Patrick Gower interviews John Key

Headlines:

New Zealand to shortly impose sanctions on Russia for Crimea invasion 'not unlike what we did with Fiji, so there will be travel restrictions.

Free-trade talks with Russia not restarting 'any time soon, but Key won't say if they will resume while Russia is in Crimea

'I would be a very odd step for New Zealand to be continuing free trade discussions with Russia at a time we're you're seeing people potentially taking sanctions

Prime Minister says Judith Collins 'could have handled some things better, I think she could have tried being much more open with all of the information in day one.

John Key still not certain if his golf game with Stone Shi was for a charity, as he first claimed, or National Party funds

'I didn't get up in the morning and say hey Stone let's go out an play some golf because I am trying to curry favour with you and help you out

John Key used Russel Norman's Tibetan flag incident with Xi Jinping to forge a strong personal relationship and gave him pounamu

A visit to Chinese President now regarded as significant as a trip to the White House

New Zealand not afraid to raise cyber-spying with China, but Key won't because he see little benefit

'I'm not sure that would be hugely productive, probably it's a lot better to focus on the other things.

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John Key interview:

JOHN KEY: Well, it feels like it, I mean to get the dinner with President Xi at his invitation, I mean in China that speaks volumes to have set a new record, or new goal I should say for $30 billion worth of two way trade by 2020, up from $20 billion, ah you know that's just an enormous amount of product being sold potentially into the Chinese market, convertibility of our currency getting another important step. So look, this is a great relationship we need to continue to nurture it an allow it to grow and develop, but for a relationship that is very important in terms of underpinning our economy and jobs I think we're in great shape with China

PATRICK GOWER: Yeah and another thing that's in great shape is you personal relationship with president Xi, I mean that's developing well, you described it yesterday as like having a certain kind of chemistry between you two

Well, it feels that way, don't want to overstate things. I'm sure there's lots of leaders that come along and meet him but, I've known him for quite a long time, we had quite a bit of engagement after you know the Russell Norman incident in New Zealand when he was vice-president, and I've just had an opportunity to sit down with him. I mean I think we have respect. I find him thoroughly engaging, I mean he is one of a very small group of leaders around the world who are truly influential. Some of us might like to think we are, but we are a bit more realistic than that

Okay, I'll just pick up on that Russell Norman issue, of course, that was the flag incident at the New Zealand parliament, when the vice-president- who he was at that stage was here. That affected him didn't it?

It did because they're not used to having somebody who is a member of parliament, rushing forward with a Tibetan flag and essentially getting in his face, I mean that is just not the way things happen in China, I mean you've got to accept that the President probably gives two or three media interviews a year, he doesn't get that sort of robustness that we get. Our problem wasn't that Russell Norman was protesting or having a Tibetan flag, he's quite entitled to do that, in fact we're an open democracy and people are free to express their views. But actually I didn't think that we afforded the right level of respect to the then-vice-president, in terms of allowing his space to be compromised, his entry into the building to be compromised. So I gave him a personal gift of some greenstone when I had dinner with him some months later and I think that's helped build the chemistry as well.

Yeah and so that gift was almost an apology for what happened to him that day was it?

It was definitely an apology of the way he was treated, not the right for Russell Norman to protest. We preserve that right.

And in a funny way, that has made the relationship between you and the President closer hasn't it?

At a personal level I think yes, he's also a very engaging character. So he, I.you know we had a very long, broad ranging discussion over dinner, everything from the golf with Obama to basically what's happening in Ukraine and the rest of the world. So he's in an amazing position, he has a great vantage point to look at things, to understand things they have historically different alliances, say than the US President would, so it's just interesting.

In layman's terms is meeting the President on the same level, on par essentially, as going to the White House?

I would say so yes, and in their system, you've got to remember they don't have the same sort of press operating the same way as we do say for instance in New Zealand and all of those sorts of things. This is a place of symbolism and the symbolism of the Chinese president having dinner with me is taken very positively, the fact that he set a new target, shows you that he believes in the long term relationship, you know beyond any government. He believes in the relationship between China and New Zealand. Some people might not understand the way that China works in every individual nuance of it, but what they probably do increasingly understand is that our economy has a lot of jobs and a lot of economic activity supported by what is a vast both vast and very wealthy consumer base in China. And of course we have to be careful that we don't have overexposure or too much concentration on the Chinese market, but this is a great opportunity for us to change the economic dial if you like In New Zealand.

Spying by China, cyber spying, cyber hacking we know that the United States and Britain have issues with China spying. Why don't you raise that with them when we are putting so many protections in place, through the GCSB to stop it, why don't you bring it up? Why do you only want to concentrate on the good bits?

Well I don't think we always concentrate on the good bits but the point around cyber threats is that they're not solely linked or unique to necessarily entities that we might be able to trace back to Chinese activity or others. They're right around the world, there are lots and lots of entities around the world that we see undertaking cyber threats against New Zealand companies so in the end, we can talk about that stuff, but probably the best thing that we can do is provide the protection, over that intellectual property. And that's really the work that we've been doing at GCSB.

I mean are you afraid to afraid to raise it with them?

No, we're not afraid to raise it, um if we genuinely thought that there was something that we actually say, hey we're unhappy about this activity, then we would do that. But in the end, actually it's not as simple as that. It's not always as easy to track down as that, we can see the threats, but we can't always. They're very well masked So you can't always be sure. I'm not sure that would be hugely productive, probably it's a lot better to focus on the other things.

