Today on Newshub Nation ` teachers say our education system is in crisis. We ask Chris Hipkins what he's doing to fix it. Kiwibank's new boss tells us how he's going to improve the bank's performance. And we look at what's been done to help the Hauraki Gulf recover from years of pollution and overfishing. Captions were made with the support of NZ On Air. Copyright Able 2018 Kia, good morning. I'm Simon Shepherd. Welcome to Newshub Nation. Primary teachers are set to walk off the job later this month in frustration over their most recent pay offer. They say their needs aren't being prioritised and something needs to happen now to address the massive teacher shortage. Education Minister Chris Hipkins joins me now. Teachers are saying that we are in a crisis in education. Do you agree? I think what you're seeing from the teacher community is a lot of built-up frustration that's built up over a long period of time. I think that's coming to the surface now, and I do take that very seriously. I think we've got some big challenges ahead. We know we don't have enough teachers coming through teacher training, for example, and that's something that we've absolutely got to get on top of. There are big and legitimate workload concerns that teachers are raising, and we do need to get on top of those as well. OK, so it's a crisis. Look, I'm not going to call it a crisis. It is certainly challenging, and there are certainly some parts of it that are more challenging than others. People at the coalface are calling it a crisis. Should we believe them? I think that teachers at the coalface are raising some really legitimate concerns, and they're ones that I'm listening very, very carefully to. They're walking off the job, they're not enrolling in the courses to become teachers ` all the hallmarks of something seriously wrong. Look, I think there are many, many things that we've got to look at as part of this, and obviously I am concerned that not enough people are training to be teachers. OK, let's get to that in a moment. One of the first things you have to deal with is this forthcoming strike over pay negotiations. They're asking for 16% over two years. You're offering about 7.2% over three years. Why should teachers accept that? What we've offered teachers is roughly double what they got, on average, under the previous government. Less than half of what they're asking for. We know that there is built-up demand there, and we do, again, take that seriously. It's not just about pay. Many of the issues teachers have raised during this negotiation process aren't actually about the salary. There are other issues too. That's true, and we will get to those. We're talking about the level of remuneration right now. Under your offer, how much will an average teacher get extra? It depends, because through the Ministry of Education, the offer has been loaded up at the beginning-teacher salary rate. So a beginning teacher, for example, stands to gain almost 15% increase over three years. Those more experienced teachers would get less under the offer that's on the table at the moment. And the majority of those teachers are the more experienced teachers. The average age is 57 or something like that. They're higher into the pay scale. So do you know how much they're going to get? Again, it depends on where they're at on the salary scale, but also about 40% of primary school teachers are earning over the top of the salary scale because they have additional allowances or additional management units or whatever. So it's quite difficult to put nice clean numbers on it, because the pay scale and the pay system for teachers is quite a complex one. But if they're still earning over the top of the salary scale, and yet we don't have enough teachers and they're walking off the jobs, if that's what you can afford, how are we going to keep teachers in the classroom? Workload is definitely an issue that we're looking very carefully at. Now, for primary school teachers, National Standards was an issue that was raised for many, many years, and their concerns about National Standards fell on deaf ears until there was a change of government, and we moved quickly to address that. National Standards did increase their workloads significantly for no real benefit for the kids. Educational improvement didn't result from National Standards, so we've addressed that. OK. But the other issue that they have raised, which I think is an incredibly important one, is the number of children who are arriving in our schools with special needs, because that puts a huge amount of additional strain on teachers. And this year's Budget gave the biggest increase in funding for kids with special needs in over a decade. We do recognise that we've got a lot of work to do there. Yeah, but the current offer doesn't do anything about teacher aides and increasing their remuneration, and that's where the teacher aides to come in ` to ease the workload of special needs children in the classroom. That's right. Those are separate negotiations, obviously, but the money comes from the same bucket of money. There's not an unlimited bucket of money, and we need to do a lot of things at the moment. Well, that's true. And so we have to balance all of those things quite carefully. Yeah, if you need to find more money from somewhere, why not just raise that debt cap that you're religiously sticking to? Why not throw out your free tertiary first year? The fees-free tertiary education actually will benefit the future generation of teachers. Let's be really clear about this. One of the challenges with teaching is the Baby Boomer cohort of teachers are the ones who are nearing retirement age. Now, many of those got their education, their post-school education for almost free, and what I'm saying is the future generation of teachers should also have a better deal when it comes to their teacher training and their tertiary education. But it's the teachers right now. We're talking about right now. We've talked about pay, and you are offering half of what they're asking for. But you're also talking about easing the workload. Now, the current offer gives two hours extra planning time, lesson planning time, per term. That equates to, like, 12 minutes a day. Is that enough? Again, classroom release time is not the only thing that contributes to teacher workload. Again, I think that there are some really legitimate issues that teachers have raised around the workload pressures that they have, the release time that they have, and over time I think we can address many of those issues. We can't do everything at once, but we can, I think, working together, address many of the concerns. In fact, all of the concerns can be addressed over time. OK. You talked about having to do a lot. Another part is the secondary teachers. They're expected to ask you for 14.5%. Do you have enough money for them as well? We have money for primary and secondary teachers. It's not of the quantum that they have been asking for. That much is clear. But we'll go into those negotiations in good faith, as we have with the primary teachers. So you've just told me that they're not going to get 16%, the primary teachers, and the secondary teachers are not going to get 14.5%. That's what you've just said. That's true, and I think if you look at the pay rises that the rest of New Zealand is getting across the board, the claim that they have on the table is certainly well out of kilter with everybody else. But teachers have only been given 17% over nine years ` an average of 1.2% pay increase per year. They haven't actually been getting decent pay rises for years. Surely they need this pay jolt, as they call it. I'd just point out that every one of those three collective agreements that were settled under the previous government were endorsed by the teaching profession, and there wasn't a hint of a strike at that point. We've got an offer on the table at the moment that