1 00:00:00,080 --> 00:00:02,440 Speaker 1: Upside of our economic story on budget day, if you 2 00:00:02,560 --> 00:00:04,720 Speaker 1: grow something, it seems you can do no wrong. At 3 00:00:04,760 --> 00:00:08,039 Speaker 1: the moment, primary sector has produced a billion dollar monthly 4 00:00:08,160 --> 00:00:11,000 Speaker 1: trade surplus. That's our highest ever dary the big winner 5 00:00:11,080 --> 00:00:14,000 Speaker 1: up six hundred and one million to two point two billion. Overall, 6 00:00:14,000 --> 00:00:15,920 Speaker 1: we sold seven point eight billion worth of goods. So 7 00:00:16,440 --> 00:00:18,320 Speaker 1: when you look at that inn isolation, you think, man, 8 00:00:18,360 --> 00:00:21,000 Speaker 1: we must be rolling, which of course we're not. Stephen Joyce, 9 00:00:21,079 --> 00:00:23,439 Speaker 1: former finance minister, is with us. Stephen, good morning to 10 00:00:23,520 --> 00:00:26,639 Speaker 1: you money, Mike cas I'm well, thank you. Is this 11 00:00:26,680 --> 00:00:29,400 Speaker 1: how economies work? From your financial experience? In other words, 12 00:00:29,720 --> 00:00:32,440 Speaker 1: at any given point in time, somebody somewhere is doing well. 13 00:00:32,520 --> 00:00:33,479 Speaker 1: Thank the Good Lord for that. 14 00:00:35,440 --> 00:00:37,479 Speaker 2: Yeah, well, you'd hope so, wouldn't you, Because after a 15 00:00:37,640 --> 00:00:42,519 Speaker 2: top three years, it feels good to see somebody doing well. Now. 16 00:00:42,960 --> 00:00:45,280 Speaker 2: I think I think what we're seeing is probably the 17 00:00:45,320 --> 00:00:48,480 Speaker 2: beginnings of an export lead recovery in the old term, 18 00:00:48,920 --> 00:00:53,479 Speaker 2: which is you've got domestically, people are spending a lot 19 00:00:53,479 --> 00:00:57,720 Speaker 2: of money, so imports are coming in. But fortunately for us, 20 00:00:57,840 --> 00:01:01,000 Speaker 2: the world is buying us stuff and it's not a subsidy, 21 00:01:01,120 --> 00:01:05,440 Speaker 2: just a memo for the US president, and you know, 22 00:01:05,560 --> 00:01:07,240 Speaker 2: they want to buy more key fruit, they want to 23 00:01:07,240 --> 00:01:09,920 Speaker 2: buy more dairy and that's a great point in the 24 00:01:09,959 --> 00:01:12,920 Speaker 2: cycle from our perspective because that will help lead the 25 00:01:12,959 --> 00:01:16,200 Speaker 2: recovery over the next year and a year or two 26 00:01:16,200 --> 00:01:16,520 Speaker 2: a head. 27 00:01:16,800 --> 00:01:19,000 Speaker 1: What does it tell us if you were finance minister 28 00:01:19,080 --> 00:01:21,319 Speaker 1: looking at this when we did the zesbrig got people 29 00:01:21,360 --> 00:01:23,920 Speaker 1: before from one sixty million tries to two hundred and twenty. 30 00:01:23,959 --> 00:01:26,200 Speaker 1: It's all very well to grow the stuff, but to 31 00:01:26,400 --> 00:01:28,880 Speaker 1: sell it and sell it at a better price, somebody 32 00:01:28,920 --> 00:01:32,680 Speaker 1: somewhere is buying it. Therefore, all this talk of worried 33 00:01:32,720 --> 00:01:35,399 Speaker 1: times can't be that true. I mean, they're either spending 34 00:01:35,440 --> 00:01:35,800 Speaker 1: or they're not. 35 00:01:35,840 --> 00:01:39,040 Speaker 2: And they are well, they are spending, which is great. 36 00:01:39,520 --> 00:01:42,200 Speaker 2: But the bit that will be making people nervous still 37 00:01:42,400 --> 00:01:46,600 Speaker 2: is the potential for rapid policy change out of the US, 38 00:01:47,640 --> 00:01:50,440 Speaker 2: and that's the bit that will be giving people pause. 