MORENA, GOOD MORNING, AND WELCOME TO Q+A. IT IS TIME FOR SOME SUNDAY MORNING POLITICS. GREAT TO BE BACK INTO IT. I'M CORIN DANN. WELL, THE GOVERNMENT'S MADE THIS HUGE CALL TO BAN ALL NEW OFFSHORE OIL AND GAS EXPLORATION PERMITS. BUT IT IS TOO SOON? AND WILL IT MAKE ANY DIFFERENCE TO OUR GREENHOUSE EMISSIONS? I'LL BE ASKING ENERGY AND RESOURCES MINISTER DR MEGAN WOODS, OUR LEAD INTERVIEW THIS MORNING. THEN NEW RESERVE BANK GOVERNOR ADRIAN ORR IN HIS FIRST TELEVISION INTERVIEW SINCE TAKING THE JOB ` HIS TAKE ON INTEREST RATES, THE SHOCKING AUSTRALIAN BANKING INQUIRY AND THE MERITS OF A CAPITAL GAINS TAX. PERSONALLY, I THINK WE HAVE A VERY UNUSUAL TAX SITUATION. AND WE'LL HAVE INSIGHT AND ANALYSIS FROM OUR PANEL ` DR BRYCE EDWARDS, LEEANN WATSON FROM CANTERBURY CHAMBER OF COMMERCE AND LAILA HARRE. CAPTIONS BY FAITH HAMBLYN AND CHELSEA BRADY. CAPTIONS WERE MADE WITH THE SUPPORT OF NZ ON AIR. COPYRIGHT ABLE 2018. BUT FIRST, SOME QUESTIONS QUESTION ` IS PRIME MINISTER JACINDA ARDERN TRYING TO POSITION NEW ZEALAND AS A MORE INDEPENDENT PLAYER IN GLOBAL AFFAIRS? ANSWER ` HARD NOT TO SEE IT THAT WAY, GIVEN HER STANCE ON THE SYRIAN AIRSTRIKES, NOT AS SUPPORTIVE AS OUR FIVE EYES PARTNERS. WHICH IS FINE, BUT IF THAT'S THE CASE, WHY NOT SPELL IT OUT SO WE ARE NOT LEFT GUESSING? QUESTION ` CAN WE TRUST THAT OUR AUSSIE-OWNED BANKS AREN'T RIPPING US OFF? ANSWER ` THEY SAY WE CAN, BUT GIVEN THE SHOCKING TALES OF LIES AND DECEPTION COMING FROM AUSTRALIAN'S BANKING INQUIRY, MAYBE WE NEED OUR OWN INVESTIGATION. QUESTION ` WHAT'S THE CHANCE THE GOVERNMENT WILL LISTEN TO THE INTERNATIONAL MONETARY FUND, WHICH SLAMMED ITS PROPOSED FOREIGN HOME BUYERS BAN AS UNNECESSARY AND DISCRIMINATORY? ANSWER ` NOT MUCH. WHILE THE IMF CARRIES PLENTY OF CLOUT, THIS IS A FLAGSHIP POLICY, AND LABOUR WILL NOT BE TURNED. QUESTION ` IF THIS GOVERNMENT'S SO KEEN ON WORKING GROUPS, AND THEY'RE ADDING UP BY THE DAY, WHY NO WORKING GROUP ON OIL AND GAS EXPLORATION? ANSWER ` BECAUSE AS MUCH AS THIS IS ABOUT CLIMATE CHANGE, IT'S ALSO POLITICS. NO ONE CAN SAY THIS IS A GOVERNMENT THAT DOESN'T MAKE THE BIG CALLS. JOINING ME NOW IS THE MINISTER OF ENERGY AND RESOURCES, DR MEGAN WOODS. CAN YOU EXPLAIN TO THE COUNTRY THIS MORNING HOW IT IS THAT ENDING EXPLORATION WILL HELP NZ REDUCE ITS GREENHOUSE GAS EMISSIONS? One of the important things to realise is that this is about addressing climate change, facing up to 2 what we need to do as a globe and a country. It is also about future PROOFING OUR country. 115% of our energy comes from a nonrenewable sources. We will stop the peaKing. What will you replace it with? Two 2035, we acknowledge there is a place for peaking. Is it possible for New Zealand to haveelectricity supplied by renewable and we won't need emergencies dry years of coal, oil, gas? The plan we are putting in place to get there will still use PeAking which is the emergency supplies. It made go to 2050. At the moment we would have to have too much overcapacity in order to have 100% renewable. 60% of our energy use as fossil fuels. How is this policy going to reduce the demand, the consumption of energy which creates the greenhouse gas emissions? It's about doing both. We have to address the demand issue. That is what they are carbon budgets will be focused on. We will be looking at the two first cabs of the rank that the independent climate commission for B King at as agriculture and 100% renewable target. We need to look across the economy. We need to think how are we building our cities, what we doing about transport? Demand is critical. If demand is critical, why are you smashing one particular industry and hurting an industry, when the goal is to stop people consuming carbon, not the supply. You can't do one without the other. What we are talking about is letting the current mining permits run and the current exploration permits. People will bedrilling for oil and gas in 2030 and 2050, 2060. Are you sure about that? We have current exploration permits that run to 2030. If someone in 2030 decides they are going to convert that into a mining permit, that goes through to 2070. Have you got evidence to back It up? There was 100,000 km of New Zealand that is currently under exploration. You would look at a 10 to 15% chance of finding something. That gives you kilometres that would be available. We haven't found anything for 12 years. We currently have 2600 km offshore and production. We have to potential for a further 10 to 15,000 squares. Tthese exploration permits were out there. We are told of the East Coast of the South Island that there is 11,000,000,000,000 m of gas sitting out there. You should have been given an update on reserves by shell, Omv. That is the figure that is going around, a 7 to 10 year being drilled. Where did the seven year come from? That is the figure we have in talking about. That is a pessimistic figure. That is the latest data? That's right. If you are a consumer of gas in New Zealand for your barbecue, hot water, cooking, sshould you be transitioning off gas? You want people to transition of gas? That is the only way this policy will bring down greenhouse gases. We are talking about it 30 year transition. We are talking about drilling in the 2030s. What makes you confident these Companies will continue