| LISA |
Well the Opposition have variously described last Thursday's budget as a donut, a pavlova, and the Bondi budget, and commentators have been hardly any more generous. The New Zealand Herald said it was a prudent but limited budget, one of bits and pieces rather than big ideas which underlined this government's limited vision. Helen Clark on the other hand says it's a budget which will transform the economy. Well she's with me now. Prime Minister Labour said that this budget would underline the government's commitment to economic transformation. I mean your definition what is this transformation, how well we measure it? |
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| HELEN CLARK – Prime Minister |
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Well we set it out first as a vision for New Zealand in the growth and innovation framework February 2002 and we've worked to build on that ever since, and I set out in the Prime Minister's Statement which I give as Prime Minister in February each year, what the detailed programme of the government this year would be around that and I went through the major review of business taxation which is due to hit the presses just a little after the middle of the year, I went through the Broad Band issues, said New Zealand couldn’t tolerate being the dunce in the class in terms of slow rollout of fast internet access for Kiwis, I of course instanced areas like skills which are so critical, the high skilled workforces, high value economy equivalent, I mentioned science and research, I mentioned the major regulatory review, a whole lot of things which when you add up together really do input into a higher value New Zealand economy, and that’s where we've gotta go. |
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| LISA |
But by definition in a nutshell what is economic transformation, when will we know we have reached the promised land? |
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| HELEN |
Well you won't because you have to continually redefine the objective, look at it this way, in my lifetime we've come from a very old fashioned commodity based economy to something different, but we have to continually change otherwise when we get what we want out of the WTO round which we'll get I think quite a lot of this time and more the next time, we will find that our commodity based industries are under severe pressure from mega producers like Brazil and Argentina and even Chile which is a lot bigger than we are, we have to go up to the high value end of everything we do, primary production, the manufacturing we do, our hitech industries our creative industries, and what Labour has been working on ever since we came into government is pushing the economy upmarket, that is it in a nutshell. |
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| LISA |
Well if you take any kind of sort of dictionary definition of transformation it is a complete change in character, a particularly radical change, what was radical about the budget? |
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| HELEN |
Well I think everyone would say there was a lot that was radical about the Broad Band changes, and Broad Band itself if we could roll out to every home in the nation would have a transformational effect on our society, that’s how important it is, if we're not up with the very latest as a small isolated western nation, thinly dispersed population, we sink below the horizon. So that is one of the key things adapt the technology to modernise your country. |
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| LISA |
Ultimately though that wasn’t part of your budget announcement, so what was radical in your budget announcement, what would significantly push forward this economy in terms of growth and investment? |
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| HELEN |
Well many things in the whole package, and I don’t think you should see the budget in isolation, you see the budget as part of the roll out that comes from the major statement I made in February which sets out the government's programme for the year, and very important initiatives for the term. You have to add up together huge changes in telecommunications, a major review of business taxation, complete overhaul of regulatory framework so we look at what else we can do to remove barriers for business and economic growth. You need to look at the huge investments that have gone into skills, huge investments into science, you need to look at the potential and environmental technologies to transform the way that we do things, and you need to look at the huge transport investments, and I'm actually very very pleased with the way the budget was received, I couldn’t have bought that headline in the New Zealand Herald yesterday which really emphasised the importance that we are putting on modern infrastructure for our country. |
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| LISA |
Look you would expect some people to criticise your budget. |
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| HELEN |
Of course some people are paid to do so, they're called the Opposition. |
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| LISA |
You would expect the Bondi budget tag the donut the pavlova, let's look at say somebody who you wouldn’t normally get criticism from, David Skilling of the New Zealand Institute, now he said this week if this was Labour's platform for economic transformation "we are in trouble" I mean if we look at the figures the OECD figures for growth, we are falling below the average growth, countries like Ireland are expected to grow 5% next year, even the Slovak Republic 6%, and New Zealand is expected to bottom out at 1%, is this your idea of an economic transformation? |
