Speaker 1: Kiota.
Speaker 2: I'm Chelsea Daniels and this is the Front Page, a
Speaker 2: daily podcast presented by the New Zealand Herald. The Coalition
Speaker 2: government has unveiled its second budget. Over twenty billion dollars
Speaker 2: in savings has been found over the next four years,
Speaker 2: more than half from the controversial changes to our pay
Speaker 2: equity scheme. There are changes to key we save a
Speaker 2: contributions means testing for support for parents, and a major
Speaker 2: new tax incentive for businesses. Finance Minister Nikola Willis has
Speaker 2: said that it is a responsible budget, while Labor has
Speaker 2: called it an austerity budget that leaves women out and
Speaker 2: is stealing from our kids. To break down what all
Speaker 2: of this means for you today on the Front Page,
Speaker 2: we're joined by Enzit Herald Business Editor at Large Liam
Speaker 2: dan So. Nikola Willis has called this a growth budget.
Speaker 2: Labour's gone with austerity. If you had to pick a pithy,
Speaker 2: one word descriptive of this budget, Liam, what would you
Speaker 2: go with?
Speaker 3: Oh, good question, sort of a tightrope balancing act, something
Speaker 3: like that. It's a little bit of austerity and a
Speaker 3: little bit of growth, some big cuts to some things
Speaker 3: and there's a big roll of the dice for example,
Speaker 3: in terms of hoping that business is going to really
Speaker 3: grab this tax cut and invest for growth. So that's
Speaker 3: probably it's probably where they really rolled the dice big
Speaker 3: on that one. You know, I was wondering, where's the
Speaker 3: growth coming from. They still had growth budget at the
Speaker 3: top of all the press releases, but you know, six
Speaker 3: six billion, six point four billion over four years. It's
Speaker 3: a significant break, especially if you think of a small
Speaker 3: business someone who's having to upgrade all their tools and
Speaker 3: you know, their transport and all that sort of stuff
Speaker 3: every five years or so. To get a twenty percent
Speaker 3: break when they do that, it could be quite a
Speaker 3: substantial amount of money for them. So it's an incentive
Speaker 3: to upgrade all the equipment earlier, you know, and make
Speaker 3: themselves more a fit and drive some productivity, which we're
Speaker 3: always talking about. So that's the that's the idea. The
Speaker 3: theory is that that will mean the businesses will invest
Speaker 3: more in up to date technology, latest equipment, and they'll
Speaker 3: be more efficient and workers will be more productive and
Speaker 3: the economy will benefit because of that.
Speaker 2: The key we saver changes are one of the big
Speaker 2: changes here. Hey, taxpayers will now get two hundred and
Speaker 2: sixty dollars and seventy two cents from the government, down
Speaker 2: from five hundred and twenty one. In return, employees and
Speaker 2: employers default contribution will rise to four percent from three percent,
Speaker 2: which is being phased in over the next three years.
Speaker 2: What sort of impact could that change have.
Speaker 3: Yeah, so the net outcome is that people would save
Speaker 3: more over the period of time. I mean the risk
Speaker 3: with cutting that tax break is so it's been cut
Speaker 3: by half, so you know, it was five hundred dollars
Speaker 3: a year. You can say, well, you've lost two hundred
Speaker 3: dollars a year, but you compound that over twenty years
Speaker 3: and you can do some maths and say that that's
Speaker 3: actually potential taking you know, twenty thousand or whatever out
Speaker 3: of people's long term retirement savings. But that is more
Speaker 3: than compensated for by the increase to the contributions, which
Speaker 3: will come out of the employee's pocket and the employer's pocket.
Speaker 3: But hopefully, you know, half a percent at a time
Speaker 3: won't be too onerous. So sort of a step in
Speaker 3: the right direction in terms of lifting those investment rates.
Speaker 3: In Australia, they're up to twelve percent or something.
Speaker 1: Well or thirteen now, Yeah.
Speaker 3: And obviously that would sound horrendous to suddenly take an
Speaker 3: extra nine or ten percent out of your pay and
Speaker 3: for employers to have to pay that. But if you
Speaker 3: if you step your way there, gradually you know they've
Speaker 3: got four trillion dollars in their superannuation scheme. And we
Speaker 3: look across the Tasman and say why are they richer
Speaker 3: than us? Well, it's because they've saved the money and
Speaker 3: they've got all this money.
Speaker 1: This is not authterity.
