in a small country, but a couple of things from Helen Clark which I thought were interesting, I mean there's clear prime ministerial displeasure about Hugh Logan, I wouldn’t mind betting that that might sink down and you know cause some pressure on him.

RICHARD Do you think Guyon he really should have also been asked whether he'd asked the obvious question, what relationship did the minister and the minister's office have to Hugh Logan's behaviour?

GUYON Well she's actually said that she does have confidence in the State Services Commission, so I think Ian Rennie's in the clear for now but I wouldn’t really like to be in Hugh Logan's shoes.

JENNI Yeah because it was failure to disclose wasn’t it, I mean Ian Rennie can't be blamed for not…

RAWDON Alright we'll leave the final word with you Guyon on Hugh Logan's future.

GUYON Well I mean you know the chain of accountability doesn’t lie directly between Helen Clark and the Ministers, that'll be up to others, but there's a clear signal being sent there that he's in the gun I think.

POLITICAL NEUTRALITY

When are private lives of public interest?

RAWDON The decision by the Ministry of the Environment to dismiss Madeleine Setchell has called into question the political neutrality of the Public Service. Setchell's partner is chief press secretary to National Leader John Key and the ministry is now proposing that staff formally register any potential conflict of interest. The Public Service was reformed under the last Labour government with the introduction of the State Sector Act making senior public servants more accountable so that a job in the civil service was no longer a job for life. Former Prime Minister Mike Moore was a member of that government he joins me now. Mike should Madeleine Setchell have lost her job?

RT HON MIKE MOORE

` I can understand David Benson-Pope saying I feel uncomfortable if a person who's very close to the opposition parties is in my office, I can understand that, his problem was of course saying he never said that, oh look I'm not gonna call that but I would not – I'd feel uncomfortable too if I were the minister.

RAWDON Should she have got the job in the first place?

MIKE That’s the other issue, she was transparent she said where she stood and it might have been more appropriate to have her, apparently she's a quality person, somewhere else, not in the minister's office, not having sensitive papers floating around.

RAWDON So how neutral is our Civil Service?

MIKE Look I owe an apology to a lot of our civil servants because I monstered a lot of them when I was in government, but watching the international public service, running an international institution and being on boards of some huge corporations our public service is pretty good, can it be improved – yes.

RAWDON But it has to be improved with a political interest?

MIKE Well here's the thing, a good dog will wag its tail without its head being patted, they know what you want, that’s why you can get a report from the Ministry of Foreign Affairs that has about six pages on disarmament and one paragraph on China and one sentence on India, the public services know what their masters want and they become appropriate and this is a dynamic in the private sector, even in television, of what you want to hear and people like this and this is the dangerous thing, and we have a beltway in people where people – it's a small place, has all the passions of Washington which has 35,000 lobbyists or the passion of London or Brussels but there's about 500 people, and because like minded people enjoy the company of like minded people whether it's golf or public affairs you could do a conspiracy chart by people in the gallery who go to SOEs to consultancies to political parties and I'm partly to blame for this because I abolished the Ministry of Publicity where people from the gallery can get more money by working in a minister's office or the Leader of the Opposition's office, this creates a moral hazard and there are journalists who are also consultants and get paid to brief companies. Now what's the answer to this? The answer to this is absolute transparency, you need to know who's interviewing you, but that’s the circular nature of it, can you do anything about it, not a lot.

RAWDON Mr Moore, I read the Prime Minister as sending a signal to the State Service Commission in the interview she just had with Guyon Espiner, her comments about her thoughts on Hugh Logan and his future, I mean is that what was happening there?

MIKE I didn’t watch the interview.

RAWDON Well basically she was saying that she and Ian Rennie hadn’t been armed with all the facts and …

MIKE I would say look what we did in the public sector in the 80s was correct and it's a model for other countries and it's still reflected upon around the world but one of the problems we created unwittingly was you know get rid of the Ministry of Sport and Recreation set up a commission have independent people, but the word independent is pretty powerful and there is a corrosive erosion of values where governments and parliaments are contracting out responsibilities to various commissions to implement government policy and you're getting some pretty average appointments to some of those commissions, a lot of them party hacks who you wouldn’t employ to do your garden but it's a thank you job. This is very dangerous, I mean for example the Broadcasting Standards Authority which decides some of the best ads on television were about domestic violence, well no one else saw that, or the Human Rights Commission coming out with all sorts of intrusions into people's lives and these are activists, do-gooders, worthy people, but are trying to make us look like them and live according to their values and they are getting enormous power inside society and they're not accountable to the parliament, they're not accountable to ministers, in a way contracting out these areas has created a moral hazard, and what's a moral hazard, it's well started by analysis of the insurance industry, if you have too much insurance the incentive is to be an arsonist. The moral hazard is that to get promoted inside this politically correct orthodox system you must have values that are associated with the bosses in control, this is the danger.

