Post-Cabinet Press Conference: Monday, 24 July 2017

Will you be raising the rights of New Zealanders living in the UK when you meet with Boris Johnson tomorrow?

Well, I think, more particularly we'll just indicate our ongoing interest in improving rights of New Zealanders to be able to work in the UK. I think we should be practical about our expectations of movement in the shorter term, because they have to deal with the fairly big challenges of how they deal with citizenship and access rights in their exit from the EU. But we want to make sure we keep the issue in front of them.

Are you concerned about how Kiwis are being treated there—that some of rights may be lost?

Well, we can keep an eye on it. Remember, this is going to be a discussion that won't include us. It'll be between the UK Government and the European Union, and they've got a very large number of issues to canvass. So we will be indicating our ongoing interest in it. I would expect that once, like the free-trade discussion, Britain has left the European Union, then they'll be in a better position to deal with us.

Is it fair, do you think, for them to charge Kiwis $440 as a health surcharge for those who are staying longer than 6 months?

Well, look, they've a range of charges related to applications for citizenship and visas and residency, and so on. It's up to them to set their charges. We set ours. They set theirs. Our primary focus is on being able to maintain and improve access.

The key difference, though, is that ours for them is zero dollars, and theirs for us is $440. Isn't that a bit unfair?

Well, look, I'm sure we can have that discussion, but I doubt that it's very high on their priority list. I think, as I said, we've got to be realistic about the positon Britain is in as it embarks just in the last few weeks on its negotiations with the European Union.

So what will you say to Boris about it? I mean, what are your personal thoughts on the rights of New Zealanders over there, and is the Government clamping down on them?

We will just make sure he’s aware of our ongoing interest in maintaining and improving access of New Zealanders to the UK, and he’s someone who's indicated in the past his interest in that issue. Again, I think we have to be realistic about the size and complexity of the issues they are dealing with, but ours aren’t going to be major in the short term, in that context.

Do you think there'll be further erosion of New Zealanders’ rights even as an unintended consequence of some of those Brexit negotiations?

Look, it's hard to speculate about that because they are now having, and will continue to have, a pretty intensive discussion about the rights of European citizens in the UK and UK citizens in Europe, and I don’t think anyone’s quite clear about where that’s going to come out, let alone what the unintended consequences of it might be.

In terms of the free-trade deal, how much of that will you be discussing tomorrow?

Look, that’s a matter for the discussions, but both Governments have signalled a strong interest in a free-trade agreement, but, of course, we can’t begin that process until they've exited Europe. In the meantime we've got a pretty high priority, which is to negotiate a free-trade agreement with Europe, which, as it stands at the moment, includes the UK. So we've just got to keep things in the right order.

How high would New Zealand be on the priority list for the UK when they're negotiating an FTA?

Well, I think in the same way we've been able to be a priority for other large economies. We aren’t as economically significant as others but we're easier to deal with, and we would, I think, want to encourage the view that if the UK needs to be able to establish early its ability to do free-trade agreements, then New Zealand is a candidate for that. They'll make their own decisions about trading that off against what will no doubt be a pretty busy schedule of agreements with larger economies.

How far away, realistically, are you talking about for a free-trade agreement with Britain? I mean, presumably a couple of years before they exit Europe and then a couple more years after that, at least, I would think?

Well, you know, your guess is as good as mine, really. We would advocate for an early start with a country that’s easy to deal with. They've still got some way to go to get to the point where they can even contemplate those discussions.

Looking at the possible stumbling blocks, do Welsh farmers have anything to fear from an FTA between New Zealand and the UK?

Oh, look, I wouldn't want to comment on it in detail, but I'd imagine that there'll be a lot of the same sort of issues that apply whenever New Zealand goes to negotiate free- trade agreements, and that is that agriculture is a pretty important part of it, and sometimes a pretty challenging part of it.

You've said that the discussions you're going to have are going to be wide- ranging but, you also said interesting, and had a bit of a chuckle. What do you mean by that?

