FINANCE LEADERS' DEBATE
1 SEPTEMBER 2005
PRESENTER: MARK SAINSBURY
MARK SAINSBURY: Good evening and welcome to this One News Special. I’m Mark Sainsbury. Tonight, the economy.
There’s no doubt we’ve been through the boom times lately. Several years of sustained growth and unemployment – lowest in the OECD. But before we get carried away, the trade deficit is worsening, we still earn roughly 30% less than the Australians.
Here in the studio, the finance spokespeople from all eight parties will debate their views on our economic options. And once again, we’ve invited each party to send representatives to make up our studio audience. Everyone here is a political party member and has been selected by their party to attend. We hope they’ll give all of our debaters a fair go. So, let’s meet the spokespeople.
Introducing everyone from left to right, we have Monte Ohia of the Maori Party, Rod Donald from the Greens, Jim Anderton from the Progressives, Michael Cullen from Labour, John Key from the National Party, Rodney Hide from ACT, Gordon Copeland from United Future, and last but not least, Winston Peters from New Zealand First.
Michael Cullen, even Jim Anderton says that this election is turning into an auction. Promises rely on growth. What can we actually expect in terms of growth?
MICHAEL CULLEN (Labour): We can expect the economy to slow down a bit in the next year or two, because the Reserve Bank has been trying to engineer that with interest-rate rises, and then pick up again. The big unknown, of course, is the impact of international oil prices over the next year or so, which again suggests caution. But what we need to do is address the underlying issues. And they are: how do we improve our skills production, produce more apprentices, more tradespeople, more skilled people? Because they’re the people that drive productivity growth in this economy.
SAINSBURY: Is there a figure you believe we need?
CULLEN: Well, we’ve put aside money for 5000 additional modern apprentices, but we also need to encourage the traditional apprentices. We aim for 250,000 people in structured industry training. Also, we’re putting a lot more money into infrastructure. We’ve committed $23.5 billion over the next 10 years.
SAINSBURY: What percentage figure do we need for growth to actually fulfil the sort of promises that you’ve been making this year?
CULLEN: We need to average somewhere around about 3% to 3.5% growth over the economic cycle. Over the last period we’ve been averaging 3.9% since we became the government versus 3.1% in the 1990s. If we can get 4% or so growth, we will definitely be catching up on other countries in the OECD, because many of them are growing at only 1% to 2% these days.
SAINSBURY: John Key, a realistic target?
JOHN KEY (National): Well, that’s right. We need to grow if we’re going to go ahead with our nation. So let me say right up front, if we’re serious about growth, then we have to have a tax policy that rewards hard work, that rewards skills and rewards risk-taking. That’s the foundation of our country. That’s what’s going to take us forward.
SAINSBURY: Can we afford it? I mean, with the growth predictions?
KEY: Can you afford to not have tax cuts? I say we’re losing 630 people a week to Australia. We’ve got an economy that’s weaker. We need to bolt on a strong tax plan.
SAINSBURY: What is the figure that National would require, in terms of growth, to put in your policy?
KEY: Well, unlike Labour, we haven’t abandoned the target of getting into the top half of the OECD, and if we can grow at 4% a year, we can do it within 10 years. That’s a realistic target on behalf of a National government.
SAINSBURY: Winston Peters, 4%? Is that realistic?
WINSTON PETERS (New Zealand First): Look, we’re an export-dependent economy, and unless we have a flexible monetary policy, unless we regain control of our asset value and worth, unless we have a coherent export plan, which we don’t have, then this country will not turn itself around. And we do have to have business taxation cut and workers’ wages to rise, otherwise we’re going to lose our best from business and from the workforce.
SAINSBURY: Is 4% growth enough to achieve that?
PETERS: Well, you’ve got to have 4% as a minimum if we’re ever going to catch up with Australia and other countries, behind which we are seriously and sadly lagging.
SAINSBURY: I mean, Rodney Hide, you support a lot of National’s policies. In terms of the growth target…?
RODNEY HIDE (ACT): They’ve got ours.
SAINSBURY: In terms of the growth target, there are a lot of promises around this election. How are we going to pay for them?
HIDE: Oh, well, we’ve got to go 4%, 5% and 6% growth. 2% or 3% won’t cut it, and that’s, sadly, the current forecast. We have to do much better. Why? Because growth is about providing for your elderly, providing a proper health system, actually having the sort of society that we aspire to. That’s why growth is so important, and that’s why tax cuts are so important to achieving that growth – because they reward hard work, they reward savings, they reward investment, and what Labour does is actually deaden all the incentives.
SAINSBURY: We’re going to come to the tax cuts later, but I want to go to you, Rod Donald. From the Greens, I mean, is growth the be-all and end-all?
ROD DONALD (Green Party): It certainly isn’t. First and foremost, the economy should serve people, not the other way around. But let’s look at growth targets. Putting a simple number on it is very simplistic. We want smart growth. You know, if there was an oil spill in the harbour, under the way we currently measure the economy, that would say the economy’s grown. If somebody goes down Queen Street, smashes a whole lot of windows, and they are fixed, the economy is grown. I mean, that’s a dumb way to measure the economy. It really is.
SAINSBURY: Monte Ohia. I mean, from the Maori Party’s perspective, where do Maori fit into growth?
MONTE OHIA (Maori Party): Well, there are two focuses. One is on the disparities, and especially giving opportunities for those on the lower income to change their life chances. And secondly is to involve Maori in the productive sector. Now, in the 1800s, we were involved in it. We owned over a hundred ships, we owned mills, we were involved in trade, both within New Zealand and internationally.
SAINSBURY: But how do you encourage?