RAWDON Are we going to see a knee jerk reaction in the Ministry for the Environment, they're talking about codifying the situation, about bringing in a formal register of conflicts?

MIKE Well I think in the main we handle conflicts quite well, maybe that'll help, I'm not too sure whether that'll help or not, it's like people saying let's have a code of ethics, well if you’ve got ethics you don’t need a code and a code doesn’t stop crooks but it can't cause too much problem except it'll probably employ another thousand public servants.

RAWDON But I mean in a place like New Zealand, in a city like Wellington surely the Madeleine Setchells are going to end up in positions where they just have to be trusted to do their job professionally?

MIKE Yes absolutely. Look I never asked the politics of people I employed in my office, probably should have, and certainly in the government appointments I made I only made one which I knew was bad and I was sort of beaten up by Lange who wanted a mate somewhere, but in the main of the dozens we made actually a lot of them were National, and we got abused for that from the party. There's a lot of power in government appointments and there's some pretty ordinary people on some of these government boards, for example I was reflecting on the Central Bank, now the government got rid of Ruth Richardson, well she's no mate of mine but to put Marilyn Waring on well we really need the feminist perspective on money supply don’t we, you know that is necessary, so there's too many jobs being given to mates and for political reasons and that I think dilutes the quality of the public sector, even the board of Television New Zealand.

RAWDON So you're talking about the quality of the public sector, how damaging is this situation to the public's view of the state sector?

MIKE I think it is a bit damaging but we'll get over it, but this is good, this is actually the open society at it's best, the journalists did their job, they hunted things down, they put the spotlight on it, I mean the cleansing searchlight of scrutiny improves performance, governments will respond by they normally over respond.

RAWDON And what about the damage to the government?

MIKE Oh it doesn’t help, you know, the hardest job in politics is to shoot the wounded, particularly when they’ve been loyal subjects and they know where the bodies are buried and Helen Clark is probably our best Prime Minister in history at shooting the wounded, she believes them, they get anaemic, they stop struggling and then she puts the pillow over their head and she's very very good at it, and it is hard to shoot the wounded, you have to have a strong stomach.

RAWDON But a necessity to be a good government? Did you? What about your own abilities to shoot the wounded?

MIKE I wasn’t that good at it and to my surprise I found many of the wounded shot me. I should have strangled them at birth.

RAWDON Are you talking about our present Prime Minister?

MIKE No no no, she was never wounded. She handles this better than probably any political leader, look how Muldoon went down the toilet in the end for some be his mates, he was tremendously loyal Rob Muldoon to a small group and as you get in government longer and longer your circle of friends have been through the struggle and the trenches with you and get smaller and smaller and it's the nature of government and you're a bit distrustful of the class – the most recent people coming in, except of course when you’ve got MMP which is a way in which you can determine who comes in and ensure they're loyal subjects before they even get there and that is the basis, so if you're looking at government appointments you also look at list appointments into parliament and this is I think a very uncomfortable and dangerous thing.

RAWDON I'll just bring the panel in here.

RICHARD Fascinated as always with Michael's take on virtually everything, he always covers a whole gamut of things, but I remember a time when they used to talk about the Catholic mafia in the public service and claim that …

MIKE And the Masons.

RICHARD That’s right and the Masons.

MIKE In the justice system.

RICHARD I would suggest that we're as well served here as anywhere and for instance in mean despite Mike taking umbrage at the sense that you don’t sleep with the enemy I'm not as tribal as he is, he's a very tribal man, never been well rewarded for it in my opinion by the Labour Party but a very tribal man does see things in a tribal way and the Labour Party is probably more tribal than any other political party in this country, in that sense I think they over react to a lot of these things.

MIKE That’s probably right. But take the SOEs, now I'm not being personal here.

RICHARD Not much.

MIKE But there is a problem with SOEs, for example you had a good job and did a brilliant job at it as a representative for the state owned broadcasting system and your job was to influence the e parliament to protect and ensure that the interests of state broadcasting were looked after, that’s a questionable thing, now you did a good job and I wished to hell I'd employed you and not Jim Bolger, but when state owned enterprises the government itself starts employing people to promote their internal interest and their public interest, I mean this is where the erosion is. For example it always stuns me when I come home the amount of government advertising on television. Now they're all worthy how can you oppose it but it's all there to tell the people if you're worried about drownings we've got a TV programme for you, it's attacking symptoms not the substance, and this is a blurred line between political advertising and informing the public and every government is worse than the last.

RICHARD Well I know Jenni despises the fact that journalists should cross over and start working for organisations whether they be corporate or government and I take your point but once again I don’t agree.

RAWDON Jenni you're saying that we should have a completely neutral service it's possible to achieve even if that involves people with any conflict not taking up positions.

