1 00:00:00,080 --> 00:00:02,440 Speaker 1: Let's return to the world of uncertainty. We're currently swimming 2 00:00:02,440 --> 00:00:04,880 Speaker 1: in the ocr got a twenty five point trim. Of course, 3 00:00:04,920 --> 00:00:07,680 Speaker 1: the headline is we wander into uncharted territory. So is 4 00:00:07,680 --> 00:00:10,640 Speaker 1: there another twenty five next month or fifty? Where's neutral? 5 00:00:10,640 --> 00:00:13,240 Speaker 1: All that sort of thing navigating this for us all 6 00:00:13,280 --> 00:00:15,600 Speaker 1: in a sense, as Finance Minister Nikola willis, who is 7 00:00:15,600 --> 00:00:17,000 Speaker 1: with us A very good morning. 8 00:00:17,440 --> 00:00:18,200 Speaker 2: Good morning, Marie. 9 00:00:18,320 --> 00:00:22,439 Speaker 1: I was watching Trump's speech yesterday to some party faithfully said, 10 00:00:22,480 --> 00:00:24,680 Speaker 1: everyone's ringing up kissing his ours? Are we one of 11 00:00:24,680 --> 00:00:26,320 Speaker 1: the people kissing his ass? Currently? 12 00:00:27,320 --> 00:00:30,480 Speaker 2: Well, Look, our diplomats in Washington have certainly been speaking 13 00:00:30,520 --> 00:00:33,760 Speaker 2: with the US counterparts. I suppose in many ways we're 14 00:00:33,800 --> 00:00:36,720 Speaker 2: fortunate because our tariff rate is lower than that faced 15 00:00:36,760 --> 00:00:39,320 Speaker 2: by some other countries. Of course, we'd prefer it to 16 00:00:39,320 --> 00:00:41,080 Speaker 2: be zero, so we'll keep pushing for that. 17 00:00:41,520 --> 00:00:45,360 Speaker 1: When you talk or they talk to the administration, and 18 00:00:45,440 --> 00:00:47,560 Speaker 1: given what's happened in the last two or three hours, 19 00:00:48,000 --> 00:00:50,559 Speaker 1: do they come back to you with any level of 20 00:00:50,640 --> 00:00:51,960 Speaker 1: clarity that makes sense? 21 00:00:52,800 --> 00:00:57,240 Speaker 2: Look, uncertainty is the big scene because sometimes it's clear 22 00:00:57,840 --> 00:01:01,320 Speaker 2: that the administration is making announce months and then the 23 00:01:01,440 --> 00:01:05,399 Speaker 2: US system is also in real time working to understand 24 00:01:05,400 --> 00:01:09,320 Speaker 2: that information and convey it accurately to officials on the ground. 25 00:01:09,480 --> 00:01:11,920 Speaker 2: So this is a situation where we need to keep 26 00:01:11,959 --> 00:01:15,440 Speaker 2: the phones working. People need to be continuing to seek 27 00:01:15,480 --> 00:01:18,200 Speaker 2: out information, monitoring developments very closely. 28 00:01:18,640 --> 00:01:22,800 Speaker 1: How come Charmers felt the need to Australia call an 29 00:01:22,800 --> 00:01:25,680 Speaker 1: emergency meeting yesterday that involved the Treasury in the RB 30 00:01:25,920 --> 00:01:28,119 Speaker 1: and you felt the need to present a day four 31 00:01:28,160 --> 00:01:30,200 Speaker 1: piece of paper that you read out on Tuesday is 32 00:01:30,240 --> 00:01:32,160 Speaker 1: why are you misreading the seriousness of this? 33 00:01:33,440 --> 00:01:36,720 Speaker 2: Well, I won't speak for Charmers. I did speak to 34 00:01:37,319 --> 00:01:41,120 Speaker 2: the temporary Reserve Bank governor yesterday and we shared our 35 00:01:41,160 --> 00:01:45,160 Speaker 2: observations of what's happening with the global economy. That's completely appropriate. 