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Speaker 1: Nikola Willis is the Finance Minister, and a big day tomorrow.

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Speaker 1: The half yearly Economic and Fiscal Update from the Treasury

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Speaker 1: will tell us basically the state of the books and

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Speaker 1: how New Zealand's accounts are looking going forward, and the

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Speaker 1: government will respond in a budget policy statement led by

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Speaker 1: Nikola Willis. Who's with me this evening. Good evening, minister,

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Speaker 1: good evening. Run not going to be good news tomorrow.

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Speaker 2: Well, I think everyone knows that the government has inherited

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Speaker 2: very challenging economic conditions and that is being reflected in

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Speaker 2: the books as the Treasury unwind the overly optimistic forecasts

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Speaker 2: from a couple of years ago. So tomorrow the Treasury

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Speaker 2: will share their updated forecasts and we will share our

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Speaker 2: response to that. I think what we've been consistent in

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Speaker 2: saying is this is a time we need to be

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Speaker 2: very careful with how we spend New zealanders money. And

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Speaker 2: what we know is that things would be a lot

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Speaker 2: worse if we'd continued with the spending track we inherited

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Speaker 2: from the last government.

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Speaker 1: How can you trust their overly optimistic forecasts.

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Speaker 2: The Treasury have been doing since a couple of years

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Speaker 2: ago is revising some of the assumptions they made after COVID.

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Speaker 2: There's two key things. One they thought that we'd come

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Speaker 2: out of the current recession earlier and more vigorously than

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Speaker 2: we have. And the second is that they read into

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Speaker 2: a bit of a bounce back and productivity and text

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Speaker 2: to GDP extrapolated that forward, and they've then been progressively

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Speaker 2: having to unwind that. So the books that we're seeing

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Speaker 2: now have actually always been the case. It's just that

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Speaker 2: Treasury prior to the election was being overly optimistic in

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Speaker 2: the forecasts that they shared.

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Speaker 1: Do you trust treasuries predictions? Now?

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Speaker 2: Look? I do. Forecasts are forecasts, they move up and down.

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Speaker 2: There's all sorts of factors that can impact them. But

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Speaker 2: do I think that Treasury do all of the things

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Speaker 2: that they should be expected to do when you're doing

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Speaker 2: the forecasting? Yes? Does that mean we should test some

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Speaker 2: of the assumptions at them, compare them with other updates

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Speaker 2: from the Reserve Bank and others. Yes, of course we

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Speaker 2: should do that too.

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Speaker 1: You were brutal on Grant Robertson for delaying surplus, delaying surplus,

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Speaker 1: delaying surplus. You're going to again delay surplus? Are you

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Speaker 1: embarrassed by that?

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Speaker 2: Not at all. I was brutal on Grant Robertson because

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Speaker 2: despite their being escalating inflation, he decided to put his

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Speaker 2: foot down on the spending accelerator. You know, in Budget

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Speaker 2: twenty two he committed more than nine billion dollars of

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Speaker 2: additional spending every year, even while inflation was through the roof.

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Speaker 2: What we said we do was bring restraint back. We

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Speaker 2: have and what I know, beyond a shadow of a

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Speaker 2: doubt is if we continued the approach of the last

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Speaker 2: government was reckless spending, the economy would be in worse

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Speaker 2: shape right now, New Zealanders would be in worse shape,

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Speaker 2: and the books would be dreadful.

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Speaker 1: Your delaying surplus again, will you commit to it? And

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Speaker 1: which means we're not going to get back to surplus

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Speaker 1: within your first term. Will you even promise to get

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Speaker 1: back to surplus in your second?

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Speaker 2: Well, you're getting a bit ahead of yourself, Ryan, because

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Speaker 2: the updates will be delivered tomorrow and I will comment

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Speaker 2: in detail on those there. The government has had a

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Speaker 2: range of short term fiscal intentions and long term objectives,

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Speaker 2: and we remain committed to the task we've set for ourselves,

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Speaker 2: which is getting the books back in balance, getting getting

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Speaker 2: spending as a.

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Speaker 1: Proportion you're committed to surplus, as.

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Speaker 2: Is getting the books back in balance is a driving

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Speaker 2: goal for this government.

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Speaker 1: Are you going to change the are you considering changing

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Speaker 1: the date by which you return the books to surplus?