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| HELEN |
Do you know this is the first year that I've sat here that you could even have made that claim during our term in government, because the New Zealand economy has grown faster than the OECD average right through the time Labour's been in government, we have grown faster over that five to six years than Australia, United States, Japan, our big trading partner. We've had a huge long run, New Zealand has just been through the longest sustained period of economic growth, the second longest since the second world war, that’s how good it's been, now at some point the way our economy's constructed you run into speed wobble because our dollar goes up our exporters can't compete at that price and you come into the balance of payments constraint, so then things slow for a little bit even at the slowest point of the business cycle economic growth is still being predicted. Last time we got to a slow point in the cycle under the previous government we actually went into zero growth. So look this economy's had a very very good run, it is rebalancing, but it's rebalancing with more than 300,000 more Kiwis having got into work under a Labour government, it's we've had a very very good run and the average economic growth predicted for the three years after the year to March 07 is 3.3%, that is very good by New Zealand standards. |
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| LISA |
But arguably you're behind the eight ball you're starting the race late… |
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| HELEN |
No no we're not, we've had an amazingly good run for the last six years, we now have one slow year of growth before picking up, that’s a record any government would be - well when you say next year we're talking about the year through to March 07, Treasury says we'll bottom out at 1% growth, which is still growth, then the next three years average out at 3.3% that is a very respectable figure for a western country, look great economies like Germany have struggled to get any growth at all over the last five six seven years. |
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| LISA |
Alright well to what extent was this budget then paying your political debts to people who have helped you into government? |
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| HELEN |
Well that’s a funny way to put keeping your promises, because one thing I have made an absolute fettish of as Prime Minister is keeping our promises, never promising more than we can deliver and what we do promise we must deliver. I have been in New Zealand parliament for close to 25 years and I have seen governments just plain fib to the public before an election, parties fib to the public before an election and then do the opposite of what they said, that is not something our government does, we go out and say we're gonna do this as a government we've costed it, we believe it's affordable, and we will do it. So what have we done? Yes we have delivered to the students and not before time, we have done quite a lot of things but this no interest on the loans is a fantastic thing for our young people, yes we've delivered on Working for Families, tax relief for 350,000 Kiwi families with children averaging $88 a week across the lot of them, 6.1 billion dollars of tax relief. |
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| LISA |
So you accept that delivering on those political debts and deals with parties that are in government or supported you in government that’s part of MMP, operating a good MMP government? |
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| HELEN |
Well those were Labour Party policies, costed, affordable and implemented, but then you come to the agreements after the election with New Zealand First and with United Future and with the Green Party and yes we're delivering on those there's the commitment to bring in the thousand extra Police for example over the next three years, and that’s started. |
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| LISA |
Well you bring that up, that’s obviously New Zealand First so you bring that up. Let's talk about the foreign investment bill there, I mean Winston Peters has said that New Zealand First won't support that bill all the way through, he's unhappy with some clauses in there, ma and pa investors are gonna get pinged he says and then we see that this company, GPG has got an exemption. I mean to what extent did Winston Peters force your hand in that? |
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| HELEN |
Winston Peters is working very very closely with us, I haven’t actually had any discussion with him about that at all but what happened was there's been tremendous amount of consultation on the changes to tax law in this area, there's been discussion papers there's government's proposals, there's yet to be legislation introduced that goes to a select committee, we live in a multi party political framework and we do work closely with other parties to get legislation through, so it's always possible that between the formulation of policy which is announced the drawing up of legislation, the passage of legislation that there will be changes. |
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| LISA |
But Dr Cullen and the Labour Party so vigorously defended this bill and said this is… |
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| HELEN |
Well it isn't a bill yet. |
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| LISA |
...this is evening the playing field, you’ve vigorously supported that argument, yet there's been a u-turn and GPG have got this exemption. |
