Immigration putting pressure on wages & Auckland housing market, Grant Robertson says

Labour Finance spokesperson Grant Robertson told TV One’s Q+A programme that 60% of the net migration last year went into Auckland and we do need to look at the way that New Zealand attracts migrants.

“We need skilled migrants, but we also need to make sure that those migrants find their way right across New Zealand,” he says.

“We should actually apply a weighting in the points system for people who are prepared to go to the regions. Now, that can’t happen in isolation. We have to have proper regional-development policy."

RAW DATA: Q+A transcript: Grant Robertson

Watch the interview here

GRANT Oh, definitely what I want to be in politics for is to improve the lives of New Zealanders, to give people opportunity, to give every New Zealander the chance to succeed. And Finance is the portfolio where you get to be part of the big decisions about where money goes, how do we make those opportunities happen for New Zealanders, so I’m delighted to be doing this role.

CORIN But what experience do you have in finance? Pretty much zip, none.

GRANT Well, look, as a politician, you inevitably end up involving yourself in the finance sector, speaking with business, spending time in the community. What I think’s really important about the Finance role is actually that it’s about the real economy – about whether people have got jobs, what kind of wages are they getting, can they afford to buy a house? They’re the issues that I think New Zealanders care about when it comes to the economy. They’re the issues I’m focused on.

CORIN So they don’t care about balancing the books?

GRANT Look, balancing the books is important, and that’s part of how you ensure that you can have a growing economy. But what I mean is when I’m standing up, talking to audiences about the economy, listening to people, it’s those issues of whether they’re getting a decent pay packet, whether or not their kids have got a good school to go to – they’re the issues people are worried about.

CORIN Well, let’s pick up on that. So as a finance minister in a future government, would you then raise the minimum wage by a big chunk, for example? And if you did, though, how would a small business hiring those workers be able to afford that?

GRANT Look, the reality in New Zealand at the moment is most small businesses actually pay their staff pretty well. It’s actually the larger, multi-national companies who aren’t paying much above the minimum wage at all. But we want to grow that minimum wage, because that’s the money that gets spent in our economy.

CORIN What’s the figure you’re going for now?

GRANT Well, we’ve got a $16.50 minimum wage promise at the moment, an hour. That I think’s where we can get to relatively easily, but we have to grow the economy along the way. I absolutely respect the fact that for small businesses in New Zealand, a lot of them are doing it tough. We’ve got to get alongside them, partner with them and make sure that they can deliver those wage increases.

CORIN Well, that’s interesting you say that, because the small businesses watching right now will have heard $16 and balked. They won’t like that.

GRANT Well, what small businesses will have heard and are hearing from us is that we’re going to get alongside them and make sure that we reduce the compliance costs that they’ve got; make sure that when they pay tax, they can afford to pay tax; make sure they’ve got access to good, skilled staff. That’s the biggest thing I hear when I’m talking to small businesses is, ‘Where can I get the skilled staff from? And what kind of support is there for me to get out there and export?’ I was with a small business in Levin the other day really struggling to get NZTE to engage with them. That’s the kind of thing we can do with small businesses. And, yeah, help them make sure they’ve got the money to pay those wages.

CORIN Okay, but to do that, you have to have a growing economy. The economy is growing at 3%. What would you actually do differently, in terms of those big policy settings, than National?

GRANT Well, we’ve got to unpack that 3%, don’t we? Because if the economy’s growing at 3%, how come we can’t deliver a surplus? How come unemployment is stuck at 6%? How come wages only grew less than 0.3% last year?

CORIN Well, we know why – because inflation was very low, there was strong migration. There’s a bunch of reasons for that. But it is growing at 3%.

GRANT Yeah, but most New Zealanders – and this is the lesson from the Northland by-election – most New Zealanders, outside of a small group of people who are doing well, are either doing it tough or going backwards. That means that that growth isn’t the kind of growth that’s delivering for all New Zealanders.

CORIN Fair point. How, then—? What tools would you use to make sure that 3% growth translates into 3% wage rises or whatever it might be?

GRANT We’ve got to put investing in jobs, investing in work, right at the centre. We’ve got to make sure that growth— No, no, let me finish. We’ve got to make sure that those jobs are growing in the regions of New Zealand. We’ve got to make sure that there’s opportunity there through education, through training, through improving the workforce.

CORIN What does it mean ‘investing in jobs’? What does that mean?

GRANT I’ll give you a very concrete example. The Hillside Workshops in Dunedin closed because the current government decided not to follow through on giving the KiwiRail contract to a New Zealand company. We can invest in jobs by saying, ‘We’re going to back New Zealand companies.’ We can support small businesses to be exporters.

CORIN But was that an effective subsidy, though? Are you saying, effectively, that—? You know, presumably, there was a cost business analysis, all that sort of stuff. They couldn’t make money or didn’t make enough money. Therefore, you’d be subsidising that business. Are you saying we go back to subsidising jobs?

GRANT No, I’m not. What I’m saying is we’re going to give Kiwi firms a fair go at getting those contracts and actually say, rather than just look at the very least-cost bid, let’s look at the bid that’s going to employ New Zealanders.

