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The Panel: Bill English and the economy

Published: 3:10PM Sunday October 20, 2013 Source: Q+A

Q + A
PANEL DISCUSSION 1
Hosted by SUSAN WOOD
In response to BILL ENGLISH AND THE ECONOMY

The Panel: Susan Wood, Dr Claire Robinson, Matt McCarten and Michelle Boag gives their opinions on the Bill English interview

SUSAN Welcome to the panel. Joining us this week, political scientist Dr Claire Robinson, Massey University; Matt McCarten from the Unite Union; and Michelle Boag, former National Party president. Good morning. Now, I did say that Winston Peters would be here at this point, and it seems- we know that hes down at his annual conference at the moment. It does seem that theres been some conflicting times around this, so Winston Peters has actually left our studio. Well let you know. Corins on the phone trying to ring him. Well let you know if we get Winston back, but I do believe, actually, he has a speech around 9.30, so it may be over that. But, yes, so well get back to Winston when he gets back to us, I guess, panel, wont we? Bill English - interesting, actually. I am wondering, Matt McCarten, New Zealand economy - star performer, three per cent growth, were hearing. Puts us up there as a pin-up child in the OECD.

MATT McCARTEN - National Secretary, Unite Union
 Mm.

SUSAN Theres a big campaign for the living wage, big campaign for minimum wage to go up and a disconnect, I think, from people hearing, Yay, great economy, but whens it going to filter through? When am I going to feel good about my money?

MATT To when does the trickle down come down?

SUSAN Or does the trickle down exist?

MATT And thats the challenge. I mean, there is an argument from the left, and I think its legitimate. Its that the economy when it does well that the wages and particularly those at the bottom have not actually gone up and has, actually, in real terms has gone backwards while those at the top have continued to do very well. Those who have got shares and properties have been doing well. So what we have now is one of the most unequal economies-

SUSAN I mean, Bill English- To be fair to Bill English, he would argue inflation has been nothing much, therefore costs havent gone up very much, and mortgages, which affect a lot of people, record lows, so, in fact, people are a bit better off.

MATT Well, the people who do own homes, yes, theyve been doing very well because its all tax gains and doing very well, thats right. But if you dont have that, youre a renter, which most poor are, that youre going backwards. And what weve actually got is that weve got wages that are actually subsidised by the state, that what we have is Working for Families. He talks about, Oh, weve got pay off this debt. What we have is Working for Families because wages are low, and what exactly- the taxpayers subsidising business, then youve got rent accommodation and some subsidies to subsidise the owners of property, but what we actually have is not a free market but, in fact, the consumer pay less, businesses being subsidised and workers are actually being underpaid. So therefore the argument for a living wage - weve got to say the market isnt actually working, because the people at the bottom are not getting it.

MICHELLE BOAG - Former National Party President 
 Well, its certainly a stretch to say that those people who are renting homes to other people are being subsidised. In fact, its the people who are in those homes that are getting the accommodation supplement. And if it wasnt for that, they wouldnt be in those homes. And theres a lot of pressure on housing, as everybody knows, partly because of the supply issue. I think what weve seen with Bill English, and somebody said this to me last night - somebody completely independent - they said, You know, Ive got so much respect for Bill English. Hes doing a great job, and he just gets on quietly and does it. And when you look at the situation we were in when this government took over, we were already heading into depression ahead of the rest of the world, then we had the earthquake come and belt us all over the head, this government has chosen to maintain some of those very high costs, such as interest-free student loans, Working for Families-

SUSAN Well, they have to, Michelle, or else thats an election loser.

MICHELLE Well, exactly.

SUSAN Student loans.

MICHELLE Exactly. And so its difficult balancing all those things, but what were seeing is New Zealand is coming out of this much better than other economies. And that is a tribute, quite frankly, to his financial management. And, look, there will always be demands for more money for people at the lower end, and, by the way, Im currently renting. I probably dont fit in with your qualific&

SUSAN ...criteria.

MICHELLE Your definition.

MATT My class definition, you mean.

MICHELLE Indeed.

