English hints at super 'reset'

Prime Minister Bill English has reiterated he's raising the retirement age – but says any potential change will be made clear before the September 23 election.

The prime minister confirmed in an interview on The Nation that he has not made the same pledge as John Key, who promised to resign if the age of eligibility for superannuation was raised from 65, or was means-tested.

"It' turned out that because so many more people are working as they get through the age 60, 65, that super is more affordable than was expected, say, 15 years ago," Mr English said.

"I haven’t made the same undertaking as John, so we have the opportunity for a bit of a reset there."

Whether that means a change to the age of eligibility or its annual indexing to wages, he wouldn't say.

"You'll just have to wait and see. We would not anticipate any drastic changes."

Any tweaks would be made clear before this year's election, however.

"People deserve to know what the government's view is when they go to the polls."

 Labour went into the 2014 election promising to gradually raise the age from 65 to 67 but that policy was dropped when Andrew Little took over the reins.

This weekend, Mr Little said the prime minister had to "come clean" about his super plans. He also criticised the government for freezing contributions to the Super Fund, now valued at around $30 billion. The Labour leader says the fund could be $20 billion higher if National had continued contributions.

Mr English earlier said contributions to the Super Fund would only resume once net debt fell below 20% of GDP, which Treasure expects to be in 2020/21.

TRANSCRIPT: Lisa Owen interviews Bill English on The Nation

Lisa Owen: Well, New Zealand’s political landscape looks very different now to how it did when we signed off last year.

Patrick Gower: It certainly does. There was a guy called John Key in place who had a seemingly unassailable hold on the prime ministership until he quit, until he pulled the pin and jumped out of the place.

Lisa Owen: And that’s left Bill English with big shoes to fill, so I sat down with him for his first long-form TV interview since becoming prime minister and asked him what he’s done so far to differentiate himself from his former boss.

Bill English: Well, look, I think that will unfold through the year. Look, this government is under my leadership as a combination of the things that we’ve had in train for quite some time, whether it’s infrastructure that we’re opening, new schools, new roads, and some fresh thinking and a bit of a reset that’s focusing beyond the next election.

So, are you familiar with the term ‘imposter syndrome’?

No, I’m not.

Okay. Where people think, ‘Hmm, I’m not supposed to be here.’ Because I’m kind of wondering, do you leap out of the bed every morning and think, ‘Yippee, I’m the prime minister,’ or do you think, ‘Oh, this is a little bit scary’?

No, I leap out of bed enjoying it, looking forward to it and getting a lot of energy and positive feedback from the public and leading a team that is running seamlessly from where it was under the previous prime minister.

But is none of that daunting?

No, not particularly. I’ve been close to it for a long time with John Key, and it’s such a fantastic opportunity. I mean, New Zealand’s had some pretty daunting problems, particularly going back to recession, earthquakes and so on. Now there’s some real confidence and direction because of all the hard work that’s been done. So the opportunities ahead of us are so positive. And that’s not daunting; that’s energising.

So when you talk about the opportunities ahead of you, I’m wondering — what will success look like for you as Prime Minister?

Look, I think it will be an ongoing growing economy with the investment to support that growth. There’s always risks with an economy. We have to keep that in mind, particularly offshore, but a sense of resilience and confidence about the economy. And secondly, everyone sharing in the benefits of that, and that’s why we’re in a relatively unique position in New Zealand with strong government books and job creation to spread the benefits of growth.

When you mention offshore, are you talking about Donald Trump specifically?

Oh, there’s a whole list of things — the Australian economy, the Chinese economy, things need to go well there for us; Brexit, American protectionism. All of these things represent risk.

How much of a risk do you think Donald Trump is?

Well, look, it’s the policies that will matter. Probably the area where we’ve got the most concern is trade. That if they do actually put in place significant protectionist measures, that will have an impact on us and on our trading partners.

I want to look at this week, because it’s been a busy week for you. Immigration numbers equal to a city the size of Rotorua; average Auckland house price still over a million bucks; and the homeless numbers and those homeless housing grants are a lot higher than you predicted. All of these things were issues under John Key, so what are you going to do about it?

