1 00:00:00,120 --> 00:00:04,120 Speaker 1: And the government's tax cuts are coming into force tomorrow. 2 00:00:04,519 --> 00:00:07,320 Speaker 1: Inflation has been tracking firmly in the right direction recently, 3 00:00:08,400 --> 00:00:10,600 Speaker 1: so the Finance Minister will be crossing her fingers and 4 00:00:10,720 --> 00:00:14,160 Speaker 1: tos that these tax cuts have absolutely no impact on inflation. 5 00:00:14,480 --> 00:00:17,239 Speaker 1: Who knows about that, Brad Olsen who joins me now, 6 00:00:17,239 --> 00:00:24,360 Speaker 1: Hallibrad Good evening any risk that these tax cuts are inflationary. 7 00:00:24,840 --> 00:00:27,080 Speaker 2: I mean, certainly, given the way they've been funded, I 8 00:00:27,080 --> 00:00:29,480 Speaker 2: don't think there's as much risk as as some people 9 00:00:30,040 --> 00:00:32,240 Speaker 2: have made it out to be previously. The government has 10 00:00:32,560 --> 00:00:35,800 Speaker 2: of course been or decided to spend less money itself 11 00:00:35,840 --> 00:00:38,600 Speaker 2: and instead let people effectively keep more of their own money, 12 00:00:38,600 --> 00:00:41,400 Speaker 2: and therefore, in a sense, it's a switch in terms 13 00:00:41,440 --> 00:00:43,560 Speaker 2: of who's spending it, rather than sort of a huge 14 00:00:43,600 --> 00:00:46,839 Speaker 2: additional amount of stimulus into the economy. You're right though 15 00:00:46,880 --> 00:00:50,080 Speaker 2: as well, with inflation at three point three percent in 16 00:00:50,120 --> 00:00:52,960 Speaker 2: the latest quarter, things are trending in the right direction. 17 00:00:53,280 --> 00:00:56,680 Speaker 2: There might well be a slight boost in retail activity 18 00:00:57,000 --> 00:00:59,320 Speaker 2: because of the tax cuts, but I think that's probably 19 00:00:59,360 --> 00:01:02,360 Speaker 2: going to be far overshadowed by the high interest rates 20 00:01:02,400 --> 00:01:05,160 Speaker 2: that people are still dealing with. Shops are still not 21 00:01:05,200 --> 00:01:08,200 Speaker 2: going to be ringing, you know, off their hinges come tomorrow, 22 00:01:08,240 --> 00:01:10,560 Speaker 2: and so it'll make a bit of a difference, but 23 00:01:10,600 --> 00:01:13,399 Speaker 2: it's certainly not going to completely up end the economic track. 24 00:01:13,760 --> 00:01:16,720 Speaker 1: Listening to talk about this afternoon with Southern Barnett and 25 00:01:16,840 --> 00:01:18,800 Speaker 1: James Daniels, so I heard a lot of people complaining 26 00:01:18,800 --> 00:01:20,760 Speaker 1: about it and that the government is giving with one 27 00:01:20,760 --> 00:01:22,720 Speaker 1: hand and taking with the other. And they were talking 28 00:01:22,720 --> 00:01:27,319 Speaker 1: about how cuts to government services, like what subsidies towards 29 00:01:27,319 --> 00:01:31,560 Speaker 1: public transport all ends out with bills going into their pockets. 30 00:01:31,720 --> 00:01:33,320 Speaker 1: And the big one for them was rates. They were 31 00:01:33,319 --> 00:01:36,440 Speaker 1: complaining about rates all afternoon long, saying those rates are 32 00:01:36,440 --> 00:01:39,199 Speaker 1: going to sky high. They're the ones driving that's driving 33 00:01:39,200 --> 00:01:43,040 Speaker 1: inflation in a real term for New Zealanders in their wallets, 34 00:01:43,160 --> 00:01:43,600 Speaker 1: isn't it? 35 00:01:44,560 --> 00:01:46,960 Speaker 2: Well not in particularly. I mean rates are only three 36 00:01:47,000 --> 00:01:49,320 Speaker 2: percent of the total inflation basket. So there's a lot 37 00:01:49,320 --> 00:01:51,040 Speaker 2: of other things. I mean, the likes of insurance I'd 38 00:01:51,080 --> 00:01:52,520 Speaker 2: point a lot more of a finger at than the 39 00:01:52,640 --> 00:01:55,440 Speaker 2: likes of rates. But also I think that also speaks 40 00:01:55,440 --> 00:01:57,800 Speaker 2: to the decisions that central government will have to make 41 00:01:58,400 --> 00:02:00,560 Speaker 2: with the money that it's got, you know, because we know, 42 00:02:00,680 --> 00:02:03,960 Speaker 2: for example that local government's only collecting about ten percent 43 00:02:04,000 --> 00:02:07,760 Speaker 2: of total sort of taxation, both rates and central government 44 00:02:07,840 --> 00:02:10,680 Speaker 2: taxes and similar Yet they're responsible for twenty five percent 45 00:02:10,680 --> 00:02:14,000 Speaker 2: of the infrastructure. So if we want decent infrastructure, someone's 46 00:02:14,000 --> 00:02:15,520 Speaker 2: got to pay for it, and at the moment that's 47 00:02:15,520 --> 00:02:18,800 Speaker 2: got to come partly from rates, funding the debt on 48 00:02:18,880 --> 00:02:20,800 Speaker 2: these sorts of things. But I think probably a lot 49 00:02:20,800 --> 00:02:22,920 Speaker 2: of households, And the point they're right is that a 50 00:02:22,919 --> 00:02:25,640 Speaker 2: lot of households will have effectively spent the tax cut 51 00:02:25,960 --> 00:02:28,280 Speaker 2: before it even hits their back pocket because of those 52 00:02:28,480 --> 00:02:30,880 Speaker 2: higher costs across the board. So, like I say, I mean, 53 00:02:30,919 --> 00:02:33,400 Speaker 2: we've heard from retailers that aren't expecting a big boost. 54 00:02:33,600 --> 00:02:36,280 Speaker 2: I think that's very much right. We're not expecting sort 55 00:02:36,320 --> 00:02:39,200 Speaker 2: of things to massively change. But for some households, you 56 00:02:39,200 --> 00:02:41,000 Speaker 2: look at those sort of figures, the like some of 57 00:02:41,080 --> 00:02:45,320 Speaker 2: minimum wage worker, for example, getting twelve dollars fifty a 58 00:02:45,360 --> 00:02:48,560 Speaker 2: week more. That's also important given that we haven't changed 59 00:02:48,560 --> 00:02:51,400 Speaker 2: these tax rates for fourteen years, and that means that 60 00:02:51,440 --> 00:02:53,519 Speaker 2: back when they were last set, someone on the minimum 61 00:02:53,560 --> 00:02:56,600 Speaker 2: wage was earning about twenty seven k, far far away 62 00:02:56,600 --> 00:02:59,400 Speaker 2: from the next tax bracket. On the current figures before 63 00:02:59,440 --> 00:03:02,320 Speaker 2: tomorrow's change, the person on the minimum wage working a 64 00:03:02,320 --> 00:03:04,640 Speaker 2: full time job but actually hit the top text the 65 00:03:04,720 --> 00:03:07,480 Speaker 2: thirty percent tax bracket. That seems pretty insane. 66 00:03:07,720 --> 00:03:09,560 Speaker 1: I don't even like cloting them tax cuts with it, 67 00:03:09,600 --> 00:03:11,760 Speaker 1: because these are changes to the threshold levels and they 68 00:03:11,760 --> 00:03:13,840 Speaker 1: should have been CPI linked right from the start. In 69 00:03:13,919 --> 00:03:17,160 Speaker 1: every government since what is it? For fourteen years, knew 70 00:03:17,160 --> 00:03:20,480 Speaker 1: exactly what happened that every time that they text us, 71 00:03:21,000 --> 00:03:24,960 Speaker 1: they got inflation up again, just quickly, wholesale rates, you know, 72 00:03:26,360 --> 00:03:29,079 Speaker 1: plunging downward. The retail banks are really starting to say, 73 00:03:29,080 --> 00:03:31,480 Speaker 1: come on now, people are starting to talk about an 74 00:03:31,560 --> 00:03:34,440 Speaker 1: OCR cut in August and not November and hoping that 75 00:03:34,480 --> 00:03:36,640 Speaker 1: the Reserve Bank here is do you think they are 76 00:03:36,720 --> 00:03:38,760 Speaker 1: hearing or do you think they're going to stick to November. 77 00:03:39,880 --> 00:03:41,640 Speaker 2: I think they're looking at the data. I mean, remember, 78 00:03:41,640 --> 00:03:45,560 Speaker 2: they themselves haven't even uttered an idea about November. Their 79 00:03:45,600 --> 00:03:49,440 Speaker 2: official last word on the matter as recently as May 80 00:03:49,600 --> 00:03:51,720 Speaker 2: was they don't think it's happening till August next year. 81 00:03:51,760 --> 00:03:53,760 Speaker 2: So if they do bring it forward, and I think 82 00:03:53,760 --> 00:03:56,800 Speaker 2: they well could, they're alsiguring to how to explain, need 83 00:03:56,840 --> 00:03:58,480 Speaker 2: to explain to all of us, why they got it 84 00:03:58,560 --> 00:04:00,480 Speaker 2: so wrong back in May, and how they think they 85 00:04:00,520 --> 00:04:03,960 Speaker 2: need to adjust the expectations so quickly ten months in advance. 86 00:04:04,040 --> 00:04:06,040 Speaker 1: Good stuff, Brad, always good to talk. Thank you so much. 87 00:04:06,840 --> 00:04:10,000 Speaker 2: For more from Hither Duplessy Allen Drive, Listen live to 88 00:04:10,080 --> 00:04:13,120 Speaker 2: news talks it'd be from four pm weekdays, or follow 89 00:04:13,160 --> 00:04:14,880 Speaker 2: the podcast on iHeartRadio.