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Speaker 1: Madam. Hi, I'm Liam Dan, New Zealand Herald Business Editor

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Speaker 1: at Large, and welcome to this episode of Money Talks.

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Speaker 1: This is a podcast about money, but we're not going

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Speaker 1: to tell you how to get rich, and we're not

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Speaker 1: going to try and pick the next interest rate move.

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Speaker 1: In this series, I'll be talking to interesting New Zealanders

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Speaker 1: about how money has shaped their lives and what they've

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Speaker 1: learned over the years. For today's podcast, I'm joined by

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Speaker 1: doctor Oliver Hartwich, economist and CEO of the independent public

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Speaker 1: policy think tank, the New Zealand Initiative. You're Oliver. Welcome

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Speaker 1: to Money Talks.

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Speaker 2: Great to be with you, Liam.

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Speaker 1: Hey, look, just regular business newsreaders will know your name

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Speaker 1: well and the initiative in its work, but can you

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Speaker 1: just describe a little bit you know, what is a

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Speaker 1: think tank exactly and how do you see its role?

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Speaker 2: Okay, So, as you said, we are think tank. We're

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Speaker 2: also a business membership organization, but we work predominantly as

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Speaker 2: a think tanker. That means we are thinking about the

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Speaker 2: big issues affecting New Zealand. We are trying to make

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Speaker 2: New Zealand a better country for all its people, and

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Speaker 2: we're trying to do that through policy research. So we're

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Speaker 2: looking into issues ranging from education to housing, to social policy, transport,

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Speaker 2: local government, anything that we think needs to be fixed

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Speaker 2: and could be better, because we want to create a

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Speaker 2: better future for this country.

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Speaker 1: Sure, and economics kind of goes to the heart of that.

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Speaker 2: A lot of it, A lot of it is economics,

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Speaker 2: but not all So in our team we're quite diverse. Actually,

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Speaker 2: We've got a psychologist, we have someone from a classics background,

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Speaker 2: so we have quite a range of different specialties in

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Speaker 2: our team.

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Speaker 1: Sure, and what would you say to people who are

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Speaker 1: inevitably particularly on the left that they would say, oh,

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Speaker 1: right wing thing tank. What do you say when you

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Speaker 1: hear yourself described that way?

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Speaker 2: I would say evidence based think tank because we do

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Speaker 2: our research, and we do our job well and you

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Speaker 2: can look at our research on our website and you

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Speaker 2: can see that all our research is extremely well documented,

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Speaker 2: well researched by people who really know what they're doing, and.

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Speaker 1: You kind of, I guess you'd say, quite focused case

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Speaker 1: by case on what the you know, the right prescription

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Speaker 1: of policy is for different aspects of the economy and

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Speaker 1: social life.

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Speaker 2: And of course when you're doing research into fiscal policy,

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Speaker 2: that differs from monetary policy, and it certainly differs from

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Speaker 2: what we're doing in education.

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Speaker 1: Yeah, sure, okay, Look, we'll come back to a bit

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Speaker 1: of that. And it was some questions later on, but

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Speaker 1: I wanted to go right back because people might have

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Speaker 1: already guessed from your accent. Really I'm trying to hide

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Speaker 1: it so well that you didn't grow up in New Zealand.

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Speaker 1: So you can you tell us a little bit about well,

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Speaker 1: we start with your first memories of money and what

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Speaker 1: that was, and maybe from there where you were growing up.

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Speaker 2: Okay, So, for my first memories of money are dorge marks, yea,

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Speaker 2: and that's where I'm from. So I was born in

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Speaker 2: West Germany in nineteen seventy five, and so I grew

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Speaker 2: up with the German mark. So if you're asking me

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Speaker 2: about my first memories of money, it is that currency

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Speaker 2: that no longer exists, and that's the money with which

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Speaker 2: I grew up. And we had marks, we had Phoenix

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Speaker 2: and Germany of course has a very complicated history with

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Speaker 2: money because we can probably talk about this later, but

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Speaker 2: there were quite a few instances of hyperinflations before my time,

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Speaker 2: but they have certainly shaped how German still feel about

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Speaker 2: money until this day.

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Speaker 1: Sure, but you're growing up in the so you're growing

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Speaker 1: up with the late seventies in the childhood in the eighties.

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Speaker 1: That was a pretty strong time for the weist German economy,

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Speaker 1: wasn't it.

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Speaker 2: That was the time immediately after the so called economic miracle.

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Speaker 2: So after World War II, Germany of course was in ruins.

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Speaker 2: It was also morally discredited. And out of that ruins

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Speaker 2: came a surprisingly strong economy because of the policies introduced

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Speaker 2: by one man, and that was not Rich Earhart. So

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Speaker 2: Aerhard was the economics minister first under Chancellor Conohad Ardenaw

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Speaker 2: and he later became Chancellor himself, and Aerhart started something

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Speaker 2: that he called the social market economy. It is an

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Speaker 2: economy that was basically free, and Erhardt argued it was

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Speaker 2: an economy that was inherently social because it produced prosperity

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Speaker 2: for all and that was his big slogan, prosperity for

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Speaker 2: all people after the war, and that worked really well.

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Speaker 2: And after about twenty years under that prescription, Germany actually

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Speaker 2: overtook Britain in gdpeper capital for the first time ever.

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Speaker 2: So that really worked well. And so when I grew

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Speaker 2: up that was really the period straight after that economic miracle,

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Speaker 2: So it was a time when West Germany at least

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Speaker 2: had enormous amounts of prosperity.

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Speaker 1: Yeah, I mean, did you feel that growing up, that

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Speaker 1: sense of you know, economic prosperity around you.

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Speaker 2: I guess yes I did, although I should probably qualify

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Speaker 2: that a bit. The region where I'm from is actually

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Speaker 2: Germany's version of Liverpool, so it is a region that

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Speaker 2: was built on coal and steel, but that region had

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Speaker 2: been in crisis since the late nineteen fifty because German

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Speaker 2: cool became uncompetitive, and so it was an area that

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Speaker 2: was always struggling when I grew up, with its predominant sectors.