CORIN How do we then go across the other side of the world and try and win service contracts over the other side of the world if we’re going to give preferential treatment to our guys?

GRANT Don’t you think that all of those countries that we trade with do that now? If you were in the US right now, they have those arrangements in place. We want New Zealand firms to be competitive. We’re not just saying give it to a New Zealand firm because they’re a New Zealand firm, but let’s look at the outcomes for all of New Zealand. Let’s look at jobs as being the lens through which all policy is looked at. That’s why we’ve started our Future of Work Commission, because we want to know that in the future for New Zealanders, young New Zealanders leaving school today, there are good, decent jobs there for them.

CORIN Okay, let’s come to some of those bigger settings, though, around tax. Tax is a biggie. You’ve ditched the capital-gains tax? That’s gone?

GRANT We’re reviewing that, and Andrew Little’s been very clear. He doesn’t see that as part of the tax mix going into the next election.

CORIN You aren’t electable with it, are you?

GRANT We haven’t been elected twice with it, have we? So we’ve got to look at that. But we’re not walking away from the problem there. The problem there is property speculators driving up the prices of houses, particularly in Auckland, locking out young New Zealand families. So we still want to address that issue. It might not be capital-gains that gets us there, but there are a suite of other possible policy responses to deal with that.

CORIN Taxes, though? Taxes?

GRANT The tax has to be part of the mix on that.

CORIN Land tax?

GRANT Look, we’re looking at reviewing our policy at the moment. I’m not going to commit to anything in that area today. But what I am committing to is addressing the issue of speculation in the property market that’s locking young New Zealanders out of buying their own home.

CORIN Michael Cullen gave a speech just recently in which he talked about, effectively, that Labour had to almost give up on the idea of increasing taxes, this type of thing, and look for other ways to try and level the playing field, in terms of incomes and equality. Do you agree with him? You know the speech I’m talking about.

GRANT I do know the speech you’re talking about, and it’s a very good speech. Look, tax will always be part of the mix. It’s important that people pay their fair share. One of the things that’s happening in New Zealand at the moment is that multi-nationals are not paying their fair share of tax. We’ve got to make sure that happens. But Michael’s right to the extent that we need a government that’s a partner in growing the economy – not standing back and hoping for the best, like the current government, but actually being there alongside those small businesses, investing in the industries that are going to create the new and different kinds of jobs, investing in education, training, skills, research and development. If we do those things as a partner with the productive economy, we’ll do well.

CORIN But in terms of the top tax rate, raising the top tax rate, he’s effectively saying you can’t really do that any more. It’s seen as an envy tax. Look for other ways. Do you agree with that, that that’s something you might have to abandon, this idea where you’ve got to tax the wealthy to level the playing field? Do it in other ways?

GRANT Look, we have to look at all the ways of doing that, but I’m not walking away from the idea that New Zealanders should pay their fair share. We’ve all benefited in the past from what taxation gives us – good schools, good health system. New Zealanders should pay their fair share.

CORIN So high taxes are still on the table?

GRANT We’ve got responsibilities to each other, yes. Look, the Labour Party believes in progressive taxation. It believes in people paying their fair share so that we can all benefit. What I want for the economy is an economy where every single person looks at it and says, ‘I’ve got the chance to succeed.’ That happens when we take responsibility for each other, and that’s what a tax system should do.

CORIN But the risk that he’s pointing out is that if you put those taxes on the higher end, people will leave.

GRANT Well, that’s not true, because Australia already has a much higher top tax rate than New Zealand does. Tax rates like that are not the driver to whether somebody stays or goes from New Zealand. What will decide that is if there are good, decent jobs to do here and we have a good quality of life. It isn’t going to be determined by tax rates. I want tax to be fair, I want it to be simple to understand, and I want it to be collected. And at the moment, on the last of those scores, we’re not doing a good enough job, and there’s a lot of room to improve there.

CORIN Okay, what about the power— electricity policy? Highly controversial. Stuart Nash has said he would like to see the back of it. You supported this in your campaign to be leader. Do you still support that power policy of intervening in the power market to get lower prices?

GRANT All of our policies are being reviewed. What I strongly support in that policy is that New Zealand residential power consumers have paid too much, and a number of the power companies have milked super profits from the fact that they get access to free water. We have to address—

CORIN But it’s the design of the policy?

GRANT Sure, and that’s what’s being reviewed at the moment. We don’t have a firm position on that. But what we want to deliver to New Zealand is cheaper energy prices.

CORIN But this is fundamental to Labour, and some of the battles that Labour is having around the world is this idea that you can’t scare off business, that you have to give them some certainty. They were scared off by that policy. Rightly or wrongly, there was capital flight.

GRANT Oh, look, there was some concern from people directly involved in the power companies that were going to lose some of their super profits, for sure. But ultimately what we have to do is put together an economic package that shows that we’re going to deliver economic security to New Zealanders, that they’re going to have confidence that they can succeed and that businesses have got a place here. But, no, I want to finish this. The businesses that I’m meeting as part of this Future of Work Commission are delighted that the Labour Party is looking ahead and saying, ‘Where are the new jobs coming from? Where are the new industries that we can be a part of?’ If we’ve got a policy that’s about reducing the cost of residential power, they won’t mind that alongside this.

