Interview: Andrew Little

  • 11/03/2017

Lisa Owen talks to Labour leader Andrew Little about his superannuation policy, housing, and how he plans to win the election.

Lisa Owen: Can we really afford to pay super to everyone over the age of 65?

Andrew Little: Yes, and we have to, because far too many New Zealanders right now who have a physical component to their job struggle to get to 65 right now. The idea of working another couple of years is just not acceptable.

Okay, well, let's look at a bit - There's a lot in there that we want to unpack, so let's look at it bit by bit. How can we keep affording it?

Well, in the way that we're doing now. The cost of superannuation for New Zealand right now as a proportion of our GDP is one of the lowest in the OECD. I don't get this issue about suddenly it's all become sort of impossible and unaffordable. I don't accept in terms of the long-term projections what Treasury is saying about, you know, GDP growth. It will be better than what they are projecting. Here's the thing - if affordability was really the issue, then the Government right now would resume contributions to the New Zealand Super Fund. They've got the means to do it. They're generating surpluses. They could do that right now.

Both you and Jacinda have been saying if the Government had kept paying into the Cullen fund we would be able to afford super into the future, yes?

Well, it'd be 20 - We'd be more than $20 billion ahead of what they are now, the super fund, and it would be affordable.

But that's your big criticism of them - stopping those payments.

Yeah.

But if you look at the maths, that doesn't add up either, because if you crunch the numbers, even if we keep paying - had kept paying into that fund, it would only cover 7 percent of super costs in 2060. The numbers just don't add up.

Well, no, the numbers that don't add up are the very conservative projections for GDP growth. So Treasury's produced this thing that says that, you know, the cost of superannuation is going to go from roughly 4.5 percent of GDP to, sort of, roughly 8 percent by 2050 or 2060. Well, that assumes incredibly conservative GDP growth. It assumes nothing about the shift and the transformation of the economy that we need to make - that we have to do for a whole heap of other reasons. So I do not accept on the basis of the official projections so far that it is unaffordable. It is affordable.

Okay. In 2015 you said, "If there is one thing that scares the bejeezus out of me, it is the looming cost of superannuation," so I'm wondering, has that fear just disappeared or is the fear of losing the election stronger than that fear?

That was a fear based on this Government's totally neglectful failure to continue payments in the New Zealand Super Fund.

But I just told you the figures, Mr Little. Even if we continued paying into the Super Fund, even if we didn't have that holiday from payments, we'd be nowhere near covering it with that fund.

But I disagree - I've disagreed with your figures before, because you're basing your figures on these incredibly conservative Treasury predictions and it isn't right.

The Super Fund would only pay around 7 percent of super costs by 2060.

It was intended to make contributions from 2032 roughly. But, you know, right now, why do we have - ?

Your numbers don't add up.

Why do we have New Zealand Super? It's because you actually want people when they're retired to be able to live in dignity. There are working people - tens of thousands, hundreds of thousands of working New Zealanders - who have a heavy physical component to their job.

So I'm just wondering, what percentage of workers do you think are in those physical work jobs? What percentage of the workforce is made up by those?

It is a huge percentage, but that's -

But what percentage?

But the point is this - then people -

No, no. I'm interested in a number, because if you're making policy based on an assumption, I want to know what the number is.

Well, no, it is a big number. It's a significant proportion.

Okay, well, we looked at - Mr Little, this is really important. I just want to say that we looked at Statistics New Zealand job data and we looked at the jobs that have high physical needs, and we were pretty generous. If you stood up in a shop all day, we considered that to be a physical job and it worked out at about 36 percent of the workforce. So why make a rule around the minority when you could just make exceptions for them?

So do you honestly think that we should have a policy that excludes 36 percent of the workforce? That's lunacy. That is just sheer lunacy.

You could make an exception. You could make an exception for people who have a physical job.

Okay, so now we get to the point. Yeah, we could make an exception, and you know who else we should make an exception for? For Maori and Pasifika, whose life expectancy is much shorter, and then we could make a whole heap of other exceptions.

You could adopt Mr Dunne's policy because it allows people to take super earlier on a sliding scale.

And entrenched poverty. No, we're certainly not going to do Peter Dunne's mad policy. And so it comes down to this - the most efficient and effective way to provide for superannuation in retirement and dignity in retirement is universal superannuation, and that's what we're sticking with.

So you think that people should get the full super even if they're working in a full-time job at 65?

See, what happens to a lot of people who continue working when they get super -

No, people who are working full-time and they're still collecting the super. I mean, most people would know someone who's doing that. Do you think that's fair?

So if you let me finish answering the question, a lot of people who continue to work once they start drawing national super is they actually start to ease back. They cut back their hours. They reduce their working week, and that makes room for others and it enables them to ease their way into retirement. That's actually an unintended benefit of superannuation at 65.

