Steven Joyce: National strategist and Minister of Everythingby Guyon Espiner
As the man in charge of National’s re-election prospects, new Finance Minister Steven Joyce has his sights firmly set on a fourth term.
Their son Steven picked up the entrepreneurial spirit. In his early twenties, he and four friends put down $100 each and set up a radio station. Before he was 40, Joyce sold up for $6 million and wondered what to do with his life. Politics was on his wish list, but it was near the bottom and slipping on to his maybe list.
With time on his hands, he was drawn in as a consultant to analyse Bill English’s catastrophic election loss in 2002, when National got just 21% of the vote, and became the chief engineer for a complete rewiring of the party machine. From that point on, Joyce, 53, has been vital to National’s domination of politics. He has run every election campaign since 2005, and since 2008 has been Minister of Everything and Mr Fixit without serving a single day in opposition.
Now, he has even more power. He’s Minister of Finance as well as Politician in Charge of National’s Re-election Prospects. We’ll confront that dual mandate soon. But why didn’t he go all the way and joust for the top job when John Key resigned? We’ll get to that, too, and in fact Joyce reveals he did consider running for National leader and prime minister.
But first, what economic direction will Joyce chart for the country? He isn’t one for grand economic theories. The grocer’s son prides himself on not being flashy. He sets his priorities and grinds it out, often through the eyes of a small-business owner trying to turn one dollar into two.
Cosmetic companies urge us to fight the seven signs of ageing. Self-help books identify the seven stages of grief. For eight years, Joyce, as Associate Finance Minister and Economic Development Minister, banged on about the six drivers of economic growth (google them if you must). Now Finance Minister, he has, mercifully, whittled his economic priorities down to four.
Top priority is “public services for a growing country”, hence Prime Minister Bill English’s announcement in his state of the nation address of extra police. Expect more of that. No 2 is “the balance sheet”: debt reduction must continue. Priority 3 isn’t much more exciting: “infrastructure”, although this does have the twist of being about resilience as well as capacity, given the earth keeps moving. The fourth also sounds dull, but will attract a lot of attention. Joyce is calling it “rewarding people for work”. The media will call it tax cuts.
So, where does housing fit into those priorities? “It fits obviously in the broader infrastructure area,” Joyce says. “Housing is infrastructure. It is where people live.” Quite. So when the Demographia International Housing Affordability Survey says Auckland has the fourth least-affordable houses in the world – median prices 10 times household income – whose problem is that? “It’s a challenge for New Zealand,” he says, before trying to discredit the report.
Awkwardly for Joyce, his leader has left his DNA on the Demographia work. As Finance Minister, English wrote the foreword to the 2013 report, which ends with him welcoming Demographia’s “ongoing and valuable contribution to the constructive public discussion about housing affordability”.
I try to point this out, but Joyce is in full flight, arguing the work is flawed because it looks only at income-to-price ratios and not interest rates. “I don’t think it’s credible,” he says of Auckland being fourth in the least-affordable stakes. “We have very high prices in Auckland, I’m not arguing with that. All I am saying is that Demographia doesn’t tell the full story.” He’s got a point. Interest rates are part of the equation and the Massey University Housing Affordability Index, which includes them, said that last year houses were more affordable than when National was first elected.
Joyce says he wants to see “house prices to income decline over time”, but he believes supply may already be achieving that, with consents for nearly 10,000 houses in Auckland in the past year. Although that’s well short of the 13,000 new houses a year signed up to in the 2013 Housing Accord with Auckland Council, Joyce says it’s the highest number in 12 years. So, has the Government turned the corner on housing? “We are turning the corner,” he says, cautiously. He cautions homes buyers, too: “Interest rates over time will go back up again, so people need to be really careful in terms of how much they commit themselves.”
An economic case for tax cuts
Before Key left office, he had set up a regular ping-pong game with English. Key would hint that tax cuts might be on. English would hint that they might be off. So, let’s have it from the new guy. Is there an economic case for tax cuts? “There is an economic case for making sure people are incentivised to increase their incomes,” Joyce says.