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Speaker 2: At the budget last year we indicated that we were

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Speaker 2: looking at the indicators used to describe what's known as

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Speaker 2: the operating balance colloquially referred to as the surplus that

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Speaker 2: has been measured a number of different ways over the years,

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Speaker 2: and we wanted to look at how it's currently made up,

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Speaker 2: particularly examining the role of self funded Crown entities including

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Speaker 2: aces SEE, who will have short term fluctuations but remain

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Speaker 2: long term funded. And so we'll be announcing the results

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Speaker 2: of that review tomorrow.

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Speaker 1: There's not going to be any as Aischaviral puts it,

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Speaker 1: book cookery going on here.

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Speaker 2: Absolutely not. It's actually in our interests to be as

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Speaker 2: open and transparent with New Zealanders as we can about

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Speaker 2: the state that New Zealand's finances are in, because what

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Speaker 2: this is about is how we can live within our

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Speaker 2: means and how we can ensure that we keep delivering

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Speaker 2: the frontline services that people deserve, that we're not over

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Speaker 2: taxing people and that we're not labeling the next generation

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Speaker 2: with excessive levels of debt. So we want New Zealanders

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Speaker 2: to understand the true size of the predicament we have inherited,

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Speaker 2: and we want them to have confidence that we are

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Speaker 2: managing through that effectively.

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Speaker 1: Okay, just so I understand what you're saying. Are you

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Speaker 1: saying that you will not delay the surplus but rather

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Speaker 1: allow Crown companies to take on more debt?

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Speaker 2: Is that No, that's not what I'm saying. What I'm

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Speaker 2: saying is that tomorrow I'll give you an update on

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Speaker 2: the forecasts across arrangement indicators, and I will also give

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Speaker 2: an update on our review of the Crown Operating Balance measure.

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Speaker 1: You've got no FTA Withindia in sight, Seymour's red tape

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Speaker 1: seems to be looking at boos at hairdresses. Thus far,

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Speaker 1: tax cuts haven't boosted growth, Productivity is a bit buggered,

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Speaker 1: potentially another delayed surplus, and we haven't even taken into

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Speaker 1: account Trump's tariffs yet. Things looking less rosy than you

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Speaker 1: would have hoped.

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Speaker 2: We have a government that is taking every step it

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Speaker 2: can to lean towards growth. Now, whether that's the fast

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Speaker 2: track legislation, getting big developments through, whether that's rewriting the

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Speaker 2: Resource Management Act so it's easier to build houses, getting

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Speaker 2: rid of some of the red tape in the Building Act,

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Speaker 2: whether that's the free trade agreements we've struck with the

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Speaker 2: UAE and the GCC, whether that's our commitment to saying

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Speaker 2: yes to more inward bound international investment. Upscilling kids so

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Speaker 2: they're not leaving school unable to read, write and do maths,

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Speaker 2: making sure our SONT system is more commercially plausible. All

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Speaker 2: of these initiatives are about improving the productive capacity of

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Speaker 2: the New Zealand economy. Now, no one promised that overnight

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Speaker 2: everything would be fixed, but we did promise that every

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Speaker 2: week we're in office, we will do things to make

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Speaker 2: this economy go faster, and we've been working at pace.

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Speaker 1: You said last week that you were putting the banks

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Speaker 1: on notice, that the big Australian owned banks should be

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Speaker 1: listening to what you were saying and that they should

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Speaker 1: be changing their behavior. Have a listening.

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Speaker 2: We're putting the major banks on notice. We expect them

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Speaker 2: to act on the Commerce Commission's recommendations.

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Speaker 1: Have any of them got in touch with you since

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Speaker 1: then come with their tail between their legs.

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Speaker 2: No, but I have noted the public statements of a

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Speaker 2: few have said had assured us that they're getting on

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Speaker 2: with it. That's what we need to see. I will

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Speaker 2: judge them by their actions, not their words. I want

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Speaker 2: to see switching services improved. I want to see open

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Speaker 2: banking accelerated. I want to see it easier for New

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Speaker 2: Zealanders to pair the terms of their home loans. I

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Speaker 2: want there to be easier access to bank accounts than

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Speaker 2: banking services for many people. So those are the tangible

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Speaker 2: actions we expect to see. And as I said last week,

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Speaker 2: they are on notice. They should get on with it.

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Speaker 1: Will you resign if you don't get those results.

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Speaker 2: I've long since departed from the idea of throwing a

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Speaker 2: resignation around. It's up to the banks to do their bit,

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Speaker 2: and as a government, we've been clear if they don't

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Speaker 2: do their bit, then we are prepared to regulate or

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Speaker 2: to use the other policy tools we have at our disposal.

