Sunday19th July 2009: Q+A’s Panel Discussions with Paul Holmes, Therese Arseneau, Alisdair Thompson from the Employers & Manufacturers Assn and Helen Kelly from the Combined Trade Unions.

The video interview of the panel discussions from this morning’s Q+A can be seen on tvnz.co.nz at, http://tvnz.co.nz/q-and-a-news

PANEL DISCUSSIONS led by PAUL HOLMES

Response to JOHN KEY interview

PAUL So what do our panel think of some of the things the Prime Minister was saying, Therese Arseneau, Alisdair Thompson and Helen Kelly. So is the recession over as he asserts?

ALISDAIR THOMPSON – Employers and Manufacturers Association
Well it's not over, we've probably got another couple of quarters of contraction to happen, but in our view it's definitely bottomed out and there are signs of it coming up, and the first one I'd refer to, the last three even four months there's been a slight improvement in the performance of manufacturing index, now we've still got a long way to go to get back to neutral, but it's coming up, that’s for the last four months. That measures things like forward orders, stock levels, sales and so on. Then there's the things like the balance of payments, we're seeing an improvement there, the trade surplus we've got one now. The focus I think on productivity that’s happening within firms is definitely on the way, they're looking at lean manufacturing and TQM and such like so that once they come out of the recession they can get cracking, and I think too you know you just see this general feeling. I've been meeting with two and a half thousand employers this last two or three weeks, and there is a feeling that we are improving, and I think that’s a key thing.

PAUL And also the feeling really that the guts didn’t completely drop out of things anyway.

THERESE ARSENEAU – Political Analyst
But I thought it was interesting when Bill English a few weeks ago said, the public does not judge it though by those indicators that you talked about, instead they judge it by the key indicator for them which is employment, and politically and statistically we see that, that that will hurt a government more than anything if unemployment keeps rising and the expectation as it will until right through in next year.

PAUL interesting that he described unemployment, what did he call it a lagging – a lagging kind of statistic, a lagging measurement, what do you think, recession over or?

HELEN KELLY – Combined Trade Unions
No I definitely don’t think it's over, and if you look at what a recession from a working person's point of view it is about whether they’ve got employment and whether there's hope of employment in the future. I think you know what we heard there is that there is a genuine commitment I think and honesty around John Key saying he wants to deal with the job issue, but very few ideas in how he's going to do that.

PAUL But who has got the ideas around the world, what can any government really do?

HELEN Well if you take a look at Australia for example, they have taken quite a different approach, they have taken an investment approach to this recession, they have really clawed money into education and training and job creation and low wage earners have been given money, and they haven't had to ....

PAUL But they probably have a hell of a lot more money.

THERESE But has it led to lower unemployment? I mean I think it's interesting, Canada, the United States, Australia, have all taken a more activist approach and yet our unemployment is lower than theirs.

HELEN We started from a very low base but actually it growing at a much more rapid rate than theirs.

PAUL China reported again 8% growth this week.

ALISDAIR Yes well unemployment here is not as bad as many people have thought. Redundancy now we believe is coming down. EMA over the last nine months was handling a huge number of calls from employers about how to reduce our payroll cost, shorter hours or redundancy, that has tailed right off now. Once a person's made redundant they have some time before they can go on to the unemployment role and benefit, because they’ve had a redundancy payment so they don’t qualify straight away. Now those people who were made redundant two or three months ago are flying through on to unemployment, that’s the lag that the Prime Minister was talking about, that’s why we're seeing a lift in the number of people on the dole, but the rate at which people are losing their jobs has definitely come down and we can measure that by the number of calls we're getting to help employers with that.

PAUL Let's examine one of the things the Prime Minister was talking about, and of course leaders want the government to be more proactive, and of course one of the things that as Guyon suggested to the Prime Minister they want to see is maybe partial privatisation of state assets, this is what the Prime Minister said.

John Key: 'I've never said I'm philosophically opposed to the sale of state assets in some form, and I've never said that that is off the agenda forever, but I live in an horizon where I need to operate in the next three years, that’s the parliamentary cycle I've got.'

