For the final episode of the year, former Prime Minister Sir Bill English shares his best and worst money stories with Liam Dann.
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Speaker 1 (00:06):
Hi.
Speaker 2 (00:06):
I'm Liam Dan, New Zealand Herald's Business editor at Large,
and welcome to this episode of Money Talks. This is
a podcast about money, but we're not going to tell
you how to get rich, and we're not going to
try and pick the next interest rate move. In this series,
I'll be talking to interesting New Zealanders about how money
has shaped their lives and what they've learned over the years.
(00:29):
For today's podcast and for the last episode of the season,
I'm joined by former Prime Minister and Finance Minister Sir
Bill English, So Bill Cura, and welcome to Money Talks.
Speaker 1 (00:40):
How are you good? Good?
Speaker 2 (00:41):
Do you use that Sir March these days?
Speaker 1 (00:45):
Oh? I don't, but other people do.
Speaker 2 (00:48):
Yeah. Yeah, anyway, it's nice to have you here. Can
I can I start by just asking a little bit
about what is keeping you busy these days. I know
you were involved with the kyng Ara Report and that
had a fair to publicity a few months ago, but
what are the things that you're getting out of bed
for in the morning at the moment.
Speaker 1 (01:07):
Well, my wife Mary has her own medical practice as
a GP and as you can imagine these days, that's
pretty busy. So part of my job is to support
her because she's doing the long airs and the hardwek. Yeah.
I spent about half of my sort of official time
(01:28):
on director jobs, including an Australia, a couple of larger companies,
a couple of larger philanthropies, and some smaller private companies,
and about the other half of my time on what
I call family business. We're along with my kids and
one or two others. We've got into a number of
smaller businesses that we're working on developing.
Speaker 2 (01:50):
Sure, you've got a lot of firepower there, right, is
it six children?
Speaker 1 (01:55):
Yeah, there's just two of them in with us so far, right, Yeah, Yeah,
I guess if we're successful acid.
Speaker 2 (02:02):
Yeah, Well, okay, we can come back to a bit
of that, but I will go right back because this
is what we do in this podcast and just ask
you if you can remember your very first memories of
having money and holding money in your hands.
Speaker 1 (02:18):
Well, I think it was the very first memories where
after church on a Sunday we used to be given
five cents to go around to the shop and dip
them and buy it what was then called the tt too,
which was actually an ice blot.
Speaker 2 (02:30):
I remember those, Yeah, I think I understand.
Speaker 1 (02:33):
I can recall going off the boarding and earning money.
Probably the first memory, which will sound a bit odd
to the general audience, is there was a time when
you could pluck dead sheep that when sheep died, you
could you'd pull the wall off them by hand, and
a lot of farmers let their kids do that as
(02:56):
their first taste of commerce.
Speaker 2 (02:58):
Doesn't sound like something kids would be that keen on
these days.
Speaker 1 (03:02):
No, no, but the money was good, well, used to
be worth something.
Speaker 2 (03:05):
Yeah, well that's true.
Speaker 1 (03:07):
And then I think my first paycheck was about thirty
five dollars a week I was. I left school, I
turned eighteen and was working for my father, and I
was kind of surprised that he decided to pay me. Yeah. Yeah,
it wasn't as much as he was paying the rest
of them, but it was it seemed like a fair
bit of money. And that was you know, that's where
(03:31):
you start, like everybody else.
Speaker 2 (03:32):
And this was on the farm, yes, yes, and southernd
yeah yeah, and just I mean it is fairly well known.
But you were also from a very big family yourself.
You were the second youngest of was it twelve.
Speaker 1 (03:48):
Number ten, third youngest young patterns Pattens were pretty well
established all the time.
Speaker 2 (03:53):
May yeah, yeah, I mean, what do you call about
money in the household?
Speaker 1 (03:57):
You know? Was it?
Speaker 2 (03:58):
I mean, I guess it's interesting. On farming generally, often
it doesn't. You can have a lot of money invested
in the land and all that sort of stuff, but
not necessarily a lot of cash around.
Speaker 1 (04:08):
Yeah, and cash wasn't really the focus. There was a strong,
i think a strong focus on the family dimension, but
also on the vocation of farming, if you put it
that way. So I think that's where I learned a
pretty important aspect of business, which is that your sense
(04:29):
of purpose matters. So my parents were wanted, of course
to have a viable, sustainable farm, but they did spend
I think more of their energy on ensuring that the
many children had the experience of self sufficiency and hard
(04:49):
work and continuity. You know that the point of doing
this was to keep things moving along, doing a great
job of the farming itself, but ensuring it could be
passed on in good shape to the next generation and
probably mattered more to them at the time, more to
them most of the time in my experience, than the
(05:11):
cash flow. Now it could be of course they were
worrying about the cash flow in the background because a
lot of children, a lot of boarding school, a lot
of outgoings.
Speaker 2 (05:21):
Are there any any analogies there to managing an economy
when you think about trying to hand off the economy
in good shape, but it's not always about the cash
flow or the operating end of it, is it.
Speaker 1 (05:31):
No, that's right. I actually think it's important to business.
I think the point in my experience that people run
the best businesses are the ones who are really have
a strong sense of purpose about what they're trying to do.
They do it well, and if you execute operate well
with good people, then the cash flow looks after itself
(05:54):
to some extent.
Speaker 2 (05:56):
When you think back to school, what were your passions
at school and with any signs then that a you
were political or b that you could have ended up
being finance minister and running the whole economy.
Speaker 1 (06:09):
Probably no sign of the finance minister part. A lot
of I was what was interested in the school, very
interested in sport, which was a bit harder when you
were in the country. So going to boarding school was
like going off to a fantastic holiday camp because you
had sport. When we were at primary school, we were
at home working. We didn't do any of the formal sport,
(06:33):
and it was also very keen on reading and I
think also listening to my parents. My parents were politically active.
My mother in particular was an activist. My father more
of a philosopher. Sir Brian Tallboys was our local member
of parliament, the Trade minister when agriculture was a big
(06:53):
deal and Britain going into the European Community was a
big deal. So a lot of a young age I
was exposed to all that, and I think I decided
reasonably early on i'd quite like to do the same
job that Brian Toolboys was doing. About twenty five years
later I got.
Speaker 2 (07:13):
To do it. And it was always probably national for you,
you right, growing up farming background and all that sort
of stuff.
Speaker 1 (07:22):
Yeah, I think, Look, the brand of the philosophy and
approached politics changes over time. At the time you might
remember we had SMPS. We had a lot of sort
of statutory marketing boards, mean a whip board loomed large
in our lives. No one's heard of it since I
(07:45):
had actually just started farming when they got rid of SMPS.
With the changes under Roger Douglass in the Fourth Labor Government,
so you'd call it a kind of collective conservatism. I
would say it's probably changed. But now certainly we had
a local guy in the community in Dipton who actually
(08:05):
started a political party. I think he called it the
Liberal Country Party, an acolyte of Milton Friedman, someone who
you would now think of as reasonably mainstream economics.
Speaker 2 (08:17):
Who's ahead of his time.
Speaker 1 (08:18):
Pre market economics, yere way ahead of his time, a
pretty colorful character and at the time regarded as as
a real maverick. But you know, he won his arguments
in the end.
Speaker 2 (08:30):
Yeah, I mean, do you remember much about that? I
suppose it was through the seventies really growing up through
that economy, that sort of controlled economy of the Muldoon years.
Speaker 1 (08:40):
I do, and I remember the intense interactions over the
government essentially negotiating the freezing workers pay, the intensive discussions
about reaching European veterinary standards and our freezing works and
(09:01):
how much that cost the farmers. Yeah, it was, it was.
There was a lot of intensity because it was so political,
Like you go to a meeting in the Dipton Hall
with the local MP and sixty sixty people to turn up,
and it's because the economy was pretty politicized. That wouldn't
(09:22):
happen now, and for in a sense, for the right reason,
and that is politicians aren't making the decisions that they
did then. I remember John Fulloon coming to inver Cargo.
He was an associate, he was a finance minister of
some sort to explain the interest rate controls.
Speaker 2 (09:39):
Oh yeah, yeah, that had.
Speaker 1 (09:41):
Been put on. You know, you forget those things.
Speaker 2 (09:44):
Before there was any kind of the Reserve Bank. Nothing
was floating and you know, independent or anything like that then.
Speaker 1 (09:50):
And an upshot of that was that when I started farming,
my first mortgage was twenty two percent, which was peculiar
to me. Of course that was the same same for everybody,
but it was was a signal of how out of
balance things had got and that times needed to change.
And that was pretty tricky in these communities that were
strong supporters of Rob Muldoon on the one hand, but
(10:12):
on the other hand sort of had a sense that
it wasn't evil adding up to something that worked.
Speaker 2 (10:24):
Between. I mean, you obviously were working on the family farm,
but you did head off to university and famously you've
got an honors degree in English, is that right?
Speaker 1 (10:33):
Yeah, that came a bit later I went to So.
Speaker 2 (10:35):
That's the passion for reading.
