Newsroom Pro's 8 things at 8 am: Bill's gentle rebuke for Gerry; A structural shift for net migration?

New foreign minister Gerry Brownlee is learning that "each word matters". Photo: Lynn Grieveson

In today's email we note Bill English's gentle rebuke of Brownlee, look into the implications of Australia's pivot to "Australia First" policies and ask English about the RBNZ's advice on stretched homebuyers.

1. Bill corrects Gerry

It was a gentle rebuke, but a rebuke nonetheless, and in public.

Prime Minister Bill English told his post-cabinet news conference yesterday that Foreign Minister Gerry Brownlee had effectively mis-spoken on his second day in the job when he criticised New Zealand's sponsoring of a UN resolution on Israel that led to Israel withdrawing its ambassador from Wellington.

Brownlee told RNZ's Jane Patterson last week that New Zealand should not “pronounce” on how either Israel or Palestine should behave, other than condemning terrorism, and that the resolution backed by New Zealand under previous Foreign Minister Murray McCully was "premature."

English said the Government held its stance that the resolution expressed “longstanding government policy”, despite Brownlee’s comments.

“Now the Minister of Foreign Affairs made some comments last week, I think he was just trying to find the right language and that hasn’t changed the Government’s position, which is to do what he’s doing and that is rebuild the relationship with Israel," English said.

Asked whether Brownlee had failed to find the right words, English said: “Well, he’s getting familiar with the language the Government's been using around it, and in this world of diplomacy, each word matters...

“I think it’s just reflective of someone brand new on the job, just getting, as I’ve had to, being fairly new into the foreign affairs area, you get to learn the Government’s positions and the language that goes with that.”

See more in our Foreign Affairs and Trade Editor Sam Sachdeva's full report on Newsroom Pro.

2. Dodging bullets, for now

Sam also has a detailed report from Victoria University's symposium on what Donald Trump's election means for US-China relations, and the rest of the region.

He has five key takeaways, including that Trump's bite hasn't matched his bark, a trade war between China and the United States now appears unlikely, New Zealand could teach Australia a few things about relations with China and that New Zealand should look beyond just China and the United States.

Trump is still volatile, but it seems the US-China relationship has dodged quite a few bullets in the first 100 days or so.

After all, this is the man who accused China of “raping” the US with its trade policies while on the campaign trail.

However, a “series of flip flops, reversals and accommodations” have followed since then, with Trump committing to the One China policy, refraining from declaring China a currency manipulator, and not slapping on significant trade tariffs.

See Sam's full report on Newsroom Pro here.

3. Primary school fees too?

The issue of New Zealanders' rights in Australia was again a hot topic in the post-cabinet news conference, given fresh speculation that Kiwi children could eventually have to pay fees to attend primary and secondary schools in Australia.

English said he had also heard the speculation, but the Government had no reason to believe it was true.

However, he said the Government had yet to receive assurances from the Australian Government that entitlements would not be stripped back further elsewhere.

"We are always keen to hear assurances that entitlements aren't going to be changed, and I think New Zealanders in Australia would be particularly keen to hear that, so that they can be assured that health, education, other services are going to be available to them," English said.

"We haven’t had those assurances last week. But I think you have got the grounds for an ongoing discussion where we would be seeking to get some assurances."

4. A structural net migration change?

The discussion about New Zealanders' rights in Australia also turned to whether it was driving a structural change in net migration.

English acknowledged the latest diminution of New Zealanders' rights in Australia around tertiary fees was one factor in the turnaround in net migration of New Zealanders leaving to live in Australia in recent years.

"I think that is one explanation for what's going on at the moment, bearing in mind that these things accumulate over time," English said when I asked whether the issue represented a structural change in the net migration outlook.

"The biggest single change that has been made was back in 2001 in this arrangement between John Howard and Helen Clark around the social security agreement arrangement," he said.

"And I think probably one of the reasons that you have got significantly fewer Kiwis going there is that you've got an accumulated sense that the safety net's not the same."

But English also emphasised the relative performances of the New Zealand and Australian labour markets.

I asked if a structural shift in this net outflow of New Zealanders to Australia also put at risk the forecasts of a cyclical fall in net migration, which most economists, including the Reserve Bank and Treasury, have been making for years.

He said he still saw a cyclical shift back to a long term outflow of New Zealanders.

"We've been waiting to see the normal cycle resume and we've now gone for a couple of years where that hasn't happened," he said.

"But the forecasters I think would say that in the long run you are going to see Kiwis up and moving back to Australia."

5. A soft entry point?

Another issue raised in the press conference was whether the changes in Australia were due to Australians seeing New Zealand as a 'soft entry point' for migrants through the back door.

English said the issue of 'backdoor' entry had been a concern of the Australians in the past, although he was not aware if it had been raised in Brownlee's recent meeting with Australian Foreign Minister Julie Bishop.

"We do want to look into the issue because the Australian authorities have raised that in the past," he said.

"We would like to understand precisely what their concern is, because there is no evidence that the New Zealanders moving to Australia constitute some unique or special burden on Australia," he said.

"This issue around whether New Zealand is a super soft entry to Australia is one that in that context has come up. I've heard those discussions myself but has been quite hard to pin down just exactly what they think the problem is."

English also again rejected the idea of restricting Australians' rights in New Zealand.

"As I said last week, we don't want to get into a tit-for-tat arrangement because actually, for no other reason than I don't think it would have any actual influence on Australian government decisions," he said.

6. 'Be careful when buying'

I also asked English about the Reserve Bank's advice (mentioned in yesterday's email) about the potential effects of interest rate hikes on first home buyers and the economy.

He repeated the Government's warnings to buyers about not over-stretching themselves in a market where interest rates could rise and house prices could fall

"The banks making their lending calculations provide for a buffer so if interest rates increase the borrowers have the income to be able to service to debt," English said.

"In the end it's a matter for the borrower. They take the risk by really stretching themselves, and they will have to deal with the consequences of rising interest rates if that's what happens," he said.

Pressed on whether it was a financial stability risk for the economy and ultimately the Government, he said he had not seen evidence that it represented a risk to financial stability.

"If interest rates rose sharply it would certainly be a pressure on households, but households go into these arrangements and go into this level of borrowing with their eyes open knowing that they are taking risk on interest rates in the hope of getting into the market, getting into the house, and maybe getting the value uplift that goes with a rising market," he said.

7. Snippets of the day

In another indication that migration is set to be a focus on the election campaign, Labour Leader Andrew Little wrote in an Op-Ed in the New Zealand Herald about Labour's yet-to-be-detailed policy of reducing net migration by tens of thousands.

The key quote: "You wouldn't invite a whole lot of people over for the weekend and have nowhere for them to sleep, but that's effectively what National is doing."

Meanwhile, Maori Television announced that CEO Paora Maxwell would resign from the end of August after being in the role for just three years of a five year contract.

He cited family and business reasons, but Maori TV reported divisions between Maxwell and the board over the building of a new studio at its East Tamaki offices. His initial appointment was controversial, sparking a protest by staff and preceding the resignation of senior staff, including Carol Hirschfeld, Julian Wilcox and Mihingarangi Forbes.

8. One fun thing

John Oliver was back last night to use New Zealand as the butt of his jokes.

That National Party's court battle with the Eminem's songwriter is the subject in the first four minutes or so of his Last Week Tonight video put up on Youtube.