Speaker 1: Someone said to me the other day, Oh, you know,
Speaker 1: shouldn't you We be doing retaliatory tariffs, and you know
Speaker 1: it's a bit like throwing a ping pong ball and
Speaker 1: an elephant, isn't it. Hey, Look, I'd love to be
Speaker 1: generous and spray the money down around. That would make
Speaker 1: my job a lot easier, to be honest, But I'm
Speaker 1: very aware of the context in which we're operating. I'm
Speaker 1: thinking very hard about in an environment of instability, what
Speaker 1: are the policies the government can pursue to give our
Speaker 1: local businesses and entrepreneurs the nudge that says be confident
Speaker 1: about investing.
Speaker 2: Cureder. Welcome to shed Lunch, brought to you by Shes's.
Speaker 2: My name is Leighton Roberts, and today I'm joined by
Speaker 2: the Minister of Finance, Nikola Willis. More than just managing
Speaker 2: the country's purse string, the Minister has also been charged
Speaker 2: with growing New Zealand's economy. She does this as Minister
Speaker 2: for Economic Growth. So in this episode we dig into
Speaker 2: the impact of the US tariffs and post on New Zealand,
Speaker 2: the leavers, the government will be pulling to stimulate growth,
Speaker 2: and what Kiwis can expel from the upcoming budget out
Speaker 2: later this month. Before we get started, here's some important information.
Speaker 3: Investing involves the risk you might lose the money you
Speaker 3: start with. We recommend talking to a licensed financial advisor.
Speaker 3: We also recommend reading product disclosure documents before deciding to invest.
Speaker 3: Everything you're about to see and here is current at
Speaker 3: the time of recording.
Speaker 2: Well, thank you so much for joining us, Miss Willis.
Speaker 1: Hey, look great to be here. I'm not particularly vain,
Speaker 1: but it is raining hard and well income days find
Speaker 1: that's the hair situation.
Speaker 2: Look fantastic, but outside is miserbral, so I'll definitely confirm that. Look,
Speaker 2: let's get straight into a New Zealand economy and the
Speaker 2: position that we're in at the moment. There are signs
Speaker 2: now that possibly we're through the worst of it, starting
Speaker 2: to see an upswing through twenty twenty five, and I'm
Speaker 2: just really interested in your thoughts on this at the moment.
Speaker 1: Yeah, Look, New Zealand's come through such a tough time,
Speaker 1: haven't we. Because post COVID we have very high inflation,
Speaker 1: very high interest rates that slowed things down in the economy.
Speaker 1: There's a lot of pain for businesses but also for
Speaker 1: households who are still dealing with that higher cost base
Speaker 1: that we've come through, but the road out is looking
Speaker 1: really good. And I know that everyone is focused rightly
Speaker 1: on global instability and what's happening in the world post
Speaker 1: Trump's tariff announcements, and yeah, that's a headwind for New Zealand,
Speaker 1: but we are on the growth trajectory. We will be
Speaker 1: growing faster over the next few months than we have
Speaker 1: over the past few months, and next year we're forecast
Speaker 1: to be growing even faster. So this is a time
Speaker 1: of opportunity for New Zealanders and I think we have
Speaker 1: a lot to be feeling positive about in this economy.
Speaker 3: Yeah.
Speaker 2: Great. I always thinking about the last year. We heard
Speaker 2: a lot about the sort of survived to twenty five,
Speaker 2: and then that became thrive and twenty five and then
Speaker 2: now I'm wondering if we're still there or for we're
Speaker 2: thinking like it's sort of pick up six and twenty six.
Speaker 2: But I'm just wondering we think we are timing wise
Speaker 2: coming into the next year.
Speaker 1: Look, I think where we are as we are going
Speaker 1: to be out the worst of it, and we are
Speaker 1: now on the bit where the thriving starts to happen.
Speaker 1: But I'm also really conscious that when people see that
Speaker 1: instability internationally, they factor that in here at home. And
Speaker 1: so when I'm thinking about what does the government need
Speaker 1: to do in this moment to make sure that the
Speaker 1: potential for really rapidly accelerating growth actually over the next
Speaker 1: twelve and twenty four months, that that potential is fulfilled.
Speaker 1: Our job, I think, is to make sure that we're
Speaker 1: putting in place policies and actions that give people confidence,
Speaker 1: in particular to invest because what you're seeing internationally as
Speaker 1: people are pausing on the investment, New Zealand should position
Speaker 1: ourselves as a safe haven for investment. We have stable democracy,
Speaker 1: stable institutions, stable regulatory framework, a government that's fundamentally pro growth,
Speaker 1: pro trade, pro international investment, and all of those things
Speaker 1: position us well. We also have a constellation of trade agreements.
Speaker 1: We've always been the warriors out there fighting for export markets,
Speaker 1: and so on that context, I think that if I
Speaker 1: was an international thinking where do I want to plant
Speaker 1: my money, who do I want to be doing business with,
Speaker 1: I'd be looking to New Zealand, and we have an
Speaker 1: opportunity to lean into that.