Well, implementing the policies that we’ve put in place. I mean, some of this is about success. So the fact is we always have anticipated that New Zealanders would start leaving again. It’s not happening. There’s been an expectation those immigration numbers would drop, but because of our relatively unique positive outlook, people just keep turning up and Kiwis keep staying home. So our real challenge is responding to that growth and investing to support it so that people can have the quality of life here that they come for.

But if you actually crunch those numbers, more Kiwis left in those numbers than returned home. We’re minus 1700-odd Kiwis. So they’re not your issue.

Well, they’re a positive result, because it used to be minus 40,000, minus 39,000, but now it’s come right up close to zero. But this is all just part of a New Zealand that’s got growth and got confidence and got momentum, and our challenge, which we’re responding to, is the investment that supports it. We opened the Kapiti Expressway just a few weeks ago; we’ll open Waterview. These are all the kinds of infrastructure that you need. Big investment of schools for more kids for better education.

The thing is, though, voters are deeply concerned about house prices. Some of them are deeply concerned about immigration levels and homelessness as well. So I’m wondering — what is your one new idea to help solve those deeply ingrained problems?

We’re implementing the policies that have been in train for some time because there’s no one new idea that suddenly makes houses appear on subdivisions. That’s a long, complex process. So what we’re seeing is strong—

It’s not a silver bullet I’m asking you for, but I’m asking — do you have a single new idea that you are going to pursue in these areas?

Well, we’re going to, in the first place, implement what’s in train, because that’s what’s producing the 10,000 new houses in Auckland as we work with the council. The next step is the Housing Infrastructure Fund — a billion dollars on the table for councils to bring projects forward. Now, they’re finding that a bit of a test, and so are we, to find the projects that will induce more housing supply sooner in the next couple of months.

But those are things, Prime Minister, that have already been announced. Do you have a new idea that you’re going to pursue in this election year?

Well, you’ll have to wait through election year, but what I’m outlining here is the implementation of ideas that take some time to turn into the reality of houses on the ground, and that’s what matters the most. What you’re going to see in this election year is the next report of the Productivity Commission around changing our whole planning regime. There’s pretty broad consensus that it should change, and through election year you’ll see some of that start to take shape.

The thing is this new idea thing is important, because you have said that you will not work with Labour or Greens because they have no new ideas. People might not want to work with you because, some critics would say, you don’t have any new ideas either.

Well, in the case of housing, we want to completely renew the planning system. Now, that’s a fairly big idea. There’s a surprising consensus that that’s what needs to happen, and if we’re re-elected, that’s what we’ll do.

So, I mean, the National government’s been talking about RMA reform for how long?

Since we’ve been the government.

Right. So how do you make it happen, then?

Well, we’ve had an intensive process of getting our current changes through the Parliament. Now, some we got through early have really paid off. So big projects that used to take six to seven years now get approved in a year. That’s why we can open Waterview now. As we look ahead, there’s a consensus that we need to change the system so that more houses happen more quickly when there’s stronger demand and that we don’t have the same pressure on households about home ownership costs and rental costs.

So change it specifically in what way? Give me one solid example.

Oh, well, we need to change the planning regime so that it takes account of house prices and land prices. In the past, it never has. Prices can be going up; nothing changes about the planning. That’s why we’re dealing with some of the real challenges in the housing market right now. We can change that.

So part of the housing issue is immigration — record levels. Are you prepared to change the settings again before the election, if those record levels continue?

Well, they’re always under discussion, so we announced some changes in the latter part of last year.

But they made no change to the quarter just gone. You’re still hitting record numbers. So are you going to tweak any more, do you think?

Well, we’re considering more changes, and that will become apparent when we’ve made decisions about it.

So what kind of changes are you considering there?

Well, it’s the changes that are… These changes are all about trying to get the right balance, that is the skills we need in a growing economy, and there’s more calls coming from businesses and the labour market about the need for skills, because we are creating so many new jobs, on the one hand. On the other hand, making sure we’re getting the people who can match those skills.

So what do you think would be the most efficient change that you can make, then, to enable the right people to come in? Because that’s what you’re talking about – making sure you’ve got the right people. So what are you looking at tweaking to ensure that?

Well, it’s just refining the tests that are about the flow of people, particularly from the temporary visas into the workforce, but, look, that’s under discussion. And when we’ve made some decisions about that—

So making it harder for people who have temporary visas to stay here permanently? To take the step up?