Speaker 4: In fact, it is what you do to avoid austerity
Speaker 4: because getting the books in shape ensures New Zealand has
Speaker 4: financial security and choices into the future. That's right, And
Speaker 4: as I am about to set out, savings in this
Speaker 4: budget have allowed us to make much needed investments in health, any, education,
Speaker 4: law and order and rebuilding our defense force.
Speaker 2: Yeah. Well New Zealanders are notoriously bad savers, and key
Speaker 2: we saver for a lot of us is our main investments.
Speaker 2: So is this government telling people to pull their bootstraps
Speaker 2: up and put some more evident in.
Speaker 3: Yeah, I guess a little bit. You know, it's it's
Speaker 3: a bit of that. I mean, there's there's a bit
Speaker 3: of that all through this budget. It's definitely to nature,
Speaker 3: to any Wellington Business editor said it called it the
Speaker 3: true blue budget. It is very much some ideological or
Speaker 3: political decisions. They are like no more dolls for the
Speaker 3: eighteen to nineteen year olds. Parents have to look after
Speaker 3: them or they have to have to go back to study.
Speaker 3: If you can't get a job, you've got to be studying,
Speaker 3: otherwise you're in the You're still responsibility of their parents
Speaker 3: to pay for It was quite a big change.
Speaker 2: If it was short sighted as well, because I mean
Speaker 2: going to UNI for some people immediately out of school
Speaker 2: that it isn't an option for some people, or in
Speaker 2: some people's minds it isn't.
Speaker 3: No I guess you know, there are other things you
Speaker 3: could be looking for apprenticeships or looking for more vocational
Speaker 3: training and things, but you know they have to make
Speaker 3: sure the pathways are there to do that. My concern
Speaker 3: would be for some of those communities where unemployment is
Speaker 3: endemic and mum and dad are unemployed. But I can
Speaker 3: see you know that that true blue bit is that
Speaker 3: I guess that from the right wing political perspective, it's
Speaker 3: to try and push people to get motivated and go
Speaker 3: and look after themselves. But it could be quite a
Speaker 3: shock in the short term for some people.
Speaker 2: The investment boost tax is a big one as well.
Speaker 2: You mentioned it before. Business is allowed to deduct twenty
Speaker 2: percent of the cost of new assets immediately from their
Speaker 2: tax will income on top of normal depreciation. Essentially, this
Speaker 2: means a lower tax bill and it's believed that over
Speaker 2: twenty years this could increase the level of GDP by
Speaker 2: one percent and wages by one point five percent. How
Speaker 2: big of a deal is this change, given how long
Speaker 2: term those benefits are.
Speaker 3: I was just talking with an economist, Christina Long from
Speaker 3: enzi Are, and she wasn't that impressed with it, like
Speaker 3: in terms of the overall transformative nature of it, But
Speaker 3: I think it is. It's sort of a move in
Speaker 3: the right direction to try and lift the productivity of
Speaker 3: New Zealand. So we have this reputation for being having
Speaker 3: a low productivity rate in the country, in this country,
Speaker 3: and there are many reasons, but one of the reasons
Speaker 3: that it has been identified is that we just don't
Speaker 3: invest to the same level in the latest technology, new equipment,
Speaker 3: the stuff that makes each worker be able to generate
Speaker 3: more output. You know, if you go to Germany then
Speaker 3: it's all robotic factories and all that sort of stuff,
Speaker 3: and so anything that incentivizes businesses to invest, it should
Speaker 3: incentivize them perhaps to take a risk, expand a bit more.
Speaker 3: That's what they want, That's what they talk about when
Speaker 3: they say going for growth. It will be interesting to
Speaker 3: see because the you know, Employees and Manufacturers Association, Business
Speaker 3: end Z, they've been lobbying for this for a long time.
Speaker 3: They've finally got it. I think businesses will kind of
Speaker 3: have to put their money where their mouth is now
Speaker 3: and get out there and do it. You'd hope, and
Speaker 3: you'd hope that it has some payoff it. It's also
Speaker 3: going to be you're going to get that twenty percent
Speaker 3: break on your new buying a new forklift anyway, where
Speaker 3: you get a twenty percent break on it, that is
Speaker 3: kind of a stimulus. So that's where people say this
Speaker 3: is an austerity budget or not arguing that that this
Speaker 3: is a little bit of stimulus into the economy. So
Speaker 3: you know, one point whatever billion a year over four years.
Speaker 2: Well, basically the people who are holding off buying that
Speaker 2: forklift now have an incentive to do so more so
Speaker 2: than before.
