John Key interview: 'Who wants a PM who's down in the mouth?'

Prime Minister John Key faces a tougher election fight than expected. Picture / Rod Emmerson

National leader John Key has had a tougher campaign than his strategists would have hoped for. Here he talks about Teapotgate, asset sales and New Zealand's credit rating downgrade.

What would be your first priority if re-elected as Prime Minister?
There are two major policy planks that we've campaigned: one is a mixed ownership model and the second is welfare reform. Both of those are very big programmes that need a lot of lead time and work. So they will dominate some of the early work as well as Budget 2012. The lead-time for the Budget starts really quickly, and by about the end of February you have to be in a position to know where you are going. We've made a big virtue of the fact that we want to balance the books as quickly as we can, so we'll be working on that.

What has been the high point of the campaign? Was it the "show me the money" line and where did that come from?
I think the ability to expose the flaws in Labour's economic management which occurred [during] that debate has obviously been the highlight. Not because we were judged to be the overwhelming winner, but it demonstrated clearly that Labour don't have an answer to the near-$16 billion hole that they would leave in the accounts over the next four years. In terms of the line, it just came on the night. I wish I could tell you I was smart enough to think about it before I went there. But that environment was a bit like the general debate. The speeches I give after the Budget, which are sometimes colourful and light-hearted, the best lines for those I never write. They just come at the moment. They can get me in trouble, but it wasn't planned.

How come you can remember who hit you at school but you can't remember your position on the Springbok tour or whether you talked about NZ First supporters in your conversation with John Banks on Friday?
Well, I couldn't remember all the details of why Greg Buzzard hit me. The Springbok tour? I got asked [about it] in 2006 when I first became leader. No one had asked me [about it] for 25 years. I wasn't actively involved. I didn't go to the games. I certainly didn't protest. I like rugby but there were a lot of other things happening in my life at the time. I've asked other people that question because it was an issue in the 2008 election, and there were a lot of people who were in the same position.

What about whether you talked about NZ First supporters in your conversation with John Banks?
Well, that matter is before the police and rightly so and I won't be making any comments about that.

Has National under-estimated Phil Goff in this campaign?
Not in the slightest. Look, Phil Goff has been around for 30 years. He was a senior minister. He is intelligent and hard-working and my view has always been that he will be a good campaigner. And I do think Labour has made a strategic mistake in not having him on the billboards. My view is that he is a tough competitor and far from being a foregone conclusion. I have always thought, genuinely thought, that elections are like world cups. They sometimes look easier from the outside and they are very difficult when you are in the middle of them.

Simon Power has left Parliament saying politicians should manage less and lead more. What do you think he meant and do you think he included you?
You'd have to ask him about the latter. In terms of the former, it's a paper war here. It's possible to spend every waking hour here on the ninth floor and not get out of the office. And this isn't the real world in here. And contrary to public opinion, I'm not incredibly poll-driven. They are an ongoing indicator of how we are going, but I take the feedback I get on the street as being the most important. Even though the press gallery are focused on the campaign trail, I'm on the campaign trail every Thursday and Friday. I think I tend to have that balance about right.

Don't people on the street simply tell you what you want to hear?
Sometimes, but if you engage them in a longer conversation when the media aren't around you'll see what's working and what's not. I think you can get a really good feel for the policies and what's actually important. Look, elections are decided on the things that matter. And they are quite basic - whether their community is safe, whether they have a job, whether the health system works for them, and whether they feel the country is going in the right direction. The only other thing I'd add to that is I'm a naturally pretty upbeat person. I've always been a glass half-full as opposed to a glass-half-empty, and the day that changes is the day I should leave. So for me I think that personality has helped in difficult times in New Zealand.

You get criticised for being optimistic but who wants a leader [who is] down in the mouth, [who] doesn't see a future for their country?

Leaving the Finance Minister to be down in the mouth?
Well, finance ministers have to use the word 'no' more than prime ministers.

Would you commit to a full-term as Prime Minister if you are re-elected?
Well, it's my expectation that I'll be staying. So yes. Yes is the word.

You don't want to say "it's my intention ..." ?
No. Yes is the word.

