Tuesday 31st May, 2011

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

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

JOHN KEY interviewed by CORIN DANN

Corin: Prime Minister thank you for joining us. A very strong poll result, do you think you can get 50% come election day?

John: Well we really don’t know, that’s in the hands of the New Zealand public. I mean what you can say is there's been three polls now over the course of the last couple of days and they’ve all been very very consistent. I think what that shows is that the public are quite realistic. They know that we've got a job to do, I think they're backing our plan to get the country back into surplus faster, make sure we try and keep interest rates lower for longer over the cycle. Make sure that we build the structure we need, and be realistic about the footings for programmes and the like. So I think that’s sort of where that’s at.

Corin: The poll also shows too little support for the extremes. Don Brash has not had the bounce. What do you think that is telling us, that New Zealanders don’t want those extremes?

John: That’s my view. I mean there’ll be a place in politics to the extreme right and extreme left, there always is, and it's good for a few percent, but I think there's a vast difference between being the leader of the National Party and being the leader of a small right wing party, and I know that as well, I know that from my own position you know I'm privileged to be the Leader of the National Party but it's the brand of the National Party, it's the values and principles we stand for, and we are unashamedly a moderate centre right government, and a moderate centre right party.

Corin: We've also seen polls though that show asset sales are not popular. The partial mixed plan that you have, what do you make of that? Are you confident you can convince New Zealanders that’s not a reason to not vote you in?

John: Yeah it depends on sort of the way the question is posed and people's understanding of what we're trying to do. So if you go back to the 1980s where Labour sold off a lot of assets and then we did in the early 90s, it was a very different deal. They were trade sales so we picked up that asset, we sold it as a chunk often to a foreigner overseas. That’s not what we're proposing. We're saying as a bare minimum 51% therefore control is held by the government. We're saying that the shares will be offered to Kiwi mums and dads first. We're saying that that money will be used to buy other assets to build up the assets that New Zealand needs. And we're saying look we think that’s a better investment alternative than a failed finance company. So it's a different proposition.

Corin: Sure but advice from Treasury. I mean John Whitehead yesterday on Q&A saying, he felt that foreigners should actually possibly be even on the boards of some of these companies, and that foreign investment was actually needed, was actually part of the deal here?

John: Yes so John you know you’ve gotta understand as well is going today or tomorrow, represents the Treasury, and they always tend to take a slightly more extreme view on these things. But the point around some foreign ownership is about the competitive tension for pricing. So it's saying look if you're a mum and dad that buys those shares having a number of other people wanting to buy shares helps that price. Now that might be one objective of the government, but our main objective is seeing those shares in the hands of mums and dads. We know there's 1.7 million Kiwi Saver accounts. We know they're looking for places to put money. Where I think there are real opportunities though for those SOEs is potentially to branch out and undertake greater development in some other countries maybe or here in New Zealand.

Corin: That’s a good point because I heard David Mahon from Mahon Investments in China, well known New Zealand banker there, saying that he felt New Zealand needs to wake up here. We need to actually let Chinese companies invest in these SOEs if we want to get the best out of China.

John: Yeah I think it's a different deal actually there. I mean it depends on what you're talking about. The power companies in New Zealand you know we wouldn’t really see that necessarily as a strong argument that there needs to be Chinese investment. Where Chinese investment has done well in New Zealand is something like Synlait is a good example, so it's a milk powder plant in the South Island. They’ve come in, they are investing heavily, you're starting to see them produce infant baby formula, so they're not buying the land, they are bringing capital and that’s creating jobs. So I don’t think we should be totally xenophobic about investment in New Zealand, doesn’t matter really whether it comes from China, Australia or the US.

Corin: Does that apply to them basically lending us money? Should we care if it comes from China or anywhere else? Because the reports that we're seeing is that they're looking at six billion dollars they're gonna spend here and they're buying up all our debt.

John: Yes so I think the thing we should really care about is being overly indebted to foreigners, and that’s why our plan gets us back into surplus in three years. Bluntly, we don’t want to keep owing the level of debt we have to the rest of the world and we certainly don’t want it to rise forever. Ultimately it probably doesn’t matter whether it comes from China or somewhere else. The truth is that China is the big saver around the world because of its domestic inflation it can't bring that money home, and so for a long time now they’ve been buying New Zealand Treasury bonds, as they are big buyers of US treasuries, they pretty much own all of the US treasury bonds.

Corin: So the people who are worried about you know headlines about China buying New Zealand, these sorts of things, they shouldn’t be worried?

John: Well what I would say is we want to own our future. If you want to do that then you want the government to be saving, you want individuals to be saving and you want to be able to control that investment, and you do that when you lift your savings rates, and that’s our whole argument as a government. Over the last nine years of a Labour government we spent money we didn’t have, we borrowed it from people from overseas, we had far too much consumption and not enough savings and investment, and we need to rebalance that economy, that’s the purpose of that. In the end if you don’t put yourself in that position you’ve only got two options. Don’t borrow the money and therefore don’t invest, or borrow it from someone else and they’ll come from overseas.

Corin: One of the other interesting poll results that I've seen over the weekend was on retirement age, 50% actually support this idea that we look to raise the retirement age in ten years' time. Does that caveat in ten years' time allow you to change your position on it, which has been very clear up until now that you wouldn’t change it or resign as Prime Minister?

John: Well I'm not looking to change my position, but what I've also said is there's nothing wrong with a good debate about this, and I think that was really the purpose of the question, what was coming through the results. And look we do have that debate. The Retirement Commissioner, Diana Crossan, leads that debate and she's been having that debate for some time, and will continue to have it, I have no doubt.

Corin: So that’s not a change in your stance, I mean are you saying you want to encourage this debate more, is that a change?

John: No I'm just saying it's an inevitable fact. I mean lots of debates take place in New Zealand whether I want to have them or not. My position's been you know there are lots of things the government needs to deal with, lots of issues we have on the table. Diana Crossan as the Retirement Commissioner herself has said, raising the age and eligibility for the New Zealand Super is not something we should do for ten years. My point is in the next ten weeks ten months I've got a lot of things to worry about, not something I'm gonna have to consider in ten years' time.

Corin: Prime Minister John Key, thanks very much.

ENDS

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