Well, 18 months ago, you said that it was unfair and costly that people who were still working full-time got super at 65. Why are you doing a complete U-turn on that?

It's not a complete U-turn. I stood for the leadership of the Labour Party on the basis that I was opposed to our previous policy of lifting it to 67. I absolutely stick by my policy - the leadership that I provided the Labour Party - of leaving it at 65, and that's what we will do.

And around universal provision, if a person owns five houses and they retire, should they still get the full super as well?

Well - Because we can look for all sorts of exceptions, Lisa, but in the end the most efficient and effective way to provide for superannuation, to provide for people in their retirement, is universal provision, otherwise you have very, very complex rules and it becomes impossible to administer.

The thing is Labour has come out hard against property speculators, so if someone is sitting on five houses when they retire, should they get the full super? It seems you're using a different measure.

I'm not using a different measure at all. I'm saying, "What is the most effective way to provide for retirement- for income support in retirement, given that most people stop earning at that point or close to it?" And that is universal provision of superannuation. So no, I don't - trying to work out a whole heap of exceptions based on a whole heap of conditions would just turn into a complete, you know, mess, and there's no point in that. It'll add costs.

Okay, well, let's move on to housing. Now, one of your big ideas to fix the housing crisis is KiwiBuild - 100,000 affordable homes in 10 years. Is that enough or do you think we need more now?

That 100,000 homes is on top of, you know, the build that is already happening, so all our projections are that that will make a significant difference.

You'd stick with 100,000?

We're sticking with 100,000 over 10 years.

Okay, and what do you consider affordable now in Auckland? Originally when that plan was launched it was $500-$600,000.

Yep, that's pretty much the figure we're working on.

Negative gearing - are you going to get rid of it?

Yep, we're going to have a look at the negative gearing rules. In principle we're saying, "Why should investors who own these investment properties have a tax advantage?" And so we're going to look at that, and that's part of, you know, dealing with the speculators of the market.

You've said in the last couple of years that you'd be looking at it, so why haven't you reached a conclusive decision on it? A decision around negative gearing under Labour?

It's - In terms of something that we're going to do and change, it's in our policy mix as a total plan to deal with the housing shortage and the housing crisis that we've got at the moment. We're going after those negative gearing rules. There's no need for them.

So, gone - negative gearing's gone under Labour?

Yep, pretty much.

Okay. The average wage is rising, so it's now knocking at that top tax bracket. Would you think it's fair for average wage-earners to be in the top tax bracket, or would you make some change there?

Let's be very careful about the average wage figure. It gets trotted out for all sorts of reasons. There's a whole chunk of people - probably roughly 60 percent of wage and salary earners - who are not enjoying the same level of pay increases as others, so if you're talking about an average wage argument, there's a heap of stuff we have to do to lift wages. If you're talking about tax thresholds, then, you know, the Government says they're going to do something about it. Let's have a look at it. Tax thresholds should change periodically. The last Labour government actually legislated to do that but backed out of that.

What changes might you make? Because last election you committed to 36 cents on the dollar's tax over $150,000. Are you still committed to that?

No, because in the end you develop a tax policy or a tax rate policy based on the revenue that you think the Government needs to have to do the things that are needed, so once we know where the Government's gone with its tax review in this year's budget then we'll have a more specific answer to what we need in terms of tax rate.

Are you going to go higher than 36 cents?

Well, we're not saying anything about tax rates at the moment, because we need to know where the Government is going to get to, having foreshadowed possible tax changes in - whether it's earlier or in this budget.

Will you tell voters before the election what your tax rates are going to be?

Yes.

Okay, because before the last election you balanced your budget based very heavily on the capital gains tax and the revenues that that would bring in, also raising the age of super to 67, so how are you going to pay for all your spending now?

Every commitment that we've made under my leadership we can pay for out of existing tax revenue. Actually the Government has achieved more tax revenue than they expected. Just earlier this week, I think, the Government said they are now expecting a surplus this year of $1 billion ahead of the Treasury projections, so the tax revenue is there. The commitments we've made and the phasing of those commitments in putting them in place means that we can fund those out of existing tax revenue.

Okay, well, if you can fund them out of existing tax revenue, then are you making a commitment not to raise taxes?

We're not planning on raising taxes and we're going to see what the Government talks about, you know, in its tax changes that it's foreshadowed, but we are making no plan for lifting taxes.

But we just talked about the 36 cents over 150 grand.

From the previous election, yeah. This is 2017 - different election.

Yes, I know. So you're sticking with that?

We are not planning on any tax changes for the 2017 election. We will finely calibrate what we do once we see what the Government does in its foreshadowed tax changes, which we assume will be in this year's budget, but who knows?

Okay. Well, what we saw last year was a number of working people who were really struggling to make ends meet, so let's look at the ways you might be able to help them out. Would you increase the accommodation supplement or extend its reach?

