1 00:00:00,040 --> 00:00:03,160 Speaker 1: So the Finance Minister found a shedloader though from savings 2 00:00:03,160 --> 00:00:04,640 Speaker 1: and spread it about the place. A lot of it's 3 00:00:04,680 --> 00:00:06,800 Speaker 1: pre announced, of course, as it is these days, areas 4 00:00:06,800 --> 00:00:09,240 Speaker 1: like health and defense we already knew about. We don't 5 00:00:09,280 --> 00:00:12,320 Speaker 1: have a surplus though for years, and we are borrowing 6 00:00:12,400 --> 00:00:15,200 Speaker 1: yet more money. The Finance Minister, Nikola Willis is with 7 00:00:15,320 --> 00:00:16,279 Speaker 1: us a very good morning to you. 8 00:00:16,920 --> 00:00:17,480 Speaker 2: Good morning. 9 00:00:17,480 --> 00:00:20,600 Speaker 1: Make the surplus that you are promising by twenty twenty 10 00:00:20,680 --> 00:00:23,920 Speaker 1: nine under your dodgy measurement process. What if you're wrong, 11 00:00:24,160 --> 00:00:27,000 Speaker 1: that will be two terms of a national government that 12 00:00:27,240 --> 00:00:30,520 Speaker 1: couldn't deliver a single surplus. Is that a government that 13 00:00:30,560 --> 00:00:31,840 Speaker 1: knows how to run an economy. 14 00:00:32,600 --> 00:00:34,960 Speaker 2: Well, it's really important to me that we do get 15 00:00:34,960 --> 00:00:37,559 Speaker 2: the books back in balance and back in surplus, and 16 00:00:37,560 --> 00:00:40,919 Speaker 2: that's our fiscal strategy. And what we've shown is despite 17 00:00:41,000 --> 00:00:44,640 Speaker 2: everything that's been happening internationally and the downgraded forecasts that 18 00:00:44,640 --> 00:00:47,560 Speaker 2: have resulted from that, we're still on track to get 19 00:00:47,600 --> 00:00:51,839 Speaker 2: that surplus. So I don't take economic recovery for granted. 20 00:00:51,960 --> 00:00:54,440 Speaker 2: That's why in this budget we've put that focus on 21 00:00:54,520 --> 00:00:58,280 Speaker 2: the investment boost policy to encourage businesses to keep investing. 22 00:00:58,360 --> 00:01:01,360 Speaker 2: That's why we're making a number of reforms for growth 23 00:01:01,360 --> 00:01:05,280 Speaker 2: because ultimately the biggest risk to surplus is if our 24 00:01:05,319 --> 00:01:08,560 Speaker 2: economy slows down, and so that's why we're really on 25 00:01:08,600 --> 00:01:10,960 Speaker 2: the side of driving activity in this economy. 26 00:01:11,080 --> 00:01:14,560 Speaker 1: The means testing stuff. I've asked many people over the 27 00:01:14,640 --> 00:01:18,560 Speaker 1: years around doctors and why you're subsidizing my kids to 28 00:01:18,560 --> 00:01:20,160 Speaker 1: go to a doctor. I've got no idea. I don't 29 00:01:20,160 --> 00:01:23,399 Speaker 1: need your help. You've always explained that it's too difficult 30 00:01:23,400 --> 00:01:25,759 Speaker 1: to means test. How come suddenly we can means test 31 00:01:25,840 --> 00:01:27,760 Speaker 1: lots of stuff and that's apparently doable. 32 00:01:28,640 --> 00:01:31,200 Speaker 2: Well, I do support means to stake here. 33 00:01:31,319 --> 00:01:33,720 Speaker 1: I do too, but you've explained previously you can't do 34 00:01:33,800 --> 00:01:35,120 Speaker 1: it well. 35 00:01:34,959 --> 00:01:38,120 Speaker 2: In some cases, in some particular areas, it may be challenging. 