PANEL DISCUSSIONS led by PAUL HOLMES

Response to JOHN WHITEHEAD interview

PAUL What do you make of Mr Whitehead's words. Where do we start? More tax reform to come he suggested.

FRAN O'SULLIVAN – NZ Herald Columnist
Absolutely I think what he was suggesting there was that consumption GST could possibly move up a bit. More move on the capital gains front which clearly they weren't able to get over the line this time, but also bringing down those personal and corporate rates even further. So this is a work in progress, figures perform in 25 years, but he is very much suggesting it could go a lot further yet.

PAUL I don’t think I've ever seen a Secretary of the Treasury on a live television interview Nigel. There's a new sense of openness isn't there. Do you sense that?

NIGEL ROBERTS – Political Scientist
Yes I do, but at the same time I thought his answers were very very politic, I mean he was very very careful not to dump the government in it and say the government didn’t do what I want, or the government should go much much further. It was a very very skilful interview, but I do think that he made it quite clear that the government didn’t move nearly as far as Treasury would advise on capital gains tax, and he didn’t really hold up much hope for the property reforms having much good. Some impact – it remains to be seen. And the crucial word hope – well when an economist uses the word hope it doesn’t auger well.

PAUL Exactly so. More tax reform you'd be pleased about that Sue.

SUE BRADFORD – Former Green Party MP
I found the most phenomenal statement he made is that lower tax rates will raise the standard of living, and I'd like to ask him how exactly what they’ve done in the Budget just now is going to raise the standard for anyone on a low wage or a benefit. It's been a very mean budget, a real attack on the poor and I don’t know how many people in middle New Zealand will realise how much it's going to impact on them, as well as low income workers and beneficiaries.

PAUL Well what the impact going to be?

SUE The cost of living's going to go up a lot with the rise in GST, rising rents, rising mortgages when the OCR goes up, rising power prices, inflation itself. All of that is gonna wipe out the taxcuts for low income people immediately. And there's a great inequity, you're talking about superannuation today, huge inequity for beneficiaries in that a couple on the unemployment benefit's going to get a princely raise of $6 a week, a couple on the superannuation will get a raise of $21 a week, good on them, but what the government's done, it's so mean, that it's actually cut gross benefit levels to ensure that beneficiaries don’t get any advantage out of this budget, and how mean can you get?

PAUL Alright let's move on to overseas investment, he said that quite clearly overseas investment is very good for the country, and he seems to be advocating a relaxation really on screening I suppose of overseas investment. Here's what he said.

John Whitehead: 'Fundamentally there's a lot to be gained from open flows of people, open flows of ideas, open flows of investment, that can actually help our economy, it can help the living standards of New Zealanders. We do need protections but fundamentally overseas investment is beneficial for New Zealand.'

PAUL Fran your comment on that.

FRAN Well I think it's not gonna be that easy, I think we're now running into a national feeling that particularly when it comes to farmland and what might conceivably be our long term best interests, in that we are one of the countries that are going to have water and so forth. I think there's a debate that has to be had, and I think that area of sensitivity will actually grow to encompass a lot of that, particularly Chinese investors coming in, would you say Mae Wang a woman who is now being looked at as if she might be struck off as a director. Are these the people we want managing our prime assets? I don’t think so, and I think this is an issue that’s not gonna go away.

PAUL There's an element of xenophobia in it always isn't there? Overseas investment – I mean people forget that we happen to go in and buy farms and we buy industries in other countries.

NIGEL I think that John Whitehead was right when he said that in New Zealand, New Zealanders are particularly sensitive about this and I think indeed later on in today's programme we're going to be talking about areas where New Zealand is particularly sensitive. It's a really difficult political equation, and I think it's quite clear from what he said, which side the Treasury's on in that equation, but I think Fran's right, any government, any elected representatives have to tread extremely careful, given the public opinion.

PAUL Well speaking of trading carefully, asset sales or partial floats. Do I get the feeling it's not the bogey in New Zealand it once was?

SUE I think you're wrong there Paul, I find it very interesting that Mr Whitehead's talking about Treasury doing work on why people don’t like the idea of selling off public assets. They could have worked that out 20 years ago during the 1980s and early 90s.

FRAN Oh things have changed, that 20 years ago.

SUE We've seen the whole history of what happened, I mean you only have to look at KiwiRail, BNZ, what disasters we've seen, and to think that we might head back down that track is just…

FRAN I think what they're proposing now isn't a sale to Sir Roger Douglas's mates to be perfectly honest. I think what they're looking at now is a combination kind of thing where the government has control, super fund will have a slice, some major institutions in New Zealand and the likes of you and me being able to have something.

PAUL Let me talk about retirement age too because this came up. now we're 65 at the moment for the superannuation. In Australia, Germany and Denmark, the age of accessibility of the superannuation is 67, the UK is going to 68. Life expectancy by the year 2050 is going to be 85 in New Zealand. Are we going to have to get real, grasp the nettle and put the super age up – Sue.

SUE I certainly hope not, especially when we look at how that would impact disproportionately on people with a much lower life expectancy than what you're talking about which are Maori and Pacific Island people. It becomes quite a cruel form of mathematics when you talk about putting it up and so…

PAUL Well another cruel form of mathematics is the amount of money available, isn't it?

