1 00:00:00,440 --> 00:00:02,480 Speaker 1: Later today, the government's going to open their books and 2 00:00:03,120 --> 00:00:05,840 Speaker 1: let us take a look inside. It's called the High 3 00:00:05,880 --> 00:00:08,920 Speaker 1: Food the half year, the Economic and Fiscal Update. How 4 00:00:08,960 --> 00:00:10,920 Speaker 1: much money did the government get in in tax and 5 00:00:11,200 --> 00:00:13,920 Speaker 1: how are they spending it. It'll give us a clearer 6 00:00:13,960 --> 00:00:16,480 Speaker 1: idea of just how back on track we are. Brad 7 00:00:16,480 --> 00:00:19,800 Speaker 1: Olsen is the Infometric's chief executive and Josy Now hallo, Brad, 8 00:00:20,560 --> 00:00:23,159 Speaker 1: good morning. So what do you reckon? Is going to 9 00:00:23,160 --> 00:00:24,800 Speaker 1: be good news or bad news? I mean there's a 10 00:00:24,840 --> 00:00:27,440 Speaker 1: lot of people talking that the third quarter was pretty good. 11 00:00:28,360 --> 00:00:31,600 Speaker 2: That's right. We have started to see a number of 12 00:00:32,640 --> 00:00:35,080 Speaker 2: I guess economic indicators that have started to show a 13 00:00:35,159 --> 00:00:38,040 Speaker 2: tune up, which is important. But of course the Treasury 14 00:00:38,080 --> 00:00:40,639 Speaker 2: would have done their forecast based on what we head 15 00:00:40,720 --> 00:00:43,919 Speaker 2: up until the second quarter, which was certainly a more 16 00:00:44,000 --> 00:00:48,720 Speaker 2: challenging period for the economy. Realistically, the economic recovery that 17 00:00:49,120 --> 00:00:52,160 Speaker 2: Treasury had been expecting through the course of twenty twenty 18 00:00:52,159 --> 00:00:56,200 Speaker 2: five hasn't been going as quickly as expected, and so 19 00:00:56,320 --> 00:00:58,840 Speaker 2: really from the High Food today, we're expecting a bit 20 00:00:58,840 --> 00:01:01,560 Speaker 2: of a downgrade head to what they said in the 21 00:01:01,560 --> 00:01:05,120 Speaker 2: budget in terms of how quickly the economic momentum is rebuilding, 22 00:01:05,319 --> 00:01:08,800 Speaker 2: and of course with that economic recovery taking longer, it 23 00:01:08,880 --> 00:01:11,560 Speaker 2: means that the government's not able to raise quite as 24 00:01:11,600 --> 00:01:14,040 Speaker 2: much tax revenue it's not seen as much spending or 25 00:01:14,040 --> 00:01:17,800 Speaker 2: anything else, but also has often had to incur higher expenses, 26 00:01:17,840 --> 00:01:21,160 Speaker 2: you know, higher benefit claims and similar Long story short, 27 00:01:21,200 --> 00:01:24,040 Speaker 2: it probably means that the government has been in a 28 00:01:24,200 --> 00:01:27,200 Speaker 2: forecast to spend more and earn a little bit less 29 00:01:27,240 --> 00:01:28,920 Speaker 2: than we probably thought back at the budget. 30 00:01:29,080 --> 00:01:31,480 Speaker 1: This is the thing, isn't it. The tax the tax income, 31 00:01:31,600 --> 00:01:34,000 Speaker 1: the revenue that is, that's about a bit where we're 32 00:01:34,040 --> 00:01:36,360 Speaker 1: actually fathing. Because you can cut costs and government spending 33 00:01:36,360 --> 00:01:38,320 Speaker 1: as much as you like, but if of course your 34 00:01:38,319 --> 00:01:41,200 Speaker 1: revenue is going down as well, you end out just standing. 35 00:01:40,920 --> 00:01:44,760 Speaker 2: Still exactly, and I mean standing still in some senses, 36 00:01:44,760 --> 00:01:47,520 Speaker 2: would still be not a bad position. As it is. 37 00:01:47,600 --> 00:01:51,320 Speaker 2: We know, and this has of course been a big 38 00:01:51,360 --> 00:01:54,120 Speaker 2: point of contention in the last couple of weeks, that 39 00:01:54,520 --> 00:01:58,640 Speaker 2: we're still effectively having to borrow to pay for ongoing 40 00:01:58,680 --> 00:02:01,800 Speaker 2: spending over the next couple of years. You know, we're 41 00:02:01,840 --> 00:02:05,760 Speaker 2: in deficit. The government books are indeficit until the late 42 00:02:05,920 --> 00:02:09,720 