1
00:00:05,280 --> 00:00:05,720
Speaker 1: Kiota.

2
00:00:05,800 --> 00:00:08,960
Speaker 2: I'm Chelsea Daniels and this is the Front Page, a

3
00:00:09,039 --> 00:00:12,160
Speaker 2: daily podcast presented by The New Zealand Herald.

4
00:00:15,400 --> 00:00:17,200
Speaker 1: This month, the government will.

5
00:00:17,000 --> 00:00:20,959
Speaker 2: Deliver its second budget and Finance Minister Nikola Willis is

6
00:00:21,000 --> 00:00:24,480
Speaker 2: starting to tease what exactly we could see from it

7
00:00:24,760 --> 00:00:25,960
Speaker 2: and basically.

8
00:00:25,800 --> 00:00:27,040
Speaker 1: Don't expect much.

9
00:00:27,560 --> 00:00:30,880
Speaker 2: There will be just one point three billion dollars of

10
00:00:30,960 --> 00:00:34,800
Speaker 2: new discretionary operating spending in this year's budget as the

11
00:00:34,840 --> 00:00:39,919
Speaker 2: government focuses once again on reducing spending by billions of dollars.

12
00:00:40,479 --> 00:00:44,440
Speaker 2: So where is all this money going and what goodies

13
00:00:44,560 --> 00:00:48,640
Speaker 2: could the government offer up in such tight conditions. Today

14
00:00:48,640 --> 00:00:52,479
Speaker 2: on the Front Page, Wellington Business Editor Jane Tibschraney is

15
00:00:52,479 --> 00:00:53,120
Speaker 2: with us to.

16
00:00:53,120 --> 00:00:56,680
Speaker 1: Look through what to expect for Budget twenty twenty five.

17
00:01:02,800 --> 00:01:06,240
Speaker 2: Janey, let's start with Willis's speech to the Heart Valley

18
00:01:06,319 --> 00:01:09,360
Speaker 2: Chamber of Commerce. The main message there seems to be

19
00:01:09,520 --> 00:01:11,760
Speaker 2: that billions of dollars has been slashed.

20
00:01:11,920 --> 00:01:12,560
Speaker 1: Is that fair?

21
00:01:13,280 --> 00:01:14,360
Speaker 3: Not quite? Chelsea.

22
00:01:14,640 --> 00:01:18,840
Speaker 4: Basically, previously Nikola Willis said that she would increase the

23
00:01:18,880 --> 00:01:22,520
Speaker 4: amount of money that the government spends on operating costs

24
00:01:22,560 --> 00:01:25,360
Speaker 4: by two point four billion dollars in the next year.

25
00:01:25,880 --> 00:01:27,959
Speaker 4: What she said in that speech was that should only

26
00:01:28,080 --> 00:01:32,360
Speaker 4: increase the spending the operation or spending by one point

27
00:01:32,440 --> 00:01:35,240
Speaker 4: three billion, So that's a cut from two point four

28
00:01:35,520 --> 00:01:39,760
Speaker 4: to one point three that is new spending. So the

29
00:01:39,800 --> 00:01:42,720
Speaker 4: government is actually still going to be spending more money,

30
00:01:43,080 --> 00:01:46,080
Speaker 4: and in many ways it needs to. We have population growth,

31
00:01:46,319 --> 00:01:50,200
Speaker 4: we have inflation. You know, all the services that the

32
00:01:50,280 --> 00:01:55,560
Speaker 4: government provides naturally cost more as as prices go up

33
00:01:55,600 --> 00:01:58,000
Speaker 4: and as more people come to New Zealand. But the

34
00:01:58,080 --> 00:02:01,440
Speaker 4: surprising thing that Nickola Willis revealed was that she wouldn't

35
00:02:01,480 --> 00:02:06,440
Speaker 4: increase her spending by as much as previously said. Now

36
00:02:06,920 --> 00:02:11,160
Speaker 4: that is significant because at two point four billion, that

37
00:02:11,480 --> 00:02:14,280
Speaker 4: was what she previously said, that was already looking tight

38
00:02:14,680 --> 00:02:19,040
Speaker 4: like at that level there already had to be reprioritizations

39
00:02:19,280 --> 00:02:23,240
Speaker 4: across government. So at one point three that does mean

40
00:02:23,280 --> 00:02:27,720
Speaker 4: that just to keep the current level of services ticking along,

41
00:02:28,360 --> 00:02:31,799
Speaker 4: there will have to be cuts somewhere across the public

42
00:02:31,840 --> 00:02:33,400
Speaker 4: sector to pay for that.