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Speaker 2: Because it's not actually about me, is it, Ryan. It's

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Speaker 2: about Keywi getting a fair deal from their bank. The

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Speaker 2: banks shouldn't be taking us for a ride. We've had

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Speaker 2: the Commerce Commission report says it's not competitive. It says

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Speaker 2: there's things they can do to make it fairer. They

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Speaker 2: should do it.

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Speaker 1: The problem is that you're not the first politician to

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Speaker 1: say that you're going to rain the banks in and

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Speaker 1: you're going to change their behavior. The banks keep laughing

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Speaker 1: from Sydney. Nothing changes. So we ask the politicians for

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Speaker 1: a bit of a guarantee to make sure that they're

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Speaker 1: a man of their word.

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Speaker 2: I'll guarantee I keep taking action. I've already taken significant

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Speaker 2: actions that the last government didn't. I've got a financial

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Speaker 2: Policy remit which puts the emphasis back on competition for

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Speaker 2: the way the Reserve Bank does its job. I've made

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Speaker 2: very clear my expectations to the Reserve Bank that I

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Speaker 2: want them to be looking at, who can use the

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Speaker 2: word bank, the capital requirements for being a bank, access

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Speaker 2: to the exchange settlement system. I've also laid out our

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Speaker 2: plans to ensure key we Bank can get the capital

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Speaker 2: it needs to grow. And I'm monitoring this much more

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Speaker 2: closely than previous governments have. And I've put the banks

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Speaker 2: on not so you'll keep seeing action from us in

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Speaker 2: this space.

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Speaker 1: Okay, let's move on talk about revenue, would you rule

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Speaker 1: out any new revenue measures to try and balance the books.

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Speaker 2: My first port of call is getting spending under control,

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Speaker 2: because when you look at what happened to the books

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Speaker 2: over recent years, the big thing that changed was the

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Speaker 2: amount of government spending is a proportion of the economy.

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Speaker 2: It leapt to levels well beyond what had been seen historically,

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Speaker 2: and we want to bend that back down and have

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Speaker 2: already delivered more than twenty three billion dollars of savings

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Speaker 2: towards that goal. I want to keep doing that because

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Speaker 2: we have to get our house and order on the

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Speaker 2: spending front. You can't just keep treating Kiwis like an

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Speaker 2: a AM. At the same time, I've been careful not

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Speaker 2: to rule out revenue measures in particular because we need

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Speaker 2: to make sure that the tech system is fear and

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Speaker 2: has integrity, and that's where we're looking in the charities area,

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Speaker 2: for example. But also because we acknowledge to meet the

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Speaker 2: infrastructure deficit New Zealand now faces, there will be new

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Speaker 2: revenue tools needed, and you saw, for example, Simmy and

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Speaker 2: Brown are announcing tolling measures last week. We are continuing

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Speaker 2: to think about how we fund infrastructure and that will

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Speaker 2: involve new revenue measures.

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Speaker 1: Other than tolling.

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Speaker 2: Yes, potentially value capture tools and other tools that are

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Speaker 2: used in other jurisdictions around the world.

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Speaker 1: We are the tools well.

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Speaker 2: Value capture, for example, is about saying, if a really

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Speaker 2: extraordinary motorway gets built by your piece of land, and

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Speaker 2: suddenly your piece of land goes up considerably in value

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Speaker 2: because it's a great place to build houses, then we

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Speaker 2: might look at how we could get some of that

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Speaker 2: upside game as a revenue source.

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Speaker 1: All right, big day for you tomorrow, So I won't

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Speaker 1: keep you. We might actually see you back on the

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Speaker 1: show tomorrow. But if we don't, what have you got

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Speaker 1: plans for summer? A break of some type? I hope, yeah,

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Speaker 1: look I do.

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Speaker 2: I'm really looking forward to having Christmas with my family,

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Speaker 2: my brother and sister, and then we take our kids

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Speaker 2: to a little beach where they do surf life saving

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Speaker 2: and we geekily read books and do puzzles and maybe

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Speaker 2: have a G and T or two. And I just

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Speaker 2: can't wait to spend some time with the Let's spend

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Speaker 2: some time with the kids and with my husband.

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Speaker 1: It's going to be great, absolutely well deserved. Nicholas. Thank

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Speaker 1: you very much for being Hopefully you don't have to

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Speaker 1: get the ferry there it was, don't answer, don't answer,

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Speaker 1: lovely to have you on the program as always, Take

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Speaker 1: care and we might see tomorrow. For more from Heather

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Speaker 1: Duplessy Allen Drive, listen live to news Talks it'd be

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Speaker 1: from four pm weekdays, or follow the podcast on iHeartRadio