OHIA: Well, in a survey that was done in 2003, Maori are the fourth most entrepreneurial people in the world. For us, we need to capture that, and the growth of the economy relies a lot on the growth of the Maori economy.
SAINSBURY: Jim Anderton, you take a big interest in business that’s happening in this country. I mean, you look today, what everyone’s talking about is what it’s costing to fill up your tank. What can a government do, or what would a government do that you’re involved in, to cope with that? Because this could throw all these great figures out, couldn’t it?
JIM ANDERTON (Progressives): Well, it’s no use hiding the fact that oil is rising in price, and if you subsidise it, you’re only setting yourself up to fail. And what I’ve heard tonight from National and ACT is a recipe for failure. Look, have we lost all memory? Well, you see, when the facts come out, they start to interject, just like Parliament. Have we lost the memory of huge tax cuts in the ‘80s, huge increases in the cost of education, which we must invest in to have a decent future for this economy? A partnership between the Government and the private sector to invest in infrastructure, and to invest in business development, that’s what this government’s been doing for the last six years, and it’s working, and it has worked, and it will continue to work.
SAINSBURY: Gordon Copeland, whose job is it to encourage growth? Is it private sector or public sector?
GORDON COPELAND (United Future): Oh, Mark, let’s get real here. It’s the hundreds of thousands of farms and businesses in New Zealand which drive growth. And what we, as government, need to do is set the scene. We need a 30% corporate tax rate, we need to lower compliance costs, we need to actually release them so that their creativity, their innovation and their entrepreneurship can be let loose. And who knows how fast we can grow? I find this discussion of percentage of GDP pretty sterile. We’ve got to get back to grass roots. We’ve got to understand what drives growth. They can pull up wages through productivity, and that raises the living standards of all New Zealanders.
SAINSBURY: Winston Peters, you’ve been there. You’ve been a treasurer. Private or public?
PETERS: Well, it’s both, actually. Because, you know, we went through the Asian crisis, and we still ended up with a significant surplus of almost $2 billion and paid far more money into education and health. But your quick answer over here on fuel prices is this. We’ve got a government getting a huge amount out of the taxes on petrol and then putting GST on top of that. We want some relief of that? Get rid of GST on petrol.
SAINSBURY: We’re going to discuss that later in the programme.
PETERS: You did ask it.
SAINSBURY: John Key, public or private? I mean, do you accept there’s a mix?
KEY: Bureaucrats don’t deliver economic growth. I mean, businesses deliver economic growth. But what we need is a partnership with government and business. What we have currently is the public sector holding back businesses, drowning them in compliance costs, overtaxing them, running surpluses far larger than they need, robbing them of investment capital. We need a business community which is backed by a government that believes in them, that’s ambitious for them, that wants them to do better. Not one that wants to hold them back.
SAINSBURY: Michael Cullen?
CULLEN: I want to follow on with Jim and inject a few facts into the ideological nonsense we’ve been hearing from the Left over here. Quiet, John. You’ve had your go in silence. The fact is that the world survey done by the World Bank said that this was the easiest country in the world to do business. The fact is that over the last five years, we’ve grown faster every year than Australia, and we’ve grown faster than the United States, when John’s mates in 2000 said we could never grow the economy when we put the top tax rate up. What they’re planning to do is to give $7 billion of tax cuts, over and above what we’re saying, and borrow half of that. They’re borrowing for a tax cut. It’s a credit-card approach for funding New Zealand’s economy, and we will pay for that in the future, plus the interest on that borrowing.
SAINSBURY: Just putting those tax cuts aside, in terms of promoting growth, as John Key says, “Bureaucrats don’t create jobs or wealth.”
CULLEN: Oh, don’t they? So you mean that when the Government, which funds most of the education system and produces most of the skills for the private sector, that’s not helping to create growth? The private sector doesn’t pay for the education system. Is it true that we provide most of the funding for roads in this country at central or local government level? Yes, we do. And that’s essential for growth. Is it true that the SOEs are the primary providers for increasing generating capacity in this country? Yes, it is. Is it true that we had to buy back our national airline, another example of failed privatisation, as we had to buy back the railway track to make sure we’ve got a railway system? What we need is some common sense, not a lot of ideological rubbish.
SAINSBURY: Rodney Hide, where’s the common sense coming from?
HIDE: Look, it’s the private sector that generates the wealth and the growth for New Zealand, and there’s a lot that government can do to help. Number one, actually lower taxes and let people keep more of their money. Number two, stop the crazy red tape that Michael Cullen and his mates have put on business, strangling. And number three, let’s have some decent infrastructure so you can actually get around this country once again.
SAINSBURY: Well, look, we’re going to put the red tape across this section, and we’re coming back to tax. Targeted relief or across-the-board cuts? We’re talking tax after the break.
SAINSBURY: Welcome back to our finance debate. If you’re weighing up the offers of tax cuts, you’re no different from those here tonight. Winston Peters, let’s start with you. Labour’s plan for targeted cuts to families versus National’s across-the-board tax cuts – are either acceptable to New Zealand First?
PETERS: Well, the problem is that the Labour Party’s strategy of topping up people’s incomes is bureaucratically heavy. The second thing is, it doesn’t do anything about low wages, which is why we’re losing so many people. And then worst of all, they have spent the bank. Now, what happened, you see, in ’89 and all the years after it, we had transparency. Everybody had to know what was going on in our economy. And all of a sudden, in the post-budget 2005, all out the window, all the pain and sacrifice, and now we’ve got a Dutch auction. Not an auction – a Dutch one.
SAINSBURY: So is that a no in terms of Labour’s plan?