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| HELEN |
Well no it is levelling the playing field but what has been negotiated is a phasing in of that and after all Kiwi investors in our local area were a little disadvantaged by the old situation as it was, so overall it's a good deal and there's been that time period for Guinness Peat to come into conformity with it. |
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| LISA |
Okay what in this budget would make Maori vote for Labour? |
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| HELEN |
Well I think the whole record of a Labour government and remember rather more than half of all Maori voters did tick the party box for Labour because a lot of the delivery in the job area has been so important for Maori, Maori unemployment's down 53, 54% since we came into government, there are so many more families who have some hope, something to get up for, something to work for, hope for their families, that’s the critical thing. |
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| LISA |
Let's turn to say infrastructure now and roading in particular, the budget roading spend was affordable Dr Cullen says, because Meridian's Australian operation was sold off, so why not just sell a few more assets and put more money into the infrastructure? |
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| HELEN |
Oh no no we're not into selling New Zealand state assets but what Meridian had done was make a very good investment in Australia, which it quit and that enabled it to pay a very large dividend to the government this year which Dr Cullen earmarked for investment and I think that’s the key point about this budget, it is an investment budget. When we came into government there was a huge infrastructure deficit and we've piled the money into infrastructure and people can see the results of it, coming in from the North Shore it's been like a war zone of construction down the motorway for years, we've got that bus way starting, the upgrade in the rail, the Auckland roading network. |
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| LISA |
Eight hundred million of that budget announcement money for roading is actually just to cover increased costs, only 425 is for new projects, so two thirds is just to cover increased costs. |
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| HELEN |
By the way it's not only about roads it's also about public transport, because when in February the Transport Agency started to say that they didn’t have the money to cover the programme that they'd announced part of that was public transport, and public transport spending is up eight and a half times on what it was before we came into government, the whole transport spend is up about 134%, so that’s why you're seeing such incredible leaps forward in transport both for the private car and for public transport. |
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| LISA |
Fostering a national identity, that was part of the budget, I mean how do you measure that and whether it's money well spent or is it just a branding exercise for your party in the government. |
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| HELEN |
No it's something I feel very very deeply, I'm a proud Kiwi and I've committed my entire adult life to being in this country and making a contribution, my country's done a lot for me and I like to put that back into my effort and contribution, so in my capacity as Minister of Arts Culture and Heritage I've constantly worked to lift the profile of New Zealand as a unique and creative nation, but it goes beyond the things I can do in that portfolio, it goes to the way New Zealand is positioned in world affairs as a constructive principled nation that really does get engaged, does pull its weight, does stand up on the big issues of our day, it goes to issues like social cohesion, the way in which we seek to include everybody in our country in our common future, it goes to reconciliation like round the Treaty of Waitangi historical settlements. |
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| LISA |
So it's not just a branding exercise, it's not just leading into the next election which you’ve said you're contesting? |
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| HELEN |
No, it goes to something that I feel very very deeply and let me add one other element and that’s the unique Kiwi outdoors and environment which our people actually find very very special. |
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| LISA |
Will you contest the next election say on the platform of tax cuts then? |
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| HELEN |
Well firstly what I said very early this year before people started asking as they inevitably would was I have every intention of contesting the next election as leader of the Labour Party and Prime Minister, so that’s step one. What am I going to contest it on? Making New Zealand an even better place to be born in, live in, grow up in, invest in, work in, find your future in, because I really believe in our country and I've made that commitment myself and I like to see people excited by what's happening in our country and there is a lot happening. |
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| LISA |
So you’ve made it clear that you're going to be there will you be taking the same line up with you? |
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| HELEN |