Speaker 1 (10:38):
Well, I think I was the only farm worker in
New Zealand with scholarship Latin in the early eighties. So
went off to Dunedin and did an English degree and
an accounting degree. Went back to the farm whereas farming
on our own account then along with one of my brothers.
So that was a pretty well class quite young two
(11:00):
twenty three, big mortgage, very difficult circumstances, made lots of mistakes,
some of them pretty big, from which I've learned and
had done it differently now that I've restarted.
Speaker 2 (11:12):
Well, this was a time that some people were being
were losing their farms during this period, right, this is
a you know, it was a really tough, tough era
for New Zealand farming.
Speaker 1 (11:20):
Oh, it was extremely difficult into the into the late
into the late eighties. And then for romantic reasons where
Mary was in Wellington and I was in Dipton, and
we decided we should probably do something about that. So
I shifted to Wellington, out of the sheepyards into an
English honors class to get it. I wanted to get
(11:43):
an honors degree so I could get a decent policy job.
And another person you might have heard of it was
in that class was John Campbell of right, but a
fantastic intellectual experience.
Speaker 2 (11:55):
Yeah, well, what was your specialty? In English literature?
Speaker 1 (12:00):
That was probably? What was it? Really? Kind of literary criticism.
I think all this Marxist feminist analysis of how the
world works, which turns out to be a powerful mechanism
for understanding government monopolies as exercises of power rather than goodwill.
Like it did turn like I had some brilliant lecturers.
Some of that toolkit I found really useful later in politics,
(12:25):
the way people construct stories and the sort of lack
of self awareness, particularly in government where they are the
power structure. They think the corporates or someone are, well, yep,
that's another power structure. But government certainly is a powerful
monopoly system.
Speaker 2 (12:43):
Yeah, it was interesting. I was going to ask because
obviously they accounting people can get the heat around how
that's going to be useful for you know, economics and finance,
and but I guess, yeah, there are that notion of
learning about how people put together stories and how influential
stories are, and in politics is probably pretty useful too.
I mean, you didn't you didn't you intended to head
(13:05):
off down as sort of the press secretary route, which
a few English majors probably would No.
Speaker 1 (13:14):
I ended up as a diversity higher in the Treasury
where they used to employ they were getting criticized from
employing too many economists these days are getting it deserbly
not employing enough. So they have an intake of twenty economists.
And then there was two diversity people, of which I
was one with an English literature degree, and found myself
(13:34):
parked across the table from Roger Douglas, who used to
work with junior treasury offices through his revolution on the
flat tax package, I suppose would be one thing that
people are old enough to remember. Yeah, had unraveled the
labor government. But I was in a very small team
(13:54):
of people who worked on that package. So it was
fantastic to be in an environment where a ware something
was You know, politicians were making a lot of decisions,
even if you didn't always agree with them. But secondly,
where as a relatively during your person, you were given
responsibility to really understand your issues and actually articulate them
(14:16):
to decision makers. But I did decide after a while
that I'd rather be on the politician side of the
desk than the policy advisor's side of the desk, and
ended up in politics not long after that.
Speaker 2 (14:28):
Yeah, I was going to ask, you know, what really
motivated you to stand It was nineteen ninety, wasn't it.
What was the driver?
Speaker 1 (14:36):
Well? I was always going to as I said to
my to Mary when we got married, I was interested
in politics and I always wanted to had in mind
being the MP for what was then the Wallace seat,
which was rural Southland. Essentially, I would didn't want to
do it anywhere else, and the opportunity arose probably fifteen
(14:57):
years earlier than we expected health of my predecessor. So
it was when I think back, it was remarkable that
a young woman raised in Wellington, who never lived in
the country agreed to go off to the middle of
South And with little babies and get into the crazy
(15:18):
world of politics. And I'm forever grateful to Mary for
that courage.
Speaker 2 (15:22):
Yeah, yeah, that's amazing. So and you were into, you know,
you had a young family and stuff at that point.
Speaker 1 (15:28):
We had one child when I was actually elected, and
followed by five more.
Speaker 2 (15:33):
I guess I mean how much was you know, finance
or money a motivator and all that sort of those
career choices. You know, as soon as you've got a
child to worry about, you've you've got to be a
bit serious.
Speaker 1 (15:44):
Do you. Yes, you do well, Yes, when you're young
with a child, with children and a mortgage, then you
want to get enough on the door. So yeah, it's
I've been fortunate to be able to have a bit
of a balance of things I really liked and wanted
to do, alongside getting enough money in to meet my
(16:09):
responsibilities as a parent and a husband. At times it's
pretty stretched, But I always think that what matters is
your prospects rather than what's happening today. A lot of
people can handle financial hardship if they think it's going
to get better. A real poverty is when you can't
see any prospect of improvement. Yeah.
Speaker 2 (16:30):
Absolutely again, And just coming back to the economy and
some really tough times were so you and you in
Parliament I guess around the time of that Mother of
all budgets and some hard decisions having to be made.
What do you recall about the economy at that time
and the choices that I guess in hindsight the National
Government had to make at that time.
Speaker 1 (16:50):
Well, it was pretty grim in my community, which I
knew better than any others, and it's in the rural communities.
The dislocation that went on as part of the deregulation
the economy was enormous. And when I hear people talking
about crisis today, by that standard of that time, it's
(17:14):
not a crisis. Maybe we should be more worried than
we are. But people had to the whole communities would change,
their lives, would changed, a lot of people lost their jobs,
and that went on for a while, I think, longer
than the proponents of deregulation thought or and proponents of
reforming the economy. And remember of nineteen ninety three. National
(17:40):
won that election by fourteen votes on a recount and
hon Aoo two weeks after the election. And that period
that to ninety three was pretty rough. I was chairman
of the Social Services Select Committee, so we bore the
brunt of the front end of public reaction to the
benefit cuts. I was on a select committee with Michael
(18:01):
Cullen and Helen Clark, and I'd never really cheered a
rugby club subcommittee. So the protests. There was crowds pushing
down doors to get into our meetings. There was no
security in those days. So it was a pretty hard
edged introduction to the politics of change, you know, and
(18:23):
it did it did left the mark on me in
the sense that it's easy to advocate change if you
don't have to face all that, if you don't have
to look into the eyes of those facing the consequences.
And I think the second thing was that there if
there's less urgency than there was, then there are better way,
(18:45):
there are other better ways of getting control of government
spending than what were some pretty, you know, some fairly
tough decisions that were made then.
Speaker 2 (18:54):
I guess people were, you know, people were very you know,
they were sick to death of inflation at that point,
and the idea of getting inflation under control finally was
pretty important, which is a little bit like what we've
seen in the past a few years. As you say,
I agree with you that it's not quite as severe
as as it may have been back then, because we'd
sort of had about a decade of it in those days.
(19:17):
But do you recall that changing do you recall I
seem to remember sometime in the mid nineties that it
suddenly started to come right for a bit, yeah.
Speaker 1 (19:26):
About nineteen ninety five heading into ninety six, which is
what made National viable for reelection because the economy was
actually starting to pick up, although it wasn't that obvious,
certainly not in the political world, but it was happening
out in the countryside. And I think Jim Bolger actually
(19:49):
deserved a lot of credit for seeing that period through.
He didn't get much credit at the time, but while
he didn't want to do it the same way as
Ruth Richardson did, all the time between them about the
right kind of things happened for the New Zealand economy.
I think another lesson out of it was the dynamism
(20:11):
that comes out of that sort of dislocation. You know,
people do come up with better ways of doing things.
And I know even in the world of the sheep
farming industry, its performance increased significantly, improved significantly over the
next ten to fifteen years in a way that might
(20:32):
not have happened. And if I had a concern about
the economy now, it's that we've we've become pretty risk averse.
You know, we regulate and make policy in a way
that dampens down the reallocation of resource, and that may
be one of the reasons our productivity is not doing
so well. And looking ahead, I think it's a big issue.
Speaker 2 (20:55):
You think politics is part of that. I mean there's
a constant battle of politicians face with the polling and
the focus groups and all that kind of stuff.
Speaker 1 (21:04):
Oh well, of course politics is part of it. But Key,
we are amenable to an argument where politicians making an
argument that sounding persistent, they can get there. I mean,
one of the things that I was involved with, which
I'm still proud of, was the tax which where we
made the argument for what is good economics, and that
(21:28):
is reducing income tax and increasing GST. And the public
went with that, you know, to a large extent because
of the skills of John Key, But it just showed
you you can win an argument we set out to
win and win an argument about floating energy companies, which
I think has turned out to be critical in the
energy transition, and probably a bit more needs to be
(21:49):
done there. But again you make the argument that's in
a way that's sensible, which I think was a bit
of a shift from the mindset of the former was
late eighties and nineties, which was a bit more about
or crash or crash through, try and get enough done
while you burn up your political capital. Well MMP doesn't
(22:10):
really let you do that, and it's not a bad thing.
It forces you to make more coherent arguments, but you
do need a political class that's interested in doing that
and not dominated by managerialism of the status quo.