39 00:01:50,560 --> 00:01:53,400 Speaker 2: So normally, normally, you know, you get to the stage 40 00:01:53,400 --> 00:01:55,360 Speaker 2: of cycle. You know you're a key fruit farmer or 41 00:01:55,400 --> 00:01:57,960 Speaker 2: you're a dairy farmer. You're investing in your future. But 42 00:01:58,480 --> 00:02:00,560 Speaker 2: there's an element of sitting there going well, this is 43 00:02:00,560 --> 00:02:04,279 Speaker 2: all good, but what happens if the Americans do something 44 00:02:04,320 --> 00:02:07,320 Speaker 2: weird which you'd have to give reasonable odds on. So 45 00:02:07,960 --> 00:02:10,359 Speaker 2: that's the bit that's making people cautious. And I think 46 00:02:10,400 --> 00:02:14,280 Speaker 2: the finance ministers acknowledging that that if it hadn't been 47 00:02:14,320 --> 00:02:17,359 Speaker 2: for that sort of level of uncertainty out of the US, 48 00:02:17,880 --> 00:02:20,680 Speaker 2: then probably our recovery would be a lot further along 49 00:02:20,720 --> 00:02:23,760 Speaker 2: by now. But people who have to make investment decisions, 50 00:02:23,760 --> 00:02:27,280 Speaker 2: from farmers to businesses to developers, they are all sitting 51 00:02:27,320 --> 00:02:31,160 Speaker 2: there going, well, I'll get ready, but I'm not quite 52 00:02:31,200 --> 00:02:35,440 Speaker 2: certain that that we're in a period of steady growth 53 00:02:35,760 --> 00:02:37,000 Speaker 2: that's going to give us the confidence. 54 00:02:37,520 --> 00:02:40,400 Speaker 1: Slightly out of left field, but the ECB overnight said 55 00:02:40,440 --> 00:02:42,840 Speaker 1: they reckon there's a fundamental shift going on in terms 56 00:02:42,880 --> 00:02:45,320 Speaker 1: of equities and bonds. In other words, people are looking 57 00:02:45,320 --> 00:02:47,440 Speaker 1: at America now and go, I've got better things to 58 00:02:47,480 --> 00:02:50,000 Speaker 1: do in better places to be, like Japan, maybe even Europe. 59 00:02:50,040 --> 00:02:51,680 Speaker 1: Do you think it's that profound or not? 60 00:02:51,800 --> 00:02:54,960 Speaker 2: Really, I think there's something very significant going on. The 61 00:02:55,040 --> 00:03:00,400 Speaker 2: bond market is unhappy with a lot of it's coming 62 00:03:00,400 --> 00:03:03,880 Speaker 2: out of the US, and we're about to head into 63 00:03:03,880 --> 00:03:05,919 Speaker 2: a tussle. You know, you talk about our budget or 64 00:03:05,960 --> 00:03:07,720 Speaker 2: the other big budget that's going on in the world, 65 00:03:08,120 --> 00:03:13,320 Speaker 2: much bigger than ours is the US budget, And you know, 66 00:03:13,639 --> 00:03:16,840 Speaker 2: they are sort of playing chicken with the bond market 67 00:03:16,880 --> 00:03:19,600 Speaker 2: at the moment by saying that they're going to increase 68 00:03:19,600 --> 00:03:22,080 Speaker 2: the size of what is an already large deficit one 69 00:03:22,120 --> 00:03:24,200 Speaker 2: hundred percent of GDP in the US, costing them a 70 00:03:24,240 --> 00:03:27,120 Speaker 2: lot to service it. And they are and you know, 71 00:03:27,160 --> 00:03:29,720 Speaker 2: they're threatening to pass a budget that would be expansionary 72 00:03:29,880 --> 00:03:33,400 Speaker 2: and increase debt, and the bond market's going I don't 73 00:03:33,400 --> 00:03:37,320 Speaker 2: think so. And your schil movies come down on Friday. 74 00:03:37,440 --> 00:03:42,040 Speaker 2: So that's the bit I think is where it's probable 75 00:03:42,120 --> 00:03:45,160 Speaker 2: that the Trump is going to come up against another 76 00:03:45,200 --> 00:03:47,240 Speaker 2: moment where he has to back track. But if he 77 00:03:47,240 --> 00:03:51,320 Speaker 2: doesn't backtrack, then definitely we're going to see continued moves 78 00:03:51,320 --> 00:03:55,440 Speaker 2: away from US dollar assets into other assets. The trouble 79 00:03:55,480 --> 00:03:57,560 Speaker 2: for the world is, you know, that's a big shift, 80 00:03:57,600 --> 00:03:59,840 Speaker 2: and there's not as many other places to go as 81 00:03:59,880 --> 00:04:02,840 Speaker 2: you like. But you know that people will move, Yes, they. 82 00:04:02,760 --> 00:04:07,440 Speaker 1: Will back home. Is she so constrained today that it's 83 00:04:07,920 --> 00:04:10,560 Speaker 1: a little here and a little there, or could she 84 00:04:10,640 --> 00:04:11,680 Speaker 1: do something profound? 