'THE NATION'
DON BRASH
Interviewed by RACHEL SMALLEY

Rachel In the past 24 hours National's confirmed that it will only target the party vote in Peter Dunne's Ohariu electorate in Wellington. That mirrors National's decision earlier this week to focus on the party vote in Auckland's Epsom electorate leaving ACT's candidate John Banks to work on the electorate vote. Now a deal's said to be in the making between National and ACT that could see ACT back off from contesting key marginal electorates like New Plymouth for example or Waimakariri to help National win those seats. ACT Leader Don Brash joins me now live from Wellington. Good morning Mr Brash. So National will gift you Epsom, not campaigning for that seat. National's new candidate Paul Goldsmith has already said as much, and that will then mean that you will stand back from seats like Waimakariri and New Plymouth. I guess that makes good coalition smart sense doesn’t it?

Don Brash – Leader ACT Party
Well let me say that the deal in Epsom if there is such a deal is not in any sense new. The National Party urged their voters in the 2008 election to support Rodney Hide, so that’s not a new thing. There's no formal deal as such at all. John Key and I meet on a regular basis, we clearly want, both want, a centre right government. The ACT Part is critical of National in some respects, but clearly we'd much prefer to work with National than with any other party.

Rachel So there's a bit of back room dealing going on I guess you could say?

Don Ah well, as I say it may make sense in isolated cases to work together in particular electorates, but the suggestion in this morning's Auckland newspaper that we're doing a deal on eight electorates is absolute nonsense. There's no such deal.

Rachel It would be a smart move though in certain seats, for example when you look at New Plymouth, Andrew Little touted as the next leader of Labour, it would make sense wouldn’t it or you the centre right to work together to keep him out?

Don Well there may be isolated cases where that might be the case. I think in Ohariu the Green candidate is urging their supporters to vote for Labour. So this is an MMP phenomenon but the kind of deal that was discussed in the media that we'd done a deal extending across a lot of electorates is simply not true at all.

Rachel Labour says it's a laughable stitch up which is possibly quite charitable really of Labour. The reality is even though it's legal it is manipulating the vote isn't it?

Don No no, it's exactly what Gareth Hughes was doing in the seat of Ohariu, this is an MMP environment. Naturally the ACT Party wants to work with National after the election. National recognises that they have an interest in having Act do well also. So in isolated cases there may be an opportunity of working together, but let's face it ACT will stand a candidate in virtually every electorate. We're not standing candidates in the Maori electorates. Why? Because we don’t actually believe in the Maori electorates, but we'll stand in virtually every other electorate.

Rachel Alright, Labour still has still has though it says it's this laughable stitch up, what's your response to that? No, because Labour's doing it as well? Is it not about disclosure? Should you not be disclosing when there are deals being done, rather than waiting for the media to print it, or to report it.

Don Look it's four months away, the election is not till actually more than four months at this stage. Last time in 2008 John Key had a coffee I think with Rodney Hide indicating fairly clearly close to the election, that what he wanted was for National Party voters in Epsom to vote for Rodney Hide. He may well do something similar with John Banks in this election. But I mean discussions I have with John Key on a regular basis, clearly are designed to ensure there's a good strong centre right government after the election.

Rachel You do need to do a deal though don’t you, you are below the 5% threshold. If Banks wins Epsom you're through. A deal makes sense, it's inevitable isn't it?

Don Well you're assuming that without a deal John Banks would not win Epsom. John Banks is a very popular man in the electorate of Epsom, he's got a high standing, high reputation, he might very well win the seat of Epsom without any deal at all. That’s the first point. Second point, yes we're polling below 5% now, but that’s typical of ACT between election periods. I'm confident we will poll more than 5% by the time the election comes round.

Rachel Where would you see yourself in a coalition Dr Brash if John Key said to you what position would you like, what position would that be?

Don Ah well I don’t think I can answer that question at this stage. The reason is frankly we don’t know what the electoral landscape will look like. It may well be that the ACT Party decides not to formally join the government at all, but to sit on the cross benches, but supporting a National Party government.

Rachel Why would you do that?

Don Well I may be that we can't find enough common ground between the two parties. We'd clearly support National because it's a much better option for us than Labour or the Greens or the Maori Party or the Mana Party, National's our first preference without question, but we may feel there's not enough common ground after the election to actually form a formal coalition.

Rachel Okay well let's explore some of that common ground or perhaps lack of common ground. I interviewed you on the day that Rodney Hide was rolled, and you said there were some very real concerns that you had about the way the country was going. Something that you pointed out then was the ETS the Emissions Trading Scheme. In an ideal world Dr Brash would you abolish the ETS?

Don We'd certainly scrap it until our major trading partners have something similar in place. Australia is now talking about a carbon tax, but China doesn’t have a deal, US doesn’t have one, Japan doesn’t have one, most of our trading partners do not have one, and to the best of my knowledge our ETS is the only all sectors all gases scheme of its kind in the world. That seems nuts.

Rachel Why not be a climate change leader instead of the climate change follower then? Why not be the first?