NIGEL Well I have to say that it does seem to me this is an area where New Zealand is going to have to change, and the last time of course when we think back to the New Zealand superannuation scheme, it was introduced by Robert Muldoon and the age was then 60, and it's been raised to 65, and I don’t think particularly painfully, and I think a long term gradual increase that is planned in stages where you don’t obviously hit somebody and say, well bad luck you're 65 next year but it's now going to be 67.

PAUL But of course in the old days when we were all growing up somebody looked old and was old at 60. Now we're not old…

FRAN Well they also died at 72, I mean 70 or 72 and so the amount of time that the state had to spend keeping those people on a benefit was proportionately quite low compared to their average working life.

PAUL Exactly so, can I give you another bit of cruel mathematics, a person aged 65 in 2050 will live 24 more years after that. In 2050 there'll be 330,000 people aged over 85, currently there are 64,000. I mean those numbers are tough.

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Response to BELLINGHAM and BAKER discussion

PAUL Chris Baker makes a compelling argument doesn’t he Fran that you know if we're gonna pay for the hospitals, if we want to keep the pension at 67 max, save, we've gotta pay for all of the baby boomers getting old, we've got to have more money, where's it gonna come from? Let's mine a bit of Schedule 4 is that he's saying, let's have a look at it.

FRAN Yeah I think there's nothing wrong with actually having a look at it, even though it is sitting in Schedule 4. Clearly the politics are going against the government on this one at the moment, but my feeling is that we may over time, see something happening on the West Coast. Well let's face the local populace understand the benefits of mining. It understands what it does to their own future.

PAUL The politics of 30,000 submissions, you can be sure they won't all be in support of it Nigel?

NIGEL No they won't, there'll be a lot who of course have just signed a postcard and things, but I think that the politics of the activists is overwhelmingly against it. I think the government is in a very difficult position, I don’t think Gerry Brownlee handled it very well to introduce it. I think he introduced it clumsily. It seems to me that one thing that confuses people is this whole thing what is Schedule 4? Schedule 4 is national parks plus other areas that have been put into Schedule 4 from 1997 onwards. It seems to me the one thing the government could do to smooth its path to say we will not permit any mining in national parks, make that quite clear and then move on to debate the other lands, but there are some very sensitive other lands in Schedule 4 as well.

SUE I think it's a gonner politically. Back in 1997 the National government then supported Schedule 4 as you pointed out, including people like Nick Smith saying we won't have to debate this again.

PAUL He implied that now that we've passed this in 97 he effectively said Conservation Ministers will no longer have the hassle …

SUE Of having to debate it, and his own party has led the charge on this, it's ridiculous and I just think it's a tribute to the activists out there that so many marched in Queen Street a few weeks ago and that there are 35,000 submissions in front of that poor select committee.

PAUL Sue what about the idea though, that you know you're the first person who wants the hospitals, you want the beneficiaries to be better off and so forth, you know you want better circumstances for low paid, where's the money gonna come from?

SUE Well it's not gonna come from mining in the national parks, and I think Mark Bellingham made that point really clearly, that there's a trade off between what we'd lose from tourism. There's no way we'd make that up by turning parts of the Coromandel into what's happened at Waihi or what's happened at Stockton, it's ridiculous.

PAUL The other thing is I spose I mean if you were to let the mining into Schedule 4 you'll have political argument for years.

FRAN Yes probably so, but I mean we're also about to embark on a whole pile of other debates around mining when we look at the iron sands on the West Coast, these sorts of things, where you’ve got international companies, local companies, wanting to partner up with Iwi. I think actually a lot of the change that will come, that I would regard as progressive in these sorts of areas, will come from Iwi wanting a slice of the action, and wanting to do state/Iwi deals and I think over time, over say a 10, 30 year period, we are going to get mined.

PAUL You said that once before when you were here didn’t you?

FRAN I did, and I was right, they want part of KiwiBank too.

PAUL Nigel Roberts, stories coming out this week, what would you be interested in in the week ahead?

NIGEL Well in the week ahead I'm actually looking forward slightly into the next week and another lot of submissions closed, and that’s submissions on the 2011 referendum bill, and I think that a lot of people will be working in the week ahead to finalise submissions because it's of fundamental importance to the country, it's a major constitutional plank, what type of electoral system we have, and we're revisiting it. I think the government – here Simon Power I'd say has acted extremely well, he's been very cautious, he's been thoughtful and the government is now through the Select Committee process, going to be debating the measures that they’ve introduced.

PAUL What you'll be looking at this week, Sue Bradford?

SUE Like Nigel a week ahead from next week, but the Welfare Working Group, very controversial body from some points of view is holding a national forum in Wellington, on the 9th and 10th of June and I'd just say for anyone that’s concerned about where the government is going with the reform of welfare, including the possible introduction of employment insurance, a form of privatisation of the welfare system, I'd love to see you come to the forum, I'm gonna be there and I hope that will have a really good debate, because the Welfare Working Group is not a balanced body, and I'd really like to see a lot more people who care about the future welfare in this country coming together in Wellington and have a really good look at it.

PAUL Enjoying being out of politics?

SUE Certainly, not out of politics Paul. Just out of parliament, it's quite a different thing.

ends

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