Oh, well, I think we're, you know, all familiar with the Foreign Secretary's eloquence.

So you're looking forward to putting him in a room with Gerry Brownlee, are you?

Well, it'd be good to listen to for a while, wouldn't it? OK, are there other—

He sometimes says a few politically incorrect things, and he compared a hongi today with a head-butt. Do you think any in New Zealand would take offence at that?

No, I don’t think so. I think we need to bear in mind that a hongi is a fairly unfamiliar ritual to almost anyone else in the world. It's pretty unique here, and sometimes people don’t exactly understand what it’s about.

Just on the immigration policy, you made noises this morning that you might be rowing back on some of the ideas that you guys put out a few months ago. Can you just explain what exactly you're thinking of not doing—is it around the 48,000 cap?

Well, look, the details will be clear when a final decision’s announced. But we put out a proposition around the essential skills visas—changes in the parameters there—and we put them out deliberately for consultation. You know, there's been some response to that, which we're listening to, and it's come from across the board, from employers and business, and employees, actually, and migrants. And so we’ll be taking that into account. But you wouldn’t be looking at wholesale change. We're just looking at changing some of the parameters.

So would you reduce that salary band, would you?

Well, as I said, we'll look at changing some of the parameters, but you'll have to wait and see where our considerations get to. I mean, we've got the submissions. They're being looked at.

Could we see targeted salary bands to the regions—say, to Auckland; higher in Auckland, lower in Southland? Is that an option?

Look, I wouldn't be—again, I wouldn’t comment on the particular parameters. But I would make this point—that in an economy that’s producing 10,000 new jobs a month, that demand for skills applies right across the country—Auckland and in the regions. And I think the extent of it in the regions, the strength of that demand, is surprising some people. But, equally, in Auckland, if we're going to build the, you know, 35,000 houses the

Government's said it's going to build—a proportion of the 60,000 houses enabled by the Housing Infrastructure Fund—with thousands more that'll be enabled by Crown Infrastructure Partners, we're going to need people in Auckland to do it. So theyre not an exception to the demand; they're part of the strong demand for skills.

Why not let the market decide here, by having employers increase their wages to attract staff, and change their systems, invest in R & D, to try and improve their productivity— with those staff you can justify the higher wages?

And I think you see that happening in parts, particularly in the construction industry, where there’s, you know, a lot of discussion now about how to deal with the fact that there’s so much work, there’s such a long pipeline, and it's so strong, and the opportunities to do just the things that you've said.

Surely these people you'd expect them to be paid more than $48,000 a year, though? Because they're in industries for which there's a lot demand. So why would you need to look at changing that wage gap?

Well, as I've said, you'll just have to wait and see just what decisions—because the decisions haven't been made. But, you know, we're listening to the feedback.

The main concern is that people didn’t want to pay their workers that much money. Was that the main concern?

Oh, no, look, the main concern has been people being able to—well, businesses and regions being able to get the people they need to do the work that’s available. And I think pretty well all the politicians have had that message, including Mr Peters.

But surely they'd have a better chance of attracting those people if they had to pay them more?

That's right, and they've got to take that into account. And that’s part of the balance we're trying to achieve here—getting the skills we need for the jobs that are available, making sure that New Zealanders have appropriate opportunities for jobs they could be getting, because we have a strong interest in that, and, you know, not being in the position where our industries find themselves, you know, becoming completely reliant. Now, I must say there’s been a good discussion over the last 12 or 18 months with a number of our industries, particularly horticulture, but hospitality coming to it as well, where, you know, they need to understand it’s not the Government's job to go and procure their workforce; it's their job.

But if you going to let them off—to just keep going ahead with the status quo— then how could you expect change to come through?

