The US is establishing a new and increased military presence in Australia. Would you welcome a similar presence in New Zealand?
It's been a long time since we've had any foreign troops based on New Zealand soil and I don't see any particular need for it. We have American servicemen here as part of Operation Deep Freeze, that's not a problem. But I don't contemplate that either the Americans would want, or we would offer, a permanent military base. New Zealand needs to remain fiercely independent as a proudly sovereign nation. We are not about to enter into new alliances that would curtail the independence that we have in making judgments according to our own values.
Sounds like you think alliances are a bad thing?
An alliance can draw you into things when you would not otherwise want to be there. Anzus as a reason to go into Vietnam is a classic example. Whereas New Zealand chose to go into Afghanistan, we chose not to go into Iraq, on the basis of our own values. We are not about to become an echo of any other country's policy.
Would you not then welcome the return of the US Coastguard to Lyttelton if the US stuck to its neither-confirm-nor-deny nuclear policy?
They can stick to whatever they like. Our assessment of the Coastguard is that of course it's not nuclear-armed or powered, and the Coastguard would be welcome here. The difficulty has been on the American side, not on our side. We would welcome navy ships from all over the world - we have Chinese ships coming here, French, Indian, British, Australian ships. Why not American?
National ripped into your costings, saying you'd used out-of-date SOE dividend numbers. Why should we trust you to run the economy?
The Reserve Bank regards our plan to pay down debt as being an achievable plan and they're independent assessors. Of course you'll get spin from the National Party. National should focus on explaining a few things of their own, like why they didn't book the loss of dividends from the assets they booked the sale revenue from.
Looking at Europe's troubles, shouldn't debt be paid down a whole lot faster than you or National plan?
It's a huge reason for making some fundamental changes in the way we run our economy, which we have put up our hand and said we're about to do. We know the world is a fragile place at the moment. Today it is the European debt crisis; what happens tomorrow if the Chinese economy slows down? We've got to put our economy on a strong financial basis and that's why we've taken the hard decisions about GST.
What is your policy on GST?
The GST will come off fresh fruit and vegetables - the whole 15 per cent - costing about $300m a year, for the dual purpose of taking a bit of pressure off the budget of families but, more importantly, sending an economic signal about families needing to make healthy choices in their foods.
When you popped into our office early in your leadership, you said taking GST off food wasn't the solution - that it would create a bureaucratic nightmare.
My original position on GST was that we try to keep it low and have as few exemptions as possible. There have always been exemptions. We exempt rent, we exempt mortgage payments, we exempt second-hand goods.
A bureaucratic nightmare?
No, it's not. I went and talked to the two supermarket chains, Progressive and Foodstuffs. They said "we're already set up to do it, we operate out of Australia, we do it there".
You've previously sold state assets in their entirety. You've bought some of those assets back in part. Clearly, selling a minority share in a few power companies is not the end of the ownership of public infrastructure?
It is the beginning of the end. These aren't things that are going to be put on the market by new purchasers. These are the most profitable assets we own. When they're gone they're gone forever - there's no buying them back.
I'm sure we would have said the same about the railways and Air New Zealand.
Well we didn't anticipate that the private sector board that said they knew how to do things best were going to run into bankruptcy. And we bought Air NZ back because we couldn't afford not to have a national flag carrier.
What's wrong with 51 per cent control?
Because when you are in economic difficulty the last thing you do is sell off the assets that produce the best possible return.
So it's not really about losing control, it's just that you're worried about losing the dividend stream?
I want to own our own future, it's as simple as that. We were wrong in the 1980s. We were wrong then; National is wrong now. In my private life I would not sell off my most valuable assets that produce the best return.
That's dividends - but we'll still have control of the companies.
Oh, no. You know the National Party, when they think people aren't listening to them, they talk openly about selling off all the assets. He's talked openly to his party supporters about selling Kiwibank, he just won't say it publicly. Well, that's dishonest.
Radio Samoa 1593am has been running hot on retirement age. It's all very well to raise the age for office workers like you and me, but how fair is it on people who are exhausted by a lifetime of hard manual labour?
And that's why we have exempted them. Those who are doing hard manual work for whom it is not possible to keep working from age 65 will get the equivalent of National Super - we will look after those people.
How are you going to measure who are the hard manual labourers?
We've got eight years to work that detail out.
Winston Peters has pretty much ruled out going into government with anyone. How would you persuade him otherwise?
I'm making no decisions about post-election negotiations until the people have spoken.
How happy would you be having Winston Peters and former North Shore mayor Andrew Williams sitting around your Cabinet table?
I'll just reiterate what I've said to you, let the people decide, we are not going to make any assumptions. It is arrogant to do so until we see what the people have decided. It will be about stability and obviously it won't be with the Act Party because we have nothing in common and most likely they won't be there. I don't have much in common with Hone Harawira in terms of his personal views so we are not looking at forming a coalition there.
Is that because his mum made Helen cry?
Let me just say I've observed the family over a long period of time.
You put integrity on the agenda when you called Key a liar on live TV.
I said that he had lied in promising not to increase GST and he did.
So what should the public place more weight on in deciding their vote: the relative integrity of the two men running for prime minister or the policies of their parties?
Labour is prepared to make some hard decisions that not everybody will like. The public's got to make its own mind up on that - that's called democracy.
I like the boldness of your policies, though I don't agree with them all. I can't help wondering if you felt free to form those policies because you didn't have a hope in hell of getting back into Government and actually having to implement them.
No, I don't think that's the case at all. These are things that we need to do - this is really important if we are genuine about wanting a stronger New Zealand future. It was not done lightly because they are important decisions.