is double what they were getting under the previous government. We do recognise the concerns that they've been raising. But, as I've been clear, we can't do everything in the first year that we are in government. OK. You just mentioned the strike. Why is it that under a Labour Government that the teachers have decided to strike? I think that teachers have seen that this government is more receptive to their concerns than the government they've had for the last nine years. That's a good thing. We are working very closely with them. We are listening. But the financial bucket is not unlimited. Did you over-promise them? Have you created an air of expectation that cannot be fulfilled? No, not at all. I've always been very realistic with teachers that any pay increases would be a matter for bargaining. We didn't make any commitments during the election campaign as to how we would resolve those pay claims. I do absolutely acknowledge the concerns that teachers are raising are quite legitimate. But my message is we can't do everything all at once. So you want to ` just to read something back to you ` 'The government has a drive to raise the status of the teaching profession and restore their trust 'and confidence.' I think that was in the Cabinet paper that you presented. Are you actually living up to that with what you're offering teachers? I think we're living up to that in a number of areas. So, for example, we've got a bill going through Parliament in a couple of weeks that gives teachers the right to elect representatives to their own professional body, which is something the previous government took away. We have listened to teachers when it comes to things like National Standards and the review of the NCEA. We are listening to them on workload, and we are listening to them when it comes to things like increased number of kids with special needs. So we're working with them across the board; the pay negotiations are a small part of that, and I do appreciate, of course, that at the moment for teachers, that's very front of mind. But also one of the other issues for them is class sizes. Are you going to reduce primary school class sizes before the next election? We haven't made a commitment to do that. The Opposition has. Yeah, we haven't made a commitment to do that because we acknowledge that there are other things that are very, very important, including special needs. I make no apology for the fact that I've made special needs the number one priority in this year's Budget. It was the biggest increase in funding for kids with special needs in a decade, and that was one of the highest priorities that we set out there. The thing about class sizes is it's very expensive to make a modest change to class sizes, and that's something we want to talk to the teaching profession about. Is that the highest priority for them? Or are things like more classroom release time a bigger priority? If you had the money, you had that big bucket of cash, what is the optimal class size? Well, that depends on the circumstances. I mean, even Simon Bridges acknowledged that the other day when he said that employing more teachers doesn't necessarily mean class sizes will be smaller, because nowadays you have more team teaching, where you might have a number of teachers working with a group of students and so on, so there isn't an optimal number. The teachers in their particular claim in the years four to six, seven, eight, want a class size gone from 29 to 25. So they've decided that 25 is the right size. Well, there's a difference between actual class sizes ` so how many kids are in an actual classroom ` and the funding ratios. If you look at the biggest funding ratios of that one-to-29er, it's the intermediate school age. But then we also provide additional teachers at that intermediate school age for technology. So it's quite hard to draw a clean correlation between the number of teachers we fund through the ratio system and the ratio of teachers who are actually in the classroom. You mentioned before that we have 40% less teachers going through college than, say, almost a decade ago. We currently have 30,000 full-time primary teachers. How many do we actually need? Well, we're going through a process at the moment of modelling that out and looking at the age profile of the profession. And, Simon, I have to say I'm surprised that this hasn't been done before. This is something that I had to commission when I became the minister as a workforce strategy that looks at the demographics of the workforce, what their needs are, and we're working very closely with the teaching profession to get those numbers right. When will you have those numbers? I think that we'll start to see the results in the coming months, and I'll hope that they inform the next part of the bargaining process. It's important that we make our decisions based on really solid and sound evidence, and that evidence base hasn't been there, and I think that that has been a frustration for everybody. OK. Let's talk about priorities. So, you've got this teacher strike looming. They're calling it a warning shot. You could have to be prepared for more warning shots, more strikes, if this negotiation doesn't succeed. Surely you should have addressed this first before coming in and giving a free year of tertiary education to students going to university and other NZQA-qualified institutions. That was a clear commitment we made during the election campaign, and we were absolutely clear that that would be our highest priority. We've funded` Sure, you've made a commitment, but is it the right priority? We funded that out of cancelling the previous government's tax cuts. So that was money they were not intending to spend on education. It is money that we are spending on education. And as I indicated, the future generation of teachers will benefit from it. Sure, but what about this current crop of teachers? You could have used that money to benefit them and get this pay dispute settled. It's not necessarily an either-or. As I've indicated, the offer that's on the table for primary teachers at the moment is double what they were getting under the previous government. We do acknowledge that more money is required for teacher salaries. OK. This particular policy of free tertiary education with the first year ` how do you think it's going? Look, it's early days yet. I think we'll really see how that's going to pan out probably a few years down the track. We introduced it right before Christmas. Obviously a lot of people had already made decisions about their plans for this year, particularly young people that had already locked in their plans for this year` Because the tertiary school numbers have only increased by 0.3% since this policy has been in place. Although, if you look at the long-term trend, we've halted a significant decline. So, universities, polytechnics, PGEs, wananga were all reporting significant declines in recent years, and that's levelled out, so that's a good sign that people are coming back to tertiary education. Now the mid-year numbers are looking very promising from the anecdotal reports I've received, particularly from the polytechnics` Right, so, you're due to report back to Cabinet in June about these numbers. What are those numbers, then? Well, the mid-year numbers, it's too` I don't have official numbers. All I've got is the anecdotal reports from the polytechs in particular, who are saying their mid-year enrolments are up, and that's a good sign. Is this particular policy benefiting people who are already going to go to tertiary or second` those kinds of educational institutions? It's benefiting the middle class, who are going to send people there already. I think when you look at any universal entitlement like this, it's going to benefit a wide range of people. It's going to benefit people who wouldn't otherwise participate, and it's going to benefit people who would have otherwise