We don't have any plans on the accommodation supplement, and in the end, you know, these sorts of devices and measures to lift the -

Why not, though? Because you were in the cross-party homeless enquiry. The cross-party homeless enquiry that you were involved in said that it should be reviewed, so are you pulling back from that?

Yep, it should be reviewed, yep. But we don't have a specific - If you're asking me whether we have a specific commitment to make on that, no, we don't at this point.

But do you think the reach should be extended or the payment increased?

We agreed that it should be reviewed. Beyond that I have no specific commitment to make about it. I do say this - incomes in New Zealand for far too many wage and salary earners are way too low and we have to lift those, and that's going to take a long time to do that. In the end, what we're going to run this election campaign on are the things that are distressing New Zealanders right now - the fact that people can't get a home. They can't even rent one, much less afford to buy one. The fact that we've had mental health services cut as badly as - our mental health service is in crisis. We've got schools now at breaking point in terms of the number of students. That's what we're going to be running this election campaign on.

Yes, but that all comes back to money and resources, doesn't it, Mr Little? Which brings us back round to super, strangely enough, because you say that we can afford that, but projections are that it's going to be around 8 percent - more than 8 percent of GDP it's going to grow to, so that means you have to find your money somewhere else. What will you cut? That's more than education spending. That is almost double the welfare budget. Where are you going to get the money to do everything you were just talking about there?

So I'll tell you why that's a stupid question is because you're talking about the plans we have for the next 10 years and then saying - and then talking about stuff that this Government says it's not going to do until 2040, so let's get real.

But I'm talking about your plans.

Let's get real about what the problems are right now facing New Zealanders. New Zealanders - young New Zealanders cannot afford to buy their first home - crazy. Working New Zealanders cannot even afford to rent a home and are living in overcrowded housing, cars and garages. We're going to fix that problem and we're going to fix it over the next 10 years. Schools - crowded. They're overcrowded - are absolutely at bursting point - because this Government's frozen operational funding, and every now and again they wheel in a prefabricated classroom for schools. We're going to fix that school problem. Every commitment we've made -

But if you're introducing new policy, that means new money - raising revenue from tax, selling something or shifting funds. So which will it be?

But you're not going to seriously debate with me about problems that are here and now that we need to commit to fixing over the next 10 years and at the same time talk about a problem that this Government says it's not going to touch until 2040, so let's get real about the debate here. So we are focused and we are talking to New Zealanders about and I will make commitments to New Zealanders about the problems that are here and now. And the commitments that we're making - all of them - can be funded out of existing tax revenue. That's what we're focused on. That's we're campaigning on.

Alright. Another thing is the Children's Commissioner. He wants the Government to commit to a target of lowering the number of children in severe hardship by 10 percent over a period of 12 months. The current Prime Minister doesn't want a bar of that. Will you commit right now to meeting that target?

Ye - two things we're going to do. We will have a child poverty measure that we're going to commit to, and I've already said every budget we will report on how we're going against that measure, and we are absolutely determined to reduce child poverty in the way that the Children's Commissioner is talking about.

Do you accept his measure, which is using the Deprivation Index, and kids who have six out of the 17 deprivation measures is the group that he's saying should be targeted - lower that by 10 percent. Do you accept that?

Yeah, because I think his figure is roughly 150,000-odd, and lowering that by 10 percent -  I mean, yeah, if we can't do that and we're not prepared to commit to that - and I say we are - then, you know, we've got something seriously wrong going on.

So you're signing on to that right here, right now? You're committing to that target and you're using that measure?

Committing to it and we're going to establish a - Yeah, that measure - a measure that we will report against every budget, and it will be transparent and open and people can engage us on it.

Alright. So that's policy. Let's talk about the party. You've got a new deputy. She's pretty popular. What happens when she's more popular than you in the preferred Prime Minister stakes?

We are campaigning to win Government, and it's great that we've got Jacinda up as deputy and we've got a great team behind both of us and we're all campaigning very hard. What matters most to New Zealanders is whether we are the party with a plan to fix the problems that New Zealanders have got. That's what we're campaigning on.

Okay. The question was what happens when she gets more numbers in the preferred Prime Minister stakes.

Yeah, so you're talking hypothetically and you're speculating and so on. I'm not going to buy into that.

Well, she was at 4 percent before she moved into the Deputy position, so it's conceivable that she's going to go up in the stakes.

So Jacinda and I work very closely together. We've established - we've always had a good working relationship. We've just had a great week together getting out and about. We'll be getting out and about a lot more, and we are talking about what matters to New Zealand and fixing the problems.

Okay. Alright. We've seen some bold moves within Labour - Annette King out, Jacinda in, Willie Jackson in, Greg O'Connor in. Is this Andrew Little's Labour?