Well, it’s not a matter of letting them off. I mean, we're doing both, making sure that—remember, this discussion has come about because we've been trying to get the mix of skills differently. That was the core of the propositions in April, so that was proposing to change the status quo, and alongside that we're having increasingly constructive discussions with these industries to make sure they don’t become reliant on Government policy to supply their workforce.

But you'd seem to not be changing Government policy once they cried foul. Like, you've put out a set of proposals; they've said they don’t want them. You've indicated you're going to row back on those proposals, so it seems like their concern is having to pay workers more and also maybe spend more for training local workers. So why not initiate the proposals that you put up a few months ago?

Well, we have, and the outcome won't be the one that you're describing.

So of those submissions the Government received, how many of those address the issue that that salary band be increased?

Oh, look, I couldn't give you detail about that.

Was it the majority, though? Was the issue around—

Honestly, I couldn’t give you detail about that, but, you know, the general level of feedback has been pretty straightforward.

So what's the time frame for a decision on this?

Oh, the next few weeks.

Using your argument that the huge increase in immigration is down to Kiwis coming home and staying home, why, then, do they need overseas workers so much, if there are other Kiwis coming home?

Well, the key element of that argument is Kiwis not leaving, actually. So in the last 5 years there's been estimated that about 150,000 Kiwis have stayed home who 5 years ago we'd probably thought would've left. The fact is the economy’s growing. The demand for skills continues to grow. We've already talked about construction and infrastructure. That's just one industry where that demand looks like it's going to be strong for some time. And other industries have, you know, I think through their public statements, made it clear that they've got very strong demand too, whether it’s, you know, trucking or horticulture or agriculture or hospitality. Aged care is another one. So, you know, these are real services that have to be provided, actually, next week, the week after, next year. So we do have to take into account those issues.

Those industries that you've mentioned are traditionally quite low-paid industries, so why let them away with that, I guess?

Well, I think we've already had some of that discussion. It's not a matter of letting people away with it; it's a matter of making sure that we've got the people to do the work that has to be done—like, you have to service the tourists, you have to build the houses, you have to look after the old people—there’s no choice about that—and working with the industries to make sure that they are adapting to this situation. And the point I'm making is that they seem to me to be getting significantly more constructive about that.

So when you developed your proposals, did you not expect the blow-back from it? Did you think that the businesses would accept those changes?

Well, you know, there’s some new aspects of the rules, and that's why we put them out for consultation, because, you know, when you're doing the policy you can make some assumptions but you have to test those, and, I think, you know, the strong demand for skills in the economy has continued, particularly in our regions. It's remained strong and that’s what's reflected in the discussion.

Do you know whether Todd Barclay will be at Parliament tomorrow?

My understanding is that he will be.

Will he be here for the full sitting week?

Look, I couldn’t comment on that.

Do you expect that he'll attend select committee meetings?

I can’t comment on that. That's a matter for the whip.

Have you given another police statement, or have the police asked you for another statement?

No, I'm not making any further comment on that.

Does the Government have any plan or response to the death of seven people to synthetic cannabis that was reported last week?

Well, I think simply to emphasis, really, two things. One is that these are illegal drugs and people should expect firm policing of the law, and the second thing is that these are tragedies. These are young people who must've believed they were taking some harmless or recreational drug and, if it's found that synthetic cannabis is the cause of their deaths, which seems likely, then that’s a real tragedy. They had no idea what they were doing, and people should listen to the health warnings about these substances. They can be lethal.

What are you doing to find the source of it?

Well, that’s a matter—this is an illegal drug, and that’s a matter for the police. And if they're seeing, you know, a significant number of deaths like that, it's a very significant policing issue.

Doesn't this level of harm—seven deaths, 20 hospitalisations a day—require something over and above business as usual?

Well, I don’t think it's business as usual. I mean, you'd need to talk to the police about how operationally theyre dealing with their aspect of, you know, policing the sale and distribution of these drugs, but the most important thing is that people who are considering taking recreational or synthetic cannabis have to be aware it could kill them. It's not a harmless recreational drug; this could kill them. They've seen the pictures on TV, and there's worse on social media. They need to understand that. Don’t take the substances; we don’t know what's in them. It’s illegal, but also, it's potentially lethal.