participated. We know that we've got $150 million less borrowing under the student loan scheme for fees this year. That's around, I think, 25,000 fewer people borrowing for fees. Those people are going to enter the workforce with less debt. They're going to be able to buy their first home faster, because they'll be able to save for the deposit for their first home quicker. All of those things are going to benefit the country as a whole, bearing in mind that people with higher levels of education go on to earn higher incomes and therefore they pay higher rates of tax. It's not living up to your promise where you budgeted for a 3% increase in full-time students ` an extra 2000 students ` in 2018. We don't see that sign yet. We budgeted it at the upper bound, which was the upper limit of what we thought the increase could be, because it would have been irresponsible to introduce a policy like this and not budget for an increase in participation. Now, we haven't seen the degree of increasing participation that we're looking for over the longer term yet, and that's understandable. We've got a very strong labour market, for example, so for a number of school leavers, there's pretty strong financial incentives for them to go directly into employment, because the pay on offer is pretty good, because the labour market's very tight. You've just mentioned polytechnic numbers there, and it's stabilising, but is that enough to save what is essentially in dire straits? Your own Cabinet documents say that 80% of polytechnics are going to be making a loss by 2022. No, look, stabilising participation numbers sadly for the polytechnics isn't going to be enough. There's going to need to be a much more significant change there. So we've got too many of them? Look, I'm not going to draw a hard and fast conclusion about that. Just to put that into context, though, there are 16 polytechnics in the country, and collectively they add up to the same size as the University of Auckland, so there is an issue around scale for some of those small polytechnics. It sounds like there's too many of them, doesn't it? I'm not going to pre-empt what's coming out of the discussion we're having at the moment. But clearly I think the polytech sector is going to be seeing some pretty big changes in the next little while. Because let's put the bottom lines on the table ` we must have a very strong vocational educational and training system in New Zealand, particularly in the regions. We desperately need those work-related skills, those foundation skills, in regional New Zealand, and that's what we risk losing if we don't sort out the issues with the polytechs. So are you going to pump a lot more money into the polytechnics to get those skills out there? Well, we already are. We've already had to put significant money into Tai Poutini Polytechnic and Unitec just to keep the lights on, and we know when we look at those projections for the polytech sector that we're going to need to put significant amounts of extra money in just in the next 18 months to keep that sector afloat while we come up with a more stable solution for it in the longer term. So, yes or no ` will you merge or close some polytechs? I think that's probably likely. I think it's likely there will be fewer polytechs at the end of this exercise. I hope that we'll actually have a better vocational education and training system at the end of it. Chris Hipkins, Education Minister, thank you very much for your time this morning. If you've got something to say about what you see on our show, let us know. We're on Twitter, Facebook and Instagram. Our Twitter panel this week is Simon Wilson and Aych McArdle. They're using the hashtag #NationNZ. You can also email us at the address on your screen right now. But up next, Kiwibank's new boss, Steve Jurkovich, tells us how he plans to improve the performance of our fifth-largest bank. Plus, more than half of all sea life in the Hauraki Gulf has disappeared in the last 90 years. What's being done to protect our marine treasures? Welcome back. How much do we trust our banks? The Reserve Bank is conducting an inquiry into the conduct and culture of banks here following the Australian Royal Commission into misconduct. New Zealand is dominated by the same big four Aussie banks. Our fifth largest ` Kiwibank ` is owned by you, the taxpayer. It has a new CEO, Steve Jurkovich, who joins me now. Thank you for coming in, and congratulations on your appointment. Why would you, after having worked at one of the big four ` ASB ` want to take on the job at Kiwibank? I think, at the end of the day, it's about progress. So each of us want to be growing and got some ambitions about what we want to achieve. And so for me, I'd sort of got to a career stage where I was really thinking about what's next. And then the opportunity came along, and the more I spoke to the shareholders, the more I spoke to the owners about what they were trying to achieve, the more excited I got. And, you know, there is one bank that's got the scale, that's New Zealand owned, that can make a difference. So that was an opportunity. Well, let's talk about that scale. I mean, the loan book is a quarter of the size of, say, ASB ` it's only got 8% of the market share; it's tiny, compared to what you've been dealing with. Yeah, well, it's the biggest of the New Zealand banks, for sure, so that's probably the first point. The second is, actually, from nothing to 17 years later, being where they are ` it's been an amazing achievement. And there's a million customers that have said, 'Look, actually, we trust you and we'll go with you.' OK, Kiwibank's appointed not only yourself, who's got experience in the big four, but also a new Treasurer and a new Chief Economist as well. Is this part of a new strategy by Kiwibank to be more aggressive? Oh, I think, for us, it's about making sure we've got the skills and attributes that are fit for the time. I think, in terms of the Treasurer, it does actually show our ambition about what we want to be and who we want to be in the future, so he's got a lot of experience. I think, in terms of the economist, we wanted to find someone who's got a uniquely Kiwibank voice, and I think we've got that in him. When you were appointed, the board chair said, "customers' clear preference is for digital "interaction with us, and this is guiding the changes we are making." What are those changes that you are going to be making? Well, I think, for us, you know, if you think about some of the big things that are changing for banking ` one, it's going to be more open than closed, and so being an open bank, there's a regulatory frame to that, but there's also just a much bigger concept of every day, every part of our life, we want to interact with different providers. And so, you know, if you look at a world that's much more digital, much more connected, a lot of customers are saying, 'Well, actually, just make it easier, make it seamless, 'make it an irresistible experience', but there's still a truckload of customers that want to come in and see someone or have someone come and see them. Well, let's talk about that, because when it was founded, it was committed to being a people-focused bank. And so does that mean keeping the branches? Keeping the presence on the ground? I think we'll always have a really strong footprint. Whether or not that's the same number of footprints and the same size, I think, realistically, we'll have to keep looking and staring into that. Banking globally, there are just less people coming in. You know, the growth of digital transactions is exponential, so footprint ` absolutely, yes` So how many branches do you have at the moment? So there's about 200 and` well, nearly 300 spots you can interact with Kiwibank ` a lot of them between franchise and New Zealand Post. And how many of those are you going to keep? Well, I don't yet. It's a week in, so, you know, the number is