Video Journal - Prime minister john key - 14 November

Hello, it's glorious day in Wellington, and thank goodness for that because the Prince of Wales and the Duchess of Cornwall are in town today, and they are going to be going to amongst other things Government House for the Official Opening of the Visitors Centre there. That was a centre that the New Zealand Government essentially had as the gift to the Diamond Jubilee Celebrations. Sixty years of recognition of the Queen's amazing role as the Monarch and Queen of New Zealand. So they've had a wonderful visit so far. I was in a privileged enough position to welcome them off the plane on Saturday night at Whenuapai. Saw them on Sunday at the Armistice Day commemorations, and then at a Black tie Fundraising dinner for the Diamond Jubilee Trust on Monday night. Yesterday was a bit of a rest day; they have had a fairly busy time of it in Australia and Papua-New Guinea and here in New Zealand. And today as I say, a day of official engagements for them, both at Government House, and seeing myself and the Leader of the Opposition in formal meetings. And then of course today is Prince Charles' birthday. He's 64 today, he happens to share that day with some other famous people including my wife, and the Governor-General, and as a nice touch I thought the Governor-General invited every New Zealander to put in an application that was born on the 14th of November to share the day with Prince Charles. There were about 14,000 people in New Zealand born on the 14th November. 1500 applied, and 64 lucky people were chosen to join in that celebration, so that'll be a very nice touch for them at Government House this afternoon. They've got a number of other functions around New Zealand over the next few days. But I'll be with them in Christchurch on Friday as we have an opportunity to take them along to the Canterbury Show of course, and indeed to show them the devastation that took place as a result of the earthquakes in Christchurch. You will all remember that the Royal Family was represented by Prince William when he came out to the Memorial Service last year, and gave that very touching speech in Hagley Park, and of course the Queen and Prince Charles, as well as other members of the royal family were constantly sending messages of support and goodwill to the people of Christchurch. So I think so far been a very, very successful visit. I myself am travelling next week - I'm off to Cambodia and Myanmar, to the East Asian Summit in Cambodia next week. President Obama will be there as well as leaders of, from the ASEAN countries, so a good opportunity to talk trade with President Obama and other leaders around the region, take stock of what's been happening in the economy out in Asia. Been a bit tougher in Asia in the last few months, with both the United States, but particularly Europe, slowing down. Some predictions that Germany will grow at under 1% next year, and for President Obama he has to deal with what's called the Fiscal Cliff at the end of the year. So what that's all about is there are essentially two stimulatory things which roll off at the end of the year. One are some tax cuts that President Bush put in place, so once they are gone there is less money in the economy. And then the second thing is that there are some spending initiatives that roll off. Now for President Obama that's quite a major issue because if nothing is done then their economy effectively contracts by up to about 4%. It's a fragile economy at the moment really, as it's starting to come through the worst crisis in several generations. And so the challenge for President Obama is to be able to address that issue and actually get support for that because of course you know really nothing changes as a result of the election in terms of the Republicans I think dominating, pretty sure it's the House, but, either that or the Senate, I think it's the House Their issue is they can't actually or don't necessarily have the numbers there so you'll remember that President Obama wants to have a combination of initiatives, some spending cuts to get back to surplus, and some increases in taxation on higher income Americans. The Republicans just don't want the bit around tax increases and they want bigger spending cuts, so quite an arm-wrestle going on there. From New Zealand's point of view we will continue to work our way through it, I mean we've had the challenge of last week's unemployment numbers. That was 7.3%, higher than what it think it's fair to say the vast bulk of economists thought and the Government thought. The advice we got from Treasury is that we'd see a reduction in that number and it went quite the opposite to what we all expected. And slightly unexpectedly it is showing up a real softness in Auckland which is the market that we've been seeing quite a lot of activity taking place particularly in the housing market. One interesting fact, there is no direct correlation between the number of people on unemployed benefits and those measured in the household labour-force survey, which is what is the basis used for the unemployment rate. So one is a survey and one is actually the physical number of people applying for a benefit. But just to give an example, back in 1999 was the last time we recorded the number of people at 7.3% on the unemployment rate, and those are picking up an unemployed benefit at that point were around about 150,000. Today the number is 7.3% and yet the number of people on picking up a benefit is under 50.000, last week alone 450 odd people went off the unemployment benefit, a large percentage of those in Auckland. So we'll continue to work our way through it these challenges are always going to be there. My view the government is on the right economic track. We can't really influence what is happening in the big economies around the world, Asia, Europe and the United States. All we really can do is make sure that we give an operating environment to our New Zealand businesses, which is the most conducive it can be, for them to be encourage to take on staff and grow their businesses. That means we have to make sure they are competitive. If they are competitive then they can sell to the world even with a high exchange rate. So that's been the area of focus and in many regards I think it is working well. I know it is frustrating for people but we are going through the worst financial crisis in a number of generations, since the 1930's Depression. There is always going to be these sort of steps forward and steps backwards. So Government has a plan and we are working on that plan, and confident its taking New Zealand in the right direction and we'll continue to work through this. So as I say, I'll be off to Cambodia next week and we'll check in after that.