SUSAN Claire, let me bring you in here about the political- because next year were going to see- obviously, were going to see Labour talking about minimum wage, talking about living wage, really hitting that quite hard. And were going to see this government saying, No, its about paying down debt. Its about preparing us. Its about resilience. Do you think theyre vulnerable on that?

DR CLAIRE ROBINSON - Political Scientist
 Well, I think the message has probably got about 12 months to run. I think it will last National through the next election, because while the global economy is still sluggish, I think that notion of the need to be economically conservative and to not take risks at a time when our trading partners are in a reasonably shaky position compared to us, that will last. But I think that six years of no to low wages for people will- it will run out after the next election, and so its going to be quite- If National gets back in, then they will have to start spending after that. The interesting issue, of course, is what Labour does next year, because the population thinks that National is quite good on the economy. Labour is clearly positioning itself to be just as good with two reasonably competent-

SUSAN And they have to convince the electorate of that.

CLAIRE And the electorate will be looking at them to see what theyre going to offer, but theyre not going to necessarily be able to offer a lot because then theyre going to be seen as being a little bit more irresponsible than National, so its a very difficult line that Labour will tread.

SUSAN Do you think that National will be forced to up the minimum wage next year, Matt?

MATT Well, they will. Theyve been doing it every year that theyve been in, very modestly. But it is election year. I think theyve held back this year. Theyve moved by 25 cents. I think they will move it substantially for next year for those reasons. I think this is going to be the issue that Labours going to push about the inequality, and National, if theyre smart and they are, that will move. I will not be surprised if they dont move the minimum wage up by about 50 to 75 cents this time round in an election year, which is a big-

SUSAN Because, Michelle, I think Matts got a point. Inequality is going to be a big issue next year. And depending on the evidence you read, we are starting to see evidence of greater growth between the haves and the have-nots.

MICHELLE Yeah, and, of course, this is the issue. Its all very well for any political party to promise to lift the minimum wage, but wheres it going to come from? You know, were still borrowing as a country. We dont have a supply of money that we can tap into. And every promise that a political party makes to spend money is going to involve more borrowing, and this is where its a very careful balancing act. I think the issue about the minimum wage ignores the fact that for many of those people, they are receiving top-ups through Working for Families or accommodation supplements and especially when theyve got children. And, you know, when you look at the tax position in New Zealand, theres a whole lot of people who simply do not pay tax. They might be earning a low wage, but theyre getting so much subsidy-

MATT I was going to say youve actually put my argument, which is the state, the taxpayer is funding businesses, because businesses are not paying the market rate.

MICHELLE Well-

MATT Because what weve got is a situation-

SUSAN Theyre paying the market rate, Matt, but theyre not paying it for people to live on.

MATT This market rate - and Im trying to be really good this morning about these sorts of discussions - but, you see, the market rate is a nonsense. The market rate, say, at the top for MPs - lets say MPs - thats not a market rate. Thousands of people, they want to be MPs, and they put their hand up. If you paid nothing, theyd put their hand up. Who sets it? A committee which they control. We just had local body elections. Thousands of people up and down the country went for the jobs. Its not like suddenly the market - weve got to create the market. Weve got one of our bureaucrats in Auckland paid 780,000 bucks for-

SUSAN And Len Browns promised to jump down on that. And were going to be talking about Len Brown a lot more in the show a bit later on.

MATT The top are doing well; the bottom are getting screwed. Thats it. Everyone knows it.

MICHELLE But the bottom are being subsidised. Lets be quite clear.

SUSAN By the taxpayer.

MICHELLE By the taxpayer. And Im sure Matt wouldnt want that to change.

MATT No, no, no, I do. I think that employers should actually pay for someone to actually pay a living wage. You shouldnt actually run a business-

MICHELLE But employers have to stay in business.

MATT If you dont run a business- If you cant run a business on paying-

SUSAN Do you pay your people minimum- a living wage?

MATT Yes, yes.

SUSAN Claire?

CLAIRE I was just going to say I think that what this leads to is that tax will become an issue for the election next year. So Labour is already signalling that it might be wanting to raise the tax rate on the higher income earners, and that will be the mechanism by which they say, Well, this is how were going to get a bit more money into the economy. This is how were going to pay for some of these things, like more- increases to the minimum wage or the living wage.