Speaker 3: Yeah, and the true blue bit, the sort of the
Speaker 3: right leaning bit is saying, well, the stimulatory part, the
Speaker 3: bit where we're putting a bit a bit cash back
Speaker 3: into the economy. You could put it in the pockets
Speaker 3: of consumers. Consumers might go out and just spend a
Speaker 3: little bit, They might drink and eat a little bit more,
Speaker 3: which is, you know, maybe good for the short term
Speaker 3: health of the economy and hospitality. But if you give
Speaker 3: it to the businesses and they invest in the machinery
Speaker 3: of the economy the business world, you know, that's positive
Speaker 3: long term. That means that they ultimately should be able
Speaker 3: to grow bigger, make more money, employ more people. You've
Speaker 3: got to believe, I mean, I'm trying to be a
Speaker 3: political here. You've got to believe that business and capitalism
Speaker 3: is going to do the job for you to back this,
Speaker 3: and obviously this government very clearly does.
Speaker 4: So.
Speaker 2: I reckon means testing is one of the themes of
Speaker 2: this budget. Hey, government, can we save a Contributions are
Speaker 2: now going to stop if you earn one hundred and
Speaker 2: eighty thousand dollars a year or more and for the
Speaker 2: best start tax credits that will become income tested. So
Speaker 2: starting at families on seventy nine thousand dollars a year.
Speaker 2: Is that a smart move from the government.
Speaker 3: Well, I mean, some people argue that it's difficult and complex.
Speaker 3: You know, you're adding another layer of complexity to have
Speaker 3: to means test everything. I guess it seems like a
Speaker 3: really a fairly generous bar one hundred and eighty thousand
Speaker 3: when you're talking about five hundred dollars or there. You know,
Speaker 3: I think if you could afford to top up your
Speaker 3: own key, we savior to some extent of it. That's
Speaker 3: the case.
Speaker 2: Rich people like getting more money, though.
Speaker 3: Everyone likes getting more money. Yeah, I wonder. I mean,
Speaker 3: it's interesting because they might get a bit better at
Speaker 3: you know, the machinery of means testing, and you know
Speaker 3: where does that lead. Well, maybe you know, they've talked
Speaker 3: about whether we should be means testing superannuation, so that
Speaker 3: if you're actually still learning while you're getting the retirement pension,
Speaker 3: you could be means tested, and that's considered quite difficult
Speaker 3: to do. Well, perhaps if for government's some getting better
Speaker 3: at means testing because they're doing it for some other things,
Speaker 3: it becomes part and parcel of what they do. But yeah,
Speaker 3: they means test already for student allowances and things like that.
Speaker 3: So I guess. I guess there is mechanisms in place. Yeah,
Speaker 3: I mean it's all about plowing back a little bit
Speaker 3: of money here and there, isn't it. I mean that's
Speaker 3: what the finance ministers had to do. They've clawed back
Speaker 3: a large chunk from the pay equity sort of reverse all,
Speaker 3: and then they're crawing back bits and pieces everywhere else
Speaker 3: to get a few billion here and a few billion there.
Speaker 1: Seventy nine thousand dollars a year for a family. Though
Speaker 1: that's quite low, isn't it.
Speaker 5: It is?
Speaker 3: The argument is with a real right when government would
Speaker 3: even want that benefit there in the first place. So
Speaker 3: they've put a means test in so it's really just
Speaker 3: the poorest people I guess that are going to get it.
Speaker 2: So last year's budget was all about putting more money
Speaker 2: into our wallets with tax cuts and other savings. Is
Speaker 2: there anything in this budget that looks like it will
Speaker 2: help ease the cost of living?
Speaker 1: Or have we moved on from that buzz term?
Speaker 2: Now there's support for working for families and supercar holders,
Speaker 2: but it doesn't feel like a massive support budget.
Speaker 3: No, this is not a support budget, and I don't
Speaker 3: know whether you'd call it austerity or not. It's probably
Speaker 3: depends on your political colors, but it's certainly from that
Speaker 3: point of view. You know, it was just that tax
Speaker 3: break for business, which may be a little bit stimulatory,
Speaker 3: but for ordinary consumers there isn't any stimulus and they
Speaker 3: don't want to kick start the inflation again. They don't
Speaker 3: want to get back growing the economy just by putting
Speaker 3: money into it, is what they're saying. Well, that's what
Speaker 3: the last government did. We're not doing that. We need
Speaker 3: it to come from the ground up, needs to come
Speaker 3: from business and export earnings and all that sort of stuff.
Speaker 3: So yeah, I don't think we expected much support for people.
