Labour’s deputy leader Jacinda Adern says her ideal job would be Minister for Children in a Labour-led government. She won’t say whether she would take over as leader if Andrew Little didn’t make it in to Parliament at the election. “Andrew Little is taking us to the election for victory. There’s no Plan B.”
Lisa Owen: Well, it’s nine weeks out from the election, and Labour’s released its alternative budget, saying it would scrap National’s tax cuts and put those billions into social services. But could Labour’s plans to cut immigration and the spending plans of its potential coalition partners through a spanner in the works? Well, Labour’s deputy leader, Jacinda Ardern, joins me now. Good morning.
Jacinda Ardern: Good morning.
You’ve got fiscal responsibilities rules, and this was party to help show that you are financially sound, financially as sound as National. But does that mean that your alternative budget has turned out, well, a bit same-same, inoffensive but not bold, not enough to make people change?
No. I would really dispute that. I think what we’ve presented to the public, to voters, is a really clear choice this election. We’ve rejected the idea from National that we can afford tax cuts right now when we have a situation where, for instance, the Salvation Army is telling us we’ve got the worst homelessness that they have ever seen, kids doing homework in cars, people not able to access health services. The choice that we’re presenting to voters is we need to invest in those social services, reject the idea of $20 a week and make sure that New Zealand is the prosperous nation that gives a good start to every child.
So why not go bolder? You have nothing to lose, looking at the polls, so why not make a bigger, bolder statement?
Cancelling tax cuts and saying now is not the time for tax cuts, we’re investing in poverty, we’re reducing inequality is bold, and exactly the kind of boldness and courage that I think New Zealanders want to see from an alternative government.
So you feel you went far enough?
I think what we have done is bold. Certainly, when we put out the families package and our choice to cancel those tax cuts and instead invest in families, particularly families on low incomes, yeah, we got a lot of criticism for that. I think people acknowledged that was a big, stark difference to choose to reduce inequality and poverty, rather than what National have done, which some people interpreted as being a bit of an election bribe. Yeah, that was bold.
Okay, well, let’s take a closer look at your fiscal plan. It is based on the current Treasury projections for growth, which are around 3%. But economists that we’ve spoken to said that immigration makes up a huge chunk of that growth, counts for 1%-2%. Your party wants to take a breather on immigration, so that means knocking off a considerable amount of income. How are the numbers going to balance out?
An interesting point there. I mean, you’ve actually just pointed out that National’s plans for growth was immigration and the rebuild off the back of crises that New Zealand has experienced. Our view is that our growth should come off the back of investing in regional economic development, becoming a smarter economy through things like research and development tax credits. You know, innovating instead of just simply saying carte blanche that we shouldn’t worry about the strain on our infrastructure that immigration in and in of itself was an answer. It’s not an answer.
But your numbers are built on the foundation of current immigration numbers and current growth projections. If you cut immigration, you might not have that money, and if you’re looking at a coalition with Winston Peters, who wants 10,000 immigrants a year, you could be looking at even less money, less growth in GDP.
I think if anyone looks at the immigration policy that we’ve set out, anyone who can demonstrate that they have a skill shortage in their area will not have a problem accessing migrant labour. That’s what we’ve been really clear on. So we won’t see, for instance—
I suppose it’s a bit different. What we’re talking about here is the GDP growth that is generated through population growth, and all through Treasury’s fiscal update in May, it talked about the fact that immigration is expected to underpin real GDP growth. Population is one of the key drivers in the economy, it says. Slowing immigration will risk slowing growth.