43
00:02:35,960 --> 00:02:41,880
Speaker 5: At every step, we've asked ourselves to questions, One can

44
00:02:41,960 --> 00:02:45,640
Speaker 5: these dollars be justified when we are borrowing to pay

45
00:02:45,639 --> 00:02:50,000
Speaker 5: for them? And two can we be sure these dollars

46
00:02:50,080 --> 00:02:53,360
Speaker 5: will do more good in this area than if invested

47
00:02:53,440 --> 00:02:57,840
Speaker 5: in our most pressing priorities, like funding essential health services,

48
00:02:58,120 --> 00:03:02,480
Speaker 5: better educating our kids, ending New Zealand's security for ensuring

49
00:03:02,520 --> 00:03:03,520
Speaker 5: our future growth.

50
00:03:07,280 --> 00:03:08,920
Speaker 2: Is it fair to say that a lot of the

51
00:03:08,919 --> 00:03:12,320
Speaker 2: focus on the budget will be to fund the rising

52
00:03:12,400 --> 00:03:15,680
Speaker 2: costs associated with things like healthcare. I saw that the

53
00:03:15,720 --> 00:03:20,080
Speaker 2: government has already allocated funds for health and new medicines

54
00:03:20,080 --> 00:03:23,480
Speaker 2: for FARMAC. Health really eats away at the budget each year,

55
00:03:23,520 --> 00:03:23,960
Speaker 2: doesn't it.

56
00:03:24,600 --> 00:03:30,160
Speaker 4: Yeah, Look, health spending is huge. Health and New Zealand superannuation,

57
00:03:30,600 --> 00:03:33,240
Speaker 4: those are the two big ticket items, and as our

58
00:03:33,280 --> 00:03:36,520
Speaker 4: population ages, those costs just keep climbing it at a

59
00:03:36,600 --> 00:03:40,080
Speaker 4: pretty remarkable rate. I think what you're talking about here

60
00:03:40,200 --> 00:03:44,720
Speaker 4: is that previously the government promised to spend certain amounts

61
00:03:44,760 --> 00:03:48,840
Speaker 4: on health, on medicines through through FARMAC. It made those promises,

62
00:03:49,160 --> 00:03:53,240
Speaker 4: so much of the new spending that is expected to

63
00:03:53,280 --> 00:03:56,680
Speaker 4: occur has already been eaten up by that promise to

64
00:03:56,720 --> 00:03:59,880
Speaker 4: it to spend more on health. So again, that sort

65
00:03:59,880 --> 00:04:02,400
Speaker 4: of means that the government has to find even more

66
00:04:02,440 --> 00:04:06,440
Speaker 4: money than previously thought from elsewhere in its budgets to

67
00:04:06,600 --> 00:04:09,400
Speaker 4: pay to keep the lights on. So I think the

68
00:04:09,400 --> 00:04:12,200
Speaker 4: theme of this budget is really going to be cuts

69
00:04:12,320 --> 00:04:16,800
Speaker 4: to public services. The government has to find that money somewhere.

70
00:04:17,160 --> 00:04:20,200
Speaker 4: But when you look at the nominal amounts, so that

71
00:04:20,360 --> 00:04:23,520
Speaker 4: dollars and cents that the government spends that is continuing

72
00:04:23,839 --> 00:04:24,400
Speaker 4: to climb.

73
00:04:25,000 --> 00:04:27,520
Speaker 2: What about the sweeteners that we always want to see

74
00:04:27,560 --> 00:04:30,200
Speaker 2: from the budget? Are there any promises of things like

75
00:04:30,279 --> 00:04:31,520
Speaker 2: tax carts or the like.

76
00:04:32,279 --> 00:04:33,080
Speaker 3: I don't think so.

77
00:04:33,600 --> 00:04:38,280
Speaker 4: Unfortunately, Nikola Willis has really tempered our expectations around this.

