Sir John praises and warns at Caring Dinner

Former Prime Minister Sir John Key had a “remarkable experience” when he met Pope Francis at the Vatican earlier this year.

Sir John, who was the keynote speaker at the Auckland diocese Catholic Caring Foundation annual dinner at the Pompallier Diocesan Centre on September 19, said his meeting with the Pontiff came about as a result of his (Sir John’s) work with the ISPS Handa Foundation, of which he is patron.

The foundation’s founder, Japanese philanthropist Dr Haruhisa Handa, was attracted to the work of the Galileo Foundation — which aims to support special projects of the Holy Father’s — and wanted to make a contribution. One of the Galileo Foundation’s goals is to work against human trafficking in South East Asia.

“As a result of that, the Pope asked him to come and visit him in the Vatican, and he (Dr Handa) was keen to have someone come along with him,” Sr John explained.

The former Prime Minister described his meeting with Pope Francis as “a great experience”.

“He is a fabulous man. I have a lot of respect for him and the work he does. Personally, I think he is a great Pope. We did have an opportunity to discuss what is happening in the world and various different things, he was amazing.”

Sir John, one of whose current roles is being chairman of ANZ Bank New Zealand, also praised the work of the Caring Foundation, which, this year, is celebrating 30 years since it was founded.

“I acknowledge the Caring Foundation. I came tonight for many reasons, but the foundation does great work and it supports people in great need and has tremendous cut-through in the community. I like to support charities that do things that help New Zealanders in need.”

Anecdotes

Sir John started his talk by saying that, while he is not overly religious personally, this does not stop him from having great respect for the Church, and for religion in general, because of the support different faiths give to many people. He also noted that his wife Bronagh was raised as a Catholic.

He acknowledged Bishop Patrick Dunn, saying — with a grin — that the bishop was famous in the Key household “because your brother (a surgeon) operated on my wife’s gallstones”.

The bulk of Sir John’s talk was based on three main topics — a social investment approach for addressing social issues, the need for New Zealand to keep its doors open to the world, and the need to set the right conditions to boost business confidence to invest and to promote economic growth.

Sir John described his successor, Sir William English, as a great finance minister and Prime Minister.

Sir William promoted a social investment approach to entrenched social issues, Sir John said.

Longitudinal studies have shown “that we live in a world where we have extensive welfare support, enormous costs when you incarcerate people . . . If we can solve those issues before they occur, really you are going to get much better outcomes and a much better society. And it is a difficult thing to do, because we live in a world of three-year election cycles and yet we try to develop programmes which, from a government perspective, are meant to last generations”.

“Once you have second, third, fourth generation where no one in the household has worked, you have got tremendous issues, I think, that you have got to deal with,” he continued.

Ultimately, “I think if you are realistic, the only pathway out of poverty is through work. That’s the reality”,Sir John added.

“You look at the moment where the Government has taken away any work requirements really for New Zealanders — you have got this ridiculous situation now when unemployment is at 3.9 per cent and all the leading economists will tell you that structural unemployment is 5 per cent, and yet the welfare rates are going up. And that doesn’t make sense.”

Global

Sir John also noted that New Zealand is a small set of islands in a vast ocean — the last bus stop on the planet.

He said it is imperative that this country does not buy into an isolationist and anti-globalisation mindset on the rise world-wide.

This is the mindset behind Brexit and it is that of many who voted for Donald Trump as US president, he added.

“The modern thinking in the world in politics, if you really think about it, is to be anti-globalisation, anti-migration, anti-foreign investment, anti engagement with anyone else,” Sir John said.

While he acknowledged fears that give rise to such a mindset — fears over perceived uncontrolled migration and a perceived strain on social services — he spoke against an idea of “fortress New Zealand” that does not want to engage with the world.

“All I’d say to you is I think that would be a terrible step for New Zealand to take. Ask yourselves this question, are we going to get wealthier . . .when we use other people’s capital to develop the infrastructure and the assets that we want in New Zealand?

“Are we better off when migrants come to our country? Personally, in my view, absolutely.”

Crash

The third topic he spoke about concerned his worries about a future economic crash.

With the Dow Jones Average at 27,000, asset prices at extremely high levels, worrying signs in the bond markets and very low interest rates, a significant recession is very much on the cards at some point, he said.

“One day, people are going to wake up and say, you know what, if I pay an enormous sum of money for something that never makes money, maybe it kind of wasn’t worth buying in the first place. It’s sort of like a sub-prime mortgage.

“And at the end of all of that, the crash could be quite ugly, I think.”

In a lot of respects, New Zealand is better placed than others, he said. “but we shouldn’t kid ourselves”.

We are part of an international economic system. Simply cutting interest rates alone is not the answer for New Zealand, Sir John said.

What is needed is to create conditions where businesses have the confidence to invest and to employ New Zealanders. But business confidence is trending down, he said.

“That is really where the Government comes in. Whatever your political views are and whatever you think the right prescription should be, one of the reasons New Zealand did well . . . previously was . . . part of what drove . . . that was we were just a business-friendly Government.”

He cited free trade deals, taxes and regulation being kept under control, and infrastructure development.

“But I think if we constantly stop things, and we don’t have the answer for starting things, there is a point at which the economy has to keep slowing like it is.

“I think the fallacy that cutting interest rates is going to deliver anything other than, eventually, a catastrophic sort of mess, is just wrong.”

A better path for New Zealand is “ultimately about how demanding we get on science, on innovation, on being prepared to invest in infrastructure and make ourselves go quicker. That’s the big challenge for New Zealand, I think. We can do that, but we have got to be ambitious for the country.”