85 00:04:13,280 --> 00:04:15,280 Speaker 2: It's very difficult to do something profound when you don't 86 00:04:15,280 --> 00:04:18,800 Speaker 2: have any dough and I think that's going to make 87 00:04:18,839 --> 00:04:23,919 Speaker 2: it constraining. I suspect what we'll see is significant savings 88 00:04:24,080 --> 00:04:27,080 Speaker 2: and that'll make some people grumpy, as we've already seen. 89 00:04:27,800 --> 00:04:32,680 Speaker 2: But actually I think overall the country will be going, well, yeah, 90 00:04:32,680 --> 00:04:35,640 Speaker 2: we had to do something, so even if you don't 91 00:04:35,720 --> 00:04:39,080 Speaker 2: like it, you accept it. I think there will be 92 00:04:39,160 --> 00:04:41,360 Speaker 2: further spending, there will be further borroing. I know that 93 00:04:41,400 --> 00:04:44,200 Speaker 2: you're keen on no further boring, but I think it's 94 00:04:44,200 --> 00:04:46,520 Speaker 2: about bending the curve down and they need to show 95 00:04:46,560 --> 00:04:49,080 Speaker 2: that they can bend the curve down. But within that 96 00:04:49,080 --> 00:04:50,680 Speaker 2: there's not going to be a huge amount of room. 97 00:04:50,720 --> 00:04:54,000 Speaker 2: I think what could be the thing that you know, 98 00:04:54,520 --> 00:04:56,599 Speaker 2: and it has been starting to be flagged around the place, 99 00:04:56,720 --> 00:05:00,880 Speaker 2: is something to give a business confidence. Business is confidence, 100 00:05:00,920 --> 00:05:04,920 Speaker 2: particularly small businesses, and how people are talking about tax 101 00:05:04,960 --> 00:05:07,159 Speaker 2: breaks and things, and maybe there will be something there 102 00:05:07,480 --> 00:05:10,040 Speaker 2: because you do need something to kick start that. New 103 00:05:10,120 --> 00:05:13,479 Speaker 2: Zealand small business is still straggling, yes, and there are 104 00:05:13,480 --> 00:05:15,560 Speaker 2: a lot of businesses that are sort of waiting for 105 00:05:15,600 --> 00:05:19,000 Speaker 2: the upturn and some hanging on by the sort of 106 00:05:19,040 --> 00:05:22,160 Speaker 2: tips of their fingernails. So I think they'll be looking 107 00:05:22,200 --> 00:05:25,160 Speaker 2: for something there, just to show that the government understands 108 00:05:25,360 --> 00:05:28,600 Speaker 2: and is going to encourage them to invest, because business 109 00:05:28,600 --> 00:05:31,080 Speaker 2: investment in this country has been low in the last 110 00:05:31,160 --> 00:05:34,560 Speaker 2: couple of years, and you can't increase productivity, you can't 111 00:05:34,560 --> 00:05:36,080 Speaker 2: increase growth if you're not investing. 112 00:05:36,320 --> 00:05:39,600 Speaker 1: What level of importance would you place a figure that 113 00:05:39,640 --> 00:05:42,880 Speaker 1: goes we will return to an annual surplus by X, 114 00:05:43,720 --> 00:05:47,640 Speaker 1: and the X is not twenty thirty something, Well. 115 00:05:47,520 --> 00:05:49,279 Speaker 2: You've got to get Yeah, you've got to show a 116 00:05:49,279 --> 00:05:52,400 Speaker 2: part down and path back the surface. And then people 117 00:05:52,440 --> 00:05:55,800 Speaker 2: will debate whether whether it's soon enough or not. And 118 00:05:55,839 --> 00:05:58,080 Speaker 2: there'll be the hawks that's it should happen much faster 119 00:05:58,640 --> 00:06:00,840 Speaker 2: and so on, and they'll be the dug that say, oh, 120 00:06:00,920 --> 00:06:02,960 Speaker 2: you know, you should be borrowing and getting us through this. 121 00:06:03,040 --> 00:06:04,720 Speaker 2: But then they are the same people that said that 122 00:06:04,800 --> 00:06:06,960 Speaker 2: through all the way through COVID and look where they 123 00:06:07,000 --> 00:06:10,640 Speaker 2: got us. But I think I think people will want it. 124 00:06:10,839 --> 00:06:12,880 Speaker 2: You know, the banks and the markets will want to 125 00:06:12,920 --> 00:06:17,000 Speaker 2: see a trend down in the latter stages of the 126 00:06:17,000 --> 00:06:20,000 Speaker 2: four years. They want to see an improving situation in 127 00:06:20,080 --> 00:06:21,160 Speaker 2: the four year projections. 