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Speaker 2: But apart from that, I mean there was a sense

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Speaker 2: of stability, and the whole country was doing well. It

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Speaker 2: was just something that was specific to my region where

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Speaker 2: you could feel that the transition actually from this these

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Speaker 2: old industries to something you hadn't actually properly started.

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Speaker 1: Yeah. Sure. And so did you get pocket money? And

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Speaker 1: did you go and spend that pocket money somewhere?

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Speaker 2: I certainly did get pocket money, and I remember my

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Speaker 2: parents started giving me fifty phoenix per week from whenever

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Speaker 2: six and that automatically increased by fifty phoenix for each year.

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Speaker 1: Yeah. Yeah, and what did you spend it on?

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Speaker 2: Well, at the time, I think that would have still

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Speaker 2: brought you probably an ice cream in a corner with

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Speaker 2: ye two scoops. I mean those were the days. And

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Speaker 2: inflation today of course, means that you probably now look

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Speaker 2: at about a europe per scoop, but back then that

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Speaker 2: was probably enough for an ice cream a week.

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Speaker 1: So it's actually, I mean, it's not that different. When

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Speaker 1: I talked to people growing up in New Zealand and

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Speaker 1: the seventies or eighties, they talk about going to what

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Speaker 1: we call the dairy obviously, Yeah, but a corner sharp something.

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Speaker 2: Like that exactly.

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Speaker 1: Yeah, yeah, absolutely. And did you have a part time

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Speaker 1: job and all that sort of stuff. Did you deliver papers?

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Speaker 2: And I did actually deliver papers for a while, and

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Speaker 2: then I also help people with their computer needs, and

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Speaker 2: I also helped tutoring, so yes, I had a few

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Speaker 2: jobs on the side.

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Speaker 1: Yeah. Sure, So that sounds like you were like in

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Speaker 1: tune with computers, which was kind of like socially new

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Speaker 1: thing at that time.

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Speaker 2: Yes, and it was fascinating. I think I had my

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Speaker 2: first computer when I was eleven and it was an

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Speaker 2: Amiga five hundred if you remember them, I do, five

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Speaker 2: and twelve killer bites and really good graphics actually for

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Speaker 2: the time.

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Speaker 1: I mean I remember back to ZIDEX eighty one I

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Speaker 1: think is the earliest.

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Speaker 2: Okay, right, just for the computer nerds out there, but

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Speaker 2: certainly exciting times and technology.

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Speaker 1: Yeah, yeah, sure. And I mean what were your parents,

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Speaker 1: What did your parents do growing up?

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Speaker 2: Well, my dad worked as a policeman and my mum

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Speaker 2: was a whole wife from the time I was born,

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Speaker 2: and so I would say it was a typically kind

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Speaker 2: of family in a pretty working class area.

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Speaker 1: Yeah. And at school, were you I mean the interest

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Speaker 1: in economics did that sort of come early?

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Speaker 2: Do you think or I think that came actually really early.

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Speaker 2: I was interested in politics and economics from a very

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Speaker 2: early age. I think even at primary school. I remember

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Speaker 2: having discussions with my primary school teacher. So that continued

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Speaker 2: then into high school or what we call gumnasium, so

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Speaker 2: that's a grammar school basically. And yes, I did take

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Speaker 2: social studies at grammar school and English and history, and

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Speaker 2: I loved this kind of stuff.

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Speaker 1: Yeah, and you must have been were you still at

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Speaker 1: school when the war came down? At a Berlin Wall.

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Speaker 2: Yes, that was right in the middle of my school

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Speaker 2: career really, nineteen eighty nine, of course, and we were

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Speaker 2: glued to the television at the time watching it because

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Speaker 2: it was really the most exciting thing that could have happened.

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Speaker 1: Yeah, I mean, if you're interested in politics, to have

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Speaker 1: that happening around you was probably quite quite incredible, right.

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Speaker 2: Yeah. When the war fell, I was fourteen, and I

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Speaker 2: was totally aware of what was happening. And actually I

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Speaker 2: had visited East Berlin just a year before, so I

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Speaker 2: actually spent a day in East Berlin. Under communism, we

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Speaker 2: visited West Berlin mainly, but we spent a day in

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Speaker 2: the East. And if you had asked me back then

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Speaker 2: whether this wall will ever disappear would have set absolutely not,

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Speaker 2: because it looked so permanent. And so when it came down,

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Speaker 2: that came as a big surprise, as a shock really

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Speaker 2: to all of us, and it was the most exciting time.

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Speaker 1: Yeah, yeah, I mean there was a lot of optimism

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Speaker 1: and all that, but also was a bit of an

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Speaker 1: economic shock for Germany. Wasn't it to have to absorb

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Speaker 1: East Germany which was not in great shape?

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Speaker 2: That's right? And actually until this day I think actually

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Speaker 2: the policies that the Germans took when it came to

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Speaker 2: unification were fundamentally wrong because they didn't give the East

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Speaker 2: German economy any chance to kind of change or gradually arrive.

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Speaker 2: For basically, we had monitory union between East and West,

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Speaker 2: and from that day onwards, the East German economy was

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Speaker 2: completely uncompetitive. They couldn't evalue their currency, something that might

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Speaker 2: have been possible in other transformation countries in Eastern Europe.

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Speaker 2: And so I think unification from an economic perspective actually

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Speaker 2: didn't work that well.

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Speaker 1: Yeah, I mean it's I guess it's like two I mean,

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Speaker 1: you could say New Zealand Australia or something, but having

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Speaker 1: suddenly running one monetary policy for two quite different economies.

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Speaker 2: That's right, and not just monetary policy, but really from

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Speaker 2: one day to the next, all apparatus of West German

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Speaker 2: regulations were put in place in East Germany, and of

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Speaker 2: course nobody could deal with that.

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Speaker 1: Yeah.

