Q+A: Finance Minister Grant Robertson interviewed by Corin Dann

‘I think what we are dealing with here is an issue around perception’ – Finance Minister Grant Robertson on business confidence

In response to the latest business confidence survey from the Auckland Chamber of Commerce which suggests business confidence is down, Finance Minister Grant Robertson told TVNZ 1’s Q+A programme, ‘I think the conditions, the underlying conditions of the economy, the environment we're working in now, has got a lot of opportunity. I think what we're dealing with here is an issue around perception, and, sure, we can improve the ways we communicate, and we need to always work on that.’

Finance Minister Grant Robertson told Corin Dann, ‘this is not a new thing for governments where the Labour Party's at the centre of them. If you go back historically on business confidence data, this happens. It doesn't necessarily match up with GDP growth, which has actually been historically very good under Labour-led governments.’

When asked whether he would give business any concessions, Mr Robertson said, ‘I don't think it's a matter of concessions, necessarily, but if we take the industrial law point, we want to work together on that.’

Mr Robertson also said, ‘short and medium term, we’ve got some fiscal stimulus coming from our Families Package, but obviously medium and long term, we transition to an economy that’s more productive.’

Q + A
Episode 15
GRANT ROBERTSON
Interviewed by Corin Dann

CORIN I asked Finance Minister Grant Robertson whether he is concerned that this gloominess could become a dangerous self-fulfilling prophecy that threatens the economy and jobs.

GRANT I hear different things from business in Auckland and around the country as I've been going there. Of course, there have been, you know, some concerns raised and some uncertainty, perhaps, with a new government, but, look, let's take the example of Auckland. We've put out a $28 billion transport plan along with Auckland Council with a pipeline of projects going out over the next few years. In terms of your question about business investment, the GDP numbers that we've seen this week show that there was a 5.5% increase in business investment in the year to March compared to a 3.9% increase in the year to March the previous year.

CORIN So are businesses being unreasonable? Are businesses being flat-out
unreasonable?

GRANT Look, I think the conditions, the underlying conditions of the economy, the environment we're working in now, has got a lot of opportunity. I think what we're dealing with here is an issue around perception, and, sure, we can improve the ways we communicate, and we need to always work on that, and we need to work on the partnerships that we're developing with business, but the point I’m making is I actually think a lot of businesses are getting on with the job. We're working closely with them. There will be some changes, of course, with a new government, but I think we're going work on those together.

CORIN But you've had a charm offensive in some ways. You've made an effort. I know the Prime Minister has said that as well. You've been making a big effort, but the message we're getting from Michael Barnett and a number of the ANZ survey and others - not all of them, granted -is that they're not convinced and that they are seriously concerned.

GRANT This is not a new thing for governments where the Labour Party's at the centre of them. If you go back historically on business confidence data, this happens. It doesn't necessarily match up with GDP growth, which has actually been historically very good under Labour-led governments. We just have to keep working together on these relationships. We've got a number of work programmes underway that the business community are absolutely critical to, the future of work area that I’m working on. Some of the industrial relations changes. We know we have to work as a partnership. The point I’m making is businesses are working hard. They're doing well, and the government's there to support them.

CORIN I guess one way of looking at this is them pushing back against some of your agenda. Will you weaken any of that agenda? Will you change any of it, give them some concessions? And I guess employment law is the big one, but in other areas as well. Will you actually adjust, because that's ultimately what they want, isn't it?

GRANT Well, I don't think it's a matter of concessions, necessarily, but if we take the industrial law point, we want to work together on that. The fair pay agreements, we've got a working group there headed by Jim Bolger, with a number of business representatives on it. On the Holidays Act, we're doing that jointly together with the Council of Trade Unions and Business New Zealand, so I don't see it as a matter of concessions. We've got a policy programme. We want to work that through. What we really want to address here in those areas is to get, you know, a balance in workplace relations, to make sure we improve the wages of New Zealanders. I know that those things are principles shared by many in the business community, so, no, it's not a matter of concessions. It's a matter of a partnership being developed.

CORIN Do you agree with Ian Lees-Galloway when he suggests that if businesses can't cope with these increases in the minimum wage, then, tough luck, maybe they shouldn't be business. I mean, that's essentially what he suggested to me on the Q+A show.