Speaker 2 (22:25):
Yeah, your treasurer at the end of the Shipley government,
is that right? So was that your first major finance
type role.
Speaker 1 (22:32):
Yes, it was. I'd been involved mainly with health through
the mid nineties, the health reforms, which had a great
deal of merit actually, and we're going to have to
relearn some of those lessons. But then with the change
of leadership in ninety seven, I became a finan sort
of a junior finance minister, and then I think just
(22:54):
for a period of like twelve months, I was the
treasurer i I think, or the finance ministry I mean.
Speaker 2 (22:59):
And there's obviously a well well traversed story of your
first go at leading the National Party and all that stuff.
We probably haven't got time to do a whole political history,
but I would like to jump into two thousand and eight,
because you know I was I was covering the GFC
at the time. It was pretty hair raising stuff and
you guys came into a pretty spectacular crisis. So that's
(23:22):
as Deputy PM and Finance minister. How do you looking
back at that, how do you think you guys handled
it and would you do anything different?
Speaker 1 (23:31):
I don't think we do a lot different That maybe
more that perhaps more opportunity for reform might have occurred
in the absence of the earthquakes, right, yeah, Remember we're
just kind of getting organized and then we.
Speaker 2 (23:48):
Had it was a double blow, wasn't it really?
Speaker 1 (23:51):
Eleven earthquakes? But I lucky you could go back in
detail and see some things should have been done differently.
But I think the important really what worked there, particularly
with the leadership of John Key, the sort of operational
effectiveness of what was pretty a coherent cabinet just maintained
(24:15):
confidence through some pretty difficult times, and that's quite that's important.
As we found out in recent years, you can if
confidence goes off, people aren't as willing to make investment
decisions or employment decisions, then an economy inevitably slows. It's
almost like a costless benefit. If the decision making looks
(24:39):
like it's coherent and a bit predictable. Then that's that's
a gain for the whole economy that you didn't have
to pay for.
Speaker 2 (24:47):
Yeah. Yeah, Do you remember a moment when those I
guess after the big quakes in christ when you're just
looking at the state of the books and thinking, oh
my gosh, you know, how do we how can we
possibly turn this around? How did you say view that?
Because it was pretty daunting for a while, you know,
especially coming off the back of the GFC.
Speaker 1 (25:06):
Yes, it was. Look, I think when things blow out
like the earth requirements for the earthquake. Really I just
remember thinking two things. One is, we don't want to
hold this back by being unwilling to spend. And if
(25:26):
I was going to give credit for the person who
really did the hard work on that, it was Jerry Browning.
He did an amazing job under difficult decisions, of difficult
conditions of being on the ground, making decisions that were
relevant in christ Church and highly relevant to rebuilding the
sort of shattered confidence in the place at the same
(25:48):
time as always having an eye on the dollars, and
he never really he didn't put the government in the
position of saying, well, I've gone off and spendless money,
You're just gonna have to pay the bill. And I
just think that was a remarkably constructive process. So that
was one thing. And the second thing was that for
a small, open economy as usual, you've got to keep
your lenders well informed and what they want to see.
(26:12):
And what we needed was a path back from what
I think a nine percent of GDP deficit, but quite
a bit bigger than what you've got now. And so
we focused very much on the road to recovery, you know,
rather than being overly focused on saving every cent. Right now,
what's the dynamic going to get you back? And in
(26:33):
that context, circumstances helped. You had ten percent of GDP
injection from reinsurers into the economy. That helped a lot
because I was coming in to rebuild christ Church. And
now that you've got to remember that was all just
part of the golden era of Chinese growth and New
Zealand as having a free trade agreement with China, which
(26:55):
was a novelty then worked on by both bipartisan base
that wasn't political as it might be now. That was
quite a strong tailwind and it was also a time
when you were part of this long term decrease in
interest rates.
Speaker 2 (27:10):
Yeah, when you look.
Speaker 1 (27:12):
Ahead, those tailwinds aren't going to be there. Yeah, restraates
can't keep dropping. You know, that'll come off. But that's good.
Speaker 2 (27:19):
Yeah, and people have highlighted that, you know, China's still
going to be a huge market, but that growth that
we experienced won't be there. I mean, you know, it's
not going to be the same anyway. We've got to
obviously find some other drivers.
Speaker 1 (27:32):
Yeah, that's right, and I think that's a bit of
a challenge because it's not obvious what those are going
to be. Certainly I don't want governments trying to pick them.
Speaker 2 (27:40):
Yeah, well that's a fair point. Just again, just quickly
looking back, are there any other economic decisions over those
nine years that you especially proud of will be that
you regret?
Speaker 1 (27:52):
Oh? Well, at tax switch is when I was pretty
pretty keen on pretty I thought it was a good
piece of well executed policy. I think the focus on
the operation of the public sector was unheralded at the time,
but people realized when the next government came along and
took a different approach that what they took for granted
(28:14):
was probably fairly sensible. Now it is twenty twenty five
percent of the economy, the most direct influenced government can
have on productivity. And this economy is run its own
business better, and you can run it better, but you've
got to decide to and you've got to understand the
leavers there. And that was all given away and we
ended up, you know, with this big spend up, including
(28:38):
COVID justified some of it, big spend up, with not
much more to show for it. So you know, the
health budget is sixty percent larger than sixty years ago
with rough with a small increase in output. Yeah, so
that but I was pleased with the work that we
did there. The early on. I remember making a few
speeches around housing housing supply when it was regarded as
(29:03):
a cranky right wing idea that supply had any influence
on housing prices. And I think one unherralded success around
that time was the Auckland Unitary Plan, which is the
most you know, that provided the biggest boost for house
building in New Zealand in a long time, and that's
(29:24):
still running even though it slowed down a bit, and
I think the lessons from that are now being picked
up by the current government spread through the system. In fact,
the last government picked up some of those lessons.
Speaker 2 (29:36):
Yeah, I mean, are there regrets about twenty seventeen and
the negotiations and all that sort of stuff. It's one
of the great what ifs. I suppose we're all surprised.
I mean, on the night, I think we all thought
you'd won it because it was a strong result. But
you know, politics as politics, and Winston Peters as Winston
Peters and how do you view that now?
Speaker 1 (29:58):
Oh, look, over time, your personal your personal situation, you
take the benefits of the personal situation take over. So look,
I wouldn't want to swap the time I've had working
with my family, being able to support Mary, running my
own life. That's been fantastic. There's plenty of life beyond politics.
(30:21):
And even at the time, I mean, look was it was.
I was a bit sorry about it. You know that
it was the wrong decision for the country. I don't
think there's any doubt about that, But that's m MP.
The voters had to say, you know, National that okay,
but it's coalition partners did badly. The Maori Party didn't
(30:41):
didn't keep a seat and was out of Parliament, and
that was only there because we made a deal to
let them stay there. And I'm sure there's some lessons
from that that I haven't spent a whole lot of
time on. Look, it's politics. I'd always thought in politics,
you get these incredible opportunities and you don't necessarily deserve them.
A lot of it comes your way from circumstance and
(31:03):
other people who you work with, or the great team
around you. But it can go in an instant if
only because of your own mistakes and stupidities in an election.
There was the public's view on it, and you just know,
I accepted that view and get on with the rest
of your life, and it's worked out well.
Speaker 2 (31:23):
Yeah, yeah, I mean obviously, as you've sort of interdut
you know, there were huge impacts economically from it all.
And you look at the COVID era and what happened.
You know, if you'd been in power, then would would
it have been wildly different policy? Do you think that
you'd have followed?
Speaker 1 (31:40):
Look, you can't tell for sure, and I didn't focus
a lot on the details of the policy making. I
think that the I think a couple of things might
have been different than one I think we would have
recognized the trade offs and been willing to work with
them a bit more than the government of the time.
You know, there's a high cost to that kind of lockdown,
(32:03):
and in a sense we're still paying that cost now.
And you look at other countries that have had a
hard lockdown, and there's others who are harder than New
Zealand and they're paying a price too. I think the
second thing was that the sense of that the government
was absolutely central everything happened in the economy lingered on
(32:25):
after COVID, after it was necessary, and I think that's
just part of the predilection of a labor government and
a complacency in the public service and a lot of it.
So there was quite a lot of less quite a
lot of poor decision making after COVID that flowed from
(32:45):
attitudes developed during COVID. Otherwise, lot people make the decisions
they do at the time. And I hope, I hope
there is going to be this inquiry they're talking about
doing will be a bit bit more than back backslapping
by the public health establishment about what a great job
it did, because there's a lot of other consequences that
(33:08):
we just need to understand.
Speaker 2 (33:09):
Yeah, you don't think you're going to be involved in
anymore I mean any more government inquiries or reports coming up.
Speaker 1 (33:16):
No, I've had a spind at KO and I enjoyed that,
but otherwise plenty to do.
Speaker 2 (33:31):
Look, I want to get in just to finish up
some of our quick fire money talks. Questions to bring
it back to money a little bit. First up, what
would you say the poorest you've ever been is?