Speaker 2: Yeah, small sample size here, but made me think we've
Speaker 2: actually had some quite random emails come our way for
Speaker 2: opportunity to trade the US market, but through a business
Speaker 2: that's not in the US, so like sort of these
Speaker 2: random opportunities and that might come from different countries, particularly
Speaker 2: on the export space for a technology company like US,
Speaker 2: but opportunities have never come from where you think going to.
Speaker 1: And I am hearing stories like that. I was speaking
Speaker 1: with someone from Garage Project, you know, boutique beer maker
Speaker 1: here and.
Speaker 2: Will there was botique beer, yeah, and.
Speaker 1: Great business and they said, look, they've just had one
Speaker 1: of the largest orders they've ever had in from China,
Speaker 1: who of course contemplating the reality that American craft beer
Speaker 1: might not be such a great proposition anymore. So there
Speaker 1: will be those niche opportunities and more sensitive though, because
Speaker 1: there'll also be those exporters who are impacted.
Speaker 2: Yep, yep completely. I mean, we've got straight into it,
Speaker 2: so we might as well cover it a little bit deeper.
Speaker 2: But it's somewhat of a political curve for what I'd imagine,
Speaker 2: which is the Trump's tariffs and very much to talk everywhere,
Speaker 2: been posed here in New Zealand on more or less
Speaker 2: every country. What do you think the actual impacts of
Speaker 2: this and looking like what's in your map and radar
Speaker 2: at the moment for dealing with these Yeah.
Speaker 1: Look, I think to some extent he did campaign on it,
Speaker 1: so we knew it was coming, and actually to some
Speaker 1: extent we what sort.
Speaker 2: Of number did you have in your mind?
Speaker 1: Well, I chose not to have a number. I mean,
Speaker 1: it's not a predictable man, is he. I think the
Speaker 1: key thing right now is the uncertainty, because what happened
Speaker 1: on day one is different from what's now unfolding, and
Speaker 1: we can expect there will be changes in the US
Speaker 1: policy position, and likely the China policy position and that
Speaker 1: of other countries over the next few weeks and months.
Speaker 1: And I think that uncertainty, as much as anything else,
Speaker 1: is what's making it really difficult globally, because what you're
Speaker 1: seeing businesses and investors doing is just saying, hold up,
Speaker 1: hold up, let's pause until we know what the lie
Speaker 1: of the land is. So by consensus, economists internationally are saying,
Speaker 1: come what May, there's going to be slower growth across
Speaker 1: the world. That always has an impact on New Zealand.
Speaker 1: Because we're an open trading economy. Our treasury is forecasting
Speaker 1: that the growth that we were predicting back in December
Speaker 1: will now be lower than we had thought, but it's
Speaker 1: still growth is just not going to be as fast
Speaker 1: as we were hoping it would be, and that's because
Speaker 1: we will be buffeted by these ones that are coming internationally.
Speaker 1: So when we grow slower, obviously that's harder in terms
Speaker 1: of job creation and income creation. But fundamentally I always
Speaker 1: have to worry about it too, because I'm the bean
Speaker 1: counter in the government, and less growth means less revenue.
Speaker 1: Less revenue makes it harder for me to balance the
Speaker 1: books and make all the investments that we need to
Speaker 1: make as a country. So we see our job as
Speaker 1: really keeping a steady course, making sure we are doing
Speaker 1: the investments needed, whether it's health, education, you know, the
Speaker 1: defense force, which is becoming increasingly strategically important. And we
Speaker 1: can do that by being careful about how we prioritize.
Speaker 1: But fundamentally, the best way for me to make our
Speaker 1: books healthier is to get that growth trajectory faster. So
Speaker 1: I'm thinking very hard about in an environment of instability,
Speaker 1: what are the policies that government can pursue to give
Speaker 1: our local businesses and entrepreneurs the nudge that says, be
Speaker 1: confident about investing, be confident about taking on the next market,
Speaker 1: taking the next step, so that.
Speaker 2: The uncertainty, you know, it's always uncertain really right, if
Speaker 2: you look back on history, we've never really been great forecasters.
Speaker 2: It's not a fantastic human trait.
Speaker 1: But any one who watches the weather forecast knows that completely.
Speaker 2: And you know, we have a bit of a front
Speaker 2: row seat to a lot of it, because markets tend
Speaker 2: to reflect how people are feeling, and people don't like uncertainty,
Speaker 2: and therefore markets don't and in their place, sir. And
Speaker 2: then I was just I literally just read the article
Speaker 2: from President Trump giving his one hundred day speech and
Speaker 2: saying that he wants to be the pope. All right,
Speaker 2: ye that specifically that would be the best job. All right, Well,
Speaker 2: I'm just not going to take a guess on that anymore.
Speaker 2: But what he did say was that he's only just
Speaker 2: getting started, and that sort of made me think, wow,
Speaker 2: if this is just getting started. But so, how as
Speaker 2: a government you do forecast and plan to that, and
Speaker 2: what sort of mitigations you're putting in place towards this?
Speaker 2: Given we can be reasonably one thing, we can be
Speaker 2: quite confident on is that the uncertainty will continue.
