Sir Bill English was New Zealand’s 39th Prime Minister. He spent 27 years in Parliament and served as Deputy Prime Minister and Finance Minister from 2008 to 2016.
Harvard Political Review: During the global financial crisis (GFC), you chose not to introduce a formal fiscal stimulus, in contrast to many other governments. How did you decide on New Zealand’s policy response to the GFC?
Bill English: We had a unique set of circumstances when the economy went into recession. We had the Christchurch earthquake, which amounted to an effective fiscal stimulus in all but name. There was a large, one-off expenditure in all sorts of “shovel-ready” work having [an] immediate impact and rehousing thousands of people. The decision was essentially taken out of our hands.
HPR: How did you balance the competing priorities of protecting the budget bottom-line and maintaining employment and living standards of New Zealanders?
BE: I thought we got the balance pretty right when we decided that there would be no reduction in entitlements, the most vulnerable would be protected, and that we would restore a budget balance by holding the growth of expenditure — rather than cutting expenditure. At the same time, we did tax reform, which assisted with getting us back to surplus.
HPR: New Zealand has the highest homelessness rate among the 35 high-income [Organisation for Economic Co-operation and Development] countries. Should the National Government have done more in nine years to fix the housing crisis?
BE: We had the same housing cycle as other developed countries driven by two significant facts: interest rates driving house values up and planning systems [that] were not designed for growth. We could not influence interest rates, so we spent a lot of time on changing the planning process and developing large tracts of housing owned by the government itself. I think the effect of a range of those policies is flowing through now to a sensible adjustment in the housing market with prices falling in some areas and growth flattening off in others. New Zealand, traditionally, had not had that kind of pressure on its housing because of our higher rates of migration. We had to invent an “emergency housing sector,” which we had not had before. We got one up and going in pretty short order, and right now, it is being tested as to whether it has the capacity to deal with the demand.
HPR: So you are hoping the positive effects of those actions will flow through to the sector down the track?
BE: We know that for a number of reasons, including changes in planning, house prices are flat-to-falling. You do not want a sudden adjustment in the housing market. But, there is a legacy where planning processes prevented the building of any moderately-priced housing. It is now possible. The current government is trying to run a significant building program, and it is going to find some challenges with that.
HPR: What are your concerns [about] the current government’s approach?
BE: The benefits of it are literally random. I think the experience around the world is that cash assistance to first home buyers, with predictable criteria, is more effective. In fact, right now, more people are being supported into first homes with the existing system than with the new house-building program. The other problem with the house-building program is that the government entering into the market will create problems for homeowners. The government is buying up developments with risk-free money. The government does not mind if it loses a lot, whereas homeowners might worry about that. I think it will be three or four years until the benefits of our policy flow through to the market. There is a reason that governments do not go in for house-building projects: it creates a lot of problems.
HPR: During the 2017 election, you faced criticism on your ability to energize the electorate. Your opponent was praised for her likeability, positivity, and youth. How much of the election boiled down to the politics of personality?
BE: Some of it. It had a big impact on the center-left. The Labour Party had been polling very low and lifted its polling, largely at the expense of parties around it like NZ First and the [Green Party]. We beat the Labour Party by five or six points. Our vote share was down a little bit from the previous election, still about the same as what we won on in 2008. Personality certainly had some impact.
HPR: Have modern politics changed the voters’ considerations of personality, policy, and ability to govern?
BE: I do not think it has fundamentally altered the considerations. I know there is a lot of media commentary and behavior that would make you think it is all now celebrity-driven, but, in the end, voters in a place like New Zealand see politics as a service industry. Voters live complex and demanding lives, and they want politicians to effectively support them where they need it. If you cannot show you can do that, they do not care what you look like or how likable you are. In the end, they value the competence that is there.
HPR: You noted that you received a higher share of the vote. Do you think if but for the controversy surrounding kingmaker Winston Peters and his superannuation entitlements, he would have formed a coalition with your party?
BE: You would need to ask Mr. Peters. We went through a constructive negotiation process with a focus on forming government. It may have been the case that he always intended to change the government; it may not have been, but we do not know.
HPR: China is Australia’s largest — and New Zealand’s second largest — trading partner. How do you think U.S. allies in the Asia Pacific should navigate China’s growing influence in the region and the competing interests of the United States and China?
BE: The tension has risen quite a bit in the last year or two. Countries in the Asia Pacific are still trying to adapt to that. At the very least, each country has to keep focused on what its own interests are and most will have, like New Zealand, a defense relationship with the United States and an economic relationship with China. Most of those countries want to preserve both of those relationships in an operating form and would prefer not to put either of them in jeopardy or under pressure from the other. It is important for countries in the Asia Pacific, now in a less benign environment, to be pretty clear about how to articulate our own interests so that we can speak honestly to both the United States and China about our interests and how we are affected by their actions.
HPR: Should Asian-Pacific countries, which share values with the United States and trade relationships with China, be idealistic or pragmatic as those values come under greater pressure?
BE: The New Zealand Government, like the Australian Government, would find that balance pretty difficult. You have to keep in mind in these scenarios that China has as much an interest in external economic relationships as other countries do. There is a self-balancing pressure there. If China acts in a way that has an impact on its own economy, it will make the task of the Government and the Chinese Communist Party a little harder. A fair bit of their strength is derived from their ability to deliver the benefits of economic growth.
HPR: Finally, Sir John Key resigned as Prime Minister after almost three terms in power and with an “unbeatable” lead in the opinion polls. You have seen leaders come and go in your time. When is the right time for leaders to move on?
BE: John Key was an exceptional politician in many respects, and this was one of them. Prime Ministers find it almost impossible to choose to leave while they are successful and almost always stay until they are beaten. But, he went at that time. He gave me a unique opportunity. I am sure he does not regret his decision, and I do not regret mine.
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This interview has been edited and condensed.