Speaker 3: I'm sure the government would argue that inflation is more
Speaker 3: or less under control. I know right now everyone's panicking
Speaker 3: about the price of butter and there's some cheese. Yeah, yeah,
Speaker 3: don't forget cheese. But basically, you know, weirdly, when dairy
Speaker 3: products are going through the roof like that, that's good
Speaker 3: news for New Zealand. I mean, there's money coming into
Speaker 3: the countries and economists think that overall inflation will stay
Speaker 3: relatively subdued. A few of those key commodity products that
Speaker 3: are accepted, you know that are having a bit of
Speaker 3: a moment, but the core inflation in the economy because
Speaker 3: of higher unemployment wages coming off, it's expected to stay
Speaker 3: pretty subdued. So nobody's ever going to say, hey, the
Speaker 3: cost of living is great, but it shouldn't be the
Speaker 3: same sort of issue that it was. And I don't
Speaker 3: think national would ideologically support the kind of just payments
Speaker 3: to people to cope with it anyway, because they would
Speaker 3: argue that that would just exacerbate the inflation.
Speaker 2: Well, you mentioned the pay equity changes that's dominated the
Speaker 2: political discourse for a few weeks. Now, now that we've
Speaker 2: learned that nearly thirteen billion over four years has been saved,
Speaker 2: is it a win for the government to the average
Speaker 2: person on the street, that's a pretty big number to
Speaker 2: attach a saving.
Speaker 3: Two Yeah, Well, I mean, I guess you know, it
Speaker 3: has kind of opened up the budget for the government
Speaker 3: to do the things they wanted to do, So, you know,
Speaker 3: I think didn't David Seymour get in trouble for saying.
Speaker 1: That Brook van Velden saved the budget. Yeah, well, it
Speaker 1: kind of has.
Speaker 5: Right.
Speaker 3: Whether it's a win for the government, well, we'll have
Speaker 3: to wait and see, because I think it's going to
Speaker 3: be a hot topic for a while to come, because
Speaker 3: you know, just just at a superficial level politically, money
Speaker 3: for businesses, and it's coming out of the potential wage
Speaker 3: increases that could have gone to some of the poorest workers,
Speaker 3: female workers and female industries and often caring for the
Speaker 3: most vulnerable people in society. So you've got a pretty
Speaker 3: stark contrast there, and that's something for the opposition to
Speaker 3: work with and say, hey, you know, why are we
Speaker 3: giving this money to businesses. They're going to have to
Speaker 3: really sell this kind of productivity argument, and it's not
Speaker 3: not necessarily a simple simple sales job. So I think
Speaker 3: the government will still be up against it politically for
Speaker 3: a few more weeks. I think they're hoping that it'll
Speaker 3: all just roll on and that maybe by the time
Speaker 3: we get to an election, but I've spoken to a
Speaker 3: few women who think it might not.
Speaker 6: This House has no confidence in the government because it
Speaker 6: has chosen to pay for its budget by cutting the
Speaker 6: future wages of working women. Mister Speaker Niicola Willis's pre
Speaker 6: budget's been got it half right. This was a scramble
Speaker 6: without the lollies.
Speaker 1: A budget that has scrambled.
Speaker 6: The government's finances, tried a whole lot of smoke and
Speaker 6: mirrors to hide where their cuts are being made, and
Speaker 6: to try and confuse Use Islanders with the idea that
Speaker 6: they'll be better off when for a lot of key
Speaker 6: we families, this budget is nothing but bad use.
Speaker 2: Well, in terms of infrastructure, we've had some investments in
Speaker 2: rail military equipment, and billion dollars on hospitals upgrades and maintenance,
Speaker 2: just under a billion dollars of capital and operating spending
Speaker 2: on new classrooms, two hundred and nineteen million on recovery
Speaker 2: work on cyclone damaged roads. Does this feel like a
Speaker 2: good infrastructure spend? I ask this only because the Herald
Speaker 2: editorial on budget Day said that it is unacceptable for
Speaker 2: some of us to have seen our quality of life
Speaker 2: fall because of a lack of basic infrastructure. So if
Speaker 2: we're saving thirteen billion dollars, shouldn't we be getting something
Speaker 2: a bit more out of it?
Speaker 5: Yeah?