to come here? The signal you have sent is that you they are not wanted. People have spent a lot of money on these permits, you have done a lot of work for you put a tender in. The advice I've had is that people will continue to do those. We have had changes of hands of permits in New Zealand, eeven before this decision was made. That is the nature of the industry in the market. New Zealand and oil and gas team out on the date that we make the announcement and said it wouldn't make a difference. A gas permit next year will go through the same process as before. And five years time they have to look at refurbishing the plant. Why would they do that if the long term horizon has been shorted? Making sure that that permit that they currently work with as extended as critical. Nothing has changed in that respect from a month ago. That is still the same issue. In terms of the long-term investment, methanol used to be made in New Zealand using biomass. Iceland is making methanol using geothermal. There are other options. A number of players are saying they want those long-term investments so that they can decide. This is a $1 billion business. It affects the economy. We don't use any of the oil that we drill here in our cars. We exported all. Did you consult with them? The argument is that you didn't. That is not the case. I am visiting them tomorrow. Did you talk to them beforehand? Yes. They knew this was coming? They were at the petroleum conference when I gave a speech. The duty album this was their plan? I said 32 times that we have begun the transition planning for when we moved away from fossil fuels. I gave them an assurance that no one's permits would be touched. The Prime Minister and the first interview that she gave when she was Prime Minister elect when asked about block offer said that 2017 was going ahead. There was no guarantee of future block offers. You will tell them tomorrow you want them to stay? Absolutely. That would free up 46% of your gas supplies. That is the shock that we are trying to avoid. We have the opportunity to do this right, tto take the time to plan a transition. I grew up in the 1980s in South Christchurch. I saw the row workshops goes down around me. We can avoid that by putting in place the long-term transition planning. We are not prepared to pull the rug out out of under communities by not doing the long-term planning. Will you ban future exploration of coal? This is about block offers and offsure oil. Have you given any thought to that decision? The speech from the thronebook about mining and conservation land. This is important. You need that coal in terms of electricity supply in terms of a dry year. The papers we have been given according to the greens is that if we didn't have any coal exploration, 2028 there would be no more coal. One of the things we have seen is that ttransitioning away from coal. Gas is about half the emissions of coal. It is part of the transitional. One of the things we need to be clear on is that a transition is not the status quo. The status quo is doing nothing and burying our heads in the sand and not having a future proofing plans for the economy. We are accepting that gas will be used as part of that. I don't need to be rude but I need an answer on coal. Is there a future for more exploration of coal? We have made no announcements about ending coal. We haven't done any work. Are you rolling out you won't ban Cole exploration? It is not a possibility. There are no plans to do that. You have a look at what font era has said in the south island, one of the major users of coal in New Zealand, they are saying by 2050 they want to be carbon neutral, that they will move away from coal. Have you sought legal advice as to whether this is in breach of the act? There is talk in the industrythat you should encourage prospecting. We have looked at that. It has been a block for this year. We have put out a block onshore. That is going ahead. We did that because they are some of the fields that are yielding the supplies that we need to ensure there is that security of the way. What is the advice tell you? There could be a judicial review. I'm confident I made the decisions within the realm of the Crown minerals act, within the criteria that I needed to decide. I had to consider the security of supply. I also had to consider the last two years the block offer has gone out, one in each of those years of those offshore permits have been taken up. This is about leadership. This is about a government having the courage to do the right thing, to lift its eyes on the three-year political cycle. You are doing an enquiry into power racing. Can you give an assurance that power prices won't go up last inflation? I will give consumers a guarantee that we are certainly looking very closely, at the here and now, the international energy agency has told us we have had rapid rises in the cost of electricity. Willing to put your neck out? We will be looking at everything right through generation through to how that power arrives at their door. We will look at the here and now, the changes in technology that are coming could have huge implications in terms of affordability for Alec to city. We might have to tackle that one another day. EQC ` the houses