Well, you have a large pool. Most of our new residents and citizens these days come from people who are already in the country, and so we’ve just got to make sure that both those coming in and those who are already here are well matched to our skills requirements.

So do you think those changes that you’re discussing will happen before the election?

Well, you’ll just have to wait and see.

Do you think people should know before the election what they’re voting for…

Oh, well, they—

…in terms of your intention to make changes to immigration? So shouldn’t they know that before they go to the polls?

Well, our positions will be quite clear by the time they go to the polls. But what they do know is that we are open to trade, we’re open to investment, we’re open to people. We’re not shutting down—

But voters should expect an announcement on immigration before the election from you?

Well, they shouldn’t expect some major change in policy. What we’re talking about here is a successful country that’s attracting people, that’s keeping its own, where we can fine-tune to get a better match to the skills we need.

And that will lower the flow of people coming in?

Well, it may or may not do. I mean, some of the advice is that in the absence of decisions we made last year, the numbers would be higher. It’s always a bit hard to tell, but you shouldn’t expect a dramatic impact from changes in the rules.

Okay. Speaking of numbers, there’s a lot of debate around the housing shortage and around those numbers. So Auckland’s Unitary Plan says it’s 40,000 short of houses. Treasury says 30,000 to 35,000. So what figure are you using?

We’re not using any particular figure.

Why not?

Well, because it’s a bit artificial. You can…

But if you don’t know the size of the problem, how can you come up with a plan to fix it – a proper plan to fix it?

Well, because regardless of how big you might think the shortage might be, the answer is always the same, and that is get more houses on the ground faster. And we know that has an impact. You’ve just got to look at Christchurch, where house prices are—

But you don’t know if you’re chasing your own tail, do you, though, Prime Minister? You don’t know if you’re getting close to how many houses you need. You’re a numbers guy; why not say a figure and indicate that that’s what the shortage is?

Well, because the answer’s always the same. It doesn’t matter whether one estimate’s twice the other. And in the end, we don’t control the decisions; the decisions are made in Auckland by the Auckland City Council and every other town by the local council. Nothing – no house – can happen anywhere unless the council makes a series of quite complex decisions, ranging from subdivision or intensification through to signing off the confirmation that it’s built properly.

But that doesn’t affect your ability to come up with an accurate estimate of how many houses we are down.

Well, who knows—?

That was a Treasury note that went to you that said 30,000 to 35,000. What’s wrong with that number? Why don’t you accept that number?

Well, whether it’s 30,000 or 35,000 or whatever, what we’re doing is working with councils to get more done sooner, and, actually, the constraint now isn’t the size of the estimates. We’ve put a billion dollars on the table for infrastructure to bring forward housing supply, and that’s been a challenge for councils to meet the requirements.

You’re struggling to get takers, aren’t you, in so much as the projects aren’t being rubber-stamped for this fund?

Well, I think the councils are realising that it seriously has to be projects that are bringing supply forward, not just funding what they already had. And we’ve had to—

So what you’re saying –they’re trying to slide projects past the goalie, they’re trying to get money for stuff that they were already going to do anyway?

Well, no, what I’m saying is that both the government and local councils are going through an intensive process to work out what’s required to get things done sooner. So we have to understand their financing much better, and we’re learning fast, and they need to understand that we’re serious that it should be projects coming forward, not just pay for what’s already in the plan.

So, just on the house prices, average house price in Auckland, do you reckon it’ll drop below a million bucks this year?

I can’t say. What we do know is that even at the higher prices, the average cost of servicing debt hasn’t changed much over a long time because interest rates are so low, but the hurdle for getting in is higher because the deposits are higher.

Do you think it would be a good thing if it dropped below a million dollars?

Well, it’ll do what it does. We need to make sure that people have the opportunity to secure reasonably-priced housing. We can’t dictate how the market works. What we do know—

No, I know, but I’m just curious of your thoughts on this. Do you think it would be a good thing if it dropped below a million dollars for the average house price in Auckland? Because that’s a big number.

Well, for some people, it would be. No doubt about that. And it can happen. In Christchurch, we’re seeing flat to falling house prices, because so many houses have been built. It’s now become a very attractive city for moderately priced housing.

So from your point of view, you say it would be for some people for it to drop. Do you think it would be good for it to go under a million?

