AGENDA Presented by RAWDON CHRISTIE

RAWDON We saw the National Party do yet another policy u-turn last week when it dropped its long-standing argument that climate change wasn’t happening and instead backed the government's new measures to combat carbon emissions. That follows their foreign affairs spokesman Murray McCully saying National was finally agreeing to the nuclear free legislation and would support a bi-partisan foreign policy. It's not surprise then that critics have started to party Labour Lite. Bill English was leader before the party changed its mind on these policies, now he's Deputy Leader and he's with Guyon Espiner.

GUYON ESPINER – One News

Well Bill English let's start there with climate change, perhaps the greatest issue facing the government and maybe the planet. We've seen National pretty much sign up to those proposals, will anything at all change under National?

BILL ENGLISH – Deputy Leader, National

Well with climate change National has quite a long history involved with this going right back to the early 90s when Simon Upton was part of negotiating Kyoto, there was a great deal of scepticism in National once Kyoto got up and running, once the government ratified it, but in the late 90s a National Cabinet actually made a choice between emissions trading and carbon tax and chose emissions trading, so that choice has now survived the scrutiny of the cabinets of two different governments so it wasn’t quite as big a leap as I think was portrayed for National to support.

GUYON Although just 18 months ago your leader was saying he was suspicious that this phenomenon actually even existed, I mean what credibility does the party have when it doubted the very existence of climate change only in mid 2005?

BILL I don’t think there's anything wrong with asking questions about it, there's just in the last few days some quite reputable publications about the complexities, the problems of the modelling of the climate phenomena that we're meant to be changing here, so I don’t belong to the camp and National doesn’t that says this is open and shut, there's absolutely no doubt. In fact that’s one reason we backed emission trading systems is because in that system that you’ve got the flexibility of a price that can change and that means you’ve got a much wider range of tools from changing technology through to different consumer preferences. It means that you can in a sense make the policy up as you go and the public are clearly signalling to the politicians that while they're interested in climate change and they're concerned about it, they're to willing to pay any price.

GUYON I'll just ask you what size this problem is, I mean Michael Cullen was comparing it to the threat of nuclear war. Do you think we're actually being alarmist about climate change?

BILL I think there's a risk of being alarmist, I mean if Michael Cullen believes it's the equivalent of nuclear war then he would have laid out a much tougher policy than he actually has, and that’s why we were able to support the general principles of this policy because it is pretty reasonable compared to the rhetoric. Now the policy itself has got some flexibility, it gives time for people to adjust behaviour to get better technology, now those are all good aspects of the policy.

GUYON Do you think this is just something for the political elite or do you think it's going to be an election issue next year?

Oh I think it's largely for the political elite, it's been a big policy challenge for the political elite to work out not only the technicalities of how to make this policy work but also to negotiate the pathway with the public who are concerned but are pretty sceptical about what price they should pay in terms of lost income or lost opportunities, and I think that’s going to be an ongoing tension over the next five to ten years.

GUYON Okay let's come to another big policy issue and right into the heart of your finance portfolio, Kiwi Saver, tell us whether you're going to keep the compulsory employer contributions to that scheme.

BILL Well we're still considering all our options.

GUYON Why is that Bill English because you’ve just signed up to an incredibly complex climate change policy and you're telling me that five months after the Kiwi Saver announcements were made you still haven’t worked it out, how can that be?

BILL Well we've had 15 years of climate change going back to the first discussions in a National Cabinet in the 1990s and Kiwi Saver as delivered in the Budget was a much more complex and much more expensive beast than the original Kiwi Save mark 1, and that’s why we're taking our time, and look I think the public would expect that, they need to know from National whether there's going to be one.

GUYON Sure but give us a signal on those compulsory employer contributions. You’ve said on this you’ve got concerns about those, you’ve got concerns about the impact on the small business, you know what is your thinking on this at the moment?