PETERS: Well, no, look. Let me ask you, will they go on with 180,000-?
SAINSBURY: No, no, no. We ask- Can I please just get a simple answer?
PETERS: Well, I’ll give you a simple answer if you just listen to me.
SAINSBURY: Are they acceptable?
PETERS: No, please, Mark. Look, you got 180,000 on hospital waiting lists. I don’t see them addressing that. You got women by the planeload going to Australia for cancer operations. I don’t see them addressing that. Now, if they can tell me how they’re gonna meet their promises, which is all rhetoric, as against their top-ups, then I’ll tell you the answer.
SAINSBURY: And is it same for National?
PETERS: Well, with National, it’s worse. They’ve not only spent the bank, they’re gonna borrow. Well, you can laugh, but, look, they’re gonna borrow, and there’ll still be 180,000 people on hospital waiting lists.
KEY: No, we’re not.
PETERS: There’ll be still over 1300 people dying every year from not getting an operation we can’t afford. And they can’t even stack their budget up.
SAINSBURY: So at this stage, neither of these parties has presented something that you would say, “We can buy into”?
PETERS: We’re in an election period where they must answer these questions to, hopefully, the audience’s satisfaction by election day.
SAINSBURY: Gordon Copeland, do you have an answer on that?
COPELAND: Well, I think, um, Mark, there shouldn’t be, sort of, a winners and losers situation. We support the Working for Families package, including the extra $10 per child, per week in 2007. But at the same time, we want to see tax cuts for every taxpayer, for every superannuitant, for every business, for every property owner, and for every charity.
SAINSBURY: So you could live with both?
COPELAND: Well, we incorporate- We’re a centre party. We incorporate elements of both, yes.
SAINSBURY: Rodney Hide, please surprise us and tell us you favourite Labour’s policy.
HIDE: (LAUGHS) No, I can tell you we’re against those targeted- what they call tax relief. It’s actually welfare. What we need is tax cuts across the board. Tax cuts across the board. We back National’s plan. It’s a good plan. It’s good for New Zealand and it’s good for hard-working families. What we say, though, is we need to bring that top rate down, and we need to bring the company rate down immediately. That’s what we need to get growth going in this economy.
SAINSBURY: Jim Anderton, I mean, you have pledged to working with Labour, but you’ve described what we’re seeing in this campaign as an auction. So are both what’s on offer from the two major parties part of that auction?
ANDERTON: Well, my warning is that contrary to what National would have you believe, in the ‘80s and ‘90s, when we had very big tax cuts – top margin rate from 66c to 33c – the Australian economy gained 20% GDP growth against New Zealand. So if it would have worked, it would have worked in the 14 years that they did it. It didn’t work. This government has actually increased taxes on the highest income earners. And let me just say this to the people of New Zealand, why should I get $100 more in my hand under National, and the kids that I know around New Zealand who live below the poverty line, why should they not get a handout? It’s interesting that a tax cut of $100 for John Key is motherhood and apple pie, and an increase in income for families of a hundred bucks a week is welfarism. I think they should get their priorities right.
SAINSBURY: Rod Donald, I mean, no issue for you with Labour’s plan?
DONALD: No which?
SAINSBURY: No issues for you?
DONALD: Oh, there is an issue with us, and Jim just actually posed the issue, which is that we’ve got too many kids growing up in poverty in this country. Working for Families is going to address half of that problem, and that’s why we back Working for Families and not tax cuts for the rich, which what National’s proposing. But no child, no child should be growing up in poverty in a wealthy country like New Zealand. So the children of superannuitants, the children of sole parents, the children of the unemployed should get Working for Families as well. And there is an element of tax bribe in this in plan, because they’ve lifted it up the income threshold, rather than down, to pick up all those people at the bottom, and that’s where the need is greatest.
SAINSBURY: Monte Ohia, the Maori Party is committed to tax cuts across the board.
OHIA: Um, when we discussed tax, our first focus was to the 300,000 children who are currently living in poverty in New Zealand. That was our first focus. And so our policy is to reduce the tax on those people first by 50% in 2006. Now, that gives them better life chances, it improves, of course, their daily lives. But we also looked at, um – and this confounds a few people – we looked at companies also, company tax, small businesses and large businesses. And our proposal is that for small businesses, we have 25% tax rate, and for larger companies, down from 33 to 30%. Now, the reason why is that we are looking towards Maori iwi authorities, urban authorities, trust incorporations becoming involved in the business sector.
SAINSBURY: But does that make you sit more comfortably with National in terms of those across-the-board-?
OHIA: Uh, no. No, it doesn’t. Uh, because, philosophically, what we are trying to do is improve the lot for Maori. That’s what we’re trying to do. And if you improve the lot for Maori, you improve the lot for New Zealand.
SAINSBURY: Ok. I mean, Michael Cullen, I mean, who can you live with in terms of the policies that the other parties are putting out, the conditions, if you like, that they wanna see, or the changes? You could live with the Greens’ concerns? You could live with United Future’s concerns?
CULLEN: Well, let’s deal with the Greens’ concerns, because we are dealing with them substantially. We are increasing the support for lower-income families through the Working for Families package. We’ve already got, before it started, child poverty down from 28% of kids to 21%. It’ll be down to well under 10% by the time that package is fulfilled. And National, one of the savings they are making is 36,000 more kids will be below the poverty line because they’re cancelling that last $10 a week.
KEY: No, we won’t.