36 00:01:38,160 --> 00:01:40,480 Speaker 2: But in the couple of areas that we've chosen in 37 00:01:40,520 --> 00:01:43,600 Speaker 2: this budget, it's very straightforward. With Key we Saver, we're 38 00:01:43,600 --> 00:01:46,679 Speaker 2: simply not putting the government contribution, the government subsidy in 39 00:01:46,720 --> 00:01:49,400 Speaker 2: for those earning one hundred and eighty thousand dollars or more. 40 00:01:49,480 --> 00:01:52,760 Speaker 2: That's pretty simple to do via ID. And with the 41 00:01:52,800 --> 00:01:55,680 Speaker 2: Best Start Payment, which is a payment for people who 42 00:01:55,760 --> 00:01:58,760 Speaker 2: have babies, we're just lining that up with what the 43 00:01:58,880 --> 00:02:01,320 Speaker 2: regime already is for year two and three. There's always 44 00:02:01,360 --> 00:02:03,880 Speaker 2: been means testing there. It's just been only for the 45 00:02:03,920 --> 00:02:06,040 Speaker 2: year two and three of the payment and we're aligning 46 00:02:06,040 --> 00:02:09,160 Speaker 2: it a new one. So those are simple changes. Collectively, 47 00:02:09,600 --> 00:02:12,280 Speaker 2: they save hundreds of millions of dollars. I think everyone 48 00:02:12,320 --> 00:02:14,480 Speaker 2: just needs to remember right now than anything the government's 49 00:02:14,560 --> 00:02:17,200 Speaker 2: doing like that, we are borrowing to do it, and 50 00:02:17,520 --> 00:02:20,639 Speaker 2: that cannot go on forever. We have to make savings 51 00:02:20,680 --> 00:02:22,160 Speaker 2: if we want to invest in the things that we. 52 00:02:22,160 --> 00:02:24,560 Speaker 1: All under your resume it is and that's that's part 53 00:02:24,600 --> 00:02:27,160 Speaker 1: of the problem. That forty six percent debt to GDP, 54 00:02:28,520 --> 00:02:30,880 Speaker 1: that's that's ruinous. We don't have enough room to move 55 00:02:30,880 --> 00:02:32,360 Speaker 1: should should something go wrong. 56 00:02:33,440 --> 00:02:36,079 Speaker 2: Yeah, Well, what the projections show is that debt is 57 00:02:36,160 --> 00:02:39,760 Speaker 2: peeking a little bit lower than was being predicted a 58 00:02:39,840 --> 00:02:42,600 Speaker 2: few months ago at the half year update before Christmas, 59 00:02:43,320 --> 00:02:45,960 Speaker 2: but and then it is starting to come down in 60 00:02:46,040 --> 00:02:48,440 Speaker 2: the final year of our forecasts. We want to see 61 00:02:48,480 --> 00:02:51,800 Speaker 2: debt coming back down to forty percent of GDP because 62 00:02:52,040 --> 00:02:53,400 Speaker 2: we need a bit more of a buffer for a 63 00:02:53,480 --> 00:02:54,000 Speaker 2: rainy day. 64 00:02:54,000 --> 00:02:57,720 Speaker 1: The box refrish for GDP. It wasn't that long ago 65 00:02:57,800 --> 00:02:58,960 Speaker 1: when Stephen joycelist off. 66 00:02:59,080 --> 00:03:03,720 Speaker 2: It was nineteen that's right, And even after the GFC 67 00:03:03,760 --> 00:03:06,160 Speaker 2: and the christ Church earthquake, the highest debt got was 68 00:03:06,160 --> 00:03:08,640 Speaker 2: twenty five percent. So I think we just have to 69 00:03:08,639 --> 00:03:11,600 Speaker 2: try to context how much well, because I got left 70 00:03:12,080 --> 00:03:15,120 Speaker 2: with an absolute debt mountain by the last loot. That's 71 00:03:15,160 --> 00:03:16,960 Speaker 2: the reality of what's happened to here. Not only did 72 00:03:17,000 --> 00:03:19,560 Speaker 2: they leave an absolute debt mountain, more than one hundred 73 00:03:19,560 --> 00:03:21,960 Speaker 2: billion dollars more of debt with very little to show 74 00:03:22,000 --> 00:03:24,360 Speaker 2: for it, they left a structural deficit in the box, 75 00:03:24,400 --> 00:03:27,440 Speaker 2: which is they were structurally spending a lot more than 76 00:03:27,520 --> 00:03:29,800 Speaker 2: we were earning. And we're now having to pair that 77 00:03:29,960 --> 00:03:32,200 Speaker 2: back and correct it. And it's pretty hard work, but 78 00:03:32,360 --> 00:03:34,320 Speaker 2: we can do it, and we've put out a plan 79 00:03:34,400 --> 00:03:35,760 Speaker 2: that shows that we'll get there. 