BILL Well look I'm not gonna comment on that particular issue, but in the Select Committee a range of issues have come up because we've just been having public hearings on Kiwi Saver and they range from concern in the workplace both from business and unions about some people being in and some people being out, but there being no clear legal basis for how to treat the contributions. Another concern is just affordability that the unions and business both telling us that a lot of low and middle income New Zealanders aren’t going to opt in because the threshold which at the moment is relatively low, there's a two plus two option is going to go up to four plus four, and they're saying that people aren’t going to be able to afford it, they're probably two of our biggest concerns.

GUYON Well wouldn’t it fit with your ideology to give tax cuts, in itself to boost income. I mean basically what you're saying is that there are a lot of low and modest income people who simply can't afford to stash away 4% of their income. Would you reward those people with tax cuts instead of Kiwi Saver?

BILL Well there's going to be a mix of both, no doubt about that, there will be a Kiwi Saver under National, it's a good idea to encourage savings. Now we certainly have clear views about tax cuts, we believe they're affordable and practical and that they’ll be good for the economy, so there is work to do to see how those fit together.

GUYON Do you think tax cuts is enough to win you the election I mean is it going to be a big issue next year?

BILL I think it's going to be a big issue but it certainly won't be the only issue, I think the winning of the election is going to be as much about who's got the sense of direction and the optimism and the willingness and ability to take the risks to lift the country's economic performance and sense of what it can achieve in the world and there's not much doubt about who that is, it's John Key.

GUYON I'd like to take you to another point which is central to the management of the finance portfolio and that is the management of our state assets. Are there any state assets that National thinks should be sold?

BILL Well we've talked frequently about partial floats. You’ve got the model of Air New Zealand which you know it's accidental in a sense because the government had to bail them out, but it shows the benefits of market scrutiny of what it does, the need every day for the management to perform…

GUYON Okay well let's get back to the direct question are there any that should be sold, should the government own a weather forecasting company, a logging company, an airline, why should the government own those things?

BILL Well we don’t think there's any that should be sold holus bolus. We haven’t got a list of those.

GUYON Well what has changed because right up until your very last year in office in 1999 you were selling airports, you sold Contact Energy, what has changed. I mean it's hard not to believe that you’ve just sacrificed your ideology for political acceptability on asset sales.

BILL Well if the nation says we want to retain control of these state assets then we can't expect to be a government and say we're going to go and head off in the opposite direction, I think National has accepted that, as we've accepted with other policies that this is where the public is.

GUYON Well that’s very interesting, so it's the public opinion which has shifted your thinking because National's ideology would be that the private sector can do it better, why would the state want to own a logging company and weather forecaster, that would be the National ideology wouldn’t it, and you're saying that because it's politically expedient we're not gonna do that now.

BILL Well I think it's just that National's a bit less ideological about it, I mean the fact is that over the last eight years National hasn’t been able to sell any assets at all, hasn’t been able to partially float, it hasn’t been able to improve the performance of our state owned enterprises because it hasn’t been in government. We're quite relaxed about a mixed model, we think it's working in the cases where it's happened such as Air New Zealand and we think furthermore with Kiwi Saver there's going to be demand from Kiwi mums and dads for some opportunities to invest.

GUYON Could I ask you to elaborate on your own policy then, which assets should have some partial floats, would you sell down some more of Air New Zealand, would you introduce partial private ownership to other assets, what are they?

BILL Well we haven’t got a list quite honestly Guyon, we just don’t have a list of assets where we've got to confirm policy, but the general principle of partial selldowns, particularly focused on the demand from Kiwi Saver accounts for good investment, because in the end Kiwi Saver's not about the government subsidy it's about good investment opportunities, and that’s a direction we will talk more about over the next 18 months.

GUYON What about the electricity companies, they're big assets, and what about giving Kiwi mums and dads a shot at owning some shares in those?

BILL Well I mean I wouldn’t exclude any, clearly those kind of assets are very topical at the moment, some of them are running very well, they're making substantial profits for government which you know get spent on health and education, so if you sell down the government's not going to get those profits, but yeah we'd look at partial floats of those.