Speaker 1 (33:41):
Oh, well, look, there's been plenty of times that didn't
have cash either as a I've always had work, but
I remember feeling very poor after buying Mary's engagement, my
life savings on it, on the engagement ring and a
trip to go go and see it. Thinking nextually, I've
got no money in the bank, but always had prospects.
(34:03):
I have to say, I don't think I ever felt poor.
Certainly felt under pressure with a young family with mortgages
and outgoings, and then unpredictable things happen, so you know,
nothing to complain about. But I you know, in my
broader family, I've seen persistent poverty and either from ill
(34:25):
health or bad luck or poor decision making, and it's
grinding on people. And what I've seen of that has
been part of motivation for taking an interest in those issues.
Speaker 2 (34:38):
Sort of the flip question to that, as I suppose,
and I don't think we should count the ring for
your wife, But what's the most indulgent purchase you've ever
made or when you.
Speaker 1 (34:49):
Well, that was certainly the most disproportionate one to my wealth,
to my wealth at the time. I'm not really an
indulgent purchasing. You know. Sometimes I think buying a nice
jacket can feel indulgent, but it's you know, well within
I think, I think, I say.
Speaker 2 (35:06):
I interviewed the late Sir Michael Callen along these lines
and he was very similar. He talked about splashing out
once in an eighty dollar bottle of wine. I thought,
it's not I wasn't the same as interviewing Sir John Well,
you know that's good for finance ministers to.
Speaker 1 (35:23):
You know, maybe that's right. We still get accused as
finance ministers. He still get accused of, you know, being
inconsistent with the constrictions he put on other people.
Speaker 2 (35:35):
Do you buy lotto tickets and do you imagine winning lotto?
Speaker 1 (35:39):
Still occasionally I've I did buy one of you. I
think last year and in my head, I've got a
ninety year old father in law who always used to
buy Golden Keywi tickets, and he was he came here
as a Sarmon migrant, we're very hard all his life
(36:00):
to raise thirteen children. And I always thought, well, wouldn't
it wouldn't it wouldn't a windfall be a nice reward
for all that? But of course my nearest and dearest
family think that was just cover for wanting to buy
a lot of ticket.
Speaker 2 (36:18):
I guess another one about money, really, but how much
you've sort of answered this about how much is making
money important to you? And how much of that is
money just the by product of success.
Speaker 1 (36:28):
Or of what you do well having spent five or
six years now in small businesses, then there's you know,
you're certainly keen on the buy product because it's hard
to come by. It's it's usually I enjoy the challenge
of it. But you know, a lot of businesses make
enough money to make a living and a lot of
(36:51):
and any number of them disappear. So it's not like
it's not as easy a ticket to significant income as
the policy world thinks it is. But look, I think
the purpose for which you do. Business is a significant
determinant of whether it's successful, and success comes in different forms,
(37:14):
doesn't It can be growth, it can be profitability, It
can be building a team of people who really work
out how to provide value for their customers. And the
other bit of success is just happy customers. I mean
one of the things we do with service charities. And
for the young people who do it, it's enormously rewarding
(37:36):
because they just see these people who are trying to
do good figure out how to do it better. But
it is I think, Look, one of the great things
about having a bit of income is it just reduces
the cognitive load of worrying about the day to day
cash outgoings all the time. And I think it's great
(37:56):
for people, particularly as they get later in life, if
they can get a bit of that space because you
spend a lot of time, you know, making it like
we used to because we had six kids, five boys.
You try and buy food on scents per kilo or
dry matter, so sweet picked bananas, rice.
Speaker 2 (38:18):
I'm feeding two teenagers at the moment where they can
need more of it.
Speaker 1 (38:21):
You can get the better.
Speaker 2 (38:24):
We can't ask you what you would do if we
made your prime minister for a day, because you had
plenty of days as prime minister. But I guess we
could ask ask you if we could put you there again.
You know, is there anything you wish you had done
or that you would do if you had another chance.
Speaker 1 (38:43):
Well that's a hard question to answer, actually, because I
always felt like you need to feel like you're working
at the outer boundary of your capacity to achieve when
you're there. Sometimes I think it'd be you know, look
back and think we could have pushed through. The one
area I think we could have pushed through harder and
(39:03):
now is happening now is around housing, because the housing
affordability is such a significant driver of misallocation of capital,
poverty for lower income households. It's like a jugger or
you know, that needs to be turned around. And we
(39:27):
got started on that, but you know, perhaps could have
pushed harder. Sometimes these things are a matter of public acceptance.
I mean the current governments making decisions in that area
which would have caused a riot as recently as twenty seventeen.
Speaker 2 (39:42):
Yeah, yeah, I mean Chrisship actually said house prices come down.
You couldn't say how you couldn't have a politician a
few years ago saying that they are in favor of
house prices.
Speaker 1 (39:51):
Coming down and that's just because it wasn't bad enough yet. Yeah,
but you know it got bad enough and so people
are accepting more radical solutions, and I think that's a
positive sign. I'm a bit of a believer in these
self balancing things.
Speaker 2 (40:06):
And producing Ethan's just written CGT here. I'm thinking you're
probably thinking supply side when you talk about rather than
CGT or demand side stuff for housing. When you when
you look back, would you have done anything more on
the tax side.
Speaker 1 (40:21):
We had a pretty good look at it, I think
every finance minister does. And then it runs into two
two problems. One is just the implementation of it, and
I think you'd find even in countries where they have it,
it's arguing about arguable about whether it's net revenue or not,
(40:42):
and any other in New Zealand is just the politics
which still get it every now and again.
Speaker 2 (40:48):
Yeah, that's another battle. Laghbour's got to go through it.
Speaker 1 (40:52):
In general, you want your tax base moving away from
things you want more of, like income and work and
returns on capital, and you want your tax space more
around things that can't move and that you don't want
more of, so you want it on fixed assets, land,
wealthy and consumption. Yeah, if you can. So you know
(41:15):
it's moved a bit that way, and probably we you
know it's moving further. Just look at rates or a
land tax and going up you know, ten to twenty
percent per annum for the next five years across New Zealand.
So we're going to get a bit of a live
experiment and growth in capital taxes. Yeah.
Speaker 2 (41:32):
Yeah, And so it's just on the supply side. You
were there any specifics that you are you talking about
opening up land? Would there been a national version of
a ki we Build or something like that that could
have been done? Oh no, just the regular tree making
it easier to build.
Speaker 1 (41:47):
Yeah. Microeconomics and regulation is boring but absolutely vital and
when it works, it works well. I think New Zealand's
done a pretty good job of its energy markets for instance,
not perfect, but better than better than a lot of
other places. And it's of in housing is all about
(42:08):
regulation and pushing back plannerism, which is a lot of
people divide designing nice cities with and buildings with no
recognition at all of the economics. But that's coming. Well,
that's underway. Even in Wellington a group of young millennials
(42:28):
was able to persuade a fairly limited council to make
sensible decisions about housing and housing affordability. Well, that's that's promising.
Speaker 2 (42:39):
That's good to hear. Look, so just a last question.
I know we've going to let you go. It really
is a big one, really, and it's around where you
think the issues around social inequality and poverty lie. And
maybe with you know, the time you've had, you've been
working with charity and a lot of all the experience
you've had, you know, what do you think it is
(43:00):
that that really? I guess keep some people poor and
some people manage to get out of that. And what
do you think the number one thing we should be
focusing on to address it is?
Speaker 1 (43:12):
Look, I think if you had, if you had to
pick a number one, that would be housing costs, housing affordability.
And I think number two is the very is the
the way that traditional government delivery of service, which is
billions of a year, doesn't work for complex families or communities.
(43:34):
And that's and the poor mainstream government service has become
part of the pathology of poverty and we've got some
of the worst record in the OECD of using education
to overcome an equity. And actually it's the recent work
that shows our health systems not much better. And that's
what that's caused by, driven to a large extent by
(43:56):
universalist mentality, that is that you're meant to treat all
everybody the same, and we just seet time and again.
And the work that we're doing customer focused delivery in
the context of a trusted relationship is magic. Doesn't answer
all the poverty issues. But if you've got the housing
(44:16):
right and that government service delivery right, I think you
can make a significant impact. And then there's always the
arguments about redistribution. You know, how far do you go
with just shifting cash around you? But there's other bits
you can do. The other bits you can do that
are going to make a significant difference that I've talked about.
Speaker 2 (44:35):
Hello, Bill, We're going to have to let you go there,
But sir Bill, I should have said sorry. Thank you
very much for coming and making the time to talk
to some money talks.
Speaker 1 (44:44):
No problem, Thank you very much.
Speaker 2 (44:45):
Ly, cheers, Thank you for listening to this episode and
to this season. We'll be back in twenty twenty five.
In the meantime, listen to Money Talks on iHeartRadio or
wherever you get your podcasts, and catch up on some
of our Ask guests while you wait for the next season.
Thanks to my producer Econsiles and my sound engineer Liann McDonald.
(45:07):
And if you want to get in touch, email me
at Liam dot Dan at injured me dot co dot
zed and read more business news and features at Injured
Herald dot co dot zed.