Sure, on the Ukraine what are the next steps here? Russia is now in there, Russia has annexed Crimea effectively All the free trade negotiations that we have got with them are they off until Russia gets out of Crimea?

They are on the short term I think, the reality it would be a very odd step for New Zealand to be continuing free trade discussions with Russia at a time we're you're seeing people potentially taking sanctions of some sort against Crimea, essentially people, including New Zealand publically voicing our real concerns about what we see, I don't think the public could sort of correlate those two things if we were on the one hand to progress economic aspect of the relationship without actually having our voice registered on the other, so I don't think it's happening any time soon, but our real

But if Russian is in Crimea, could you go back and negotiate say in a year's time if they say we're not going anywhere?

Well I think the way to look at it is to say, we believe in self determination. So if Scotland ultimately one day decides it wants to vote to be a country in its own right and not part of you know Great Britain, the rest of it, then they're actually free to do that, as long as they do it under conditions that allow a free vote to be held. Our concerns are, we don't believe that the vote that took place in Crimea was a free vote, and so in a sense we don't recognize what's taken place there.

So what can the West do then, I meanhat is the next step for the West, is military action in your views still a possibility?

Well I don't think anyone would really want to go there that historically hasn't been proven to be the right way to go. You're seeing like-minded countries of New Zealand starting to apply certain sanctions and travel restrictions around Crimea and those involved in the most recent changes, you're certainly seeing a lot of pressure being heaped on I suspect it will be a topic of discussion when we go to the nuclear security summit even though its not part of the overall agenda so look the international pressure will be large to see if we can get a much better outcome for the people of Crimea than we currently have.

Will we move towards some sanctions as well do you think?

We're in the final stages of getting of getting that advice from MFAT, but I think it's likely we'll move in the way that other like minded countries have.

But that would be blocking certain individuals from coming to New Zealand?

Yeah, not unlike what we did with Fiji, so there will be travel restrictions likely to be applied to those that we closely associate with the activities in Crimea.

So, do we let them actually come to New Zealand has your advice shown?

Very few, I mean in reality um, like a lot of these things, sometimes if you take those steps it's not so much about what's absolutely happening in New Zealand when we for instance designate international terrorist groups not that we think they're active in New Zealand , but because we believe that we want to join in that chorus of international outrage about their activities.

Just quickly on Oravida, Judith Collins - more has come out since we last spoke on The Nation. A lot more. What's okay about what she did? Is it still okay with you?

Well, my main point here is that ministers need to manage conflicts of interest and perceived conflicts of interest, what happened with the revelations of the dinner came out was that there was a cumulative effect of that- that was the advice from the cabinet office. No individual action of itself breached the conflict of interest but the cumulative effect led to a perception of conflict of interest and I accepted that. That was why I made my feelings very clear so in the end, ministers do have to manage that situation, very carefully.

And did she manage it okay?

Well look, in the end, I think she would sit back and say she could have handled some things better, I think she could have tried being much more open with all of the information in day one. She has a real friendship with these people, in the real world people do have friendships, but even if you have a friendshipou've got to manage that against these allegations.

Stone Shi, did he buy you in a charity or not?

Well I don't know but, what I do know

Because that's what you said, probably it was a National party donation.

It may well have been, but let me just run through that, so basically the point I'm making is that it was definitely an auction redemption. In my diary I see things as auction redemptions, so I do lots of those things; I do morning teas and lunches and afternoon teas and I do golf games, you be amazed how much stuff over the course of a three year period I do. Some of it's for charity, some of it's definitely fundraising for the National party, no question about that. If they go through if it's a fundraising for the national party then it's the party's responsibility to make sure that it is fully recorded. I genuinely don't know in terms of the Stone Shi purchase, it could have easily been for a National party fundraiser. If it is, as long as the party actually registers it, then that's fine. My point was, because that was really the basis of the question you asked me, I didn't get up in the morning and say hey Stone let's go out an play some golf because I am trying to curry favour with you and help you out. My point simply was, it came about because of another action.

Hekia Parata finally, the Kohanga Reo. It looked like a botched job, one minute she says everything is okay, the next day the SFO is called in. What's going on? 92 million dollars worth of taxpayers money at stake here

Yeah, I don't think that's quite right. The back story of all of it, is that yes there were the real allegations that there were problems with the trust, that lead to her and Pita Sharples setting up the enquiry which was undertaken by Ernest Young, so what happened was that they found that there were no real issues there. But as part of that whole back story there have been concerns as I understand it about the subsidiary, there's also other information that has come in now about the subsidiary so in her discussions; Hekia Parata with the trust board, on the Tuesday, the trust board gave her insurance of a couple of things one that they were undertaking the investigation and B that they would actually front the media on the Wednesday and talk about all those things. They didn't. We can't be sure that they're undertaking investigations, we've had further information that's come in- allegations, its unsubstantiated but in the end, trust me. You know public money does potentially ultimately run through that trust. So we can do only what we can do, which is go and ask the SFO and see whether they will consider looking at it

Yeah, so you've got confidence in Hekia Parata as well?

Yeah I do. Look, I think in the end these things are never perfect but you work with partners and the Kohanga Reo to a certain degree is a partner with us. So if they're giving us assurances they're doing something then we expect them to follow up, so if they don't then we have no options but to take the options that we did.

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