GRANT I think there was a little bit more subtlety to it than that. But what we are saying is that the minimum wage has now been increased to $16.50. We have a long-term plan to increase that to $20 an hour by 2021. We want to work with the business community on how we roll out those increases. Actually, my experience is that small and medium enterprises already pay above the minimum wage in the most part. It's actually often the multinationals that don't, but we want New Zealanders to be able to work, you know, a 40-, 50-hour week and come home and have enough money to put food on the table. We all know wages need to lift. The government's got a responsibility to lead on that.

CORIN So what do you say to that business, then, that’s looking at a 20-buck minimum wage in a couple of years’ time and thinks they can’t survive? What’s your message, then?

GRANT Well, my message is we want to keep working with them and talking to them about how we can support them to be a profitable business. Maybe it’s making sure their staff have got access to training. Maybe it’s making sure that we sort out the infrastructure and transport needs that are holding up the productivity of their business. We are doing a lot of things in the community to support businesses to grow. At the same time, we want to make sure that everyone’s benefitting from that growth. That’s what minimum wage increases are about.

CORIN Just one more question on this. At what point do you say as the Labour Party, you know, to quote Sir Michael Cullen, ‘We won; you lost. Eat that’? At what point do you just say, ‘enough’s enough? We can’t do any more. This is us. We’re Labour. Deal with it’?

GRANT I’m not going to use that language. What we are doing is we have a clear programme of work. We want to work alongside unions, businesses, the wider community to implement that. It’s about lifting our productivity. It’s about looking forward to the middle part of the 21st century where we know we’ve got to be a lower-carbon economy, and it’s about an economy where people get a fair share. Those things are being clearly outlined. We want to work in partnership with people. But they are the principles of this government, and we’re determined to implement them.

CORIN Looking at the Gross Domestic Product figures, the economic activity numbers we got for a read on the first part of the year – okay, 0.5%. Trucking along. A bit slow, a bit sluggish. But if we break it down and look at it per population, per head of population, we’re not really going at all, which, of course, was your main point as Opposition Finance Spokesperson when you were criticising the last government.

GRANT Yeah, and, look, per person grown is one of the things New Zealand needs to work really hard on lifting. The data we’re talking about is backward looking. It’s for the first three months of this year, which represents only the first five months being in government, so I think most New Zealanders would understand we can’t turn everything around within five months. We have a plan to transition this economy to being more productive. It’s why we’re investing so much in research and development. It’s why we’re focused so much on lifting the skills of the workforce. It’s why we’re developing further trade agreements. We want to lift that productivity of the economy. We want to transition through to that lower-carbon economy where there are lots of opportunities for New Zealand businesses to get into clean technology, to add value to what we do. All of that takes more than just five months, and, actually, what the forecasters are saying is that in the second and third quarters of this year, we’re going to see some lift from the investment we’re making in the Families Package. So short and medium term, we’ve got some fiscal stimulus coming from our Families Package, but obviously medium and long term, we transition to an economy that’s more productive.

CORIN You talk value-add, and I wonder how important are our big companies and in particular Fonterra when we talk about value-added, because there’s a big debate starting to fire up now about that company – huge company for New Zealand. The value-added part of that company, there’s been a lot of people that have suggested you need to split that off, and it could grow with extra capital coming in and this sort of thing. And of course, your own cabinet ministers have suggested this, one being Shane Jones – had a bit of a crack. What do you think? Is it time for our largest company to be looked at? If you want to grow your value-add is that the way to do it – split it?

GRANT That will ultimately be a matter for Fonterra shareholders to decide. But what I think is that Fonterra has begun work in their value-add strategy and some of the plant development we’ve seen around New Zealand in recent years, moving them further up the value chain in terms of, you know, high-quality cheese products, moving away from those raw commodities. I want to see that go bigger and faster, and I’ve made that point to Fonterra when I was in opposition. I’d happily make it again today on the show.

CORIN Would you encourage the shareholders of Fonterra, though, to have another look at the capital structure, to have a look at whether it’s time to split it off. It’s been an issue for many years. As Minister of Finance, would you say to them, ‘Have a look at this?’

GRANT I don’t think it is my job to say that to them. What I would say to them, though, is that as a company looking ahead for the next few years, it’s in the value-add space that Fonterra and indeed that every other New Zealand company has to be looking. We can no longer rely on exporting raw commodities, be it in dairy, be it in forestry, anywhere else. We have to be looking for the opportunities to add value, because that’s where the higher-wage jobs come from.

CORIN But you would accept that it would be very difficult for them to grow that value-add in the way in which you want if they- do not have the capital to do it?