CULLEN: Now, Mark, let me come to a bit of simple common sense, cos there’s a lot of rubbish talked on this. It’s like a household budget. When you cut your income – you’re income’s gonna be cut – you either borrow more or you spend less. What John’s gonna try and get you to believe is you can do all of it without borrowing more or spending less. We’ve done the numbers. They’re planning to borrow $3.5 billion more and cut $3.5 billion off spending. That will mean higher interest rates because of higher borrowing. It will mean cuts in health, education and more costs for those services. People get more money in their pocket; it’ll go straight back out to pay for the services they weren’t previously having to pay for.
KEY: Mark, let’s clear up a few myths for a start off. National delivers a family that has $35,000 in income and two children around $6000 to $7000. That is far more than any high-income earner in New Zealand, so no one – no one – can tell me it’s tax cuts for rich.
CULLEN: That’s our policy being taken over.
KEY: Secondly, there is no reason – there is absolutely no reason – when the country is running a $7 billion to $8 billion surplus, when mainstream New Zealanders have gone six years of rising prices and no tax cuts, when, uh, four out of every 10 police officers are now paying the top rate, when Labour is putting people on a welfare package and charging them a top personal rate of taxation, that it is fair that those people don’t get a cut in taxes as well.
SAINSBURY: You are gonna have to borrow, though.
KEY: No, we’re not going to have to borrow. Look, I’m sorry. Look, I’m sorry, Michael, but this is the way it is.
CULLEN: So it’s all cuts, then?
KEY: We are running- We are running an $8 billion surplus.
CULLEN: It’s $7 billion of cuts, then. You can’t have it both ways.
KEY: We are running an $8 billion surplus in this country. We will be running a surplus that is larger, after our tax-cut plan, larger than Labour ran for the first four years in office.
CULLEN: No, that’s not right. That is not right.
KEY: That is absolutely right, Michael, I’m afraid.
CULLEN: That is absolutely wrong.
KEY: We’ll be running a surplus of 2.5% GDP; they ran them around 2%.
CULLEN: We ran a surplus in the budgets we were responsible for.
KEY: We will be running very large surpluses indeed.
CULLEN: We ran a surplus- The budgets are responsible for a 3.7% GDP on average.
KEY: Rubbish. Rubbish, Michael.
CULLEN: We are forecasting 3.4. He is forecasting just over two.
KEY: No, Michael. We are running a massive surplus.
CULLEN: That is not enough to fund the contribution to the Super Fund…
KEY: Yes, it is. Yes, it is.
CULLEN: …and without having to borrow money.
KEY: I’m afraid that’s complete nonsense.
CULLEN: We’ve already allocated that surplus of the future.
KEY: Complete nonsense.
CULLEN: Nearly half of it goes to the Super Fund. The rest goes to building up assets, building hospitals, building prisons, building schools. And he is going to have to borrow $3.5 billion.
KEY: Michael, it doesn’t matter how many times you say it. If it’s wrong, it’s wrong.
SAINSBURY: All right, all right.
CULLEN: You can’t take that $7 billion of income away unless you believe in the tooth fairy.
KEY: Absolute nonsense.
CULLEN: And he believes in the tooth fairy.
SAINSBURY: We haven’t finished with tax. We’re gonna be back after the break with more on tax. See you then.
SAINSBURY: Welcome back. We’re still talking tax. John Key, I wanna come back to you. Before the break, Michael Cullen was saying, “You simply cannot afford to do what you’re planning to do.” Convince us you can.
KEY: Look, absolute nonsense. The country is running a surplus of around $7 billion to $8 billion. After our tax plan, we will still be running a surplus of between 2% and 2.5% of GDP. That is enough to fund every single nurse, teacher, hospital, everything we fund in the country, and growth of government spending – about $1.5 billion on average, going forward – enough to fund our entire contributions to New Zealand’s superannuation fund and enough to fund some of our contribution towards capital payments. What we have in this country is a massive surplus that is going back to a government currently. They are wasting it and they should be returning it to New Zealanders and rewarding them for working hard, for gaining skills and for making the extra effort.
SAINSBURY: But we have a surplus now. We have a surplus now, but what’s…? Who knows how things are gonna change?
KEY: Well, that’s right. We have a massive surplus. Two months ago, when Michael Cullen read out the budget, he stood up and told New Zealanders there wasn’t any money for tax cuts at all. And when they got behind in the polls, he pulled all sorts of rabbits out of hats.
CULLEN: Oh, I did, did I?
KEY: He’s now… He’s now… He’s now wanting to…
CULLEN: Here’s an attack, Mark. Here’s an attack on the integrity of Treasury officials.
KEY: He’s now wanting to put a capital-gains tax on New Zealanders and he’s about to get into bed with the Greens, who want to have capital-gains tax left, right and centre. He’s about to get in bed with the Greens, have capital-gains tax, eco-taxes. You name it, they’ll tax it, Mark. If that doesn’t take New Zealand backwards, I don’t know what will.
CULLEN: Well, first of all, Mark, he’s got nobody to get into bed with, and that’s a very lonely life for a middle-aged gentleman.
KEY: I’d rather get in bed with Rodney than I would Rod, that’s for sure.
CULLEN: Secondly, he’s attacking the integrity of Treasury officials. The forecasts on the economy are produced by Treasury. They forecast a quite small increase in revenue over the next two years, which enabled us to move. But let’s come back to the surplus.
KEY: Hang on. No, no, no, no. No, Michael.
CULLEN: The surplus is pre-allocated. It is not a cash surplus.
KEY: The surplus is huge. The surplus is huge.
SAINSBURY: I need to bring Winston Peters in here.