80 00:03:35,840 --> 00:03:37,480 Speaker 1: Were you tempted to go harder? 81 00:03:39,560 --> 00:03:42,240 Speaker 2: Well, I was always of the view that we should 82 00:03:42,240 --> 00:03:45,520 Speaker 2: look for as many savings as we could reasonably deliver, 83 00:03:45,800 --> 00:03:49,080 Speaker 2: because when you're borrowing to pay for the groceries, you 84 00:03:49,120 --> 00:03:51,400 Speaker 2: owe it. I think to New Zealanders to say, have 85 00:03:51,480 --> 00:03:54,680 Speaker 2: I raally tested whether we're getting value for money for everything? 86 00:03:54,720 --> 00:03:57,400 Speaker 2: And there were some big calls in this budget. No 87 00:03:57,400 --> 00:04:00,560 Speaker 2: one's saying it's easy. But I think think where we've 88 00:04:00,560 --> 00:04:02,440 Speaker 2: got to is the right balance, because for me it 89 00:04:02,480 --> 00:04:04,920 Speaker 2: is important we keep investing in education, we keep investing 90 00:04:04,920 --> 00:04:06,760 Speaker 2: in how those things matter to people, and they are 91 00:04:06,800 --> 00:04:08,280 Speaker 2: ultimately making a difference to the accoutry. 92 00:04:08,320 --> 00:04:10,040 Speaker 1: Do you don't give me your normal answer, which is 93 00:04:10,080 --> 00:04:11,880 Speaker 1: this is what I've been told by Treasury. Do you 94 00:04:12,040 --> 00:04:14,840 Speaker 1: believe the growth forecasts of an average of two point 95 00:04:14,920 --> 00:04:16,480 Speaker 1: nine over the next four years. 96 00:04:16,960 --> 00:04:19,720 Speaker 2: I do. I look at our exporters and how well 97 00:04:19,760 --> 00:04:23,200 Speaker 2: they are doing right now. I can see that continuing. 98 00:04:23,680 --> 00:04:27,480 Speaker 2: I have the benefit of visiting really cool businesses across 99 00:04:27,520 --> 00:04:30,840 Speaker 2: the country and seeing their prospects for the future. And 100 00:04:30,880 --> 00:04:32,800 Speaker 2: I look at New Zealand compared to lots of other 101 00:04:32,839 --> 00:04:35,560 Speaker 2: countries in the world. Right now, we're safe. We're secure, 102 00:04:35,920 --> 00:04:38,960 Speaker 2: we've got great farmers, we've got lots of trading relationships. 103 00:04:38,960 --> 00:04:42,280 Speaker 2: There's every reason we can succeed over these next few years. 104 00:04:42,320 --> 00:04:44,080 Speaker 2: But we do need a government that's on the side 105 00:04:44,080 --> 00:04:45,680 Speaker 2: of business, and we absolutely are. 106 00:04:45,920 --> 00:04:49,400 Speaker 1: Are we structurally limited? Do you think at about see 107 00:04:49,400 --> 00:04:51,560 Speaker 1: two point ninety three is about what we do in 108 00:04:51,600 --> 00:04:53,240 Speaker 1: the good days. If we can manage that over the 109 00:04:53,240 --> 00:04:56,000 Speaker 1: next four years, that this is an export lead recovery. 110 00:04:56,040 --> 00:04:59,080 Speaker 1: All of that's great news. Are we structurally limited to 111 00:04:59,160 --> 00:05:02,800 Speaker 1: doing anything better than that without sort of smoking inflation? 112 00:05:03,839 --> 00:05:05,920 Speaker 2: Yeah, well, look what Treasury says that we do come 113 00:05:06,000 --> 00:05:09,440 Speaker 2: up against productivity constraints when growth gets a bit higher 114 00:05:09,440 --> 00:05:13,480 Speaker 2: than that. And that's why we're doing this investment boost policy. 