SUSAN Now lets get on to the regions, because that was part of the interview that Corin did - and Im looking at you, Michelle - with Bill English, and Corin jumped on him about Auckland and Christchurch, and Bill tried to make the point that it trickles down to the regions. The regions are vulnerable.

MICHELLE Yes, but when you look at that recent report on regional growth, the regions - some of the regions, thats most of the regions - are doing incredibly well. And I think it gets back to this resilience Bill was talking about-

SUSAN But theyre not doing as well as Auckland and Christchurch, are they?

MICHELLE Yes, but people- I dont think you can ever in our system of democracy say to people, You mustnt go to Auckland. You mustnt go to Christchurch. One of the freedoms we have is to live and work where we like. And, yes, there will be pressures for people to go to Christchurch, because thats where jobs are, and thats what people are doing. But, in fact, there is this resilience in New Zealanders, and we do see it. When people lose jobs, they come out with their redundancy, they create new businesses, the sorts of things presumably you would like to see happen, Matt,&

MATT Of course.

MICHELLE &because theyre creating jobs. So I dont think theres anything like a crisis in the regions. I think what were seeing is everybodys found it tough. Everybody has found it tough.

MATT Been to Rotorua lately?

MICHELLE Everybody has found it tough over the last few years, but the best way for people to get back on the horse and to be able to create some wealth for themselves is to get a job or create a job, and thats a huge emphasis of what the Governments been doing.

SUSAN Matt?

MATT Well, I just- The regions are a mess. There is the drift north, as you all know. What weve actually got-

SUSAN I mean, there are different regions. Some-

MATT No, no-

SUSAN Look around Queenstown. Theyre doing pretty fine, but you look north - not so good. Its a different story-

MATT Well, you speak to the hoteliers down in Queenstown - no, theyre not doing well, actually. Theres a perception they are, but theyre not. But, anyway, because Christchurch, because whats happened there, thats another discussion. But what youve got in Rotorua - youve lost some more jobs there. You see, theres nothing to replace it, because we just dont believe in it. The state say, We just stay hands off, so those jobs will disappear, and theyll all move to Auckland. Weve got all these spare houses in Auckland. We can just put them all in. Look, our infrastructures not coping. There used to be a time we used to bond our immigrants when they came in. Youd put them into the regions. You wouldnt just say, You can come to New Zealand, but, no, you have to all come to Auckland, where we cant actually manage it. But we have no plan. Theres no approach. Its just saying, Well cross our fingers and hope the sun shines-

MICHELLE Thats not right. There is a plan, but the thing is when you look, for example, at north Auckland, and Shane Jones has been an exponent of this, you cant say, Were not going to exploit our mineral resources. Were not going to build plants. Dunedin chose not to build an international hotel. Now, imagine the jobs that would have created. Some of these people are their own worst enemy. They complain about not having jobs, but they are completely intolerant of projects that would create jobs, and you cant have it both ways. If you go down the road of being the Greens, where you have no exploration, nothing happening, no activity, and youre all going to go back to subsistence farming, we are never going to have the sort of economy-

SUSAN A quick last word from Claire on this. Claire, how vulnerable is this government in the regions?

CLAIRE Well, theyre pretty solid in the regions, so a lot of the support for the National Party comes from the regions.

MATT Its DNA.

CLAIRE Yeah, its DNA. And the regions are a lot more conservative than cities. They are very loyal. Theyre very-Theyre more likely to stay supporting the National Party, regardless.

MATT I think theyre vulnerable in the provincial seats, as the rural will always be National. I think in New Plymouth and Palmerston North and Rotorua and Taupo, those places, I think theyre vulnerable.

MICHELLE But, Matt, over the last few years, National has won all those seats.

MATT Yes, Im just saying-

MICHELLE Theres very few seats that Labour now hold in the provinces.

MATT Im saying thats one thing-

MICHELLE And in the regions, in the cities, very few.

SUSAN Very good. Thank you, panel.

MATT I did say it was in their DNA.

 

 

 


 

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