WEBVTT - Quick bite: Finance Minister Nicola Willis on NZ's secret weapon...

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<v Speaker 1>You're listening to a shares these podcast I feel a

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<v Speaker 1>part of my job, the responsibility I have, is to

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<v Speaker 1>be optimistic and to remind people of the good things

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<v Speaker 1>going on, because, you know, for all of their own reasons,

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<v Speaker 1>our mainstream media will often emphasize conflict or crime or

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<v Speaker 1>negative things, and you don't.

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<v Speaker 2>Often see stories of By the way, did you know

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<v Speaker 2>that this new business is doing amazing stuff? Did you

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<v Speaker 2>know that the Hawthorn Institute is coming up with world

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<v Speaker 2>leading scientific breakthroughs into algay and seaweed with Nesley is

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<v Speaker 2>their major major research partner because they think they're the

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<v Speaker 2>best in the world that creating protein from the sea,

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<v Speaker 2>Like did we hear about that? And I get to

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<v Speaker 2>see these success stories all the time. You know Picks

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<v Speaker 2>peanut Butter.

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<v Speaker 1>I was there the other day.

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<v Speaker 2>There's a little business that started with a fifty five

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<v Speaker 2>year old who decided to make peanut butter in a

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<v Speaker 2>concrete mixer for the market, and he is now making

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<v Speaker 2>twenty five thousand jars of peanut butter a day. So

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<v Speaker 2>we need to tell these stories about ourselves because we're awesome.

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<v Speaker 2>I've just been at the Fintech Festival meeting all these

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<v Speaker 2>people who are taking a risk to run a new

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<v Speaker 2>financial business because they see opportunity. And I see that opportunity,

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<v Speaker 2>and I think we should talk ourselves into that and

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<v Speaker 2>not into the things that are hard. Yes, there are challenges,

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<v Speaker 2>of course there are, but let's also highlight the positive coming.

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<v Speaker 3>Back to these geo political situations where all as businesses

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<v Speaker 3>trying to make changes to our business and thinking about that.

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<v Speaker 3>You've made some early announcements on the budget and just

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<v Speaker 3>interested to hear how much of this change, which has

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<v Speaker 3>come very quickly over the last couple of weeks, is

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<v Speaker 3>playing into you're thinking there and what New Zealanders should

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<v Speaker 3>start to expect for the budget.

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<v Speaker 2>In a month or so. Yeah, well, look, I feel

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<v Speaker 2>quite a solemn durty in this job to deliver responsible

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<v Speaker 2>budgets because hey, look I'd love to be generous and

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<v Speaker 2>spray the money down around. That would make my job

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<v Speaker 2>a lot easier, to be honest, But I'm very aware

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<v Speaker 2>of the context in which we're operating, which is that

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<v Speaker 2>New Zealand rightly took on debt during COVID. We can

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<v Speaker 2>have a debate about whether we took on too much,

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<v Speaker 2>but we now have dead at levels not seen since

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<v Speaker 2>the mid nineteen nineties. For context, we're at forty two

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<v Speaker 2>percent government debt to the size of our economy. Historically

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<v Speaker 2>it's hovered between five and twenty five percent.

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<v Speaker 3>Now, the problem, what do you think is like a

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<v Speaker 3>good level?

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<v Speaker 2>Now, what we'll we I'd like us to see come

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<v Speaker 2>back down to forty and then hover between twenty and

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<v Speaker 2>forty over time, depending on where we are in the side, because.

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<v Speaker 3>We're still low globally, is that right?

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<v Speaker 2>Yeah, we are, and we should borrow for investments that

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<v Speaker 2>are going to drive our future productivity. Absolutely on board

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<v Speaker 2>for that. The problem that we always need to be

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<v Speaker 2>aware of is that if something major happens, you know,

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<v Speaker 2>big earthquake, big biosecurity incursion, we're then going to have

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<v Speaker 2>to go out to the world and borrow a lot more.

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<v Speaker 2>And there's a ceiling. Yeah, that's right, And there's a

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<v Speaker 2>ceiling at which we don't look as good as proposition.

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<v Speaker 2>And so it's about having enough headroom that when that

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<v Speaker 2>big event can't, we can borrow without getting into it's basically,

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<v Speaker 2>I worry about the death spiral of a really high

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<v Speaker 2>interest bill on our debt. So for context, right now,

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<v Speaker 2>our interest bill is nine billion dollars a year on

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<v Speaker 2>our debt, up from hovering just around three previously. Right now,

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<v Speaker 2>we are borrowing to pay for the groceriy, so we're

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<v Speaker 2>not just borrowing for assets, we're borrowing for our day

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<v Speaker 2>to day spending. There's a thirteen billion dollar deficit this

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<v Speaker 2>year between what we as a government are taking in

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<v Speaker 2>in revenue and other earnings and what we're spending to

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<v Speaker 2>keep the economy going. That's the right thing to do

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<v Speaker 2>because New Zealanders need stability and their welfare supports and

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<v Speaker 2>the funding for our schools and hospitals. It just can't

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<v Speaker 2>go on forever. Now. I've taken the gradual approach. Some

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<v Speaker 2>people would say sort that out immediately. I think that

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<v Speaker 2>would create a lot of pain for people, and it

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<v Speaker 2>would actually create instability in the economy. So we've set

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<v Speaker 2>a path that says we will get the books back

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<v Speaker 2>and balance by twenty twenty nine. We think that's reasonable

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<v Speaker 2>period of time to narrow that gap between what we

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<v Speaker 2>spend and earn, and that will allow us to start

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<v Speaker 2>paying down debt. Now, because of the Trump stuff, the

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<v Speaker 2>forecasts I've been receiving told me you're now going to

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<v Speaker 2>be off track to meet that goal of getting the

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<v Speaker 2>books back and balance unless you make some change.

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<v Speaker 3>It's an interest rate has been held up because of

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<v Speaker 3>what listening to answer and do you or what is

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<v Speaker 3>it that's driving well.

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<v Speaker 2>It's basically that because growth will be lower, we're forecast

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<v Speaker 2>to be taking in less revenue, which has two effects.

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<v Speaker 2>One the deficit grows larger now and two we then

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<v Speaker 2>have to borrow more, which then creates a larger cost

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<v Speaker 2>there in terms of interests, investing involves the risk you

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<v Speaker 2>might lose the money you start with. We recommend talking

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<v Speaker 2>to a licensed financial advisor. We also recommend reading product

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<v Speaker 2>disclosure documents before deciding to invest.