115 00:05:13,560 --> 00:05:16,520 Speaker 2: That's about acknowledging that one of the things that's held 116 00:05:16,600 --> 00:05:19,359 Speaker 2: us back traditionally is we've got low rates of capital intensity. 117 00:05:19,400 --> 00:05:21,840 Speaker 2: That is, our firms don't have as good a machinery 118 00:05:21,880 --> 00:05:25,160 Speaker 2: and technology as their international counterparts. How do we encourage 119 00:05:25,160 --> 00:05:26,800 Speaker 2: people to invest more in that, Well, we're giving them 120 00:05:26,839 --> 00:05:29,479 Speaker 2: a tax break for investing in assets. Those are the 121 00:05:29,520 --> 00:05:32,240 Speaker 2: sorts of things that over the years will make this 122 00:05:32,279 --> 00:05:34,599 Speaker 2: a more productive economy. But it's also things like having 123 00:05:34,640 --> 00:05:38,239 Speaker 2: better educated workers, having a better match up between business 124 00:05:38,320 --> 00:05:41,960 Speaker 2: and science, having resource consent laws that don't mean you 125 00:05:42,040 --> 00:05:45,600 Speaker 2: have to spend three years in court fighting to build something. 126 00:05:45,960 --> 00:05:47,599 Speaker 2: You know that stuff as waste for it gets in 127 00:05:47,600 --> 00:05:48,280 Speaker 2: the way of growth. 128 00:05:48,440 --> 00:05:50,599 Speaker 1: The RB next week, are they going to come to 129 00:05:50,640 --> 00:05:51,080 Speaker 1: the party. 130 00:05:52,520 --> 00:05:55,680 Speaker 2: I think they will. Obviously I'm not allowed to influence them, 131 00:05:55,720 --> 00:05:58,719 Speaker 2: but you don't need to talk to many economists to 132 00:05:58,760 --> 00:06:02,000 Speaker 2: hear that there's room for straits to ease further. Certainly, 133 00:06:02,040 --> 00:06:06,520 Speaker 2: treasuries forecasts show that our budget helps create that room. 134 00:06:07,360 --> 00:06:09,719 Speaker 2: And I look around the world and I think that 135 00:06:09,760 --> 00:06:12,880 Speaker 2: the uncertainty still is out there, So I think the 136 00:06:13,040 --> 00:06:14,400 Speaker 2: Reserve Bank still has room to go. 137 00:06:14,560 --> 00:06:16,680 Speaker 1: What do you, well, you're not influencing the Reserve Bank. 138 00:06:16,720 --> 00:06:18,880 Speaker 1: They can make up their own mind. What's neutral? You reckon? 139 00:06:18,960 --> 00:06:22,400 Speaker 1: Is it two and a half? Well, the reason I 140 00:06:22,480 --> 00:06:24,440 Speaker 1: asked that is I think it's two and a half 141 00:06:24,480 --> 00:06:26,280 Speaker 1: to two seven five. And the reason I think that 142 00:06:26,440 --> 00:06:28,520 Speaker 1: is I think things are harder than a lot of 143 00:06:28,560 --> 00:06:29,360 Speaker 1: people understand. 144 00:06:30,720 --> 00:06:32,880 Speaker 2: Yeah, well, I think the Reserve Bank thinks neutral is 145 00:06:32,880 --> 00:06:35,120 Speaker 2: a bit higher than that. But it'll be interesting to 146 00:06:35,160 --> 00:06:38,599 Speaker 2: see what they say next week. But I think the 147 00:06:38,680 --> 00:06:41,599 Speaker 2: key thing that we've seen recently is that interest rates 148 00:06:41,600 --> 00:06:44,800 Speaker 2: haven't necessarily transmitted through to people. You've still got a 149 00:06:44,800 --> 00:06:46,719 Speaker 2: lot of people who haven't gone on to a lower 150 00:06:46,800 --> 00:06:49,240 Speaker 2: rate yet, so we haven't had all the stimulatory effect 151 00:06:49,320 --> 00:06:52,719 Speaker 2: of the earlier cuts. So things should be flowing through 152 00:06:52,720 --> 00:06:54,120 Speaker 2: over the next few months and that'll be what the 153 00:06:54,120 --> 00:06:54,799 Speaker 2: reserve banks. 