Agenda transcript: 15 04 2006 - PETER GARRETT, TONY GIBBS

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AGENDA Presented by LISA OWEN

GUEST		DAVID BEATSON – Columnist
COMMENTATORS: CHRIS NIESCHE – Business Editor, NZ Herald

LISA		To our panel for the week that was. This week we saw Air New Zealand and Qantas sidling up to each other, is the consumer going to miss out?

DAVID		Well when anybody sidles up generally there's somebody going to miss out but I have to say that the Tasman route is one of the most competitive routes in the world and frankly there are a lot of airlines beyond Qantas and Australia on that route and frankly dumping seats, so I think the competition is still going to be there but obviously the two major players cosying up through a co-share arrangement means that in all likelihood at least there will be a driver for a fare increase I would think.

LISA		The survey that your paper's actually been running about CEOs they're hitting the big bucks here with salaries sort of averaging around the million dollars?

CHRIS		That’s right a survey we have done and we have in today's Business Herald shows that the average pay for New Zealand's top CEOs has climbed above the million dollar mark for the first time and this is a result in part of the strong economy and good bonuses and the fact that you have to keep pace with Australia to retain top talent.

LISA		So what does that mean in the scheme of things are we more attractive now as a result now do you think?

CHRIS		Well this is for the very top CEOs it probably means that New Zealand will be able to retain them in jobs, that they won't necessarily rush off to Australia to take jobs.

DAVID		No the companies would instead.

LISA		One thing that interested me and it might have passed people by was David Parker down south with Helen Clark, the disgraced former cabinet minister wandering round with the Prime Minister, we're expecting the Companies Office to come out with a decision on his problems next week, what does that say to us?

DAVID		Well let's be fair, not yet disgraced.

LISA		Fallen from grace shall we say then?

DAVID		Yes well he's certainly sidelined from some cabinet duties and sidelined himself to that extent. I think it looks like a staging for a very swift resurrection and another bit of solid campaigning in some of the marginal seats that the Prime Minister's going to have to try and win back at the next election, simple as that, South Island seats, South Island boy, get out there and shake a few hands.

CHRIS		I think this appearance of the two of them together this week is a sure sign that he will be back in cabinet and that he will be exonerated by the Companies Office.


PETER GARRETT
Australian Labor MP

LISA		Peter Garrett is not stranger to controversy as lead singer of the Australian rock group Midnight Oil. He was known for his views on Aboriginal rights, the environment and nuclear power. As a political candidate Garrett agreed to stand in the safe Labour seat of Kingsford Smith causing a bit of strife in the party. Two years on Garrett is still a controversial figure and the Australian Labour Party is still plagued with internal ructions. Now Peter Garrett once saying it is better to die on your feet than to live on your knees, so when we spoke on Thursday I asked him is he was still standing.

PETER		Very much so, oh look there's no doubt that the political life is different from the life I was living before, it requires you if you join a major political party to work as a colleague within the party accepting the policy decisions that are made. I'm more than willing to do that. I've really enjoyed my transition into politics, I've picked up plenty of opportunities to speak out on the things that I think are important and yeah look without it sounding like too much of a cliché I just want to make a contribution to political life here in this country.

LISA		The Howard government's just announced uranium sales to China, Kim Beazley came out welcoming the deal saying this is important to Australia we are about to become the world's largest supplier of uranium, is that something to be proud of, I mean what are your thoughts on that?

PETER		Well I expressed my concerns about the circumstances of the sale to China, the Labour Party position on welcoming it was based on the notion that it ought to be a guarantee that the use was for peaceful purposes only. I'm not at all convinced that the statements by Mr Downer and Mr Howard nor the material information that we got on the record about that agreement guarantee that, and there is a debate here both within the party and amongst the Australian public about uranium mining and whether it should be expanded or not, and that debate I think is going to be a fairly vigorous and fairly dynamic one and that issue will be decided on the run up to the national conference and at the Labour National Conference, and so I'll continue to argue for the position that I think's important as will many others.

LISA		You mentioned concerns about where that uranium might end up I mean what do you think's going to happen to it?

