1 00:00:00,080 --> 00:00:02,040 Speaker 1: Right now, Nicola, what is fin it's mister, good evening, 2 00:00:02,680 --> 00:00:04,560 Speaker 1: good evening, run, good to have you on the show. 3 00:00:05,400 --> 00:00:09,160 Speaker 1: The defense plan that we've had announced today. So how 4 00:00:09,240 --> 00:00:11,320 Speaker 1: much of this because I spoke to Juth Collins earlier 5 00:00:11,400 --> 00:00:14,000 Speaker 1: she said it's about twelve billion dollars three billion of 6 00:00:14,040 --> 00:00:17,600 Speaker 1: depreciation then nine billion left over over four years. How 7 00:00:17,680 --> 00:00:20,920 Speaker 1: much of it is capital versus operational expenditure? How much 8 00:00:20,920 --> 00:00:24,319 Speaker 1: are we spending on helicopters and things as opposed to 9 00:00:24,400 --> 00:00:26,239 Speaker 1: day to day Well. 10 00:00:26,040 --> 00:00:28,000 Speaker 2: It will be a mixture of the two, and you'll 11 00:00:28,000 --> 00:00:32,240 Speaker 2: see our first announcements in that regard in this budget, 12 00:00:32,320 --> 00:00:35,920 Speaker 2: and you'll see a clear commitment from us to meeting 13 00:00:36,000 --> 00:00:39,199 Speaker 2: the commitments we've made in the Defense Capability Plan. It 14 00:00:39,280 --> 00:00:42,640 Speaker 2: strikes the right balance between on the one hand, providing 15 00:00:42,800 --> 00:00:46,919 Speaker 2: a meaningful response to what's clearly a deteriorating security environment, 16 00:00:47,280 --> 00:00:51,239 Speaker 2: but also being deliverable and being affordable and compatible with 17 00:00:51,280 --> 00:00:54,560 Speaker 2: our fiscal strategy. So every investment will be made on 18 00:00:54,600 --> 00:00:57,160 Speaker 2: a budget by budget basis, because we still have to 19 00:00:57,160 --> 00:01:00,720 Speaker 2: see a good business case for each individual item of kit. 20 00:01:01,440 --> 00:01:04,160 Speaker 2: But we're confident that we can deliver the plan as 21 00:01:04,280 --> 00:01:07,919 Speaker 2: envisaged in the capability plan within our budget constraints. 22 00:01:08,000 --> 00:01:11,880 Speaker 1: So you what within your operating allowance. 23 00:01:12,959 --> 00:01:17,080 Speaker 2: The combination of our capital and operating allowance, And of course, 24 00:01:17,319 --> 00:01:20,200 Speaker 2: what people often forget is that our operating allowance is 25 00:01:20,240 --> 00:01:23,360 Speaker 2: not just the money that we've put aside for new spending, 26 00:01:23,440 --> 00:01:27,400 Speaker 2: it's also any reprioritization that occurs across government that frees 27 00:01:27,480 --> 00:01:31,280 Speaker 2: up funding for our more pressing priorities. And our pressing 28 00:01:31,319 --> 00:01:36,720 Speaker 2: priorities include defense, education, health, and our law and order. 29 00:01:36,840 --> 00:01:40,280 Speaker 2: So those will continue to be priorities in future budgets totally. 30 00:01:40,319 --> 00:01:42,319 Speaker 1: But you've got to understand, I mean, your operating alliance 31 00:01:42,400 --> 00:01:44,679 Speaker 1: is what two and a half billion, and then you're 32 00:01:44,680 --> 00:01:47,600 Speaker 1: talking here about, due to Colin's numbers, two point twenty 33 00:01:47,640 --> 00:01:50,880 Speaker 1: five billion a year that. 34 00:01:50,800 --> 00:01:54,400 Speaker 2: Remember runs of We also have a we also have 35 00:01:54,440 --> 00:01:57,920 Speaker 2: a capital allowance of more than that of three point 36 00:01:58,000 --> 00:02:01,720 Speaker 2: sixty five billion indicatively, although that will fluctuate from year 37 00:02:01,720 --> 00:02:05,800 Speaker 2: to year. And so between those two allowances and our 38 00:02:05,840 --> 00:02:10,760 Speaker 2: commitment to ongoing reprioritization and savings, we've judged that this 39 00:02:10,960 --> 00:02:13,799 Speaker 2: plan is compatible with our fiscal strategy. And as I say, 40 00:02:14,120 --> 00:02:17,400 Speaker 2: the proof of that will be in this upcoming budget, 41 00:02:17,440 --> 00:02:22,640 Speaker 2: where you'll see a significant commitment in defense spending alongside 42 00:02:22,760 --> 00:02:26,840 Speaker 2: US keeping to our fiscal strategy keeping within those allowances. 