PAUL So fairly straight up on that, but nevertheless not philosophically opposed.

HELEN The most important point he made was that that’s not gonna create jobs. You know there's two different debates going on here, one is jobs and one is the focus....

ALISDAIR I don’t agree with that.

HELEN Well we've had an experience of privatisation of state assets causing mass unemployment in this country, actually you know jobs not being created through that.

PAUL We're talking about the railways.

ALISDAIR Yeah but I disagree...

HELEN Yeah and it's been a disaster, we've ended up having to buy them all back, you know the banks and the railways.

PAUL Well we didn’t have to buy them back did we?

THERESE But I think the bigger point is he talked about a three year cycle, I mean that is too short term vision for what we need, I mean the speech he gave last week was about a longer term vision and if we're really gonna get this economy turned around in the long term, deal with the structural problems in the economy, he has to be looking more than three years down the road, and I agree with Helen that you know a lot of the speech that we heard from him, still I mean I think he put out a very good vision, very short on detail, and as of yet nothing really new. I mean it's the exact same thing the Chamber of Commerce put out before the election wasn’t it, that booklet they put out in terms of what needed to be done to the economy.

PAUL Yeah but he said that he's not going to be distracted from an economic and productivity focus.

HELEN Well we think this focus has shifted from jobs to debt, and we want to see the shift back on – the Job Summit started the focus on jobs, it's shifted in the Budget to debt and we want to see it moved back to the focus on jobs.

PAUL Now let's go to another clip from the Prime Minister he brought up the subject or Guyon brought up a subject, which was very controversial on this programme last weekend when we had the Food Safety Minister Kate Wilkinson on Folic Acid in the bread. A change now, look at this.

John Key: 'The government's clearly stated preferred option is that there is a deferral to the mandatory inclusion of folic acid in bread, that deferral would take place until May 2012 and we could then use that time to fully assess the merits or otherwise of the debate.'

PAUL So last week we can do nothing, suddenly there's a reversal, we can defer until May 2012.

ALISDAIR Well of course he's right, of course we can defer it, I mean mass medication of the population isn't necessary, if bakers bake some bread with folic acid in people can choose to buy it and eat it if they want to, and we should have that choice, he's right, Kate Wilkinson was wrong. Just because the last Labour government said we have to go down that path didn’t mean to say that Kate Wilkinson had to agree last week, the Prime Minister has fixed it.

PAUL We also seem to be on a committee with Australia where we have one vote and the Australians have nine, which presumably is six states, two territories and one federal representative. But anyway so a reversal are you pleased about that?

HELEN I think it's a sensible thing to do, to wait and see what the research is and I think there was a lot of concern after last week's programme and obviously they're the government and they can make these decisions. I think what was revealing last week was that Kate Wilkinson didn’t understand that actually she is the Minister of Food Safety and can make these types of decisions.

PAUL And that we are an independent sovereign nation.

THERESE Yeah and yet another sort of flip flop in terms of a Minister says one thing and then the Prime Minister plays clean up afterwards.

ALISDAIR It tends to happen though doesn’t it, we saw a lot of that in the last nine years as well, you know it's sort of what happens in politics.

PAUL Because they're very focused on ...

ALISDAIR The polls.

PAUL Jobs and productivity.

*****

Response to RODNEY HIDE interview

PAUL So you’ve heard Mr Hide on what he wants to do with the rate rises and with the way he wants local government to administer itself. Well it's not unreasonable, I think there'll be a lot of sympathy around the country for what he's trying to do in terms of halting these imperious rates rises Alisdair what do you think?

ALISDAIR Yes indeed, and I think it's great that we have the opportunity to have this debate about the controlling of costs and council and what is and isn't core services, and how far over core services should we go, and the question he talked of at the end about privatisation, councils own gyms, hotels, all manner of things that they have no business in being in, and just like with government owning state owned enterprises if they did privatise half of them, you know not the whole lot but 40% or something like that, they would have that money then to invest in infrastructure. We've got a multi billion dollar deficit in infrastructure in New Zealand that pays a great return, $4.80 for the western highway per dollar spent, that’s a much better investment for a government to be making, whether it's local or central, and that’s why privatisation or partial privatisation makes sense and that’s why we should have the debate in the country.