Well I'm very happy with the people that I work with in our government and let's face it a lot of these relationships go back a very very long time. Why does our government hang together? Because some of us have actually known each other for 30 years and probably about the least time we've known most of the front bench colleagues would be nine to fifteen years, so we're a very very tight cohesive team of people, and of course you like to keep happy and well functioning relationships going. |
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| LISA |
Can you just clear up there's been much speculation about the corporate tax review and there's comments from Dr Cullen in the papers this morning about whether we could expect lowering in the corporate tax and whether that would have a flow on effect to personal tax, is that a whiff of a lowering tax rate or what is it? |
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| HELEN |
Well I don’t think it's that useful to foreshadow what might be in a business tax review, I've see the report on the front page of the Herald as you have, of course we did foreshadow adjustment to the tax thresholds, I think Dr Cullen's simply saying when you look at business tax it might open up other issues to look at, but really we've got to wait until we see the shape of that discussion document that comes out after the middle of the year. |
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| LISA |
Right so no guarantees on the personal tax cuts. |
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| HELEN |
Well that’s just not a territory I'm going into right now but I'm looking forward to working a way through the range of proposals which have come up from Inland Revenue and Treasury on the business tax issue. |
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| LISA |
Alright, thank you very much this morning Prime Minister, Helen Clark. |
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| LISA |
Joining us are our guest commentators Chris Niesche and Guyon Espiner. Well has the big wow factor gone out of the budget? |
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| GUYON ESPINER – Political Editor, TVNZ |
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Well I guess there would have been a big wow if the Broad Band unbundling decision had been in the budget, I mean the market reaction would have been pretty significant so I guess he did have a big surprise it just got stolen from him. |
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| LISA |
Alright well we've had the Prime Minister in here this morning, Chris Niesche are you any wiser as to what economic transformation is after that discussion? |
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| CHRIS NIESCHE – Business Editor, NZ Herald |
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No I still don’t know what it means and if the Prime Minister knew she wasn’t sharing it today. It just seems to be a tag the government has put on this budget, they're just words and I can't really see any sort of great evidence of how this economic transformation whatever it is is going to take place. |
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| GUYON |
Yeah I mean we've had this for years and decades actually from politicians that we need to change our economy from relying on international prices for slabs of meat and slabs of wood to something a bit more hitech and that has evolved anyway from businesses and I also wonder how much you should expect the government to do in this area and whether business people and New Zealanders themselves should be responsible for this, I mean I think a lot of people would want the government to set a regulatory environment that’s fair and has some incentives and then for business people themselves to do that. |
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| LISA |
So on the subject of tax cuts then obviously there were none in the budge we knew that was gonna happen but we're still waiting for this corporate business tax review, any inkling there that we're gonna get a little morsel of something. |
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| GUYON |
You'd think that one might flow on to the other wouldn’t you because I guess - there's been a lot of speculation that the corporate rate might come down to 30 cents in the dollars from 33, now that opens up a massive gap with the top personal tax rate of 39 which a lot of people are uncomfortable with, you get sort of distortions and people turning themselves into companies and other sort of you know ways to get out of paying tax, so you'd think that might flow from a cut in the business rate down to a cut in the personal rate. |
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| CHRIS |
I would expect so and Michael Cullen seems to have left room for a tax cut, he's talking about the IRD forecasts which are much more rosy about how much revenue the government will get over Treasury and he has been saying, he was saying yesterday if those IRD forecasts are right then there may be room for a tax cut. |
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| GUYON |
It would be hard to believe they wouldn’t go into the election with something, they nearly lost the last election over tax cuts. You’ve had Peter Costello deliver 45 billion dollars worth of tax cuts, you’ve got Don Brash unveiling billboards telling people how good it is across the Tasman, they’ve got time it's not an election year budget, but I think it would inexplicable if they didn’t offer something back in that regard. |
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| LISA |
This rather nebulous concept of national identity, is that gonna be a tagline a brand do we think going into the next election or is it more than that? |
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| GUYON |