PETERS: Let me ask you this question – do you really believe that with police so unmanned or under-womanned as they are now; do you believe that with how many thousand people on hospital waiting lists and some waiting for 10 years for cataract operations; women going abroad for cancer operations; PHARMAC boasting it spends one-third of the EEC on pharmaceuticals in this country by comparison; do you think the surplus is real? If you wanna sacrifice people’s lives, ignore the things that matter to humanity, you’ll get a surplus, all right, but it won’t be a real one. Now, what’s wrong with National’s policy is this – they are making all sorts of promises on health, on roading, on police. There’s no numbers, there’s no funds to it, and they’ve spent that, plus they’re borrowing.
SAINSBURY: So you don’t believe them.
PETERS: No, no. Let me ask Mr Key this.
PETERS: How many more police and how much is it gonna cost you?
KEY: We’ll probably add around a thousand police, going forward.
PETERS: No, excuse me. Mr Ryall…
KEY: I’m more than happy to release our independent costing. No problem.
PETERS: Mr Ryall, yesterday, when he was asked that question, said that he would consult with the Commission of Police on that matter.
SAINSBURY: All right, listen, I wanna stick with tax. Now, as we talked before, we talked about petrol. Now, New Zealand First has said they’ll remove the GST from petrol. Rod Donald, I can’t see you voting for that.
DONALD: No, because that’s ostrich economics. I mean, you can’t bury your head in the sand. The fact is…
PETERS: You’d be an expert on that.
DONALD: The fact is we have reached the end of cheap oil, so what are the choices? We can put off the inevitable for a short term or we can do what the Government is doing, which is to plan for the future. And we want to get there faster. We want an extra $300 million to go into public transport, for a start. We wanna get more freight off the roads and back on the rail track, where it belongs, cos it’s more fuel-efficient.
SAINSBURY: Now, one of your other policies- I mean, the eco-taxes that the Greens talk about – OK, after the election, if Labour have got the numbers and they’re looking at a coalition with you, are you gonna say to Dr Cullen, “We want eco-taxes or you don’t get our support”?
DONALD: We’ve already told Dr Cullen we support the carbon taxes the Government is already planning to introduce. We’d like to do it quicker, but given the way petrol prices are rising, maybe their timing is gonna end up being right.
SAINSBURY: But would it be a bottom line for you?
DONALD: We want an ecological tax commission to look at a suite of eco-taxes, cos New Zealand needs… Let me finish. New Zealand needs a strong, stable economy. At the moment it’s very fragile. We want to shift tax off work and enterprise, on to waste and pollution, OK? It’s that simple.
SAINSBURY: OK. I just wanna do this briefly – a quick run round here on petrol tax. Monte Ohia, do you believe that petrol tax needs to be reduced?
SAINSBURY: No, you don’t. Jim Anderton?
ANDERTON: Can’t be reduced unless you’re gonna start cutting into hospitals and education and so on. Where does the money come from when you cut it?
SAINSBURY: Dr Cullen?
CULLEN: We’ve committed the excise duty for roading construction already. Secondly, if you really want to reduce the price, you’d actually reduce excise duty, not GST. Why petrol? Why not food? Why not housing? Why not almost anything else you’d like to have?
SAINSBURY: But you’re not looking at reducing excise duty. John Key?
KEY: Mark, consumers are paying $8 a week extra now with petrol prices going up. We deliver the average working New Zealander $25 a week. We’ve done a lot for the tax system.
SAINSBURY: You won’t touch the tax. Rodney Hide?
HIDE: The extra 5c that Michael Cullen put on this year was wrong. It should go, and we should can the carbon tax. We should not be putting up…
SAINSBURY: Gordon Copeland?
COPELAND: No, but the point of actually giving, say, superannuitants another $1110 a year…
SAINSBURY: No, but the tax. Would you look at reducing the tax?
COPELAND: …and also reducing other tax is to really put those people in the position where they can actually afford to pay the taxes off.
SAINSBURY: I wanna just stick with you for a minute, Gordon Copeland, because one of United Future’s policies is income-splitting.
SAINSBURY: Now, that’s for all families with children only.
COPELAND: Yes, correct. Couples with dependent children.
SAINSBURY: Gay couples?
COPELAND: Yes. Well, if they’ve got dependent children. It’s gotta be a couple, obviously, who would have to be living together and jointly involved as a partnership in the raising of the children.
SAINSBURY: See, this is one of the issues, I suppose, around this election, looking at what the various parties are offering. What about a couple who cannot have children? Why are they penalised, where couples with children are rewarded?
COPELAND: Well, they’re absolutely not, Mark. Let’s get down to understand this.
SAINSBURY: But they’re treated differently.
COPELAND: No, let’s really get down to really understanding this. A single person at the moment pays exactly the same tax as a person that I used to be like, as a sole-income earner with a wife and five children. Now, that’s fundamentally unfair. Income-splitting says that each of these people are in a partnership. They should be treated equally for tax purposes, and, Mark, it’s so important, because, as compared to the present system under Labour, we’re talking, at the average household level for a couple-led household with children, as much as an extra 163 bucks a week. And even under National’s so-called generous package, another $92 a week. So this is a core policy for us, and it’s a good reason for voting for United Future.
SAINSBURY: Monte Ohia, this comes back- I mean, we’ve seen in terms of… Your party’s policies are looking at across-the-board cuts at all levels – corporate tax… All taxes you would like to see the rates come down. But the philosophical argument, I suppose is… I mean, you mentioned poverty and issues like that. What has to come first? Do you believe that you can’t touch the tax scales until you’ve dealt with the fundamental problems?
OHIA: I think, um, you know, commentators, economic commentators are going to have difficulty with us, because they can’t put us in the left wing or right wing or centre wing. What we are is Maori, and we are applying a kaupapa – a set of principles and values – which drive us. And what we’re saying is we’re looking at it right across the board and saying, “No, we have to look at the poverty issues. We have to look at the low-income groups, the beneficiaries.”