78
00:04:38,560 --> 00:04:42,360
Speaker 4: I think under the previous government we got used to

79
00:04:42,720 --> 00:04:45,640
Speaker 4: turning up on budget Day and going, Oh, what's the

80
00:04:46,000 --> 00:04:48,479
Speaker 4: creative new thing that the government has come up with

81
00:04:48,600 --> 00:04:51,320
Speaker 4: to support the economy. I strongly doubt there will be

82
00:04:51,360 --> 00:04:55,080
Speaker 4: anything like that that in this budget. It's worth noting

83
00:04:55,120 --> 00:04:58,599
Speaker 4: that for governments that the middle budget, so governments have

84
00:04:58,920 --> 00:05:01,400
Speaker 4: a three year term, the middle budget is often the

85
00:05:01,440 --> 00:05:03,640
Speaker 4: one where they kind of can do the g nally

86
00:05:03,720 --> 00:05:07,599
Speaker 4: things and then they save the positive things for the

87
00:05:07,640 --> 00:05:10,200
Speaker 4: final budget before the election. So a part of me

88
00:05:10,279 --> 00:05:14,400
Speaker 4: does wonder whether Nicola Willis is really knuckling down in

89
00:05:14,440 --> 00:05:18,040
Speaker 4: this budget and that might give a little bit more

90
00:05:18,080 --> 00:05:21,000
Speaker 4: room to be a bit freer at the next budget

91
00:05:21,279 --> 00:05:23,920
Speaker 4: ahead of the election. If I was to be cynical.

92
00:05:24,080 --> 00:05:25,560
Speaker 1: Yeah, well that makes sense, doesn't it.

93
00:05:25,600 --> 00:05:29,200
Speaker 2: Because the first budget it's like, well, here's some sweetness,

94
00:05:29,240 --> 00:05:31,840
Speaker 2: this is why you elected us, and then the last

95
00:05:31,880 --> 00:05:34,240
Speaker 2: ones like, well, here's some sweetness, because this is why

96
00:05:34,279 --> 00:05:36,080
Speaker 2: you should elect us again. So one of the big

97
00:05:36,120 --> 00:05:39,960
Speaker 2: sweetners last year was the childcare rebate policy. Hey, and

98
00:05:40,000 --> 00:05:42,599
Speaker 2: in the last week that's blown up in the government's face.

99
00:05:42,680 --> 00:05:43,839
Speaker 1: What's happened there?

100
00:05:44,360 --> 00:05:46,840
Speaker 4: Yeah, Look, I think that the government has said that

101
00:05:47,800 --> 00:05:51,839
Speaker 4: it got some modeling which suggested the uptake of the

102
00:05:51,960 --> 00:05:56,360
Speaker 4: support would be much larger than it's been, so it

103
00:05:56,400 --> 00:05:58,560
Speaker 4: has a bit of egg on its face there. The

104
00:05:58,640 --> 00:06:01,560
Speaker 4: other big support that came through last budget was, of

105
00:06:01,560 --> 00:06:05,200
Speaker 4: course the changes to those income tax brackets. So that

106
00:06:05,240 --> 00:06:07,479
Speaker 4: has effectively given I don't know if you call it

107
00:06:07,520 --> 00:06:11,320
Speaker 4: an income tax cut, but the brackets for income tax

108
00:06:11,360 --> 00:06:15,240
Speaker 4: have been adjusted partly to reflect inflation, which means we

109
00:06:15,320 --> 00:06:18,520
Speaker 4: are paying a bit leass income tax than would eitherwise

110
00:06:18,560 --> 00:06:21,960
Speaker 4: be the case. That was a pretty massive cost and

111
00:06:22,000 --> 00:06:23,360
Speaker 4: big election promise.

112
00:06:24,440 --> 00:06:27,320
Speaker 5: Was my intention that we would make any changes to

113
00:06:27,440 --> 00:06:30,800
Speaker 5: charity tax law at the budget. But I won't be

114
00:06:30,880 --> 00:06:34,440
Speaker 5: making changes at the budget, and I can confirm that

115
00:06:34,640 --> 00:06:35,360
Speaker 5: because we are.

116
00:06:35,279 --> 00:06:37,040
Speaker 3: Continuing work in this area.

