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Speaker 1: You're listening to a podcast from News Talks. It'd be

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Speaker 1: follow this and our wide range of podcast now on iHeartRadio.

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Speaker 2: Just release the half yearly economic and fiscal update. Our

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Speaker 2: political editor, Jason Woolves has been in the lockup. Get a, Jason,

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Speaker 2: get a.

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Speaker 3: They've released me from the lock up, and here I

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Speaker 3: be better.

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Speaker 4: Than the locker. No, much worse than the locker. Think

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Speaker 4: about my days back in England. So, Jason, how bad

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Speaker 4: is our nation's fiscal situation?

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Speaker 1: Oh?

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Speaker 3: Look, you know Nikola Willis and the Finance and the

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Speaker 3: Prime Minister. Rather, we're holding true to their downbeat beat

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Speaker 3: forecast of what the economy was going to be looking

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Speaker 3: like when Treasury opened its books. It is, it is

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Speaker 3: grim reading and that was forecast. But I don't think

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Speaker 3: we forecast anything like this. I mean, the main headline

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Speaker 3: figure here is the expected surplus. That is how much

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Speaker 3: extra money the government has after it's got its taxes

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Speaker 3: and it's paid for all of the things such as healthcare,

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Speaker 3: superannuation and or everything that a government does. Right that

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Speaker 3: I was supposed to come into effect in twenty twenty seven.

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Speaker 3: That's when the surplus was supposed to be happening. That's

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Speaker 3: now being pushed out to beyond twenty thirty. Now, the

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Speaker 3: budget cycles only go in these sort of one, two, three, four, five, six,

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Speaker 3: sort of six yearly more really five yearly forecasts. When

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Speaker 3: you're looking forward, I mean, we can see the twenty

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Speaker 3: twenty five FORCAS here, twenty six, twenty seven, twenty eight,

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Speaker 3: twenty nine. It goes out to twenty twenty nine on

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Speaker 3: the obigal, which is essentially the measure of the surplus,

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Speaker 3: surplus or the deficit, and it's at a deficit at

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Speaker 3: the twenty twenty nine financial year. We can't see beyond that,

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Speaker 3: so we technically don't know if it's going to be worse.

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Speaker 3: So we can say at least twenty thirty is when

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Speaker 3: the government is going to be sniffing a surplus. But

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Speaker 3: there is a big butt here, you know that word

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Speaker 3: that I just mentioned, Obergel. I won't give you the

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Speaker 3: technical definition of this outside that is all you need

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Speaker 3: to know. It's a surplus or a deficit. The government has,

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Speaker 3: as I signaled, about forty five minutes ago or an

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Speaker 3: hour ago, changed the way that it measures this, so

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Speaker 3: it's taking out ACC's liabilities essentially ACC's deficit at the moment,

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Speaker 3: ACC has a four point one billion dollar deficit. Now,

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Speaker 3: what the government has done is they've essentially isolated that.

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Speaker 3: They've ring fenced this deficit so it doesn't sit alongside

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Speaker 3: the government surplus or deficit, which means that it's come

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Speaker 3: up with a completely new measure that is four point

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Speaker 3: one billion dollars better off. So by this new measure,

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Speaker 3: and get this, this is what they're calling it. They're

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Speaker 3: calling it so that the measure we have right now

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Speaker 3: is called Obergel. What they're calling it is Obergel X,

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Speaker 3: like it's the new iPhone or something like that. They've

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Speaker 3: just class they've slapped an X on the end of it,

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Speaker 3: and everything's going to be hunky dory. But by the

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Speaker 3: twenty twenty nine financial year they're anticipating a one point

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Speaker 3: nine billion dollar surplus by the ober Girl X measure.

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Speaker 3: So in terms of the fiscals, you know, things are

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Speaker 3: looking bad. Things are looking worse than the government expected.

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Speaker 3: But hey, they've done a little bit of swanky pr here.

