Two interesting articles in the Herald. The first:
Prime Minister John Key has admitted he had to be persuaded to back off his bid to press the Reserve Bank into exempting first-home buyers from the banks’ new rules on loan-to-value ratios (LVRs) by Finance Minister Bill English.
Mr Key went into bat very publicly for an exemption for first-home buyers in June, during the bank’s consultation period on LVRs, which limit low-deposit or no-deposit mortgages by retail banks.
At the time he said he didn’t want the LVR to work for a “bunch of rich people and lock out a whole lot of first-home buyers.”
But in a joint interview with Mr English this week – marking five years in power for the National-led Government – he indicated that Mr English thought taking on the independent bank would be more trouble than it was worth.
“So I took a step back from that and said ‘yeah, okay, well fine’. That’s the way it goes.”
There is a line between advocating and directing. It is important the Reserve Bank is independent. Sadly Labour proposes ending that independence.
Mr Key also admitted he had been very reluctant at first to raise GST in 2010 but was persuaded fairly quickly about its merits.
“I’d be the first to admit I was a bit nervous about raising GST thinking can you actually politically sell all of that,” he said.
“Actually after we did all the modelling and we worked on it together, we were absolutely convinced it was fair and would actually work and it would deliver the sort of policy outcomes we wanted. And actually it’s definitely delivering results for the economy.”
The pair said they did not have arguments or rows.
Mr Key said the measure of any decent relationship was that you worked your way through all sorts of issues and respected each other’s views.
They are a hugely effective team.
Mr English made much of what he described as Mr Key’s instinctive ability to communicate with the public and maintain its support, and knowing how to set boundaries in terms of policy constraints.
They cited the example of state tenants’ entitlements.
Mr Key said successive Ministers of Housing and Housing officials had wanted the income that any state tenant received from boarders to be received to be counted as income in terms of calculating entitlements.
“But my view is well that would be seen as a step too far for large families or families that are trying really hard to make ends meet.
“And in the end if they are prepared to go the extra mile of having someone live in their home and cook them a meal, they are just good New Zealanders trying to get ahead.
“It’s like the carparking [dumped fringe benefit tax] issue.
“In the perfection of the IRD officials, we should have carried on with putting an FBT on those carparks – but that’s how you lose the public,” he said.
Mr Key also indicated that he had put constraints on labour market reforms.
You don’t get to implement much policy in Opposition. You fight the good fight on issues worth it such as the GST tax trade-off and the partial asset sales, but why take a hit on relatively minor issues such as FBT on car parks. No one will thank you in 20 years time for that one.
A second article looks at the John and Bill team:
The lingering question is how this pairing has avoided the pitfalls which have seen governments paralysed when the two pockets of power have stopped trusting one another and started undermining one another.
Told, the Herald wants to focus on their partnership before and after National was returned to power in 2008, Key turns and looks at English and exclaims “Okay, love” and laughs. English replies in typically droll fashion: “As a loyal deputy, I can assure you, it is not a partnership.” He means not that sort of partnership.
The humour, however, has an edge which leaves the listener wondering just how well the two men actually get along.
Very well, because they both understand which job they have, and Bill is not seeking a promotion (and in fact has ruled out ever standing for the leadership).
English’s tentacles certainly extend way beyond the confines of his finance portfolio. He was the one pushing hard for meaningful welfare reform. He has basically overseen the big changes in the housing of the poor. He keeps a watching brief on the public service and its adoption of new methods of delivering services. Given the almost-universal involvement of the Treasury in any reform, however, it is par for the course that the finance minister is involved.
Bill is constantly thinking about how to improve the performance of the Government as a whole. He has dozens of little pet projects on the go at any times ranging from championing open data to some funds for small local councils to do anti-truancy measures.
Bill on John:
• “(John) has more ideas than we know how to handle. My framework is a bit more conventional so I spend a lot of time just dealing with issues in a reasonably predictable way but the PM is always stretching the boundaries.”
• “He’s endlessly capable of everything, I assure you – catching fish, cooking pasta, making up policy, being friends with the Queen. There is nothing this man can’t do.”
John on Bill:
• “They are quite complementary skills. I do a lot of going around the country opening things and cutting ribbons and being the kind of face of the party that’s interacting with the public. And Bill is doing a lot of the long term thinking, heavy-lifting and policy design, all the things that involve ministers … I’m kind of the retail face.”
I wonder how David Cunliffe and Russel Norman or David Parker will work together, if they become Government.