probably less, but not necessarily around that they'll look the same as they do now. Oh, OK. Because you're going to get some kickback from that ` I mean, there's a petition of 4000 in Dunedin when you closed` were aiming to close four New Zealand Post branches there. Yeah. So are you prepared for that sort of kickback? Well, I think that sort of talks to what people feel about Kiwibank, which is they own it. And that's one of the big attractions about joining. Does that mean that they hold us to a higher standard about where they want us in the community? Yeah, probably. For me, that's actually a huge attraction for the role, which is, I think, people's expectations of Kiwibank are higher. They do own us. You know, we are New Zealand's footprint in the banking industry in a lot of ways, so, you know, we need to make sure that communities aren't left behind. And that's one of the great things about the shareholders with New Zealand Super, ACC and Post ` you know, that community focus is right at the heart of who we are. OK. Let's talk about your shareholders, though. Do they have enough capital to guarantee Kiwibank's growth? Because there's always been a bit of a struggle with capital. Yeah, I think when you look at New Zealand Super and ACC in particular around why they wanted to join the group ` they have a long-term view, and that's hugely attractive, in terms of for the senior leadership team and the people that are part of the Kiwibank team, is we've got owners that are aligned to the long-term. They're thinking about what's their commitment for the next 10, 20, 30, 50 years. And to be blunt, that's a little different to` Well, it is. So do you have a vision? I mean, you've got 8% market share now. Do you have a vision of how much market share that Kiwibank would want in New Zealand? Uh, no, it's too early. But I think, from our perspective, you know, we want to be making sure that we are creating value for New Zealand over the medium term. So that means making some really decent commitments about where we'll be and how we'll be as a team. But, certainly, our ambition is to help more customers achieve what they want, so that does mean growing. Are you coming in at a time where Kiwibank's had a few issues, though? I mean, you had the $100 million IT project that went belly-up. It cut into your half-year profits ` most recently, $20 million down. You had the spat with the Reserve Bank over the quality of your capital. How can you reassure your shareholders and the taxpayers that things are going to improve? It's a very fair question, isn't it? And I think the challenge from the owners and from the taxpayer is have you got a really clear plan and vision as to how you want to achieve it. And that's evolving ` you know, we're well advanced in terms of where we want to be technology wise. Look, there's a huge amount of focus gone into the lessons learned. We, unfortunately, won't be the first or last big organisation that takes on a big technology change and has its issues. I think the worst thing that we could have done is not really stare into why that happened; secondly, is to try and pretend that we can stand still. So we're going to have to move forward, but to be honest, I think technology has changed ` far less big bang, big massive projects, much more iterative, much more stuff happening, you know, in short order. So that's the plan for us. So has this set back Kiwibank a lot? I think everyone has to stare into that and take ownership of it. And obviously it's difficult for me because I wasn't there at the time. But, certainly, a week in, the conversation we're having with people is, you know, people aren't staring away from the fact that we need to do better. I think every organisation and every bank in New Zealand is staring into a high bar of expectations, so, you know, that's kind of where we're at. But, yeah, I think people are, you know, a little bruised from that. But I think that just shows the passion they have for the organisation and wanting to be the best thing they can. You talk about expectation from the public, in particular, you know, your customers and the taxpayers. Is one of the changes that you think you may have to make is around banking culture? Now, this obviously comes off the back of what's happening in Australia where the Royal Commission has, sort of, found allegations of bribery, misspelling insurance, charging fees to dead people. Anything like that happening here? Nothing that I've seen from first-hand. I mean the one thing that's been most encouraging for me a week in has been just how awesome the culture is and how people really want to feel like they're doing the right thing, and coming to work at Kiwibank's a big part of that for them. You know, I think your question's really about trust. And for me there's, sort of, there's at least three elements to that ` there's this sort of prudential stuff which is, 'Do you have enough capital; are you managing things properly?' Secondly and most importantly is about culture, so, 'Are you about doing the right thing?' And the world's changed there. I mean, you know, your question's a very fair one; people want evidence. It's not enough for a banking industry to say, 'No, we're fine here.' You know, expectation is that you're going to have to evidence that, and I think that's a very fair bar. I personally think, you know, after 20-so years in New Zealand financial services, for the trillions of transactions, actually the problems that happen are pretty minor. Having said that, one problem is one problem too many. So you can see that in the complaints to the banking ombudsman, you can see that in organisations about how they treat complaints. So there's a high bar, it's a big challenge. We need to make sure that works. And then the last bit of trust is, you know, 'I trust you to be reliable; 'I trust you to look after my deposits; you know, if you lend my money out, I want it back.' So, you know, it's kind of a recipe; all those ingredients need to work. But the expectations are high. Is there, I mean, you say there haven't been those kinds of examples that you've seen which are the more extreme level in Australia. But what about the culture of this vertical integration of services in banks where I go in` I go in for a new EFTPOS card and I end up with a new insurance policy. Is that what Kiwibank does? Is that culture of upselling really acceptable? Well, I think the question is` I think it's a very fair situation that we might want to find out, are all your needs being met? I think it's absolutely unacceptable that we would ever try to push a product on you that's not what you need. So my commitment as the chief executive is there will never be a situation where we will be wanting to push you a product, in that sense, in your words, that doesn't meet your needs. And so, you know, I think and feel really passionately that if you look after the customer and you have a really good conversation about what's their real needs, whether they fulfil them with Kiwibank or not is actually a little bit academic. Because the Reserve Bank sent out questionnaires to 15 banks, got them back from 10 to 11, Kiwibank was one of those. But one of the reasons it said that they wanted this kind of enquiry is because bank lending can be impaired by the pursuit of short-term profits. Yeah. So what did you say to the Reserve Bank? Well, I wasn't part of the response because I was actually between jobs. So, from my perspective, what I would have expected us to say is actually, 'We're going to take a long-term view.' As I touched on earlier with the shareholders, between, you know, all of those shareholding groups, you know, one of them's been at the heart of the community forever, the other two have been about making sure that, you know, you're protected against stuff that you hope doesn't happen to you, like accidents, and that you've got a retirement that you can enjoy. And