CORIN Yeah, but it’s the way you do it, though, because you are in these constrains. You talked about in your campaign of wanting to do away with some neo-liberal, laissez-faire-type economics, but you aren’t, are you? You are constrained by them. You’re not going to break out of that norm, are you?

GRANT Look, I think it’s really important that we move to an economy that gives everybody a chance to be involved and be included. You know, it’s actually a huge risk to business in New Zealand that inequality grows. The OECD’s reported on that just in the last week or so, that if New Zealand continues to have a big gap between the very wealthy and the rest, we won’t grow as an economy. So those businesses know they need their consumers to be earning a decent wage, to be secure and comfortable in their lives. We can deliver that. Actually, the days of a big, ideological, sweeping policy like neo-liberalism are over. What people are looking for in New Zealand is a government that is practical, alongside business, alongside the community, helping create those decent jobs and delivering a good standard of living.

CORIN But this is significant from you, because in the leadership battles with David Cunliffe, you were trying to out-left each other, and there was a lot of talk about doing away with this, sort of, model that we’re in, looking for something different, more radical. You’re now signalling, no, you need to be more centrist, more pragmatist.

GRANT Look, I stand by the fact that I think that those old, out-of-date ideas, which the National Party is still stuck to today, have gone. What the path forward is is about an economy that grows and includes everybody. And if that’s seen by some people to be far left, well, so be it. To me, it’s actually about giving all New Zealanders a fair go and a chance at success.

CORIN What do you make of the immigration situation at the moment? Does there need to be changes in our immigration settings? It’s putting a lot of pressure on things like wages.

GRANT Well, it’s putting a lot of pressure on wages. It’s also putting an awful lot of pressure on the Auckland housing market. You know, 60% of the net migration last year went into Auckland. We do need to look at the way that we attract migrants to New Zealand. We need skilled migrants, but we also need to make sure that those migrants find their way right across New Zealand. If we’re going to have a proper regional-development policy, I want to see some incentives in place for migrants to go to those regions. We need to perhaps—

CORIN Well, what sort of—? Like tax incentives?

GRANT Well, no. Actually, I think we need to look at the system that we use – and this is in the Labour Party’s policy – that we should actually apply a weighting in the points system for people who are prepared to go to the regions. Now, that can’t happen in isolation. We have to have proper regional-development policy that means a town like Whanganui or Gisborne is attractive for a migrant because we’ve helped invest in the industry.

CORIN So you lower the bar for migrants to get into a region?

GRANT What we would do is effectively say – because there’s plenty of people who want to come and live here – is effectively say, ‘If you’re prepared to go – along with a region that’s growing, like, you know, where we’ve invested, in Gisborne or Whanganui or in Northland – if you’re prepared to go there, then you’ll get—’

CORIN And stay there for some period of time?

GRANT Exactly. ‘You’ll get an additional weighting when you’re being considered.’ Now, I don’t expect people who are going to say, ‘Well, I don’t want to go there if there isn’t a job.’ This has got to be a partnership between central government, local government and the businesses in those regions to make sure there’s a reason for people to go there. But having migration so concentrated in Auckland is causing one of the big problems in that housing market, along with the fact that we’ve got this situation where foreign speculators who have no intention of coming to New Zealand can buy up big. We’ve got to address those issues.

CORIN The budget is coming up. The government has got serious revenue problems – $15 billion over the next four years that’s going to be short. You could face the same problems. Will you once again be stuck in the parameters of what this government says you can spend or not?

GRANT Look, we strongly believe we’ve got to keep the books balanced. New Zealanders expect us to do that. But we’ve got to invest wisely, and I think that’s where the government’s got this wrong. I think they’ve wasted a lot of money. You know, they’ve wasted money in selling assets. They’ve wasted money in going down charter-school path and that kind of thing. If we invest wisely in a good education system, in supporting small business—

CORIN They’ve put huge amounts of money into education.

GRANT Yeah, but, again, look at what they’ve done in education. They’ve funded charter schools, a failed experiment from overseas. Let’s actually create a world-class education system that’s ready to prepare young people for the jobs of tomorrow. If we do that—

CORIN But are you saying, though, that you can find enough savings from policies that you’ll get rid of in order to spend more in other areas? Because you’re not going to have much money, no two ways about it.

GRANT Look, we’ve gone to the last two elections with balanced budgets, and I’m confident we can do that again. What it’s about it priorities. It’s about prioritising the things that are going to grow decent jobs, that are going to support a good education system, that are going to give people some confidence and security about being able to buy their own home. If we invest wisely, as a partner with business and a partner with the community, absolutely we can grow the economy.

CORIN And of course you might have a few more taxes to raise a bit more revenue, do you think?

GRANT Look, it’s possible that will be, and that’s because at the moment, I don’t believe the tax system in New Zealand is fair. I think it’s unbalanced, and we do need to address those issues.

CORIN Grant Robertson, I’ll leave it there. Thank you very much for you time.

GRANT Thanks, Corin.

CORIN Cheers.