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Q+A: Transcript interview with Bill English

Published: 1:57PM Sunday May 27, 2012 Source: Q+A

SHANE TAURIMA
You've stressed that your job has been to rebalance the economy, but one of the big remaining imbalances is between young and old. Third year student Denise French says the budget attacks students, families, workers, and let me read a quote - 'borrowing to live is intergenerational theft. The politicians in the Beehive had free tertiary education and many received living allowances too.' Does Denise have a point, Minister, or is she simply overreacting?

BILL ENGLISH - Finance Minister
  think that's a bit of an overreaction. Most New Zealanders would think the students are getting a pretty fair deal. Despite the fact the government's books have been tight, we've maintained interest-free student loans, largely maintained student allowances. We've got one of the more generous student support systems in the developed world. What she needs to be looking for, though, is a budget that doesn't borrow even more than is absolutely necessary and it focuses on lifting our long-term economic prospects, because that'll enhance her ability to repay, and we believe the budget does that as part of a series of budgets now that have focused on, as you said, rebalancing the economy and supporting businesses to make the decisions that actually do grow the economy.

SHANE 
Let's talk about some of the things you have done. You've toughened up the rules around student loans; early childhood funding is frozen; you've stopped auto-enrolment of KiwiSaver; you've increased class sizes; and you're penalising little Jonny on his paper run. How are those types of policies supporting young people?

BILL 
Well, they're all part of an overall programme to, in the first place, make sure that we don't run up our public debt and therefore our national debt too far. We've borrowed extensively through this recession to support all of those people to ensure the most vulnerable are protected, that people keep getting the cash they have become used to through the government support programmes at the same time as signalling quite clearly that couldn't go on forever. And we're making a series of considered adjustments that put us on a track to surplus. And alongside that we have focused on the last two or three years on investing in infrastructure, growing some of our future potential around, say, oil and gas exploration, tidying up our rather messy skills investments from the past so that we're underpinning our future growth.

SHANE 
Before we move on, can I just clarify, did you say when you were spokesperson for education that 'smaller class sizes would lead to better relationships between families, teachers and students, which research shows is really important for achievement, particularly disadvantaged kids.' Did you say that or something like that?

BILL 
Well, frankly, I don't recall, but what the research does now show is that what's more important than the class size is the quality of teaching, and that's why we've done what every other household and business has done. We've looked across our spending, and in the case of education, said we would rather put more resource into improving the quality of teaching for all kids than put it into having one less child in each classroom.

SHANE 
Let's get back to what you were saying before about taking a responsible approach. If you're trying to minimise future debt for young people and for future generations, why aren't you tackling the issue of superannuation, when 10 to 20 years down the track you're expecting those very young people today to be picking up the debt?

BILL |
Well, look, the government's position on that's been quite clear going back to 2008, that we wouldn't change the eligibility for national super, and 600,000 people over 65 relied on that undertaking. We are not going to change it. Secondly, in some respects it's a bit of a distraction, because no one is suggesting change in national super in the next 10 or 15 years. The Labour Party aren't; no one else is. In the meantime, we've gotta get on with growing the economy sufficiently to meet the costs which are rising now. I think this budget the cost of national super goes up about half a billion, and that'll grow over the next few years, and that needs growth-orientated policies that are going to give us the capacity to meet that demand. The final point I'd make is we are focussed more immediately on the other large long-term cost, and that is the cost of welfare dependency. So those are the actions we are taking now to reduce that long-term indebtedness.

SHANE 
If you were, though, to raise the super age, for example, from 65 to 67, you would save $1.5 billion a year. Now, that's just in one year, you'd make more than double what you'd get for Mighty River Power. So why not do it?

BILL 
Well, because the only feasible way to do that would be to signal it well ahead of time. So you might save $1.25 billion in 15 years' time. We have a few issues between now and 2025 that we have to deal with. People can't wait round for 15 years. So we're focusing on dealing with the other long-term high costs - that's welfare dependency - and on growing the economy.

SHANE 
So why not signal it now, Minister?

BILL 
Well, as I said before, the government made an undertaking-

SHANE 
That was the political answer, but what about the economic answer?

BILL 
Well, the political answer matters. People relied on that undertaking that we would not change eligibility for national super.

SHANE 
John Key's pledge, though, was said, as you say, five years ago. It was before the global financial crisis. Given the effects the crisis has had on the economy and the changes you've had to make as a result, and you've repeatedly stressed how important it is for you to adapt to that volatility. So surely your thinking on super should change as well.

BILL 
Well, look, the undertaking was made and we're sticking to it.

SHANE 
While we're talking about John Key, let's look at what he said back in 2008. He was National Party leader before he became prime minister.

---CLIP---

JOHN KEY  We're here today at Westpac Stadium. It holds nearly 35,000 people, and believe it or not, the equivalent of this entire stadium and more leaves every year to permanently live in Australia. They leave in part because the wages and conditions are better in other countries, and I'm convinced we can do a lot better than that. I'm convinced we can give them a reason and a purpose to stay in New Zealand, and that's why I want to be New Zealand's next prime minister.