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Speaker 2: There was another thing. Actually, we subsidized a lot of

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Speaker 2: the development from west to east. So billions and really

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Speaker 2: by now twillions of euros were shifted into the East

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Speaker 2: and subsidized basically capital, well, capital is mobile anyway, so

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Speaker 2: I'm not sure whether if anything needs to be subsidized

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Speaker 2: its capital. What might have actually worked better in the

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Speaker 2: long run would have been to subsidize labor for a while,

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Speaker 2: at least in East Germany, because the way it happened

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Speaker 2: it came as a complete shockgun. It actually led to

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Speaker 2: large parts of the East German population just leaving because

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Speaker 2: it was so brutal.

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Speaker 1: Yeah, yeah, absolutely, so that's happening when you're a teenager.

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Speaker 1: You obviously were keen to go to university. Was it

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Speaker 1: straight in with economics at university?

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Speaker 2: Yeah? But actually at the time, we had a military

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Speaker 2: draft in German, so I had a choice between doing

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Speaker 2: twelve months in the German army or fifteen months of

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Speaker 2: something else. Because I was always a that I would

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Speaker 2: be the first to kill myself cleaning my gun. I

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Speaker 2: did fifteen months of something else, and I worked in

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Speaker 2: a daycare center for people with mental health problems.

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Speaker 1: Oh wow. Yeah, so that was sort of like you

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Speaker 1: had to do some public service basically exactly.

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Speaker 2: So fifteen months of that dealing with people who were

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Speaker 2: suffering from all sorts of mental problems, and that was

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Speaker 2: eye opening and quite an experience for a teenager.

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Speaker 1: Yeah, I bet. I mean, did it change your attitude

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Speaker 1: on life?

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Speaker 2: It did change my attitude on mental health and mental

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Speaker 2: problems because I came to recognize them as something absolutely normal,

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Speaker 2: and it's a disease almost like any else. It can

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Speaker 2: happen to anyone. And I mean back then in the

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Speaker 2: nineteen nineties, there was probably still a little bit of

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Speaker 2: stigma around mental health issues, and just working with our people,

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Speaker 2: I've quickly got over that and actually realized it for

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Speaker 2: what it is.

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Speaker 1: Yeah. Sure, so you've got a PhD here, doctor of economics.

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Speaker 1: Oh no, it's not economics.

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Speaker 2: It's not economics. I got a doctorate in law.

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Speaker 1: Okay, So how did you make your choices around what

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Speaker 1: to study?

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Speaker 2: Well, economics was what I always found fascinating and what

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Speaker 2: I was interested in at school, and so for me

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Speaker 2: it was quite a natural choice to go to university

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Speaker 2: and study economics. But actually the university I chose had

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Speaker 2: a combined degree, so you did economics and business administration

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Speaker 2: together all the way up to the master's degree, which

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Speaker 2: at the time in Germany we called a diploma. And

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Speaker 2: I did marketing in my business studies, and I did

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Speaker 2: public finance and public choice on the economics side, and

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Speaker 2: towards the end of my studies, I was nevertheless quite

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Speaker 2: disillusioned with economics as a discipline, and I wanted to

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Speaker 2: do something else. And we had a very good law

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Speaker 2: teacher at the time, and I took some voluntary law classes,

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Speaker 2: and so after the master's thesis, I thought, what, actually

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Speaker 2: this might be something for a PhD, right on the

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Speaker 2: border of economics and law. And I thought, well, I'll

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Speaker 2: give to go and and I tried to figure out

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Speaker 2: where I should do that, and I found, to my

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Speaker 2: great surprise that our law faculty at Boham University opened

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Speaker 2: the PhD program to non lawyers. That's why I applied.

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Speaker 2: And I said, well, I would like to do something

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Speaker 2: that is a law thesis but with a lot of

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Speaker 2: economics in it. Would you like to take me on?

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Speaker 2: And so they did, and so in the end I

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Speaker 2: got a law PhD. But I've got no law undergraduates

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Speaker 2: to stand in the court and trying I couldn't. I

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Speaker 2: lack the proper qualifications for what.

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Speaker 1: Was the what was the topic of the PhD.

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Speaker 2: Topic of the PhD was actually a critique of German

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Speaker 2: unfair competition law. That sounds a bit abstract perhaps, but

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Speaker 2: it's basically the regulation of advertising. I've had done a

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Speaker 2: few internships with companies and was always puzzled actually be

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Speaker 2: how complicated advertising law was in Germany. I mean, just

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Speaker 2: to give you an example, you could not legally offer

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Speaker 2: your customers a cup of coffee because then some lawyers

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Speaker 2: would argue that you're putting a psychological pressure compulsion really

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Speaker 2: to buy on your customers. And so just because he

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Speaker 2: gave them a cup of coffee, they felt really grateful

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Speaker 2: now that they had to buy the whole kitchen from you,

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Speaker 2: and so absurd regulations like that actually drove me into

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Speaker 2: my PhD thesis and I wanted to critique that, and

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Speaker 2: I did it from a legal history point of view,

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Speaker 2: where I went through two hundred years of German legal

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Speaker 2: history trying to figure out where all of this came from,

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Speaker 2: and I found it had a lot to do with

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Speaker 2: Nazi law. And then I compared this with the experience

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Speaker 2: of Australia. So I spent a year in Australia comparing

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Speaker 2: with a Trade Practices Act, and my conclusion was, actually,

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Speaker 2: the Australians do it a lot better than the Germans.

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Speaker 2: There's much to learn and then I finally did a

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Speaker 2: law and economics chapter just comparing how unfair competition law

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Speaker 2: could be done from a liberal economic point of view,

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Speaker 2: from an Austrian school point of view, and how legal

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Speaker 2: systems actually deal with it in practice, and whether this

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Speaker 2: is in any way efficient. And just to conclude this,

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Speaker 2: I had an example where I do all of these

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Speaker 2: perspectives together and looked at comparative advertising because it's really

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Speaker 2: fast there.

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Speaker 1: Yeah, so that was your first time this part. I

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Speaker 1: mean you went to Australia, so obviously you know, just

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Speaker 1: looking for how you ended up with this connection to

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Speaker 1: this part of the world. Was that did you stay

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Speaker 1: in Australia long?