Speaker 1: Yeah, So there's a couple of things first in terms
Speaker 1: of the forecasts of what the global trajectory will look
Speaker 1: like and therefore what it looks like at home to
Speaker 1: some extent that stays outside of our control, because what
Speaker 1: he does won't be influenced by what we do. Someone
Speaker 1: said to me the other day, Oh, you know, shouldn't
Speaker 1: you we be doing retaliatory tariffs, and you know, it's
Speaker 1: a bit like throwing a ping pong ball and an elephant,
Speaker 1: isn't it.
Speaker 2: And that's not.
Speaker 1: All that will do is harm consumers here at home
Speaker 1: who will end up paying higher prices and business is
Speaker 1: here at home. So instead, what we're thinking about as
Speaker 1: to things, first of all, providing some stability in our
Speaker 1: own for school settings, making sure that we're still on
Speaker 1: track to get back to balanced books as a country,
Speaker 1: because you can appreciate that when there's global market volatility.
Speaker 1: Lenders on whom New Zealand is very dependent, we're currently
Speaker 1: every Thursday afternoon, New Zealand issues around five hundred million
Speaker 1: dollars worth of bonds. We need to look like a
Speaker 1: good place to be lending to and investing so we've
Speaker 1: made adjustments to our own position to make sure that
Speaker 1: we're still on track to get back into balanced books territory.
Speaker 1: We think that's quite important right now. The second thing
Speaker 1: is just being clear that our exporters are going to
Speaker 1: need us. So in the first instance, we have established
Speaker 1: hotlines websites through the Ministry of Foreign Afairs and Trade
Speaker 1: and through MZTE to make sure exporters can get the
Speaker 1: information they need about what's a quickly changed environment. We've
Speaker 1: got a thousand companies that we work really closely with
Speaker 1: through MZTE, who we've been running seminars and really intense
Speaker 1: support for, and we're going to keep that going. We
Speaker 1: need to make sure that export is trying to get
Speaker 1: information can get it. That's going to be really important
Speaker 1: over the next little while. And then fundamentally strategically, New
Speaker 1: Zealand has always been a country that has pushed for
Speaker 1: a rules based trading system where countries trade with each other,
Speaker 1: and we want to keep that role in the world,
Speaker 1: so that means forging new free trade agreements is more
Speaker 1: important than ever. You saw the Prime Minister kick off
Speaker 1: the beginning of the year with a new arrangement with
Speaker 1: the United Arab Emirates, so really pushing into those Middle
Speaker 1: East markets. We've opened trade negotiations with India which are
Speaker 1: continuing to progress well despite global turmoil, and I think
Speaker 1: this is actually a time to double down on the
Speaker 1: trade agreements we do have and make sure that we're
Speaker 1: a good partner because that's how our exporters get access
Speaker 1: for their products.
Speaker 2: Over the last this uncertainty of the last two weeks
Speaker 2: has driven some of the highest training volumes we've actually
Speaker 2: seen on the platform, which again investing reflects people's confidence
Speaker 2: in the future. And so I think whilst is key,
Speaker 2: we do tend to be quite good in conversation having
Speaker 2: the negative part of it, like it's a nice way
Speaker 2: just to have a bit of a winge with friends
Speaker 2: and stuff like that, but how we act on mass
Speaker 2: behind that can be quite different totally.
Speaker 1: Look that the A and Z Business Confidence Survey came
Speaker 1: out today and instantly sort of stood out to me
Speaker 1: was while people were generally less confident about the economy
Speaker 1: than they were pre Trump, at the same time, some
Speaker 1: of them were more confident about the conditions for their
Speaker 1: own business. They were reporting high levels of confidence for
Speaker 1: their business than they were for the economy as a whole,
Speaker 1: but of course all the economy is is each individual
Speaker 1: business added together. And so that gives me heart that
Speaker 1: individual businesses are still confident about what the next few
Speaker 1: months looks like for them. Yeah, I feel a part
Speaker 1: of my job, the responsibility I have is to be
Speaker 1: optimis stick and to remind people of the good things
Speaker 1: going on because you know, for all of their own reasons,
Speaker 1: our mainstream media will often emphasize conflict or crime or
Speaker 1: negative things, and you don't often see stories of By
Speaker 1: the way, did you know that this new business is
Speaker 1: doing amazing stuff? Did you know that the Hawthorn Institute
Speaker 1: is coming up with world leading scientific breakthroughs into algay
Speaker 1: and seaweed with Nesley is their major major research partner
Speaker 1: because they think they're the best in the world that
Speaker 1: creating protein from the sea, Like, did we hear about that?
Speaker 1: And I get to see these success stories all the time.
Speaker 1: You know it picks peanut butter. I was there the
Speaker 1: other day. There's a little business that started with a
Speaker 1: fifty five year old who decided to make peanut butter
Speaker 1: in a concrete mixer for the market, and he is
Speaker 1: now making twenty five thousand jars of peanut butter a day.
Speaker 1: So we need to tell these stories about ourselves because
Speaker 1: we're awesome. I've just been at the Fintech Festival meeting
Speaker 1: all these people who are taking a risk to run
Speaker 1: a new financial business because they see opportunity. And I
Speaker 1: see that opportunity, and I think we should talk ourselves
Speaker 1: into that and not into the things that are hard. Yes,
Speaker 1: there are challenges, of course there are, but let's also
Speaker 1: highlight the positive.