so that perspective around we're in it for the long term and actually we're in it for all New Zealanders I think's, put that together with a culture that really cares about the customer, and hopefully we're in good shape. Ok. Speaking of good chat, let's talk quickly about the economy. Business confidence down, business outlook unhappy, and stalling in the housing market. Now, a major part of your business is housing loans; does that pose a risk to Kiwibank? Oh, I think it's sort of a` I wouldn't call it a dark cloud but maybe a grey cloud on the horizon. For me, actually, personally, it's pretty hard to put my finger on why the business confidence has moved. Sure, the trade stuff, geopolitical stuff is kind of influential, obviously. But actually New Zealand's going along pretty nicely. So I would say the environment feels OK. But the metrics are that business confidence is more cautious than it's been for a while. But, you know, there's been times in the cycle, you know, most recently, I guess, dairy prices, where you could understand why confidence might be a bit down. But it's harder for me to understand that. I mean, I think we are seeing a cooling in the market. You know, LVR's and other things that were put in place were designed to that. Well, speaking of LVR's, do you think that they should be more relaxed now by the Reserve Bank? Above my pay grade to answer that one. So, I think the question is, and the Reserve Bank are open-minded about looking at that all the time, and I think that's key. I think you have to be careful that the unintended consequences aren't that you do stall things. But, you know, they're smart people sitting around and thinking about that, so, you know? OK, one last quick question before you go, you are the bank of the people; it was set up by Jim Anderton to be that. So perhaps you have more responsibility to the tax-payer and your shareholders. We've got KiwiBuild coming along. Do you have any pressure or any inclination that that is something that Kiwibank would get involved in, and perhaps even offer discounts to people to get people into houses? Well, I can't answer the last bit because it's way too early to be thinking about that. But if the expectations and the questions around, 'Will we be active 'and participating in that Kiwibuild?' yeah, we will. And is the public's expectation that we'll lead from the front? Yeah, I think so, probably. Early for me to tell, but, you know, I wouldn't bet against the fact that they will be expecting us to help as many first-home buyers as we can. And we're up for that. OK, Steve Jurkovich, thank you very much for your time, new CEO of Kiwibank. Thanks for having us. Still to come, we dissect the week's political news with our panel, Ziena Jalil, Bernard Hickey and Morgan Godfrey. Plus, is a two-year-old plan to restore Auckland's Hauraki Gulf finally about to be implemented? And will it be enough to save the area's depleted marine life? Welcome back. Auckland's population is forecast to reach almost 2.4 million in the next 30 years. It's not just housing and infrastructure feeling the strain of this rapid growth. Overfishing and pollution are taking a toll on the region's marine environment. In 2016, stakeholders from various industries, environmental groups and government bodies published a plan to clean up the Hauraki Gulf, but nearly two years later, it still hasn't been implemented. John-Michael Swannix reports. (PEACEFUL MUSIC) The Hauraki Gulf ` it's a food basket, a playground and a taonga to those who live around it. This Gulf is just` it's incredible. The variety of life out here. I've seen manta rays. I've seen free-jumping marlin. That's inside the Gulf. I mean, we have hammerhead sharks and makos; they see great whites from time to time ` it's all here. And if we can create a better connection between people understanding what their actions are, even on land, and how it impacts the ocean, then I think that they'd care more. Over the past 90 years, more than half of the Gulf's marine life has disappeared. Snapper and crayfish numbers are down more than 80%, with older and larger breeding adults the worst affected. There's 86% fewer trevally and sharks. And shellfish like mussels and oysters have been decimated by up to 90%. It's the shifting baseline. So it's people's perception of what they think is good now versus what it used to be like. You know, mussels are these incredible filter feeders that used to turn over all the water in the harbour and keep it nice and clean and pristine. And so now we don't have that important part of the ecology. And of course, the mussels are also good food for the snapper and the octopus and the stingrays and everything like that. And now with all these external pressures, like sedimentation run-off and overfishing and things like that, it's a real tricky balance to get right. To get it right, a group called Sea Change got together in 2013 ` a stakeholder working group of 14 people representing mana whenua, conservationists, commercial and recreational fishing, farming and local and central government. In late 2016, it published its recommendations in the Hauraki Gulf Marine Spatial Plan. The former National Government welcomed the plan, as does current Conservation Minister Eugenie Sage. But nearly two years on, progress has been slow. There are a lot of overlapping issues. That's why it's taking time. It is one of my priorities as minister. Working with colleagues like Fisheries Minister Stuart Nash, we'll be putting a paper to Cabinet shortly. The report includes a number of recommendations around the management of fisheries in the Gulf to help marine life recover. There are some incredibly unsustainable fishing practices that are happening out there in the Gulf, such as bottom trawling. And the Sea Change Plan actually recommends that those destructive bottom-contact fisheries are withdrawn from the Gulf, and that would be a game changer for our fisheries. So will this government phase out these practices in the Gulf? I think, personally, we do need to move away from dredging, from bottom-impact methods, but that's a negotiated process with the industry and with ministerial colleagues. Dave Killian who represented commercial fishing interests on Sea Change, says the industry is prepared to make changes, but there needs to be further negotiations on the specifics of how it can adapt. Establishing more marine protected areas is another recommendation of the Sea Change Plan. Just 0.3% of the Hauraki Gulf is currently protected. It's a miniscule amount of protection when you consider the benefit of the MPA, not only for wildlife, people's well-being and our fisheries. It seems very strange that we don't have more protection. But even with that protection, crayfish numbers in places like the Leigh Marine Reserve off Goat Island are now lower than when monitoring began in the mid '90s. The crayfish are moving out on to sandy habitats at certain times of the year to feed on dog cockles. And while they're out there, they're actually beyond the reserve boundary, so fishermen are quite legally allowed to fish along that boundary. Sea Change recommends the Leigh Marine Reserve be extended from 800m to 3km offshore to better cover the crayfish feeding zones. That would actually encompass most of those offshore movements and, at least, protect them from being caught on that outer boundary. And the huge decline in the number of crayfish has contributed to the loss of kelp forests, where many animals shelter on rocky reefs. They are an important predator. They feed on a wide range of things, including kina and sea urchins. So with high numbers of kina on the reefs, they graze down the kelp, which creates the kina barrens. Forest and Bird says extending and creating more marine protected areas isn't about stopping people from fishing. It's important that people are able to eat fish, but it's also equally important that that