36 00:01:45,600 --> 00:01:49,080 Speaker 2: I'm continuing to be briefed regularly by Treasury. This is 37 00:01:49,120 --> 00:01:53,360 Speaker 2: a significant global economic event and as the Finance Minister 38 00:01:53,520 --> 00:01:56,560 Speaker 2: I need to keep on top of what's happening implications 39 00:01:56,600 --> 00:02:01,200 Speaker 2: for New Zealand. Our responses required the right thing, and 40 00:02:01,280 --> 00:02:04,720 Speaker 2: so far very much our view is we should stay 41 00:02:04,800 --> 00:02:07,120 Speaker 2: the course with the approach that we have been taking 42 00:02:07,160 --> 00:02:10,960 Speaker 2: to our economy, a sensible fiscal strategy, strong economic management, 43 00:02:11,120 --> 00:02:14,960 Speaker 2: continuing to make reforms which support economic growth, business certainty 44 00:02:15,000 --> 00:02:15,639 Speaker 2: and investment. 45 00:02:16,120 --> 00:02:18,320 Speaker 1: How do you have certainty in a world this morning 46 00:02:18,360 --> 00:02:20,400 Speaker 1: where we're at one hundred and twenty five in counting 47 00:02:20,400 --> 00:02:22,720 Speaker 1: with China, China being our biggest trading partner. 48 00:02:23,960 --> 00:02:27,120 Speaker 2: Well, we cannot control what happens elsewhere in the world. 49 00:02:27,200 --> 00:02:30,000 Speaker 2: What we can control is what we do here at home. 50 00:02:30,080 --> 00:02:33,280 Speaker 2: And that's why there's even more of a premium on 51 00:02:33,560 --> 00:02:38,280 Speaker 2: macroeconomic stability and sensible policies. You know, I've watched labor 52 00:02:38,360 --> 00:02:41,720 Speaker 2: have already hit the alarm, the panic button, saying, look, 53 00:02:41,760 --> 00:02:44,760 Speaker 2: this is the time to surge the borrowing, surge the 54 00:02:45,280 --> 00:02:48,280 Speaker 2: debt and of course in turn surge the tax. Well, 55 00:02:48,320 --> 00:02:51,679 Speaker 2: that would be completely the wrong approach, that would alarm markets, 56 00:02:51,720 --> 00:02:54,360 Speaker 2: that would create more instability. This is a time to 57 00:02:54,400 --> 00:02:56,720 Speaker 2: be steady and have a tarme hand on the tiller. 58 00:02:57,240 --> 00:03:00,280 Speaker 1: The EU overnight retaliatory. I don't know what has happens 59 00:03:00,320 --> 00:03:03,000 Speaker 1: post the pause, but do you worry that it's all 60 00:03:03,040 --> 00:03:05,880 Speaker 1: on among hundreds of millions of consumers all over the 61 00:03:05,880 --> 00:03:06,839 Speaker 1: world in the trade wark. 62 00:03:08,000 --> 00:03:12,200 Speaker 2: I do not like seeing retaliatory action and tips attached, 63 00:03:12,280 --> 00:03:17,320 Speaker 2: because that sort of escalation harms everyone. What we would 64 00:03:17,400 --> 00:03:20,079 Speaker 2: like of course, is stability and calm so our exporters 65 00:03:20,080 --> 00:03:22,800 Speaker 2: can work out they can get the best prices for 66 00:03:22,880 --> 00:03:26,079 Speaker 2: their products. And when the tower situation is changing as 67 00:03:26,120 --> 00:03:29,359 Speaker 2: regularly as it is, it's very difficult for our exporters 68 00:03:29,600 --> 00:03:31,640 Speaker 2: to work out what's best for their business, and that 69 00:03:31,800 --> 00:03:35,240 Speaker 2: uncertainty in and of itself can be quite paralyzing. So, 70 00:03:35,520 --> 00:03:37,280 Speaker 2: of course we would like to see calm in the 71 00:03:37,320 --> 00:03:41,480 Speaker 2: global situation and an end to retaliatory actions, given. 