Speaker 1: You're listening to a shares these podcast I feel a
Speaker 1: part of my job, the responsibility I have, is to
Speaker 1: be optimistic 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.
Speaker 2: Often see stories of By the way, did you know
Speaker 2: that this new business is doing amazing stuff? Did you
Speaker 2: know that the Hawthorn Institute is coming up with world
Speaker 2: leading scientific breakthroughs into algay and seaweed with Nesley is
Speaker 2: their major major research partner because they think they're the
Speaker 2: best in the world that creating protein from the sea,
Speaker 2: Like did we hear about that? And I get to
Speaker 2: see these success stories all the time. You know Picks
Speaker 2: peanut Butter.
Speaker 1: I was there the other day.
Speaker 2: There's a little business that started with a fifty five
Speaker 2: year old who decided to make peanut butter in a
Speaker 2: concrete mixer for the market, and he is now making
Speaker 2: twenty five thousand jars of peanut butter a day. So
Speaker 2: we need to tell these stories about ourselves because we're awesome.
Speaker 2: I've just been at the Fintech Festival meeting all these
Speaker 2: people who are taking a risk to run a new
Speaker 2: financial business because they see opportunity. And I see that opportunity,
Speaker 2: and I think we should talk ourselves into that and
Speaker 2: not into the things that are hard. Yes, there are challenges,
Speaker 2: of course there are, but let's also highlight the positive coming.
Speaker 3: Back to these geo political situations where all as businesses
Speaker 3: trying to make changes to our business and thinking about that.
Speaker 3: You've made some early announcements on the budget and just
Speaker 3: interested to hear how much of this change, which has
Speaker 3: come very quickly over the last couple of weeks, is
Speaker 3: playing into you're thinking there and what New Zealanders should
Speaker 3: start to expect for the budget.
Speaker 2: In a month or so. Yeah, well, look, I feel
Speaker 2: quite a solemn durty in this job to deliver responsible
Speaker 2: budgets because hey, look I'd love to be generous and
Speaker 2: spray the money down around. That would make my job
Speaker 2: a lot easier, to be honest, But I'm very aware
Speaker 2: of the context in which we're operating, which is that
Speaker 2: New Zealand rightly took on debt during COVID. We can
Speaker 2: have a debate about whether we took on too much,
Speaker 2: but we now have dead at levels not seen since
Speaker 2: the mid nineteen nineties. For context, we're at forty two
Speaker 2: percent government debt to the size of our economy. Historically
Speaker 2: it's hovered between five and twenty five percent.
Speaker 3: Now, the problem, what do you think is like a
Speaker 3: good level?
Speaker 2: Now, what we'll we I'd like us to see come
Speaker 2: back down to forty and then hover between twenty and
Speaker 2: forty over time, depending on where we are in the side, because.
Speaker 3: We're still low globally, is that right?
Speaker 2: Yeah, we are, and we should borrow for investments that
Speaker 2: are going to drive our future productivity. Absolutely on board
Speaker 2: for that. The problem that we always need to be
Speaker 2: aware of is that if something major happens, you know,
Speaker 2: big earthquake, big biosecurity incursion, we're then going to have
Speaker 2: to go out to the world and borrow a lot more.
Speaker 2: And there's a ceiling. Yeah, that's right, And there's a
Speaker 2: ceiling at which we don't look as good as proposition.
Speaker 2: And so it's about having enough headroom that when that
Speaker 2: big event can't, we can borrow without getting into it's basically,
Speaker 2: I worry about the death spiral of a really high
Speaker 2: interest bill on our debt. So for context, right now,
Speaker 2: our interest bill is nine billion dollars a year on
Speaker 2: our debt, up from hovering just around three previously. Right now,
Speaker 2: we are borrowing to pay for the groceriy, so we're
Speaker 2: not just borrowing for assets, we're borrowing for our day
Speaker 2: to day spending. There's a thirteen billion dollar deficit this
Speaker 2: year between what we as a government are taking in
Speaker 2: in revenue and other earnings and what we're spending to
Speaker 2: keep the economy going. That's the right thing to do
Speaker 2: because New Zealanders need stability and their welfare supports and
Speaker 2: the funding for our schools and hospitals. It just can't
Speaker 2: go on forever. Now. I've taken the gradual approach. Some
Speaker 2: people would say sort that out immediately. I think that
Speaker 2: would create a lot of pain for people, and it
Speaker 2: would actually create instability in the economy. So we've set
Speaker 2: a path that says we will get the books back
Speaker 2: and balance by twenty twenty nine. We think that's reasonable
Speaker 2: period of time to narrow that gap between what we
Speaker 2: spend and earn, and that will allow us to start
Speaker 2: paying down debt. Now, because of the Trump stuff, the
Speaker 2: forecasts I've been receiving told me you're now going to
Speaker 2: be off track to meet that goal of getting the
Speaker 2: books back and balance unless you make some change.
Speaker 3: It's an interest rate has been held up because of
Speaker 3: what listening to answer and do you or what is
Speaker 3: it that's driving well.
Speaker 2: It's basically that because growth will be lower, we're forecast
Speaker 2: to be taking in less revenue, which has two effects.
Speaker 2: One the deficit grows larger now and two we then
Speaker 2: have to borrow more, which then creates a larger cost
Speaker 2: there in terms of interests, investing involves the risk you
Speaker 2: might lose the money you start with. We recommend talking
Speaker 2: to a licensed financial advisor. We also recommend reading product
Speaker 2: disclosure documents before deciding to invest.