SAINSBURY: And then you look at the tax.
OHIA: And then look at tax, yes.
SAINSBURY: Jim Anderton, I mean, you’re interesting on tax, because in some ways, you’re sitting a bit closer to John Key than Michael Cullen in terms of company tax.
ANDERTON: Yeah, right (!)
KEY: Yeah, come over. It’s only one seat, but we’ll take it.
ANDERTON: The issue for us, the Progressive Party, and in the role I play as Minister of Economic and Industry Development, is to give incentives for business to invest more in research and development, smarter technology and market access. Now, that’s gonna grow the economy. There’s a hell of a lot of dividing up the economy here. I wanna see the economy grow first. Let me say there’s too much, in this election of, “What’s in it for me?” I would like to hear people talk about, “What’s in it for New Zealand? What’s in it for the best of us?”
SAINSBURY: You talk about growing the economy, and that’s what we’re coming back to next. The Cullen Fund, KiwiSaver, savings and investment – all those after the break.
SAINSBURY: They can spend, but can they save? Let’s start with Super – the Cullen Fund. Now, Rodney Hide, National said they’d leave it.
HIDE: Yeah, they also said that it was a financial smoke and mirrors, and that’s absolutely right. That money going into that fund doesn’t do anything to build our economy. We need tax cuts. We should be returning that Cullen Fund to New Zealand. And we need tax cuts for this reason-
SAINSBURY: But, hang on-
HIDE: It’s actually good-
SAINSBURY: If they’re wrong-
HIDE: Let me finish, Mark. It’s good to have the money in the pocket – that’s true. That’s good for hard-working New Zealander’s. But the important thing is, it’s good for New Zealand. If we want to grow our economy, if we want to have a prosperous future, we need to get tax rates down, especially the top rates, and we need the company rate down. That’s what’s important to New Zealand so we can actually grow our economy.
SAINSBURY: OK. John Key, you said that you’d keep the Fund.
SAINSBURY: What’s to stop you changing the rules and plundering the dough somewhere down the track?
KEY: Well, we won’t. We’re totally committed to the New Zealand Super Fund. The New Zealand Super Fund helps us to pre-save for New Zealand Super, going forward. We think that’s very important. We’re totally committed to New Zealand Super. There will be no changes under National. We’ll continue to make our contributions. We can well and truly afford them. We believe in the fund. It’s produced a fantastic result, and Paul Costello’s done a wonderful job with his team.
SAINSBURY: You don’t, Rod Donald, do you?
DONALD: The money’s going in the wrong place. It shouldn’t be gambled on the overseas share market. Just the way oil prices are going surely points to the need for that money to be invested in New Zealand in the rail network, in the public transport, in the solar water-heating, in the wind power. That’s what should be happening with the money. And investing it in our young people – you know, our human capital, as the right wing would say. Because, quite frankly, when I retire, it’s my three daughters that are going to need to be the productive, healthy individuals generating the goods and services, creating the wealth, paying the taxes, so I can get some superannuation. So let’s give them a taxpayer-funded tertiary education and tell them we need them here at home.
SAINSBURY: Jim Anderton, you want to see more of that fund invested here.
ANDERTON: This is not a fund to speculate with. This is a fund to pay- Well, you see, people have got very short memories. Does anyone remember 1987? When $20,000 million was knocked off the stock market of New Zealand in three months? If the Superannuation Fund had been invested in New Zealand, we would’ve lost nearly the whole lot of it. Now, this is a fund for paying superannuation in the future. Those smart people who say “spend it now” should answer the question – how are you going to pay for superannuation in 20, 30, 40 years’ time, when it all comes home to roost? Are you going to increase taxes? Cos here we’ve got the National Party and ACT saying they’re going to reduce taxes. So how are they going to pay for superannuation with reduced taxes? They’re never going to do it. What they’re going to do is cancel it.
DONALD: They’re to future-proof the economy. That’s what we need to do.
SAINSBURY: Now, Winston Peters, you don’t disagree necessarily with the fund, but you still- individualised accounts are still what you would’ve seen.
PETERS: That fund would not be there were it not that we agreed with Dr Cullen to back it, because it didn’t have enough backers in Parliament. And we didn’t think it was perfect, but it’s better than doing nothing. This country is a country that’s got far too much of its asset wealth and foreign control, and we’ve got far too much… far too many people getting cheap wages. And we’ve got to change that. But let me just say this here. I don’t know understand why we’ve got that fund propping up other economies when we’ve got some serious investment potentials there that other foreigners are coming in to buy and we are not a contester for it. That doesn’t make any sense to me.
SAINSBURY: You want to see it invested here. Gordon Copeland?
COPELAND: We’re very content with the fund. We fully support that. In terms of investment in New Zealand, the only question mark I’ve got- I have real confidence in the guardians and so on, Mark, but I have this thought, and I’ve conveyed it to them – we’ve got $138 billion worth of private-sector debt in this country, right? $138 billion. Huge by any standards. And that’s in the private sector. That’s including Government. And I’ve said to the trust guardians, “Well, hey, look, there must be-” And a lot of that’s come from offshore – a huge amount of it. There are, in fact, investment opportunities here, and I’m just wondering whether we’ve actually got the mix quite right. But at the end of the day, it’s their decision.
SAINSBURY: You’re happy with the mix, Michael Cullen?
