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Speaker 1: Right now, Nikola, what this is the finance minister, Minister,

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Speaker 1: good evening, good evening, Ron, What do you make of

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Speaker 1: the services sector? This is down again after what it's

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Speaker 1: down after going up. We thought we were getting a

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Speaker 1: bit of relief, there was positive territory. Now it's down again.

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Speaker 1: And what do you think that says about our prospects

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Speaker 1: for growth?

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Speaker 2: Well, as you say, it was expanding the month before

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Speaker 2: and then has come back a little bit. And I

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Speaker 2: think this is just what happens during a recovery. Things

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Speaker 2: do bounce around a little bit. What you want to

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Speaker 2: see is a trend of things getting better. So you've

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Speaker 2: got to look month to month and I hope that

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Speaker 2: it will be expanding in the next month. It's good

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Speaker 2: to see manufacturing was up again and that is expanding again.

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Speaker 2: That's really positive.

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Speaker 1: There's been a lot of forecasts about global growth being

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Speaker 1: hit by Trump's trade terrifs. Have you had any advice

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Speaker 1: on the potential effect on New Zealand's economy.

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Speaker 2: Yet, yes, I have. Look, there are a couple of effects.

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Speaker 2: The first is what you've seen in international debt and

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Speaker 2: bond markets is that the price of borrowing has gone up,

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Speaker 2: so there's no escaping that. For New Zealand, we're having

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Speaker 2: to borrow funds to service the debt we built up

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Speaker 2: during COVID, and so the interest fee on that is

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Speaker 2: likely to increase. The second thing that's harder to predict

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Speaker 2: is if we see a slow down in global growth,

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Speaker 2: how does that slow down effect New Zealand. Well, it

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Speaker 2: depends which markets it affects and whether our exports get

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Speaker 2: lower prices as a result, and that's very hard to know.

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Speaker 2: So our forecasters are looking into all of the detail

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Speaker 2: and I won't get their final assumptions on that after

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Speaker 2: a little while.

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Speaker 1: Yet, what if they told you is top line potential

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Speaker 1: figures between what and what.

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Speaker 2: They haven't given me those figures yet, Ryan, because they

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Speaker 2: are the first to say there are really dynamic effects here.

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Speaker 2: On the one hand, we might get some positive upside

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Speaker 2: in some markets where we might be getting higher prices. Perversely,

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Speaker 2: inflation can have a positive impact for some exports and

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Speaker 2: for some markets. On the other hand, if we see

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Speaker 2: decline in global growth, that could affect our trade position

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Speaker 2: as well. So they are very careful to say to me,

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Speaker 2: there's things on one side of the ledger, there's things

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Speaker 2: on the other side of the ledger will tell you

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Speaker 2: how we think it's all going to pan out later

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Speaker 2: on when we're closer to the budget for casts being

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Speaker 2: put to bed.

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Speaker 1: Speaking of which, this is really putting the squeeze on you,

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Speaker 1: isn't it. You've got your debt servicing costs going up,

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Speaker 1: thank you Trump, and potentially your revenue via export revenue

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Speaker 1: taxes being cut at the same time. How do you

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Speaker 1: put a budget together?

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Speaker 2: Well, it's a challenging time to put a budget together

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Speaker 2: because we are still in a mode of having to

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Speaker 2: consolidate our financial position after years of spending much more

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Speaker 2: than we earned, so we are in a tight environment.

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Speaker 2: We're also having to meet some really significant commitments. We

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Speaker 2: do need to increase our investment and defense and foreign

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Speaker 2: affairs capability. We do need to provide for some redress

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Speaker 2: for those survivors of abuse and state care, whom the

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Speaker 2: Royal Commission reported on last year. We need to big

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Speaker 2: uplift and funding for our health system. Our schools need

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Speaker 2: an uplift and funding. Our police need an uplift and

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Speaker 2: fund So our challenge is to meet all of those

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Speaker 2: costs within a tide operating environment. The only way we

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Speaker 2: will do that is by finding savings and areas where

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Speaker 2: we're not getting maximum impact for the public dollar. We've

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Speaker 2: been working on that for months, so we're in a

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Speaker 2: good position right now. I'm confident we'll deliver it to

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Speaker 2: New Zealander's priorities.