And what we’ve said is that, actually, we’ve got a plan around economic development that isn’t simply reliant on population growth that we can’t meet the needs of. So instead, and we’ve been really clear in the fiscal plan that we’ve presented, which I should add that BERL that endorsed as being absolutely correct, that we’ll be investing in making sure that we diversify our economy and continue to stimulate it, but instead of just relying on population growth, saying we will have things like research and development tax credits, things like our $200 million regional economic development. Things that will generate jobs in New Zealand, also diversify our economy and innovate within our economy. That’s the kind of growth that New Zealanders want to see, rather than just saying the only way to see growth in our economy is simply through unvetted immigration that doesn’t necessarily meet the needs of migrants as well. They’re coming into New Zealand without even having the housing and infrastructure to have a decent life.
— Tim McCready 🇳🇿 (@Tim_McCready) July 21, 2017
You raised jobs, so let’s go there. Labour’s aiming to get unemployment down from 5% to 4%. In real terms, how many jobs is that and how are you going to do it?
Yeah, we are, and we’ve talked about some of the specific ideas that we’ve had. For instance—
Sorry, how many jobs will that be in real terms?
Well, we’ve said we want to drop it down to 4% as a target. I can’t give you the specific number that that generates.
So about 25,000.
We’ve set 4% as a target, but we are a party that believes in full employment. I want to make that point. But some of the ideas that we’ve already set out, like, for instance, in Gisborne, where we have a large amount of unprocessed timber going off shore.
We want to invest in that area to create a timber-processing plant that creates prefabricated housing that then helps us deal with our other major crisis in New Zealand, which is the housing crisis. We’ve looked in Whanganui, for instance. They’ve got jobs that will be generated if they have work done on their port. We’ve said we’ll invest there. We’re looking for ways that we can invest in our regional economies to try and generate jobs — real jobs — that they know right now, if they had a little bit of a boost, would make a real difference.
And I don’t think anyone would argue with the fact that job creation is a good thing, but under National, unemployment is on track to drop to 4.3% by 2021 anyway. So I suppose we’re circling back round—
And what specific plans—?
…we’re circling back round to the fact that your critics would say you’re not being that ambitious. We’re getting there anyway — 4.3%. You’re offering us 0.3%. Is that enough to motivate people to change, which is what you want them to do.
And as I say, we’ve set some targets, but, actually, we are a party, as I say, is ambitious enough to say that, actually, what we want is full employment. We will never be satisfied as long we have anyone—
But that’s not the target you’ve set in the short term. The target you’ve set is this, which is so close to National’s, it could be National’s.
We’ve set a target that allows us to make some projections around the kind of spending in investment in other areas. But, as I say, as much as we’ve got a number in this fiscal plan, our target is that as long as there is anyone who is unable to work because they cannot find employment, that isn’t supported, that doesn’t have the dignity of that work, we will not be satisfied. Yeah, we put a number on it. We believe in full employment. That’s bold. And I would love to hear Steven Joyce say the same thing.
You say you’re going to spend about $17 billion more than National over four years — 8 billion in health, I think it is; 4 billion in education; Super Fund payments. All of that means carrying a higher debt load for longer, which is a costly exercise. How much does a billion bucks cost you in interest?
Yeah, and let’s put that in perspective. Yeah, we’ve said that relative to what the government’s doing, we will take on a bit more debt. So our debt track will actually take us about two years to get down to where the government’s saying. But let me be really clear on what we’re borrowing on, because I think that’s actually the point.
No, but before we get to that, there is a price that you pay for that. So what is that price?
Well, on the market, of course it costs less for a government to borrow than it does an individual, right. But let me be clear on what we’re borrowing for. We’re talking $3 billion for the Super Fund. The return on the Super Fund, we’re looking at around—
Your fiscal plan says it’s about $10 million in interest a day, I think it was. So that’s an opportunity cost, isn’t it?
Let me just answer the question. Which is why we’re trying to get the debt track down to 20%, and we’ll be there at about two years later than the government. The reason we’ve said that we’re willing to wear those extra two years is this — we cannot sit by while children live in cars. We are not willing to have a country where we can get the debt track down at the same rate as the government, but people suffer. So we will borrow for KiwiBuild, but that’s the kind of borrowing that we need. That’s the kind of borrowing that is justified. The other borrowing — the most substantial other bit of borrowing — is so that we can restart contributions to the—
To the Super Fund?