Well, is it not important to find the source to prevent perhaps another seven deaths in the next fortnight? I mean, how urgently are you actually taking this?

Well, again, that is a matter for police. I mean, they need a set of legal powers to investigate and take action. Only the police have those powers, and they, you know, I think have shown previously that where they see a priority for policing they're able to move resource to it. It's up to them to make that decision about how they do so.

You talked yesterday about arresting people rather than, you know, ideas like offering an amnesty to people to come forward to actually identify the source.

Well, look, again, these are—we don’t run the police force. It's an illegal drug. They make the operational decisions. They've indicated where they see priorities, they're able to shift their resources to police more effectively and more aggressively, and we would expect that if this does turn out to be a rising death toll, that would be taken very seriously.

So have you asked for any advice on it at all?

Well, I've asked for advice about what action is feasible to be taken, and that falls into those two categories, and that is it’s an illegal drug; it has to be policed. We are not the police force. They have to be able to deal with it. The most important thing here, though, is that people do not take these illegal substances that can kill them. That sense of personal responsibility is pretty critical to staying alive. They need to decide they're not going to take these drugs. They're not harmless recreational substances; they are potentially lethal because no one knows what's in them.

So are you stepping up the educational campaign along those lines?

Well, that would be possible. We haven't made a decision to do that yet. I would've thought the pictures in the media were pretty educational.

Isn't this what you were warned about, though, when you banned legal highs— that this would go underground and there'd be a black market where people are putting horse tranquiliser on the synthetic cannabis? Isn't this what you were warned about?

Well, there was—as you may remember—extensive public discussion at the time because the ban followed on from the alternative policy, which was to make them publicly available in a regulated form. And it turned out that was both not practical, because they could keep changing the make-up of the drugs, and unacceptable to the public. You may recall that. So we've been through a whole cycle of policy to try and get this right. In the end, we have two tools right now. One is young people deciding not to take a drug that can kill them. I can’t emphasise that enough. They should have a sufficient sense of self- preservation to be very, very careful, and the capacity for assertive policing around the sale and distribution of the drug.

So do you think you've got the policy right now, after going through those policy steps?

Well, if it is the case that there’s been seven deaths and a large number of hospitalisations, that’s a tragedy. We have tried our best on policy over 6 or 7 years, with different versions to try and get it right. As we pointed out, the readily available public sale of them turned out to be impractical and unacceptable to the public. Now those drugs are meant to be clinically proven before they're approved, and if they're approved they can then be sold. None have been clinically tested. But we've got a more urgent problem, which is there's clearly pills out on the street which are lethal, and young people should stay well away from them.

So the rise of that problem, does that indicate the police haven't been doing their job?

No, I wouldn't assert that. I think, you know, things change. In the world police are dealing with, sometimes something’s a problem and it becomes less so.

There's less aggravated robberies going on in South Auckland, partly because of assertive policing and support for the shop owners. This is just another different source of criminal activity that they have to deal with.

Media; But it's not hard to find them. We went down to Queen Street and we found a handful of people who were high on these drugs and talked about it happily. So it's not like they're hard to find; it's not like it's hidden. They're just wandering the streets on Queen Street.

Well, I hope you referred the ease of finding it to the police, because we would expect them to deal with that.

Well, we broadcast it on the 6 o'clock news. Shouldn't they have seen that and just gone for a walk—

Well, I suggest you take those matters up with the police. I mean, this is not a particularly useful discussion because we don’t run the police force.

Has anyone applied for their products to be tested so they could be legalised? Is it that no one’s applied or they've applied and the products aren't acceptable?

As far as I understand, no one has applied.

One of the problems is that the Government outlawed animal testing so that made it harder to get a rigorous test. Is there any room for relaxing that to essentially allow these low-risk products to get on the market and replace the black market?