GUYON I'd like to move from that to the way that we actually finance our political parties. Now you’ve had a lot to say about things you don’t like that are in the electoral finance bill, I'd like to ask you something briefly about what's not in there and that is the banning of anonymous donations and the use of blind trusts. Will National continue to use what has been a very lucrative stream of money from those techniques, will you still use blind trust coming up to the election?

BILL We will go with the law and we have said that we would expect – we expect the law to tighten up, we were as surprised as anyone when that piece of legislation turned up essentially making no difference to the operation of trusts. Now so going to the next election I don’t believe we can use them in the same way just given our public position, and I imagine over the next two or three months the government is going to produce some changes, so we don’t expect to be operating it the same way.

GUYON I know that the panel's got more to ask you, I just want to ask you one final question from me. You led National to an historic defeat in 2002, 21% of the vote, I mean was that in any sense a mandate from the public that they don’t see you in a senior role in New Zealand politics.

BILL Well I'd hope to be in a fairly senior role after the election. Look I don’t take that too personally, certainly my leadership performance at the time made a difference but the National Party was quite frankly a bit of a shambles at the time and it's also a lesson that I think Labour need to heed, because National's learnt it, and that is that if people run out of reasons to vote for you then your vote can just collapse.

GUYON That’s all from me for the moment.

RAWDON Thanks Guyon, I just want to bring Claire in, we've had a reference there that optimism will see this party through to success next year, is optimism going to be enough?

CLAIRE HARVEY – NZ Herald

Ah well I guess we'll find out, but it's nice to know that they are optimistic, I mean it's the only attitude to go into it with. One thing I wanted to ask Bill actually was how is National learning the lessons of The Hollow Men? What's happening strategically in your preparation for this election are you being more careful about emails? Is there some sort of you know inhouse security procedure for internal communications?

BILL Well look The Hollow Men is a book full of innuendo and conspiracy theories and actually doesn’t bear that much on our strategic thinking. I think most National MPs are a bit more careful about their emails and that’s probably the end of it.

CLAIRE What about you personally, what's your email strategy, what's your email protocol?

BILL Well I still use email a fair bit, I don’t see why I should change the way I run my life just because Nicky Hagar managed to get hold of a few, but look I think most us are a bit more careful, it is better to talk to people directly.

RAWDON Vernon I saw you scribbling madly when Bill English was talking about Kiwi Saver just then.

VERNON SMALL – Dominion Post
Yeah just some follow up questions Bill. You mentioned the two plus two and it being at a fairly low level, 2% from the employer and 2% from the employee, should we take from that that’s where you're thinking of drawing the line, stopping there and not going on to the 4%?

BILL Oh no I wouldn’t necessarily take that, I'm just letting you know what issues came through in the Select Committee because that was a good sort of post introduction review where we had the CTU and Business New Zealand making quite a number of similar points, and it was clear from that that essentially their message to the politicians was that if you want mass participation in this then the 4% hurdle is pretty high, remember that’s about 5½% of net income. We have a large number of people in the workforce earning 25, 30,000 dollars and it is a big hurdle for them and it always was.

VERNON But two plus two would solve your political problems wouldn’t, you can waive some of it through and save some money in the long run.

BILL Well as I've said Vernon we're looking at the options and when we've sorted them out we'll let you know.

VERNON One of the other things that came up when Guyon was asking you questions was about the future direction of the party and you're saying that it's the party that's prepared to take risks and that may be one of the things that distinguishes you from Labour at the election. What are those risks, is this borrowing more money or what were you talking about?

BILL Well I think in the first place just an attitude, I mean you’ve got a control freak government which has paralysed the Civil Service and turned it into a risk averse bunch of people who can't think the way they should be able to, cos they're not allowed to, you’ve got a wider spread perception in the public that if it moves the government's gonna regulate it, that it's hard to…

VERNON So you want the Public Service to take more risks are you saying?

