Monday16th May, 2011

TRANSCRIPT: Prime Minister, John Key interviewed on TV ONE’s Breakfast at 7:20am this morning.

The full length video interview can also be seen on tvnz.co.nz at, http://tvnz.co.nz/Breakfast

JOHN KEY interviewed by PETRA BAGUST

Petra : It is of course Budget week, on Thursday we find out just how far no new spending can be stretched, and if this budget looks bleak how confident can we be in any predictions of prices overhead. For that and the latest on the Fiji Tonga standoff, Prime Minister John Key good morning. The Budget, you’ve been laying the groundwork for this sort of bad news budget, but how are you feeling about it?

John: I feel good about it actually, I mean it's a sensible responsibility budget and it's balanced. So there's no new money in the sense that we're spending the same amount this year that we spent last year, but what we have done is we've changed that mix. So more money into Health and Education, big dollop of money, five and a half billion dollars going into Christchurch for the rebuild of Christchurch. But obviously we save money in other places and we've given a few indications of those. There are changes to Kiwi Saver. Some modest changes to Working for Families, but I sort of hasten to add more modest, and they take a long period of time, and some changes to the Student Loan Scheme but not interest going back on.

Petra: Over the weekend there's been criticism about fiddling with things like the savings, Kiwi Saver, just undermines the nation's confidence in saving programmes and makes them feel like they don’t want to get involved, or they can't trust the government to keep these things in place?

John: Yeah, look I wouldn’t accept that criticism. If you look at Kiwi Saver when it was first set up, the Treasury said by about now there'd be I 685,000 people in it. Actually there's 1.7 million and about 20,000 people…

Petra: But why mess with them? Why disincentivise them from staying in and putting money in?

John: Sheer cost. So of the money that’s in Kiwi Saver at the moment about half of it the government's put in. So it's a much bigger scheme, and much less affordable than we'd originally thought.

Petra: So wouldn’t we rather have savings as our impetus rather than say tax cuts, because in a sense you're doing tax cuts through Kiwi Saver, so why the double up?

John: We did the tax cuts in the last budget anyway and they were across the board, and I think that put the right incentives in the economy for people to work and save and get ahead. If you look at Kiwi Saver we want to lift what's called national savings. So that’s the combination of what the government either saves or doesn’t save, and what either you save or don’t save. So if you put some money into Kiwi Saver you're saving, but if we put some money into match you and we're simply borrowing it from overseas, which is the current position, we're not really saving, because on the one hand we're putting money in your account, on the other hand we're borrowing.

Petra: The government is always borrowing for all sorts of things aren’t they?

John: No not really. For the most part actually we've run a surplus in New Zealand for about the last 15 years, now it's been much more difficult in the last three or four, and it'll be like that for a wee while. The story of the budget actually is that the Crown accounts are improving. We've charted I think a really good course if you think about the conditions we've had. Worst global recession since the Depression, two major earthquakes, all of those other issues we've had to deal with, baling out finance companies whatever it might be. So we've had a lot to deal with, but what this shows is our debt is well and truly under control, our accounts are starting to come right, we're getting back into surplus, and actually our schemes are more affordable, and I think if you talk about those issues, I mean in the end people want to know that those schemes are going to be there and we can afford them. There's no point in just going into debt the whole time.

Petra: Hearing the budget from Australia as you will have in the past week, did it make you wish you lived in Australia?

John: No, not in the slightest actually. I mean they’ve got their fair set of challenges. I mean if you actually have a look their mining industry is very strong, but once you strip that away, then what you see is retail consumption's actually quite weak, their housing market's a bit overcooked. So they’ve got a lot of different issues, their deficit is actually quite large this year.

Petra: They don’t act worried though.

John: Well we don’t act worried either. I mean we've just got a plan to go and resolve that issue, and we've been dealing with that for now two and a half, three years it's been billing, this is third budget, and I think it's actually responsible. If you get into election day November 26, you know what you're gonna see is we've delivered tax cuts across the board, we've delivered a much better spending, and we've delivered a balanced budget that gets us back into surplus. That’s not bad given the conditions we've had.

Petra: And obviously we look forward to Thursday. Our other neighbours Tonga and Fiji, what's your sense of that situation?

John: Yes it's a very interesting position and we're obviously monitoring that quite closely. Tevita Mara is the guy that was Bainimarama's right hand man when he undertook the coup back in 2006, so the fact that he's jumped ship if you like is a very interesting development there. The second thing is New Zealanders might remember his father when he was Ratu Sir Kamasese Mara, so basically this is right up there in the leadership of Fiji. So look we'll continue to monitor it, we're not playing any role in it, it's an issue between ultimately I guess at this stage, Tonga and Fiji, but we are monitoring it.

Petra: Could the situation escalate, might New Zealand need to play a role?

John: We're not thinking that will be the case at this point, I mean it will be interesting to see how it goes, I mean it's always been quite fragile in Fiji and that’s the nature of coups they always are. But let's all see how things go, I mean New Zealand's long term position has always been and will continue to be, we want to see democratic elections held in Fiji and we're prepared to offer whatever support is necessary to allow that to take place.

Petra: And finally Mr Joy of the BBC Fame has issued you with a challenge to find a scientist to back up your claims, have you taken up that challenge?

John: Well I haven’t seen his challenge yet, but look if you take a step back and have a look at it, 100% pure, yeah okay it's a marketing campaign, but you know, go back to the point I was making on the show, I mean we could be very tough on ourselves and you can always find an academic who will tell you that things aren’t great. I mean fair enough. But by definition any human action at all will pollute the environment, so cave men were doing that when they were burning things, by definition. Just take water, let's just take water, cos that’s where Mr Joy I think is talking about one point. New Zealand is ranked second in the world for water quality, only eclipsed by Iceland, we're 99.2% on that scale, and you know I'm the Minister of Tourism, I see the exit if you like, interviews and polls and things of people when they leave. I haven’t seen one where people say I came to New Zealand and I was disappointed with the environmental experience I had. So no one's arguing that we don’t need to clean up our waterways. We issued a national policy statement on water last week. We're spending a quarter of a billion dollars cleaning up some waterways from intensification of dairying, I think we all need to acknowledge that. But relatively speaking I think I've travelled a fair bit in the world, some places that are very nice, and still look at those places and is their air quality and water quality a lot better than New Zealand? I don’t think so for the most part.

Petra: So you think we're getting it right at the moment?

John: I reckon, I mean within the bounds of reason, I mean you know everyone has a marketing slogan.

Petra: 98%? 95% 82%. 82% pure.

John: You're saying the Australians have backed themselves.

Petra: Yeah you’ve gotta back yourself.

John: You’ve gotta be a bit reasonable about these things, I mean you know okay we could live with absolutely no activity whatsoever but it would a fairly lonely and quiet place.

Petra: It would be and some people would like it like that but not everyone. Prime Minister John Key thanks for joining us this morning.

ENDS

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