Q + A
Episode 922
STEVEN JOYCE
Interviewed by CORIN DANN

GREG Auckland construction companies are desperately looking for workers as the city enters the biggest building boom in its history. There are thousands of jobs going, just not enough trained people to fill them. Political editor Corin Dann spoke to Economic Development Minister Steven Joyce on Friday and asked him what he'd say to a young construction worker thinking about moving to Auckland.

STEVEN Well, actually, right now I’d say to them you’d probably get a job in the regions, because, actually, the regions—

CORIN But they might not in Northland.

STEVEN Well, actually, no. In Whangarei, construction is actually really picking up, and there’s quite a lot of activity—

CORIN Growth in Northland fell in the first quarter.

STEVEN I’m not sure about that.

CORIN Well, according to the ANZ it did.

STEVEN Well, yeah, the ANZ uses a different measure to what the—

CORIN To what?

STEVEN …Statistics New Zealand people use. And they’ve seen growth actually pick up in Northland over the last couple of years. So I think we’ve just got to be a little bit careful of just picking out a quarter in any region, actually. But, actually, Northland’s economy has been growing; the construction sector’s growing. So more broadly, I think it’s a great time for people to get into construction. They’ve got a trade week coming up in a couple of weeks’ time, so I’m more—

CORIN But you’re not going to find them all in Auckland, are you? I guess, what is the message to that young builder, though, who’s out in the regions? Why wouldn’t they be attracted to go to Auckland?

STEVEN Oh, they’re welcome to be, of course. All I’m saying is that there’s a lot more work in regional New Zealand now than there has been for some time, and so just saying to young builders to move to Auckland’s not necessarily the answer. The answer has to be things like we’ve got out at Auckland Airport, the Ara programme, which has basically got 39 different construction-based employers working together on one site, bunch of Portacoms, training people, bringing people into the workforce from South Auckland, giving them fast-tracked driver’s licences that they’ve trained—

CORIN You’re putting huge effort in – great – but you will need some migration, and I’m wondering if migration’s starting to get problematic for you, the political nature of it. You’ve got Winston Peters strongly critical of it. You’re coming into an election year. Are you going to be able to get through the next year with keeping migration levels up around that 60, 70,000 mark?

STEVEN Well, Winston’s been banging the migration drum for 40 years now, so it’s not a new story to have Winston going on about migration.

CORIN Yes, but we are in an unprecedented period – the size of this migration cycle.

STEVEN It is quite significant. Most of it is actually about less Kiwis leaving and going overseas, and that just shows that those that are arriving just look a bigger number because there’s less people leaving. So migration is strong at the moment, but we also have to look at the industries. To your point, the construction sector’s one, IT sector’s another one, various other sectors. In the South Island, they’ve got a shortage of labour. So we can’t just sort of turn around and say we’re going to cut migration levels hugely, because that would impact on many successful parts of the economy. So you’ve just got to walk and chew gum at the same time, train lots of locals and also be prepared to bring in people, particularly experienced people, if there are shortages.

CORIN Because Winston Peters in his speech just a couple of days ago, he says, ‘Giving away citizenship wholesale fits the Government’s phoney success story. It’s a fix. It’s a con. It’s all about pumping up growth. It’s a political manoeuvre.’

STEVEN Well, the only thing is he’s wrong. I mean, in actual fact, the citizenship numbers have not changed. The number of people that come in permanently to New Zealand has not changed. Yes, the numbers of people coming on some of the temporary visas has gone up, and certainly—

CORIN But he’s right in a sense about growth, isn’t he? Because if you stripped out population growth, what would be our growth rate per capita?

STEVEN Well, actually, it’s strengthening again.

CORIN But what would it be, though?

STEVEN Well, last year it was about half a per cent.

CORIN Half a per cent?

STEVEN That was relatively low, but it’s strengthening again, and prior to that it was strong. And, actually, New Zealand’s growth story overall is stronger than most of the rest of the world, and Winston hates that because it doesn’t fit his narrative that we’re all going to hell in a handbasket. But the reality is it’s going strongly, and that’s actually the problems of success.

CORIN No, no, I take your point. The economy is growing well in the here and now right now.

STEVEN That’s right.

CORIN And it is 3%, some people say, and that’s great.

STEVEN Possibly 3.5.