Hi.
Speaker 2 (00:06):
I'm Liam Dan, New Zealand Herald's Business editor at Large,
and welcome to this episode of Money Talks. This is
a podcast about money, but we're not going to tell
you how to get rich, and we're not going to
try and pick the next interest rate move. In this series,
I'll be talking to interesting New Zealanders about how money
has shaped their lives and what they've learned over the years.
(00:29):
For today's podcast and for the last episode of the season,
I'm joined by former Prime Minister and Finance Minister Sir
Bill English, So Bill Cura, and welcome to Money Talks.
Speaker 1 (00:40):
How are you good? Good?
Speaker 2 (00:41):
Do you use that Sir March these days?
Speaker 1 (00:45):
Oh? I don't, but other people do.
Speaker 2 (00:48):
Yeah. Yeah, anyway, it's nice to have you here. Can
I can I start by just asking a little bit
about what is keeping you busy these days. I know
you were involved with the kyng Ara Report and that
had a fair to publicity a few months ago, but
what are the things that you're getting out of bed
for in the morning at the moment.
Speaker 1 (01:07):
Well, my wife Mary has her own medical practice as
a GP and as you can imagine these days, that's
pretty busy. So part of my job is to support
her because she's doing the long airs and the hardwek. Yeah.
I spent about half of my sort of official time
(01:28):
on director jobs, including an Australia, a couple of larger companies,
a couple of larger philanthropies, and some smaller private companies,
and about the other half of my time on what
I call family business. We're along with my kids and
one or two others. We've got into a number of
smaller businesses that we're working on developing.
Speaker 2 (01:50):
Sure, you've got a lot of firepower there, right, is
it six children?
Speaker 1 (01:55):
Yeah, there's just two of them in with us so far, right, Yeah, Yeah,
I guess if we're successful acid.
Speaker 2 (02:02):
Yeah, Well, okay, we can come back to a bit
of that, but I will go right back because this
is what we do in this podcast and just ask
you if you can remember your very first memories of
having money and holding money in your hands.
Speaker 1 (02:18):
Well, I think it was the very first memories where
after church on a Sunday we used to be given
five cents to go around to the shop and dip
them and buy it what was then called the tt too,
which was actually an ice blot.
Speaker 2 (02:30):
I remember those, Yeah, I think I understand.
Speaker 1 (02:33):
I can recall going off the boarding and earning money.
Probably the first memory, which will sound a bit odd
to the general audience, is there was a time when
you could pluck dead sheep that when sheep died, you
could you'd pull the wall off them by hand, and
a lot of farmers let their kids do that as
(02:56):
their first taste of commerce.
Speaker 2 (02:58):
Doesn't sound like something kids would be that keen on
these days.
Speaker 1 (03:02):
No, no, but the money was good, well, used to
be worth something.
Speaker 2 (03:05):
Yeah, well that's true.
Speaker 1 (03:07):
And then I think my first paycheck was about thirty
five dollars a week I was. I left school, I
turned eighteen and was working for my father, and I
was kind of surprised that he decided to pay me. Yeah. Yeah,
it wasn't as much as he was paying the rest
of them, but it was it seemed like a fair
bit of money. And that was you know, that's where
(03:31):
you start, like everybody else.
Speaker 2 (03:32):
And this was on the farm, yes, yes, and southernd
yeah yeah, and just I mean it is fairly well known.
But you were also from a very big family yourself.
You were the second youngest of was it twelve.
Speaker 1 (03:48):
Number ten, third youngest young patterns Pattens were pretty well
established all the time.
Speaker 2 (03:53):
May yeah, yeah, I mean, what do you call about
money in the household?
Speaker 1 (03:57):
You know? Was it?
Speaker 2 (03:58):
I mean, I guess it's interesting. On farming generally, often
it doesn't. You can have a lot of money invested
in the land and all that sort of stuff, but
not necessarily a lot of cash around.
Speaker 1 (04:08):
Yeah, and cash wasn't really the focus. There was a strong,
i think a strong focus on the family dimension, but
also on the vocation of farming, if you put it
that way. So I think that's where I learned a
pretty important aspect of business, which is that your sense
(04:29):
of purpose matters. So my parents were wanted, of course
to have a viable, sustainable farm, but they did spend
I think more of their energy on ensuring that the
many children had the experience of self sufficiency and hard
(04:49):
work and continuity. You know that the point of doing
this was to keep things moving along, doing a great
job of the farming itself, but ensuring it could be
passed on in good shape to the next generation and
probably mattered more to them at the time, more to
them most of the time in my experience, than the
(05:11):
cash flow. Now it could be of course they were
worrying about the cash flow in the background because a
lot of children, a lot of boarding school, a lot
of outgoings.
Speaker 2 (05:21):
Are there any any analogies there to managing an economy
when you think about trying to hand off the economy
in good shape, but it's not always about the cash
flow or the operating end of it, is it.
Speaker 1 (05:31):
No, that's right. I actually think it's important to business.
I think the point in my experience that people run
the best businesses are the ones who are really have
a strong sense of purpose about what they're trying to do.
They do it well, and if you execute operate well
with good people, then the cash flow looks after itself
(05:54):
to some extent.
Speaker 2 (05:56):
When you think back to school, what were your passions
at school and with any signs then that a you
were political or b that you could have ended up
being finance minister and running the whole economy.
Speaker 1 (06:09):
Probably no sign of the finance minister part. A lot
of I was what was interested in the school, very
interested in sport, which was a bit harder when you
were in the country. So going to boarding school was
like going off to a fantastic holiday camp because you
had sport. When we were at primary school, we were
at home working. We didn't do any of the formal sport,
(06:33):
and it was also very keen on reading and I
think also listening to my parents. My parents were politically active.
My mother in particular was an activist. My father more
of a philosopher. Sir Brian Tallboys was our local member
of parliament, the Trade minister when agriculture was a big
(06:53):
deal and Britain going into the European Community was a
big deal. So a lot of a young age I
was exposed to all that, and I think I decided
reasonably early on i'd quite like to do the same
job that Brian Toolboys was doing. About twenty five years
later I got.
Speaker 2 (07:13):
To do it. And it was always probably national for you,
you right, growing up farming background and all that sort
of stuff.
Speaker 1 (07:22):
Yeah, I think, Look, the brand of the philosophy and
approached politics changes over time. At the time you might
remember we had SMPS. We had a lot of sort
of statutory marketing boards, mean a whip board loomed large
in our lives. No one's heard of it since I
(07:45):
had actually just started farming when they got rid of SMPS.
With the changes under Roger Douglass in the Fourth Labor Government,
so you'd call it a kind of collective conservatism. I
would say it's probably changed. But now certainly we had
a local guy in the community in Dipton who actually
(08:05):
started a political party. I think he called it the
Liberal Country Party, an acolyte of Milton Friedman, someone who
you would now think of as reasonably mainstream economics.
Speaker 2 (08:17):
Who's ahead of his time.
Speaker 1 (08:18):
Pre market economics, yere way ahead of his time, a
pretty colorful character and at the time regarded as as
a real maverick. But you know, he won his arguments
in the end.
Speaker 2 (08:30):
Yeah, I mean, do you remember much about that? I
suppose it was through the seventies really growing up through
that economy, that sort of controlled economy of the Muldoon years.
Speaker 1 (08:40):
I do, and I remember the intense interactions over the
government essentially negotiating the freezing workers pay, the intensive discussions
about reaching European veterinary standards and our freezing works and
(09:01):
how much that cost the farmers. Yeah, it was, it was.
There was a lot of intensity because it was so political,
Like you go to a meeting in the Dipton Hall
with the local MP and sixty sixty people to turn up,
and it's because the economy was pretty politicized. That wouldn't
(09:22):
happen now, and for in a sense, for the right reason,
and that is politicians aren't making the decisions that they
did then. I remember John Fulloon coming to inver Cargo.
He was an associate, he was a finance minister of
some sort to explain the interest rate controls.
Speaker 2 (09:39):
Oh yeah, yeah, that had.
Speaker 1 (09:41):
Been put on. You know, you forget those things.
Speaker 2 (09:44):
Before there was any kind of the Reserve Bank. Nothing
was floating and you know, independent or anything like that then.
Speaker 1 (09:50):
And an upshot of that was that when I started farming,
my first mortgage was twenty two percent, which was peculiar
to me. Of course that was the same same for everybody,
but it was was a signal of how out of
balance things had got and that times needed to change.
And that was pretty tricky in these communities that were
strong supporters of Rob Muldoon on the one hand, but
(10:12):
on the other hand sort of had a sense that
it wasn't evil adding up to something that worked.
Speaker 2 (10:24):
Between. I mean, you obviously were working on the family farm,
but you did head off to university and famously you've
got an honors degree in English, is that right?
Speaker 1 (10:33):
Yeah, that came a bit later I went to So.
Speaker 2 (10:35):
That's the passion for reading.