that can't be reinsured ` has the government got enough money in the fund? There is 370 million left in the fund. When it gets to 200 million, the EQC will write a letter saying we are running low. That will happen reasonably soon. That will happen this year. We have been planning for that. It is called the Crown guarantee. It is something you cylinders can have certainty around the fact that when the fund runs out that there is a Crown guarantee. That is reasonable. Do you as a government have to take a big chunk of money, half $1 billion, stick it in the fund, then you can't use that money for other things. We have and planning when we put this budget together that the Crown guarantee will be drawn on. The Minister of Finance and I have been talking about it frequently. You are going to have to put some money across? We are planning on the fact the Crown guarantee will be activated in the next financial year. SEND US YOUR THOUGHTS. WE'RE ON TWITTER @NZQANDA. YOU CAN EMAIL US AT Q+A@TVNZ.CO.NZ STAY WITH US ` THE PANEL'S NEXT. LET'S BRING IN OUR PANEL ` POLITICAL SCIENTIST DR BRYCE EDWARDS FROM VICTORIA UNIVERSITY; LEEANN WATSON, CEO OF THE CANTERBURY EMPLOYERS CHAMBER OF COMMERCE; AND LAILA HARRE, FORMER MP AND MINISTER. I am getting my head around some of that. Leanne, do you have a greater sense of certainty? No one is going to just agree with the governments and game around thezero greenhouse gas emissions by 2050. There is agreement around the. What is of concern is the lack of proper and gauge meant and consultation with industry. While the Minister mentioned there has been engagement and signals, tthose signals haven't been clear enough. It wasn't an labour policy and wasn't in the coalition agreement. This has come out of left field as far as the announcement last week. Are you inspired by this decision that has been made by the government? Do you see it as transformation? It is transformational andinsistent with Jacinda's declaration prior to the election That she will take on the issue of climate change as the nuclear free issue of her generation. It is consistent with the policies of the Green party. The protection reach and all development through the process that has been spelt out means that there is a coming together. Will it put jobs at risk? This is the point of signalling now what the future begins to look like. This time around we have a 30 to 40 year transition. Unlike in the 1980s, wwhere there were overnight decisions to decimate eventual manufacturing in this country. This is a huge improvement. The fact is that this transition is going to a.L. And two can parison compare to the transition that is coming with digitisation and general. What I would hope to see is that in the workforce and community transition side that we begin to see the government linking this together to the previous work on the future of work. That needs to come in a package. Do you think they have done a good job of bringing the public with them? They have in terms of their own side. Tthat is what this announcement has been around. The government had bad news. This was about regaining the narrative that they were in control and a government of transformation. Greens and labour supporters are looking for a transitional government. There are going to be questions about whether the symbolism will be matched by the climate cage commission. The opposition is coming in with criticisms this is not enough. That is where the public debate is going to be decided, whether it has been complement it with substance. Do you see a pathway being laid out whether it is this transition that can work? There is no industry immune to change in the future. The sector is one of them. I believe we need that transition between the here and now and what the alternatives are. The alternatives are unknown. There are jobs at stake. This is a multibillion-dollar industry that has been banned. The government has subsidised a areas? Should the oil industry get subsidies? It is about working with industry to work out what that transition looks like. To do that you need to good quality engagement. That needs to be done over a long period of time. That is true for the details of closing down what is a sunset industry. The notion that we would be encouraging investment and an industry that is responsible for the biggest global challenge we have, the destruction of our climate. There will need to be engagement with industry about how we transition out of fossil fuels. I would disagree with the idea that there should be some sort of subsidy that's based on the history of this industry. What we need as a country and as individual regions as to be looking at all the challenges that are coming our way in terms of maintaining workforce participation. Distributing income is fairly. Forget oil and gas; we are heading for a future where the whole access to full-time permanent paid jobs, that can support a family and keep a community healthy is simply not the future we are looking at. This is a fundamental issue. If they don't come through with those things. My concern is that we start to look at these problems problem by problem. We know that GrantRobertson's future work ideas, the original project understood the enormity of what lies