JENNI Well I think it is and actually Mike I've got a question about conflict of interest because I don’t think that New Zealanders recognise it terribly well in fact a lot of people seem to think it's a perk of the job, but the Auditor General has said look a register of interests isn't going to do it when it comes to things like personal relationships, you're never going to be able to write a rule that covers every situation, and it seems to me that the key to it seems to be the public servant himself or herself recognising that there's been a conflict in the first place so it can then be disclosed an managed. Now how do you think we can educate people to recognise the conflict of interest in the first place?

MIKE Well I think one of the lessons of the last week is teaching people. We also you know the highest paid public servant in the world is in Singapore, the highest paid politicians in the world are in Singapore and the incentive is to move out of the public sector to the non government sector or to these commissions you’ve got a problem, so a professional public service is central, in fact there's a lot of evidence and I do work in very strange places, the quality of public sector is a fundamental part of economic success and development, you have a dodgy public sector and all sorts of other things start to happen and we have in the main a pretty good public sector.

RICHARD Would you suggest that in any way a register of people's proclivities or political affiliations make even the slightest difference to that exercise?

MIKE I don’t think in the end it will frankly. Don’t forget it was illegal for a public servant to be involved in politics up until the 1930s when the Labour Party changed that, so I don’t think it will make much difference at all.

JENNI I really think the idea of a register isn't going to solve the problem entirely, it's a good idea when it comes to looking at the variety of areas that conflicts can occur but it can never ever do the whole job, you have to rely on the person themselves to recognise the conflict and then to disclose it so it can be managed.

MIKE it would be improper of a register to ask you your political affiliation.

JENNI It absolutely would that’s a human rights issue.

MIKE It would be improper of the Health Department to ask a person what your views on abortion or these sort of issues are, so there is a rights thing here as well.

RICHARD The people who raised the register idea essentially came out of the Public Service and often I think State Services also are out of touch with reality, I think Ian Rennie despite what the Prime Minister has to say didn’t do an adequate job, I don’t think he really went to the source of information or attempted to investigate it which would have to suggest that there are all sorts of pressures on State Services too but I don’t understand why Mark Prebble wasn’t doing the job in the first place but be that as it may a register nothing's going to change the dynamic between ministers and their chief executive except commonsense. Most people working in the Public Service including someone in the communications job would not have a contact with a minister on a regular basis, in fact probably never have contact directly with the minister, possibly with the minister's office. The dynamic between the minister and the department is always through the chief executive, in the end they're the people who have to uphold these sentiments and essentially it's what Hugh Logan should have done and didn’t.

MIKE So is it possible the system's working, is it possible the fact that a minister has been kicked out that’s a scrutiny on how the system worked whether the State Services Commission which is a good concept has worked and we're all talking about it from that scrutiny and disappointment, drives up a better result.

RICHARD Transparency is critical.

RAWDON We're saying I'd Ian Rennie do enough, should he have sought out more facts.

RICHARD In my opinion I listened to him on several occasions but particularly the day Friday week ago when he brought the report out and I thought this question's screaming at him was why didn’t you talk to the Minister, why did Hugh Logan not reveal to you – there had to be a conversation between the Minister's office and Hugh Logan, I think Ian Rennie was either naïve or simply didn’t want to go there.

JENNI But hang on a minute it had been specifically denied so why would he go further when I had been specifically denied?

RICHARD Because that’s your job if you're in that sort of situation, if you're an investigator in circumstances like that you don’t take anything for granted.

JENNI But you have to wonder what other evidence there would have been other than what people told him and there was very very little.

RICHARD In my opinion he should have not only been far more stringent in his question lines.

JENNI But we don’t know what his question line was.

RICHARD Well he made it pretty obvious in his interview that he hadn’t asked the questions, and then it was very clear and he kept saying I haven’t asked the Minister that or I don’t know what the Minister's position was, that was critical to the whole argument and he didn’t come through.

RAWDON So this is about sharpening up the SSC's act rather than changing the system.

MIKE The basic core belief systems in our Public Service is good, can it be improved – yes, have we a display here of decision making that is not good – probably yes. You know when the space shuttle crashes or there's a disaster the Americans have a management system where you work – there's the disaster work back page by page day by day whether this could have been avoided, and it could have been avoided because as you say perhaps the right questions weren’t asked and therefore what we're having is an example of the system maybe working.

JENNI Well it could have been avoided a lot earlier if they'd done the proper pre employment check because this relationship would have thrown itself up and presumably she would never have been hired.

MIKE But she was honest she said the right thing, she probably should have been employed but where? A minister should feel comfortable in the office to scratch themselves to throw around some ideas otherwise you deny yourself the opportunity of improving your job.

RAWDON Mike Moore thanks very much, we're going to call a close to it there, thank you to all three of you for coming in.

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