Speaker 1 (10:38):
Well, I think I was the only farm worker in
New Zealand with scholarship Latin in the early eighties. So
went off to Dunedin and did an English degree and
an accounting degree. Went back to the farm whereas farming
on our own account then along with one of my brothers.
So that was a pretty well class quite young two
(11:00):
twenty three, big mortgage, very difficult circumstances, made lots of mistakes,
some of them pretty big, from which I've learned and
had done it differently now that I've restarted.
Speaker 2 (11:12):
Well, this was a time that some people were being
were losing their farms during this period, right, this is
a you know, it was a really tough, tough era
for New Zealand farming.
Speaker 1 (11:20):
Oh, it was extremely difficult into the into the late
into the late eighties. And then for romantic reasons where
Mary was in Wellington and I was in Dipton, and
we decided we should probably do something about that. So
I shifted to Wellington, out of the sheepyards into an
English honors class to get it. I wanted to get
(11:43):
an honors degree so I could get a decent policy job.
And another person you might have heard of it was
in that class was John Campbell of right, but a
fantastic intellectual experience.
Speaker 2 (11:55):
Yeah, well, what was your specialty? In English literature?
Speaker 1 (12:00):
That was probably? What was it? Really? Kind of literary criticism.
I think all this Marxist feminist analysis of how the
world works, which turns out to be a powerful mechanism
for understanding government monopolies as exercises of power rather than goodwill.
Like it did turn like I had some brilliant lecturers.
Some of that toolkit I found really useful later in politics,
(12:25):
the way people construct stories and the sort of lack
of self awareness, particularly in government where they are the
power structure. They think the corporates or someone are, well, yep,
that's another power structure. But government certainly is a powerful
monopoly system.
Speaker 2 (12:43):
Yeah, it was interesting. I was going to ask because
obviously they accounting people can get the heat around how
that's going to be useful for you know, economics and finance,
and but I guess, yeah, there are that notion of
learning about how people put together stories and how influential
stories are, and in politics is probably pretty useful too.
I mean, you didn't you didn't you intended to head
(13:05):
off down as sort of the press secretary route, which
a few English majors probably would No.
Speaker 1 (13:14):
I ended up as a diversity higher in the Treasury
where they used to employ they were getting criticized from
employing too many economists these days are getting it deserbly
not employing enough. So they have an intake of twenty economists.
And then there was two diversity people, of which I
was one with an English literature degree, and found myself
(13:34):
parked across the table from Roger Douglas, who used to
work with junior treasury offices through his revolution on the
flat tax package, I suppose would be one thing that
people are old enough to remember. Yeah, had unraveled the
labor government. But I was in a very small team
(13:54):
of people who worked on that package. So it was
fantastic to be in an environment where a ware something
was You know, politicians were making a lot of decisions,
even if you didn't always agree with them. But secondly,
where as a relatively during your person, you were given
responsibility to really understand your issues and actually articulate them
(14:16):
to decision makers. But I did decide after a while
that I'd rather be on the politician side of the
desk than the policy advisor's side of the desk, and
ended up in politics not long after that.
Speaker 2 (14:28):
Yeah, I was going to ask, you know, what really
motivated you to stand It was nineteen ninety, wasn't it.
What was the driver?
Speaker 1 (14:36):
Well? I was always going to as I said to
my to Mary when we got married, I was interested
in politics and I always wanted to had in mind
being the MP for what was then the Wallace seat,
which was rural Southland. Essentially, I would didn't want to
do it anywhere else, and the opportunity arose probably fifteen
(14:57):
years earlier than we expected health of my predecessor. So
it was when I think back, it was remarkable that
a young woman raised in Wellington, who never lived in
the country agreed to go off to the middle of
South And with little babies and get into the crazy
(15:18):
world of politics. And I'm forever grateful to Mary for
that courage.
Speaker 2 (15:22):
Yeah, yeah, that's amazing. So and you were into, you know,
you had a young family and stuff at that point.
Speaker 1 (15:28):
We had one child when I was actually elected, and
followed by five more.
Speaker 2 (15:33):
I guess I mean how much was you know, finance
or money a motivator and all that sort of those
career choices. You know, as soon as you've got a
child to worry about, you've you've got to be a
bit serious.
Speaker 1 (15:44):
Do you. Yes, you do well, Yes, when you're young
with a child, with children and a mortgage, then you
want to get enough on the door. So yeah, it's
I've been fortunate to be able to have a bit
of a balance of things I really liked and wanted
to do, alongside getting enough money in to meet my
(16:09):
responsibilities as a parent and a husband. At times it's
pretty stretched, But I always think that what matters is
your prospects rather than what's happening today. A lot of
people can handle financial hardship if they think it's going
to get better. A real poverty is when you can't
see any prospect of improvement. Yeah.
Speaker 2 (16:30):
Absolutely again, And just coming back to the economy and
some really tough times were so you and you in
Parliament I guess around the time of that Mother of
all budgets and some hard decisions having to be made.
What do you recall about the economy at that time
and the choices that I guess in hindsight the National
Government had to make at that time.
Speaker 1 (16:50):
Well, it was pretty grim in my community, which I
knew better than any others, and it's in the rural communities.
The dislocation that went on as part of the deregulation
the economy was enormous. And when I hear people talking
about crisis today, by that standard of that time, it's
(17:14):
not a crisis. Maybe we should be more worried than
we are. But people had to the whole communities would change,
their lives, would changed, a lot of people lost their jobs,
and that went on for a while, I think, longer
than the proponents of deregulation thought or and proponents of
reforming the economy. And remember of nineteen ninety three. National
(17:40):
won that election by fourteen votes on a recount and
hon Aoo two weeks after the election. And that period
that to ninety three was pretty rough. I was chairman
of the Social Services Select Committee, so we bore the
brunt of the front end of public reaction to the
benefit cuts. I was on a select committee with Michael
(18:01):
Cullen and Helen Clark, and I'd never really cheered a
rugby club subcommittee. So the protests. There was crowds pushing
down doors to get into our meetings. There was no
security in those days. So it was a pretty hard
edged introduction to the politics of change, you know, and
(18:23):
it did it did left the mark on me in
the sense that it's easy to advocate change if you
don't have to face all that, if you don't have
to look into the eyes of those facing the consequences.
And I think the second thing was that there if
there's less urgency than there was, then there are better way,
(18:45):
there are other better ways of getting control of government
spending than what were some pretty, you know, some fairly
tough decisions that were made then.
Speaker 2 (18:54):
I guess people were, you know, people were very you know,
they were sick to death of inflation at that point,
and the idea of getting inflation under control finally was
pretty important, which is a little bit like what we've
seen in the past a few years. As you say,
I agree with you that it's not quite as severe
as as it may have been back then, because we'd
sort of had about a decade of it in those days.
(19:17):
But do you recall that changing do you recall I
seem to remember sometime in the mid nineties that it
suddenly started to come right for a bit, yeah.
Speaker 1 (19:26):
About nineteen ninety five heading into ninety six, which is
what made National viable for reelection because the economy was
actually starting to pick up, although it wasn't that obvious,
certainly not in the political world, but it was happening
out in the countryside. And I think Jim Bolger actually
(19:49):
deserved a lot of credit for seeing that period through.
He didn't get much credit at the time, but while
he didn't want to do it the same way as
Ruth Richardson did, all the time between them about the
right kind of things happened for the New Zealand economy.
I think another lesson out of it was the dynamism
(20:11):
that comes out of that sort of dislocation. You know,
people do come up with better ways of doing things.
And I know even in the world of the sheep
farming industry, its performance increased significantly, improved significantly over the
next ten to fifteen years in a way that might
(20:32):
not have happened. And if I had a concern about
the economy now, it's that we've we've become pretty risk averse.
You know, we regulate and make policy in a way
that dampens down the reallocation of resource, and that may
be one of the reasons our productivity is not doing
so well. And looking ahead, I think it's a big issue.
Speaker 2 (20:55):
You think politics is part of that. I mean there's
a constant battle of politicians face with the polling and
the focus groups and all that kind of stuff.
Speaker 1 (21:04):
Oh well, of course politics is part of it. But Key,
we are amenable to an argument where politicians making an
argument that sounding persistent, they can get there. I mean,
one of the things that I was involved with, which
I'm still proud of, was the tax which where we
made the argument for what is good economics, and that
(21:28):
is reducing income tax and increasing GST. And the public
went with that, you know, to a large extent because
of the skills of John Key, But it just showed
you you can win an argument we set out to
win and win an argument about floating energy companies, which
I think has turned out to be critical in the
energy transition, and probably a bit more needs to be
(21:49):
done there. But again you make the argument that's in
a way that's sensible, which I think was a bit
of a shift from the mindset of the former was
late eighties and nineties, which was a bit more about
or crash or crash through, try and get enough done
while you burn up your political capital. Well MMP doesn't
(22:10):
really let you do that, and it's not a bad thing.
It forces you to make more coherent arguments, but you
do need a political class that's interested in doing that
and not dominated by managerialism of the status quo.
Speaker 2 (22:25):
Yeah, your treasurer at the end of the Shipley government,
is that right? So was that your first major finance
type role.