ahead. The problem is that we haven't seen any follow-through on a policy level that will take up those. Brian mentioned this in his column ` the bipartisan support for the overall program of the ETS carbon zero could be undermined. The government hasn't done well in terms of get in those ducks lined up. If they feel strongly about it they could have done it in a more consensual way. It was a more of a gotcha move of political management. They wanted to announce a nuclear free moment. It risks that national will overturn it. They haven't taken those people along with it. Iit has ramifications for other investment into New Zealand. When a multibillion-dollar industry can be banned overnight, and I'm not saying that we haven't got the 30 year forecast and things, it sends a message to investorsabout the viability of investing in New Zealand. The minister said we had up to 30 years more in this industry, which for many of us is far too long. We don't know how investors will see that. We know that globally people are just investing from the fossil fuel industry. It is the least trending place to put the money. We should not be about a rescue plan for what will become stranded assets by an industry that is as well past its use by date. There are far more voices in the world's and we are not been fast enough to transition out of fossil fuel uses. The minister acknowledges that the national disaster fund we have is going to be empty. That sounds alarming. Very much so. These homeowners are finding themselves in the situation and we need to have an outcome for Christchurch urgently. We don't want to have to go through another couple of years of reviews. The process that has been suggested; we need outcomes now. The minister says they will take money and transfer. This could beup to half $1 billion. It could be from health and education. It means they are not willing to borrow. They might have to take it from somewhere else in the budget. How much of this is politics? They are building a narrative where they want to present the last government having left them with a largeproblem, labours has spending choices. They could increase borrowing. They take a conservative fiscal policy under Grant Robertson. They are in danger of losing some of their supporters. I have to go for folder announcements about oil and gas, about other areas that don't cost money, because they can't afford to spend. BEFORE WE GO TO THE BREAK, THIS WEEK'S Q+A BUSINESS PODCAST IS UP ON SOUNDCLOUD AND ITUNES. MAINFREIGHT'S ONE OF OUR MOST SUCCESSFUL COMPANIES, OPERATING FOR 40 YEARS, NOW IN 22 COUNTRIES WITH NEARLY 8000 STAFF. I TALKED TO MANAGING DIRECTOR DON BRAID ABOUT A NUMBER OF ISSUES, LIKE CLIMATE CHANGE, GENDER DIVERSITY AND WHY HE'S A BIG FAN OF RAIL. HERE'S A SOME OF THAT INTERVIEW. WE'VE CONTINUED TO SUPPORT RAIL. WE'VE BUILT BUILDINGS ON RAIL LAND, SO THAT WE CAN CONTINUE TO MOVE MORE FREIGHT BY RAIL. BUT IT'S JUST NOT FREIGHT; I THINK PASSENGER RAIL IS NEEDED IN THIS COUNTRY ALSO. AND THERE'S A REAL OPPORTUNITY THAT IF WE CAN GET THAT RAIL NETWORK ` IT HAS TO BE COMMERCIAL, IT HAS TO BE PROFITABLE ` BUT IF WE GIVE IT A LIFE, WE GIVE IT AN INJECTION, SOME EXCITEMENT AND SOME SUPPORT, WE'VE GOT A REAL OPPORTUNITY TO HAVE MODE-NEUTRAL TRANSPORT OPERATIONS IN THIS COUNTRY THAT'S GOOD FOR THE INFRASTRUCTURE FOR THE FUTURE. WE'VE ALSO POSTED THE VIDEO OF THAT INTERVIEW ON OUR WEBSITE, WHERE YOU'LL BE ABLE TO FIND TODAY'S PROGRAMME AND INTERVIEWS FROM THE PAST FEW WEEKS, ON OUR WEBSITE, TVNZ.CO.NZ/SHOWS/QANDA THAT'S TVNZ.CO.NZ/SHOWS/QANDA COMING UP AFTER THE BREAK, NEW RESERVE BANK GOVERNOR ADRIAN ORR ` WHY HE'S WATCHING THE AUSTRALIAN BANK INQUIRY WITH INTEREST. THAT'S NEXT. ADRIAN ORR HAS TAKEN UP HIS NEW POST AS RESERVE BANK GOVERNOR, AFTER 10 YEARS RUNNING THE SUPER FUND. HE'S PROMISING A NEW STYLE OF OPENNESS AND COMMUNICATION, AND, AS SUCH, SAT DOWN WITH Q+A ON FRIDAY FOR HIS FIRST TELEVISION INTERVIEW. THERE WAS SO MUCH TO TALK ABOUT ` GLOBAL RISKS, INTEREST RATES, AND, OF COURSE, OUR HOUSING PROBLEMS. SO,I STARTED BY ASKING WHETHER WE NEEDED A CAPTIAL GAINS TAX. PERSONALLY, I THINK WE HAVE A VERY UNUSUAL TAX SITUATION, AND IT REFLECTS BACK INTO THE BANKING SECTOR. WHEN YOU SEE, YOU KNOW, 90% OF HOUSEHOLD WEALTH OR NET WORTH AND LEVERAGE ` YOU KNOW, 80% OF THE LOANS IN BANKS ARE TO HOUSING ` AND THEN YOU SEE RELATIVE PRICES OF HOUSING WHERE THEY ARE, THEN YOU ARE SAYING, 'HEY, THIS IS A REAL ISSUE, PART OF WHICH SITS IN 'THE RESERVE BANK AROUND THE CONCENTRATION OF RISK... SURE. '...AND THE POTENTIAL UNRAVELLING, 'YOU KNOW, IF THINGS HAPPEN.' SO WE'VE GOT ABSOLUTE LEGITIMACY TO BE TALKING ABOUT WHAT IT IS, WHY WE SEE IT AS A CONCERN, WHAT WE ARE DOING ABOUT IT WITH OUR TOOLSET, BUT ALSO PUTTING SUNLIGHT ON OTHER AREAS. SO, WOULD YOU SUBMIT TO THE TAX WORKING GROUP THAT WE SHOULD HAVE A CAPITAL GAINS TAX? I WILL HAVE TO SEE WHAT THEY ARE OFFERING. IF WE ARE ASKED, WE WILL PROVIDE ADVICE. BUT DO YOU PERSONALLY HAVE A VIEW ON IT? AROUND CAPITAL GAINS TAX? YEAH, I DO. I THINK THAT WE NEED TO HAVE A MORE EFFICIENT, LEVEL PLAYING FIELD AROUND TAX. WE'LL TAKE THAT AS A YES. LET'S MOVE TO INTEREST RATES. INFLATION THIS WEEK WAS WEAK AT 1.1%, NEAR THE BOTTOM OF YOUR RANGE. I'M WONDERING WHETHER YOU'RE THINKING THERE SHOULD BE A CUT IN INTEREST RATES COMING. YEAH, SO` I'M SMILING AWAY, BECAUSE THE NEW PTA HAS BEEN` THE AGREEMENT BETWEEN YOU AND THE GOVERNMENT. YEAH, BETWEEN MYSELF AND, YOU KNOW` BASICALLY, MY RAISON D'ETRE WHEN IT COMES TO SHIFTING INTEREST RATES, AND WE'VE TRIED TO MAKE IT ACTUALLY SIMPLER IN WHAT WE'RE AIMING FOR, AND WE'RE AIMING FOR THE MIDPOINT OF TWO, AND THERE'S A RANGE AROUND 1% TO 3%. AND WHAT IS THAT RANGE? IT JUST SAYS, 'LOOK, WE'RE ALWAYS AIMING FOR TWO. 