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Speaker 2: Yeah. My connection with this part of the words ax

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Speaker 2: my wife. Right. So what I haven't mentioned is I've

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Speaker 2: coursed at the real background to my PhD thesis. Was

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Speaker 2: the design to spend some time with her. Yeah, because

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Speaker 2: we started off as pen friends when we were when

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Speaker 2: she was fifteen I was sixteen. We started writing. We

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Speaker 2: had a pen friendship for eight years.

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Speaker 1: So this is one of those classics I sort of

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Speaker 1: had one old school years. You swounded up and you

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Speaker 1: found a pin free, yes, and.

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Speaker 2: There was no internet, and we didn't telephone because it

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Speaker 2: was ridiculously expensive back then. It was all before the

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Speaker 2: liberalization of the tel course, and so we wrote led

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Speaker 2: to us the old fashioned way, and so whatever I wrote,

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Speaker 2: it would take about a couple of weeks until I

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Speaker 2: got an answer from Australia and vice versa.

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Speaker 1: Wow.

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Speaker 2: We did this for eight years, and then we met

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Speaker 2: on my first trip to Australia a holiday, and I thought, okay,

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Speaker 2: and no, one wouldn't need a really good excuse to

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Speaker 2: spend more time with her, so why not actually include

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Speaker 2: an Australian chapter into.

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Speaker 1: My fantastic Yeah, and so obviously you got married, yes, yeah,

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Speaker 1: And well I mean from there did you stay in Australia,

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Speaker 1: because I noticed on your CV you've spent some time

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Speaker 1: in London, including the House of Lords, which looked interesting.

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Speaker 2: That follows straight from that story, because after I finished

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Speaker 2: a PhD and we said, okay, it's now time to

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Speaker 2: bring our long distance relationship to a clause and move together.

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Speaker 2: And London was a compromise. So for me it was

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Speaker 2: relatively easy because it was before Brexit and you didn't

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Speaker 2: need a visa at the time as a German to

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Speaker 2: live in London. It's all changed, of course, for in

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Speaker 2: Australia it was relatively straightforward visa program exactly. And so

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Speaker 2: we decided to meet in London, and we got married

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Speaker 2: in London, so we could actually stay a bit longer.

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Speaker 2: And yeah, I worked in the House of Lords. That

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Speaker 2: was my first job I got. And then afterwards I

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Speaker 2: got a job with a think tank called Policy Exchange,

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Speaker 2: which turned out to be David Cameron's. But I actually

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Speaker 2: got this before David Cameron was leader of the Conservative Party,

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Speaker 2: and it was only after he became leader of the

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Speaker 2: Exchange became basically his ideas factory and I was chugor

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Speaker 2: economists there. And then yeah, after four and a half

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Speaker 2: years in London, we decided, okay, we had enough. My wife, bizarrely,

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Speaker 2: although she was Australian, wanted to move to Berlin, and

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Speaker 2: I bizarrely wanted to move back to Sydney. And so

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Speaker 2: the compromise we had was, I mean, for her it

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Speaker 2: was relatively easy to get jobs no matter where. For myself,

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Speaker 2: I said, well, it's a bit harder. So I said, okay,

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Speaker 2: I'll apply for jobs in both places. We'll see what

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Speaker 2: comes up, and the best job wins and I got Sydney,

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Speaker 2: so I won.

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Speaker 1: Yeah, so that was that was that was that with

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Speaker 1: a think tank in Sydney.

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Speaker 2: Yes, I was the Center for Independent Studies. I knew

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Speaker 2: them for my time in Australia when I had studied there,

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Speaker 2: and I had been in touch with them before, and

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Speaker 2: so I knew who they were and what they were doing.

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Speaker 2: And I liked them, and well, they liked me and

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Speaker 2: hired me. And that's how I ended up back in Sydney.

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Speaker 1: Okay, so a bit around off this bit how do

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Speaker 1: you end up in New Zealand from there?

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Speaker 2: So what happened was actually that I met a few

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Speaker 2: New Zealand That's well, I was working in Australia. We

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Speaker 2: had conferences and they often came over and so they

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Speaker 2: me and when it came to the formation of the

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Speaker 2: New Zealand Initiative, they had heard of me, they had

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Speaker 2: met me before, and then they asked me whether I

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Speaker 2: would be interested in leading a New Zealand think tancher

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Speaker 2: And at the time, I didn't know New Zealand that well,

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Speaker 2: but sounded interesting, yeah, and I thought why not? And

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Speaker 2: I was twelve years ago. Initially I thought this might

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Speaker 2: just be another five six years continuing my normadic lifestyle.

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Speaker 2: But then we had a son in Wellington and we

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Speaker 2: had bought a house and suddenly things felt a lot

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Speaker 2: more settled.

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Speaker 1: So now you really are like, you know, you're adopted kiwi.

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Speaker 2: I guess well, I'm a naturalized key words passport.

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Speaker 1: Yeah, and as soon as you've got kids as well,

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Speaker 1: that's always a really draws you. It draws you. And

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Speaker 1: can I ask then, just because I'm curious and I

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Speaker 1: know that there's a lot to it, But you know, culturally,

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Speaker 1: have you noticed differences around money in this country compared

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Speaker 1: to say Germany, particularly growing up massively?

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Speaker 2: Yeah? Massively? So where do we want to start? Yeah? Yeah,

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Speaker 2: I mean for star Germans love cash. It is a

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Speaker 2: cultural thing. I'm not quite sure where it comes from,

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Speaker 2: but we do love cash wars. Of course in New

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Speaker 2: Zealand everything is.

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Speaker 1: By contesting because I mean everyone knows the stories of

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Speaker 1: Germans in the hyperinflation years in the twenties and in

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Speaker 1: pre war wheelbarrows for the cash and all that sort

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Speaker 1: of stuff. Do you think there's a cultural hangover from that?

