On Newshub Nation: Emma Jolliff interviews Prime Minister Jacinda Ardern

• Prime Minister Jacinda Ardern says she still has confidence in Immigration Minister Iain Lees-Galloway, but would not express confidence yet in immigration officials. "I'm not going to predetermine that until we get the information back. At the moment obviously I don't have confidence in the decision."

• Ms Ardern rejected claims from the Salvation Army that KiwiBuild was an example of "middle class welfare”. She said she would not apologise for trying to help middle class New Zealanders into homes “as long as we’re also meeting the needs of other New Zealanders who might not be able to muster those deposits and that’s why we’re looking at shared equity as well.”

• Asked why benefit sanctions had not been removed yet, despite being in the Confidence and Supply agreement with the Greens and the Speech from the Throne she said the Government had asked the Welfare Advisory Group to look at the entire sanctions regime. "So they’re doing that for us, and I expect that you’ll see us moving on their recommendations after they’ve reported.”

• The Prime Minister defended the implementation of a regional fuel tax, saying it was not the cause of high petrol prices, and would help offer commuters greater choice. “"Every cent from the regional fuel tax and excise, every single cent, goes straight back into roading, straight back into the kind of public transport projects that will give commuters options, that will stop them sitting in traffic, that will stop that lost productivity”

• She said the effects of policy changes that had been implemented during the first year would be seen in the Government’s second year. “People will then see those doctors’ visits costs come down, the investment we plan to make in mental health, some of those child poverty initiatives really start to kick in. KiwiBuild will continue to roll on.”

Emma Jolliff: The Labour Party is meeting in Dunedin weekend for its annual conference. Prime Minister Jacinda Adern is there for her first as party leader and she joins us now. Good morning to you, Prime Minister.

Jacinda Ardern: Good morning.

First up, can I ask you — do you still have confidence in your immigration minister?

Yes, I do.

The granting of residency to a convicted drug smuggler Karel Sroubek has been a debacle, though. Is this naivety or is it poor advice?

At the moment what we’re looking at is why it is that the information that the minister was provided in order to make the decision that he made — keeping in mind that this individual already had residency —it was around the automatic deportation order. Why is there now information in the public domain information that appears to directly contradict what was provided to him. I spoke with the minister yesterday. Neither of us are satisfied with the long timeline around going back and looking at what’s happened in this case. We both want to see resolution quickly and answers quickly. Officials are, understandably, working as quickly as they can, and I’m hoping and expecting we will get a response very, very soon.

You say the information that was in the public domain has come to light but Mark Mitchell said it only took a day to uncover some of these details that the immigration minister didn’t seem to have.

As with every Minister of Immigration, they rely on the information that’s put in front of them. Now, I don’t say that to place blame — that’s just the reality of how the process works. For instance, under the last government there were in the order of 100 of these kinds of decisions that were made, and in each of those cases those ministers again would have relied on what was provided to them. Now we have a set of information that seems to be in direct contradiction. Obviously that’s raised questions. We need to get to the bottom of this quickly, and it needs to be sorted quickly.

So do you have confidence in those officials?

I’m not going to pre-determine that until we get the information back. At the moment, obviously, I don’t have confidence in the decision. My focus and the focus, rightly, of the minister of immigration is to sort this case out. Then we can ask questions around how it got to this place.

If you find that the fault does lie with the immigration minister, what are the consequences likely to be?

Again, I haven’t seen evidence of that. The minister made decisions based on what he had. Now there are some very direct contradictions and differing information. We need to make sure there’s strong evidence that that wasn’t provided to him and make sure that the right decision is made.

Your push for criminal justice reforms needs public support. Are you concerned that the granting of residency to a convicted drug smuggler just feeds into those perceptions that you’re soft on crime?

No, not at all, and again, look as I said, this individual already had residency. This was around the deportation order. There was information placed in front of the minister now that’s really being questioned. We do need to get to the bottom of this. I think ultimately the response from the public will be — given that we’ve been provided additional information how do we act on that? How do we, if an error has occurred here, how do we fix that? And that’s rightly what we should be judged on. Again, there have been cases like this in the past. I’ve had raised with me cases involving sex offences under the last government — 100 of these kinds of cases. When you are in government these kinds of situations do present themselves. It’s all about the way you manage it, and it’s all about how you fix mistakes when they occur.

You’ve already been embarrassed by two ministers in your first year — Clare Curran and Meka Whaitiri —now you have a third under pressure. This must be disappointing for you.

No, look, this is government. When you’re in government you have in front of you decisions that are made every day that we must act with caution, do our best to get right every single time, but there will be occasions when errors will occur and mistakes will be made. What I reflect on a year after being in office is that we have low unemployment; we have delivered a surplus; we’ve manage to deliver to families — lower to modest-income families — on average a $75 increase in their back pockets; we’ve started KiwiBuild; we’re lowering the cost of doctor’s fees; we’re trying very hard to fix the issues with renting in New Zealand. We’ve done a whole list of things that are making a difference to people’s lives every day. Those are the things you are in government for, and those are the things we’re delivering.