CULLEN: It’s not for the Minister of Finance to make that decision. The essence of this fund is it’s independently managed by experts to be a superannuation fund – to help pay for pensions in the long term. It’s not to be used for pet projects by any particular government. And I accept that John is absolutely genuine in supporting it. But I do not trust Dr Brash on this, and I remind you, in 1998, he gave a speech that said it’s all right to lie before elections if it’s in the good cause after the election. And I know that he does not support the New Zealand Superannuation Fund.
KEY: Yes, he does. Yes, he does.
SAINSBURY: OK. OK. There is one issue, in terms of what we do with the Super Fund money. The other issue is when it’s paid out. Now, the Maori Party want to see changes in terms of eligibility for Super. Monte Ohia?
OHIA: We do support Super Fund, because it looks after our elders – our kaumatua – when they reach that particular age, and-
SAINSBURY: And the age they reach, though, isn’t right for you.
OHIA: Right. The fact that Maori die eight years prior to the rest of the population means that that needs to be introduced into the debate. If a particular group is not able to enjoy their retirement and people are dying before they can enjoy life as a kaumatua, then I think we need to look at it.
SAINSBURY: But, you see, where do you draw the line there? If you say, for instance- Just want to finish this, thanks. If you’re looking, especially, in terms of Maori, with life expectancy, they don’t get that opportunity. What, then, if people say, “Well, OK, you can look at people who are obese, who have chronic illnesses, who could equally argue, ‘We are not going to get to enjoy it as well – why something here, and not for everyone else?’”
OHIA: Well, what we’re proposing in the Maori Party is no longer to wait for the health to come to us. We’ve actually got to go out proactively and get it. For example, if a family is suffering from diabetes, they need to find out about that, find out about that disease and look to collectively minimising it or even eradicating it from the family.
SAINSBURY: Thanks. There’s one other-
PETERS: There’s an answer here. There’s an answer to this. Look, it doesn’t matter whether you’re Maori or European – if you die one day under 65, you don’t get a cent of your taxes back for that. The only answer to that is what every other country does – individualised personal accounts.
SAINSBURY: OK. John Key, how do we make people save?
KEY: Well, they need to be richer. One of the reasons that- Well, it’s actually very easy to understand. If you have a look in New Zealand, the statistics bear that out. The top 50% of income earners have no issues saving at all. The 50% of lower-income earners actually have great difficulty saving. If you are a family earning $40,000 with two children, I’d defy you to be saving at the moment. It’s tremendously difficult. If we want people to save – and we certainly do – so that they can enjoy a much better retirement, then we need their incomes to be rising. We need to be growing productivity and growing wages.
HIDE: How can you save when Michael Cullen’s taken all your money?
CULLEN: Oh, don’t talk rubbish.
HIDE: How can you save when Michael Cullen’s taken all your money?
CULLEN: Don’t be silly. That is so silly.
HIDE: That’s absolutely true.
CULLEN: It’s so silly.
SAINSBURY: But, Michael Cullen, isn’t there a point, though? If people do have more money in their pocket, they will save more?
CULLEN: Well, that’s not necessarily true. We’ve actually had… Well, the gentleman’s laughing. Over recent years, our incomes have gone up and our savings have gone down. And our savings rates are lower than many countries with lower incomes than we have, and our savings rates now are lower than when we had lower incomes 40, 50 years ago. What we’re doing, we’re the party that’s put forward an actual, practical step to help people at the workplace – give them an incentive; help meet the cost of the management fees; meet the administration costs so that they can save for their retirement, also save for their first home. That’s going to go to pay for tax cuts for John Key and me under a National government.
SAINSBURY: OK. I just want to get quickly round all of you. Just a yes, no answer. The KiwiSaver scheme… KiwiSaver scheme – yes, no?
DONALD: Great, as far as it goes.
ANDERTON: Much further. Capitalisation of family benefits so you can own your own house.
CULLEN: Absolutely critical.
KEY: No. Terribly designed system.
HIDE: No. More money in the pocket.
COPELAND: Yes. Good start; we should do more.
PETERS: It’s a start; we need to do more.
SAINSBURY: OK. Next up, free trade and Kyoto. See you after the break.
SAINSBURY: A lot of the talk tonight in this financial debate has been about growth and how to get the country moving and one of the key policies for a lot of the parties in that is free trade. Rodney Hide, where’s ACT in free trade?
HIDE: We’re absolutely four-square in favour of it. We need free trade. We’re a trading nation. But what we’ve got to do is allow our businesses and provide a business environment in which they can succeed in a free-trade environment. That’s a difficulty that we have under Labour.
SAINSBURY: But there are concerns, aren’t there, as to how we actually foot it? Like, for instance, doing a free-trade deal with China – are own businesses going to get swamped? Our own products, are they going to get undercut?
HIDE: Oh no. Free trade is always good for a country. It is always good for a country. But what we have to do, Mark, is provide the best trading environment for our businesses. We can’t be like in Albania and shut ourselves up. We do need to trade with the rest of the world. And it’s good news for New Zealand that China is succeeding. Why? Because that’s now a good market for New Zealand to export to.
SAINSBURY: Now, Rod Donald, I mean, you have issues over this.
DONALD: I sure do.
SAINSBURY: So, tell me, post-election, suddenly, let’s say, there was a Labour-Greens coalition. You’re sitting around that Cabinet table. Let’s say you’re the Minister of Trade and you’re asked to sign… it is your job to sign that free-trade agreement. Could you do it?
DONALD: No, we wouldn’t do it. And I wouldn’t be Minister of Trade. Jim Sutton and I did a deal just the other day that he could keep that one and I could be Minister of Buy Kiwi-Made. And that’s something that I think the Government will move on, because they do accept there is a need to promote our own businesses. Let’s face it, we’re loyal to the All Blacks – why aren’t we loyal to Kiwi businesses and Kiwi workers?