BILL I think that’s one place where you can start, I mean for a future National government if we get the opportunity we should be able to signal to the Public Service pretty quickly that the idea of thinking for themselves and offering their best advice is back in fashion. I mean if you're going to show leadership you’ve gotta start with the people you employ directly, but I think John Key's personality has worked so well with the public precisely because they see him as quite a different style than Helen Clark which is much less buttoned down and managerial, much more aspirational and upbeat and willing to take some decisions.

RAWDON Mr English how does that square with John Key saying Clint Rickards should be sacked?

BILL Well he was expressing what I think's a widespread public view. It was a bit ironical to hear from the government that you’ve gotta follow the right process, I recall when they were in opposition they daily ran stories about big payouts that were all the product of the legal process at the time, so I think John Key was expressing public opinion and it's up to the government and the Police to sort out the problem.

GUYON I wonder if I can just jump in here Bill English. A thing that seems to be coming through from this conversation is that National is abandoning its actual political principles, its ideology, really to sort of make policy by opinion poll. I mean it doesn’t seem as though you’ve actually got a set of centre right values and principles that you're actually bringing to this policy process.

BILL Well that’s not right Guyon. I think if you listen to what the government, what Labour says about National you'd think that we are some kind of reincarnation of Genghis Kahn and Roger Douglas rolled in together, so clearly our political opponents believe the public should be dead scared of our political principles.

Look you are going to see from National and are seeing already various ways in which we want to – various ways in which we're going to use kind of centre right principles such as more competition, higher standards, smaller government, lower taxes, wise government spending rather than endless government spending, backing our businesses, these are all the things that National Party has always been associated with, mutual obligations in welfare, that’s the kind of change we're getting the message New Zealanders are looking for.

I don’t think there's much doubt about that in the public mind while you know the commentariate might be sitting around saying Labour Lite and all that, the public are pretty clear, they like what they're hearing otherwise we wouldn’t have at least some of the support we have.

VERNON Is there anywhere where you'd boost spending Bill? I mean you’ve taken a lot of flak from Labour in the House about the cuts that they say you have to make to fund your tax package, but I'm interested in whether there's any areas you think that significant spending increases are needed?

BILL Well we're open to it, and I have to say we get a parade of people through our offices which started about three months ago when the public started believing the government might change. They're coming in putting cases to us. You know we are thoughtful about how government spends its money we're not just thoughtless big spenders.

VERNON Yeah I know there's a lot more people asking and I know your thinking but what are you thinking where do you think there are shortages, is it in Police, Corrections, Education?

BILL Well we're working through our priorities.

VERNON No detail?

BILL No detail, no.

RAWDON Is that not taking risks Mr English, I thought this was about risk taking?

BILL Well we've got a plan to follow to win an election and that involved in particular a high degree of credibility about policy, so we don’t announce any particular decisions till we've considered it, we've put out one or two this year, for instance unlimited tax deductibility on charitable donations, that’s costs money, cos we want to create a culture of giving.

The government picked up that policy and it's now government policy as well. In the next few weeks we'll issue a health discussion document, now no opposition party has issued an extensive document on health before an election that we can find, and it's being talked about in the sector, when we put out the document it'll be open to scrutiny by everybody including our political opponents, and that'll demonstrate I think credibility on a difficult policy area.

RAWDON Bill English thank you. So Guyon what have you learned?

GUYON Well I think it's a big ironic in some ways that Bill English is talking about risk taking being at the forefront of their strategy, he doesn’t seem to be taking many risks at all, I mean why would you, you're ahead in the polls, it's what a year out, I mean why would you tinker and why would you take those risks at the moment, and maybe you know I mean if you take him at his word maybe we're going to see some of that in the election, but I wonder whether they're figuring just a couple of big hits might be enough to push them over the line, tax and a couple of other policies, that’s probably what they're thinking why would you open up other big areas of points of difference if they're not gonna be to your advantage.

RAWDON Thanks Guyon and again thank you Bill English.

ENDS

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