117
00:06:37,200 --> 00:06:40,000
Speaker 5: So if you take that example of sanitarium, if we

118
00:06:40,000 --> 00:06:44,800
Speaker 5: were to say we're now not exempting your business from tax,

119
00:06:44,839 --> 00:06:48,000
Speaker 5: what they could do is instead make their profits a

120
00:06:48,080 --> 00:06:52,359
Speaker 5: donation back to the Seventh day Adventist Church, their parent

121
00:06:52,480 --> 00:06:56,200
Speaker 5: and get around. And yet, well, yeah, that's right, they'd

122
00:06:56,240 --> 00:06:58,039
Speaker 5: get around it, and so they wouldn't in fact be

123
00:06:58,120 --> 00:06:59,200
Speaker 5: paying more tax.

124
00:07:03,320 --> 00:07:06,320
Speaker 2: Have they looked at any alternative methods of bringing in

125
00:07:06,440 --> 00:07:10,240
Speaker 2: revenue asides from I guess raising everyone's taxes? I saw

126
00:07:10,280 --> 00:07:13,520
Speaker 2: that Willis has rejected a charities tax for this budget.

127
00:07:13,520 --> 00:07:14,040
Speaker 1: Why is that?

128
00:07:14,440 --> 00:07:15,960
Speaker 3: Yeah, that was really interesting.

129
00:07:16,000 --> 00:07:20,280
Speaker 4: Actually, Nichola Willis made the point that changing the rules

130
00:07:20,320 --> 00:07:25,080
Speaker 4: around how much tax charities pay is really complicated. You know,

131
00:07:25,160 --> 00:07:28,960
Speaker 4: there are a lot of charities that operate that do

132
00:07:29,040 --> 00:07:32,200
Speaker 4: really good work for the community, and in fact, this

133
00:07:32,800 --> 00:07:37,200
Speaker 4: government does rely on charities a lot to do social work. So,

134
00:07:37,280 --> 00:07:41,160
Speaker 4: for example, community housing providers, this government in particular is

135
00:07:41,200 --> 00:07:44,680
Speaker 4: relying really heavily on them to build state houses so

136
00:07:44,720 --> 00:07:47,280
Speaker 4: that the government doesn't have to build the houses. It's

137
00:07:47,280 --> 00:07:50,000
Speaker 4: a nally piece of law because you have all that

138
00:07:50,120 --> 00:07:53,080
Speaker 4: legitimate stuff that goes on, and then you have the

139
00:07:53,120 --> 00:07:59,120
Speaker 4: controversial ones like Destiny Church or sanitarium, you know, charities

140
00:07:59,120 --> 00:08:02,840
Speaker 4: that are kind of businesses. So it sounds like differentiating

141
00:08:02,880 --> 00:08:04,600
Speaker 4: between the two and changing the law in such a

142
00:08:04,640 --> 00:08:06,280
Speaker 4: way that cracks down on the ones you want to

143
00:08:06,280 --> 00:08:08,320
Speaker 4: crack down on but supports the ones you want to

144
00:08:08,320 --> 00:08:11,320
Speaker 4: support is really tricky. Nikola Willis also said that actually

145
00:08:11,960 --> 00:08:14,960
Speaker 4: making changes might not bring in that much more tax

146
00:08:15,080 --> 00:08:18,640
Speaker 4: revenue for the government. So I think she said we'll

147
00:08:18,920 --> 00:08:22,200
Speaker 4: keep working on that, and the accountants i've heard comment

148
00:08:22,240 --> 00:08:23,600
Speaker 4: on that have said that's a good call.

149
00:08:23,880 --> 00:08:26,200
Speaker 3: It's a Nali peace law. It's best. You know, you

150
00:08:26,280 --> 00:08:27,040
Speaker 3: have to get it right.

151
00:08:36,960 --> 00:08:39,439
Speaker 2: We've seen a lot of backlash in the US towards

152
00:08:39,679 --> 00:08:44,200
Speaker 2: dough cutting billions from public services, and Donald Trump is

153
00:08:44,240 --> 00:08:47,960
Speaker 2: facing record low approval ratings in the polls there. Do

154
00:08:48,000 --> 00:08:50,760
Speaker 2: you think the government needs to be careful in how

155
00:08:50,880 --> 00:08:53,360
Speaker 2: much it cuts in case it faces this kind of

156
00:08:53,400 --> 00:08:56,440
Speaker 2: anti Trump sentiment at the ballot box next year?

157
00:08:56,920 --> 00:08:59,319
Speaker 3: You know, I think the sentiment in New Zealand is

158
00:08:59,400 --> 00:09:00,000
Speaker 3: quite different.