Speaker 1 (22:32):
Yes, it was. I'd been involved mainly with health through
the mid nineties, the health reforms, which had a great
deal of merit actually, and we're going to have to
relearn some of those lessons. But then with the change
of leadership in ninety seven, I became a finan sort
of a junior finance minister, and then I think just
(22:54):
for a period of like twelve months, I was the
treasurer i I think, or the finance ministry I mean.
Speaker 2 (22:59):
And there's obviously a well well traversed story of your
first go at leading the National Party and all that stuff.
We probably haven't got time to do a whole political history,
but I would like to jump into two thousand and eight,
because you know I was I was covering the GFC
at the time. It was pretty hair raising stuff and
you guys came into a pretty spectacular crisis. So that's
(23:22):
as Deputy PM and Finance minister. How do you looking
back at that, how do you think you guys handled
it and would you do anything different?
Speaker 1 (23:31):
I don't think we do a lot different That maybe
more that perhaps more opportunity for reform might have occurred
in the absence of the earthquakes, right, yeah, Remember we're
just kind of getting organized and then we.
Speaker 2 (23:48):
Had it was a double blow, wasn't it really?
Speaker 1 (23:51):
Eleven earthquakes? But I lucky you could go back in
detail and see some things should have been done differently.
But I think the important really what worked there, particularly
with the leadership of John Key, the sort of operational
effectiveness of what was pretty a coherent cabinet just maintained
(24:15):
confidence through some pretty difficult times, and that's quite that's important.
As we found out in recent years, you can if
confidence goes off, people aren't as willing to make investment
decisions or employment decisions, then an economy inevitably slows. It's
almost like a costless benefit. If the decision making looks
(24:39):
like it's coherent and a bit predictable. Then that's that's
a gain for the whole economy that you didn't have
to pay for.
Speaker 2 (24:47):
Yeah. Yeah, Do you remember a moment when those I
guess after the big quakes in christ when you're just
looking at the state of the books and thinking, oh
my gosh, you know, how do we how can we
possibly turn this around? How did you say view that?
Because it was pretty daunting for a while, you know,
especially coming off the back of the GFC.
Speaker 1 (25:06):
Yes, it was. Look, I think when things blow out
like the earth requirements for the earthquake. Really I just
remember thinking two things. One is, we don't want to
hold this back by being unwilling to spend. And if
(25:26):
I was going to give credit for the person who
really did the hard work on that, it was Jerry Browning.
He did an amazing job under difficult decisions, of difficult
conditions of being on the ground, making decisions that were
relevant in christ Church and highly relevant to rebuilding the
sort of shattered confidence in the place at the same
(25:48):
time as always having an eye on the dollars, and
he never really he didn't put the government in the
position of saying, well, I've gone off and spendless money,
You're just gonna have to pay the bill. And I
just think that was a remarkably constructive process. So that
was one thing. And the second thing was that for
a small, open economy as usual, you've got to keep
your lenders well informed and what they want to see.
(26:12):
And what we needed was a path back from what
I think a nine percent of GDP deficit, but quite
a bit bigger than what you've got now. And so
we focused very much on the road to recovery, you know,
rather than being overly focused on saving every cent. Right now,
what's the dynamic going to get you back? And in
(26:33):
that context, circumstances helped. You had ten percent of GDP
injection from reinsurers into the economy. That helped a lot
because I was coming in to rebuild christ Church. And
now that you've got to remember that was all just
part of the golden era of Chinese growth and New
Zealand as having a free trade agreement with China, which
(26:55):
was a novelty then worked on by both bipartisan base
that wasn't political as it might be now. That was
quite a strong tailwind and it was also a time
when you were part of this long term decrease in
interest rates.
Speaker 2 (27:10):
Yeah, when you look.
Speaker 1 (27:12):
Ahead, those tailwinds aren't going to be there. Yeah, restraates
can't keep dropping. You know, that'll come off. But that's good.
Speaker 2 (27:19):
Yeah, and people have highlighted that, you know, China's still
going to be a huge market, but that growth that
we experienced won't be there. I mean, you know, it's
not going to be the same anyway. We've got to
obviously find some other drivers.
Speaker 1 (27:32):
Yeah, that's right, and I think that's a bit of
a challenge because it's not obvious what those are going
to be. Certainly I don't want governments trying to pick them.
Speaker 2 (27:40):
Yeah, well that's a fair point. Just again, just quickly
looking back, are there any other economic decisions over those
nine years that you especially proud of will be that
you regret?
Speaker 1 (27:52):
Oh? Well, at tax switch is when I was pretty
pretty keen on pretty I thought it was a good
piece of well executed policy. I think the focus on
the operation of the public sector was unheralded at the time,
but people realized when the next government came along and
took a different approach that what they took for granted
(28:14):
was probably fairly sensible. Now it is twenty twenty five
percent of the economy, the most direct influenced government can
have on productivity. And this economy is run its own
business better, and you can run it better, but you've
got to decide to and you've got to understand the
leavers there. And that was all given away and we
ended up, you know, with this big spend up, including
(28:38):
COVID justified some of it, big spend up, with not
much more to show for it. So you know, the
health budget is sixty percent larger than sixty years ago
with rough with a small increase in output. Yeah, so
that but I was pleased with the work that we
did there. The early on. I remember making a few
speeches around housing housing supply when it was regarded as
(29:03):
a cranky right wing idea that supply had any influence
on housing prices. And I think one unherralded success around
that time was the Auckland Unitary Plan, which is the
most you know, that provided the biggest boost for house
building in New Zealand in a long time, and that's
(29:24):
still running even though it slowed down a bit, and
I think the lessons from that are now being picked
up by the current government spread through the system. In fact,
the last government picked up some of those lessons.
Speaker 2 (29:36):
Yeah, I mean, are there regrets about twenty seventeen and
the negotiations and all that sort of stuff. It's one
of the great what ifs. I suppose we're all surprised.
I mean, on the night, I think we all thought
you'd won it because it was a strong result. But
you know, politics as politics, and Winston Peters as Winston
Peters and how do you view that now?
Speaker 1 (29:58):
Oh, look, over time, your personal your personal situation, you
take the benefits of the personal situation take over. So look,
I wouldn't want to swap the time I've had working
with my family, being able to support Mary, running my
own life. That's been fantastic. There's plenty of life beyond politics.
(30:21):
And even at the time, I mean, look was it was.
I was a bit sorry about it. You know that
it was the wrong decision for the country. I don't
think there's any doubt about that, But that's m MP.
The voters had to say, you know, National that okay,
but it's coalition partners did badly. The Maori Party didn't
(30:41):
didn't keep a seat and was out of Parliament, and
that was only there because we made a deal to
let them stay there. And I'm sure there's some lessons
from that that I haven't spent a whole lot of
time on. Look, it's politics. I'd always thought in politics,
you get these incredible opportunities and you don't necessarily deserve them.
A lot of it comes your way from circumstance and
(31:03):
other people who you work with, or the great team
around you. But it can go in an instant if
only because of your own mistakes and stupidities in an election.
There was the public's view on it, and you just know,
I accepted that view and get on with the rest
of your life, and it's worked out well.
Speaker 2 (31:23):
Yeah, yeah, I mean obviously, as you've sort of interdut
you know, there were huge impacts economically from it all.
And you look at the COVID era and what happened.
You know, if you'd been in power, then would would
it have been wildly different policy? Do you think that
you'd have followed?
Speaker 1 (31:40):
Look, you can't tell for sure, and I didn't focus
a lot on the details of the policy making. I
think that the I think a couple of things might
have been different than one I think we would have
recognized the trade offs and been willing to work with
them a bit more than the government of the time.
You know, there's a high cost to that kind of lockdown,
(32:03):
and in a sense we're still paying that cost now.
And you look at other countries that have had a
hard lockdown, and there's others who are harder than New
Zealand and they're paying a price too. I think the
second thing was that the sense of that the government
was absolutely central everything happened in the economy lingered on
(32:25):
after COVID, after it was necessary, and I think that's
just part of the predilection of a labor government and
a complacency in the public service and a lot of it.
So there was quite a lot of less quite a
lot of poor decision making after COVID that flowed from
(32:45):
attitudes developed during COVID. Otherwise, lot people make the decisions
they do at the time. And I hope, I hope
there is going to be this inquiry they're talking about
doing will be a bit bit more than back backslapping
by the public health establishment about what a great job
it did, because there's a lot of other consequences that
(33:08):
we just need to understand.
Speaker 2 (33:09):
Yeah, you don't think you're going to be involved in
anymore I mean any more government inquiries or reports coming up.
Speaker 1 (33:16):
No, I've had a spind at KO and I enjoyed that,
but otherwise plenty to do.
Speaker 2 (33:31):
Look, I want to get in just to finish up
some of our quick fire money talks. Questions to bring
it back to money a little bit. First up, what
would you say the poorest you've ever been is?
