RAW DATA: Pre-Budget debate with David Seymour, Peter Dunne, Julie-Anne Genter and Marama Fox

RAW DATA: The Nation transcript: The Nation Budget 2016 debate

Watch the interview here

Lisa Owen: Now, next week, Finance Minister Bill English delivers his eighth Budget. The debate’s well underway, some of it within National. Debt or taxes? More spending or saving for a rainy day? And why has English felt the need to bring forward spending from next year’s Budget? I’m joined now by United Future’s Peter Dunne, the Green Party’s Julie-Anne Genter, ACT’s David Seymour and Marama Fox from the Maori Party. Winston Peters and, indeed, all the NZ First MPs declined our invitation to appear. Thank you for joining us, though. Ms Genter, can I come to you first? What would the Greens’ top priority be for this Budget?

Julie-Anne Genter: Top priority is dealing with the housing crisis. The recent revelation that we have an absolute emergency with people living in cars means that we need to make it an urgent priority. Greens showed just last week how we could actually double the number of state houses that are being provided in the year.

Okay, does anyone disagree with that? Does anyone else have another top priority?

Peter Dunne: I think, growing out of the debate we heard prior to this, actually, social dysfunction’s a huge priority. We have huge numbers of vulnerable, at-risk children; we have dysfunctional families; housing’s a part of that; so too are a number of other social conditions; and I think the Budget’s big focus has got to be on addressing some of those inequalities.

Marama Fox?

Marama Fox: Yeah, absolutely. The disparities that are faced largely by Maori and Pasifika in this country affect all of us. If we can lift those disparities and get some equity going in this country, then we will be addressing the issues of homelessness, poverty, hardship. They must be a priority for the government.

Mr Seymour, this doesn’t sound like ACT policy. What would be your top priority?

David Seymour: Oh, look, housing is important and answering the simple question, ‘How is it possible New Zealand built more homes in 1974 than any of the last 40 years?’ We have to solve that problem. It has huge social costs. Very hard for kids to learn when they’re moving from one house to another to another. But I’ll just put two other things on the table, because they can’t all be housing. No tax cuts for eight years – what’s the point of having a centre-right government if the tax is like a Labour government? And let’s not forget a long-term issue, because we get a bit short-termish sometimes in New Zealand, and that’s the sustainably of New Zealand super. People of my generation know they’re not going to get super at 65, but right now the Prime Minister won’t even let us have a discussion apparently. And most of the opposition have shied away from the issue.

All right, Marama Fox, David Seymour raises tax cuts there. There seems to be some tension between Bill English and John Key. One wants to give tax cuts; the other says, ‘Let’s pay down debt.’ Who do you agree with?

Fox: I absolutely agree with holding back on tax cuts. Why wouldn't we be holding back on tax cuts when there are so many things that need to be addressed in this country? We can’t afford to save money from who? From one group of people while the other group of people suffer. We need to ensure that there is better distributed wealth. If we’re going to do a tax cut, give a tax incentive to someone who’s going to set up business on the East Coast and provide jobs in areas of high unemployment.

Mr Dunne, what’s your feeling on tax cuts?

Dunne: Well, I think tax cuts have got to be targeted to maximum effect, and consistent with what I said before, I think a tax cut programme could look at lowering the burden on middle-income families in particular because a lot of the stresses that they have are arising from the fact that there’s simply not enough money to go around. Wage growth is steady but not dramatic. I think tax is one way of doing it, but as I say, there is this big social deficit that needs to be addressed as well.

So, the Prime Minister categorically thinks that we can afford 3 billion in tax cuts. Who agrees that we can afford it? Let’s see a show of hands. Show of hands. I want to know. Who thinks we can afford it? Can we afford it?

Seymour: Absolutely.

You’re on your own, Mr Seymour.

Seymour: I seem to be alone in Parliament standing up for the taxpayer these days, and the fact of the matter is we’ve got a billion dollars in new spending just because. $1.3 billion of government giving taxpayers’ money to business or corporate welfare and yet nothing for taxpayers for eight years. And Peter’s right. We should be targeting the tax cuts to maximum effect. In a couple of years’ time, the majority of income earners will be in the top tax bracket. That’s outrageous, and we could very cheaply raise the point at which the top tax rate kicks in. I’d start there. But this government’s failed to do that for eight years.

I can hear Ms Genter huffing in the corner. Let’s see what she has to say.

Genter: David assumes that taxpayers just want to pay less. I think New Zealand citizens want to live in a fairer country with decent infrastructure and invest in society. And the reality is we could have a tax cut if we funded it through putting a price on carbon pollution. And that would solve two problems at the same time. We would start actually transitioning to a lower carbon economy, which is absolutely essential, and our carbon emissions, just today released, are up higher than ever at a time when they need to be going down, and that revenue could be returned from the bottom to benefit those lower and middle income earners.