Well, that’s an interesting policy idea. At the time there was a great deal of pressure to ban animal testing. So the Parliament listened to that and banned animal testing, which does make it reasonably challenging to be able to get the drugs tested.

Weren't there alternative ways of testing?

Look, I can’t recall the advice, but at the time there were indications that there may be but it wouldn't be easy.

There's an argument that if you were to legalise or decriminalise cannabis, more people would be smoking that instead. Does that change your view on that in any way?

No, it doesn’t and I don’t see why it would. I mean, these are dangerous products in their own right and people should be very careful with them.

The Rich List came out this morning and it showed that the collective wealth of everybody on that list was over $80 billion, essentially showing the rich of New Zealand are getting richer. Does this show that inequality in New Zealand is on the rise?

No, it doesn’t. The Government reports regularly on trends in income and inequality in New Zealand. I think there’ll be another report out pretty soon. The trend has been that inequality rose in the late 1980s, early 1990s, and since then it's been roughly flat to falling.

But that’s income inequality, not wealth inequality.

That's right. It is income inequality. You'd have to look through about the wealth inequality. I don’t think there’s much doubt that if you look at what's happened with interest rates over the last 8 or 10 years, going back to 2008, much lower interest rates drive up capital values. It wouldn't be surprising that people who hold assets are going to find those assets are more valuable. If interest rates rise, then on that measure of inequality, inequality will drop, and they'll still have the same assets. So, you know, it’s a tricky area, but I don’t think there's any doubt, from people who bought a house in 2009 to those who owned a bunch of shares on Wall Street, that those values have all gone up, and one of the big drivers has been low interest rates.

With the infrastructure fund announced yesterday, do you think that the targeted rates used to fund them will reduce land values, because in theory they should be capitalised into the land grants.

Quite possibly. I mean, there was a report that came out from SUPERU the other day showing that around half—well, that land had a premium of over 50 percent on it due to regulation; land price. So I would expect that, looking ahead, if the policies are right, then you will tend to see land being less expensive but there being a bit more paid for marginal infrastructure. Now, overall, whether that means the overall price of housing stays the same or goes down, I think is yet to be seen. But, clearly, better regulation of our land markets and more competitive land markets are going to tend to take the pressure off the price of land. And this fund, or this vehicle, alongside the Housing Infrastructure Fund, are important elements in creating more competitive land markets, which would, in time, with better regulation, lead to, on average, lower land prices.

But don’t you need to have significantly lower land prices, though, to be able to actually get housing costs down, because these targeted rates will be an extra cost per year on the homeowner—quite significant costs?

Well, that’s what we're going to be testing. But these are, I think, steps in the right direction. But, you know, the magnitude of those effects, I think, is yet to be seen.

So how much bigger does the fund need to be to cope with the infrastructure demands, which look a lot bigger than $600 million, or whatever the leveraged version might be?

Well, we'll get to test that as the market realises there’s greater availability of finance and that the usual bottlenecks—such as council debt ceilings, which have helped underpin higher land prices—are gradually being freed up. So we'll see what the magnitude of those effects are.

What do you think of New Zealand First's plans around updating the Boxing and Wrestling Act to allow police to have the power to stop events like what happened at the weekend?

Well, it's probably a bottom line, along with the other ones, so—I mean, I haven't given much thought to it, to be honest.

Do you think those sorts of events, where you have a number of gangs coming together in a town and boxing the hell out of each other, is a good idea?

Look, I think the more important thing for the gangs is to stop manufacturing meth—that wrecks lives—and to take better care of their children and their women. That's what they should focus on.

Just one further point about the Boris Johnson meeting—will you be talking to him at all about the Conservative Party’s appetite for a change in leadership?

No, I don’t think so.

What specific things will you raise with him about Kiwis in the UK?