Well, I'm getting the party ready for success, ready for winning, and we are going to be a party that has a broad as possible a reach. And I think when people see our final list and candidate slate when we do that in the end of April, early May, they'll see that we are a party that are as reflective and representative of New Zealand as we can make it.

So it's your leadership that made those changes? You're owning those decisions?

I am the leader. I own those decisions and I own the direction that we're taking, and that is about a party that is serious about fixing the problems that New Zealanders are talking to us about.

Okay. Māori and the Mana Party have a deal. They're not going to run in the same seats, right? Don't you need to fight fire with fire here? Why aren't you doing the same thing across the board with the Greens? Because Tamaki Makaurau, Te Tai Hauauru, Te Tai Tonga - those are going to be pretty tight races. Why not make a deal?

Yeah, that's if you buy the rhetoric from, you know, the Māori Party and Tuku Morgan and all the other -

No, that's if you look at the numbers. That's if you look at the numbers. So why not just make it simple, do a deal and try and guarantee your hold?

We've had good discussions, ourselves and the Greens, because our memorandum of understanding said that we could look at electoral accommodations. In the end, they want to be able to campaign for their party vote. We want to campaign for the seat and we're going to do that, and I have absolutely every confidence we're going to win those Māori seats. And here's the thing - because most Māori now know - they look at that Māori Party and they say, "Hold on. You've been the lapdog of a National Government for nine years now and nothing much has changed." You look at all the figures that Māori are sadly overrepresented in - all the wrong figures in terms of, you know, criminal justice, educational performance. For young Māori, unemployment - absolutely through the roof, and you don't hear the Māori Party saying anything about it.

So you're saying you don't need the Greens to win these seats, then? You don't need an arrangement with the Greens to win these seats?

No.

Alright. So the Māori King has given Nanaia Mahuta a serve this week and is putting his support behind the potential Māori Party candidate in Hauraki-Waikato. He says she's got no mana after being moved down the party rankings. Do you take responsibility for that loss of mana because you demoted her?

No. I think if the Māori King wants to hitch his wagon to a failing National Party and a Māori Party that has just totally failed Māori, failed to deliver anything meaningful to Māori, it's his prerogative.

This is about Nanaia Mahuta being moved down the rankings, Mr Little.

I backed Nanaia, who is not only in my shadow cabinet but in the front bench, and -

No, she's not on the front bench, Mr Little.

Yes, she is.

No, she's not. The front bench in Parliament - the physical front bench in Parliament is, what, eight seats? She's not on that front bench.

She is in the group that meets every week to lead the direction of the caucus and the party. She's in that group.

How many spots did she drop down, Mr Little?

We have two Māori on the front row -

Mr Little, for clarity, how many spots has she dropped down?

She has - we have two Māori on the front bench. We have, I think now, five Māori in our shadow cabinet.

Do you not want to answer that question? How many spots has she dropped down?

But you're - If you -

How many spots, Mr Little? It's a simple question.

If you want to run to me the Māori Party line, by all means, you know, go ahead. I back our Māori caucus. We have an outstanding Māori caucus.

You demoted Nanaia Mahuta.

We have in Nanaia an outstanding advocate for Māori. She's doing terrific things for Maniapoto right now, and we're going to have a fantastic Māori caucus after the election and they're not going to be the lap dogs of anybody. They're not going to be called in on a grace and favour basis, as Māori MPs are with the National Party right now.

Mr Little, how many spots did you demote her?

They are part of the Labour DNA. They'll be sitting around that Cabinet table. They'll be sitting around the caucus, and Labour will be capable of doing way more for Māori than the Māori Party, shackled to the National Party, could ever do.

Okay, so you're so confident in her abilities that you dropped her six spots, I think it was. Okay. Now, you've put Winston Peters on the Intelligence and Security Committee. You came out strong on super - he'll love that. What else are you prepared to give him to keep him on side?

I'm not quite sure what you're getting at, but we have good relations with all the other Opposition parties - Greens and New Zealand First.

Well, could he be the Prime Minister in a Labour government?

No.

Absolutely not? You're ruling it out?

Yes.

What about Deputy, then?

You're not going to start - I'm not going to start negotiating coalition arrangements when we haven't even had an election. Please, give me a break. We've been very clear.

But do voters deserve to know that? You know, he's a potential coalition partner. Would you countenance him as Deputy Prime Minister?

Voters want to know what are the parties that we have good relations with and who are likely to be part of a coalition arrange - a set of coalition arrangements. We have a good relationship with the Green Party. We have a good relationship with New Zealand First.

Okay, so you're not ruling it out. You're not ruling it out.

If I have the privilege after the 23rd of September to form a Government, my first phone call will go to the Greens and New Zealand First will be not far behind.

Alright. Thanks for joining us this morning. Good to talk to you.

Thank you.

 

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