PETER		Well the problem is we don’t know, and I think that any discussion about expanding uranium mining, and discussion about the likely additional amounts of material that might come into the nuclear chain as a result of enrichment and so on and so forth has to bear in mind the fact that the existing safeguards regime has failed. I mean Koffee Annan the United Nations Secretary General, Mohammed El Barada you know senior international officials have already highlighted the fact that the old protocols regimes and treaty arrangement that stem from the 70s and the 80s through the non proliferation treaty and so on haven’t worked, so even if as Australia is at the moment expanding uranium, it's uranium mining under the Howard government, there's still a residual responsibility not only from that government but from all of us to ensure that we work to a regime and a set of protocols that’s much more transparent and much safer and doesn’t allow for this material to get itself into the weapons making capacity.

LISA		Let's look at another one of Mr Beazley's enthusiasms, one that we know very well here which is ANZUS, what are your views on Australia' relationships with the US?

PETER		Well I agree that the relationship with the US is going to be a very important one there's no doubt about that. I mean if it's a question of emphasis certainly in the Labour Party and again across the Australian community there'd be differences in emphasis. What I do think we haven’t done and I'm speaking personally now here, over the past five to ten years is recognise the really significant shifts that are taking place outside the theatre of the Iraqi engagement that the Americans entered into in relation to China's increasing rise in economic and political strength in the region, and additionally I think we probably haven’t been as supportive of our New Zealand partners colleagues and neighbours yourselves as we could have and should have been. I don’t think that in the future ANZUS is only going to be predicated on whether we're willing to go to war with the Americans. I opposed that war vigorously so did at least half the Australian population if not more, the fact that Prime Minister Howard has been able to prosecute his case here I think has more to do with a range of other circumstances and issues other than the fact that he was actually doing the right thing, it's very clear that it was the wrong thing to do, it's an illegal war we shouldn’t be there and it's a terrible terrible situation that we face as a result of it but there'll be a debate about that relationship as it unfolds over time but it's going to be a constant in our political life notwithstanding.

LISA		When we look at your career in Midnight Oil you were enormously popular here and people felt some empathy with your anti nuclear stance, anti ANZUS stance, can you understand why some of those fans might think now as a Labour MP that you know you’ve lost your voice?

PETER		Look I can understand it but I guess it's just one of those things where you’ve got to go out and walk the walk and not concern yourself so much with the perceptions that people have. I feel that the primary values that I have are as important to me as they always have been. My life's a journey like everybody else's and I want to find places to work in which aren’t necessarily the easiest places for me to be but where I can raise the issues that I think are important and argue for them. There's no doubt that if you join a major political party I think in the democratic system you're going to be living with policies that you'd like to change, that doesn’t mean that you’ve forgone your beliefs or your views or your values and I find that there is a lot of open space both in the party and also in the community for me to continue to talk to the things that are important to me and I'll continue to do that.

LISA		Have you come to the realisation perhaps that it's harder to get things done when you're a politician, I mean you don’t have the luxury of being necessarily a popular musician type figure, it's much harder when you are voted for.

PETER		Look I don’t agree with the assumptions behind your question Lisa, I spend a lot of my time working with community groups, I was the President of the Australian Conservation Foundation for two separate terms and I did a lot of work both in and out of the political process. I understand it's imperfections but I also appreciate it's possibilities, and at the end of the day governments and even opposition parties who are forming policy are putting up ideas that if they become law can make the country work in a better way, can respond to the needs and the interests and the issues that people think are important, so I don’t feel a sense of frustration, I don’t feel that I've been lessened in my impact in any way, I'm really pleased with the decision that I made, I'm not pretending that it's easy but it isn't easy for anybody, but in no way would I go back to where I was, I've done that in that party of my life and now I'm working within the Labour Party, I've got responsibilities for the arts and reconciliation, things which are both very very important to me, I've got great passion for those issues and I want to try and get some good policy up on them and speak out on those other things that I always have at the same time.

LISA		Let's talk about reconciliation, Aboriginal Affairs, would white Australia ever accept the kind of policy that we have here, a Waitangi Tribunal, like that, where colonial injustices are recognised and compensation is paid out?

PETER		Well I hope so, not so much to mirror Waitangi and the experience that you’ve had and your own past history and your dealings with your indigenous people but the guts of what you're asking me in terms of that question I would very much hope so, I think that’s been one of the real disgraces of the Howard era is that we've just stopped altogether on reconciliation and we've adopted in the country a new way of engaging with our indigenous people whose disadvantage is still extreme and we've left behind the questions of redressing the history that took place and the very good work that was done by aboriginal leadership aboriginal communities and many Australians that wanted to see reconciliation happen through the 90s into the early 2000s and I very much want to renew and build on the work that was done then. For the present point in time we're fighting an uphill battle because Howard has no interest.