Well, look, it would be good for some people. What we’re focusing on is not so much what the price actually is; it’s on getting more houses on the ground, because we see the demand, and that demand is the product of a strong economy, rising incomes and people wanting to live here.

Well, on the demand front, then, is there any plans to bring in any more measures before the election on the demand side and make the bright-line test longer than the two-year period? Would you like any changes to LVRs? What are you thinking around that?

Well, you’ll just have to wait and see. It depends a bit on how the situation unfolds, so, for instance, at the moment there’s some evidence that level of sales have dropped, prices are pretty static. That may stay in place. It may pick up again. We’ve yet to see.

So are you keeping the prospect of demand-side measures on the table?

Well, look, they’re always on the table. And over—

No, seriously on the table.

Well, they’re always on the table, and over the last two or three years, we’ve taken quite a number of demand-side measures, and one of the things we’ve learnt from that is there’s nothing better than another house on the ground. That’s the best measure.

Well, with the social and emergency housing, you’re pumping an extra $304 million into emergency housing over the next four years. So right now, how many new beds has that money created?

Well, we’d expect by winter it’ll be something around 1200 across the country. I just opened some last week in Luke St. I think everyone involved, including the people who’ve lobbied extensively for more emergency housing, are pretty happy with the arrangements. It’s just a matter of how fast we can make them happen.

Is that going to be enough, though? Because if you looked at this week the grants for people living in hotels – 8800 grants in three months – quadruple the budget. 1200 houses, you’re saying, by winter, or 1200 spots. They’re not even houses, are they? They’re beds.

That’s in Auckland. Across the country, we’ll have the capacity to deal with about 8000 people over a year, because they stay for three months in these houses. So 2000 units, you’d get roughly four people through each of them, because they have a limited period. So the 8000 places should have some impact. That’s about as many as we can achieve in the time that we’ve got, which has been pretty short. I mean, that project the other day that I opened, they only got on the site in October. Families moved into the houses just in the last couple of weeks.

The social investment programme – now that’s been your baby. You even created a new minister’s role. What plans do you have to expand that programme?

Well, we plan to expand it, because there’s still too many New Zealanders, particularly the most vulnerable, for whom government services don’t work that well. We’ve had some real gains, particularly in the welfare area, where—and the most success, probably, with sole parents, where we have individualised and strong support to get them into work. The next area where we want to expand that to is the tens of thousands of people who have mild mental illness or disability of some sort. We’ve got a lot to learn about how to do a better job for them. And the change is coming up from 1 April for vulnerable children are going to be the biggest it’s been for years. The great news about that is there’s broad support for big change, and that’ll be an agency that’s driven primarily by investment principles rather than cost.

So the whole principle behind that is spending targeted money now to have money later, right? So the Children’s Commissioner wants the government to cut child poverty, to set a target, and the suggestion was 10%. Cut it by 10% within a year. Would you take on a target like that?

Well, we’ve got a whole lot of targets to bear in on child poverty, because there’s two—

I’m asking you about that target. This is the Children’s Commissioner who’s saying that he really wants this done. Why not take that on as target?

Well, we’re not taking on that particular one. There’s lots of arguments about measurements, and we’re focused on two things. One is lifting incomes, and we’ve taken one step last year with the increased $25 a week in all welfare homes with children. We’ve got the opportunities ahead of us to lift incomes further, and alongside that, get into dealing with the cycles of dependency and criminal offending and abuse.

But that is a categorical no to a child poverty target, a reduction in child poverty? A categorical no to setting a target that the Commissioner would approve of?

Well, we have a number of targets which we believe bear in on child poverty, and like—

Yeah, but that’s not the target that the Children’s Commissioner set out.

So we’re not agreeing to that target.

And you’ve got no plans to get on board with that?

No, we’re not going to. We’re not adopting that target, but we have a number of targets, many of which are quite challenging, that are coming in at all the angles on the issue of the welfare and future of our children.

So are you going to do anything specific in a financial level to help those families? Accommodation supplement – are you going to raise or expand that?

Well, you’ll just have to wait and see.

I’m impatient, though.

Yes, I know. Well—

I’m wondering, are you going to raise or expand that?

What we’ve made clear is we have surpluses, which everyone’s worked hard to achieve, so that means we’ve got choices, and one of the things that drives those choices is that everyone benefits from a growing economy, so we’ll be making those choices through this year.