159
00:09:00,440 --> 00:09:04,000
Speaker 4: And I mean, every time there's a cut, someone is

160
00:09:04,040 --> 00:09:05,960
Speaker 4: going to be affected. Now, if you are affected by

161
00:09:05,960 --> 00:09:08,680
Speaker 4: a cut, you're not going to be happy. But I

162
00:09:08,720 --> 00:09:11,760
Speaker 4: believe the general sentiment in New Zealand at the moment

163
00:09:12,120 --> 00:09:15,040
Speaker 4: is that people are you know, they feel like a

164
00:09:15,080 --> 00:09:17,760
Speaker 4: lot of the spending that occurred under the previous government

165
00:09:18,440 --> 00:09:24,040
Speaker 4: hasn't produced the results that have benefited their lives materially.

166
00:09:24,240 --> 00:09:24,360
Speaker 3: Now.

167
00:09:24,400 --> 00:09:27,880
Speaker 4: Of course, it's easy to say that now, you know,

168
00:09:28,400 --> 00:09:30,160
Speaker 4: we don't know. We could have been in a much

169
00:09:30,160 --> 00:09:33,040
Speaker 4: worse position now had the previous government not provided all

170
00:09:33,040 --> 00:09:36,439
Speaker 4: that support during the pandemic. But I believe the majority

171
00:09:36,440 --> 00:09:38,720
Speaker 4: of New Zealanders at the moment, I think, want to

172
00:09:38,760 --> 00:09:40,480
Speaker 4: hang on to a bit more of the money they earn.

173
00:09:40,960 --> 00:09:44,199
Speaker 4: They don't want spending on, you know, things that are

174
00:09:44,200 --> 00:09:47,760
Speaker 4: not necessary. But I think it is hard because things

175
00:09:47,800 --> 00:09:50,840
Speaker 4: like healthcare and education they need to be I mean,

176
00:09:50,880 --> 00:09:53,439
Speaker 4: investment really needs to continue there. And those are the

177
00:09:53,480 --> 00:09:56,400
Speaker 4: areas I believe people really care about how long you're

178
00:09:56,400 --> 00:09:59,360
Speaker 4: waiting to get your medical treatments, or how long you're

179
00:09:59,360 --> 00:10:01,880
Speaker 4: waiting at the hospit or whether it's safe with your

180
00:10:01,960 --> 00:10:05,800
Speaker 4: kids are getting good eddication. Those areas the government desperately

181
00:10:05,880 --> 00:10:06,960
Speaker 4: needs to keep focused on.

182
00:10:07,000 --> 00:10:08,800
Speaker 2: I think yeah, and I guess if you were walking

183
00:10:08,840 --> 00:10:11,640
Speaker 2: down the street and asking people what shouldn't be cut

184
00:10:11,679 --> 00:10:14,120
Speaker 2: health and education would be up there. Hey, is there

185
00:10:14,120 --> 00:10:18,080
Speaker 2: any an inclination of what could be cut more?

186
00:10:18,559 --> 00:10:21,920
Speaker 4: Well, we've been playing the guessing game, and my best

187
00:10:22,000 --> 00:10:26,240
Speaker 4: guess at the moment is that the government might cut

188
00:10:26,960 --> 00:10:31,080
Speaker 4: or might means test the contribution it makes to key

189
00:10:31,120 --> 00:10:34,199
Speaker 4: we Saver members. So as it stands, if you contribute

190
00:10:34,360 --> 00:10:36,640
Speaker 4: a certain amount every year to your kei we Saver,

191
00:10:36,920 --> 00:10:39,840
Speaker 4: you get just over five hundred dollars a year from

192
00:10:39,840 --> 00:10:43,599
Speaker 4: the government. Now, the idea behind that was to encourage.

193
00:10:43,240 --> 00:10:44,640
Speaker 3: People to contribute to key we Saver.

194
00:10:45,200 --> 00:10:49,640
Speaker 4: With these costs of superannuation really rising and looking to

195
00:10:49,679 --> 00:10:51,560
Speaker 4: the future, key we Saver is going to play an

196
00:10:51,559 --> 00:10:55,520
Speaker 4: increasingly important part of helping us pay for our retirements.