43 00:02:27,080 --> 00:02:32,760 Speaker 1: Will there be reprioritization from aid money. 44 00:02:32,320 --> 00:02:34,840 Speaker 2: That is not in the plan to fund the Defense 45 00:02:34,880 --> 00:02:37,800 Speaker 2: Capability Plan, but of course the Minister of Foreign Affairs 46 00:02:38,040 --> 00:02:40,560 Speaker 2: on an ongoing way will always be looking to get 47 00:02:40,600 --> 00:02:43,600 Speaker 2: the maximum value out of our aid investment offshore. 48 00:02:45,760 --> 00:02:47,640 Speaker 1: There will be a lot of people who'd be disappointed, 49 00:02:47,680 --> 00:02:49,760 Speaker 1: particularly in the Pacific, if we're ripping aid out while 50 00:02:49,760 --> 00:02:50,600 Speaker 1: the States is too. 51 00:02:51,400 --> 00:02:53,160 Speaker 2: And as I say, that is not part of our 52 00:02:53,200 --> 00:02:55,720 Speaker 2: plan to deliver on the Defense Capability Plan. We're not 53 00:02:55,760 --> 00:02:59,799 Speaker 2: proposing to reprioritize aid funding towards the Defense Capability Plan. 54 00:03:00,040 --> 00:03:02,320 Speaker 1: We're not going to have to borrow for the defense plan. 55 00:03:02,360 --> 00:03:04,400 Speaker 1: We're not going to have to delay surplus because of it. 56 00:03:04,440 --> 00:03:08,720 Speaker 2: Either well, we can deliver it compatible with our current 57 00:03:08,760 --> 00:03:11,400 Speaker 2: fiscal strategy, which as you know, is to get the 58 00:03:11,400 --> 00:03:15,760 Speaker 2: books back in balance within the forecast period. Is to 59 00:03:15,919 --> 00:03:18,600 Speaker 2: ensure that over time we're getting our debt back down, 60 00:03:19,240 --> 00:03:22,120 Speaker 2: and to ensure that we're reducing our overall spending as 61 00:03:22,160 --> 00:03:25,880 Speaker 2: a proportion of our economy, our government spending. So it's 62 00:03:25,919 --> 00:03:29,160 Speaker 2: compatible with all of those objectives you can imagine. I 63 00:03:29,160 --> 00:03:32,800 Speaker 2: have worked very carefully through it to make sure that 64 00:03:32,880 --> 00:03:36,240 Speaker 2: it is affordable and deliverable, and I'm satisfied that it is, 65 00:03:36,320 --> 00:03:39,480 Speaker 2: as is the Cabinet, that this is a very important priority. 66 00:03:39,680 --> 00:03:42,040 Speaker 2: It is if you look around the world, we're all 67 00:03:42,080 --> 00:03:42,840 Speaker 2: giving to do it. 68 00:03:42,960 --> 00:03:45,040 Speaker 1: I guess it's how important? Is it important enough that 69 00:03:45,120 --> 00:03:48,080 Speaker 1: you're willing to borrow more in order to get there? 70 00:03:48,240 --> 00:03:50,120 Speaker 1: I think that's what people will be wanting to know. 71 00:03:51,240 --> 00:03:54,280 Speaker 2: Well, not beyond what we were already proposing in our 72 00:03:54,280 --> 00:03:56,640 Speaker 2: fiscal strategy. I think it's important to remember that right 73 00:03:56,680 --> 00:03:59,080 Speaker 2: now the country is running a deficit, so we are 74 00:03:59,240 --> 00:04:02,800 Speaker 2: borrowing right now. So I'm not pretending that that's not occurring. 75 00:04:02,880 --> 00:04:05,360 Speaker 2: It is occurring. Our plan is to get the books 76 00:04:05,440 --> 00:04:08,400 Speaker 2: back and balance over the next few years. We're working 77 00:04:08,440 --> 00:04:10,800 Speaker 2: hard to do that, but in a sustainable way, because 78 00:04:10,840 --> 00:04:12,800 Speaker 2: we don't want to crash the economy on the way through. 