72 00:03:41,240 --> 00:03:45,000 Speaker 1: Our success so far or lately in America wine red 73 00:03:45,040 --> 00:03:48,080 Speaker 1: meat in particular, as somebody like hawksby able to give 74 00:03:48,160 --> 00:03:52,400 Speaker 1: you any sort of specific number around the hit to 75 00:03:52,520 --> 00:03:56,080 Speaker 1: your bottom line. 76 00:03:55,440 --> 00:03:58,320 Speaker 2: Not at the stage, because the hit to our bottom 77 00:03:58,360 --> 00:04:02,920 Speaker 2: line will be affected, ironically, not by the ten percent tariffs, 78 00:04:03,280 --> 00:04:06,200 Speaker 2: but by the impact of a slow down in global growth. 79 00:04:06,640 --> 00:04:09,520 Speaker 2: And just how dramatic that slowdown is yet to be 80 00:04:09,560 --> 00:04:11,880 Speaker 2: seen and depends a bit on whether Trump is going 81 00:04:11,920 --> 00:04:15,760 Speaker 2: to be pausing tariffs for longer, what the retaliator reaction is. 82 00:04:15,800 --> 00:04:18,520 Speaker 2: What we do know is we're expecting lower growth among 83 00:04:18,560 --> 00:04:22,240 Speaker 2: our trading partners, particularly here in the Asian region. We're 84 00:04:22,279 --> 00:04:24,560 Speaker 2: forecasting they will grow by at least half a percent 85 00:04:24,680 --> 00:04:29,240 Speaker 2: less than we had thought. We are looking as inflation 86 00:04:29,279 --> 00:04:31,800 Speaker 2: effects that are still unpredictable, So all of that gets 87 00:04:31,800 --> 00:04:35,520 Speaker 2: factored into our forecasts and it's just too soon to tell. 88 00:04:35,560 --> 00:04:38,039 Speaker 2: I know that it's not a satisfying answer, but you'll 89 00:04:38,040 --> 00:04:40,400 Speaker 2: find that that's the response economists throughout this having. 90 00:04:40,480 --> 00:04:42,239 Speaker 1: I mean, no one knows. I mean no one blames 91 00:04:42,240 --> 00:04:44,040 Speaker 1: you for this, because literally no one knows. Is it 92 00:04:44,040 --> 00:04:45,880 Speaker 1: fair to suggest you needed this like a hole in 93 00:04:45,920 --> 00:04:46,240 Speaker 1: the head. 94 00:04:47,440 --> 00:04:51,400 Speaker 2: Ah? Look, New Zealand was gathering momentum in our economic recovery. 95 00:04:51,560 --> 00:04:54,480 Speaker 2: We were turning a corner strongly, and now we are 96 00:04:54,480 --> 00:04:58,640 Speaker 2: facing into a real headwind. However, we remain much better 97 00:04:58,680 --> 00:05:02,160 Speaker 2: positioned than many many countries throughout the world. I back 98 00:05:02,240 --> 00:05:06,279 Speaker 2: our exporters. They are wily. We are helping them access markets. 99 00:05:06,279 --> 00:05:08,839 Speaker 2: If anyone in the world can do okay out of this, 100 00:05:09,240 --> 00:05:10,040 Speaker 2: it's New Zealand. 101 00:05:10,200 --> 00:05:11,920 Speaker 1: Okay. I know you're not going to help me out much, 102 00:05:11,960 --> 00:05:14,520 Speaker 1: but help me out a little bit. Given what you've 103 00:05:14,600 --> 00:05:18,520 Speaker 1: just told us, and the budget coming next month, where's 104 00:05:18,600 --> 00:05:22,080 Speaker 1: the nine billion dollars for guns and weapons and drones 105 00:05:22,120 --> 00:05:22,720 Speaker 1: coming from? 106 00:05:23,440 --> 00:05:26,560 Speaker 2: That is coming from a combination of the capital allowances 107 00:05:26,600 --> 00:05:29,719 Speaker 2: and operating allowances that the government has set aside for 108 00:05:29,760 --> 00:05:33,160 Speaker 2: future budgets. We won't deliver all of that funding in 109 00:05:33,200 --> 00:05:36,840 Speaker 2: one budget. We will deliver it over successive budgets. And 110 00:05:36,839 --> 00:05:39,080 