Speaker 2: Coming back to these geo political situations where all as
Speaker 2: businesses trying to make changes to our business and thinking
Speaker 2: about that. You've made some early announcements on the budget
Speaker 2: and just interested to hear how much of this change,
Speaker 2: which has come very quickly over the last couple of weeks,
Speaker 2: is playing into your thinking there and what New Zealanders
Speaker 2: should start to expect for the budget in a month
Speaker 2: or so.
Speaker 1: Yeah. Well, look, I feel quite a solemn durty in
Speaker 1: this job to deliver responsible budgets because hey, look, I'd
Speaker 1: love to be generous and spray the money down around.
Speaker 1: That would make my job a lot easier, to be honest,
Speaker 1: But I'm very aware of the context in which we're operating,
Speaker 1: which is that New Zealand rightly took on debt during COVID.
Speaker 1: We can have a debate about whether we took on
Speaker 1: too much, but we now have dead at levels not
Speaker 1: seen since the mid nineteen nineties, for context, where at
Speaker 1: forty two percent government debt to the size of our economy.
Speaker 1: Historically it's hovered between five and twenty five percent.
Speaker 2: Now the probably what do you think is like a
Speaker 2: good level? Now what we'll we I'd.
Speaker 1: Like us to see come back down to forty and
Speaker 1: then hover between twenty and forty over time, depending on
Speaker 1: where we are in the side.
Speaker 2: Because we're still low globally, Is that right?
Speaker 1: Yeah, we are, and we should borrow for investments that
Speaker 1: are going to drive our future productivity. Absolutely on board
Speaker 1: for that. The problem that we always need to be
Speaker 1: aware of is that if something major happens, you know,
Speaker 1: big earthquake, big biosecurity incursion, we're then going to have
Speaker 1: to go out to the world and borrow a lot more.
Speaker 1: And there's a ceiling. Yeah, that's right, And there's a
Speaker 1: ceiling at which we don't look as good as proposition.
Speaker 1: And so it's about having enough headroom that when that
Speaker 1: big event comes, we can borrow without getting into it's
Speaker 1: basically I worry about the death spiral of a really
Speaker 1: high interest bill on our debt. So, for context, right now,
Speaker 1: spill is nine billion dollars a year on our debt,
Speaker 1: up from hovering just around three previously. Nine billion hard
Speaker 1: number to understand because it's so big. That is more
Speaker 1: than the amount of funding we put into the defense force,
Speaker 1: the prison service, the police and customs combined. All of
Speaker 1: that's just context for the fact that I then say
Speaker 1: the next thing, which is that right now we are
Speaker 1: borrowing to pay for the grocery so we're not just
Speaker 1: borrowing for assets. We're borrowing for our day to day spending.
Speaker 1: There's a thirteen billion dollar deficit this year between what
Speaker 1: we as a government are taking in in revenue and
Speaker 1: other earnings and what we're spending to keep the economy going.
Speaker 1: That's the right thing to do, because New Zealanders need
Speaker 1: stability and their welfare supports and the funding for our
Speaker 1: schools and hospitals. It just can't go on forever. Now
Speaker 1: I've taken the gradual approach. Some people would say sort
Speaker 1: that out immediately. I think that would create a lot
Speaker 1: of pain for people, and it would actually create instability
Speaker 1: in the economy. So we've set a that says we
Speaker 1: will get the books back and balance by twenty twenty nine.
Speaker 1: We think that's reasonable period of time to narrow that
Speaker 1: gap between what we spend and earn, and that will
Speaker 1: allow us to start paying down debt. Now, because of
Speaker 1: the Trump stuff, the forecasts I've been receiving told me
Speaker 1: you're now going to be off track to meet that
Speaker 1: goal of getting the books back and balance unless you
Speaker 1: make for change.
Speaker 2: The interest rate's been held up because of what listen,
Speaker 2: new uncertainty or what is it that's driving Well.
Speaker 1: It's basically that because growth will be lower, we're forecasts
Speaker 1: to be taking in less revenue, which has two effects.
Speaker 1: One the deficit grows larger now and two we then
Speaker 1: have to borrow more, which then creates a larger cost
Speaker 1: there in terms of interest. So those effects on the
Speaker 1: books mean in the absence of any reaction, I'd be
Speaker 1: literally presenting a forecast to New Zealand that showed no
Speaker 1: path to balanced books, and I don't think that's feasible,
Speaker 1: both in terms of international lending but also in terms
Speaker 1: of what's responsible. So we've said, look, we were planning
Speaker 1: that our kind of our allowance, if you want to
Speaker 1: call it, that would be two point four billion in
Speaker 1: the coming for school year. Actually, we've gone and looked
Speaker 1: really hard. We've found some more stuff we can reprioritize.