79 00:04:12,920 --> 00:04:15,680 Speaker 1: The terriffs from Donald Trump that are coming through, and 80 00:04:15,880 --> 00:04:18,320 Speaker 1: it's going to be more of an indirect effect on us. 81 00:04:18,360 --> 00:04:20,400 Speaker 1: But have you had any hard numbers get in terms 82 00:04:20,440 --> 00:04:23,320 Speaker 1: of estimates from officials about what it might do to us? 83 00:04:24,279 --> 00:04:27,880 Speaker 2: Look, I have been getting ongoing updates from official situation 84 00:04:28,080 --> 00:04:31,960 Speaker 2: updates because obviously this is a significant global economic event 85 00:04:32,760 --> 00:04:37,440 Speaker 2: which still has uncertain implications, but undoubtedly profound implications for 86 00:04:37,640 --> 00:04:42,760 Speaker 2: New Zealand. We will finalize our economic forecasts, which then 87 00:04:42,839 --> 00:04:45,359 Speaker 2: feed into the budget in the next few days. I 88 00:04:45,440 --> 00:04:48,200 Speaker 2: expect to be briefed on them soon. Of course, the 89 00:04:48,279 --> 00:04:53,200 Speaker 2: major effect is the estimate that global growth is going 90 00:04:53,240 --> 00:04:55,880 Speaker 2: to be lower than had been predicted. That has a 91 00:04:55,960 --> 00:04:59,360 Speaker 2: run on effect for New Zealand's growth projections, and so 92 00:04:59,480 --> 00:05:01,960 Speaker 2: you will expect that to be reflected in our budget 93 00:05:02,040 --> 00:05:04,839 Speaker 2: updates and I am going to continue to be updated 94 00:05:04,880 --> 00:05:07,400 Speaker 2: on that, and I do intend to keep New Zealand 95 00:05:07,400 --> 00:05:11,479 Speaker 2: as updated on the significant material developments for our economy. 96 00:05:11,560 --> 00:05:14,080 Speaker 1: Can you update U some what your officials are telling you. 97 00:05:15,360 --> 00:05:18,279 Speaker 2: Yes, what they're telling me is that it is likely 98 00:05:18,960 --> 00:05:22,760 Speaker 2: that the tariffs are going to reduce overall estimates of 99 00:05:22,800 --> 00:05:27,440 Speaker 2: global growth and that that will therefore reduce our forecast 100 00:05:27,560 --> 00:05:30,680 Speaker 2: growth in the New Zealand economy, which, as you can 101 00:05:30,720 --> 00:05:35,680 Speaker 2: work out, means potentially less revenue for New Zealand, which 102 00:05:35,800 --> 00:05:39,400 Speaker 2: is obviously a significant economic effect that we need to 103 00:05:39,440 --> 00:05:42,040 Speaker 2: be prepared for and we are prepared, we are aware, 104 00:05:42,320 --> 00:05:45,680 Speaker 2: we're keeping it monitored. We're prepared, and we're also resolute 105 00:05:45,839 --> 00:05:48,760 Speaker 2: that now more than ever, it's important that we be 106 00:05:48,920 --> 00:05:52,720 Speaker 2: backing our exporters, that we be backing our domestic growth settings, 107 00:05:53,040 --> 00:05:57,159 Speaker 2: and that we retain confidence in the New Zealand Investment Proposition, 108 00:05:57,240 --> 00:06:01,800 Speaker 2: which remains strong. We're a multilateral trade country with many 109 00:06:01,839 --> 00:06:04,760 Speaker 2: options for where we send our products with a stable. 110 00:06:04,400 --> 00:06:06,919 Speaker 1: Economic environment, what by how much? 111 00:06:08,760 --> 00:06:09,360 Speaker 2: By how much? 112 00:06:09,480 --> 00:06:11,359 Speaker 1: In relation to what to our growth? 