As I said, we'll just be making sure that the Foreign Secretary is aware of our ongoing interest in improving access for Kiwis to the UK. And, again, I'd stress, we're practical—we understand the pressures they are under over the next few years to deal with very significant issues for their own citizens and European citizens. And we would expect that when the time comes, we're able to talk to them directly in detail about our requirements—well, our interests.

What specific interests are they that you're talking about?

Well, I'm not going to be any more specific than I've been.

The prospects around Gareth Morgan perhaps running in Epsom—does that worry you or alter your outlook for how you might deal with ACT in that electorate?

Not particularly. I mean, I don’t think it matters much. I don’t think it matters much where Gareth runs. I mean, he’s presumably chasing the party vote, and seems to be creating a bit of pressure for the Greens and Labour in that process.

Do you think he could beat David Seymour in Epsom?

Oh, look, it's just speculation. He hasn't even decided to stand there, as I understand it.

There's been another slip in the Manuwatu Gorge, about the same size as the last one. Will that road ever reopen?

Well, that’s yet to be seen. I think in the meantime it's pretty important that we build confidence in the interregional work there. So I'm advised NZTA have taken over the maintenance of the Saddle Road from the council, because that is going—you know, for at least the foreseeable future, that's going to be the main route and it needs good maintenance and upgrade. So we're, you know, keen to make sure that access is there and that people aren’'t—people who may have been reliant on the gorge have got an alternative option, because the gorge problem does look pretty considerable.

But would the Government consider giving any assistance to businesses that are affected?

Well, look, we're always open to listening to them. The Saddle Road route goes through Woodville. I understand people in Ashhurst are worried about the heavy traffic going through their small town there, too. There'll be some things that can be done to mitigate those, but, you know, the route services those towns and we just want to make sure the route’s of sufficient quality to handle the volume of traffic that’s going to be on it.

Your MP Alastair Scott told a public meeting that the Government wouldn’t be offering them a support package. Is that true?

Where is this, sorry?

Alastair Scott said that at a public meeting.

In?

I'm not too sure where it was.

Right. Yeah, I mean, we wouldn't be assuming a support package. As I say, we're, you know, happy to listen to what businesses have to say. If there's a route there that’s taking traffic through the towns, then the case for support wouldn’t be very strong, I wouldn’t think.

I mean, it’s an act of God, really, just like the earthquakes, just like floods. You've rolled out packages of support for businesses in Kaikoura, Edgecumbe, and the like. Why not here, where, essentially, it's an act of God that’s prevented them from getting business?

Well, you know, as I said, happy to listen to whatever it is the businesses have to say. I have to say in the other cases the impact has been pretty definitive in that the businesses were closed, and, you know, in the case of Kaikoura indefinitely. So we’ll work on the access route, because the ideal here is that Saddle Road is in an acceptable state, that the traffic is unaffected and the traffic through those towns is maintained in a way that'll assist the businesses.

Is it appropriate in election year, do you think, to skip question time to go see your son’s rugby match?

Well, it's—you know, sometimes as a parent you have to make decisions that trade off different obligations, and I've made the decision in this case. There’s good reasons for it.

Who are you rooting for?

Oh, St Pat's town.

Which son is it that’s the captain?

Oh, my youngest one.

Is that Bart?

No, Xavier.

Xavier.

Yep.

Is St Pat’s his team?

What's that?

Is St Pat's his team?

Yes. I played for the Silverstream first XV. OK. Thank you very much.

Sorry, just really quickly. There’s been a letter signed by hundreds of GPs calling for extra funding to train more GPs. They want to train 120 more a year. Would the Government look at funding that?

Oh, look, all that’s under discussion, and these various proposals have been floating around about how to get more rural GPs. As I understand it, officials have been looking at propositions from Waikato University, Otago, and Auckland University, so they’ll—

What's your view on that Waikato University idea? Apparently it's a quarter of a billion dollars extra.

It's going through a process and when we get some advice we'll let you know.

OK. Thank you.