197
00:10:55,640 --> 00:10:58,160
Speaker 4: So the government wants to encourage people to contribute. That's

198
00:10:58,160 --> 00:11:01,000
Speaker 4: what that five hundred dollars payment is therefore, but that

199
00:11:01,080 --> 00:11:03,800
Speaker 4: does cost about one point one billion dollars a year.

200
00:11:04,120 --> 00:11:06,480
Speaker 4: That's a lot. I feel like the government could means

201
00:11:06,520 --> 00:11:09,839
Speaker 4: test that, so it could say, look, if you earn

202
00:11:09,880 --> 00:11:12,280
Speaker 4: over a certain amount, you don't need to get this

203
00:11:12,320 --> 00:11:15,160
Speaker 4: free money from the government. We're only going to give

204
00:11:15,160 --> 00:11:18,120
Speaker 4: it to lower income owners. That would save a lot.

205
00:11:18,679 --> 00:11:21,120
Speaker 4: Nicola Willis has also you know I've been talking to

206
00:11:21,120 --> 00:11:22,760
Speaker 4: her a bit about this a bit recently, and she

207
00:11:22,880 --> 00:11:25,360
Speaker 4: is looking at reviewing key we save the settings. So

208
00:11:25,400 --> 00:11:28,480
Speaker 4: I wonder whether they cut that payment, and they could

209
00:11:28,559 --> 00:11:33,320
Speaker 4: even look to increasing the minimum contribution. So currently it's

210
00:11:33,360 --> 00:11:36,080
Speaker 4: three percent, but I do wonder whether they might say, hey,

211
00:11:36,360 --> 00:11:40,000
Speaker 4: look in a couple of years, the default contribution rate's

212
00:11:40,040 --> 00:11:41,480
Speaker 4: going to be, say four percent.

213
00:11:41,800 --> 00:11:42,160
Speaker 3: Again.

214
00:11:42,360 --> 00:11:46,520
Speaker 4: Superannuation is a real big issue for New Zealand, and

215
00:11:46,600 --> 00:11:50,040
Speaker 4: I think governments really need to look to help us

216
00:11:50,040 --> 00:11:52,280
Speaker 4: better equip ourselves for our retirements.

217
00:11:57,760 --> 00:11:59,880
Speaker 6: I think New Zealanders can see every day the concert

218
00:12:00,400 --> 00:12:04,200
Speaker 6: of the government's decisions to prioritize tax cuts and spending

219
00:12:04,280 --> 00:12:07,200
Speaker 6: cuts over investing in the public services that New Zealanders

220
00:12:07,240 --> 00:12:10,160
Speaker 6: rely on. We see a health system descending into crisis,

221
00:12:10,160 --> 00:12:13,080
Speaker 6: we see record numbers of New Zealanders giving up and

222
00:12:13,200 --> 00:12:15,520
Speaker 6: leaving the country, and this government are going to make

223
00:12:15,520 --> 00:12:16,640
Speaker 6: all of those problems worse.

224
00:12:20,040 --> 00:12:25,160
Speaker 2: In terms of less government spending, what does that do

225
00:12:25,920 --> 00:12:27,120
Speaker 2: to the Reserve Bank?

226
00:12:27,679 --> 00:12:32,080
Speaker 4: So in theory, if the government spends less, that can

227
00:12:32,160 --> 00:12:35,440
Speaker 4: have a contractionary effect on the economy. If the government's putting,

228
00:12:35,720 --> 00:12:38,920
Speaker 4: you know, isn't increasing, it's spending as much that can

229
00:12:39,120 --> 00:12:42,839
Speaker 4: weigh on economic growth. Now, if that is the case

230
00:12:43,160 --> 00:12:47,120
Speaker 4: and the country needs growth, and then that does put

231
00:12:47,559 --> 00:12:50,160
Speaker 4: more of the onus on the reserve Bank to do

232
00:12:50,240 --> 00:12:53,640
Speaker 4: more to stimulate the economy. So currently the Reserve Bank

233
00:12:53,760 --> 00:12:57,160
Speaker 4: is it's not really it's been cutting interest rates the

234
00:12:57,200 --> 00:12:59,480
Speaker 4: OCRs at a level at the moment where it's still

235
00:12:59,520 --> 00:13:02,560
Speaker 4: actually a highy bit contractionary, but it's getting into that

236
00:13:02,600 --> 00:13:08,000
Speaker 4: sort of stimulatory level. Theoretically, if the government does less

237
00:13:08,040 --> 00:13:11,160
Speaker 4: to stimulate the economy, that does put pressure on the

238
00:13:11,200 --> 00:13:14,160
Speaker 4: Reserve Bank to do so by cutting interest rates a

239
00:13:14,160 --> 00:13:14,720
Speaker 4: bit more.