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Speaker 2: There might be, And that's the other difference. Actually, Germans

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Speaker 2: hate inflation with a passion. Yeah, I mean, okay, New

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Speaker 2: Zealand's have recently had their own experience with inflation, but

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Speaker 2: in Germany it's quite something. So even when inflation was

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Speaker 2: still in the you know, one or two percent range,

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Speaker 2: inflation news every month in Germany that's kind of front

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Speaker 2: page news because everybody was always panicking. We had this

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Speaker 2: experience twice. We had the big hyper inflation in the

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Speaker 2: Weima Republic in the nineteen twenties. We had another case

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Speaker 2: of hyper inflation after World War two. And so Germans

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Speaker 2: have actually made the experience that from one day to

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Speaker 2: the next audio money can be worthless and saw inflation reporting,

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Speaker 2: even if it's just one or two percent, is always

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Speaker 2: kind of big news in Germany. So from that perspective,

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Speaker 2: actually looking at the creation and of the European Central

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Speaker 2: Bank and the transition into the Euro or the Germans

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Speaker 2: were was the more skeptical and it's why and when

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Speaker 2: I look at New Zealand, well, New Zealand's never really

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Speaker 2: had that experience with hyperinflation. Yes, we've had some periods

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Speaker 2: where there was a bit more inflation in nineteen seventies,

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Speaker 2: but then again everybody had that. But this complete eradication

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Speaker 2: of all your previous wealth in one gore very quickly.

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Speaker 2: That kind of collapse I think New Zealand's never had. Yeah.

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Speaker 1: Also, you come into New Zealand and how does it

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Speaker 1: look politically because we're an interesting max we sort of

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Speaker 1: flip flop. We had a fairly long period, you know,

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Speaker 1: post war until nineteen eighty four where we were almost

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Speaker 1: sort of into socialist territory or certainly the state was

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Speaker 1: involved in everything, and it's changed and we know, how

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Speaker 1: did you see all that when looking in as an outsider.

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Speaker 2: Well, first of all, I arrived in twenty twelve, and

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Speaker 2: if you remember Australian politics at the time, that was

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Speaker 2: the time of Kevin Rutt and Julia Gillard and later

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Speaker 2: again Kevin Rudd. It was well, let's put it mildly,

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Speaker 2: it was a turbulent.

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Speaker 1: Time in Australian politics as exactly.

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Speaker 2: And so arriving in twenty twelve in New Zealand, I

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Speaker 2: felt like, oh great, finally and I was in government

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Speaker 2: and stability. I mean that was just my first impression actually,

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Speaker 2: and things politically were quite settled in using ye I mean,

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Speaker 2: whether it was previously Halen Clark or John Key. But

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Speaker 2: I didn't have the feeling that it was like Australia

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Speaker 2: where they spopped their prime ministers every fortnight or so,

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Speaker 2: and that was actually quite nice. It felt good actually

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Speaker 2: coming from this craziness of Australian politics into New Zealand.

439
00:20:54,720 --> 00:20:56,359
Speaker 1: We'll come back to a little bit more of those

440
00:20:56,400 --> 00:20:58,159
Speaker 1: big questions, but I do want to get through some

441
00:20:58,160 --> 00:21:00,560
Speaker 1: of our quick fire questions. Just to go back on

442
00:21:01,200 --> 00:21:03,840
Speaker 1: some of your experiences with money over the years. Can

443
00:21:03,880 --> 00:21:05,760
Speaker 1: I ask one of the ones we love here is

444
00:21:05,960 --> 00:21:07,240
Speaker 1: what's the poorest you've ever been?

445
00:21:08,680 --> 00:21:11,800
Speaker 2: Probably when I was a student, I mean obviously, I

446
00:21:11,880 --> 00:21:15,000
Speaker 2: mean that's where I was living on some of the

447
00:21:15,040 --> 00:21:17,000
Speaker 2: money that I still had for my grandparents. Actually they

448
00:21:17,040 --> 00:21:19,600
Speaker 2: were quite nice to leave some money for my studies

449
00:21:19,600 --> 00:21:23,400
Speaker 2: for me. Yes, I had a job at university as well,

450
00:21:23,600 --> 00:21:27,000
Speaker 2: but yeah, it was not a luxurious life, I would say.

451
00:21:27,119 --> 00:21:29,199
Speaker 1: And flip side of that is what what would be

452
00:21:29,200 --> 00:21:31,960
Speaker 1: the when you when you first got a proper job,

453
00:21:32,080 --> 00:21:34,159
Speaker 1: like a decent salary. Do you remember what what you

454
00:21:34,680 --> 00:21:36,640
Speaker 1: was there? Something you splashed out on, or what what's

455
00:21:36,680 --> 00:21:39,040
Speaker 1: the most indulgent purchase you would have gone for?

456
00:21:39,160 --> 00:21:41,040
Speaker 2: Actually I do remember such an incident and that was

457
00:21:41,080 --> 00:21:44,040
Speaker 2: actually when I at the civil service, time after school

458
00:21:44,119 --> 00:21:47,640
Speaker 2: at the Mental health Decare Center, and my first few

459
00:21:47,720 --> 00:21:50,879
Speaker 2: salaries because it wasn't much really were invested into a

460
00:21:51,200 --> 00:21:51,880
Speaker 2: video recorder.

461
00:21:52,080 --> 00:21:54,320
Speaker 1: Oh yeah yeah, which was actually quite a big deal.

462
00:21:54,480 --> 00:21:55,879
Speaker 2: It was quite a big deal back then. I mean

463
00:21:55,920 --> 00:21:57,600
Speaker 2: you have to explain it for the younger generation.

464
00:21:58,119 --> 00:21:59,479
Speaker 1: Could take you or you could get a movie out

465
00:21:59,520 --> 00:22:00,919
Speaker 1: and you could watch a movie at home, and it

466
00:22:00,960 --> 00:22:05,000
Speaker 1: was amazing. Yeah, yeah, absolutely. I mean how are you

467
00:22:05,040 --> 00:22:07,760
Speaker 1: with money? Do you think so yourself as a without

468
00:22:07,800 --> 00:22:12,080
Speaker 1: going into you know, specifics, but are you a good saver?