Speaker 1: We've juggled around the other tens of billions of government
Speaker 1: spending that we do, and that collectively means that we
Speaker 1: will only need an allowance of one point three billion,
Speaker 1: so a bit less, and that as to effects one,
Speaker 1: it just means that we're borrowing less than the short
Speaker 1: term than we would otherwise be doing. But it's doable
Speaker 1: because with the reprioritization, I can still look everyone in
Speaker 1: the eye and say we've got enough to make the
Speaker 1: investments we clearly need in our health services, that we
Speaker 1: clearly need, in our schools, that we clearly need in
Speaker 1: our defense force, in law and order. Also got enough
Speaker 1: room to make a few modest measures to support businesses
Speaker 1: to grow, which is going to be really important over
Speaker 1: this period. So I've made room for that, and I've
Speaker 1: made room for some very modest, targeted cost of loving measures,
Speaker 1: so I can do all of that and spend less.
Speaker 1: So that's the right thing to do. I'll still be
Speaker 1: spending more next year than this year. I mean, this
Speaker 1: is the context, right, it's just about how much more
Speaker 1: we're spending next year.
Speaker 2: Actually, I hadn't actually observed that.
Speaker 1: Yeah, we'll be spending more next year and the year
Speaker 1: after that and the year after that. So the trend
Speaker 1: is always up because things like super anuation.
Speaker 2: Lie.
Speaker 1: Yeah, the trend is always up. Yeah, that's right, things
Speaker 1: like superinnuation. That bill just grows by baliance over the
Speaker 1: next few years, you know, So we will be spending more,
Speaker 1: but it's just a question of how steep that spending
Speaker 1: more line is.
Speaker 2: The defense size of the defense spend. Has that been
Speaker 2: a bit of surprise to you, like it was that
Speaker 2: presumably when you were going through the election process that
Speaker 2: probably wasn't.
Speaker 1: Yeah, it's definitely become much more of a top of
Speaker 1: mind consumed for everyone in the world. I think we've
Speaker 1: all observed that the strategic environment is far less stable
Speaker 1: than it was, and New Zealand really has to look
Speaker 1: at it through two lens. One, we have really solemn
Speaker 1: commitment to our Pacific partners, who, to quite an extent,
Speaker 1: you know, our Pacific family, rely on us to be
Speaker 1: the ones that are survailing their ocean space to be
Speaker 1: there if there's a disaster and they need help. So
Speaker 1: that matters, and it's become clear that our defense force,
Speaker 1: without a lot more investment, is going to have reduced
Speaker 1: capability to do those things. The second part of it
Speaker 1: is we need to be a good partner, you know,
Speaker 1: particularly to Australia who our only ally, but also the
Speaker 1: other countries who realistically we defend on, We depend on,
Speaker 1: defend on you depend on to not only defend us
Speaker 1: if we need defending, but also to defend the values
Speaker 1: that we collectively as a world share, and so you
Speaker 1: know right now that's playing out in Ukraine. New Zealand
Speaker 1: is helping by training troops and at the same time
Speaker 1: we want to keep being able to do those.
Speaker 2: Things alongside the country's per strings or being counter I
Speaker 2: think you put it before. You'll now also have the
Speaker 2: economic growth portfolio, so the Minister of Economic Growth as well.
Speaker 2: So I'm just interested. You know, it seems to me
Speaker 2: like they could quite easily contradict a little bit, whilst
Speaker 2: there's also a lot of alignment. But I'm interested in
Speaker 2: how you see those portfolios as being different, and then
Speaker 2: how you manage those differences.
Speaker 1: Yeah, Well, I'm really pleased that they're sitting with me
Speaker 1: together because one of the frustrations I had when I
Speaker 1: became Minister of Finance was I would spend quite a
Speaker 1: lot of time have quite lengthy conversations with my officials
Speaker 1: at the Treasury about ten million dollars here that we
Speaker 1: could make in savings or twenty million dollars an efficiency
Speaker 1: that we could do here. Those conversations are important, but
Speaker 1: the most important thing is what are we doing to
Speaker 1: earn more? Because when you earn more, your choices are easier,
Speaker 1: and so I wanted much more of a focus on growth,
Speaker 1: on what the government's role is in making sure that
Speaker 1: actually businesses are investing, our creating jobs are growing faster,
Speaker 1: and the government has a huge role and it goes
Speaker 1: across basically everything we do if you think about it,
Speaker 1: from how we educate people and upskill them, what we're
Speaker 1: doing with research and science, the regulatory and competitive settings
Speaker 1: that we set for businesses, how we support trade and
Speaker 1: international investment, what we do in terms of infrastructure that
Speaker 1: businesses rely on. So it spans a huge amount of work,
Speaker 1: But ministers get into their own little silo working on
Speaker 1: their thing, and what I wanted to ensure them what
Speaker 1: the Prime Minister wanted to ensure is that in all
Speaker 1: we do, we are still focused on will this help
Speaker 1: the boat go faster? Will this support growth? And let's
Speaker 1: really focus our gender in on that because New Zealand
Speaker 1: needs growth for everyone to have the living standards we
Speaker 1: desire over these next few years.
Speaker 2: Does that change who you like engaging with very much
Speaker 2: on a day to day like you sort of Treasury
Speaker 2: seem to me more about the sort of accounting side
Speaker 2: of it, I suppose.