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Speaker 1: Can you give us can you set us an expectation

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Speaker 1: of what exactly your cut?

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Speaker 2: Look, what we've done is we've looked across government, both

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Speaker 2: at an individual department or agency level and at cross

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Speaker 2: government as a whole, and we've said, not just so much,

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Speaker 2: what are the areas that are completely wasteful, but where

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Speaker 2: are the areas where there was a good intention But actually,

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Speaker 2: when we measure it up in the cold light of day,

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Speaker 2: these dollars are not delivering as much as they could elsewhere.

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Speaker 2: So there's a number of areas we've looked at. Will

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Speaker 2: make them all clear on budget day. But one thing

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Speaker 2: is a theme of the budget, which is that the

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Speaker 2: public service isn't going to get more funding for doing

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Speaker 2: the same thing. There is only more funding if New

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Speaker 2: Zealanders are going to benefit from additional services or improved

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Speaker 2: impact from those services.

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Speaker 1: Will you do away with entire departments or agencies.

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Speaker 2: That's not on the agenda for this budget, because the

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Speaker 2: judgment that we've made at the stage is that could

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Speaker 2: end up costing us more in the short term than

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Speaker 2: we would deliverance savings.

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Speaker 1: Okay, so you've got basically got to make a whole

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Speaker 1: bunch of cuts, which I think a lot of people

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Speaker 1: will completely understand at a time like this. What about

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Speaker 1: revenue measures? Can you rule out new revenue measures that

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Speaker 1: will hit people sneakily in the back pocket.

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Speaker 2: Well, have already been very open that we are currently

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Speaker 2: consulting on changes to the charities system, the way that

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Speaker 2: charities attacks. We want to keep the charity system strong,

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Speaker 2: but there are a few integrity issues that are popped

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Speaker 2: up there. So that is on our revenue agenda. But look,

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Speaker 2: I'm acutely conscious that the cost of living is the

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Speaker 2: number one concern for most key we so we're working

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Speaker 2: very hard to make sure this is a budget that

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Speaker 2: helps their back pocket, doesn't harm it.

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Speaker 1: So no more no extra levy increases, you know, no

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Speaker 1: tourist visitor levy increases, no congestion charging in this one,

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Speaker 1: No bed tax is coming for the councils, no motor

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Speaker 1: vehicle charge increases, nothing like that.

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Speaker 2: Well, there's no bed tax or anything novel like that.

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Speaker 2: I think what I would say is that across government

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Speaker 2: there's always work being done on where levees are set

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Speaker 2: in various areas. So that's not a specific budget initiative

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Speaker 2: that I've taken, but that work goes on throughout the

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Speaker 2: year under any government.

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Speaker 1: The bad text one in particular.

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Speaker 2: You mean, no, I'm not. I'm not. I'm ruling that

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Speaker 2: out at this point. That's not going to be in

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Speaker 2: my budget. But what I mean is in terms of

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Speaker 2: levees across government, So the charges that government agencies fund

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Speaker 2: for their services, those are constantly being reviewed. They're not

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Speaker 2: specific to a budget process.

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Speaker 1: Right, so at the budget none of them will go up.

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Speaker 2: The budget will make very clear what we are doing,

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Speaker 2: and I'm not going to I'm not.

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Speaker 1: This is what you're going to have to do, isn't it,

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Speaker 1: Because as you said, your borrowing costs are going up,

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Speaker 1: you were lumped with the debt by the last lot,

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Speaker 1: and we're not going to have as much tax revenue

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Speaker 1: because Trump's coming to gobble some of our profits.