240
00:13:14,600 --> 00:13:15,680
Speaker 3: Than it otherwise would.

241
00:13:16,280 --> 00:13:19,800
Speaker 4: Now what that means is if interest rates are quite low,

242
00:13:19,960 --> 00:13:23,400
Speaker 4: that encourages people and businesses to borrow and spend. So

243
00:13:23,480 --> 00:13:26,559
Speaker 4: I do wonder whether we could get to a situation

244
00:13:26,679 --> 00:13:28,840
Speaker 4: where the government puts a bit of a lid on

245
00:13:28,920 --> 00:13:31,320
Speaker 4: its spending and its debt. But on the other side,

246
00:13:31,440 --> 00:13:35,360
Speaker 4: that means that individuals and businesses end up taking out

247
00:13:35,360 --> 00:13:40,360
Speaker 4: more debt. Already, traditionally New Zealand households are pretty indebted.

248
00:13:40,679 --> 00:13:43,120
Speaker 4: It's because our house prices are so high, our mortgages

249
00:13:43,120 --> 00:13:45,199
Speaker 4: are so big, so that there could be a bit

250
00:13:45,200 --> 00:13:47,240
Speaker 4: of a shift there, as I say, a slow down

251
00:13:47,520 --> 00:13:50,600
Speaker 4: an uptake of government debt and a speeding up of

252
00:13:50,720 --> 00:13:52,440
Speaker 4: uptake of private debt.

253
00:13:52,600 --> 00:13:55,160
Speaker 2: But if the government did commit to more debt in

254
00:13:55,280 --> 00:13:58,080
Speaker 2: order to spend more fund some more big schemes like

255
00:13:58,120 --> 00:14:01,520
Speaker 2: I don't know, but a third harbor crossing in Auckland.

256
00:14:01,120 --> 00:14:03,520
Speaker 1: What would be the negatives of doing that?

257
00:14:03,559 --> 00:14:06,400
Speaker 2: Because you often hear the argument of debt being bad

258
00:14:06,480 --> 00:14:09,760
Speaker 2: for the country, but what is the harm of being

259
00:14:09,800 --> 00:14:11,360
Speaker 2: a bit slower to pay that back?

260
00:14:11,600 --> 00:14:14,880
Speaker 4: Yeah, this is a really hotly debated issue, and I think,

261
00:14:15,200 --> 00:14:17,960
Speaker 4: you know, most sensible people agree that a debt is

262
00:14:18,000 --> 00:14:22,400
Speaker 4: good if it's invested in productive things, so you know,

263
00:14:22,520 --> 00:14:27,280
Speaker 4: infrastructure that as I said before, that supports productivity. Arguably

264
00:14:27,640 --> 00:14:31,360
Speaker 4: giving people wealthy people various payments like the Kei we

265
00:14:31,440 --> 00:14:33,400
Speaker 4: saver payment, well, is that really helpful?

266
00:14:33,680 --> 00:14:34,080
Speaker 3: Maybe not.

267
00:14:34,360 --> 00:14:36,240
Speaker 4: The issue of having lots of debt is that you

268
00:14:36,280 --> 00:14:39,200
Speaker 4: have to pay interest on that debt, and currently our

269
00:14:39,400 --> 00:14:42,840
Speaker 4: interest costs are heading towards ten billion dollars a year,

270
00:14:43,000 --> 00:14:45,320
Speaker 4: So that's ten billion dollars that could be spent on

271
00:14:45,640 --> 00:14:47,040
Speaker 4: hospitals or other things.

272
00:14:47,600 --> 00:14:49,080
Speaker 3: You know, debt doesn't come for free.