You mention KiwiBuild — there’s been more controversy this week around the income thresholds for KiwiBuild. Have you over-promised on how affordable KiwiBuild homes actually are?

I think when you look at the context of where we’re building in the Auckland market, when you’ve got houses sitting around the million-dollar mark, and first home buyers saying that’s simply not a threshold that we can meet. What we’ve done with KiwiBuild, of course, is not about subsidising housing, but about providing more supply in the housing market where builders and developers just were not producing houses. From memory, roughly five per cent of houses being built in that market were what you would call something adequate for a first home buyer. We’re trying to turn that around. We’re intervening in the market by building what people are looking for. When you think about that fact that, say, two teachers with five years’ experience, you know they just come under the threshold for KiwiBuild and even then those couples are struggling to find a home. So that’s what KiwiBuild is all about. It’s rightly been popular, and I think we’ll look back on what we’re doing in the housing market and think this is something that will be a real turning point.

MBIE figures released to us early this year suggested that a first home buyer would need to earn at least $114,000 to buy a $600,000 home. The median household income is only $88,000. We’re looking at seven times the median income in order to afford a $650,000 home. That’s not considered affordable. The New Zealand initiative would say that you would need to bring that down to three times the median income to meet international affordability ratings.

Two points that I would make there. That’s the upper end of KiwiBuild, of course there are price differentials across the country, and we expect they’ll be much more affordable in different parts of the country. That’s the first point. The second point is that that demonstrates — the fact that even at 650 that’s a very big difference from the million-dollar houses that we’re seeing sold more frequently in the Auckland housing market — pointing to the unaffordability that we have right now. So we know we have an issue. That’s the top end of what KiwiBuild is offering. There are lower price points as well for slightly smaller homes that are good starter homes and, again, they’re cheaper across the country. But it points to the problem that we have in New Zealand that that is the price point that people are having to look at in order to get into the market. We are looking at other options. We’re looking at shared equity schemes. We are increasing the number of public and state houses available. We’ve got an agenda to build 6400 state and public houses within New Zealand as well. So for us it’s about providing housing for every price point, every income level and every need.

Alan Johnson from the Salvation Army says KiwiBuild is one example of how Labour has become the party of middle-class welfare. What do you say to that?

I totally disagree. People still have to pay for these homes themselves. They have to muster a deposit themselves. This is just one of the things that we’re doing across housing. I’ve already mentioned state housing. We’ve brought on an extra 1200 public housing spaces. We’ve invested in housing first, which is to try and work with those who are homeless in New Zealand. We know that a home affects everything. It affects your ability to build community, to keep your kids in the same school, and so we’re looking at everyone’s income needs and everyone’s housing options to make sure that we’re providing for everyone. But what I would say to Alan as well, is that it’s part of our psyche — the idea of home ownership and the fact that people who consider themselves to be in the middle haven’t been able to afford a home, we should want to turn that around too. I don’t apologise for that — as long as we’re also meeting the needs of other New Zealanders who might not be able to muster those deposits and that’s why we’re looking at shared equity as well.

There are almost 9000 people waiting for a state house; you mentioned state housing. 800 homeless in Auckland alone. Can you see how people would think maybe that $2 billion going to KiwiBuild could be better used elsewhere?

And again, we need to be really careful around the way that we talk about KiwiBuild. That’s, of course, a rotating fund that’s set up to ensure that we have the initial funding for the project. Of course, people are purchasing these homes, and that money goes back into the pot to rebuild additional houses. This is not a subsidy. This is actually just the state using its large buying power and determining that there’s a gap in the market and partnering with developers to build what’s missing. It is not a subsidy scheme for buyers; it’s just plugging the gap and ensuring that we’re providing where the market has failed.

More than 296,000 people, Prime Minister, are getting an accommodation supplement because they can’t afford their housing costs. That’s 6500 more people than this time last year. Do you need to do more?

Look, absolutely. Absolutely we do. And that’s why it can’t be just about KiwiBuild. It can’t be just about state housing. It can’t be just about emergency housing places. But one of the great issues, of course, with things like accommodation supplement – what we ultimately need to be doing is making sure that we’ve got that public housing in the first place. So that’s why we stopped the state housing sell-off under the last government. We are increasing supply. We just announced a huge amount of work that we’ll be doing in Porirua to renew and refresh 2900 state homes there. It is a huge agenda that we have. And I hark back here to something Michael Joseph Savage first said when we first started building state houses under that Labour government. He said, ‘We don’t claim perfection, but we do claim a considerable advancement on where we have been in the past.’ And I’d say the same for us. It’s not perfect. We’ve had 12 months, but already, we’re ramping up a building programme that I think will really pay dividends and make a real difference for people who need shelter.

One thing you could’ve done already, Prime Minister, is to remove the benefit sanctions that was in your confidence and supply agreement with the Greens. It was in your Speech from the Throne. When are you going to get rid of the sanction that penalises mothers who don’t identify the fathers of their children by $22 a week?