GRANT And, look, we do have the Dairy Industry Restructuring Act review underway. And that can look at some elements of the way that Fonterra operates and what its obligations are. And we will take that seriously. But ultimately, this is already the strategy of Fonterra to move up the value chain. What we want to do is support all our exporters to be doing that in a bigger way and a faster way.

CORIN On the issue of exports, have you had advice on what the potential impact of a trade war will be for New Zealand? Are you getting advice on what we need to do, how we need to prepare for this, because this war looks like- particularly between China and the US, but also Europe, looks like it’s kicked off?

GRANT Looks, it’s pretty clear advice from everybody that for a small country like New Zealand that relies so much on our trading relationships, any kind of trade war that creates instability in the global trade system will be bad for us. If it starts to move more towards the protectionist directions that perhaps we’re seeing at the moment, we know that does not work for New Zealand. We do best as a small country with a rules-based trade regime, where we’ve got certainty for our exporters, so we have to continue doing the job that we’ve got. We’ll keep a close eye on those. It’s also a reason why it’s so important that we diversify our markets that we export to, and it’s why a free trade deal with the European Union and hopefully one with the UK is so important, as we keep diversifying the markets that are available.

CORIN Sure. Have you had any advice on whether this might start knocking some points off the gross domestic product, I mean, and costing us?

GRANT No specific advice on that, other than the fact that we know that as a small economy, we do have to be aware of anything that happens in the global environment, be it a trade war, be it a geopolitical issue. That’s just the reality for New Zealand, that when things change internationally, they can affect us. What we can do best is prepare ourselves by being a much more robust, sustainable and productive economy.

CORIN Should we push back? I mean, at what point-? We haven’t got an exemption on steel. We know the European Union’s just put in some tariffs on Harley Davidsons and orange juice, jeans. At what point do we start to push back. I know we’re small, but it’s the principle of the matter. When do we start to push back at Trump and say, ‘Well, we’ve got to join the rest of the world here and fight back?’

GRANT Look, we keep a close eye on the WTO disputes. And New Zealand generally doesn’t involve itself in those unless we’ve got a fairly direct interest in them. And I think the best way for New Zealand to deal with that- Or the two best ways for New Zealand to deal with that are, A, to continue to support a strong global rules-based system through the WTO and, B, to be out there making high-quality agreements, like the one I hope we get with the European Union. You know, trade wars that take place between two very large trading partners are difficult for New Zealand, but in the end, they will not be resolved by New Zealand alone. We have to do that at a global level.

CORIN Is your government just a bit timid, though, when it comes to the US? I mean, we didn’t see a particularly strong response to the issue of the child separation issue in the US with the migrants, when it comes to Trump. I mean, why aren’t we seeing a more vocal response to international issues which many New Zealanders think we should be speaking up about?

GRANT I think New Zealanders are rightly proud of our independent stance on the world stage and on issues like climate change recently, where you’ve seen New Zealand out there doing that. And I think, you know, most New Zealanders would have looked at what was happening in the United States and have said, ‘This is not a humanitarian way of dealing with things.’ And I’m very pleased that that’s changed. New Zealand will always stand up for what it believes in on the world stage. We have an independent foreign policy, and indeed, we have an independent trade policy. We can do those two things together.

CORIN But have we expressed that to the United States publically?

GRANT Well, I think it was expressed. I mean, you wouldn’t expect at any point, you know, countries to comment regularly on other countries’ internal affairs. We wouldn’t expect other people to do that. But I know that expressions of New Zealand’s view were made, and obviously we’ve now seen the outcome that I think the whole world is very pleased about.

CORIN Just finally, Minister, the next six weeks, does the role change for you with Jacinda Ardern taking her break. Do you step up and take on any extra roles? Do you see yourself taking a more prominent role as a senior Labour cabinet minister?

GRANT Not particularly, but I think all ministers realise that with the Prime Minister away for six weeks, we all have to step up to do particular speeches or to make sure that we’re covering off where there are any gaps, but, you know, with Winston Peters as the acting prime minister, we’ll all be there to support him. As finance minister, I’ve got plenty that keeps me busy on a day-to-day basis.

CORIN Always an interesting relationship, isn’t it, the prime minister and the finance minister? How’s that going to work? Do you work well with Winston?

GRANT I do, and, you know, I’ve really enjoyed the last nine months or so working with him as deputy prime minister, and we speak often, and we work together on a lot of issues, and I don’t foresee any difficulties at all.



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