He is concerned that people paying a 17.5% tax rate are hit with a 30% rate when they start to earn more than $48,000. “What impact does that have on their ability to provide for their families and their own motivation?” It’s a clear signal he’s looking at income thresholds rather than tax rates. “We are just not going to have stacks of money to throw at big tax cuts, but we do have to look at things like thresholds.”
The grocer’s son is never far away. “This is all people’s money. Whatever we take is money they don’t get to spend on their own families.” The tax cuts may take the form of a Families Package, but he’s trying not to build up expectations. “I am not a believer in election-year Budgets. We have never done one and I think the public see those pretty cynically.”
I want to explore tension between being both a prudent fiscal manager and election-campaign manager. Is he going to run the campaign again, I ask, although I know the answer. “Yep. I think they’ll keep asking me until I lose one.” You lost in 2005, I remind him, helpfully. “That was the first one,” he offers. “I actually think it went from 21% to 39%, so from a campaign team’s point of view, I’d call that a victory.”
A victory this year would be against the run of history, given the last four-term government was Keith Holyoake’s 1960-72 administration. This is just flashy punditry for Joyce. “I don’t think it will be determined by the public saying, ‘Oh, these guys have had three terms.’ I think it will be about what they think the options will deliver for them and their economic security. Political commentators who think it is about whose turn it is will be wrong.”
Joyce doesn’t have a lot of time for political commentators. Nor they him. Even on the right he’s a frequent target. In economic terms, right-wing political commentator Matthew Hooton sees him as a modern-day Muldoonist. The Taxpayers’ Union of Jordan Williams and David Farrar recently blasted him for “corporate welfare”, after Peter Thiel did embarrassingly well in a joint venture with the Government.
“That’s just rubbish. I am one of the drier people in Cabinet,” Joyce says, although he bridles at right wing. “I wouldn’t say I was right wing. The difference is that I probably have a bit more confidence than some in the power of markets to deliver for people.”
It was a market that delivered for his parents – a supermarket. Well, a dairy first, then a Four Square, then a New World. “Borrowed a lot of money and worked hard” is the way Joyce describes his parents’ strategy.
That was seared into his young brain. “I can remember times when it would be Mum, Dad, Nana, my sister and me all working there. I can remember them counting out the float at home.” Joyce says his parents started with very little. “My father was the son of a beekeeper and my mother was the daughter of an insurance agent and they scraped together their deposit for a dairy. The first house they bought, they used beer crates for seats for the first little while.”
They had a pretty basic merger-and-acquisition strategy in the shopping block. “They progressively borrowed money to knock a wall down and extend the size of the shop until it became a food market rather than a dairy.” This wasn’t a dirt-poor family and nor is he making them out to be, but it was a hard grind. “When they sold it, they bought a caravan and Mum and Dad took us on a trip around the North Island for the first time. I was about 13.” The idea of an overseas holiday was laughable.
Were they National Party folk? “I think so. Mum definitely and Dad National or further right, probably.” Dad votes Act? No, he says, just that Joyce Sr has some “interesting” views.
They weren’t a political family, but the values are ones that resonate with his politics. So, is that mindset more important to him as Finance Minister than economic theory? Did he spend the summer schooling up? “It is very hard to find time to read books,” he says. “I’ll read the Economist, the Financial Times, the Spectator – that’s about it by the time you deal with the daily news and government reading. And I am known around the building as someone who closely reads the briefs.”
Joyce has the confidence of someone who built an empire. And he did. With his uni mates, including comedian Jeremy Corbett, whom he still counts as a friend, he started a radio station in his hometown of New Plymouth. “I’m not sure we really knew we wanted to be in business when we started. We just wanted to play REM on the radio, and that was our guiding principle at first, but once we got into it, there was a real desire to run a business and be successful.”