fish is caught sustainably. So what's holding the government back? We've also got the Treaty settlements. And there are a number of recommendations in Sea Change like Ahu Moana. That potentially cuts across some of the Treaty settlements. Ahu Moana would see the entire coastline along the Hauraki Gulf, out to 1km offshore, come under the co-management of local iwi and community representatives. That would allow areas to be temporarily closed to fishing or harvesting so species and habitats can be restored to healthy levels. These issues need to be resolved for the plan to move forward. Stakeholders say the Sea Change Plan must be implemented as a whole, because it's carefully balanced to consider everyone's interests. However, overfishing isn't the only problem affecting the Hauraki Gulf. Pollution is another major issue. In some Auckland suburbs, the wastewater infrastructure is almost a century old. Last summer, inner-city beaches like Takapuna, Herne Bay and St Mary's Bay were unsafe for swimming more than a third of the time. That has been the situation for decades. It's time we took that issue out of the too-hard basket, tackled that issue. And that's what we're doing with our targeted rate on water quality. The Council has introduced a targeted rate of $1.30 a week per household to help pay for a $7 billion upgrade of the city's wastewater network. $1.2 billion has been earmarked for the central interceptor ` a 13km long wastewater tunnel that will take waste from Auckland city to the Mangere wastewater plant. We will do in 10 years what was going to take 30 years to do ` that is, eliminate up to 90% of the wastewater overflows that were getting into our harbour. Sedimentation is also a problem for the Hauraki Gulf in both urban and rural areas. The Hauraki Plains are among the most intensively stocked areas in the country, with 410,000 dairy cows. There is now 10 times more sediment entering the Firth of Thames than there was 90 years ago. And in urban areas, there is growing concern that housing developments are causing large amounts of run-off, smothering wildlife. Just a few months ago, there was a mass die-off of cockles in the Okura Estuary, which locals Peter Townend and Lisette Reed blame on the sediment run-off. If you get 5ml of sediment landing at one time, these little fellas can't do anything. And so consequently, they die off in mass numbers. And that's what we believe happened. The cockle deaths mainly occurred inside the Long Bay Marine Reserve. If we can't protect the marine reserve, the Hauraki Gulf is doomed. Developers in Okura say they're not to blame for the sedimentation, pointing the finger at farming and forestry in the 8000ha catchment. What's being said is not true. (CHUCKLES) And I do care. Weiti Development Director Evan Williams told Newshub in May that he'd spent about $15 million on sediment filtering ponds, as well as planting trees and covering the hillsides with matting to prevent run-off. There are occasions, like a couple of these` three recent cyclones, where we've been getting up to 90mm of rain in a day, and that will overtop anybody's system. To combat the problem, Sea Change recommends erodible soils are identified and protected and good sediment management practices are put in place by farmers, forestry and developers. We need to look at it holistically, deal with the urban problems where we've got a problem, but deal with the reforestation of our steep-hill country and dealing with recreating the wetlands that filter the water before it goes into our Gulf. Another major problem identified in Sea Change is plastic pollution. By 2050, there's supposed to be more pieces of plastic in the ocean than fish, and that breaks my heart. Riley Hathaway and her father, Steve, have been organising education campaigns, showing people just how much unneeded plastic they use and what happens to it. It's been fantastic. We're getting lots and lots of schools using our website and thousands of kids, so it's incredible. We're starting with single-use plastic bags. We're working to respond to China's ban on the import of waste and recyclables. We need to process more of our waste here, recover the materials from it. And we need to really think about how we design products. The question we want to ask is, like, what do you want for your grandkids, you know, or your great-grandkids? With some species expected to vanish from the Gulf in the next few years, time is of the essence. But the government says major changes like this can't be rushed. Sea Change was an innovative process. It was original for New Zealand ` the first Marine Spatial Plan. It had a whole suite of recommendations, and a lot of those actually require new legislation, new ways of doing things. So agencies have been looking closely at them. If the government takes bold leadership, and if we all act collectively and get the Sea Change Plan put into action, we can actually secure a really healthy, abundant future for the Hauraki Gulf. And the underwater footage in that report was provided by cameraman Steve Hathaway. All right, still to come, we talk to our panel ` Managing Editor of Newsroom Pro Bernard Hickey, writer and unionist Morgan Godfery and SenateSHJ Communications Strategist Ziena Jalil. Welcome back. I'm joined now by our panel, communications expert Ziena Jalil, business journalist Bernard Hickey and unionist Morgan Godfrey. Excuse my stumbling, guys. We've got a lot to talk about this morning. Chris Hipkins basically says teachers are not going to get what they're asking for, are they, Ziena? Well, it's an interesting one, right? The Government's kinda between a rock and a hard place here. It's a lose-lose situation. The irony is no-one's really blaming them for the situation they find themselves in. It's not a problem of their making but it has become their problem. They've created expectations in terms of what they've given to the nurses. And so now they have to be really careful in terms of how they're managing this to not send a signal that, somehow, nurses are more valuable than teachers or vice-versa. Well, Morgan, I mean, has the government created an air of expectation that it cannot live up to? I don't necessarily think they have, because you don't` remember last year they came out with the budget responsibility rules which was intended for everyone to know that, you know, we're not gonna have a lolly scramble or anything this year. So I kind of sympathise with Chris Hipkins' position. Because there are so many people, there are so many demands and now it's a question of priority. You know? Who comes first. You know, it was disappointing in the budget to see more money for prisons rather than more money for nurses and teachers. But it comes down to those choices again ` who's making them, and are they the right choices? I don't necessarily think it is with the teachers or the nurses. Right, so we talked about priorities there. And one of the choices that they did make was, you know, the first year free tertiary education. Have they got there priorities right there, Bernard? Well, when you look at the delivery of good things from that, it's a tough one to sell. They perhaps could have put the money at the end of the process for second and third year rather than first year, and they would have gotten more value, more bang for their buck. But it certainly worked for them electorally. We all saw those big lines at the universities of kids who were looking to vote for the first time. And that youth tremor actually helped get them just over the line and help them get those extra special seats. So, politically, it was a great move. If you look at the policy, not so fantastic. And now they're up against their budget limits and they're having to make those tough choices. They obviously couldn't reverse that one, that was a key election promise. Yeah, they're trying to justify it by saying that future teachers are gonna have