'ON AVERAGE, WE HOPE TO BE SOMEWHERE BETWEEN ONE AND THREE.' SO THAT IS NOT A HARD BAND OR ANYTHING. WHEN WE ARE FORWARD-LOOKING, AND YOU WILL ALWAYS SEE IN THE ECONOMIC PROJECTIONS WE PUT OUT, INFLATION IS HEADING BACK TOWARDS TWO. AND SO WHAT WE'RE TRYING TO DO IS SAY, 'GIVEN THE LAGS BETWEEN 'WHAT WE DO AND THE END OUTCOME FOR INFLATION, 'WE'RE ALWAYS AIMING AT 2%.' AND THAT'S STILL THE CASE WITH THE CURRENT SETTING, AS PER THE LAST MONETARY POLICY STATEMENT. WE HAVEN'T STARTED THE WORK THIS TIME AROUND. I'M LOOKING FORWARD TO THAT. THAT'S COMING IN THE NEXT COUPLE OF WEEKS TO SAY, 'ALL RIGHT. REFRESH THE FORECASTS.' BUT THE REAL POINT IS THAT WE'RE AIMING AT 2%. THE FACT IT'S AT 1.1%, YOU THINK, 'THAT'S GREAT. IT'S LOW. IT'S STABLE.' IS THERE A WORRY THERE THAT WE'VE GOT A LOT OF PEOPLE ON FIXED ONE, TWO, THREE-YEAR RATES THAT WHEN THEY ROLL OFF, THEY'RE GONNA GET WHACKED WITH QUITE A BIG, HIGHER RATE? I THINK THAT IS A CONCERN FOR PEOPLE. THEY ALWAYS HAVE TO UNDERSTAND WHAT DRIVES THEIR INTEREST RATE, AND THAT IS A COMPONENT OF DECIDING WHETHER TO BE FLOATING OR FIXED, AND, REALLY, IT COMES DOWN TO YOUR PERSONAL POSITION. SO, RATHER THAN YOUR ABILITY TO FORECAST WHERE THE RATES ARE GOING, YOU KNOW, WHEN YOU'RE THINKING ABOUT, 'DO I FIX? DO I FLOAT?' REALLY, IT'S THINKING ABOUT, 'WHAT IS MY CERTAINTY? Qe 8 O** E MY LIQ 'WHAT'S THE HORIZON OVER WHICH I CAN MANAGE THIS PARTICULAR PAYMENT?' HAVE YOU BEEN WATCHING THE AUSTRALIAN ROYAL COMMISSION AND SOME OF THE ALARMING STUFF THAT IS COMING OUT OF THERE OF THOSE AUSTRALIAN BANKS, WHICH ARE THE PARENT BANKS OF OUR BANKS? WE'RE TALKING LYING TO REGULATORS, DECEIVING PEOPLE, OVER-CHARGING PEOPLE. WE'VE GOT THE AMP CHIEF EXECUTIVE IN AUSTRALIA. IT'S JUST NOT A HAPPY SITUATION, IS IT? IS IT NOT UNREASONABLE FOR NEW ZEALANDERS TO GO, 'HECK, IS THAT GOING ON HERE?' WELL, I THINK THAT IS EXACTLY THE TYPES OF QUESTIONS WE SHOULD ASK OF ANY BUSINESS, ANY COMPANY. YOU KNOW, WHAT IS THE MORAL COMPASS OF THE LEADERS, THE BOARD, THE PURPOSE OF THAT INSTITUTION? AND SO THE ANSWER ` YES, WE ARE WATCHING. YES, IT IS A REAL CONCERN. YOU JUST THINK OF THE` EVERY DAY, YOU KNOW, TWO-THIRDS OF THE DAY FOR A BANK IN AUSTRALIA NOW IS EXPLAINING WHY THEY'RE NOT GUILTY. AND THAT IS JUST SUCH A TERRIBLE POSITION TO BE IN. WHICH IS WHY WE'VE BEEN ARGUING SO HARD, AND WE WILL CONTINUE TO MARKET DISCIPLINE ` YOU KNOW, THE ABILITY TO BE TRANSPARENT AND TO ALLOW PEOPLE TO SEE WHAT YOU'RE DOING ` SELF-DISCIPLINE ` AROUND THE BOARDS, OUR TESTING, WORKING HARD AND SIGNING OFF ON ISSUES, WHICH REALLY COME DOWN TO THE MORAL FIBRE OF THE INSTITUTION ARE CRITICAL, BECAUSE THAT IS SUNLIGHT COMING IN AND, HOPEFULLY, DISINFECT IT. SO THAT IS CRITICAL. BANKS WILL ALWAYS ARGUE AND BE UPSET BECAUSE WE ARE ASKING; WE ARE INTRUDING. YOU KNOW, 'HOW DID YOU GET COMFORTABLE WITH THAT? 'SHOW US HOW YOU SIGNED OFF ON THAT.' DO THAT TYPE OF ACTIVITY. YOU KNOW, THAT IS THE REGULATORY DISCIPLINE. WELL, I WONDER ` JUST TO INTERRUPT YOU ` WHETHER, IN FACT, THAT'S THE CASE. BECAUSE THE IMF REPORT OUT LAST YEAR SUGGESTED THAT THE RESERVE BANK HAD BEEN TOO LAX IN ITS MONITORING OF THE BANKS. AND KERRY MCDONALD ` YOU'LL BE FAMILIAR WITH HIM. FORMER BNZ CHAIRMAN. YEAH, HE WROTE A VERY PASSIONATE LETTER. HE WROTE A STINGING LETTER, IN WHICH HE SUGGESTS THAT THE RESERVE BANK IS NAIVE; IT'S WEAK IN ITS APPROACH, INEFFECTIVE, AND LEAVES NEW ZEALAND BANK CUSTOMERS SERIOUSLY EXPOSED. WHAT WAS HE REALLY THINKING? (CHUCKLES) EXACTLY. I MEAN, THERE'S MORE. DO YOU WANT ME TO READ SOME MORE? NO, NO, I'VE READ THE LETTER. I'VE SEEN THE MOVIE. I KNOW KERRY WELL. AND WE HAVE TO TAKE THAT TYPE OF STUFF SERIOUS. YOU'RE COMING IN FRESH. DO YOU THINK THERE NEEDS TO BE A STERNER LOOK AT WHAT'S GOING ON IN THE BANKING SECTOR AND A STERNER LOOK AT YOUR OWN BANK HERE TO MAKE SURE THAT THEY ARE DOING IT RIGHT? NUMBER ONE TASK ` OUR BANK HERE, FOR ME. ARE WE DOING THE TASK EFFECTIVELY? THAT IS A CRITICAL QUESTION. LAST WEEK, BY THE WAY, IF WE CARRY ON THE CRITICISM THAT WAS THE NEW ZEALAND INITIATIVE, THEY PUT OUT A REPORT ALSO WITH ALL THOSE SAME TYPES OF CLAIMS. I'LL JUST SAY A COUPLE OF THINGS AS QUICKLY AS WE CAN. THE FIRST THING IS, THE IMF DID NOT SAY WE ARE INEFFECTIVE. THEY SAID YOU ARE BEST PRACTICE, FIT FOR PURPOSE, BUT YOU DON'T HAVE ENOUGH CAPACITY ` IE, ENOUGH BOOTS ON THE GROUND. THAT MESSAGE WAS TAKEN IN MANY DIFFERENT WAYS WRONGLY. SO, I WILL REFER PEOPLE BACK TO THE IMF REPORT, AND THE MINISTER OF FINANCE KNOWS HIMSELF. THE SECOND PART, WITH THAT IMF, WE HAVE ACTIVELY IN NEW ZEALAND, AS REGULATORS, CHOSEN NOT TO DO CERTAIN TYPES OF ACTIVITIES, BECAUSE A) THEY'RE ALREADY BEING DONE TO THE BANKS ELSEWHERE` BY WHO? BECAUSE, I MEAN, KERRY MCDONALD SAYS AUDITING, TESTING... YOU'RE NOT GOING IN THERE, AND YOU'RE TRUSTING THEM TO TICK THE BOXES THEMSELVES. HUGE