PAUL Well he's quite open about it too isn't he, and I mean some would say it is inevitable that if you really contain councils and that the public contain their councils, some things might have to be sold. What do you make of what he's planning?

HELEN Well I think if you read the Cabinet paper which is now available you'll see exactly what Rodney Hide's planning and I don’t think he was necessarily open about that in this interview. He lists the core services as transport, water and health and safety, refuse collection that sort of thing, and he has said in the Herald that citizens will have ballots around things about whether they want to run art galleries, and I imagine that includes things like skateboard parks, Pasifika Festivals, Festivals of the Arts, he has a very very narrow definition of core services in that Cabinet paper.

THERESE I think he's got a point.

PAUL Well core services probably are narrow.

THERESE He has a point that local government spending is an issue and you see that it has impact in terms of productivity and the things that John Key was talking about in his interview. The question is how he plans to go about it, and it strikes me that he's taking a sledge hammer approach when maybe a scalpel would be a better idea, and all you have to do is look at a state like Colorado that has the same sort of principles that’s he's recommending, that you have a set formula based on population and inflation, and in order to get any more money than that or spend any more than that, you have to go to a referendum, and it's interesting he likes referenda when he thinks the answer's gonna be no, he's not so interested in the referendum on the Super City for Auckland

HELEN And Colorado's ditched that scheme, because Republicans and Democrats, the lot have said the whole place is run down, the education system's failing...

PAUL Have they completely ditched it though.

HELEN Yes...

PAUL Right, but the thing was the roads started to not get repaired but of the state of Colorado runs education, our councils don’t run education either.

THERESE It's a different example.

PAUL Isn't Rodney Hide saying before you work out what your increase in rates is going to be, go to the public and say here's what we'd like to do.

THERESE Hold an election, it's called an election.

PAUL No but I think he would formally at the election the council would probably have to put its proposed budget.

THERESE How many people are gonna vote yes for a rate rise.

HELEN And Rodney should have to put beside the ACT's box when he stands for election going to privatise state assets, going to sell pensioner flats, going to shut down the art galleries.

ALISDAIR Yeah exactly they should say that.

PAUL Here's what Rodney Hide was actually saying about the cultural activities, council being involved in cultural activities.

Rodney Hide: 'I think cultural and sporting life is important and I've got no objection to councils actually getting involved in that, what I want to say though is that sometimes they get carried away, sometimes they commit tens of millions of dollars and they don’t take the ratepayers with them. I'm not about telling them they can't do this, they can't do that, they can't do this, but what I am saying is if you're going to commit tens of millions of dollars, don’t just do it without taking the ratepayers with you because we've seen so many poorly executed projects particularly in local government that have ended up becoming white elephants.'

PAUL Like backing shows.

ALISDAIR Well yes indeed, and look there is something here about this core issue, you know the first and foremost issue for people is their health, and that is a truly core services, sanitation, collecting the rubbish, potable water, sewerage schemes, air quality, waterways quality, roads and public transport. All of those things are essential and they are the top priority for local government, not to gold plate them but to make sure they're there in a workable order, then you spend the money on those other things, and Shadbolt or whoever it was is right that a city or a district is more than just its roads and its sewerage.

PAUL Exactly as you say he does have a point. I've gotta look ahead to the week ahead, what would you be expecting to see in the news this week. You note that food prices have gone up.

HELEN Yeah food prices have gone up 7½% this year, very little coverage of that, adding $30 to every average family's shopping basket, but also what's going to happen this week is all those community education classes are gonna start up after the holidays, those adults are going to go back to those classes and find out that their courses have been cut and I think that’s going to make the news.

THERESE I think a very interesting question time for Kate Wilkinson.

ENDS

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