Speaker 1: And then.
Speaker 2: And for the people who support you and your team,
Speaker 2: does it they sort of wear jill hats as well?
Speaker 1: Like?
Speaker 2: How does that work in a practical I.
Speaker 1: Want to be kind to my folk at the Treasury.
Speaker 1: That's still very important to me and what we do
Speaker 1: is very important, but there it has changed. So I've
Speaker 1: had this amazing experience, which is that I have been
Speaker 1: visiting businesses around the country and just literally getting in
Speaker 1: on their factory floors talking to them about what they
Speaker 1: want to see the government focused on from a growth perspective,
Speaker 1: and I have absolutely loved that. Whether it's going to
Speaker 1: see the guys who started here in Wellington and are
Speaker 1: now making electric bikes that they send all over the world,
Speaker 1: whether it's going and visiting the small small startups who
Speaker 1: are thinking about our food industry and where they can
Speaker 1: take it next, whether it's going and visiting a dairy
Speaker 1: farmer who now is feeling pretty happy about the world.
Speaker 1: Those business conversations are where a government policy gets real
Speaker 1: because instead of it being theoretical, it's look, this is
Speaker 1: the one thing that if you guys could change that rule,
Speaker 1: it would help. And I've got my officials right there
Speaker 1: with me, and they're empowered through my Economic Growth portfolio
Speaker 1: to go and talk to the relevant government agency and say,
Speaker 1: the Ministry of Economic Growth is really concerned about it.
Speaker 1: Can we fix it? And we can a lot of
Speaker 1: the time. So that's hugely empowering and I love it
Speaker 1: for you.
Speaker 2: Personally, do you feel like there's a I guess hierarchy
Speaker 2: of the jobs aside? Do you feel like you skew
Speaker 2: towards a sort of front wheel on that and your
Speaker 2: own thinking between the two portfolios?
Speaker 1: For me, as I said earlier, I'm an optimist. I'm
Speaker 1: a positive mindset person and so that's the part of
Speaker 1: my job that really spins my wheels in terms of
Speaker 1: getting me excited about the future. I view the finance
Speaker 1: role as having some really critical enablers. You know, if
Speaker 1: we don't have stable inflation, interest rates are soaring, it's
Speaker 1: very hard to get growth, and so good fiscal economic
Speaker 1: management really matters. But I view it, almost particularly in
Speaker 1: this moment in time, as a role where it's a responsibility,
Speaker 1: it's a duty, whereas the growth role as much more
Speaker 1: about possibility and free wheeling. And so I get to
Speaker 1: indulge that side of myself.
Speaker 2: Nice. So it she's like the whole purpose of our
Speaker 2: business to create financial impartment for everyone. So we do
Speaker 2: a huge amount of thought of this, and we also
Speaker 2: do a lot of serving. And one of the things
Speaker 2: we've noticed, and I'll take any opportunity I can speak
Speaker 2: with someone in covenment about it, but is the key
Speaker 2: receiver settings and our surveys, for example, for the first
Speaker 2: time showing appetite for our customers anyway to take a
Speaker 2: hit today for something into the future. A couple of
Speaker 2: questions here. Firstly, anything you think on that about the
Speaker 2: sentiment of New Zealanders, which would be wider than our
Speaker 2: customer base, who would more be more likely to follow
Speaker 2: this closely, but then also any plans for the government
Speaker 2: with a save a space specifically.
Speaker 1: Yeah. Look, I'm just going to first so very happy
Speaker 1: to talk about keep we save it. Delighted too, But
Speaker 1: first it's going to pick up on that point around
Speaker 1: financial empowerment, because one of the things that I've observed
Speaker 1: is the often quite large gap between New Zealanders who
Speaker 1: have really great financial literacy and knowledge and understand compounding
Speaker 1: interest rates, asset growth, dividends, returns, and those people can
Speaker 1: then make really great financial decisions. And I'm sure a
Speaker 1: lot of them are on your platform and are excited
Speaker 1: about Chazy's. At the other end, there are some people
Speaker 1: who are smart people. They're great people, but they went
Speaker 1: brought up with those skills. It's not part of their
Speaker 1: daily job, it's not part of their language. And I
Speaker 1: worry about that gap because I truly believe that when
Speaker 1: you have financial knowledge, you can make choices that secure
Speaker 1: your future and your living standards. So I'm delighted. I
Speaker 1: just have to say it on your show today that
Speaker 1: the government has just announced that we are putting financial
Speaker 1: literacy into all schools. Is a compulsory part of the curriculum. Yeah,
Speaker 1: compulsory part of the curriculum and quite exciting because what
Speaker 1: we've done is we've said everyone has to do it
Speaker 1: up to year ten as part of the Social Studies curriculum.
Speaker 1: Fairly teachers are going to say what resources am I
Speaker 1: meant to use? So we've done a peer up with
Speaker 1: the Retirement Commission where they're providing a number of different
Speaker 1: resources on their platform that link to different parts of
Speaker 1: the curriculum, and I hope to see the people supporting
Speaker 1: that increase over time, so everything from banker to sorted.