I think it will be a marketing concept and a relatively clever one actually, to link and to brand low spending in the budget, I mean who would have thought that defence spending would have been tagged on to national identity I think it's actually probably quite a clever marketing tool. |
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| CHRIS |
Is that something you want the government to be defining, do you want the government to be defining what the national identity is, surely that’s just something that happens that Kiwis themselves will define as they go along. |
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| LISA |
Coming up, will farmers ever get to surf the net at top speed? |
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| LISA |
High profile business woman Annette Presley has made a name as the founder of Call Plus and Slingshot, New Zealand's third largest internet provider. Well following the government's decision to open Telecom's network to competition Presley has now said that she'd like to run Telecom but just for one year. Annette Presley joins me now. |
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Why quite simply why would you want the job? |
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| ANNETTE PRESLEY – CEO, Slingshot |
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Very good question, I've been asked that a lot, but I haven’t actually had a phone call from Mr Deane yet, I've kept my line open. The reason is that I don’t think I can do a worse job than what Telecom has done for the last ten years in terms of delivering to New Zealanders real technology, real pricing and real options and to be frank I think there's going to be vacancy there soon and my CV is pretty good so I'd like to have that option, and there are a lot of strategies that we would employ that we believe would deliver to New Zealanders real choice real competition. |
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| LISA |
Well you just said then that you don’t think you'd do a worse job than what's being done, but what makes you think you can do a better job? |
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| ANNETTE |
We care about our customers, we'd be straight up, we wouldn’t use confusion as a marketing strategy, we certainly wouldn’t work against the government and accept leaked documents, we would voluntarily structurally separate, we would create new markets with unbundling so that our share price was driven up, and I think most importantly we would listen and care about our customers and what they wanted to help drive New Zealand's economic growth which is simply lagging at the moment. |
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| LISA |
Right well given as you say that you haven’t had the call from Rod Deane and I'd imagine that Teresa Gatting's not getting up and moving out of the chair the reality of this is that you're probably not gonna end up with that job, so I mean there's been more to this than just a publicity. |
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| ANNETTE |
You don’t think I'll get the job? Oh that’s a bit sad. Is there more to this? |
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| LISA |
Yeah is there more to this than just rattling a few cages? |
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| ANNETTE |
Well unbundling is a cause that we're passionate about, the government has made a decision and as Helen Clark said before this could cause a Broad Band transformation maybe get us back on track if Broad Band is rolled out in New Zealand quickly and cost effectively so New Zealanders see the results of that. Just because an announcement's been made does not mean that we're going to see the effects of that quickly or effectively, so this for us is the beginning of a fight to say well hey we're already three years behind the rest of the world technologically, how far behind are we going to get, two years Cunliffe has said this will take to put in place, well we think well let's make some bold moves, why can't Helen Clark say let's do a fast track, get New Zealand on track now so that we have competition, real pricing, and real technology availability. That’s what this is really about. |
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| LISA |
Let's bring in our panellist Chris Niesche here, I mean is there a concern, the unbundling issue kind of got lost because of the leak, do you think it's going to deliver anything better for customers or is there a concern that companies like Annette's are going to be cherry pickers? |
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| CHRIS |
Two things, theoretically yet it should deliver better service for customers but probably only customers in urban areas, in high density urban areas, I don’t know if ISPs aside from Telecom are going to actually be going and laying lines out in rural areas and delivering fast Broad Bands to farmers for instance, what are your plans for rural New Zealand? |
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| ANNETTE |
Well you know there is a lot of bullshit around the rural type environment. |
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| LISA |
This whole idea that you're just gonna pluck the good customers you know. |
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| ANNETTE |
You know Chris I'm sorry it's spin, so you're telling me that for instance in Whangarei we have invested around $500,000 we will be investing around two million and we see it will be rolling out movies on demand, voiceover IP which potentially it's free national and international calls, we're doing that with Slingshot now, but more than that – if there's no competition in rural areas then how is that going to drive any company to provide products and services, we think the rural areas have been sadly neglected and we've got a commitment to giving rural areas real choice which they don’t have today, so sorry. |