154 00:06:54,600 --> 00:06:56,800 Speaker 1: Are and that for you then brings in the politics 155 00:06:56,800 --> 00:06:59,480 Speaker 1: of all of this, because you look at manufacturing, manufacturers 156 00:06:59,480 --> 00:07:01,800 Speaker 1: on the move, exports as we know, are on the move, 157 00:07:02,360 --> 00:07:07,080 Speaker 1: services isn't, and sentiment isn't and you need something to 158 00:07:07,160 --> 00:07:09,560 Speaker 1: switch Otherwise people come election, you are just going to 159 00:07:09,560 --> 00:07:11,240 Speaker 1: look at you and go, jeez, we're still in debt 160 00:07:11,240 --> 00:07:13,040 Speaker 1: and the place is still stuff. Let's give someone else 161 00:07:13,040 --> 00:07:13,360 Speaker 1: a crack. 162 00:07:14,440 --> 00:07:16,760 Speaker 2: Yeah. Well, look, that's why I'm heartened by this forecast, 163 00:07:16,800 --> 00:07:20,360 Speaker 2: because what they show is growth really speeding up next year. 164 00:07:20,480 --> 00:07:24,160 Speaker 2: They show unemployment peaking the middle of this year and 165 00:07:24,160 --> 00:07:26,400 Speaker 2: then coming down again. They show a lot of job 166 00:07:26,440 --> 00:07:29,360 Speaker 2: creation happening. And when I'm out and about talking to businesses, 167 00:07:29,960 --> 00:07:31,960 Speaker 2: they say to me, look, the thing we need to 168 00:07:31,960 --> 00:07:33,840 Speaker 2: see is that the government's really on our side. That 169 00:07:33,920 --> 00:07:36,880 Speaker 2: investment boost tax policy. It's a very clear indication that 170 00:07:36,960 --> 00:07:41,120 Speaker 2: we are. We'll get our Resource Management Act replacement this year. 171 00:07:41,920 --> 00:07:43,920 Speaker 2: We're going to have a succession of things that I 172 00:07:43,960 --> 00:07:46,560 Speaker 2: think will and gender confidence and we'll build a sense 173 00:07:46,600 --> 00:07:50,840 Speaker 2: of momentum. I can't stop international events making people a 174 00:07:50,840 --> 00:07:53,680 Speaker 2: bit wobbly. That is the reality of things. A lot 175 00:07:53,680 --> 00:07:55,720 Speaker 2: of businesses look at the world and go, I'm not 176 00:07:55,760 --> 00:07:58,160 Speaker 2: sure I'm that confident right now, but I think that 177 00:07:58,320 --> 00:08:00,000 Speaker 2: every reason to be This is a much better place 178 00:08:00,200 --> 00:08:01,880 Speaker 2: to be doing business then lots of other parts of 179 00:08:01,920 --> 00:08:02,240 Speaker 2: the world. 180 00:08:02,320 --> 00:08:05,160 Speaker 1: The under eighteen nineteen year olds who are unemployed. You're 181 00:08:05,160 --> 00:08:08,200 Speaker 1: going to mean to test the parents. When's that announcement coming, 182 00:08:08,840 --> 00:08:11,800 Speaker 1: and why wasn't it yesterday? And when it does come, 183 00:08:11,840 --> 00:08:14,120 Speaker 1: the reason it wasn't yesterday is people are going to squeal. 184 00:08:15,520 --> 00:08:18,440 Speaker 2: Well, it's a great policy, Mike, because I have talked 185 00:08:18,520 --> 00:08:21,160 Speaker 2: to parents myself who say it's pretty tough. 186 00:08:21,520 --> 00:08:23,920 Speaker 1: But it depends, Nicola, don't play this game with me. 187 00:08:23,960 --> 00:08:26,000 Speaker 1: It depends when you where are you going to means 188 00:08:26,000 --> 00:08:28,040 Speaker 1: test the mat? Is it one eighty plus or is 189 00:08:28,080 --> 00:08:29,720 Speaker 1: it a lot lower? And a lot of parents are 190 00:08:29,760 --> 00:08:31,320 Speaker 1: going to go I can't afford to do that. 191 00:08:31,600 --> 00:08:33,599 Speaker 2: Well, we only really want it to be an exceptional 192 00:08:33,679 --> 00:08:37,640 Speaker 2: circumstances that this policy doesn't apply, because our base expectation 193 00:08:37,880 --> 00:08:41,520 Speaker 2: is if you're a teenager, we expect agreement. If you 194 00:08:41,559 --> 00:08:44,120 Speaker 2: can't get a job, you should be in training or 195 00:08:44,160 --> 00:08:44,880 Speaker 2: an apprenticeship. 