It started out as Energy FM and grew into the sprawling network RadioWorks, employing 650 staff at more than 20 stations. By 2000, it was too big to ignore and CanWest raided the share register. Joyce hung in for another year and sold up in 2001. He was 38, with $6 million in the bank.
“I had no idea what I was going to do. I had been on this amazing ride from 1987 to 2001 where it had been work, work, work.” He joined the gym and ran some half marathons, having barely exercised since university. The next step was politics, but it was more one step forward, two steps back.
“I thought about standing and I talked to a few people and I put my name forward, then I withdrew,” he says. “I didn’t feel ready.” Or maybe it was his latent political savvy. That was 2002 and the tide was so far out on National that it scored just over half Labour’s vote.
National got Joyce to figure out what went wrong. It liked his answers and asked him to do a full strategic review, which led to 85 remits for constitutional change being passed at the party’s 2003 conference.
He was finished with politics at this point. But politics hadn’t finished with him. National wanted him to head its election bid to make Don Brash prime minister. “So I ran my first election campaign in 2005 and nearly got him elected.”
Are you thankful you didn’t? “Ah no. I mean, Don is an interesting fellow in hindsight,” he demurs. It was pretty divisive, though, wasn’t it, with the iwi/Kiwi billboards? “Overall, it was a good campaign. That part of it was a bit edgy,” he says, sheepishly.
After 2005’s near miss, Joyce tried to escape politics again. He married and went back into business. “I decided that was it, I wasn’t going to do any more.” This time, Key brought him back. First as a consultant, then to run the 2008 campaign, then to be parachuted in with a top list ranking to serve as a minister.
Astute political calls
After entering Parliament in 2008, Joyce was earmarked as a frontrunner to eventually take over from Key. In the end, he didn’t put up his hand last December. But it turns out he considered it more closely than was reported at the time. “My judgment of it when it happened was that the right thing for the team and the country was for Bill to do it.”
Did he consider it, though? “Yeah, I did. I thought about what it meant.” Did he think about having a grab at it? “Briefly. But actually, I’m a bit 50-50 about all that. People say, ‘Oh, does that mean you don’t have any ambition? I’m ambitious, otherwise I wouldn’t be here,” he says. “But my thing is, what is best for the team? There are people in politics who would crawl over cut glass to be the leader of the party and the prime minister. I’m just not one of them.”
And yes, maybe he simply judged he couldn’t win and made one of the astute political calls he’s been making for a decade. He’s big on setting down his basic priorities. He knows what he’s got and what he’s good at.
He’s got his money from the radio business, his family and a lifestyle block in Dairy Flat, north of Auckland. “I bought it 11 years ago. It is a huge money sink and I love it.” He plays tennis with his nine-year-old daughter while he can still beat her. He’s got a zucchini patch there and makes dad jokes on Twitter about his vege garden.
Although Joyce didn’t crave the leadership enough to risk his reputation for it (unlike Judith Collins and Jonathan Coleman), he’s certainly not cruising towards retirement. Soon, he’ll have a campaign to run. That means getting up at 4.30 each morning and calling the leader before 6am to map out the strategy.
“Campaigns are not unlike breakfast radio shows. It’s all about the planning, but then having the ability and the knowledge to know when to change the plan.” He’s talking to someone who gets up at 4.25am and attempts to do pretty much that, and so his analogy is met with some weary head nodding. If you do have a plan, then news breaks and you’ve wasted your time, but that’s okay. If you don’t have a plan, then nothing happens and you’re stuffed.
“Murphy’s Law applies,” he says. “It is the same with politics. If you don’t have a plan, then someone will fill it for you pretty quick.”
So, what’s the plan? How does he pull it off for National again? Nothing flashy, he says with faux modesty. It’s simple, of course. Under MMP, you just make your vote as big as you can. “The bigger it gets, the more choices you have.”
And the chances of victory? “I don’t know. I am one of those people who says: don’t make predictions, just work your butt off and see where you get to.”
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