Don Well because this is not painless. This is not costless. It costs New Zealand producers, it costs New Zealand consumers, higher electricity prices, higher diesel prices, higher costs right across the economy, and given the fact that New Zealand produces just 0.2% of greenhouse gases, it's entirely unclear why we should hurt our consumers and our producers when the rest of the world's not doing something similar.

Rachel Okay Julia Gillard suggested that any scheme that she might put in place would make petrol exempt. Would you accept an ETS system and Emissions Trading Scheme that excluded petrol?

Don No we want to scrap it completely until our trading partners have something similar.

Rachel Would it be a deal breaker then for you?

Don I don’t think we can answer that question yet, there are whole lot of things which we would like to accomplish in any kind of coalition deal, or any kind of confidences, or prior agreement I guess I should say with National after the election, and I can't prejudge those at this stage. It depends very much on what the electoral landscape looks like post election.

Rachel Jon Boscawen did suggest the possibility of a deal, he said earlier in the month if National's not willing, and I quote him here to show sense and scrap the scheme altogether, the least they could do is excluder fuel. He was suggesting that would be ACT's bottom line. Is it?

Don Well as I say there's no bottom line feasible at this stage. I mean there are a lot of other things we'd like to do. For example we'd like to reinstate youth minimum wages. That’s a hugely important thing for teenagers who are unemployed right now. Now we've gotta weigh up those things when the post election bargaining takes place.

Rachel Okay I want to touch on Capital Gains Tax here for a moment. It seems that that’s Labour's trump card if you like heading into this election. National on the other hand is talking about the part privatisation of state assets. Which policy would you favour?

Don Oh there's no question about that. We would favour the part privatisation of state assets. Frankly the Capital Gains Tax is an abomination. It will not stop a housing price bubble, Australia's had a housing price bubble, as has the United States and both have Capital Gains Taxes. It doesn’t make sense in that context.

Rachel In a speech though in 1998 you did say, given that was a wee while ago, when you were Reserve Bank Governor you said it's not at all clear to me why given an already strong tendency for New Zealanders to invest in property, we should give special tax advantages to that form of investment. So you are open to the idea of Capital Gains Tax then, what's changed now?

Don More information I think. I mean the reality is that New Zealand does not invest more in housing for example as a share of our economy, than Australia does. We actually invest somewhat less in housing than Australia does. I think I've just been better informed.

Rachel Look the average Kiwi though pays 33% of their average salary, they pay 33%. The above average New Zealander though who perhaps has one or two investment properties, pay no tax on any profit they make. You keep pushing this line that ACT wants one law for all. So surely that should apply to tax too?

Don Oh absolutely, I agree with that and I think it's important that we do have a fair tax system, but there's a misunderstanding about Capital Gains Tax. The reality is when Charlie's, the fruit juice company was sold for I dunno 100 million dollars or something of the kind, people said that should surely be taxed, it's a capital gain, why isn't it taxed? The reality is that the price at which they sold that is based on a future stream of profits which are calculated after tax. If there were no corporate tax the price at which they would have sold Charlie's would have been much higher. So they're effectively paying a Capital Gains Tax anyway.

Rachel There's no doubt it's complex and you’ve actually given that as one of the reasons why it shouldn’t be put in place, but we do have enough tax brains in this country. We've got the financial nous here, we could put a capital gains policy in place so that it wouldn’t be particularly complex to operate surely?

Don Well the question is as I said not just one of just complexity, the question is, is it appropriate to tax double tax, the income on capital, and that’s what a Capital Gains Tax does.

Rachel Okay well I'll briefly touched on the subject of one law for all. Let's talk about race relations here. You feel that the government had pandered to Maori radicals, you feel that they’ve created a special class of citizen if you like with Maori. What do Maori have at the moment that you think they shouldn’t?

Don Well let's make it clear it's not just National, it's been successive governments, Labour and National have been on this track, and we're very critical of that fact. Let's take one simple example, the Maori Statutory Board in Auckland. Maori New Zealanders, Maori Aucklanders have the same right to vote for the Auckland Council as every other citizen in Auckland does. Why then do they have a second bite at the cherry so to speak by having unelected members of the Maori Statutory Board sitting as voting members on most of the Auckland Council committees?

Rachel Sure, but with respect Dr Brash, have you lost touch with what the average New Zealander thinks? I'm not sure to my generation for example that this is such a big issue, it was yesteryear's debate, we've moved on from that. Have you lost touch with how New Zealanders feel towards Maori?

Don No I have not, and I'm quite sure that there are many New Zealanders who are getting very very angry about that, they're angry about the way the Foreshore and Seabed deal was done. They're angry about the way the Resource Management Act operates to give Maori two bites of the cherry. They're angry about having separate Maori electorates. Look when I was in parliament there were 21 Maori in parliament, only seven of them elected in Maori electorates. We no longer need special legal status for people of Maori ethnicity.

Rachel Okay we head towards the election and the possibility of a centre right government. Is there a situation where you would refuse point blank to go into government with National?

Don Ah well yes I imagine there might be, but I can't at this moment imagine what that might be.

Rachel Alright, we will leave it there. I do appreciate your time this morning Dr Brash, thank you very much indeed.

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