113 00:06:12,480 --> 00:06:15,839 Speaker 2: As I say, Ryan, I haven't had the precise update 114 00:06:15,880 --> 00:06:19,000 Speaker 2: in terms of the financial forecasts that will be in 115 00:06:19,040 --> 00:06:22,640 Speaker 2: the budget, but I expect to be updated on that 116 00:06:22,839 --> 00:06:23,880 Speaker 2: over the coming days. 117 00:06:24,960 --> 00:06:27,320 Speaker 1: But are they giving you estimates? They must be giving 118 00:06:27,320 --> 00:06:29,640 Speaker 1: you estimates, like, you know, half a percent of GDP 119 00:06:29,800 --> 00:06:31,840 Speaker 1: for the next year or something. I mean, they must 120 00:06:31,920 --> 00:06:34,600 Speaker 1: be giving you some kind of number. And if they are, 121 00:06:34,680 --> 00:06:35,720 Speaker 1: why don't we get to know? 122 00:06:36,839 --> 00:06:39,800 Speaker 2: Well, of course, it depends on what they estimate the 123 00:06:39,839 --> 00:06:44,599 Speaker 2: decline and global GDP will be. For reference. Treasury research 124 00:06:44,640 --> 00:06:46,760 Speaker 2: in the past has indicated that if there's a one 125 00:06:46,800 --> 00:06:50,960 Speaker 2: percent decline in global GDP, that can reduce New Zealand 126 00:06:51,080 --> 00:06:54,880 Speaker 2: GDP by up to zero point three percent, But of 127 00:06:54,920 --> 00:06:57,520 Speaker 2: course there's a number of other factors in there, because 128 00:06:57,520 --> 00:07:01,840 Speaker 2: it depends on our commodity price, and it depends on 129 00:07:01,880 --> 00:07:04,159 Speaker 2: how much we think we will be exposed to that 130 00:07:04,200 --> 00:07:07,159 Speaker 2: global GDP impact, and it depends on the estimate of 131 00:07:07,200 --> 00:07:09,320 Speaker 2: what they think the global GDP impact will be. And 132 00:07:09,360 --> 00:07:13,040 Speaker 2: as you appreciate, everyone around the world still waiting to 133 00:07:13,120 --> 00:07:16,520 Speaker 2: work out what is the impact of global GDP complicated picture. 134 00:07:16,560 --> 00:07:18,920 Speaker 1: I understand that. Okay, so we're predicted to grow what 135 00:07:18,960 --> 00:07:20,840 Speaker 1: is it, one point four percent this year and then 136 00:07:21,000 --> 00:07:24,240 Speaker 1: two point seven this is off memory in twenty twenty six. 137 00:07:24,920 --> 00:07:27,960 Speaker 1: Will are the numbers you're hearing enough to put us 138 00:07:27,960 --> 00:07:28,800 Speaker 1: back in recession? 139 00:07:30,480 --> 00:07:33,679 Speaker 2: No, I haven't heard anything that makes me think that's 140 00:07:33,720 --> 00:07:36,240 Speaker 2: the case at this stage. But as I say, this 141 00:07:36,320 --> 00:07:39,960 Speaker 2: is a developing situation, and so what we need to 142 00:07:40,000 --> 00:07:43,920 Speaker 2: do is remain aware of what is happening and then 143 00:07:44,000 --> 00:07:46,640 Speaker 2: be analyzing what that means for New Zealand. But no, 144 00:07:46,800 --> 00:07:48,920 Speaker 2: I don't think that's the case. And of course there 145 00:07:48,920 --> 00:07:52,119 Speaker 2: have been other factors since those previous forecasts were put out, 146 00:07:52,680 --> 00:07:55,520 Speaker 2: some of which have been positive factors. So there's ups 147 00:07:55,560 --> 00:07:57,800 Speaker 2: and downs, overs and unders, and I intend to keep 148 00:07:57,800 --> 00:07:59,000 Speaker 2: people updated. 149 00:07:59,320 --> 00:08:01,920 Speaker 1: The elder situation. You had any update from them? 150 00:08:03,680 --> 00:08:07,440 Speaker 2: No, I haven't. Of course. We have requested that they 151 00:08:07,520 --> 00:08:11,040 Speaker 2: respond to our request for their interest in our market, 152 00:08:11,600 --> 00:08:14,640 Speaker 2: and look, there's no guarantee that they will respond. I'd 153 00:08:14,640 --> 00:08:16,880 Speaker 2: be very keen to see them do so, along with 154 00:08:16,960 --> 00:08:21,120 Speaker 2: Little who are another hard discounter who internationally where they 155 00:08:21,240 --> 00:08:24,960 Speaker 2: vented markets have brought grocery prices down. But ultimately whether 156 00:08:25,000 --> 00:08:27,400 Speaker 2: they respond to New Zealand's call is up to them, 157 00:08:27,440 --> 00:08:27,960 Speaker 2: not up to me. 158 00:08:28,960 --> 00:08:31,640 Speaker 1: Have you have you specifically? Aren't? It seems old that 159 00:08:31,680 --> 00:08:33,120 Speaker 1: I mean, they're the big one you want and they 160 00:08:33,120 --> 00:08:35,520 Speaker 1: haven't even replied. Have they done it? Have they just 161 00:08:35,559 --> 00:08:37,960 Speaker 1: seen you on on? Have they left you on scene? 