Speaker 1: I know Chesy's does some work in this area, so
Speaker 1: I'd love to see you involved on the platform. And
Speaker 1: that means that teachers have the tools they need to
Speaker 1: teach this stuff. And that's what we need to see
Speaker 1: because the set ways to keipisaver, which is I think
Speaker 1: as soon as people go on to that sordid website
Speaker 1: and put the numbers in and see what happens when
Speaker 1: you make a higher rate of contribution and see how
Speaker 1: much that can grow your asset base at retirement, then
Speaker 1: their minds really start to wear over and they start
Speaker 1: to think, oh gosh, this is the compounding effect if
Speaker 1: I save just a little bit more now can have
Speaker 1: a massive impact on my quality of life when I'm older.
Speaker 1: Exciting thing about key we Saver, I think, and it's
Speaker 1: part of the scheme that some people criticize but I celebrate,
Speaker 1: is that it's not just about retirement. There's a whole
Speaker 1: cohort of people who use it now to save for
Speaker 1: their first time because let's be honest, not everyone when
Speaker 1: they first enter the workforce is going to prioritize what's
Speaker 1: happening when they're sixty five. But a lot of people
Speaker 1: are entering key we Saver thinking about how do I
Speaker 1: save for that first home? And it's a great tool
Speaker 1: for enabling that. So I'm a supporter of Kei Saver.
Speaker 1: I want to see people's key we Saver balances grow
Speaker 1: and I will have more to say about it in future.
Speaker 2: Cool. Well hold that thought even Yeah.
Speaker 1: Yeah, yeah, yeah, I've been working away on it. I've
Speaker 1: been taking a lot of advice and hopefully when I'll
Speaker 1: be back on the podcast talking about it.
Speaker 2: So you also have a portfolio called Social Investment, Yeah,
Speaker 2: which many listeners might not be too familiar with, but.
Speaker 1: It's a prime Minister refers to it as your passion project.
Speaker 2: Right, So Firstly, why is it called social investment? And secondly,
Speaker 2: how are you applying this new lens to affect how
Speaker 2: you're leading the portfolios or your decisions that you're making
Speaker 2: across the responsibilities that you have.
Speaker 1: So fundamentally, the way I think about social investment rather
Speaker 1: than people use the phrase social welfare or social development
Speaker 1: to describe the things that we rightly do as a
Speaker 1: society to support people in need. The better thing is
Speaker 1: if we make interventions and changes that stop the need
Speaker 1: that we actually don't want people to have to be
Speaker 1: dependent on government support and services into the future. We'd
Speaker 1: much prefer them to have the issues and challenges in
Speaker 1: their life resolved so that they can actually have independence
Speaker 1: and choices. And I think of this through the lens
Speaker 1: of an individual about how badly government does that sometimes.
Speaker 1: I gave a speech last year about Jack. I want
Speaker 1: you to imagine Jack. He's a young guy. He's living
Speaker 1: in a house where there's family violence at home, there's
Speaker 1: never really very much money. He stops going to school,
Speaker 1: he gets in trouble with the law. Like there are
Speaker 1: people like Jack out there, and it's very sad. Now
Speaker 1: in Jack's life, the government is ever present. He is
Speaker 1: probably engaging with the police. He's probably had a social
Speaker 1: welfare worker. He's had someone from ordering a tamariki come
Speaker 1: into his life. He's probably engaged with the local truancy service.
Speaker 1: There's probably multiple community groups who have been contracted by
Speaker 1: government to provide support to at risk youth like him.
Speaker 1: There's people who are there to try and get him
Speaker 1: into a job. There's lots of people and lots of
Speaker 1: money going at Jack, but it ain't joined up and
Speaker 1: it's not fundamentally breaking the cycle for him. So the
Speaker 1: opportunity for government is to say, how can we better
Speaker 1: use our dollars to make Jack's life actually better? And
Speaker 1: my philosophical view, having worked in this area for a
Speaker 1: long time and looked across the community, is often the
Speaker 1: people who will make the biggest difference from Jack, for
Speaker 1: Jack will be directly from his community, or it will
Speaker 1: be a local non government provider that have been working
Speaker 1: in that community for a very long time. When you
Speaker 1: talk to those providers, they get often six seven, eight,
Speaker 1: thirteen twenty one contracts from government, but it's impossible for
Speaker 1: them because the contracts are focused on how many meetings
Speaker 1: do you have, how many boxes have you ticked. They're
Speaker 1: getting audited across all the contracts, and they say to us,
Speaker 1: could you treat us like an investment. Could you come
Speaker 1: to us and say these are the outcomes we want
Speaker 1: for Jack and the people like him, and then give
Speaker 1: us the space to innovate and do it properly. And
Speaker 1: with the modern world of data, we can now do
Speaker 1: that because we can track the progress that making. So
Speaker 1: instead of old fashion multiple overlapping contracts, let's have one
Speaker 1: contract and let's contract for outcomes. That's what social investment's about.
Speaker 1: I went on a very long spiell.
Speaker 2: Didn't they contract for outcome? You came to get back together,
Speaker 2: like is there a place for private capital play in
Speaker 2: your thinking on this or is it just how you're
Speaker 2: sort of managing from them?