Speaker 1 (33:41):
Oh, well, look, there's been plenty of times that didn't
have cash either as a I've always had work, but
I remember feeling very poor after buying Mary's engagement, my
life savings on it, on the engagement ring and a
trip to go go and see it. Thinking nextually, I've
got no money in the bank, but always had prospects.
(34:03):
I have to say, I don't think I ever felt poor.
Certainly felt under pressure with a young family with mortgages
and outgoings, and then unpredictable things happen, so you know,
nothing to complain about. But I you know, in my
broader family, I've seen persistent poverty and either from ill
(34:25):
health or bad luck or poor decision making, and it's
grinding on people. And what I've seen of that has
been part of motivation for taking an interest in those issues.
Speaker 2 (34:38):
Sort of the flip question to that, as I suppose,
and I don't think we should count the ring for
your wife, But what's the most indulgent purchase you've ever
made or when you.
Speaker 1 (34:49):
Well, that was certainly the most disproportionate one to my wealth,
to my wealth at the time. I'm not really an
indulgent purchasing. You know. Sometimes I think buying a nice
jacket can feel indulgent, but it's you know, well within
I think, I think, I say.
Speaker 2 (35:06):
I interviewed the late Sir Michael Callen along these lines
and he was very similar. He talked about splashing out
once in an eighty dollar bottle of wine. I thought,
it's not I wasn't the same as interviewing Sir John Well,
you know that's good for finance ministers to.
Speaker 1 (35:23):
You know, maybe that's right. We still get accused as
finance ministers. He still get accused of, you know, being
inconsistent with the constrictions he put on other people.
Speaker 2 (35:35):
Do you buy lotto tickets and do you imagine winning lotto?
Speaker 1 (35:39):
Still occasionally I've I did buy one of you. I
think last year and in my head, I've got a
ninety year old father in law who always used to
buy Golden Keywi tickets, and he was he came here
as a Sarmon migrant, we're very hard all his life
(36:00):
to raise thirteen children. And I always thought, well, wouldn't
it wouldn't it wouldn't a windfall be a nice reward
for all that? But of course my nearest and dearest
family think that was just cover for wanting to buy
a lot of ticket.
Speaker 2 (36:18):
I guess another one about money, really, but how much
you've sort of answered this about how much is making
money important to you? And how much of that is
money just the by product of success.
Speaker 1 (36:28):
Or of what you do well having spent five or
six years now in small businesses, then there's you know,
you're certainly keen on the buy product because it's hard
to come by. It's it's usually I enjoy the challenge
of it. But you know, a lot of businesses make
enough money to make a living and a lot of
(36:51):
and any number of them disappear. So it's not like
it's not as easy a ticket to significant income as
the policy world thinks it is. But look, I think
the purpose for which you do. Business is a significant
determinant of whether it's successful, and success comes in different forms,
(37:14):
doesn't It can be growth, it can be profitability, It
can be building a team of people who really work
out how to provide value for their customers. And the
other bit of success is just happy customers. I mean
one of the things we do with service charities. And
for the young people who do it, it's enormously rewarding
(37:36):
because they just see these people who are trying to
do good figure out how to do it better. But
it is I think, Look, one of the great things
about having a bit of income is it just reduces
the cognitive load of worrying about the day to day
cash outgoings all the time. And I think it's great
(37:56):
for people, particularly as they get later in life, if
they can get a bit of that space because you
spend a lot of time, you know, making it like
we used to because we had six kids, five boys.
You try and buy food on scents per kilo or
dry matter, so sweet picked bananas, rice.
Speaker 2 (38:18):
I'm feeding two teenagers at the moment where they can
need more of it.
Speaker 1 (38:21):
You can get the better.
Speaker 2 (38:24):
We can't ask you what you would do if we
made your prime minister for a day, because you had
plenty of days as prime minister. But I guess we
could ask ask you if we could put you there again.
You know, is there anything you wish you had done
or that you would do if you had another chance.
Speaker 1 (38:43):
Well that's a hard question to answer, actually, because I
always felt like you need to feel like you're working
at the outer boundary of your capacity to achieve when
you're there. Sometimes I think it'd be you know, look
back and think we could have pushed through. The one
area I think we could have pushed through harder and
(39:03):
now is happening now is around housing, because the housing
affordability is such a significant driver of misallocation of capital,
poverty for lower income households. It's like a jugger or
you know, that needs to be turned around. And we
(39:27):
got started on that, but you know, perhaps could have
pushed harder. Sometimes these things are a matter of public acceptance.
I mean the current governments making decisions in that area
which would have caused a riot as recently as twenty seventeen.
Speaker 2 (39:42):
Yeah, yeah, I mean Chrisship actually said house prices come down.
You couldn't say how you couldn't have a politician a
few years ago saying that they are in favor of
house prices.
Speaker 1 (39:51):
Coming down and that's just because it wasn't bad enough yet. Yeah,
but you know it got bad enough and so people
are accepting more radical solutions, and I think that's a
positive sign. I'm a bit of a believer in these
self balancing things.
Speaker 2 (40:06):
And producing Ethan's just written CGT here. I'm thinking you're
probably thinking supply side when you talk about rather than
CGT or demand side stuff for housing. When you when
you look back, would you have done anything more on
the tax side.
Speaker 1 (40:21):
We had a pretty good look at it, I think
every finance minister does. And then it runs into two
two problems. One is just the implementation of it, and
I think you'd find even in countries where they have it,
it's arguing about arguable about whether it's net revenue or not,
(40:42):
and any other in New Zealand is just the politics
which still get it every now and again.
Speaker 2 (40:48):
Yeah, that's another battle. Laghbour's got to go through it.
Speaker 1 (40:52):
In general, you want your tax base moving away from
things you want more of, like income and work and
returns on capital, and you want your tax space more
around things that can't move and that you don't want
more of, so you want it on fixed assets, land,
wealthy and consumption. Yeah, if you can. So you know
(41:15):
it's moved a bit that way, and probably we you
know it's moving further. Just look at rates or a
land tax and going up you know, ten to twenty
percent per annum for the next five years across New Zealand.
So we're going to get a bit of a live
experiment and growth in capital taxes. Yeah.
Speaker 2 (41:32):
Yeah, And so it's just on the supply side. You
were there any specifics that you are you talking about
opening up land? Would there been a national version of
a ki we Build or something like that that could
have been done? Oh no, just the regular tree making
it easier to build.
Speaker 1 (41:47):
Yeah. Microeconomics and regulation is boring but absolutely vital and
when it works, it works well. I think New Zealand's
done a pretty good job of its energy markets for instance,
not perfect, but better than better than a lot of
other places. And it's of in housing is all about
(42:08):
regulation and pushing back plannerism, which is a lot of
people divide designing nice cities with and buildings with no
recognition at all of the economics. But that's coming. Well,
that's underway. Even in Wellington a group of young millennials
(42:28):
was able to persuade a fairly limited council to make
sensible decisions about housing and housing affordability. Well, that's that's promising.
Speaker 2 (42:39):
That's good to hear. Look, so just a last question.
I know we've going to let you go. It really
is a big one, really, and it's around where you
think the issues around social inequality and poverty lie. And
maybe with you know, the time you've had, you've been
working with charity and a lot of all the experience
you've had, you know, what do you think it is
(43:00):
that that really? I guess keep some people poor and
some people manage to get out of that. And what
do you think the number one thing we should be
focusing on to address it is?
Speaker 1 (43:12):
Look, I think if you had, if you had to
pick a number one, that would be housing costs, housing affordability.
And I think number two is the very is the
the way that traditional government delivery of service, which is
billions of a year, doesn't work for complex families or communities.
(43:34):
And that's and the poor mainstream government service has become
part of the pathology of poverty and we've got some
of the worst record in the OECD of using education
to overcome an equity. And actually it's the recent work
that shows our health systems not much better. And that's
what that's caused by, driven to a large extent by
(43:56):
universalist mentality, that is that you're meant to treat all
everybody the same, and we just seet time and again.
And the work that we're doing customer focused delivery in
the context of a trusted relationship is magic. Doesn't answer
all the poverty issues. But if you've got the housing
(44:16):
right and that government service delivery right, I think you
can make a significant impact. And then there's always the
arguments about redistribution. You know, how far do you go
with just shifting cash around you? But there's other bits
you can do. The other bits you can do that
are going to make a significant difference that I've talked about.
Speaker 2 (44:35):
Hello, Bill, We're going to have to let you go there,
But sir Bill, I should have said sorry. Thank you
very much for coming and making the time to talk
to some money talks.
Speaker 1 (44:44):
No problem, Thank you very much.
Speaker 2 (44:45):
Ly, cheers, Thank you for listening to this episode and
to this season. We'll be back in twenty twenty five.
In the meantime, listen to Money Talks on iHeartRadio or
wherever you get your podcasts, and catch up on some
of our Ask guests while you wait for the next season.
Thanks to my producer Econsiles and my sound engineer Liann McDonald.
(45:07):
And if you want to get in touch, email me
at Liam dot Dan at injured me dot co dot
zed and read more business news and features at Injured
Herald dot co dot zed.
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