162 00:08:38,520 --> 00:08:41,840 Speaker 2: No? To be clear, my officials have been asked to 163 00:08:41,960 --> 00:08:45,720 Speaker 2: write to them requesting that they respond to our request 164 00:08:45,760 --> 00:08:47,960 Speaker 2: for information process and I haven't. 165 00:08:48,320 --> 00:08:52,200 Speaker 1: Well out of supermarkets, this is not the way to 166 00:08:52,200 --> 00:08:53,080 Speaker 1: go about it, Nicolas. 167 00:08:53,520 --> 00:08:55,959 Speaker 2: Look, I disagree, Ryan, because there's still a few weeks 168 00:08:56,000 --> 00:08:59,240 Speaker 2: to go on the process, and we'll have an update 169 00:08:59,240 --> 00:09:00,679 Speaker 2: at the end of the process as to whether or 170 00:09:00,720 --> 00:09:01,520 Speaker 2: not they've responded. 171 00:09:02,240 --> 00:09:07,280 Speaker 1: Now Adrian or how come your press secretary prepped you 172 00:09:07,360 --> 00:09:10,559 Speaker 1: for a question about Adrian or raising his voice. 173 00:09:11,559 --> 00:09:13,400 Speaker 2: Oh look, I wouldn't read too much into that. That's 174 00:09:13,440 --> 00:09:16,120 Speaker 2: just press secretaries imagining the sorts of questions that I 175 00:09:16,200 --> 00:09:16,880 Speaker 2: might get asked. 176 00:09:17,720 --> 00:09:20,360 Speaker 1: Did they often imagine that people raise their voice and 177 00:09:20,400 --> 00:09:22,360 Speaker 1: meetings with you or was it just Adrian? 178 00:09:23,960 --> 00:09:27,120 Speaker 2: I think that this is just press secretaries anticipating you 179 00:09:27,240 --> 00:09:30,720 Speaker 2: wiley journalists and the broad range of questions that you 180 00:09:30,800 --> 00:09:34,200 Speaker 2: ask in a range of circumstances, and getting me prepared 181 00:09:34,200 --> 00:09:35,520 Speaker 2: for questions I might be asked. 182 00:09:35,840 --> 00:09:38,400 Speaker 1: Did he ever raise his voice with you? 183 00:09:38,440 --> 00:09:41,679 Speaker 2: No, as you can imagine, we had robust exchanges as 184 00:09:41,720 --> 00:09:44,640 Speaker 2: I do with a range of officials, but I don't 185 00:09:44,679 --> 00:09:46,440 Speaker 2: recall him raising his voice. 186 00:09:47,520 --> 00:09:51,160 Speaker 1: And you would. I'm assuming why could a medical school 187 00:09:51,240 --> 00:09:53,480 Speaker 1: very quickly there is apparently going to be an announcement 188 00:09:53,520 --> 00:09:56,640 Speaker 1: on this or cabinet was making a decision or discussing 189 00:09:56,640 --> 00:09:58,120 Speaker 1: it today? Is that correct? 190 00:09:59,120 --> 00:10:02,160 Speaker 2: A cabinet hasn't a decision on that matter. As you know, 191 00:10:02,679 --> 00:10:06,240 Speaker 2: we are considering a detailed business case in the future. 192 00:10:06,880 --> 00:10:09,280 Speaker 2: We haven't had that discussion yet. 193 00:10:09,400 --> 00:10:12,079 Speaker 1: Okay, really appreciate your time, minister, Thank you very much. 194 00:10:12,240 --> 00:10:16,679 Speaker 1: Nikola Willis Finance Minister. For more from hither, Duplessy Allen Drive. 195 00:10:16,840 --> 00:10:20,240 Speaker 1: Listen live to news talks it'd be from four pm weekdays, 196 00:10:20,360 --> 00:10:22,559 Speaker 1: or follow the podcast on iHeartRadio