1 00:00:00,960 --> 00:00:05,000 Speaker 1: You're listening to a shares these podcast I feel a 2 00:00:05,080 --> 00:00:08,360 Speaker 1: part of my job, the responsibility I have, is to 3 00:00:08,400 --> 00:00:11,600 Speaker 1: be optimistic and to remind people of the good things 4 00:00:11,640 --> 00:00:15,160 Speaker 1: going on, because, you know, for all of their own reasons, 5 00:00:15,280 --> 00:00:19,400 Speaker 1: our mainstream media will often emphasize conflict or crime or 6 00:00:19,440 --> 00:00:22,160 Speaker 1: negative things, and you don't. 7 00:00:21,960 --> 00:00:24,760 Speaker 2: Often see stories of By the way, did you know 8 00:00:24,880 --> 00:00:27,360 Speaker 2: that this new business is doing amazing stuff? Did you 9 00:00:27,400 --> 00:00:29,920 Speaker 2: know that the Hawthorn Institute is coming up with world 10 00:00:30,000 --> 00:00:34,680 Speaker 2: leading scientific breakthroughs into algay and seaweed with Nesley is 11 00:00:34,760 --> 00:00:37,680 Speaker 2: their major major research partner because they think they're the 12 00:00:37,680 --> 00:00:40,280 Speaker 2: best in the world that creating protein from the sea, 13 00:00:40,400 --> 00:00:42,920 Speaker 2: Like did we hear about that? And I get to 14 00:00:42,960 --> 00:00:45,000 Speaker 2: see these success stories all the time. You know Picks 15 00:00:45,040 --> 00:00:45,600 Speaker 2: peanut Butter. 16 00:00:45,640 --> 00:00:47,080 Speaker 1: I was there the other day. 17 00:00:47,560 --> 00:00:49,720 Speaker 2: There's a little business that started with a fifty five 18 00:00:49,760 --> 00:00:53,320 Speaker 2: year old who decided to make peanut butter in a 19 00:00:53,479 --> 00:00:56,320 Speaker 2: concrete mixer for the market, and he is now making 20 00:00:56,320 --> 00:01:00,040 Speaker 2: twenty five thousand jars of peanut butter a day. So 21 00:01:00,080 --> 00:01:03,160 Speaker 2: we need to tell these stories about ourselves because we're awesome. 22 00:01:03,240 --> 00:01:06,160 Speaker 2: I've just been at the Fintech Festival meeting all these 23 00:01:06,200 --> 00:01:09,040 Speaker 2: people who are taking a risk to run a new 24 00:01:09,280 --> 00:01:13,559 Speaker 2: financial business because they see opportunity. And I see that opportunity, 25 00:01:13,560 --> 00:01:16,000 Speaker 2: and I think we should talk ourselves into that and 26 00:01:16,080 --> 00:01:18,480 Speaker 2: not into the things that are hard. Yes, there are challenges, 27 00:01:18,520 --> 00:01:21,840 Speaker 2: of course there are, but let's also highlight the positive coming. 28 00:01:21,600 --> 00:01:27,320 Speaker 3: Back to these geo political situations where all as businesses 29 00:01:27,360 --> 00:01:29,640 Speaker 3: trying to make changes to our business and thinking about that. 30 00:01:29,880 --> 00:01:33,800 Speaker 3: You've made some early announcements on the budget and just 31 00:01:34,120 --> 00:01:36,520 Speaker 3: interested to hear how much of this change, which has 32 00:01:36,520 --> 00:01:38,000 Speaker 3: come very quickly over the last couple of weeks, is 33 00:01:38,040 --> 00:01:41,120 Speaker 3: playing into you're thinking there and what New Zealanders should 34 00:01:41,120 --> 00:01:42,640 Speaker 3: start to expect for the budget. 35 00:01:42,440 --> 00:01:45,080 Speaker 2: In a month or so. Yeah, well, look, I feel 36 00:01:45,120 --> 00:01:48,120 Speaker 2: quite a solemn durty in this job to deliver responsible 37 00:01:48,280 --> 00:01:52,200 Speaker 2: budgets because hey, look I'd love to be generous and 38 00:01:52,200 --> 00:01:54,320 Speaker 2: spray the money down around. That would make my job 39 00:01:54,360 --> 00:01:57,960 Speaker 2: a lot easier, to be honest, But I'm very aware 40 00:01:58,000 --> 00:02:00,640 Speaker 2: of the context in which we're operating, which is that 41 00:02:01,520 --> 00:02:04,040 Speaker 2: New Zealand rightly took on debt during COVID. We can 42 00:02:04,040 --> 00:02:05,880 Speaker 2: have a debate about whether we took on too much, 43 00:02:06,840 --> 00:02:08,840 Speaker 2: but we now have dead at levels not seen since 44 00:02:08,840 --> 00:02:11,920 Speaker 2: the mid nineteen nineties. For context, we're at forty two 45 00:02:11,960 --> 00:02:15,240 Speaker 2: percent government debt to the size of our economy. Historically 46 00:02:15,240 --> 00:02:17,520 Speaker 2: it's hovered between five and twenty five percent. 47 00:02:17,960 --> 00:02:19,639 Speaker 3: Now, the problem, what do you think is like a 48 00:02:19,680 --> 00:02:20,200 Speaker 3: good level? 