AMOUNTS ARE ALREADY DONE BY THE APRA REGULATOR FOR THE LARGE BANKS. WE THEN DO IT OURSELVES. BY THE WAY, THAT IS A SINGLE PERSON'S OPINION. YOU CAN ALSO GO AND GET OTHER OPINIONS` HANG ON. WHEN YOU SAY 'APRA', WHO IS THAT? OH, SORRY, THAT'S THE AUSTRALIAN PRUDENTIAL REGULATORY AUTHORITY. BUT WE CAN HARDLY TRUST THEM, BECAUSE LOOK AT WHAT HAPPENED IN AUSTRALIA. AREN'T THEY THE ONES WHO ARE DOING THE COMMISSIONS? AREN'T THEY THE ONES WHO ARE WORKING ON THIS TYPE OF STUFF AT THE MOMENT? AREN'T THEY THE ONES WHO KERRY MCDONALD IS REFERRING TO, FOR EXAMPLE, AS BEST PRACTICE? SO WHY DO YOU SAY THAT? YOU EITHER BELIEVE WHAT KERRY IS SAYING, AND WE HAVE APRA, OR YOU DON'T. WELL, TO BE FAIR, HE IS SAYING` YEAH, SURE. SO WHAT WE'RE SAYING IS, WE NEED TO HAVE A REGULATORY FRAMEWORK THAT IS FIT FOR PURPOSE FOR NEW ZEALAND. THE TRUE PROBLEM AND CHALLENGE THAT IS GOING ON IN AUSTRALIA IS CULTURAL. YES. IT'S NOT WHETHER THE REGULATOR WAS AWAKE OR ASLEEP. IT'S CULTURAL. YOU CANNOT SAVE A FOOL FROM` AND WHAT DO YOU THINK OF THE CULTURE OF THE BANKS IN NEW ZEALAND? I THINK IT IS INFINITELY BETTER THAN SOME OF THE ACTIVITY YOU'VE SEEN IN AUSTRALIA. SOME SORT OF AN INVESTIGATION TO REASSURE NEW ZEALANDERS THAT SOME OF THE`? AND WE'RE TALKING FINANCIAL SERVICE PRODUCTS, REALLY, IN AUSTRALIA. MY VIEW IS NO. WE DON'T NEED AN INQUIRY? NO. I WOULD SAY NO, BECAUSE THE FINANCIAL MARKETS AUTHORITY ARE ALL DAY, EVERY DAY, THINKING HARDER AROUND THE CONSUMER-INVESTOR BEHAVIOUR. WE'VE GOT OURSELVES AROUND THE PRUDENTIAL REGULATORY BEHAVIOURS. WE'VE GOT THE MINISTRY OF BUSINESS, MINISTRY FOR THE ENVIRONMENT, TALKING ABOUT CONSUMER PROTECTION. YOU KNOW, THESE THINGS ARE HAPPENING DAILY. WHY, SUDDENLY, STOPPING EVERYTHING AND HAVING A ROYAL COMMISSION IN SEARCH OF A PROBLEM NOT YET TO BE IDENTIFIED? IT JUST DOESN'T MAKE SENSE. IT'S CONFIDENCE, THOUGH, ISN'T IT? CONFIDENCE THAT... I DON'T SEE ANY LACK OF CONFIDENCE IN BANKS IN NEW ZEALAND. THEY ARE HIGHLY CAPITALISED. THEY ARE HIGHLY EFFICIENT. WE'RE ONLY JUST STARTING TO SEE TRICKLE OUT OF AUSTRALIA, YOU KNOW, CHIEF EXECUTIVES OF A BIG BRAND LIKE AMP ` ADMITTEDLY, THE AUSTRALIAN PARENT ` GOING. THAT STARTS TO ROCK PEOPLE. I THINK IT SHOULD ALWAYS KEEP PEOPLE AWARE, AND THAT IS WHY WE HAVE ALWAYS LEANED VERY HEAVILY ON THAT TRANSPARENCY. MARKET DISCIPLINE. SELF DISCIPLINE. WHAT HAPPENS IF IT'S JUST US ` REGULATORY DISCIPLINE? WELL, THEN BLAMESHIP JUST COMES ON TO THE REGULATOR. 'OH, YOU DIDN'T SEE THAT. WHY DIDN'T YOU DO THAT?' AND THAT WILL NEVER HAPPEN. WE'LL ONLY BE THE AMBULANCE AT THE BOTTOM OF THE CLIFF. UNLESS YOU GET THE ATTITUDE AND ALIGNMENT WITH THE BOARD, WITH THE MANAGEMENT, INVESTORS, CONSUMERS, COMPETITORS CAN ALL WATCH, OBSERVE AND, YOU KNOW, WHISTLE BLOW ` THAT IS HOW IT REALLY WORKS. THE CENTRE STRUCTURES HAVE TO BE ALIGNED. TAKING IT TO THE FUTURE A LITTLE BIT, I WONDER IF` WE'VE SEEN THE BANKING SECTOR COME BACK TO A REQUEST FROM THE GOVERNMENT ABOUT OPEN BANKING AND THE IDEA THAT WE COULD SEE SOME THIRD PARTIES COME IN, EFFECTIVELY WHOLESALE THE BANK'S DATA, YOU KNOW, APPS. CALL IT AN UBER-ISATION OF BANKING. MAYBE THAT'S LONG-OVERDUE. I WOULD SAY THAT, YOU KNOW, BANKING IS THE SECOND-OLDEST BUSINESS IN THE WORLD, AND IT'S MADE VERY, VERY HIGH RATES OF RETURN ON CAPITAL FOREVER. AND, YES, LIKE MANY INDUSTRIES, BANKING WILL BE DISRUPTED IN SOME WAY. INSURANCE HAS BEEN ABSOLUTELY DISRUPTED, BOTH THROUGH HOW THEY OPERATE THEMSELVES, AND ALSO THE PRODUCTS. SO, YOU KNOW, PEOPLE ARE GONNA HAVE TO EMBRACE THE TECHNOLOGY OF THE FUTURE. DOING THE SAME THING TODAY IS NOT GOING TO BE PROFITABLE IN THE FUTURE. THE OPEN BANKING, YOU KNOW, THE MERE NATURE THAT` I USED TO CHALLENGE THIS WHEN I WAS WORKING IN THE BANK, SAYING, 'HEY, WHY CAN'T I JUST TAKE MY BANK ACCOUNT NUMBER AND TAKE IT 'AND PUT IT IN A DIFFERENT BANK, 'AS OPPOSED TO HAVING TO REWIND AND START AGAIN?' WHEN I LEFT, I TOOK MY OWN PHONE NUMBER WITH ME. WHY CAN'T I DO THAT WITH MY BANKING ACCOUNT? AND SO THESE TYPES OF THINGS ARE ALWAYS GOING TO BE CHALLENGED. THERE IS NOTHING UNIQUE OR NATURE-SPECIFIC AS TO WHY BANKS ARE WHAT THEY ARE TODAY. AND WILL WE STILL HAVE CASH? YES, YES. I MEAN, I FIND THE CASH SIDE AMAZING. YOU KNOW, THE DEATH OF CASH HAS BEEN FORECAST NOW FOR A LONG, LONG WHILE. GREATLY EXAGGERATED. THERE WILL BE LESS OF IT ` PROBABLY SMALLER DENOMINATIONS. I'M TALKING GLOBALLY. BUT THERE IS ALWAYS A NEED. Fascinating character. THE PANEL'S BACK AFTER THE BREAK. PLUS, AT THE END OF HER EUROPEAN TOUR, PRIME MINISTER JACINDA ARDERN SAT DOWN WITH EUROPE CORRESPONDENT JOY REID TO TALK ABOUT NEW ZEALAND'S POSITION ON SYRIA ` NEXT. THE PRIME MINISTER HAS NEARLY FINISHED HER FIRST OFFICIAL TRIP TO EUROPE, AFTER A WEEK MEETING FOREIGN LEADERS AND ATTENDING THE COMMONWEALTH HEADS OF GOVERNMENT MEETING IN LONDON. BUT SHE'S COME IN FOR SOME CRITICISM BACK HOME OVER HER COMMENTS ON THE US-LED STRIKE AGAINST SYRIA LAST WEEKEND. EUROPE CORRESPONDENT JOY REID ASKED HER WHETHER SHE BACKED OUR TRADITIONAL ALLIES AND THEIR ACTIONS. YES. OF COURSE, WHAT WE WOULD HAVE FAVOURED WAS AN APPROACH BY THE UNITED NATIONS. NEW ZEALAND HAS ALWAYS FAVOURED A MULTILATERAL APPROACH. BUT LOOK, GIVEN THE VETO POWER WAS USED AT THE SECURITY COUNCIL BY RUSSIA, WHICH IS SOMETHING WE'VE STRONGLY CONDEMNED, THERE WAS VERY