-
Watch Video
-
Related
Paul Holmes and Therese Arseneau are joined on the panel by Keith Locke and Peter Neilson as they pick up on points made by Don Brash
PAUL So very illuminating that interview and we see Peter once and for all the gravity of the situation.
PETER Yes I think that this is probably the worst time to be Minister of Finance probably since about 84, you've got elected on a policy of saying Labour's policies for spending for Working for Families and other policies will continue, student loans, and at the same time saying and we're gonna give you tax cuts, and now saying oh we no longer have the growth that's gonna allow us to probably do those things how do we get off that position, and start moving people to the debate about long term.
PAUL He did say to me in the Green Room when I was just having a little bit of a chat to him and in saying hullo to him that what he really hopes and he emphasised it again here, what he really hopes the government understands at the moment is they've got to convince New Zealanders of the intense gravity of the situation, but it looks like tax cuts gone.
THERESE I would think so and from recent polling it also shows that the public understand that, that they actually don't want tax cuts if it involves borrowing and having excessive debt for future generations, so I actually think politically the big issue for National now is managing this, because on the one hand they're gonna have to break a promise but on the other hand I think the public is actually a bit more savvy about this and they understand that if circumstances change they have to change, but I would say my bottom line on this though it does tend politically it comes down to jobs, and politically a government gets really hit hard when there's high unemployment.
PAUL Let us look at that now, we had Dr Brash talking about unemployment he said this -
Dr Brash: 'The typical forecasts around the New Zealand
economy about unemployment have been too optimistic, I think we do
see a prospect of - I see a prospect of unemployment going quite a
bit higher than it is now.'
Of course the figure he mentioned was something like 10%.
KEITH Yes I think that means that rather than tax cuts there should be investment in job rich infrastructural projects like developing the rail system etc, rather the OECD prescription is to sell off Kiwi Rail and KiwiBank which will only worsen the long term current account deficit which Don Brash was rightly concerned about.
PAUL No the OECD said selling some of the assets helped with a little bit of cash in the 80s but anyway it's not ever gonna get on the table is it, it's a huge great bogey isn't it?
PETER Well I think probably it's really selective, you know for example the OECD report says hey you're isolated you're at the bottom of the world, if you do not have competitive trade links if you do not have a cost of trade, a cost of operating, a cost of transport you've really got a major problem for New Zealand, so therefore that's an argument about ports it's not necessarily an argument about ACC or anything else.
THERESE And in terms of your question politically I think they can wear the change in tax cuts in a way they cannot wear a break of the promise on privatisation, I think they are a government that is still haunted by the ghost of the National government past and privatisation is just a no go I think.
PAUL Can I just say to you on the business of you saying they've gotta be really careful now how they communicate you know the situation, that's where I disagree with you on the fact that Bill English is being much more sombre about the recession than John Key is, I think they're working quite a clever double act. Mr Key as Don Brash said is keeping people encouraged and asking them to spend, Bill English is the one ....
KEITH I think we've gotta look a bit ahead into you know New Zealand being a cutting edge country in energy efficiency in organic future, all of those things that are going to make us stand out, we've gotta use this recession to our advantage in trying to develop that side of our ...
PAUL But are we business friendly enough, you see this is something else you will have noticed Peter in the OECD report, it says if you're this far away from the world, if you're as isolated as this, if you've got distance, and for the tyranny of distance you've gotta be a sexy place for business to come, are we sexy enough?
PETER No. Bluntly our tax system is not competitive with most of the rest of the world in terms of with the OECD expansion number of countries coming in at relatively low corporate tax rates the gap between the highest personal tax rate and the corporate tax rate means that we have reasons to believe we need to actively reform that. The problem with that is you cut the tax rates back you don't have the revenue to pay for the promises in relationship to social welfare, health. Education.
PAUL And you've got the RMA as well of course.
THERESE Can I go back to the original point about I have no trouble with having a more sombre message and a more uplifting message, what I'm saying is, is that these are difficult times and I actually don't think there's a split between Bill English and John Key but what I do think is that there are very mixed message coming out and it can be confusing, for example you talked about you know is the recession gonna hang on or are we gonna get out early, but also I think in terms of this budget Bill English has a really difficult job and it is sort of mixing those messages that we want you to spend in the short term but save in the long term, and cut spending but not cut spending in terms of infrastructures.
KEITH I think we'll attract the smart capital if we're cutting edge in terms of sustainable economy and we've got a lot of capital...
PAUL Not if you people start moaning every time a fella wants to build something here.
KEITH Well I think we want to design our cities our houses in the most sustainable way there's nothing wrong with having standards, I think that will actually attract the international attention you're talking about.
PETER There are too many conflicting signals and basically what you need is a coherent message coming across the whole government, it's not two characters in the government it's people consistently talking about the same story.
PAUL Very good well of course it is what do you call it a movable feast at the moment isn't it, as you said on the very first programme the trouble is at the moment that nobody knows what's gonna happen, I keep going back to that I know. The House is in recess again next week, Therese, but of course MPs have still gotta be working so what are you looking for next week.
THERESE I think we're all sort of fascinated to watch what happens with the Mt Albert bi-election, I think that's gonna be a very interesting bi-election, a safe Labour seat but how safe, how much of it is a personal vote for Helen Clark, I mean there was a sizeable comfortable gap for Helen Clark but...
KEITH That's right and if the Greens win it that's an extra seat for us.
THERESE You may cost Labour it if you're right.
KEITH Yes well it's not gonna change the government so it'd be great for the Greens to have an extra seat and it's really set up for us because you've got the Labour supporting 2.7 billion dollars on 4.5 kilometres of tunnel motorway, National supporting about the same amount a bit less than an over ground version, it's gonna wipe out a whole pile of houses in Waterview in the electorate and the Greens saying well look put all that aside for a few years and spend it on public transport, I know which way the Mt Albert voters are gonna go.
THERESE It'll come down to turnout.
PAUL If you start telling people to get on bikes this will prosper you not.
PETER It's the whole issue with bi-elections basically, you've got a government that's in a comfortable position, if you want to send a message it's very safe you can do whatever you like knowing you actually won't change the composition of the total government, so effectively if John Key can't turn out and explain how he's gonna get through the next year and the next three and how it's all part of a grand plan, National is going to have an issue, not because they're doing anything particularly wrong but because it'll be localised down to a place where can actually put a vote in that'll send a strong signal.
PAUL National too has a very strong candidate I think that they have appointed or are soon to appoint in Mt Albert, we'd better talk about that another day.
THERESE Another day and National also claims that they have increased party membership in the electorate but I do think in bi-elections it comes down to turnout, who can get the vote out, and vote splitting, the Greens running a strong candidate may well cost Labour.
KEITH Well it's not vote splitting if we win, if we make it a three way race we could win.
PETER More it becomes a referendum on the Auckland Super City proposals, for example ...
PAUL Very good, I've gotta stop it there, I thank you very much
to the panel.