128 00:06:21,360 --> 00:06:25,120 Speaker 1: Okay, the politics you alluded to going into election year 129 00:06:25,160 --> 00:06:30,120 Speaker 1: next year, how much political capital can they burn to 130 00:06:30,200 --> 00:06:33,400 Speaker 1: go in and say it's still hard, it's still difficult. Yes, 131 00:06:33,440 --> 00:06:35,839 Speaker 1: we still get it. The better times are ahead. But 132 00:06:35,880 --> 00:06:37,920 Speaker 1: we've said this for three years, give us another three 133 00:06:37,960 --> 00:06:40,880 Speaker 1: In other words, is there enough or are there enough 134 00:06:40,920 --> 00:06:42,640 Speaker 1: New Zealanders who get it? 135 00:06:44,240 --> 00:06:45,960 Speaker 2: I think there's thing. There's a lot of people that 136 00:06:46,080 --> 00:06:49,320 Speaker 2: get it. I think obviously in a political sense, the 137 00:06:49,400 --> 00:06:52,080 Speaker 2: economy is really starting to grow, and there's there's lots 138 00:06:52,120 --> 00:06:54,200 Speaker 2: of data points and people are feeling better. That would 139 00:06:54,200 --> 00:06:56,400 Speaker 2: that would make the next election easier for the government. 140 00:06:56,839 --> 00:07:00,520 Speaker 2: What we don't know, though, is whether things will conspire 141 00:07:00,560 --> 00:07:03,599 Speaker 2: in that way. I think there was it was hardly 142 00:07:03,720 --> 00:07:06,200 Speaker 2: likely that was going to occur with the work they 143 00:07:06,240 --> 00:07:09,920 Speaker 2: were doing before the new Trump presidency started and we 144 00:07:09,960 --> 00:07:12,880 Speaker 2: had Liberation Day and all that sort of stuff. Now 145 00:07:12,920 --> 00:07:15,080 Speaker 2: I think that will receive in importance. It will just 146 00:07:15,120 --> 00:07:18,600 Speaker 2: become a lot of noise because what's the way they're 147 00:07:18,640 --> 00:07:23,960 Speaker 2: describing them Taco Trump Trump always chickens out as the 148 00:07:23,960 --> 00:07:27,160 Speaker 2: way they're talking about them in the financial markets. So 149 00:07:27,360 --> 00:07:30,240 Speaker 2: maybe by then or maybe you know, later this year, 150 00:07:30,320 --> 00:07:32,480 Speaker 2: people will sort of be parking all of that and 151 00:07:32,560 --> 00:07:35,640 Speaker 2: getting on with life, which would then increase the political 152 00:07:35,720 --> 00:07:38,040 Speaker 2: chances for the government. But always at the end of 153 00:07:38,080 --> 00:07:40,720 Speaker 2: the first three years you were saying it's a work 154 00:07:40,720 --> 00:07:42,720 Speaker 2: in progress, because it is. It has to be after 155 00:07:42,720 --> 00:07:45,800 Speaker 2: a big probably a series of problems like we've got 156 00:07:45,880 --> 00:07:49,000 Speaker 2: now or we had when this government came in. You know, 157 00:07:49,080 --> 00:07:51,200 Speaker 2: the idea that you'll fix them within three years is 158 00:07:52,240 --> 00:07:55,560 Speaker 2: a bit fanciful. But if you can say we've made 159 00:07:55,560 --> 00:07:58,600 Speaker 2: some progress and here is the progress, then you're probably 160 00:07:58,640 --> 00:08:00,920 Speaker 2: back yourselves to be really good stuff. 161 00:08:01,120 --> 00:08:02,760 Speaker 1: Always good to talk to you, Stephen Joyce form the 162 00:08:02,760 --> 00:08:06,160 Speaker 1: Finance Minister. Of course, coverage on ZI be at two 163 00:08:06,200 --> 00:08:09,520 Speaker 1: o'clock this afternoon. For more from the Mic Asking Breakfast, 164 00:08:09,680 --> 00:08:12,040 Speaker 1: listen live to News Talk z it B from six 165 00:08:12,120 --> 00:08:15,280 Speaker 1: am weekdays, or follow the podcast on iHeartRadio