LITTLE OPTION, IN TERMS OF STANDING UP AND GIVING A RESPONSE TO THE USE OF CHEMICAL WEAPONS, WHICH IS ABHORRENT AND IS A BREACH OF INTERNATIONAL LAW. SO WE ACCEPT THE DECISION MADE BY THE U.S., BY THE UK AND BY FRANCE, BUT NOW WE'RE CALLING FOR A RETURN BACK TO THE UN, WHICH ACTUALLY, THE LIKES OF FRANCE AND OTHERS ABSOLUTELY AGREE WITH. OUR ALLIES HAVE BEEN A LOT STRONGER IN THEIR WORDING. WHY IS IT THAT WE HAVEN'T GONE TO THAT LEVEL? THE REASON THAT WE HAVE USED SLIGHTLY DIFFERENT LANGUAGE IS BECAUSE WE DON'T WANNA GIVE UP ON THAT INTERNATIONAL INFRASTRUCTURE. WE DON'T WANNA SEE A WORLD WHERE THERE IS AN ACCEPTANCE THAT THE UN ISN'T THE PLACE WHERE WE NAVIGATE THESE ISSUES, AND BECAUSE ULTIMATELY, FOR THE RECONSTRUCTION OF SYRIA, WE WILL NEED TO TRY AND BUILD A MUCH WIDER INTEREST GROUP FOR THAT LONG-TERM PROJECT. BUT AGAIN, WE ALSO WANNA UPHOLD INTERNATIONAL LAW. THE WAY TO DO THAT IS THROUGH THOSE INSTITUTIONS, WHICH IS WHY WE'LL ALWAYS CAMPAIGN AGAINST THE USE OF VETO POWERS IN THE SECURITY COUNCIL. WHAT DO YOU MAKE OF ROBERT FISK'S DOUBTS ABOUT WHETHER A CHEMICAL ATTACK EVEN OCCURRED IN SYRIA? WELL, THIS HAS BEEN ONE OF THE PROBLEMS WE'VE SEEN AT THOSE INTERNATIONAL AGENCIES, WHICH ULTIMATELY WE WOULD WANT TO BE IN THE ASSESSING WHAT HAS HAPPENED; HAVE HAD TROUBLE ACCESSING SOME OF THOSE AREAS. AND THERE HAVE BEEN REASONS WHY. WE'VE CALLED ON THE SYRIAN GOVERNMENT AND RUSSIA AS AN ALLY TO ENSURE THE ACCESS OF THOSE INDEPENDENT INVESTIGATORS TO GET IN THERE AND MAKE THAT ASSESSMENT. CERTAINLY, THOUGH, FROM THE LIKES OF FRANCE, THERE HAVE BEEN PUBLIC REPORTS THAT HAVE PRODUCED SUFFICIENT EVIDENCE TO SUGGEST THAT THAT IS WHAT HAS HAPPENED IN SYRIA. PRIME MINISTER JACINDA ARDERN SPEAKING TO JOY REID THERE. That was quite a clear explanation. She gave a bit more clarity as to why we took a different stance with the language. . That is often what happens with these trips. They do the diplomatic speech which is very balanced... But she has been trying to have it both ways. She has done quite well. She has managed to maintain that balance. Not too much of a New Zealand independent foreign policy. When you say something deliberately ambiguous, you know your supporters that are against war will like the fact you aren't injured highly in favour of the bombings, but you think your allies will see that you basically are. . Another thing comes down the track, and once again, we are in the situation of making a difficult tightrope decision. She clearly has a balancing act on her hands, trying to make sure we have a consistent message from New Zealand, but also making sure we are not offside with our counterparts offshore. She admitted herself a different use of language in the future. It is about having a really clear strategy for New Zealand's position. . Importantly, she stressed that New Zealand wants to see those institutions be protected. I'm sorry, but I am still confused. I heard there that New Zealand is really saying that we support the bombing in response to this allegation of a chemical attack. I think that is highly problematic. I feel that this government is running from incident to incident in the foreign policy world, and have not yet got a clear framework for dealing with issues that arise. Do we support the efforts of the US, the UK, France now to overthrow the Syrian regime? Is that New Zealand's foreign policy? That is why the response to this attack, or alleged attack, I don't want to get into that, has been the air strikes. It is part of a longer term strategy. Are they trying to overthrow the regime? Absolutely. There has been a clear and explicit strategy for the last 10 years to overthrow the regime. New Zealand has never said that it supports that strategy. But every one of the steps as part of that gameplan. So I do think that it leaves people confused, knowing what is New Zealand's view on violence and the use of violence, including by our allies in the Middle East. . New Zealand is in a bind. Do we really want to make it position one way or the other? Probably not. Can you imagine how this trip to Europe would have gone if Jacinda Ardern had gone against the bombings. She would not have been very welcome. Morally, perhaps not the right thing. . Do you think, as these things keep coming at this government, they will have to make that call? Be more explicit. . I think their own supporters want a really transformative, bold government. This is been a really successful trip. You saw that amazing image of Jacinda Ardern and her partner walking through Buckingham Palace. Her supporters loved it. It looks like a transformational leader on the world stage. People do want this boldness, and sometimes she is lacking in coming up with this clarity. Do you think that business will be worrying about it? From a trade perspective, I think she did a fantastic job of reinforcing New Zealand. There were certainly some good signals on the EU free trade agreements, in New Zealand wants to make sure we continue with those. So I think by and large, this trip has been a success from a trade perspective. It is about getting a clear strategy around those wider positions. In terms of the polls, not a great pole at the start of the week for labour. Labour's numbers were down a bit. Will this trip