Speaker 1: Yeah? Look there is in a few ways. I mean.
Speaker 1: The first is that we have a big philanthropic sector
Speaker 1: in New Zealand and there are real opportunities for us
Speaker 1: to partner. Is government better with that sector to both
Speaker 1: share the information we often have so that they know
Speaker 1: both where the need is but also where investments can
Speaker 1: make are making a big difference. Sometimes philanthropists are better
Speaker 1: at doing the risky innovative things than we are. But
Speaker 1: then they come up with something that they say, this
Speaker 1: is really working like it is fundamentally a great investment,
Speaker 1: and they want us to take it over so they
Speaker 1: can fund the next innovative thing. And that's sometimes going
Speaker 1: to make sense. But the other thing is, you know,
Speaker 1: social bonds and those opportunities they can stand cap and
Speaker 1: I'm interested in continuing to explore them. The challenge is
Speaker 1: always proving that you're going to get a better outcome
Speaker 1: that way than contracting with a provider who already exists directly.
Speaker 1: So working through that policy challenge is something that I'm
Speaker 1: taking advice on.
Speaker 2: So Lastly, a big driver for economic activity is confidence.
Speaker 2: We've touched a little bit on that at the moment,
Speaker 2: but confidence by business system vests consumers to spend flow
Speaker 2: into each other a little bit. So with regards to
Speaker 2: New Zealand economic sentiment, and my hope and my assumption
Speaker 2: is that it will have approved and improved in twelve
Speaker 2: months time, just intersting in what you think will have
Speaker 2: been the main driver for that. When we look back
Speaker 2: over the previous.
Speaker 1: Twelve months, it'll be people like you, Layton, It'll be
Speaker 1: people like the people.
Speaker 2: Who listen, there's a lot of weight on my shoulders,
Speaker 2: but I'll take it lock.
Speaker 1: But truly it will be It won't be that government
Speaker 1: did this, think it will be individual businesses. Individual New
Speaker 1: Zealander is saying, actually, right now, this is the time
Speaker 1: I'm going to take another loan. I'm going to invest
Speaker 1: in this idea that I've had. I'm going to take
Speaker 1: this business. I'm going to expand it to a new market.
Speaker 1: I am going to hire that new workforce to pursue
Speaker 1: that new innovation. I am going to invest some money
Speaker 1: in R and D that I reckon is going to
Speaker 1: pay off. I'm going to do the next thing. And
Speaker 1: so I genuinely think for this economy to have more
Speaker 1: confidence than twelve months, we need to see momentum build
Speaker 1: now by having individual firms, sectors, entrepreneurs saying let's actually
Speaker 1: make the investment now to do that thing we know
Speaker 1: could be brilliant. And there are so many things out
Speaker 1: there that could be brilliant. So I want people investing
Speaker 1: and doing it. And obviously every business will make its
Speaker 1: own decisions. But when you do that, that is literally
Speaker 1: where economic growth and confidence comes from.
Speaker 2: Nice completely such a mindset thing.
Speaker 1: So everyone listening to do it invest.
Speaker 2: So before we go, because we're like, firstly, appreciate, really
Speaker 2: appreciate your time for sharing with us and unvestas today
Speaker 2: and this access is another great thing about New Zealand.
Speaker 2: So that's very much appreciated. But Budget days coming up
Speaker 2: has some strange rituals associated with it. We've been told
Speaker 2: that Sybil English used to eat a pie on budget Day.
Speaker 2: We were just wondering if you had any particular snack
Speaker 2: of choice.
Speaker 1: To because Grant Robertson used to have sausage rolls. So yeah,
Speaker 1: that's the whole thing. It's like food related. Yeah. So
Speaker 1: last year, what I had my kids do was bake
Speaker 1: cookies for me and the Prime Minister so we could
Speaker 1: have a little kind of morning tea coffee together. And
Speaker 1: that was a really lovely thing actually, because my kids
Speaker 1: came to watch the budget and they had some reflections
Speaker 1: on my discussions of the ober garlic surplus, but mostly
Speaker 1: they were reflected. Prime Minister really liked their biscuits. So
Speaker 1: they have been thinking about what the next batch are
Speaker 1: going to be for a year now, so I'm expecting
Speaker 1: they're going to be pretty good. So that's one tradition,
Speaker 1: and then I guess the other tradition that I really
Speaker 1: like is obviously budgets, Like any great endeavor, involve hundreds,
Speaker 1: if not thousands, of people working extremely hard. And I'm
Speaker 1: lucky that I work with some of the most talented, wonderful, earnest,
Speaker 1: hardworking people, and so on budget night, a small group
Speaker 1: of them come together and we raise a glass to
Speaker 1: celebrate the job done. So I'm looking forward to that great.
Speaker 2: Well be so luck Thank you, thank you, thanks everyone
Speaker 2: for tuning in. You can watch Shared Lunch on YouTube,
Speaker 2: or follow the podcast on Apple, Spotify, or wherever you
Speaker 2: get your podcasts. Leave us a rating in a comment
Speaker 2: about what you'd like to hear about next. Enjoy the
Speaker 2: rest of your week.