Speaker 3: I mean this is the spending is fairly basic. It's
Speaker 3: the kind of keeping things running, coping with the higher population,
Speaker 3: more people living in certain areas, needing the schools, making
Speaker 3: sure that the hospitals can cope, and I imagine it's
Speaker 3: still going to be plenty of people saying that this
Speaker 3: is still going to be an incredibly tight budget for
Speaker 3: health and education regardless. So this is where the government
Speaker 3: is caught on the spending front. They and the argument
Speaker 3: would come back to debt and borrowing because the tax
Speaker 3: takes down issues about how quickly it's going to come
Speaker 3: back and start putting more money into the government coffers
Speaker 3: they're up against it, and so what are the options, Well,
Speaker 3: you cut or you borrow, And of course the opposition
Speaker 3: is saying, well, we could afford to borrow more, and
Speaker 3: depends who you talk to, you know we could, but
Speaker 3: that might be taking a higher level of risk than
Speaker 3: some people feel like taking. At the moment, we could
Speaker 3: probably technically afford to borrow more. But I think one
Speaker 3: of the issues that politically holds this government back and
Speaker 3: a lot of people who voted for them, is the
Speaker 3: sense that governments can actually spend that money. Well, so
Speaker 3: after what we've been through with all the borrowing and
Speaker 3: spending to get through COVID, but then all sorts of
Speaker 3: other stuff that was planned on the infrastructure front and
Speaker 3: hasn't happened, people are skeptical about the the ability of
Speaker 3: governments to deliver if they borrow more money. So I
Speaker 3: think that's a big part of the debate around borrowing
Speaker 3: more you know, New Zealanders country that has to be
Speaker 3: ready for the next earthquake or the next major natural disaster,
Speaker 3: or the next big international shocks. So I'm kind of
Speaker 3: pleased to see Nikola Willis being prudent there and hopefully,
Speaker 3: you know, building for the future. I'm not as gloomy
Speaker 3: as some other commentators. If you've talked to Matthew Hooton
Speaker 3: or someone like that, they.
Speaker 1: Think it's pretty gloomy. They're all dar livestream.
Speaker 5: Yeah, until the government is prepared to cut superannuation and
Speaker 5: tertiary healthcare, basically this country is heading towards bankruptcy. None
Speaker 5: of this takes into account the problems that we've known
Speaker 5: about for thirty or forty years that chicken from twenty thirty.
Speaker 5: We're going to start that period about fifty percent of
Speaker 5: GDP worse than we expected at the end of the
Speaker 5: era of reform under the Bulger, Shipley and Clark governments.
Speaker 3: He would argue that we're in real trouble, say in
Speaker 3: the next ten years, if we don't take some really
Speaker 3: radical action and cut back even harder. So the alternative
Speaker 3: is to bet on the growth. So I think the
Speaker 3: government is rolling the dice, betting on business to grow
Speaker 3: this economy and betting, I guess, or hoping that you
Speaker 3: know that the boom and the primary sector keeps going,
Speaker 3: they can get tourism back. Yeah, those are the things
Speaker 3: that need to happen.
Speaker 2: Well, ultimately, Liam, do you think this budget is going
Speaker 2: to be a winner with voters or is it a
Speaker 2: bit too middle of the road.
Speaker 3: Yeah, it could, It could be a difficult cell. But
Speaker 3: it is the middle budget, you know, so that the
Speaker 3: first budget in power in a three year term. You've
Speaker 3: kind of got to deliver all these promises that you made,
Speaker 3: so that's pretty costly. Second budget is the one that
Speaker 3: might as well be the most unpopular budget, and it's
Speaker 3: the one that people might forget because you've got another
Speaker 3: one coming up in election year where you can maybe
Speaker 3: put something a little bit more like whatever. For Nicholais
Speaker 3: said no lolly scramble this year. I'm not sure that
Speaker 3: budgets are meant to be a lolly scramble, but a
Speaker 3: lolly or two. Yeah, I think I think this budget
Speaker 3: probably is quite a hard sell. I mean, the business
Speaker 3: community will be quite happy and they'll be excited about it,
Speaker 3: and there'll be lots of discussion about growth and maybe
Speaker 3: maybe it's you know, from a confidence point of view,
Speaker 3: that will be quite good. But for the wider public,
Speaker 3: I think it's probably tough.
Speaker 2: Sel Thanks for joining us, Liam, cheers. That's it for
Speaker 2: this episode of the Front Page. You can read more
Speaker 2: about today's stories and extensive news coverage at enzdherld dot
Speaker 2: co dot MZ. The Front Page is produced by Ethan
Speaker 2: Sills and Richard Martin, who is also our sound engineer.
Speaker 2: I'm Chelsea Daniels. Subscribe to The Front Page on iHeartRadio
Speaker 2: or wherever you get your podcasts, and tune in on
Speaker 2: Monday for another look behind the headlines.