Speaker 2: what you will say to remember is it's not just 111 00:05:39,120 --> 00:05:41,480 Speaker 2: about the new money we've set aside and allowances, it's 112 00:05:41,520 --> 00:05:44,839 Speaker 2: our ability to reprioritize. In last year's budget, we found 113 00:05:44,839 --> 00:05:49,560 Speaker 2: twenty three billion dollars on savings that we directed to 114 00:05:49,640 --> 00:05:53,159 Speaker 2: better use elsewhere, including tax relief and investments and education 115 00:05:53,320 --> 00:05:56,680 Speaker 2: and health. So where you will combine our operating allowances 116 00:05:56,680 --> 00:06:00,440 Speaker 2: with our ongoing reprioritization program, and that will support investment 117 00:06:00,560 --> 00:06:03,640 Speaker 2: not only in defense, but of course the additional funding 118 00:06:03,640 --> 00:06:06,800 Speaker 2: that the health system, the education system need, the other 119 00:06:06,839 --> 00:06:08,159 Speaker 2: pressing priorities for government. 120 00:06:08,400 --> 00:06:09,560 Speaker 1: So no new borrowing. 121 00:06:11,600 --> 00:06:17,000 Speaker 2: Well wow, I'll tell you why there's a pause, Mike, 122 00:06:17,320 --> 00:06:19,840 Speaker 2: because right now the country is in deficit. So by 123 00:06:19,839 --> 00:06:21,240 Speaker 2: definition we are borrowing. 124 00:06:21,240 --> 00:06:24,880 Speaker 1: Well, of course that I am new borrowing. 125 00:06:25,360 --> 00:06:28,080 Speaker 2: No, No, We're going to stick to the allowances that 126 00:06:28,120 --> 00:06:31,839 Speaker 2: we have usage operating allowance and the indications that we've 127 00:06:31,880 --> 00:06:34,920 Speaker 2: made there. I view those as a ceiling. I don't 128 00:06:34,920 --> 00:06:37,880 Speaker 2: want to exceed those. I'm very conscious of new Zealand's 129 00:06:38,160 --> 00:06:41,359 Speaker 2: net debt position, which has climbed dramatically and more than 130 00:06:41,440 --> 00:06:44,080 Speaker 2: doubled under labor when up one hundred billion dollars don't 131 00:06:44,080 --> 00:06:46,120 Speaker 2: have very much to show for that, and so we 132 00:06:46,200 --> 00:06:48,520 Speaker 2: need to be prudent and careful so that New Zealand 133 00:06:48,640 --> 00:06:51,840 Speaker 2: is well placed. When global storms such as the one 134 00:06:51,839 --> 00:06:54,320 Speaker 2: happening right now come along, does. 135 00:06:54,160 --> 00:06:56,480 Speaker 1: It push out our return to surplus annually? 136 00:06:58,040 --> 00:07:01,200 Speaker 2: No, because, as I say, we're sticking to our fiscal strategy. 137 00:07:01,279 --> 00:07:04,440 Speaker 2: The thing that we have decided to do a slick 138 00:07:04,520 --> 00:07:06,920 Speaker 2: to our intention, which is to manage to hold in 139 00:07:06,960 --> 00:07:08,680 Speaker 2: such a way that we get back to surplus in 140 00:07:08,720 --> 00:07:12,120 Speaker 2: twenty seven twenty eight. Of course, I don't control the forecast. 141 00:07:12,400 --> 00:07:15,080 Speaker 2: Will will the events have an impact on that track? 142 00:07:15,560 --> 00:07:18,800 Speaker 1: Say well, appreciate your time as always, Finance Minister Nikoloulis. 143 00:07:18,800 --> 00:07:20,840 Speaker 1: I think we've got a good insight there. For more 144 00:07:20,920 --> 00:07:24,040 Speaker 1: from the Mic Asking Breakfast, listen live to news talks 145 00:07:24,040 --> 00:07:27,240 Speaker 1: that'd be from six am weekdays, or follow the podcast 146 00:07:27,280 --> 00:07:28,080 Speaker 1: on iHeartRadio.