LISA		But you believe that the people, the ordinary people would accept a solution like that?

PETER		Well I'm not saying exactly the same as the tribunal I don’t know the full details of it, I think I know enough about it to say that I agree with the ideas in principle but certainly if we're talking about reaching in the near future a form of settlement that acknowledges the past, that is agreed by indigenous leadership and indigenous communities, by national political leadership, by parliaments and by the community which enables us to build a solid platform for aboriginal people to go forward, with a sense that they’ve got control over their future, that past wrongs have been properly acknowledged and accounted for and where we start to seriously address some of the issues particularly in health and education in the regions and also in the cities, yeah I think there is support for that amongst the population, but it needs leadership. I mean we voted in 1967, it was overdue but we did vote, the majority of Australians in the majority of states in a national referendum, for the proper recognition of our indigenous people. I mean that’s a hell of a long time ago and whilst we've had ups and downs since that period it very much depends on the domestic politics of the moment. Underneath it all many young Australians that I speak to are coming through the school the university system with a passion to see this issue resolved, and I was very pleased to see a recent meeting that took place in Melbourne in Victoria amongst a series of young leaders pulled from the high schools around Australia, outstanding young leaders, and the issue that they put as number one priority for Australia is to get relations right with our aboriginal people.

LISA		Look you talk about leadership there, it seems that the Australian Labour Party is struggling to get any traction. To what extent do you think Kim Beazley is at the heart of those problems?

PETER		Oh look another provocative question. Our two party preferred is strong and Kim has brought the necessary stability into the party to do its job well, I don’t take any notice particularly of bubbling along surface leadership polls, he's got the full support of the caucus in the party, he'll continue to do a good job and he's got every possibility of winning this next election from Howard, even though the swing that came against us in the Latham period was only a small one, I mean despite the fact that it was a small one I guess, we have the possibility provided we provide an alternative that Australians want to respond to and a leader that they want to respond to in 10 we can do the job.

LISA		Well if you're called upon would you be prepared to step up to the plate – Peter Garrett as Leader of the Labour Party and possibly Prime Minister?

PETER		Well it's a wonderful hypothetical and quite flattering to me but the honest answer is that I've been in this party for 18 months, I've got my role in reconciliation and the arts, I want to do that as best as I can, of course anyone who enters political life would accept whatever responsibilities came their way, I'm no different, but I didn’t come into the parliament with any particular aspiration in mind other than to try and do my job well and to represent the values that I thought were necessary for the party to have and for me to reflect in the party which would make the country move in a direction which I reckon is healthier than the way it's been going over the last ten years.

LISA		A true politician, thank you very much Peter Garrett for joining us.

PETER		See ya later mate.

LISA		Well joining us again are our guest commentators Chris Niesche and David Beatson, what do you reckon, fast talking politician or a man who still has passion now he's in power?

DAVID		He's certainly demonstrating that he's making a very rapid re-entry into the real world but I think he's got a hell of a long way to go. He might be enjoying a lot of space to talk about what he likes how he likes right now, but they're in opposition, try it in government it's a different story.

CHRIS		Mm, and he is sounding very much like a politician not like the campaigning rock star of the 80s I think. I think one of the problems he'll face is trying to make himself more broadly appealing, you know his preoccupations are not preoccupations that will necessarily win him government, non proliferation, nuclear weapons, the everything and so on, I think he would have to try and have a broader appeal if he wants to lead his party.

LISA		On that note he is sold as being radical, I mean he is a former pop start rock star what have you, but he's publicly stated that he's a Christian, he's anti abortion, he apparently banned swearing from conservation foundation meetings, I mean is he that radical and unappealing to the general population?

DAVID		Well how can you tell? What are his actual policies, what is he actually promoting, what is he fighting for. You know I mean this is what we're fighting for, there's no mistake what he was fighting for when he was up on stage as a rock singer, but there's a lot of uncertainty about what he's standing for up on stage as a campaigning politician.

LISA		Kim Beazley – he expressed his hope that Kim Beazley could lead Labour to victory, what do you think?

CHRIS		Well he sounded just like any other politician expressing belief in the leader didn’t he?

DAVID		I'll accept whatever responsibilities come my way.

CHRIS		That’s right, whether Kim Beazley can lead the Labour Party to victory in the next election who knows, there was a poll a couple of weeks ago showing that on the two party preferred vote Labour was actually ahead of the Liberal Party but we've seen that before with Kim Beazley and come the election campaign he's lost that lead.