Mr Dunne, what about debt, though? Because Bill English is saying we need to pay down debt. He says if we have another shock event like the Christchurch earthquake, we’re going to get caught short.

Dunne: I think that’s correct, and I think the government does have a prudent approach to debt repayment, but all of these things are a balance between the level of debt repayment, how much you want to increase the level of spending by what your prospects are of tax cuts.

So you’re not saying it’s one or the other?

Dunne: I think it’s a package of things, and steady prudent management is about keeping your hands on all of the particular elements in roughly even space. I don’t think you need to go on a splurge on tax cuts or a splurge on debt reduction. We’ve tried those things in the past, and the distortions that they’ve created are really what we’ve been working our way through since this government came to office.

Seymour: We currently do have a splurge on spending. We’ve had eight years with no tax relief, no tax changes whatsoever, so if you want to talk about balance and avoiding splurges, can we just have one Budget in eight years of a centre-right government with some thought for the taxpayer? And you want to talk about debt, a lot of households have debt as well, and the priority is always government spending over the people that actually earn the money and pay for it.

Dunne: We had the Christchurch earthquake, don’t forget.

Seymour: Oh, no, I’m aware of that.

Dunne: We had the global financial crisis, the biggest international economic disruption since the Depression.

Seymour: That’s right.

Dunne: The government could’ve simply adopted the scorched earth approach as previous governments did in the ‘90s to dramatic, disastrous effect. I think the government was prudent to take the approach that it did and to bring people through it. Now, you can argue about the extent to which that’s happened, but I think it’s actually saved us a lot of social stress.

Seymour: That’s a good argument for the past five Budgets, but at the moment we’re talking about no tax cuts for the next three. And, of course, John Key is campaigning from the right, but Bill English, the finance minister, is governing from the left.

Fox: When we address poverty and homelessness and get people out of the cars that they’re sleeping in, get hardship reduced from people who are suffering, sure.

Seymour: But this is the great fantasy of the left.

My turn to talk. So, I just want to pull you up on what you’re saying about spending. You’re talking about spending, but Bill English is saying he’s going to have to spend more now because of migrants. We had record numbers this week – 68,000. Is it time to put some brakes on? We can’t afford these people. That’s why he’s having to spend more, isn’t it?

Seymour: Well, actually, I think New Zealand can’t afford not to have immigrants. If you talk to people who are running businesses in need of skilled labour, if you go to a hospital… Unfortunately, I was in a hospital with a family member recently. Our hospital system would not function if it wasn’t for the doctors and nurses coming from other countries. So I actually think we can’t afford not to have immigration. Yes, that creates pressure, but also remember that immigrants tend to come and work and pay tax.

Marama, are you comfortable having to spend all this money because of rapid population growth through migration?

Fox:  Listen, people all over the country look at me and say, ‘Marama, we don’t mind having immigrants in the country. Obviously, there is a place for them. But if we’ve got people on a waiting list – 83 people on a waiting list in Gisborne for a house. There are 60 empty houses. Why the heck are they not in them? Why are people having to wait for a home when New Zealanders see that they have to wait in line for basic services when others can come in and be immediately housed and immediately placed, it just doesn’t seem fair. I’m saying it has to be an ‘and-and’, it can’t be ‘either-or’. If our people are not being able to get into a home, then the government is simply not doing its job.

Just very quickly before we go to the break, I want to ask you all, do we really need to be worrying about debt at the moment? This is the cheapest money ever on offer. Should we be borrowing it and building infrastructure? Mr Dunne.

Dunne: We should always be worried about debt, but I don’t think we should become fixated by it. In the past I think we have. I think there’s a balance, as I said before, between our debt levels, our spending levels, and what the government’s overall economic objectives are. I think it’s a prudent pathway forward.

Borrow and build?

Genter: I think the government is overly focused on surplus, and we want to run surpluses, we want to run a balanced budget, but at the same time, there is a need for investment in infrastructure, particularly given the population growth that we have, and it’s got to be low-carbon infrastructure.

Seymour: Well, this—You go, Marama.

Fox: Well, infrastructure, let’s talk about that, because up on the East Coast, if you want to make manuka honey or manuka oil but you can’t get it to port because your roads are rubbish, you can’t make a phone call because you’ve got no coverage, you can’t get on a…

So spend more money on infrastructure?

Fox: Put infrastructure in there. Let everybody realise the benefits of free trade.

Mr Seymour, before the break.

Seymour: We have some of the lowest government debt in the developed world and some of the highest household debt, and we actually need to start looking after the people that earn the money as well as increasing government spending.

All right. Stick around. We will be back after the break to tackle housing and are social services reaching breaking point?