Yeah, and we’ve spoken openly about our views on that, as has the Green Party. It is in our Confidence and Supply agreement. One of the things that we wanted to do, though, is we asked the Welfare Advisory Group that’s underway now – and we expect to report soon – we asked them to look at sanctions overall and our entire sanctions regime. So they’re doing that for us, and I expect that you’ll see us moving on their recommendations after they’ve reported.

On to petrol prices – we’re hearing that people are buying less food and cutting down on power usage in order to afford petrol to drive to work. You’ve ordered a review into petrol pricing. But if you’re so concerned about petrol prices, why implement the regional fuel tax now?

Yeah, and look, the regional fuel tax obviously came in a few months ago now, and we’ve seen a real spike in recent times. It’s something I personally have been worried about and been keeping a very close eye on. I remember very early of course, on when we saw the excise come in. The price differential between, say, Auckland and Wellington – Wellingtonians, for a time there, were paying more than Aucklanders, even with the 10 cent regional fuel tax. Now, since 2008, we have seen a change in the profit... the importer margin. We have seen New Zealand become the highest pre-tax price of fuel in the OECD. Things have happened in the last 10 years that no one’s been able to provide me a reasonable explanation. So our excise and the regional fuel tax doesn’t actually answer for us why we’ve seen a 40 cent increase in the last 12 months, and neither does transportation costs or the change in the currency or the price of crude. So that’s why we have legislated—

But that regional fuel tax doesn’t help consumers.

But the jump that they have seen, the big jump that they have seen, cannot be answered by that regional fuel tax. And I can’t guarantee that if we removed excise, for instance, or the regional fuel tax that we wouldn’t see that price at the pump continue to stay high. And one thing I can guarantee, though, is that every cent from the regional fuel tax and excise, every single cent, goes straight back into roading, straight back into the kind of public transport projects that will give commuters options, that will stop them sitting in traffic, that will stop that lost productivity. We need to give commuters choices. At the moment, they don’t have enough of those, which is why the fuel prices are such a concern.

But it’s making it harder for consumers in the short term, though, isn’t it, that regional fuel tax?

Yeah. And look, on the flipside, though, what we’ve also done, though – the Working for Families increases, as I say, on average, a $75 increase in people’s incomes from that. We introduced the Winter Energy Payment to help over the winter months with winter fuel costs. And we’ve increased the minimum wage. So all of that, for those families, far outstrips, of course that additional cost – which, of course, goes straight into the kind of projects that should also ease the burden of transport.

If that Commerce Commission review comes back and says that petrol companies are charging too much, what can you do about it?

The very initial, early advice I’ve seen from MBIE suggests that there are things that can be done that would improve competition. But I do want to wait and see what the Commerce Commission comes back with. We saw with the Electricity Price Review – we saw some interesting issues raised there that perhaps otherwise wouldn’t have been brought to the fore. We’ve seen the debate around prompt payments. And so, again, we don’t yet know what the Commerce Commission might produce for us. But what has been used more often in recent years are discount coupons, for instance. I’d be really interested to see what that’s done to change pricing and behaviour.

On child poverty reduction – the bill has just passed its second reading. It would require specific poverty reduction targets to be set. But how’s that legislation going to be affected by MSD’s decision not to publish the latest poverty figures? It says, ‘Because there’s uncertainty around the data going back to 2016.’

Yeah, and look that’s something that they raised with us as soon as they saw from the Household Income Survey that they did not believe that the data was robust enough to rely on. It couldn’t all be answered by sample sizing, but what we do know is that the Household Income Survey is a small sample. We do need to make that data more reliable, so one of the things we did last budget was give Statistics New Zealand additional funding to increase the number of families who are surveyed. Because if we are going to place more weight on what we’re generating around those income surveys and the action we take as a consequence, we need those numbers to be robust. So that should be happening in those next surveys.

So how can you make any decision in the short term if you haven’t got something to measure against?

Well, the baseline figures will be based on the more robust data, first of all. Second of all, we already know that we have an issue with poverty in New Zealand. It’s a relative measure. We will establish a baseline from more robust numbers, and from there, we then set our targets against it. But look, what really matters, though, is what action we’re taking. And that’s why the Families Package was so important for us – that extra $5 billion going to those middle- and low-income families. What we do on minimum wage, what we do to try and bring down the costs of education – those are things that we immediately know will have an impact on families.

Your first Labour Party conference as prime minister this weekend – what are your priorities for the conference?

There will be time for a bit of reflection. There’s a lot of positivity here that we have formed a really pure form of MMP government, and yet, the list of things that we’ve been able to achieve over a 12-month period we’re really proud of. There is a lot more to do. But if I could express it this way – we’ve always said it will take us some time to turn the ship around. And we can’t do everything overnight. We’ve got to get the balance right between making sure the economy’s in good shape and the investment that’s needed. But in year two, the ship will have started to turn, and we’ll really started sailing. People will then see those doctors’ visits costs come down, the investment we plan to make in mental health, some of those child poverty initiatives really start to kick in. KiwiBuild will continue to roll on. I think people will really start seeing the effect of the things we laid down in this past year.

All right, we’ll leave it there. Prime Minister Jacinda Ardern, thank you for joining us.

Thank you.

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