LISA		And as a leader the leadership poll showed that he wasn’t the preferred option within his party.

DAVID		I think Labour's chances of winning of the next election in Australia depend on what John Howard's government does between now and that election more than what Labour does. I think Labour is retreading a lot of old faces in old places and under those circumstances it hasn’t worked up until now and unless Howard really blows it, it probably won't work next time.

LISA		On that note the Wheat Board hearings the allegations over these kickbacks I mean how much of a hit do you think the Howard government's gonna take over that.

DAVID		I think their amazing blank memories are going to see them through that particular issue, bottom line is it really catching fire in Australia?

CHRIS		Yeah, I don’t think it actually is, I think Howard appeared last Thursday at the inquiry and said that he didn’t know anything about it, the officials are very good at not telling him things he doesn’t want to know.

TONY GIBBS
Executive Director GPG

LISA		Earlier this week the government announced its long awaited changes to investment tax. The latest proposals could see lower income investors paying less tax but investors with money outside of New Zealand or Australia may pay more. This has angered Tony Gibbs of London based Guinness Peat Group who says they may be forced to quite the country. GPG was founded by New Zealand business icon Sir Ron Brierley, and Tony Gibbs joins me now.

		Now Tony the government reckons these changes amount to a tax cut, it's costing them 110 million a year, mum and pop investors are in for a treat, what's the problem?

TONY		Well to some people it is a tax cut but let's just go back a step here and regardless of GPG let's talk about New Zealanders and as a New Zealander what this is is capital gains tax. The government is putting capital gains tax in in New Zealand, I don’t like it, I think it's un-New Zealand, I think it's wrong, and to boot, to make it worse, the government is going to tax people on unrealised gains, i.e. they're going to tax New Zealanders on something they haven’t got. Now how are they doing that, they're going to do it through shares, they're going to say if you happen to have shares in a company which is registered offshore but the shares are traded in New Zealand such as GPG, we're going to tax you. We're going to tax you on the unrealised gains and for institutions they're going to be taxed at 33% on 85% of the notional gain and value each year.

LISA		But look they're saying that people with just $50,000 in overseas shares they’ll be exempt, there's a cap on the tax 5% and dividends paid within New Zealand would just be on marginal rates.

TONY		Well what they're saying is anybody whose got $50,000 or less of offshore shares will effectively be able to pay each year only 5% of the tax but the liability doesn’t go away.

LISA		So what you're saying is it catches up with you, it keeps rolling over.

TONY		It keeps rolling forward, people that are exempt won't pay it but anybody over $50,000 will pay it and that’s not very much, they’ll pay tax on it, at the end of the day it is 85% of the capital gain is going to be taxed one way or another. Now that is just appalling and for GPG where we've got basically I think in the world 31, 32, 33,000 shareholders and 27 or 28,000 of Kiwis, it's simply appalling, it is just simply appalling, it shouldn’t happen.

LISA		Why do you think your company should be exempt?

TONY		Very simply we may be registered and we are, we're a British registered company but emotionally we're a New Zealand company. The people that invest in this company are New Zealanders predominantly in the world, the board of directors are New Zealanders bar one, this is your heartland, this is where we belong, our shares are the cornerstone of many thousands of New Zealanders portfolios. Let me Lisa just go on a little bit further. It's not about the 30,000 shareholders that might fall under the radar screen, I'm sure they don’t but there will be some that have less, this is about the institutions. Institutions have hundreds of millions of shares in GPG, and where do they get their money from, they get it from other New Zealand investors, so they represent hundreds of thousands of other Kiwis out there and they are going to pay tax on the unrealised gains annually at 33% on 85% of the unrealised gains, this is appalling.

LISA		Now your company's said well we might up stakes, New Zealand might not be an option for us, I mean are you just throwing a tantrum because you can't get your own way?

TONY		No, no, we're not throwing tantrums and it's not a matter of getting our own way, it's a matter of sensible economics. What the government is doing in this and I think inadvertently they don’t understand what they’ve done themselves, is they're trying to tell New Zealanders where you should invest your money by adjusting tax rates. So basically a New Zealander now can invest his money in Australia and not pay any tax but he invests in GPG because we're registered in Britain he will, he or she will. Now what you're going to have is yet another wealth transfer to Australia, I mean this is all crazy stuff.