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| CHRIS |
So someone using your network after unbundling will be able to get the same service in a rural area, a farmer for instance that they will get in the Auckland CBD? |
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| ANNETTE |
What I can tell you is that we have commitment to rural areas as much as the CBD type areas and I can tell you – or do you think that Telecom is just going to say okay there you go Slingshot why don’t you have Whangarei, you know we're just gonna give you all our customers cos we're not going to invest any more, and if that’s what's going to happen that’s what they're telling us, well that’s great that’s fantastic. |
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| LISA |
But Whangarei realistically I mean Whangarei isn't really a rural area, it's a big city, let's look at somewhere like Ruatoria I mean what can they expect? |
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| ANNETTE |
Well I haven’t go the demographics of Ruatoria but I can guarantee you that there will not be service or products offered to the farmers if there's no competition. I've just come back from a speech down in Dunedin and Christchurch and the farmers there are really sadly neglected in terms of the products and services that they're offered and they receive, so why can't we offer then a good service – there's no competition. |
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| CHRIS |
You said this is gonna take two years, what need to happen next, what do you need next before you can start rolling out better services? |
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| ANNETTE |
Well we need availability, so we need David Cunliffe to say okay right now today New Zealanders can have what they call "unconstrained Broad Band" - …complicated words. What he has the ability to do today is to give all New Zealanders fast Broad Band the same speed as Australians are getting today which is 14 times faster, he really just has to say I'm going to make it happen today. Unbundling is the next step but today he has the ability to give all New Zealanders unconstrained fast Broad Band, as fast as Australians have. |
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| FINAL COMMENTS |
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| LISA |
Now turning back to our panel gentlemen for final thoughts of the day, perhaps we can start with Helen Clark, your final thoughts on that Guyon. |
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| GUYON |
Well I just think she was being a bit coy on the tax cuts thing, that’s probably inevitable. What's interesting to me is the succession too whether Michael Cullen does continue to hold that finance role, I mean if he is so reticent to give tax cuts it's going to be quite hard for him to move and maybe there is a succession thing there and Trevor Mallard or Phil Gough comes in to take that role, so I mean on the succession thing I don’t know whether Annette Presley will get Teresa Gatting's job but you’d kind of wonder how secure she is there I mean Telecom share prices dropped I think 40% since she came in 1999, governments only really regulate when an industry fails to deliver the competition so I'd say that her tenure must be shortlived. |
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| CHRIS |
I would have thought her tenure and Telecom Chairman Rod Deane's tenure are both pretty limited, that they have presided over the strategy of resisting competition and resisting regulation and it's failed and the government has had to overrule them. |
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| LISA |
See Presley stepping into the breach? |
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| GUYON |
It was a great marketing ploy wasn’t it, she's a great self publicist and she's done very well there, but I can't see that going down terribly well. |
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| LISA |
What about your final thoughts then Chris on the Helen Clark interview and the tax cuts and the direction of the government? |
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| CHRIS |
Well the tax cuts certainly are looking inevitable, Michael Cullen in his speech yesterday raised the prospect of tax cuts so the expectation is now out there, there will just be no way the government can retreat. |
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| LISA |
So the whiff is now turning into a strong indication when the corporate tax goes you reckon there'll be something in it for the everyday person? |
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| CHRIS |
I think it's almost certain. |
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| GUYON |
Yeah I think there must be, they might not even be able to bring themselves to use those two words tax cuts but maybe they’ll call it something else, maybe they’ll shift the thresholds around the income levels at which those rates cut in but they're gonna have to give people something the appetite is just too strong, the pressures too great. |
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| LISA |
Maybe it'll come under the nationhood banner do you think? |
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| GUYON |
Well maybe it will that seems like a good marketing tool that they're delivering up but I think that’s inevitable now. |
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| LISA |
Thank you very much gentlemen for joining us this morning. |