273
00:14:49,120 --> 00:14:52,320
Speaker 4: That is kind of a downside Another downside is that

274
00:14:52,400 --> 00:14:55,680
Speaker 4: a country's debt gets too high and the people who

275
00:14:55,760 --> 00:14:58,200
Speaker 4: lean to us around the world, the investors, if they think,

276
00:14:58,280 --> 00:15:00,640
Speaker 4: oh my god, New Zealand's debts too high, that the

277
00:15:00,680 --> 00:15:03,360
Speaker 4: country can't really pay it back, they could start seeing

278
00:15:03,360 --> 00:15:05,920
Speaker 4: New Zealander as being risky. And if they see New

279
00:15:06,000 --> 00:15:09,000
Speaker 4: Zealander as being risky, they'll say, okay, we'll buy our debt,

280
00:15:09,040 --> 00:15:11,080
Speaker 4: but we want to hire a return. So that ends

281
00:15:11,160 --> 00:15:14,200
Speaker 4: up pushing up the interest rates that they demand for

282
00:15:14,240 --> 00:15:16,720
Speaker 4: the debt that they buy, and that costs the country more.

283
00:15:16,840 --> 00:15:18,960
Speaker 4: I don't really think we're at that point at the moment.

284
00:15:19,040 --> 00:15:24,320
Speaker 4: Like we've seen bond yields go up in America, and also,

285
00:15:24,640 --> 00:15:28,240
Speaker 4: you know, because of Donald Trump's policies, investors are saying, oh,

286
00:15:28,320 --> 00:15:30,400
Speaker 4: this is a bit this country is looking a bit shaky,

287
00:15:30,520 --> 00:15:32,920
Speaker 4: so we're happy to lend to you, but we want

288
00:15:32,960 --> 00:15:35,400
Speaker 4: to hire a return. We also saw this in the

289
00:15:35,480 --> 00:15:39,040
Speaker 4: UK when Liz Trust was the Prime Minister. Briefly investors

290
00:15:39,080 --> 00:15:43,120
Speaker 4: got the shakes and bond yields went up, So that's

291
00:15:43,120 --> 00:15:45,960
Speaker 4: another downside. I don't think we're at that point. Something

292
00:15:45,960 --> 00:15:48,480
Speaker 4: else to consider is, well, what is the cost of

293
00:15:48,800 --> 00:15:53,280
Speaker 4: not borrowing and investing, you know, if we don't you know,

294
00:15:53,360 --> 00:15:56,200
Speaker 4: support our people, have a decent health system, all these

295
00:15:56,240 --> 00:15:59,200
Speaker 4: things that also costs us. Now an area that you

296
00:15:59,240 --> 00:16:04,440
Speaker 4: see that as ac the ACC is in a major deficit.

297
00:16:04,760 --> 00:16:07,200
Speaker 4: It's costing us a lot. ACCC is one of the

298
00:16:07,240 --> 00:16:09,080
Speaker 4: reasons for this. It's all very complicated, but one of

299
00:16:09,120 --> 00:16:12,440
Speaker 4: the reasons is because it's taking people longer to get rehabilitated.

300
00:16:12,920 --> 00:16:15,760
Speaker 4: Is it taking people longer to get rehabilitated because the

301
00:16:15,760 --> 00:16:18,600
Speaker 4: health system is not functioning well? They're along wait lists,

302
00:16:18,600 --> 00:16:21,080
Speaker 4: it takes ages to get an appointment. So maybe that's

303
00:16:21,120 --> 00:16:24,440
Speaker 4: an example of how underinvestment can cost you.

304
00:16:24,760 --> 00:16:27,520
Speaker 3: Thanks for joining us, Janey, awesome. Thanks Chelsea.

305
00:16:31,480 --> 00:16:34,600
Speaker 2: That's it for this episode of The Front Page. You

306
00:16:34,640 --> 00:16:38,440
Speaker 2: can read more about today's stories and extensive news coverage

307
00:16:38,480 --> 00:16:42,520
Speaker 2: at enzadherld dot co dot nz. The Front Page is

308
00:16:42,520 --> 00:16:46,280
Speaker 2: produced by Ethan Sells and Richard Martin, who is also

309
00:16:46,440 --> 00:16:51,080
Speaker 2: our sound engineer. I'm Chelsea Daniels. Subscribe to The Front

310
00:16:51,120 --> 00:16:54,720
Speaker 2: Page on iHeartRadio or wherever you get your podcasts, and

311
00:16:54,800 --> 00:16:58,400
Speaker 2: tune in tomorrow for another look behind the headlines.

312
00:17:00,320 --> 00:17:00,360
Speaker 4: S