LISA		Now the government reckons it's done this to even up the playing field, let's bring our panellists in here, has it done that, is this a neutral policy or are we making ourselves look a bit more attractive?

DAVID		I don’t think it's a neutral policy, I think it's a discriminatory policy, it's founded on a bad principle which is taxing unrealised capital gains and it is in fact a tax which replaces a system which favoured direct investment by high stakes investors offshore in favour of one which actively discriminates against that group of investors when we want a neutral regime where investment flows to where business prospects and business performance actually are generating real activity and wealth, and that’s the fundamental for running a good economy surely. However I've got to take up Tony on a couple of point and one of them is Tony isn't it true that managed funds are already paying tax on capital gains on investments in GPG?

TONY		Under the current regime – yes. They're paying under all their shares, New Zealand shares whatever, what he's done is made New Zealand – with the shares that they hold in New Zealand and Australia exempt, but make sure that for individuals you get caught under this new draconian tax if you're investing offshore. So what he's done is he's levelled up their side but he's made our side worse.

DAVID		Overall though on balance he's saying that I'm going to reduce my tax take by 115 million through this move, well somebody's going to be gaining from that surely?

TONY		Well it's certainly not going to be the GPG shareholders.

LISA		Let's bring Chris in here, some commentators Chris are saying that these changes are really only going to hurt about 20,000 odd investors, Labour's own press releases says this may not suit sophisticated investor mates of John Key, so what's Labour saying that these people don’t vote for us so we simply don’t care about them?

CHRIS		Essentially they are I think, these 10 or 20,000 investors who will be hurt are very very unlikely to be Labour voters anyway so really there's no electoral cost to Labour from this policy at all. Something I'd like to ask Tony is GPG has run into this problem because it's a London registered company what's to stop you registering in New Zealand?

TONY		Well it's a very good point but it's not quite that simple. Let me just explain about GPG. First of all GPG Guinness Peat Group out of London is probably 160 years old, secondly our biggest investments is Coates which is the world's largest thread company, we're in 68 countries, we've got 24,000 employees around the world, this is a very serious company, one in four garments in the world's got Coates' thread in it, now can you imagine the structuring to try and – it's not as simple as just putting a little company over the top in New Zealand, there's all sorts of miles more complex tax rules behind all this which I don’t have the ability to talk about today but it's not as simple as doing this. My other point is effectively Coates the world's largest thread company is owned by 80% of New Zealanders, I would have thought the government would be proud that a New Zealand icon would actually own such a company like that, instead what are they trying to do, they're trying to make it difficult for us.

LISA		Chris I want to ask you also, some commentators are saying the market here is too shallow to offer people the diversity and safety that they need is the government pushing people into unsafe investments by doing this and not allowing them to have that diversification?

CHRIS		Yeah this is not ideal, it's never ideal when people start making investments based on how those investments are going to be taxed because then they're not necessarily putting their money in the best place, in the place where they can get the best return, so for instance GPG has been a very good performer over the years but people might not, if they’ve got over $50,000 might no longer want to invest in that company.

LISA		And the follow up suggestion is it might force more people into the domestic property market which we're grumbling about already.

CHRIS		No I can't see how that would happen because some of these tax reforms are very good and what they do do is they even up domestic shares with houses for funds, people can now put their money into funds and the funds won't be paying capital gains tax on those shares which means they're on a level playing field with property investment so it should see more money flowing to the sharemarket.

DAVID		Tony you’ve explained why you are a British registered company but can I just come back on that particular point and say how many companies would be in your situation with substantial numbers of New Zealand shareholders but registered in the UK or one of the other countries which fall in I think they're called the grey areas?

TONY		I think the answer's none that I'm aware of.

DAVID		Well why couldn’t you get an exemption?

TONY		Well I've applied for an exemption and I've seen Treasury, I've seen the IRD and I've seen both Ministers and I'm prepared to go and see anybody about it. I think GPG should have an exemption and let me just give you something…

DAVID		But is there scope in the law for exemption?

TONY		Well I'm going to demonstrate to you, there already is precedent. Five years ago the OIC rules changed….

LISA		We might have to stop you there Tony, you're looking for an exemption…

TONY		Well this is an important point. We've already got an exemption from the OIC they’ve acknowledged that we are a New Zealand company but we've now got another arm of government that says we're not, it's ridiculous.

LISA		So there's confusion in the ranks.

TONY		Not by me.