less debt. But, you know, that's a long way down the track. They need to solve an impending problem right now. I think the recall issue here is that the economy and the society is like a pressure cooker. They've put this lid on the top which is the 20% net debt target, but even they, I think, were surprised at the pressure coming up from below, from the population growth. You should remember we've had a massive population shock; in the last five years our population has risen 10%. And when you put the lid on, as for the last four or five years of the National Government, that's what they did, that builds up enormous pressure on resources, on calls for wages and when Labour got in there suddenly they looked under the lid and it was an enormous amount of pressure. But one of the other fitting problems that they have` and I think Chris Hipkins has just mentioned it` the polytechnics, right? There's too many of them, not enough enrolments, they're gonna have to close some, Morgan. Yeah, and a lot of them are offering low-quality courses, as well. And they looked at that with the international students, when Ian Lees-Galloway came on the programme a few months ago to say that, you know, we're counting the number of international students coming in because they are using these polytechnics as a backdoor into the country. So, you have to look at polytechnics. But at the same time, where are you gonna get the people for Kiwibuild; where are you gonna get more nurses? Right, so skills? So it's a very, very, hard, delicate, balancing act. Yeah, ITPs play a very important role, right, in terms of vocational training? And we're talking about skills shortages in the country, that's a really important role that they can play. But this is a sector that's undergoing enormous transformation, enormous change at the moment. And one of the other things impacting the polytechnics is what's happening with international visa policies around students because they are feeling a decline in numbers and that's affecting their bottom line in terms of the profits they can make. And at the same time, they're gonna have to throw a whole lot of money at the Polytechnics to keep them going, aren't they Bernard? That's right. And there's already been a couple where they've had to put commissioners in that they're making big losses. And I think it's a political risk for the Government in the next couple of years as they consolidate that sector down from, what was it, 14 polytechs? There's an awful lot more of them that need to be put together. And often that means, you know, the small one being merged into the big one. Those facilities moving to the bigger city; that's a regional development problem. And you can imagine New Zealand First being very grumpy about some of the closure of these polytechs. (LAUGHS) That's right. All right, I just want to move on to Steve Jurcovich who's taken over at Kiwibank. Has Kiwibank, do you think Bernard, lived up to what Jim Anderton wanted it to be? Certainly in it's first decade or so ` the capital was put in, they provided competition for the big four banks, they won that market share. But when the National Government came in, they really starved it of capital, and they forced it to pay dividends; fair enough. But it's meant that Kiwibank for the last five or six years has not been competing as hard to win market share off the Big Four, and it's pricing has not been dramatically better than the big four. Essentially, it's had a capital starvation problem. And then it had a big hiccup in the last two or three years with a IT project went wrong. With an IT project, yeah. But it seemed to be intimated there, Ziena, that Kiwibank's gonna have to go more digital and close some branches? More digital, definitely. I think that's a trend that we're seeing throughout, you know, across all sectors. And banking's not immune to it. If anything, we see it a lot in banking. And just picking up on the point that Bernard made, you know, in terms of Kiwibank's place in New Zealand, it probably is unlikely for a bank probably loved more than banks generally are. And that's partly the New Zealand brand and the New Zealand ownership. But as a sector, generally, banking is hurting, it is suffering, and the financial sector generally. And, Morgan, is there a lot of distrust about banks? Oh, absolutely, absolutely. When you look across the ditch, the Royal Commission into the Australian banks; that revealed an enormous amount of controversy over debt sales, over debt targets that workers had to meet. And the same pressures apply here, but it's quite disappointing to see Kiwibank, kind of, fall into this idea that a more digital world means fewer branches when it doesn't necessarily have to mean that at all, because you cannot get a mortgage over the phone. You can't get financial, sound financial advice at least over the phone. We have to go into a branch for that. And, you know, there's big market opportunity for branch expansion for Kiwibank, Westpac closed 19 in 2016, ANZ has closed more this year, last year and in 2016 as well. So, you know, there's opportunity to get into regional New Zealand here for Kiwibank. You might be surprised though at how much of the banking is now done online. Particularly around, you know, checking balances, applying for credit cards, those sorts of things. I actually think there is a big opportunity here for Kiwibank in the next three or four years, partly because of the Hayne Royal Commission, those big four Australian banks here are exactly the same ones that have been pinged for misselling in Australia. Now, they think that things are different here, certainly, we'll find out from the inquiries from the FMA and the Reserve Bank in the next few months whether it is really that much better. But also, you've got to remember that those banks are incredibly profitable at the moment. And there is room to compete away some of those profits if only Kiwibank had the capital. And it's new half-owners or so, the ACC and New Zealand Superfund could look to put extra capital there to have a go at those big four banks. Can I just ask, those kinds of shareholders, though, are they innately conservative. Will they be wanting to take on the big four and inject capital into Kiwibank? Well, I think they will, because their time horizon is quite long. The good thing about the New Zealand Superfund and the ACC is that they look at things in a 20-30 year time horizon. And this is an incredibly profitable market, where that cash is going across the ditch to Australia. And a well capitalised, well run New Zealand owned bank could grow quite substantially. Also, you've gotta remember there is a review of capital going on at the moment where it's quite possible the big four banks could be hamstrung by having to hold more capital, whereas Kiwibank could go in there with extra capital from their owners and have a really good crack again at winning market share off those Big Four. Well, we'll leave it there for the moment. Stay with us, we're going to be back after break. Welcome back. And we're back with our panel. Jacinda Ardern is back in control. She's moving down to Wellington this weekend. So, what is the focus going to be, Ziena? I think she's got a lot of important things to focus on. I mean, the business confidence is a big thing. But can I just say, as the only woman on this panel today, that the prime minister going on maternity leave as the leader is sending a very empowering image to women and girls, not just in New Zealand, but around the world, that women can have a high-powered career and also have a family. And the thing for her now will be` The next step is` She's said you can have it all, but can you have it all at the same time and juggling that act of having a really important position in a country and looking after your family? And again I think the prime minister's done a good job of managing that by recognising the