CORIN But you are seeing an increasing number of businesspeople from presumably, you could argue, National Party type figures coming out and saying similar messages to Winston Peters, which is that the migration is not helping, is that we need per-capita growth to be stronger and that you are relying on construction, the housing market, consumption, increased borrowing, all these things, and they’re pointing to risks.

STEVEN Well, with the greatest respect, you know, these are not problems in the sense that they were problems 10 years ago. So some people are actually sort of playing the same record, but, actually, New Zealand’s exports have been strong, our balance of payments is much smaller than it has been for some time and despite predictions, stayed small probably—

CORIN Dieter Adam from the Manufacturers Association—

STEVEN Give me a moment.

CORIN …says we are importing growth rather than creating it.

STEVEN Well, no, I disagree with that because the same people will turn around and say they need more process workers, they need more people to come and work. There’s a company, for example, I was visiting in Whakatane the other day who had brought in some aluminium welders from overseas because they can’t get them locally, and they’re saying, ‘Literally, if you turned off the tap completely on migration, then we wouldn’t be able to grow our businesses.’ So it’s got to be a judgement call. We’ve taken, for example, 55 occupations off the skills shortages list in New Zealand over the last few years and only put three on, so we have been watching that very closely. But you can’t just have a carte blanche. You can’t have a cartoon Winston Peters-type story – we don’t have migration – because, actually, we do need to be able to both train local people and also have people come in.

CORIN Fair point.

STEVEN Yeah.

CORIN But the point I’m making is that it’s not just Winston Peters any more. David Hisco, ‘We need a sensible discussion about immigration. Need to review the policy.’ The ANZ’s boss in New Zealand. Stephen Jennings, billionaire, ‘Rising price of immigration-fuelled economy.’ Are we heading for an iceberg?

STEVEN Well, with the greatest respect to Stephen, he hasn’t been in New Zealand for a long time. But different people have different views at different times. I can tell you that I was at a business meeting earlier this week and another one the previous week, and a lot of these companies are actually both not only training their own people but also keen to bring in a few good people to be perhaps more experienced. If you take an ICT company, for example, they’re growing at a rate of 3000 high-paid jobs a year, and they can’t take them all from graduates. And, of course, they’re actually already employed, the experienced people, so what are you going to do? Say to the ICT companies, say to Rod Drury from Xero, for example, ‘You can’t hire any more skilled people into this country,’ and he’ll say, ‘That’s fine. I’ll just build an office in Sydney and do more software development there. And so as a country we’ve just got to get that balance right.

CORIN But as a country, is that extra immigration making us wealthier? Because at 0.5% growth per capita, that would suggest it is not really.

STEVEN Well, firstly, it is, because it’s positive, but secondly, this is all about building industries for our future. The ICT industry, our high-value food industry, all these high-tech, innovative industries that actually need not only the people that we’re growing internally and we’re increasing the number of, for example, engineers as students, increasing the number of ICT students dramatically, but we also need to be open to highly skilled people from overseas to help these companies grow.

CORIN And that would be great if it was all in the IT industry or in manufacturing and high-skilled jobs, high-value-added jobs. Some of it is, but a lot of it is low skilled workers as well.

STEVEN Well, not necessarily.

CORIN I mean, Treasury has said that there’s a risk that the increased migration in the low skills sector is suppressing wages.

STEVEN Well, here’s an interesting thing for you. OECD just did the adult skills survey across the whole of the developed world – 33 countries – and they said in that survey— they surveyed migrants as well as people who already live in a country, and they said New Zealand had the highest skill level of migrants of anybody in the OECD, across the 33 countries. So that’s a pretty good story that New Zealand’s skilled migrants actually make a real contribution to this country.

CORIN I mean, there’s economists like Michael Reddell who might beg to differ.

STEVEN He might be, but—

CORIN He’s arguing that it’s, in fact, not the case.

STEVEN Well, I spent quite a lot of time on it. That’s my job as Skills and Employment Minister. Not saying other people don’t have different views. My point is that we do have to take an approach which encourages a Kiwis-first attitude to work, that gets people trained in the right areas, and we are seeing that with big increases in the sort of things that we care about, you know, trades, engineering, ICT, those areas of work that need to grow, but we also can’t close ourselves off to the opportunities that these growing industries bring.

CORIN Sure.

STEVEN And every now and then they need to have a more highly skilled, experienced person.

CORIN I don’t want to take away from the fact that you have delivered an economy with 3% growth. We’re doing a lot better than many countries.