To the Super, where, actually, we get a return of about 10%, which is well over what we’ll be paying and what we’re borrowing to do it. That is justifiable debt. And also, I have to say, we will not be lectured by Steven Joyce when it comes to debt. We left in office, after Labour, a debt net — Crown debt — that was at around 10%, and now we’re up around, what, 25%? We’ve got goals to bring that down, yes, but we have a track record that proves we will.
Okay. Let’s move on to the diverted profits tax, which was announced this week. Andrew Little says he’s going to claw back money from foreign corporates who are not paying their fair share of tax. So, what’s that going to be set at? What rate?
Yeah, well, we’ve originally started out by saying we’ve written to multinationals. We’ve told them that this is our intention if they don’t come to the table.
But how much are you going to after them for?
Well, at the moment, IRD’s predicted that we’re forgoing over, I believe, from three to four years, about $600 million. So our view is they’ve set a really unambitious target of collecting, you know, about $100 million. Our view is that we can do better than that through a diverted tax.
Yes. Using what percentage?
But that’s set by IRD, dependent on what—
But you have already accounted, in your fiscal plan, for gains of $200 million a year. That’s taken into your costings from this tax. So you must’ve used some figure to work that out.
Based on what IRD have predicted is the forgone tax revenue that we’re losing, the government’s then gone, ‘Actually, we think that we can only then recoup a certain percentage of that.’ Our view is we can recoup more of that by actually investing in IRD to be able to do that, so we’ve budgeted for investing in IRD to—
You can’t give me a ballpark of what the tax level would be? So, in Australia, it’s like—
Because the diverted tax regime is set by IRD, based on how much they think the company has forgone in revenues, so that then comes down to an IRD discretion.
All right. So, you’ve got $10 billion that’s unaccounted for spending in your budget — so, unallocated spending — looking at your potential coalition partners — New Zealand First and the Greens — what policies of those parties do you like and that you think would be worthy of consideration for unallocated funds?
And the reason we’ve done that is because all governments do that. That’s the way that you build a fiscal plan. Because, also, you have to take into account inflation adjustments for your spending.
But there’s obviously money in there, because you’re going to have to have friends in a government, and friends like their policies to be implemented. What policies do you like from the Greens and New Zealand First that you think are worthy of consideration?
I love this hypothetical, because, of course, this is talking through Labour forming a government afterwards. And, of course, that’s the position that we’re out there campaigning on, to be in that position to be able to do that. But, ultimately, as every election has generated, that’s the conversation you have after the election. We’ve put out a set of priorities—
So you don’t like any of their policies?
Oh, there are similarities in some of the policies.
So which ones do you like?
There’s some similarities in the Families Package and what the Greens have put out in theirs, because we’ve both targeted poverty alleviation and looking after middle income.
Yeah, but the Greens propose to spend more on a family package, so would you support some of their initiatives in spending more in those areas that they’ve suggested?
Oh, well, if you look, for instance, at what we’ve done with Best Start, which is about investing in children in their early years, they’ve got something that they’ve called a Child Benefit, and so there’s some similarities there.
But they are spending more, so is that a policy that you would support being implemented?
That’s all for negotiation. But even though they’ve spent more—
But voters want to know what exactly they’re voting for.
Yeah, and if they vote for Labour, they get our Families Package. If they vote for the Greens or any other party, then it comes down to a negotiation afterwards. But my simple message, Lisa, to any voter—
Let’s move on, because you, personally, want to eradicate child poverty — that’s what you’ve said — and the Children’s Commissioner says benefits should be tagged to wages, like Super. So why not commit to that? Why not make a bold move and commit to something like that?
