On Friday we found out some of the details about the partial sale of Mighty River Power. The price range for the shares estimated to be between $2.35 and $2.80. That should bring around $2 billion into the government coffers.
Good morning, David Shearer.
Good morning, Susan.
SUSAN $2 billion on schools, on things that are public good. Money well spent?
DAVID No, because you also miss out on the revenue over a longer period than that, and as soon as you do that, 50 per cent of your revenue goes, and over time, obviously, that’s nonsensical. But the other thing about selling these shares is that a small group are going to get ownership of those shares-
SUSAN 400,000 people is not a small group of New Zealanders.
DAVID Well, if you actually add it up, it’s going to be well less than 10%. More than 90% of New Zealanders will not have the opportunity to buy shares, and they will lose, in a sense, what they already owned before, which is a national asset.
SUSAN So without selling assets, and we know you don’t want to, how will you balance the books without borrowing?
DAVID Well, what we had been saying before is a whole programme of economic development, capital gains tax, and in the short term-
SUSAN So tell me how you’ll raise $2 billion. This government’s raising $2 billion doing it. How will you come up with $2 billion?
DAVID Let’s start from the beginning, then. Do we need to have exactly that $2 billion or not? The way the government’s put its books in order, or not in order, is by putting forward an argument that we need to sell our state-owned assets. I don’t believe that that’s the way that we should be going forward. There are other alternatives.
SUSAN Do you agree, though, that the government should be running a surplus? They should not be in deficit? Households have to tidy up their act. Do you agree that the government books should be in surplus?
DAVID Well, of course we should be in surplus, and that’s what the Labour government did for nine years while it was in government, and that’s what it handed on to the National government – government books that were in surplus.
SUSAN Yeah, but to be fair, there’s been a GFC.
DAVID When you sell a state-owned asset like Mighty River Power you forego the income that that brings in.
SUSAN I understand that.
DAVID So what you’re effectively doing- It’s like selling your business, putting an extension on your house – you feel much better for that, but you lose the income from the sale.
SUSAN OK, but they are getting the books back into surplus. They are getting their house in order. Give me a few ideas of how Labour would get the house in order without borrowing more money.
DAVID Well, at the moment we don’t have a growth agenda in New Zealand. We are not growing our economy as we should.
SUSAN But give me some specifics here of what you would do. We know what this government is doing. How would you raise a couple of billion to get the books back in balance?
DAVID Well, what I’m saying is that what we need to do is to grow the economy in a way that it’s not growing at the moment, and we’ll be talking about Tiwai Point in a little while…one of the big problems about – no, no, let me finish – one of the biggest problems about that is that the exchange rate is so low that we’re seeing many of our businesses actually going out of business because they’re not being able to succeed. We’re not putting our money in the profitable sector; it’s going into the property market because we don’t have a capital gains tax that will help us direct money into those areas. And if you’re wanting to raise money, then at least put money into businesses- invest in businesses through the incentives of capital gains, and that brings, obviously, money into the government as well.
SUSAN Let’s talk about the GCSB spy boss, Ian Fletcher. Is he the right man for the job?
DAVID I don’t know Ian Fletcher, but I can say that the way he has been appointed-
SUSAN No, no, there is nothing negative about him, is there? There is no suggestion that he is not the right man for the job. Let me phrase it that way.
DAVID Well, let’s put it another way. Just last year, when the whole Dotcom issue was running, Ian Fletcher was the person who went to the prime minister and said, ‘Sign this, because I want to cover up the fact that we’ve been illegally spying on Dotcom.’ That was the ministerial certificate that Ian Fletcher took to the prime minister. Now, I don’t think that was a good move. I don’t have an opinion of him per se, but-
SUSAN Well, you don’t like that.
DAVID Of course I don’t. No, I’ve just said that. But what I don’t like is the way that he was interviewed and the process that went through. I don’t like the idea-
SUSAN But hang on-
DAVID Hang on, no, no, just let me finish- John Key has shoulder-tapped one person, put him into that position. We now have in our most secret agency in New Zealand a friend of John Key’s who reports directly to him. John Key is the only person who has democratic oversight over that agency.
SUSAN And it’s his right. It is his right to select whoever he wants for that job.
DAVID There is a real problem in New Zealand now with the confidence that we have in our intelligence agencies, and if I was coming into office, I would have a full independent inquiry into our intelligence agencies to restore that confidence, because if we don’t do that we will not be able to hold ourselves up as the transparent nation that we are.
SUSAN Rebecca Kitteridge has been looking into it.
DAVID That’s an internal report. I would want this to have a terms of reference that would be agreed by parliament. It would report back to parliament so that we all have confidence in it. It’s something the Australians did a few years ago when there was a crisis in their intelligence agencies, and they’ve had regular independent outside reviews going on. Now, we have the SIS at the moment. The SIS is about to look at its legislation, reform its legislation, and I think that we need to have that independent review before we get to that point.
SUSAN Much made this week of the Prime Minister’s memory loss. You, of course, have had your own memory loss over that $50,000 US or more, how much was it?
DAVID I’m not going to say. It’s my family business. I don’t talk about my savings online, but I do-
SUSAN Tony Ryall said in the house it was a couple of hundred thousand dollars US. Is that correct, or is it more than that?
DAVID I’m not going to say. It’s my family business.
SUSAN Didn’t you lose your right for privacy around it when you forgot to declare it? When you broke the rules and did not declare it?