have helped? . I think every New Zealander would have felt incredibly proud just at the visual images that we were betraying to the world, through our beautiful, young, smart, pregnant prime minister. For the oil drilling announcement to have come just before that, I think position things really well. On the foreign policy side of things, I think you cannot escape. I do not disagree with Bryce on that. But ultimately we have to put our government under scrutiny for the details of its moral compass on foreign policy issues. We have to know where it stands. I think this is a problem in our coalition arrangement two. Which will come more of a problem if there is not an open discussion about the framework. Winston Peters is not far from taking over the reins. What does he do in terms of foreign policy. When he is in charge? We are seeing he is having to move on the Russian free trade agreement. He has given up that. He has given up signalling his sympathies towards Russia in terms of Syria. He will be an interesting Prime Minister, I think. I think he is going to push some more radicalism while he is prime minister. That will be fascinating. I don't know, I was there when Jim Anderson was acting prime minister, they tend to take their place. THE PANEL'S NOT DONE YET ` THEIR HITS AND MISSES OF THE POLITICAL WEEK NEXT. PLUS ` WITH ANZAC DAY AHEAD OF US, WE LOOK BACK AT SOME ARCHIVE FOOTAGE FROM WORLD WAR ONE YOUR FEEDBACK NOW. FRANK MACSKASY'S TWEETED THAT THE CLIMATE WILL NOT WAIT FOR US TO DEBATE THIS LOOMING CRISIS TILL THE COWS COME HOME. JOHN'S GIVEN MEGAN WOODS A THUMBS UP, SAYING AT LAST A GOVERNMENT WHO IS PLANNING FOR OUR ENERGY FUTURE. Hits and misses? . My hit as our Prime Minister being announced as one of the top 100 influences in the Time magazine. That has to be good for New Zealand and for women across the globe. Miss ` probably the EQC situation. Other than the obvious number one hits for the week, I think Andrew Little standing at the drift for the Pike River mine with the families and really clearly demonstrating that the government is committed to a recovery operation, if that is at all possible. It was very moving in the right thing. No big Mrs for the government this week. I think the opposition was missing in action. . My hit of the week was Nikki Haag are being appointed by the watchdog of the state as part of her advisory panel. Also Nikki Hager had some stuff on RNZ about tax havens. Unfortunately the New Zealand Herald has dropped John driven as their media commentator. But he really does concentrate on the powers that be. We need a lot of focus on politics and media, and of course David Cullen has gone from the MBR. So the media needs to be watched? John brought up the Clare Curran saga. We need to focus on the way that media and politics are working together, or not working. I think some National Mps raids some eyebrows about Nicky Hager. I was amazed, I have to admit. I can see how they might be disgruntled with this. Because the group that was chosen was quite critically minded, I think. . This is a case of, a step forward, isn't it? It is about being more transparent. I would have thought it makes perfect sense. It surprised me more than anything else. It makes perfect sense to involve them in the scrutiny process. FINALLY ` 100 YEARS AGO, WORLD WAR I WAS ENTERING ITS LAST BRUTAL MONTHS. BY ITS END, 18,000 NEW ZEALANDERS WERE DEAD AND AROUND 40,000 MORE INJURED ` OUR TOLL IN ONE OF THE WORST CONFLICTS THE WORLD HAS EVER SEEN. OUR ARCHIVES HAVE MANY EXTRAORDINARY IMAGES FROM THAT TIME. HERE ARE SOME OF THEM FROM A SERIES CALLED 'THE YEARS BACK' THAT FIRST SCREENED ON THE NZBC IN 1973. ARCHIVE: BUT DOWN ON THE GROUND, WINTER CONDITIONS MADE LIFE UNBEARABLE. GHASTLY, HELL. JUST MUD, MUD, MUD. TRENCHES HALF-FULL OF MUD. AND YOU'RE WET THROUGH, OH, ALL THE TIME. OH, FRIGHTFUL. YOU'VE NO IDEA WHAT IT WAS LIKE. YOU LIVED IN DUGOUTS, AND YOU WERE PRETTY WELL OVER YOUR ANKLES IN MUD ALL THE TIME. YOU HAD NO PROTECTION. MESSINES, THE SOMME 1916 AND 1918, PASSCHENDAELE, YPRES, THE HINDENBURG LINE, LE QUESNOY ` THE COST OF MAINTAINING OUR DIVISION IN FRANCE FOR TWO AND A HALF YEARS WAS APPALLING. OUR TOTAL CASUALTIES WERE 18,500 DEAD, NEARLY 50,000 WOUNDED, MANY TWICE OR MORE. THIS WAS A TERRIBLE PRICE TO PAY, WHEN OUR POPULATION THEN WAS JUST OVER A MILLION. IN THEIR REJOICINGS AT THE SIGNING OF THE ARMISTICE, WHICH BRINGS TO AN END THE AGONY OF THE PAST FOUR YEARS, THE PEOPLE OF NEW ZEALAND GIVE THANKS TO ALMIGHTY GOD FOR THE MEN, LIVING AND DEAD, OF THE NEW ZEALAND DIVISION. FROM THE LANDING AT ANZAC ON APRIL THE 25TH 1915, TO THE SURRENDER OF TURKEY AND THE STORMING OF LE QUESNOY, WHO HAVE FOUGHT AND CONQUERED IN BATTLES, WHOSE NAMES WILL BE FAMILIAR IN OUR MOUTHS AS HOUSEHOLD WORDS. YOU HAVE WON FOR NEW ZEALAND A FAME IMPERISHABLE. GOD BLESS YOU AND BRING YOU SAFELY HOME TO US. ('BRING THE BOYS BACK HOME') MARAE IS NEXT. Q+A REPEATS TONIGHT AT QUARTER PAST MIDNIGHT ` ONE FOR THE NIGHT OWLS AMONGST YOU. THANKS FOR WATCHING, AND THANKS FOR YOUR CONTRIBUTIONS. THOSE WERE THE QUESTIONS, AND THOSE WERE THE ANSWERS ` THAT'S Q+A. SEE YOU NEXT SUNDAY MORNING AT 9. CAPTIONS BY FAITH HAMBLYN AND CHELSEA BRADY. CAPTIONS WERE MADE WITH THE SUPPORT OF NZ ON AIR. COPYRIGHT ABLE 2018.