Speaker 2: twenty twenties. On the government's preferred measure there the over 43 00:02:09,800 --> 00:02:12,680 Speaker 2: gar x, and of course that means that New Zealand's 44 00:02:12,720 --> 00:02:16,079 Speaker 2: debt over time continues to accumulate. Now, the difficulty and 45 00:02:16,120 --> 00:02:18,600 Speaker 2: the challenge there is that at the same time as 46 00:02:18,720 --> 00:02:21,239 Speaker 2: clearly it would be better to be in a surplus, 47 00:02:21,480 --> 00:02:24,880 Speaker 2: there is also the difficulty of a lot of decisions 48 00:02:25,120 --> 00:02:27,400 Speaker 2: that have been made over the last couple of years 49 00:02:27,919 --> 00:02:30,680 Speaker 2: that have to continue to be funded. And unless you 50 00:02:30,760 --> 00:02:33,400 Speaker 2: are willing to take some pretty serious services and similar 51 00:02:33,440 --> 00:02:36,840 Speaker 2: away from people, that's sort of where the balancing act is. 52 00:02:36,919 --> 00:02:39,040 Speaker 2: And so one of the questions we're trying to work 53 00:02:39,040 --> 00:02:42,040 Speaker 2: out for ourselves today looking through the numbers, is what 54 00:02:42,080 --> 00:02:45,200 Speaker 2: does the government do heading into an election your budget 55 00:02:45,200 --> 00:02:49,320 Speaker 2: twenty twenty six. You know, sometimes there expectations from some 56 00:02:49,400 --> 00:02:52,320 Speaker 2: quarters for more of a spend up, but if the 57 00:02:52,360 --> 00:02:54,920 Speaker 2: government books aren't looking quite as slash, there's also a 58 00:02:54,919 --> 00:02:58,480 Speaker 2: reasonable expectation that the government might say, look, we were 59 00:02:58,520 --> 00:03:00,440 Speaker 2: going to spend X amount of money, but now we're 60 00:03:00,440 --> 00:03:02,000 Speaker 2: going to spend less than that to try and keep 61 00:03:02,000 --> 00:03:05,359 Speaker 2: a bit more control there. It is a fine balancing act. 62 00:03:05,840 --> 00:03:09,960 Speaker 1: Absolutely. If you had to bet on Nikola versus Ruth Hoodwin. 63 00:03:11,280 --> 00:03:12,919 Speaker 2: I don't like getting into that one. I mean, put 64 00:03:12,960 --> 00:03:14,720 Speaker 2: it this way, I'm a lot more interested in the 65 00:03:14,720 --> 00:03:16,560 Speaker 2: actual numbers and where they've gone. I mean, one of 66 00:03:16,600 --> 00:03:19,360 Speaker 2: the challenges of the last couple of years is given 67 00:03:19,400 --> 00:03:22,960 Speaker 2: how high wage inflation previously has been, one of the 68 00:03:23,000 --> 00:03:25,760 Speaker 2: reasons you've seen an increase in government spending over the 69 00:03:26,040 --> 00:03:28,679 Speaker 2: last couple of years is because the single biggest line 70 00:03:28,760 --> 00:03:31,720 Speaker 2: item New Zealand, sooper continues to go up. I mean, Andrew, 71 00:03:31,760 --> 00:03:35,080 Speaker 2: we still spend more money on New Zealand Super each 72 00:03:35,080 --> 00:03:38,680 Speaker 2: and every year than the entire education budget in New Zealand. Like, 73 00:03:38,760 --> 00:03:42,160 Speaker 2: in terms of making changes, that's probably the biggest difficulty. 74 00:03:42,160 --> 00:03:44,080 Speaker 2: You can make little nips and bucks here and there 75 00:03:44,120 --> 00:03:46,880 Speaker 2: when it comes to the budget, but really unless you're 76 00:03:46,880 --> 00:03:49,040 Speaker 2: going to hit some of those biggest spending items, and 77 00:03:49,080 --> 00:03:52,480 Speaker 2: they're generally in that sort of social area, the likes 78 00:03:52,480 --> 00:03:55,760 Speaker 2: of superannuation and summer, you really aren't going to touch 79 00:03:55,800 --> 00:03:58,040 Speaker 2: the sides in terms of the big spending challenges. 80 00:03:58,200 --> 00:04:01,920 Speaker 1: Thank you, Brad Olsen from informt For more from Early 81 00:04:02,040 --> 00:04:05,040 Speaker 1: Edition with Ryan Bridge, listen live to News Talks it 82 00:04:05,160 --> 00:04:09,160 Speaker 1: B from five am weekdays, or follow the podcast on iHeartRadio.