469
00:22:12,320 --> 00:22:14,120
Speaker 1: Do you do all the right things with the personal

470
00:22:14,160 --> 00:22:15,880
Speaker 1: finance or are you a spender?

471
00:22:16,320 --> 00:22:19,120
Speaker 2: I actually think I am a saver and I'm an

472
00:22:19,119 --> 00:22:21,439
Speaker 2: investor and I like to keep my money together and

473
00:22:21,400 --> 00:22:23,159
Speaker 2: i'd like to have full control over it, and I

474
00:22:23,200 --> 00:22:26,119
Speaker 2: need to dot or almost onto the last dollar how

475
00:22:26,240 --> 00:22:28,480
Speaker 2: much I currently have, otherwise I wouldn't sleep well. But

476
00:22:28,480 --> 00:22:29,280
Speaker 2: then again, I'm.

477
00:22:29,240 --> 00:22:32,920
Speaker 1: Sure German, yeah, yeah, so an investor but relatively conservative

478
00:22:32,920 --> 00:22:35,640
Speaker 1: then like you're not taking wild risks with well.

479
00:22:35,440 --> 00:22:39,080
Speaker 2: Actually I am taking some risks. I've invested in a

480
00:22:39,240 --> 00:22:43,480
Speaker 2: number of ETFs and investment funds. But then again, you

481
00:22:43,520 --> 00:22:44,399
Speaker 2: see that's.

482
00:22:44,240 --> 00:22:46,560
Speaker 1: A way to take some risk in a measured way, right.

483
00:22:46,680 --> 00:22:48,680
Speaker 2: Yes, And I've spread it over so many of them

484
00:22:48,680 --> 00:22:50,600
Speaker 2: that are trying to cancel each other out, and so

485
00:22:50,600 --> 00:22:52,919
Speaker 2: I'm trying to get some return, but I'm trying to

486
00:22:52,960 --> 00:22:55,040
Speaker 2: also have a reasonable risk profile.

487
00:22:55,200 --> 00:22:57,840
Speaker 1: Sure, And just like for people listening to ETF is

488
00:22:57,920 --> 00:22:59,480
Speaker 1: kind of like a fund that will track a certain

489
00:22:59,560 --> 00:23:01,320
Speaker 1: sector of the of the stock market.

490
00:23:01,080 --> 00:23:03,240
Speaker 2: Right, that's exactly right. And so what I've tried to

491
00:23:03,280 --> 00:23:07,919
Speaker 2: do is actually combine different regions, different industries, different risk profiles,

492
00:23:08,520 --> 00:23:11,080
Speaker 2: different everything, basically just to mix it as much as

493
00:23:11,080 --> 00:23:14,360
Speaker 2: I could. Except you remember probably a couple of years ago,

494
00:23:14,440 --> 00:23:17,960
Speaker 2: after the Russian invasion of Ukraine, every single Essa class

495
00:23:18,000 --> 00:23:20,080
Speaker 2: went on and I something wrong.

496
00:23:20,280 --> 00:23:22,359
Speaker 1: Yeah, well, there are times when you wonder where you

497
00:23:22,359 --> 00:23:26,480
Speaker 1: can put money. But during the election campaign last year,

498
00:23:26,560 --> 00:23:29,560
Speaker 1: Christopher Luxen was asked how much he spends a week

499
00:23:29,600 --> 00:23:31,960
Speaker 1: on groceries and he came up with sixty dollars, which

500
00:23:32,040 --> 00:23:36,800
Speaker 1: was a unusual, pets politically thing to say. But are

501
00:23:36,880 --> 00:23:39,040
Speaker 1: you are you the grocery shopper in the house, and

502
00:23:39,080 --> 00:23:40,040
Speaker 1: do you.

503
00:23:39,680 --> 00:23:41,840
Speaker 2: Know actually that is mainly my wife. I mean I

504
00:23:41,840 --> 00:23:45,560
Speaker 2: do occasional shopping, but know that that's typically her territory.

505
00:23:45,640 --> 00:23:49,200
Speaker 1: Yeah, so it's not like you're not controlling the money,

506
00:23:49,200 --> 00:23:50,119
Speaker 1: not down to needing to.

507
00:23:50,160 --> 00:23:51,960
Speaker 2: Check or no nor way.

508
00:23:52,280 --> 00:23:54,840
Speaker 1: Yeah, because I say that because I kind of am

509
00:23:55,280 --> 00:23:59,160
Speaker 1: like I'm going through the supermarket checking that the onions

510
00:23:59,160 --> 00:24:01,000
Speaker 1: are good and all that sort of stuff. How about

511
00:24:01,520 --> 00:24:06,800
Speaker 1: we often ask if you buy lotto tickets and if

512
00:24:06,800 --> 00:24:10,480
Speaker 1: you're you know, when you imagine winning lotto, how much

513
00:24:10,520 --> 00:24:11,520
Speaker 1: would you imagine winning?

514
00:24:12,600 --> 00:24:14,480
Speaker 2: Well, I always have a bad conscience when I do

515
00:24:14,600 --> 00:24:16,919
Speaker 2: buy a lot of tickets, which I do occasionally because

516
00:24:16,960 --> 00:24:19,600
Speaker 2: as a cold hearted and rational economists, I know this

517
00:24:19,640 --> 00:24:22,439
Speaker 2: is nonsense, of course, but I do it for the

518
00:24:22,480 --> 00:24:25,080
Speaker 2: thrill of just playing, and also knowing, of course that's

519
00:24:25,560 --> 00:24:28,719
Speaker 2: whatever profits the company makes, it goes into good products.

520
00:24:28,760 --> 00:24:29,480
Speaker 1: So that's fine.

521
00:24:30,320 --> 00:24:33,400
Speaker 2: So I don't really plied with the expectation of winning anything,

522
00:24:33,480 --> 00:24:35,919
Speaker 2: but just for the fun of it and actually for

523
00:24:36,000 --> 00:24:37,120
Speaker 2: doing something good.