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Speaker 2: Look, as I say, Ryan, I'm very clear that the

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Speaker 2: goal on the budget is to make it easier for

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Speaker 2: everyday Keiwi's not harder, and so I am very allergic

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Speaker 2: to costs that fall on every day kiwiks, and my

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Speaker 2: budget will reflect that.

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Speaker 1: Hey, the defense spending, we know that you want to

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Speaker 1: get to two percent of GDP. We've had Jutic Colins

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Speaker 1: on saying that they want to get the Obviously it's

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Speaker 1: a matter of time. Much of that I'm assuming will

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Speaker 1: be capital spending. Does that mean that it won't come

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Speaker 1: out of your operating and how does that work?

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Speaker 2: Well, it's a combination of both. So on the one hand,

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Speaker 2: we do need to make sure that the Defense Force

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Speaker 2: has the funding it needs day to day to pay

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Speaker 2: for its increasing costs and everything from ammunition to sending

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Speaker 2: soldiers over on deployment to the pay for soldiers and

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Speaker 2: recruiting people in specialist roles. So we do expect to

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Speaker 2: continue to increase the operating funding for the defense forces.

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Speaker 2: It's also capital funding. As you know, we've got a

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Speaker 2: lot of kit we need to replace, from planes to

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Speaker 2: ships to drones and everything in between. So that will

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Speaker 2: be a big part of the capability plan that we're

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Speaker 2: putting together is what pieces of kit do we need

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Speaker 2: in what order and how does it all come together, well,

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Speaker 2: not in one budget. Our plan is about what do

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Speaker 2: we need to do over successive budgets to increase our

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Speaker 2: investment over time and make sure we have a fully

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Speaker 2: capable defense force.

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Speaker 1: The average salary public servants the Public Service Commission, the

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Speaker 1: average salary one hundred and fifty five thousand a year

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Speaker 1: at the Social Investment Agency one hundred and forty nine thousand,

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Speaker 1: the Ministry for Regulation ironically one hundred and forty eight

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Speaker 1: thousand dollars corrections is the lowest salary eighty six thousand

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Speaker 1: for your average. Are we getting value for money here?

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Speaker 1: And why does this keep going up? Why is there

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Speaker 1: more money going to public servants under you than Rob

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Speaker 1: ground Robertson.

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Speaker 2: Well, across the public service as a whole, the median

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Speaker 2: income is eighty eight thousand, nine hundred. Now that compares

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Speaker 2: to what I'm advised is the average pay for a

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Speaker 2: frontline nurse. Once you include their overtime, they get paid

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Speaker 2: around one hundred and twenty five thousand. And there are

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Speaker 2: more than twenty nine thousand nurses employed within our public service.

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Speaker 2: So yes, there are some policy analysts and some agencies

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Speaker 2: getting paid a bit more than that, But our view

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Speaker 2: is that ensuring that you have a really great frontline

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Speaker 2: public service is where the focus should be. And you

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Speaker 2: will have seen that overall the numbers and the public

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Speaker 2: service have reduced on our watch, and that reflects the

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Speaker 2: fact that we want more resources going to those frontline

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Speaker 2: roles teachers, nurses and the like and less bound up

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Speaker 2: in Wellington.

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Speaker 1: Would you be announcing like a twenty percent savinget target

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Speaker 1: for this budget for some agencies that sort of you know,

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Speaker 1: that sort of thing you did the first time round.

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Speaker 2: That's not an announcement I'm going to make. But we've

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Speaker 2: made it really clear to every agency that if they

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Speaker 2: want to do new things, and they all have lots

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Speaker 2: of bright ideas well, the first thing they should do

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Speaker 2: is go and find out what's not working, stop doing it,

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Speaker 2: and use those savings to fund the bright new ideas.

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Speaker 2: That's the way businesses work, that's the way households work.

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Speaker 2: We expect the public service to be acting the same way.

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Speaker 1: All right, Nichola Wills really appreciate your time this evening.

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Speaker 1: Thanks so much for being with me. Thank you for more.

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