When was the last time it was changed?

What was changed?

The accommodation supplement adjusted?

Oh, it hasn’t been adjusted for some time.

Yeah, 2007, based on 2005 rents. So can families expect an announcement on this before the election?

You’ll just have to wait and see.

What about Working For Families?

Well, again, you’ll just have to wait and see. I mean, the point here is that there’s a number of tools that enable a country that’s got a growing economy and got government surpluses – a number of tools that enable us to share the benefits of that growth.

Okay, let me put it another way. The man who had the job before you indicated that there would be some kind of family package probably in the Budget, so are you still thinking along those lines and still thinking that we can afford it?

Yes.

Can you give us an indication of what form that might take?

No, not yet.

Not even a hint?

No, not yet.

Okay, so the average wage – do you still reckon it’s going to hit $66,000 by 2021?

Well, look, it depends a bit on the economy, but what— The track record of the average wage is moderate but consistent gains, and that’s—given the economic stability there’s been around the world, compared to most countries, it’s pretty good. Still not enough for everybody. We need more growth in the economy, more sustained innovation, more sustained research and risk-taking. That’s what’ll generate better incomes.

Because the thing is, as you’ll be acutely aware, given that it’s creeping up around that top tax bracket, is there a need to shift the threshold?

Well, that’s another issue—another opportunity that we have. We’ve talked about tax reductions, focused on low and middle incomes. You’re quite right. The average wage is sneaking towards the top threshold. By international standards, that’s pretty low. But we’ve got to look at the balance here. As we’ve said, we want to share the benefits of growth with everybody. Everyone deserves that. It’s not just a matter of us deciding. And the tax system is one way of doing it, but it’s hard to target.

Is it one that you would favour?

Well, it’s an option. It’s part of the mix.

Would you think it would be—Would it be fair for the average wage to slip over into that top category? Would that be a fair situation to have?

Well, look, it would probably feel to people like they’re not earning that much, and they find themselves paying the top tax rate. What it helps people understand is that our rates—

So you think that, fundamentally, it would be unfair if the average wage came into that top tax bracket?

Well, fairness is relative to everyone else, right?

I’m asking you.

Well, you have to weigh it up against the other needs across your community. So there’s a case there for making changes in the tax system. There’s also a case for lifting the incomes of the people on the lowest incomes. So that’s the balance we’ll be looking to achieve over the next wee while.

And do you personally favour one side of that equation over the other?

Well, we make our decisions as a collective in the government.

Okay. We’ve got a few things to get through, so I’m going to skip across a couple of things quickly. Super – John Key said no changes on his watch. Well, his watch is over. Can we afford to carry on as we are?

Well, it’s turned out that because so many more people are working as they get through the age 60, 65, that super is more affordable than was expected, say, 15 years ago. I haven’t made the same undertaking as John, so we have the opportunity for a bit of a reset there.

So what does that mean, ‘a bit of a reset’?

Well, we’re just working through the long-term affordability.

That sounds like changes. Resets sounds like changes. So are you looking at the age of eligibility? Is that on the table for you?

Well, as I said, I haven’t made the same undertaking as John, and so now we need to think through what difference that makes.

This is really important to a bunch of people who are watching this, and with an ageing population, increasingly important for those people. So what, maybe don’t index it against wages?

Well, look, you’ll just have to wait and see, but we would not anticipate any drastic change. I mean, super has—we’ve benefited from the stability over the last seven or eight years. That’s why the previous Prime Minister make the undertaking that he did, so people didn’t have to worry through tough times about what was going to happen with national super.

But you’re saying you’re not making the same commitment as John Key not to tinker with this, and you’ve also just indicated that you’re kind of looking at it.

Well, just remember the commitment that he made was if there was any change in national super, he’d resign. I mean, that was a pretty cast-iron, clear-cut—

Well, he’s gone now. He has resigned.

A clear-cut commitment. That’s right.

So do—Age of eligibility? You said not major changes, so maybe raising it a couple of years? Is that what you’re talking about?

Well, look, you’ll just have to wait and see, but the—

The thing is, this is a huge thing for voters, though, so if you’re not going to make a commitment to keep it how it is, can you commit to telling voters before the election exactly what your plans are for super?

Yes, yes.

So you’ll make it clear before you go to the polls if you’re going to change any element of the super programme?