---END OF CLIP---

SHANE 
Does the fact, Minister, that 53,000 people moved to Australia last year show that you've failed to do better?

BILL 
No. It shows what a big job New Zealand has to do to close that gap, and I'm pleased that John Key set a high benchmark that's part of his confidence and aspiration for New Zealand. That gap opened up over a long period of time, and the last few years has been a set of circumstances which have meant that Australia has got a once in 100 year resources boom at the same time there's been a global recession-

SHANE 
So it's not a failure, Minister?

BILL 
No, it's not a failure, because we are taking the steps that are needed to close that gap, and we've learnt a lesson from Australia. Where they've been successful is considered and consistent change over time that always focuses on lifting their productivity and their growth potential. And if New Zealand sticks to this plan that we've put in place for the next five to 10 years, we will close that gap.

SHANE Will we start to see it go down?

BILL I imagine we will. The Australian economy's got its own challenges. But the better they do, the better we do. There's no point in catching up with Australia by them doing badly. We have to focus strongly on taking every opportunity for jobs and growth. And interestingly our political critics, including the Labour Party, as the Prime Minister pointed out on Thursday, are against every growth-enhancing policy this government's put in place.

SHANE 
Are you proud of that statistic, though? 53,000 moved to Aussie last year. Are you proud of that?

BILL 
Well, it's not a matter of whether we're proud of it. It's a matter of what we're doing about it, and what we're doing about it is putting in place a whole range of sensible growth orientated policies-

SHANE 
But isn't the truth, though, that there's very little that you can do in terms of when you've got wages, for example, 30% higher? Aren't you in a corner?

BILL 
It's not a matter of whether we're in a corner. It's a matter of what can be achieved for New Zealand. And the wages are higher in Australia, so what do we do about higher wages in New Zealand? Well, what we need is businesses who can employ- who have sufficient capital to invest, can employ another person, sell their products for more so they can pay higher wages. There is no growth you can just pluck out of the sky here, and there's a bit much magical thinking around about this. In the end, the growth in wages comes from businesses and organisations who are able to make a sufficient profit to employ another person and pay a higher wage, and a lot of our decisions are focused on getting those decisions more easily made in New Zealand.

SHANE  
John Key said super was a promise. What about this? Was this not a promise? Minister?

BILL 
I didn't hear what was said, there, Shane.

SHANE 
OK, so Mr Key, back in 2008, we've just seen what he said in that clip. You spoke before about super, saying that was a promise. Was what he said in that clip not a promise as well?

BILL 
You must have a technical problem, Shane. I didn't see the clip. I don't know what you're referring to.

SHANE 
Well, it was John Key in Westpac Trust Stadium, I think it was, talking about the 35,000 that back in 2008 were departing our shores and moving over to Australia. We've now got 53,000. Is that not a promise? He said he'd do better. He said he'd do something about it.

BILL 
And he is doing something about it. He's led a programme which is built on confidence in New Zealand's future that takes steps across about 100 areas that we've gotta get right, ranging from more investment and infrastructure, rolling out ultrafast broadband, improving our skills programmes, breaking welfare dependency, changing the Resource Management Act so we can get effective business decisions made - these are the things you've got to do. You can't just have the aspiration, which he certainly has, and the government certainly has, but we're filling it out with-
 
SHANE 
Let me give you 30 seconds now, Minister, 30 seconds to give us your best sales pitch to people and why they should stay here and not go over to Aussie.

BILL 
Well, they'll make up their own minds, Shane. We're not here to tell people how to think-

SHANE 
Do you not want them to go, though? Do you not want them to stay here?

BILL 
Well, we'd prefer them to stay here, but-

SHANE 
Tell them now, tell them why, and I'll give you 30 seconds. I won't interrupt you. Tell them why they should stay here.

BILL 
We want to make New Zealand a better country where there is a stronger growing economy that can pay higher wages, and we are taking all the sensible, practical steps that we can to support the businesses and the people who will make the decisions, that create the opportunities that keep New Zealanders here.

SHANE 
Minister, finally, there were overnight reports in The Guardian that Serco is under investigation in the UK over some of its practices. Now, Serco, of course, runs Auckland Central Remand Prison and will run the private prison out at Wiri. Do you still have confidence in Serco?

BILL 
Yes, we do. We've signed a contractual agreement with them. It's a very tight contractual agreement. For the first time it's aiming public money at getting results. That is they'll be incentivised to reduce prisoner reoffending. Every ex-prisoner we can stop reoffending saves us $90,000 a year. It's a cutting-edge contract. We have confidence that as it's put in place we can actually make a difference, get results. This year we will be closing prisons for the first time in a generation.

SHANE 
Mr English, thank you very much for your time this morning. We do appreciate it.

BILL 
Thank you.

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