DAVID No, I absolutely did not. I said that I made an error. I myself came forward and corrected that error. I took it on the chin and said ‘here it is’. And I expect that to be the standard by which all politicians operate if they do make a mistake.
SUSAN That’s what John Key did this week. He said he’d made a mistake and he fessed up. Exactly the same scenario.
DAVID I think what John Key was doing this week-
SUSAN He came forward.
SUSAN Yes, he did. He came forward and he said, ‘Actually, I’ve checked by records and I did call Ian Fletcher.’ He came forward.
DAVID What he was doing this week was that he was deliberately trying to move opinion away from and deflect opinion away from his friendship and relationship with Fletcher.
SUSAN Is your problem with this money- Is your problem with this more than $50,000 US in the bank, is your problem that there is so much money there that it would not resonate? You would not resonate? I mean, Michael Cullen very famously called John Key a ‘rich prick’. Are you, Mr Shearer, a rich prick?
DAVID Look, I worked for my money working for the United Nations in Iraq. I put it in the bank. It’s my family’s savings. I didn’t put it on my pecuniary interest. I declared that and I came forward and I was honest about it.
SUSAN And you were very well paid in that job, sometimes up to half a million Kiwi dollars a year.
DAVID No, I think you need to do your research on that, quite frankly, Susan. But, look, working in Iraq, where we lost 25 people, there was a- people do get paid hazard money in those situations.
SUSAN What’s the money sitting there for?
DAVID Look, it’s my family- Look, people put money in the bank for any- Look, this is my private savings, my family’s savings. Do you ask John Key what he does with $50 million when he comes on to your show?
SUSAN John Key actually does have scrutiny over his money all the time. There are reports about how much money he has; he’s on the NBR Rich List – all those sorts of things. So, yes, he does have the same sort of scrutiny.
DAVID Well, I haven’t heard you asking the same sorts of questions-
SUSAN I haven’t had him on the programme yet, but when I do, I will ask him. So, are reports that it’s around $1 million correct or incorrect?
DAVID Look, I am not going to put a figure on it, and I resent the fact that you are asking me to reveal how much is in my bank account. Nobody needs to do that. I have done-
SUSAN You do need to.
DAVID I have done what I was obliged to do under parliamentary rules, which is to declare any account that had more than $50,000 in it. I did do that. I regret, obviously, not putting that on my pecuniary interests, and that’s where it stops.
SUSAN So you’re not a rich prick?
DAVID I’m- Obviously, as a New Zealander, I’m fortunate, but I’m not in the same league as our prime minster, no.
SUSAN Tiwai Point – what would you do if you were in government?
DAVID Oh, look, Tiwai Point needs to be negotiated. It obviously needs the government to have a look and see what it can do.
SUSAN What would you offer, though? Would you be offering Rio Tinto some sort of extra funding to stay here?
DAVID Oh, look, I think what we would need to do is take a look at what’s on the table, and I don’t know what’s on the table.
SUSAN Nothing’s on the table. The government’s pulled it off the table, haven’t they?
DAVID We don’t know how far apart they are. We’ve only just got indications about that. I think what we need to do, though, is look at the national interests about what this means to New Zealand, what it means to Southland, what it means to jobs. And at the moment the government is not in the business of creating jobs. There are jobs going and for Southlanders obviously they are very, very -
SUSAN I think you could actually say that the government has played Rio Tinto pretty well on this. And the numbers – let’s talk about them. $250 million a year they pay for power. That’s about a quarter of what you pay for power, of what all of our viewers pay for power. They pay one quarter. They then return about $150 million. Effectively, we’re giving them a $750 million discount. Should they even be here? I mean, what are they really adding?
DAVID Well, that was what they were set up for, obviously, and they were guaranteed that power for a long time. I mean, you have to play out what does it mean for jobs, what does it mean for the Southland economy, what does it mean for our current account deficit? But the bottom line is you would try to, obviously, secure a deal-
SUSAN Really? Because those numbers I’m looking at there, there are other things you could do. The power could be in other uses.
DAVID But you wouldn’t be going into a negotiation with a blank chequebook.
SUSAN And the government hasn’t. They’ve walked away.
DAVID Well, the government, what it did, was it was trying to-
SUSAN The government put pressure on Rio Tinto.
DAVID What the government was trying to do was actually get the sale of Mighty River Power across the line and reduce the uncertainty around the electricity price. That’s what it was trying to do, and that’s why it went into negotiations. Now, it went into negotiations with Rio Tinto aware that the government was wanting to do that. So it went in with one hand tied behind its back.
SUSAN Well, they haven’t paid it one cent, which I think would be the public mood at the moment – no mood to give a lot of money to a foreign multi-national. One final question – there is some confusion around Labour, and I’ve been trying to press you during this interview about what you would do differently. So let me give you a specific example. You’re a 26-year-old woman. You’re living in Auckland. You’re earning $65,000 a year. You’re paying off your student loan. You’re renting. What would Labour do for this woman that National is not doing?
DAVID Well, two things – first of all, we would have a healthy home guarantee to make sure that where she’s living, in the rental accommodation that she’s living in, is actually up to scratch; it’s both heated and it’s insulated. The second thing that we would do is we’re building 10,000 houses, affordable homes, a year, and that would enable her to have an opportunity to get on to the housing ladder. So there are two specific things that I believe that would help that case.
SUSAN Thank you for your time this morning.
DAVID Thanks, Susan.
I like how Labour goes from condemning the Government for negotiating with Rio Tinto on Tiwai Point, to complaining they didn’t secure a deal.