Because the Children’s Commissioner has also talked about doing things like investing in the early years of a child’s life. In fact, we looked at some of the research and analysis, and it told us that, actually, the period of a child’s life where they experience the most persistent poverty is 0—
I know you’re giving a universal baby bonus in these winter payments. I’m asking you about this. Why not do that?
If you just let me finish. He also pointed out that, actually, if we increase the payments for those early years, that’s going to make a really big difference to those low-income families and those ones in poverty. So we prioritise that—
So you don’t think you need to tag benefits to wages, is that what you’re saying?
We haven’t done it in this package, but we have acknowledged that those families who are on constrained incomes, who are on benefits, are doing it tough. And those are the areas where kids are suffering. What we’ve done goes to those beneficiary families as well.
Yes, but this is a step further, I suppose. And you’ve also said in the past that you think that the Commissioner needs to have more power, and you don’t get more power just through money. You get more power by implementing his suggestions or ideas.
So why not go with this one? Why not go with a big, bold—?
What will give him more power is, actually, greater independence, the ability to speak freely. And we want him to do that. We want any Children’s Commissioner in the future to have the ability to hold us to account.
Okay, so you’re not prepared to take that on, then?
But, to be fair, everything that we did in this package — the Winter Energy Payment, the Best Start payment, the increases to the Family Tax Credit, all go to families on benefits. In fact, by doing what we’ve done, we’ve got a big boost—
You’ve said that, and viewers will get that, but really the question is about whether it’s enough of an incentive, if it’s bold enough, if it’s dynamic enough to get people to change — which is what you want them to do.
And what I would say is that those families we have targeted, in the most need, end up being thousands of dollars better off. And that would even do more, in some cases, than what the Children’s Commissioner has suggested.
We’re running out of time. Sorry to interrupt, but we want to get to a couple of other things. You’ve made it clear that you’re not keen to be Prime Minister; it’s not on your radar. How likely do you think it is that you’re going to be deputy prime minister?
Do you know, for me, if we’re in the position where we’re negotiating those positions, then that’s where I want us to be.
Come on, how likely? How likely is it?
My relative position actually doesn’t matter to me. If we’re in government, that matters to me.
— Tim McCready 🇳🇿 (@Tim_McCready) July 21, 2017
Is the reason—?
So if I’m not deputy prime minister, but I’m a minister, that is fantastic. That means that we’ve won, and we’ve got a progressive government.
So you’re prepared to give up the opportunity of that role if one of the people you’re in coalition with—?
Yeah, because, as I’ve said, it’s never been about me. If we are in a position to be in government, that’s what I want. I don’t care about my relative status in that government.
Okay, so would you rather it be a Green or Winston Peters who held that position?
I’m loving this negotiation that we’re conducting here, Lisa.
Yeah, well, voters want to know what they’re getting. All right, let’s be fair, they want to know what they’re getting. So I’m asking you what your thoughts are.
And I agree with you. Voters deserve, in an MMP environment, to know, which is why we have the MOU. We’ve indicated that we’re going to work with the Greens. New Zealand First is a wildcard for voters. They could go with either Labour or National. If people want to change the government, the clearest way to do that is with Labour. Beyond that—
So, Greens is your preference, then?
Yes. We’ve got an MOU with the Greens.
And Greens is your preference for deputy prime minister as well?
I’m not saying that. That’s words in my mouth. What I’m saying is that, ultimately, there’s a range of things that will be on the table, but for me, it doesn’t matter to me.
You’ve mentioned a ministerial portfolio. So, social development — is that one that you’d like?
Children. I’m happy to say that I would very much like to be the minister for children. I’m very happy to say that.
Just before we go, if something should happen, as Winston Peters suggests, and your polling goes down and your leader is out, if it is a decision between stepping up for your party or not, will you do that?
Andrew Little is taking us to the election.
What about after the election?
Andrew Little is taking us to the election for victory. There’s no Plan B.
All right. Thanks for joining us this morning. Nice to talk to you.