196 00:08:44,920 --> 00:08:48,080 Speaker 1: You're talking to that's how much, Nicola, How much does 197 00:08:48,120 --> 00:08:50,200 Speaker 1: a parent have to earn before you ping them? 198 00:08:50,520 --> 00:08:52,160 Speaker 2: Well, Cabinet will make those decisions. 199 00:08:52,200 --> 00:08:53,280 Speaker 1: You haven't even made the decision. 200 00:08:54,480 --> 00:08:57,120 Speaker 2: No, we haven't made that decision. The final design of 201 00:08:57,160 --> 00:09:00,240 Speaker 2: the policy is yet to be made. But what we 202 00:09:00,280 --> 00:09:02,839 Speaker 2: are clear about is that it will be very difficult 203 00:09:03,240 --> 00:09:05,920 Speaker 2: for those teenagers to access a benefit. It will only 204 00:09:05,920 --> 00:09:09,120 Speaker 2: be an exceptional circumstances where they genuinely can't rely on 205 00:09:09,160 --> 00:09:10,120 Speaker 2: their parents for support. 206 00:09:10,280 --> 00:09:12,720 Speaker 1: Is it one the plus? Should it be one agy plus? 207 00:09:13,920 --> 00:09:15,520 Speaker 2: Well, I actually think it should be less than that. 208 00:09:16,120 --> 00:09:18,040 Speaker 2: Kevnet will obviously have to deliberate. 209 00:09:17,960 --> 00:09:19,280 Speaker 1: What we said. Do you think it's less than one 210 00:09:19,320 --> 00:09:20,439 Speaker 1: hundred thousand dollars? 211 00:09:20,760 --> 00:09:24,240 Speaker 2: Well, I think basically any parent, it doesn't really matter 212 00:09:24,280 --> 00:09:27,440 Speaker 2: what their income situation is, doesn't want to have to 213 00:09:27,480 --> 00:09:29,600 Speaker 2: say to their kid, look, just live at home. It's fine. 214 00:09:29,679 --> 00:09:32,120 Speaker 2: Take take the doll take it. Take the benefit from 215 00:09:32,440 --> 00:09:34,040 Speaker 2: the government. They want to be able to say, look, 216 00:09:34,720 --> 00:09:38,480 Speaker 2: get out there, do some training, get a job, because 217 00:09:38,520 --> 00:09:41,800 Speaker 2: that's actually where your future lies. And we're aspirational for you. 218 00:09:41,840 --> 00:09:44,199 Speaker 2: We don't want you just taking a check from the government. 219 00:09:44,280 --> 00:09:46,520 Speaker 2: And actually that's not a nice recipe for anyone. 220 00:09:46,600 --> 00:09:49,040 Speaker 1: No, it isn't. But that number is going to be political, 221 00:09:49,120 --> 00:09:50,679 Speaker 1: isn't it a nice suspect that's why you've not made 222 00:09:50,720 --> 00:09:51,480 Speaker 1: the decision yet. 223 00:09:52,520 --> 00:09:54,400 Speaker 2: Well, no, it's not that. It's just that we were 224 00:09:54,400 --> 00:09:57,120 Speaker 2: clear that this was a reform that we wanted to progress, 225 00:09:57,160 --> 00:09:59,120 Speaker 2: but we needed to finalize some of the details and 226 00:10:00,000 --> 00:10:01,720 Speaker 2: look forward to announcing those in due course. 227 00:10:01,880 --> 00:10:03,400 Speaker 1: Look forward to talking to you about it. Appreciate it, 228 00:10:03,440 --> 00:10:07,199 Speaker 1: Finance Minister Nikola Willis. For more from the Mic Asking Breakfast, 229 00:10:07,360 --> 00:10:10,679 Speaker 1: listen live to News Talks at B from six am weekdays, 230 00:10:10,920 --> 00:10:12,960 Speaker 1: or follow the podcast on iHeartRadio.