unique situation she's in because of her personal circumstances. She has a lot of support that most people don't have. Yeah. There'll be PAs for Africa and cars and everything, but the real pressure is on Clarke. So tonight... (LAUGHTER) Tonight will be the big one. Our prime minister has her first cabinet meeting on Monday, and tonight, Clarke will have to make sure that she gets a good sleep. OK. Speaking of having it all, though, Morgan, she wants to have it all as a high-profile mum running the country. Can she have it all as well in terms of restoring that business confidence from a Labour government? It's an interesting one. I tend to see business confidence as more of a political measure than an economic one. You know, I see it about as useful as a Newshub Reid Research poll. (LAUGHTER) You know, we don't need it every few weeks, because what is it telling us? It's not telling us much. When you look at the economy, there are an enormous amount of profit opportunities, whether it's in KiwiBuild, wherever it is. So there's literally no reason for business confidence to be so low, unless it is political. Well, it's worth looking at that and challenging it. You are right that the main measure of business confidence which everyone looks at, which is the measure of confidence about the wider economy, is politically biased. It is often very low under a Labour government. But there's another measure which is own activity, and that is useful to look at, because it is quite closely correlated with GDP growth. This is ` what do people think is happening in their own businesses? And that's something they actually know about as opposed to projecting to other people. And that didn't fall as much after the election as the wider business confidence figure, and it rebounded in January, February, but it too is falling, and that's the` Up until two or three months ago, I'd agree with you it's just a political reaction. But something more substantial is going on. Not necessarily all the government's fault. I mean, there's a lot of stuff happening overseas. We've got the banks being very cautious with their lending; all these problems in the construction sector. But she does have to step in and address the elephant in the room, she called it a few months ago, and, uh, you know, actually grab this by the scruff of the neck and say the government is responding, because up until now, it's tried to ignore it. So, is this mud that, as you say, is political, Morgan, but is it starting to stick, Ziena? Yeah, I think perception is it can very quickly becoming a self-fulfilling prophecy, and then it becomes a reality and businesses stop to invest, right? So the thing for her is she needs to come out with real solid engagement, and in addition to solid policies, perhaps bring some of that relentless positivity back from the election campaign... (LAUGHTER) ...to try and weave her magic around the gloom of the business outlook, because this could otherwise` How can you have relentless positivity when you're up all night with a newborn? Clarke... (LAUGHTER) One of the problems she has is you can be as positive as you want. She has that 20% debt target hanging over her head, and a lot of people in the business community are really concerned that the government is not addressing the infrastructure crisis we have because of this population shock ` 10% in five years. And she will need to, in the next year or two, actually come up with a solution there which involves changing that target. OK. I just wanna move on briefly to our visiting Canadian cousins, Lauren Southern and Stefan Molyneux, who are here this weekend and last week. They didn't get to have their event at The Powerstation ` it got cancelled. Morgan, should they have been allowed to give a talk? Absolutely not. Good riddance to them. The only thing they got from New Zealand was a flight home, so I'm quite happy about that, because I don't think they should have been given a platform to essentially spout hate speech. Because when you look at the particular things that these people believe, Stefan Molyneux literally says on YouTube videos that the reason we have war is because women have children. You know, that's the level of genius that these guys are coming at issues with. So I think, you know, there's no need for those kinds of people to have a platform to attack women, immigrants, indigenous people, to attack whoever it is. I think New Zealanders did the right thing. Ziena, do you think shutting them down just buys into their narrative that they're, you know, they're fighting against this injustice and it's against free speech? No, this is a tricky one, because, you know, there's that really famous quote, right? I might not agree with everything you say but I'll defend to the death your right to say it. I mean, personally, I'm completely against hate speech, discrimination and racism of any kind. And, given the way I look, you know, I've had my fair share. But, at the same time, I also have a problem with decisions being made based on pressure from media or social media and not based on, sort of, reasoned debate and discussion. But that's an exercise of free speech in itself, is when people go on Twitter or Facebook or, you know, protest in public wherever it is, that's an exercise of free speech whether it's in opposition to another person's free speech, you know, isn't this exactly the sort of thing we want? You know, two opposing views coming together and that's exactly what happened. And, you know, a business owner made his own free speech act and decided to cancel it as well. Yeah, did the business owner get pressure on him just because it wasn't going to be profitable? Or was it actually a case of standing up for free speech? Yeah, I'm sort of concerned here about how a lot of people in the media decided to cover this story. At news room, we just decided not to cover it because these views actually aren't that relevant in New Zealand. These are foreigners who are, you know, fly in, fly out merchants who just are spatting their Trump-y lines that actually just don't resonate here. OK. So, we just decided it wasn't worth it. Right, so not to give them any option. I'd just like to wrap it up there, thank you very much for the panel, Ziena, Morgan and Bernard. All right, Green MP Gareth Hughes joined us on Facebook live this week to talk about the surging video game industry, the future of green tech and the limits of free speech. He also explains that while he thinks climate change disaster is now inevitable, there is still some hope. As a dad, you know, I find it heartbreaking to think of the world my kids are gonna adults raising kids in. Because it will be a vastly changed world with, potentially, tens of millions of climate refugees massive economic dislocation, and literally millions of deaths, potentially. So it's a bleak story, but the faster we act, the less worse the out comes are gonna be. There's lot's we could do in New Zealand to prepare for Climate Change. You know, we've had some big battles about coastal properties and issues like that that the Government is acting on at the moment. But the Zero Carbon Act is gonna position New Zealand as a leader. So that's the negative side of the coin, you know, we need to prepare for it and make sure it's as least worse as possible. The flip side of that coin, and where the Zero Carbon Act is also so important, is it positions us as a leader in the coming 21st century economy. Economies are gonna prosper based on clean technology, renewable electricity, green tech. And these are areas where I think we are uniquely placed to really take advantage. And that's all from us for now. If you didn't catch all of the show, you can watch us on Three+1, see you again next weekend, thanks for watching. Captions by Jake Ebdale, Elizabeth Welsh, Virginia Philp and John Gibbs www.able.co.nz Captions were made with the support of NZ On Air. Copyright Able 2018