49 00:02:20,240 --> 00:02:22,000 Speaker 2: Now, what we'll we I'd like us to see come 50 00:02:22,040 --> 00:02:25,200 Speaker 2: back down to forty and then hover between twenty and 51 00:02:25,240 --> 00:02:27,880 Speaker 2: forty over time, depending on where we are in the side, because. 52 00:02:27,680 --> 00:02:29,120 Speaker 3: We're still low globally, is that right? 53 00:02:29,280 --> 00:02:33,760 Speaker 2: Yeah, we are, and we should borrow for investments that 54 00:02:33,800 --> 00:02:37,480 Speaker 2: are going to drive our future productivity. Absolutely on board 55 00:02:37,520 --> 00:02:40,680 Speaker 2: for that. The problem that we always need to be 56 00:02:40,680 --> 00:02:43,400 Speaker 2: aware of is that if something major happens, you know, 57 00:02:43,560 --> 00:02:47,639 Speaker 2: big earthquake, big biosecurity incursion, we're then going to have 58 00:02:47,639 --> 00:02:49,320 Speaker 2: to go out to the world and borrow a lot more. 59 00:02:49,840 --> 00:02:52,680 Speaker 2: And there's a ceiling. Yeah, that's right, And there's a 60 00:02:52,720 --> 00:02:55,760 Speaker 2: ceiling at which we don't look as good as proposition. 61 00:02:55,840 --> 00:02:59,320 Speaker 2: And so it's about having enough headroom that when that 62 00:02:59,320 --> 00:03:02,560 Speaker 2: big event can't, we can borrow without getting into it's basically, 63 00:03:02,639 --> 00:03:05,240 Speaker 2: I worry about the death spiral of a really high 64 00:03:05,280 --> 00:03:07,880 Speaker 2: interest bill on our debt. So for context, right now, 65 00:03:08,320 --> 00:03:11,520 Speaker 2: our interest bill is nine billion dollars a year on 66 00:03:11,600 --> 00:03:16,359 Speaker 2: our debt, up from hovering just around three previously. Right now, 67 00:03:16,480 --> 00:03:18,839 Speaker 2: we are borrowing to pay for the groceriy, so we're 68 00:03:18,840 --> 00:03:20,960 Speaker 2: not just borrowing for assets, we're borrowing for our day 69 00:03:21,000 --> 00:03:25,160 Speaker 2: to day spending. There's a thirteen billion dollar deficit this 70 00:03:25,240 --> 00:03:27,600 Speaker 2: year between what we as a government are taking in 71 00:03:27,600 --> 00:03:30,679 Speaker 2: in revenue and other earnings and what we're spending to 72 00:03:30,760 --> 00:03:33,560 Speaker 2: keep the economy going. That's the right thing to do 73 00:03:33,720 --> 00:03:36,720 Speaker 2: because New Zealanders need stability and their welfare supports and 74 00:03:36,720 --> 00:03:39,200 Speaker 2: the funding for our schools and hospitals. It just can't 75 00:03:39,200 --> 00:03:42,280 Speaker 2: go on forever. Now. I've taken the gradual approach. Some 76 00:03:42,320 --> 00:03:44,400 Speaker 2: people would say sort that out immediately. I think that 77 00:03:44,440 --> 00:03:46,200 Speaker 2: would create a lot of pain for people, and it 78 00:03:46,200 --> 00:03:49,720 Speaker 2: would actually create instability in the economy. So we've set 79 00:03:49,720 --> 00:03:51,840 Speaker 2: a path that says we will get the books back 80 00:03:51,880 --> 00:03:55,400 Speaker 2: and balance by twenty twenty nine. We think that's reasonable 81 00:03:55,480 --> 00:03:58,120 Speaker 2: period of time to narrow that gap between what we 82 00:03:58,160 --> 00:04:00,320 Speaker 2: spend and earn, and that will allow us to start 83 00:04:00,320 --> 00:04:04,400 Speaker 2: paying down debt. Now, because of the Trump stuff, the 84 00:04:04,440 --> 00:04:08,200 Speaker 2: forecasts I've been receiving told me you're now going to 85 00:04:08,200 --> 00:04:11,280 Speaker 2: be off track to meet that goal of getting the 86 00:04:11,280 --> 00:04:13,440 Speaker 2: books back and balance unless you make some change. 87 00:04:13,440 --> 00:04:15,080 Speaker 3: It's an interest rate has been held up because of 88 00:04:15,080 --> 00:04:16,719 Speaker 3: what listening to answer and do you or what is 89 00:04:16,720 --> 00:04:18,120 Speaker 3: it that's driving well. 90 00:04:18,000 --> 00:04:21,960 Speaker 2: It's basically that because growth will be lower, we're forecast 91 00:04:22,080 --> 00:04:25,320 Speaker 2: to be taking in less revenue, which has two effects. 92 00:04:25,440 --> 00:04:28,320 Speaker 2: One the deficit grows larger now and two we then 93 00:04:28,400 --> 00:04:32,159 Speaker 2: have to borrow more, which then creates a larger cost 94 00:04:32,200 --> 00:04:35,120 Speaker 2: there in terms of interests, investing involves the risk you 95 00:04:35,200 --> 00:04:37,720 Speaker 2: might lose the money you start with. We recommend talking 96 00:04:37,720 --> 00:04:41,640 Speaker 2: to a licensed financial advisor. We also recommend reading product 97 00:04:41,640 --> 00:04:43,880 Speaker 2: disclosure documents before deciding to invest.