Lisa Owen: You’re back with The Nation and our pre-budget debate with the minor parties – the Greens’ Julie-Anne Genter, United Future’s Peter Dunne, the Maori Party’s Marama Fox and Act’s David Seymour. Question for all of you – who here thinks that the Auckland housing market is a bubble? Is it a bubble? Hands up if it is.

Peter Dunne: It’s a large bubble, a very large bubble.

Julie-Anne Genter: And can I say that National has really, completely been irresponsible in not dealing with this issue? Treasury was trying to get them to act on it back in 2010. They’ve failed to act on both the demands side and the supply side, and now it’s actually a ticking time bomb.

Ticking time bomb, Mr Dunne. Do you think it is too?

Dunne: I think it is, but I think there is a solution, but we’ve got to do the whole job, and it seems to me that the solution involves the Government, it involves the local authorities, the construction industry and the banking sector. It’s all very well to talk about freeing up land for housing development. That’s fine. I think you’ve got to bring in the housing construction companies and the banking sector to say, ‘How do we get good financing packages to get young families into new housing in particular? How do we build houses that are going to meet their needs?’ If you’re going to take the whole picture-

If you’ve got a bubble, bubbles burst, so you’re saying we’re at risk of that?

Dunne: No. As I said, it’s a big, expanding bubble.

Genter: But it’s been eight years, and the Government still hasn’t acted. They’ve had eight years.

Hang on. David Seymour, I just want to know how it can- how it can’t be a bubble when house prices are going up in Auckland 1300 bucks a day. How is that not a bubble?

David Seymour: We’ve been programmed to think in terms of the GFC and the US mortgage market from a decade ago, and the difference is that the Auckland housing market is a very very small part of the global economy, and I’m sure that the number of returning New Zealanders, the number of migrants, can actually keep it going, perhaps indefinitely, because Auckland house prices are not that high by global standards.

On that point, actually, the Westpac bank has predicted that migration levels are going to drop away in two years’ time to a third of what they are now, so how would you sustain it?

Seymour: If I had a dollar for every time a bank’s made a prediction, then I probably wouldn’t need to be a politician.

So you’d buy a house in Auckland at the moment? You think it’s a good investment?

Seymour: Well, look, I haven’t bought a house in Auckland. I’m hedging, I guess. But at the end of the day, I don’t know where the price of housing will be in a few years’ time. What I do know is that as the government, we have to create the conditions where people can build more homes, because we just are not building enough homes. That’s the start, middle and end of it.

Mrs Fox, this Government that your party’s helping prop up, are they asleep at the wheel on this one?

Marama Fox: Well, let’s get that right for a start, because if I wanted to be in the National Party, I’d be wearing blue; I’m not. We’re the Maori Party, so we can only govern what we can do, and what we’re doing is the housing network-

So are they asleep at the wheel?

Fox: Of course they’re asleep at the wheel. We need to get on to it. They’re starting to get on to it. They agreed with Labour the other day about stretching out the boundaries for a housing development in Auckland, and that’s going to be good. But let’s talk about what the Maori Party are doing, because actually, we’ve just put an extra $12 million into Kainga Whenua so that people can establish Papakainga developments all over the country that are seeing young Maori families into home ownership and low-income families being able to rent homes.

Seymour: Lisa, can I just respond to something we heard earlier about the politicking of this? If you look at the ratio between house prices and incomes in Auckland, it started taking off in the very early 2000s, so it’s not right to blame just the current Government, just as it’s not right to blame just the Labour Government.

Genter: No, but it is right to say that they haven’t taken action in the past eight years.

Seymour: Well, that is correct, but you can’t blame any particular side.

Dunne: At the moment, we’re focusing, I think, on one side of the equation only. We’re saying we need more land supply to build houses. Absolutely, but we still have to get the houses built. We still have to get the families that want those houses into them. And I get annoyed when I see all the construction company adverts on TV every night for ‘the home of your dreams’. Let’s bring them to the table. Let’s sit down with the banks as well and the Government and say, ‘How do we jointly work to resolve this?’

Seymour: I’m pretty sure if we build the houses, people will willingly go into them.

Dunne: But you still have to actually get the houses that people want.

Seymour: Yep, I agree.

Julie-Anne Genter?

Genter: Developers tend to seek to maximise profit. They pitch to the high end of the market, and so we need the Government to be involved in well-run economies where you have affordable housing. Government is far more involved in the provision of housing. And it’s not just stand-alone houses-

Seymour: No, it’s not. That’s absolutely not true, Julie-Anne. And can I just make the point that if you have a shortage of land-? If it costs $800,000 for a section, you’re not going to put a $100,000 house on it. Until you free up the land supply, you’re not going to get a wide range of houses for people.

On that point-

Dunne: But that’s not the sole- That’s part of it. It’s not the sole- It’s not the sole issue.