You made a big thing each Budget about avoiding a downgrade by the credit rating agencies then when it happened minimised its importance. Is that credible?
Firstly, I think that credit rating agencies matter. I'm not in the camp that says you can just ignore them. In the case of Standard and Poor's and Fitch, their downgrades came as a result of the weakening in the international environment and the concerns they had about private sector debt. So if you looked at their comments about the Government's forward track, they were supportive of what we were doing. Given we have hit every metric we had talked to them about over the course of the three years and did better than what they thought, I think in hindsight it would have been possible to have avoided that, given the worsening position in Europe. And the other way of looking at that, it got very little media coverage, but very recently Moody's came out and reaffirmed New Zealand AAA and they are the only one who looked at the Government's track. I would obviously prefer we had a higher credit rating than a lower one, but I am confident we are heading in the right direction.

The taxpayer had to bail out Air New Zealand in the early 2000s after it was privatised because it was an essential strategic asset for exporters. What is there to stop it happening again?
The first interesting observation with Air New Zealand is that it's the living, breathing, working example of the mixed ownership model and it has been highly effective. It was airline of the year, it has provided good dividends for the Government and it has been successful. So I don't think the mixed ownership model in any way threatens the strength of those organisations. If anything it is likely to improve their performance because there [are] more eyes, more commercial interests looking at them and external directors, you've got shareholder meetings, it's very different.

Would a global recession make you more or less committed to selling five state-owned assets?
We're not selling them. We are offering New Zealanders a part-share in them. That's the truth of it. Obviously we'd work through the timing of that, but even with the recession it's been interesting to see the way the equity markets have performed. Fairfax has applied exactly the same model to Trade Me. They are keeping 66 per cent, they floated off 34 per cent, it was three times oversubscribed. And its value to the company is over $1 billion.

So there's a great example of the fact that that has all happened on the backdrop of Italy changing its prime minister and Greece nearly defaulting, so there might be an argument that conditions can only get better from there.

Do you have any initiatives to tackle the rapidly escalating health care costs that will come as the baby boomer generation ages?
I think we've already demonstrated in the last three years that we're doing that. The health buying agency has had quite a big impact in terms of potentially over time lowering costs. Certainly deployment of technology will help tremendously. The integrated family health clinics and keeping as many surgical procedures out of tertiary care, out of hospitals, and happening in the community is not only more convenient for New Zealanders, it is a lot cheaper. We've also been looking at public private partnerships and bulk buying and changing the mix of our workforce - hiring more doctors, nurses, midwives and reducing the amount of health administration.

One of the reasons Labour is not talking about health on the campaign trail which has typically been a strong [issue] for left wing parties is because they don't believe they can make any political mileage because we've been successful. Cancer waiting times are four weeks or less. We're not sending people to Australia for cancer treatment; [there are] 27,000 additional elective surgical operations. The waiting time for elective surgery is now down to six months which is world best-practice and we'd like to be no more than four months by 2014.

Last election you promised not to touch Working for Families or interest-free student loans. Are you making a similar pledge this election not to touch them next term beyond what has been foreshadowed in Budget announcements?
There is no agenda to make changes we haven't campaigned on. There's always the possibility that at the margins minor things are changed to reflect circumstances, but the fundamental premise of those policies remains intact and we intend to honour that. There are always minor technical things you do, but I'm not anticipating major changes.

What is your vision for race relations?
I think for the most part people are proud of the bicultural foundation New Zealand is built on and the fact that we are a multicultural society. I don't think there is anywhere near the heat in the issue that there was when Winston Peters used to try and drum up votes on the back of it years ago. That is not to say that there aren't areas where people would have concerns and they would want fairness in the system. But New Zealand is a much stronger country for being a multicultural society. It's a more interesting place to live. It is more dynamic and it addresses the skills shortage that we sometimes have. So to me I think it is really important that people have a sense of what it means to be a New Zealander but can accept people of different race and different ethnicity as falling within that category.

There is clearly an improving political relationship with the United States under National. Where do you see the future of the defence relationship heading? Is there room for a much closer defence relationship?
We are not about to change our position on an independent foreign policy so I don't see a formal return to Anzus. I think we have managed to work through that now and put the rock in the road of anti-nuclear policy and the likes behind us. And we are and we do work very constructively with the Americans. We are doing that in Afghanistan and other places.

If China asked if its new aircraft carrier could visit New Zealand, would you agree?
As long it wasn't nuclear-powered, I think it would possibly be okay. We have a lot of other foreign vessels that come to New Zealand.