524
00:24:37,600 --> 00:24:40,520
Speaker 1: I guess I ask about how much money because sometimes

525
00:24:40,560 --> 00:24:43,119
Speaker 1: you know, and I'm thinking about Loto, it might be like,

526
00:24:43,160 --> 00:24:45,160
Speaker 1: I'd rather just win two million dollars. I don't want

527
00:24:45,160 --> 00:24:47,440
Speaker 1: to win forty four million dollars and turn my life

528
00:24:47,520 --> 00:24:48,040
Speaker 1: upside down.

529
00:24:48,119 --> 00:24:50,119
Speaker 2: Say, win forty four million dollars and then just give

530
00:24:50,160 --> 00:24:51,560
Speaker 2: the rest away and keep as much as you like.

531
00:24:51,640 --> 00:24:54,320
Speaker 1: Well that's true. Yeah, yeah, yeah, I mean I get

532
00:24:54,400 --> 00:24:55,280
Speaker 1: I guess.

533
00:24:55,440 --> 00:24:57,040
Speaker 2: If you don't know what to do with the other

534
00:24:57,080 --> 00:24:58,600
Speaker 2: forty two million dollars, I mean, I can give you

535
00:24:58,600 --> 00:24:59,040
Speaker 2: my address.

536
00:24:59,640 --> 00:25:03,720
Speaker 1: Yeah, I can fund some research projects that would be

537
00:25:03,760 --> 00:25:04,160
Speaker 1: a good idea.

538
00:25:04,240 --> 00:25:04,400
Speaker 2: Yeah.

539
00:25:04,480 --> 00:25:07,560
Speaker 1: Yeah. Coming back to some bigger questions, but that you know,

540
00:25:07,840 --> 00:25:10,120
Speaker 1: how much is money important to you? And how much

541
00:25:10,320 --> 00:25:13,760
Speaker 1: has it been sort of a byproduct of the career?

542
00:25:13,960 --> 00:25:17,720
Speaker 2: You know, Well, I think money is important, but it

543
00:25:17,720 --> 00:25:22,479
Speaker 2: doesn't make you happy, but it calms you down. So

544
00:25:22,760 --> 00:25:24,879
Speaker 2: what I really want to see with my money in

545
00:25:24,920 --> 00:25:27,399
Speaker 2: my investment is actually that I don't have to worry

546
00:25:27,400 --> 00:25:29,200
Speaker 2: too much about what will happen in maybe twenty or

547
00:25:29,240 --> 00:25:32,760
Speaker 2: thirty years time. So weirdly, perhaps I think most people

548
00:25:32,760 --> 00:25:37,000
Speaker 2: are not quite like that. I've always had this perspective that, well,

549
00:25:37,560 --> 00:25:39,960
Speaker 2: you don't want to rely on state pension in the end,

550
00:25:40,680 --> 00:25:43,439
Speaker 2: because of my constant moving around anyway, I couldn't actually

551
00:25:44,520 --> 00:25:47,359
Speaker 2: bank on any state pension system to pay me anything

552
00:25:47,440 --> 00:25:49,359
Speaker 2: because I was always too short in the country, so

553
00:25:49,359 --> 00:25:51,760
Speaker 2: I was only spending a few days a few years

554
00:25:52,359 --> 00:25:55,000
Speaker 2: and so I always thought I have to kind of

555
00:25:55,359 --> 00:25:58,040
Speaker 2: do it for myself. I can't rely on anyone to

556
00:25:58,119 --> 00:26:00,679
Speaker 2: really pay me a pension at the end, and so

557
00:26:01,200 --> 00:26:03,480
Speaker 2: I always had this idea of being totally self funded

558
00:26:03,520 --> 00:26:06,760
Speaker 2: in the end, and that made me quite conservative in

559
00:26:06,760 --> 00:26:07,080
Speaker 2: a way.

560
00:26:07,320 --> 00:26:09,879
Speaker 1: Sure, these last questions are sort of kind of a

561
00:26:09,880 --> 00:26:13,280
Speaker 1: sitter for you know, given you know that you're at

562
00:26:13,280 --> 00:26:15,800
Speaker 1: a think tank and they're sort of policy type questions.

563
00:26:15,800 --> 00:26:18,280
Speaker 1: But if you had to say one thing, what do

564
00:26:18,320 --> 00:26:20,919
Speaker 1: you think the biggest driver of social inequality is in

565
00:26:20,920 --> 00:26:24,280
Speaker 1: the sense of, you know, why some people are rich

566
00:26:24,480 --> 00:26:25,280
Speaker 1: some people are poor.

567
00:26:26,040 --> 00:26:29,920
Speaker 2: I think that a too. Actually one is education, and

568
00:26:30,040 --> 00:26:33,040
Speaker 2: I'm the best example. So I come from, as I said,

569
00:26:33,040 --> 00:26:36,439
Speaker 2: a typical kind of middle class background in a not

570
00:26:36,520 --> 00:26:39,199
Speaker 2: so flash part of Germany. But I had an excellent education.

571
00:26:39,320 --> 00:26:42,480
Speaker 2: I had a fantastic school, a state school, by the way,

572
00:26:43,640 --> 00:26:46,720
Speaker 2: and that the door to all sorts of jobs afterwards,

573
00:26:46,880 --> 00:26:51,399
Speaker 2: and education is super important for that kind of social mobility.

574
00:26:51,560 --> 00:26:53,679
Speaker 2: The other factor I think that makes a massive difference

575
00:26:53,720 --> 00:26:57,320
Speaker 2: is housing, And I mean often housing and education are linked,

576
00:26:57,600 --> 00:27:01,400
Speaker 2: but we are now at a situation where, I mean,

577
00:27:01,480 --> 00:27:04,520
Speaker 2: for ordinary New Zealander's coming from not so flash backgrounds,

578
00:27:04,520 --> 00:27:07,520
Speaker 2: actually owning our house as a major challenge and sometimes

579
00:27:07,520 --> 00:27:13,280
Speaker 2: outright impossible. And so I think actually, with the craziness

580
00:27:13,320 --> 00:27:16,800
Speaker 2: of our property markets, the property letter has actually lost

581
00:27:16,800 --> 00:27:20,040
Speaker 2: its bottom rungs and that is a massive warrior, and

582
00:27:20,040 --> 00:27:22,800
Speaker 2: it should wearry us all for social reasons because I

583
00:27:22,840 --> 00:27:25,679
Speaker 2: think that is one of the biggest drivers of inequality

584
00:27:25,680 --> 00:27:28,680
Speaker 2: in this country. So housing an education, both of them.