STEVEN Yeah, that’s right.

CORIN And the Government should take some credit for that.

STEVEN The country should take the credit.

CORIN But do you not see that there are increasing warnings about these the sustainability of that growth? And I guess what I want to hear from you is what are we going to do about it to make sure that we don’t run into those icebergs that Stephen Jennings and co are warning?

STEVEN I think we’ve got to be a little bit careful. For example, a lot of people say, well, the housing market can’t keep up, therefore we should cut back on certain areas like migration. But you can’t run the whole economy for the Auckland housing market, because that’s actually a negative thing from the country as a whole.

CORIN So we need to take no notice of those points?

STEVEN No, it’s all about balance, and we actually do have to firstly acknowledge that these are the problems of success, that in many developed countries in the world, they’re not trying to work out where to find construction workers and where to—

CORIN No, but success would be growth per person 3%, wouldn’t it?

STEVEN Well, and in different times you can do that, but you actually have to build the industries that can deliver that growth. You can’t just look at a six-month period and say, ‘Well, in this particular six-month period, growth per capita was not high enough.’

CORIN And when you came in, you did have lofty goals to do that.

STEVEN Still have very lofty goals. Don’t you worry about that.

CORIN But this growth agenda’s been bubbling away. I give it to you there. But it had a goal of obviously increasing exports as a percentage of the economy from 30% to 40%

STEVEN Yeah.

CORIN You haven’t really made any progress on that.

STEVEN Well, to be fair, that’s a long target. It’s targeted out for 2025. Let’s look at the export strategy.

CORIN But it has gone nowhere since you’ve been in. It’s at 30.

STEVEN No, that’s not true. If you look at exports, calendar year 2015, exports went up from $67 billion to $69 billion in that year at the same time as dairy, our biggest export, was going backwards by 3 billion, which meant that non-dairy exports had to grow by 10.5% in one year. That’s across the average, and they’ve done that.

CORIN And that is—

STEVEN And that’s actually a real tribute to our export sectors.

CORIN Fair point.

STEVEN And our balance of payments, which everybody, Treasury included and for all I know Mr Reddell and others expected our balance of payments to blow out again post the GFC to something like 6% of our economy. It’s now at the moment where it’s probably going to be just below 3%.

CORIN Okay.

STEVEN So our exporters in the context of a pretty sluggish world economy are growing quite rapidly.

CORIN But answer me this – where have you got to with that target of 30 to 40%? It’s still 30%, isn’t it?

STEVEN Well, what happened, actually, was that the Department of Statistics after we came out with the target, went and rerated the last—

CORIN That sounds like spin.

STEVEN No, it’s not spin. It’s reality. You can go and check yourself. It came out and actually—

CORIN Is it 30% or not?

STEVEN It’s around 30% at the moment, but it was cut back to 28% because they went and rerated everybody’s export figures back for 25 years. But my point is this – it’s got to be done over the next 10 years through to 2025.

CORIN You’ve been doing this stuff for a very long time now. Do you still want to do it? Are you still committed to politics?

STEVEN You’re talking about me personally? Absolutely.

CORIN Into next term?

STEVEN Yeah, I want to.

CORIN You want to be back for another round?

STEVEN Absolutely. I just get so excited about these clever Kiwi companies that are getting out there and winning on the world stage from all over New Zealand, from Gisborne, from Southland, from Canterbury. And I get the privilege of going to see those companies, whether they’re making frozen juice drinks for kids or they’re making high-tech medical instruments or they’re making composite stuff, and I get the opportunity to work alongside them with government agencies and support and encourage them to grow. And I’m very excited about it.

CORIN If you’re committing to next term, do you have higher aspirations? If John Key was to move on after four terms, do you see yourself as a future leader?

STEVEN He does a tremendous job.

CORIN I mean, other people see you as one.

STEVEN Well, they can do what they like, but my job is to help grow the economy. That’s the bit that really excites me. He gets the bigger job, which means he has to do so many more things than I do. My job is to encourage Kiwi entrepreneurs to make a success and encourage kids to get into the sort of occupations that can make them a success from a New Zealand basis.

CORIN But you don’t want to be leader at some point down the track? Is that an aspiration?

STEVEN No, I have no aspiration in that regard. I’ve watched the big guy from up close, and, believe me, I think I work hard, but he works a heck of a lot harder.

Transcript provided by Able. www.able.co.nz

ENDS

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