On that point, Mr Seymour, has Phil Twyford been sculling from the Act Kool-Aid when he says he wants to ditch the city limits in Auckland and build further out?

Seymour: No, that’s the point-

Hang on. Just a minute. If you build further out, doesn’t that mean that the Government has to stump up with infrastructure before you start putting houses up so people can get to their houses?

Seymour: Well, it’s a bit of both, because in my electorate right now, we’re having massive earthworks to upgrade pipes in the centre of Auckland. Everybody flushes the same amount, whether they live in the centre of the city or outside the city. You still have to build the pipes, whether it’s upgrading existing infrastructure or building new infrastructure. So it’s not obvious-

Fox: You should take that argument to the people of Mangere Bridge and Ihumatao, whose last little piece of land is going to be taken away for a special-housing development without their needs being even spoken about or discussed. They’ve had no infrastructure in that land until all of a sudden, ‘now we want it’. If we’re going to take land, please, let’s talk to iwi, because we own less than 5% of this country.

Seymour: Look, I’m sure all of us here can give a bouquet to Phil Twyford. Six months ago he was playing the race card; now he’s talking real economics. So good on Phil Twyford.

All right. Ms Genter, I want to ask you about this. Is Labour backing urban sprawl? Have you sold you down the river on this one?

Genter: If you look at the policy announcement, it’s not just getting rid of the rural urban boundary. It’s also getting rid of the regulatory barriers to providing more dwellings where people really want to be, in the inner suburbs, where land-bankers are highest.

But you don’t back sprawl, do you? You don’t want cars and congestion on the roads. You don’t back that.

Genter: I think that if you get rid of the barriers to providing more dwellings where people want to be, in the inner city, then we will get more dwellings. It is true that transport costs are much higher for land on the fringe. So if you build a bunch of cheap houses at the outside of the city, you’re going to get more congestion, more cars, higher costs.

Yes or no – do you support their view on the urban boundary?

Genter: I think that Labour was incorrect in how they characterised what Auckland Council’s looking at with the rural-urban boundary. We said, ‘Look, we’re willing to talk if you price the externalities, if you price the infrastructure; if you get rid of the height limits and the density restrictions, actually, we’re probably not going to get car-orientated urban sprawl.’ But that’s a completely different planning system that Twyford is talking about, and, you know, it’s pretty hypothetical.

Seymour: The fact is that the argument is being lost by the compact-city model.

I want to move on to something else. Mr Dunne, negative-gearing tax breaks for people who have rental properties – shouldn’t we just get rid of that, because that would cool the investor market instantly, wouldn’t it?

Dunne: Again, it’s maybe part of the solution, but I think the problem we have with housing all the way through, whether it be advocates for capital gains’ tax or people say ‘here’s the silver bullet’ is we keep grasping at the one thing that’s going to make the dramatic breakthrough.

But as a factor, one of the things we could do?

Dunne: But I wouldn’t get hung up on it. I think the bigger issue is – how do we provide the houses that we’re short of for the people who need them? That is the bigger issue. I don’t think anyone has actually really come up with the answer to that.

I want to just poll the table – should people with rental properties be getting this tax break? Hands up if you support them getting the tax break, negative gearing, keeping it?

Dunne: Yeah, I don’t have a problem with that.

So nobody wants to keep negative gearing?

Dunne: No, I don’t have a problem with the system we have at the moment, but it’s not the issue.

Genter: There are too many tax advantages in our system to investing in property, and that holds back our economy in many ways. It’s just one part of the housing problem, and it’s also part of the reason why we don’t have more investment in actual productive sector of the economy, which is part of the reason why the productive sector of the economy has been languishing for a decade.

Fox: It’s additional corporate welfare. It is. It is additional corporate welfare. There is corporate welfare all over this country, and we need to stop that and have just a fairer tax system for everybody.

Seymour: But let’s be clear. The only reason that people are speculating in housing is because there’s a shortage.

Time out, table. In the time we’ve got left, I want to talk about the Housing New Zealand dividend. Mrs Fox, should the Government scrap it, just use the money to build more houses – don’t ask Housing New Zealand to pay 118 million back. What do you reckon?

Fox: Absolutely. Why are we charging our own government agency? Why are they getting to benefit from housing our most vulnerable people? That should not be happening. Use the money, build more homes. Get the people who are waiting to get into a home into a house.

We’re out of time, so I just want to ask – I know the Greens want to build houses – Peter Dunne, should they have to pay the dividend?

Dunne: I think we should use it as part of a wider home-building strategy.

David Seymour.

Seymour: No. You’ve got to run it with proper accounting. It’s always tempting to just right off a dividend, but that’s actually dishonest accounting.

So keep paying the dividend? We’re out of time, so keep paying the dividend?

Seymour: Absolutely.

Okay.

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