585
00:27:28,720 --> 00:27:30,520
Speaker 1: Sure, So I think that it probably sets up the

586
00:27:30,600 --> 00:27:34,520
Speaker 1: last question really, which is if we could make you

587
00:27:34,560 --> 00:27:36,920
Speaker 1: prime minister for a day, and if prime ministers could

588
00:27:36,920 --> 00:27:40,399
Speaker 1: actually wield this kind of power, what would be the

589
00:27:40,760 --> 00:27:43,960
Speaker 1: policy you would focus on that you could would want

590
00:27:44,000 --> 00:27:46,840
Speaker 1: to bring through to try and address some of those issues.

591
00:27:46,880 --> 00:27:49,000
Speaker 2: I've got so many ideas after twelve years at the

592
00:27:49,080 --> 00:27:52,480
Speaker 2: end stuff, but I would really focus on these tools.

593
00:27:53,600 --> 00:27:55,960
Speaker 2: In education, I mean, we have a government that's currently

594
00:27:56,000 --> 00:27:59,920
Speaker 2: undertaking a lot of reforms, introducing a new curriculum, introducing

595
00:28:00,280 --> 00:28:03,640
Speaker 2: changes to teacher education, and new assessment system. So all

596
00:28:03,680 --> 00:28:05,399
Speaker 2: of these things are really important. I mean, there's not

597
00:28:05,440 --> 00:28:08,679
Speaker 2: that one silver bullet that would fix the whole education system,

598
00:28:08,680 --> 00:28:11,600
Speaker 2: but that's roughly what I would do too. And on housing,

599
00:28:11,720 --> 00:28:14,040
Speaker 2: I mean, we've had discussions in the past. You know

600
00:28:14,119 --> 00:28:17,679
Speaker 2: that I'm a great believer in decentralization and subsidiarity and

601
00:28:17,720 --> 00:28:20,240
Speaker 2: giving incentives to councils because I think that's the only

602
00:28:20,280 --> 00:28:23,520
Speaker 2: way we can really crack that housing market. But I

603
00:28:23,520 --> 00:28:25,320
Speaker 2: would do that, and if I had a third wish,

604
00:28:25,960 --> 00:28:28,840
Speaker 2: I would also liberalize or foreign direct investment regime.

605
00:28:29,160 --> 00:28:31,800
Speaker 1: Yeah, which may be going to happen to some extent.

606
00:28:31,640 --> 00:28:33,760
Speaker 2: Looks like it. I think it's in the Coalition agreement.

607
00:28:34,080 --> 00:28:37,639
Speaker 1: Yeah, but I guess you know, with the housing and

608
00:28:37,680 --> 00:28:39,680
Speaker 1: the logo, the idea, I mean, we've talked before about

609
00:28:39,880 --> 00:28:44,320
Speaker 1: localism does seem difficult for even seen to right parties

610
00:28:44,320 --> 00:28:47,360
Speaker 1: in this country. It's sort of there's a lot of

611
00:28:47,400 --> 00:28:48,960
Speaker 1: central control in Wellington right.

612
00:28:48,880 --> 00:28:52,040
Speaker 2: Now, yes, and much more so than in most other countries.

613
00:28:52,080 --> 00:28:54,560
Speaker 2: So we have more than ninety percent of our texas

614
00:28:54,600 --> 00:28:58,440
Speaker 2: and tax revenue and spending control by central government in Wellington.

615
00:28:58,840 --> 00:29:01,680
Speaker 2: For most other developed countries it's more like a two

616
00:29:01,760 --> 00:29:06,080
Speaker 2: thirds kind of central control. And New Zealand's been like

617
00:29:06,120 --> 00:29:09,000
Speaker 2: that for a long time, although not forever. So if

618
00:29:09,040 --> 00:29:11,040
Speaker 2: you go into the nineteenth century, can find that New

619
00:29:11,120 --> 00:29:14,160
Speaker 2: Zealand was way more decentralized than it is today. New

620
00:29:14,240 --> 00:29:16,600
Speaker 2: Zealand back then looked a bit more like Germany or

621
00:29:16,600 --> 00:29:19,960
Speaker 2: Switzerland today, so that there is a localist tradition even

622
00:29:20,000 --> 00:29:21,880
Speaker 2: in New Zealand. I think it's just something that we

623
00:29:21,960 --> 00:29:22,680
Speaker 2: have to rediscover.

624
00:29:23,080 --> 00:29:25,040
Speaker 1: Well, look, that is fantastic, all of it. We're going

625
00:29:25,120 --> 00:29:27,320
Speaker 1: to leave it there. But thanks for being on Money Talks.

626
00:29:27,480 --> 00:29:30,720
Speaker 1: Thank you Liam, Thanks for listening to this episode of

627
00:29:30,760 --> 00:29:33,480
Speaker 1: Money Talks. If you want to get in touch, drop

628
00:29:33,520 --> 00:29:36,920
Speaker 1: me a line at Liam dot Dan at inzme dot

629
00:29:36,960 --> 00:29:39,880
Speaker 1: co dot nz and you can read more from me

630
00:29:40,120 --> 00:29:43,680
Speaker 1: at inzidherld dot co dot nz. Thanks to my producer

631
00:29:43,880 --> 00:29:48,959
Speaker 1: Ethan Sills and sound engineer LeAnn McDonald. Follow Money Talks

632
00:29:48,960 --> 00:29:52,080
Speaker 1: on iHeartRadio or wherever you get your podcasts, with new

633
00:29:52,120 --> 00:29:54,200
Speaker 1: episodes available every Thursday,