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Speaker 1: Finance Minister Nicola Willis has certainly raised eyebrows today announcing

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Speaker 1: that she's going to slash her own operating allowance for

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Speaker 1: this year's budget to a ten year low of just

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Speaker 1: one point three billion dollars. She's virtually halved what she's

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Speaker 1: given herself to play with, and the last time it

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Speaker 1: was this low was in twenty fifteen, when Bill English

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Speaker 1: only gave himself a billion dollars. Now, independent economist Cameron

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Speaker 1: Baggery's been looking at this and he's with us Hey

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Speaker 1: can evening hit. Did it raise your eyebrows?

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Speaker 2: Yeah? Yes, yeah, in my mind, the real number is

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Speaker 2: not one point three. The real number looks to be

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Speaker 2: close to zero. Yeah, because out of the two point

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Speaker 2: four that was the initial allocation, there was pre commitments

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Speaker 2: within last year's budget of about one point five billion. Yeah,

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Speaker 2: so they had about yeahero point seven point eight Bill.

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Speaker 3: You're left to allocate. Yeah.

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Speaker 2: So what we're effectively looking at in the twenty twenty

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Speaker 2: five budget for the time you cake, Yeah, the dedication

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Speaker 2: to health.

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Speaker 3: Which I'll have to follow through on, it's a zero number. Yeah.

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Speaker 1: Well, I mean if she's pre allocated one point five

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Speaker 1: and she's given herself one point three. Then she's in

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Speaker 1: deficit to the tune of about zero point two. Right,

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Speaker 1: So this would say that there are enormous cuts in

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Speaker 1: this budget, right well reallocations.

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Speaker 2: But you know, to be fair, what we saw in

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Speaker 2: the twenty and twenty four budget was a bit of

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Speaker 2: the same. So if you actually have a look at

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Speaker 2: the gross cost of the twenty twenty four budget package

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Speaker 2: was an average of nine point one billion dollars per year,

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Speaker 2: but what they offered up was savings revue raising initiatives

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Speaker 2: of five point nine, so the net number was three

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Speaker 2: point two.

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Speaker 3: You know, what we're going to.

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Speaker 2: See again is that there'll be a pretty sizable budget

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Speaker 2: twenty and twenty five package in regard to who gets what,

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Speaker 2: but it's going to be funded differently. It's going to

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Speaker 2: be funded by spinning cuts, reallocations, productivity, and there'll be

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Speaker 2: some revenue initiatives in there.

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Speaker 3: It's just a question who's giving what and who's getting what.

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Speaker 1: Okay, So it sounds like means testing is at least possible.

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Speaker 1: What would she means test?

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Speaker 2: Well, I guess the big the big five hundred pound

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Speaker 2: gorilla out there in New zeone that we need to

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Speaker 2: get a head around. Is the explosion we're already seeing

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Speaker 2: or we're going to continue to see in New Zeon superannuation. Now,

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Speaker 2: if you go back to twenty twenty, New Zeon superannuation

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Speaker 2: was fifteen point five billion, which is a pretty big

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Speaker 2: chunk of cash. It's prejected to be twenty eight point

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Speaker 2: eight billion by twenty twenty nine. We've got the New

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Speaker 2: Zealan's superannuation is indexed to wages. All the other benefits

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Speaker 2: are indexed to the consumer price intuation. Why is the

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Speaker 2: difference between the two. I can't get my head around that.

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Speaker 2: But we're starting to see the very strong effects of

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Speaker 2: the moment of the fiscal cost of an aging population,

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Speaker 2: and current fiscal settings are just not sustainable. So the

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Speaker 2: question is it, how are we going to change?

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Speaker 3: What are we going to change?

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Speaker 1: Okay, now, what she should do, to your mind is

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Speaker 1: different to what she is going to do. Do you

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Speaker 1: really think she's going to means test the pension.

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Speaker 3: No, it's been murdered.

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Speaker 2: As well about whether the retirement age it goes up.

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Speaker 2: There's very others mechanisms you could bring in, but yeah,

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Speaker 2: that that that portion of the population tends to be

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Speaker 2: a little bit more national party centric.

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Speaker 3: It's one of the sort of hot potatoes.

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Speaker 2: I'd like to see them take it on because I

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Speaker 2: think it's pretty obvious what the numbers are saying. It's

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Speaker 2: not sustainable. You know, if we're pouring a lot more

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Speaker 2: money into health than New Zealand superangulation is a share

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Speaker 2: of the economy, then other parts of the economy have

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Speaker 2: got to miss out, and then it becomes a simple

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Speaker 2: gain regardable who's going to miss out. And what we

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Speaker 2: know is that the minister you've gone on today's she

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Speaker 2: identified the obvious priorities, which is health, education, defense, law

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Speaker 2: and order. But yeah, just to keep some of those

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Speaker 2: them staff as a share of GDP is going to

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Speaker 2: require a pretty bigger uplift in spending. And if that

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Speaker 2: is a share of GDP, but government spending is going

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Speaker 2: to be overall going down as a share of GDP,

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Speaker 2: then you take it from Peter to pay Paul. There's

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Speaker 2: got to be some cuts on the other side, and

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Speaker 2: the issue is that where are those cuts on the

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Speaker 2: other side coming from.

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Speaker 1: Yeah, that's a fair point. Hey, Cam, thanks very much,

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Speaker 1: really appreciate your expertise. That's Cam Bagri, Independent Economist for

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