SAINSBURY: Could you sit around a Cabinet table with a coalition partner that is promoting free trade?
DONALD: Yes, we could. And we would argue vociferously from our corner. We would say the Government should not sign up to any free-trade deal where there aren’t core standards – labour standards – in place to protect the workers in that country. And we would argue that lean, mean Kiwi businesses deserve protecting from unfair competition. But at the end of the day, if we lose that argument in Cabinet – and we will continue to take it to the streets and talk to the public about it – but we would not bring down a government over it.
SAINSBURY: Michael Cullen, you’d be happy having someone in your Cabinet taking those issues to the street?
CULLEN: Well, I remind you that we’ve made coalitions work now for six years. With the Alliance, we had an agreement around the ability to differentiate over issues. And this was actually one of them. And we could go to other parties in the House for support where we had common ground. And I, certainly, am a very strong supporter of free-trade agreements, particularly the Doha World Trade Round. We stand to be the biggest gainers if agricultural trade is properly liberalised. We’ve stayed a first-world country fighting with both hands tied behind our backs for the last 50 years. We got one finger free in Uruguay. We get a whole hand free, we’ll take on the world.
SAINSBURY: Now, one of the other issues, of course, that is going to affect some of this, John Key, is Kyoto. Now, National doesn’t want us in that.
KEY: Well, National doesn’t want to put on the carbon charge, because there’s absolutely no reason to do that. New Zealand’s the first country out of the blocks doing that in an experiment. Secondly, I think that you have to have a good look at Kyoto and ask some hard questions. Here we are, exporting coal to China, which we will put a surcharge on here in New Zealand so we won’t burn it, and then the Chinese will go out and burn it. I mean, that makes no sense.
SAINSBURY: OK, what’s the alternative?
KEY: Well, there are many alternatives. You don’t have to part of Kyoto. The US and Australia are working hard to reduce their emissions, actually, in CO2. We care a lot about the environment. But we don’t want to be part of a global agreement. We don’t want to part of a global agreement that’s not global enough to include America and is not global enough to include Australia, and the developing nations who are burning emissions have a free licence to do whatever they want. That makes no sense.
SAINSBURY: John Keys, right, we-
HIDE: John Key’s is absolutely right. We shouldn’t be hobbling ourselves with taxes that our major trading partners – Australia, the United States, China – aren’t signing up to. Why are we shooting both our feet off? We should be getting right out of that tax immediately.
SAINSBURY: Rod Donald, Kyoto non-negotiable for the agreement?
DONALD: Kyoto’s one of the biggest challenges facing this planet. You can’t put your head in the sands like Rodney and John. We’ve got to tackle it. We’ve got to reduce our emissions – fossil-fuel emissions. And the $500 million that the Right goes on about is the cost of doing nothing. That’s the challenge – to get our emissions down by 37 million tons by the end of this period.
HIDE: Helen Clark will be-
DONALD: And I believe New Zealand can do it. And that’s our international responsibility.
HIDE: It’s costing us.
DONALD: Otherwise, there’ll be no Tokelaus, there’ll be no Tuvalus, because they’ll be flooded.
SAINSBURY: Just briefly, Jim Anderton.
ANDERTON: I wonder whether you asked the people of New Orleans whether they believe in climate change. Just ask them right now. Ask all the small Pacific Island states whether they believe in climate change. And anyone who says they’re not going to do anything about climate change is part of the problem, not part of the solution.
SAINSBURY: One thing I’ll ask all of you… One thing I want to ask all you right now is – this is our final question – I want each of you to pick the person standing here who you would least want to see as the Finance Minister after September 17th. Monte Ohia?
OHIA: Uh, Rodney Hide. And I think the reason is because I think they’re just unrealistic.
SAINSBURY: OK. Rod Donald?
DONALD: Winston, because he’s too erratic.
SAINSBURY: Jim Anderton?
ANDERTON: It’s a very close call between Rodney and John, but I think Rodney wins it, when I think about it very seriously.
CULLEN: Definitely Rodney.
SAINSBURY: John Key?
KEY: Rod Donald. He’s into caveman economics.
HIDE: No contest – Rod Donald.
DONALD: Thank you for your endorsement.
COPELAND: I’m the same. I’m not into… back into the past.
SAINSBURY: Winston Peters, who would you not want to see around here?
PETERS: We have never been, and are not, involved in personality politics, OK?
SAINSBURY: We’re not talking about-
PETERS: Get serious.
SAINSBURY: We’re not talking personalities. Who, in terms of who you think the country should trust, would you least want to see in that job?
PETERS: Well, why not be positive and look at somebody who you think might be able to do the job?
SAINSBURY: OK, apart from you, who would you want to see in there?
PETERS: Well, look, let’s be serious here.
SAINSBURY: I am serious.
PETERS: The problem with the two old party strategies, briefly, is this – when the election’s over, business will still be paying high tax and the workers will still be getting Third World wages.
SAINSBURY: When it’s over, hopefully, we’ll know where New Zealand First...
Anyway, that, I’m afraid is all we have time for. Don’t forget, you can read a full transcript of the debate on our website, www.tvnz.co.nz tomorrow. The keyword is Decision 05.
Thank you to everyone here for joining us here this evening, and thank you for watching at home. Thank you, also, to our audience. I almost forgot they were here. And I’ll be back with you the same time next week with all eight party leaders for a one-and-a-half-hour debate special. Until then, goodnight.Transcripts are copyright to TVNZ and may contain errors. Transcripts should be checked against a copy of the programme to ensure accuracy.