Welcome to our panel, Dr Raymond Miller from Auckland University, former Labour Party president Mike Williams and New Zealand Herald business columnist Fran O'Sullivan. Mike Williams, what did you make of that?
MIKE WILLIAMS - Fmr Labour Party President
Well, he seemed remarkably tentative, and I didn't think it was one of his better performances. A lot of the answers he was giving were obviously rehearsed. They were rote answers to questions that he expected, and he only smiled just at the end. And, you know, every problem that came up - 'no problem'. Water - 'no problem'.
SHANE Yeah, well, let's start on water right and then make our way through if we can. He seemed to be a bit uneasy and a bit vague in his responses. Raymond Miller?
Dr RAYMOND MILLER - Political Scientist
Yes, well, I think Key is confronting this issue of legal action and what that might mean. He's also having to think about when the Mighty River shares are going to be put on the market, and he's hedging his bets a bit on that. He realises that some negotiating might have to take place. He wants to avoid legal action. But there's a lot of uncertainty around this, and it hasn't been helped in recent days by, you know, comments about his being disrespectful to the Maori Council, for instance, and his response about opportunism and so on. So I think we didn't get any real clear answers from him as to whether the sale will go ahead in the next two or three months or whether they're going to be delayed by several months.
SHANE Are you any clearer, Fran, on what a water right is or what these rights are that he's saying that he's not going to legislate against?
FRAN O'SULLIVAN - NZ Herald Business Columnist
Well, I think what he did is I think he distinguished quite well between ownership and then having rights and interests in the use of that water, and he gave the example of co-management with Tainui of Waikato. And I think that's where he's trying to nudge the debate. But it's interesting because when you look at the court case the Maori Council has taken and the preliminary argument to get to the table in front of the Tribunal and for urgency, they want shares. They want shares in Mighty River Power as a trade-off for basically going away, and that's putting it fairly black and white. Yes, they may have interests, but they've taken this case right up at the wire when the Government is about to move. And the Government needs to move, because it has a budget problem if it doesn't do these partial privatisations.
SHANE He hinted towards a loyalty scheme being announced today, Mike Williams, as well as these $1000 parcels for mum and dad investors. What do you expect out of that?
MIKE Well, these are attempts to sweeten the pill. It's fairly clear that most people oppose privatisation, even the sort of half-pie version that's happening. The loyalty thing I think is probably going to happen, because if you look at what happened when, you know, Contact Energy was privatised. John Key is right - in the first instance, the vast bulk of shareholders were New Zealanders, but they were rapidly hovered up and now Contact Energy is majority controlled by Origin Energy out of Australia. So I think there's that aspect to it. The $1000 package of shares I think is a bureaucratic nightmare for the person who has to administer them. I mean, what? You're going get a cheque for $3.50 once a year? You know, whoop-de-doo. But that again is attempting to sweeten the pill.
SHANE But it's coming back again, I suppose, to what they said at the last election, isn't it? Mum and dad investors being able to be part of it, I suppose.
MIKE Yeah, but what's the point, Shane? And you've got to go back to the central point. He's trying to sell us something we already own. I mean, it's the ultimate con job.
FRAN Yeah, I think really what they're doing is they're releasing capital, and the option otherwise of borrowing another 7 billion or so or putting up taxes, which they don't want to do, because otherwise they have a gap with the budget. But beyond that, there's an issue about getting developed capital markets, and I actually support the mixed-ownership model. I think it's worked well in Air New Zealand's case. And I think what it will do when we have a number of these companies listed and along with Fonterra coming up with the shareholder fund, it will once again put New Zealand on the map in capital markets internationally. And we have been suffering because we just don't rate at the moment.
SHANE Raymond, again we touched on the whole super issue. No movement at all there. What do you make of that?
RAYMOND Well, a couple of things. One is he has this very strong view of mandate, and he believes that he went to the country last year and said quite clearly, 'We are going sell these assets.' He got a vote, became the government. The same argument is applied to superannuation - 'I need to go to the electorate.'
SHANE How likely do you think that is? Do you think he could actually seek a fresh new mandate at the next election?
RAYMOND Well, he could, but his reasoning would seem to suggest that he's not convinced that raising the retirement age is a good idea. The interesting thing about John Key's leadership - his success is built on cautious pragmatism. He's really not a 'big picture, big ideas' person like the Mayor of Auckland, Len Brown. So he really doesn't like to play around with ideas that take you forward five or 10 years. He's comfortable talking about debt, but he's not very comfortable talking about specifics of housing accommodation and the cost of education and the like. And the other thing I think that's really important here is that the young are the least likely to vote. They are the least likely to be members and activists in political parties. They're least likely to have their views expressed on mainstream media, on shows like this. So it really- very often politicians don't take enough account of these issues that a young generation of New Zealanders are going to be facing over the next 10 or 20 years.
SHANE I want to start too with you, Fran, on the whole intergenerational issue because you've been doing a lot of work on this.
SHANE He didn't seem to accept a lot of the argument. What did you make of that?
FRAN Well, I mean, I think he's probably from a boomer lens and somebody who's getting a bit older anyway and like we all are. But I think there is an issue. I talk to young people. Young people's expectations are a hell of a lot bigger than they were when I was a kid growing up, and we didn't have half the toys and things people have now. You had hand-me-downs. People do expect to go into a much more upbeat kind of accommodation. They don't necessarily want to start, you know, miles and miles away from major centres in dungers and with second-hand stuff. And so you've got to kind of think about that. And you've also got to think about it in the sense that if we want to retain our young people here, I think we do need to make some sort of accommodation around this. When I was starting out, though I didn't personally have one myself, you know, we had a, I think, state advances or a corporation which actually gave 3% loans and admittedly interest rates for first homes. And admittedly interest rates are low now, but they'll go up again. And people who have gone in and, you know, got something at the sweet spot where they're only paying 5% or 6%, if that goes to 12%, they will be absolutely screaming, and that happens.
SHANE And we have to leave it there.