That’s right, yeah. People deserve to know what the government’s view is when they go to the polls.

So we can expect an announcement on that, then?

Well, you’d expect people to know what the government’s position is.

You’ve indicated already who you’re prepared to work with post-election, and so let’s look at some of your current partners. The Maori Party – you have in recent times repeatedly described them as challenging. Was that a compliment?

Yeah, it was in a way. Look, this is a party that we went into partnership with originally back in 2008, when people thought it was a pretty lateral, unexpected thing to do, and we’ve maintained that partnership right through. It’s, I think, made us a better government, but it does mean we’ve had to deal with some pretty challenging issues, because they put them on the table. And in that sense, I think they’ve represented Maori very well. The Maori MPs and Labour haven’t had any influence on government ever.

Well, the thing is they’ve got a new friend, though, haven’t they? His name’s Hone Harawira. Will that make them even more challenging to work with, that relationship?

Look, that all depends on the Maori Party, you know, what policies they bring to the table. I wouldn’t get too mixed up about the personalities. You know, we’ve worked with a whole range of personalities, including Hone Harawira when he was in Parliament.

But the thing is, you don’t actually think he’s going to make it to Parliament, don’t you? Because you have said that in Te Tai Tokerau, you don’t think he will make any difference.

Well, look, that’ll be sorted out by the voters in Te Tai Tokerau.

Well, it raises a question, then, are you backing Kelvin Davis to win, then?

We’re not backing anyone up there. We prefer to see—

But do you think he’s going to win it? If you’re saying that Hone Harawira’s not going to make a difference, you think Kelvin Davis is going to walk away with it.

Well, look, the voters there will sort it out. What we know is that we need to get our proportion of the vote high so that we have the opportunity, ideally, to negotiate with the parties we’ve worked with for some time, and if not, work with whoever else the voters put there.

Ohariu, where your other support partner is, Peter Dunne. Do you think that’s going to be a tight race?

That’ll depend on the candidates. Peter Dunne’s a very experienced local MP.

He is, but he only had a margin of 700-odd last time. Do you think you could be doing yourself a disservice by standing a candidate there?

Look, we’ll deal with any issues related to Ohariu closer to the election.

Do you mean by giving a message to voters about what they should do?

Well, let’s just see how things go.

Like Epsom?

Let’s just see how things go. What we do know is that the arrangements that have been made there between Labour and the Greens fundamentally change the choices around voting Labour, because they’re no longer, kind of, the moderate alternative government that they used to be.

So, are you going to tell voters to give you the party vote there and give their candidate vote to Peter Dunne?

Well, let’s just see how it unfolds through the year.

Leaving that open, then?

Yep.

Okay. Would you arbitrarily change immigration policy in order to get Winston Peters’ support post-election? Is that a possibility?

We’re not negotiating post-election positions with anybody, and our focus is—

I’m just curious about that.

Well, I can see why people might be curious, but our focus is on we have to make sure we can sell to New Zealand the prospect of an energised, focused, new National Government after the 2017 election. That’s what’ll get our vote up far enough to negotiate with anybody.

Okay, well, the thing is you’ve been in this game for more than a quarter of a century. Your social investment programme, what, that’s going to take 10, 15-odd years to bear results. So if you win the election, how long are you committed to staying in the game for?

Oh, as long as it takes. I’m hugely enjoying the job. It’s a great team. It’s energised. They’re coming up with some real focus through to the election and beyond, and we have taken unashamedly a long-term view about a number of things, a number of issues because they take quite a while.

And a long-term view means you’ve got to be around for a long time before you see it to fruition, so if you win this election, and you’re Prime Minister, you’re going to go again?

Yes, that’s right. I mean, when we set targets—

You’re absolutely committed to that yourself? I mean, you personally?

Yes, that’s right, because as we’ve developed these frameworks around lifting the quality of our fresh water or predator-free New Zealand or a better start and a better life for our most challenged children, that takes a while, and we do have to protect that, particularly from the Opposition parties, who are locked into a 1970’s view of the state, which would be damaging to many of the people that we’re now helping effectively.

What about the one after that? Do you know yet about that?

Well, I haven’t thought about that. Let’s just get the next two.

So the first two? All right, I appreciate your time. Thanks for joining us.

Thank you.