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Speaker 2: I would say, yeah, sounds like it. So obviously the

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Speaker 2: opposition are going to push back on that. What about economists, Jason,

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Speaker 2: do you think they'll look at that new way of

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Speaker 2: calculating the operating balance and say, hang on a minute,

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Speaker 2: that's a bit of trickery.

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Speaker 3: To be honest, the economists might even agree with something

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Speaker 3: like this. I mean, if you look at actually what

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Speaker 3: ACC is. The argument that Nicola Willis was making in

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Speaker 3: there is that ACC is as an institution, it's set

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Speaker 3: up to handle large deficits and then large as large surpluses.

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Speaker 3: So if it's a bit down one year and then

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Speaker 3: a bit up the other year, this fluctuation shouldn't be

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Speaker 3: included in the surplus or the deficit measure because it's

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Speaker 3: not something that politicians or lawmakers need to be across

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Speaker 3: when it comes to making various different policies. For example,

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Speaker 3: I mean ACC sort of has its liabilities to some

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Speaker 3: degree ring fenced within there, So it doesn't really mean

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Speaker 3: that this is Nicola Willis's argument that it should be

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Speaker 3: part of the government's surplus or deficit measure. But you know,

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Speaker 3: the opposition are going to standard the rooftops and they're

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Speaker 3: going to cry, you've shifted the goalposts. You've shifted the goalposts.

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Speaker 3: You've done something. It makes your books look better than

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Speaker 3: they are by some creative accounting. Doesn't matter if it's

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Speaker 3: technically correct, or if it is actually a more prudent

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Speaker 3: way of measuring the ober gel in the first place,

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Speaker 3: it just looks a little bit naff from the government,

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Speaker 3: will be the opposition's argument.

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Speaker 4: And what does this worsen expect result mean for every

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Speaker 4: day in New Zealanders over the next few years.

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Speaker 3: Well, it's the million dollar question, isn't it. But at

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Speaker 3: the end of the day, I mean we did have

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Speaker 3: the Treasury in front of the Select the Finance and

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Speaker 3: Expenditure Select Committee a few weeks ago, and one of

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Speaker 3: their top brass was saying, essentially, when you boil it

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Speaker 3: down to it, when you push out a surplus, that

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Speaker 3: essentially means that the Reserve Bank has to make further

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Speaker 3: different decisions based on its official cash rate, and it

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Speaker 3: might not be able to loosen that, ie, bring it

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Speaker 3: down as quickly as it might have liked in the past.

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Speaker 3: And as we know, the ocr is directly correlated to

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Speaker 3: people's mortgage rates, so you can take about five steps

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Speaker 3: from the government surplus to your own mortgage and technically

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Speaker 3: there is some link there. In fact, it is probably

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Speaker 3: quite a strong link, but we'll have to be quite

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Speaker 3: down the track to realize that. The other thing Nikola

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Speaker 3: Willis was at pains to point out today during the

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Speaker 3: lockup was just how much worse things were than she

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Speaker 3: expected in the budget. We talked earlier today about how

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Speaker 3: we're expecting to see the New Zealand economy go back

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Speaker 3: into a technical recession when we see those GDP numbers

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Speaker 3: later this week, and that was top of her mind

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Speaker 3: when she was talking about the New Zealand economy today.

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Speaker 3: I mean she was talking about there are some good

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Speaker 3: news here. I mean anybody that is invested in housing,

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Speaker 3: or somebody there's got a house that they are running

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Speaker 3: a loss on. I mean the house prices are expected

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Speaker 3: to fall zero point one percentage points next year, then

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Speaker 3: going up to five point three, then five point eight

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Speaker 3: and then five point one by twenty twenty eight. So

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Speaker 3: some good news on the housing market, and there's some

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Speaker 3: other good news and employment. They're expecting unemployment to peak

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Speaker 3: at five point four percent in June next year, in

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Speaker 3: inflation to four below that two percent mark at some

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Speaker 3: point next year because of lower oil prices.

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Speaker 2: A note that Nichola Willis ruled out selling state owned

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Speaker 2: assets in this term of government. Was that a surprise

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Speaker 2: that she put that line in the scene today, not

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Speaker 2: really a surprise.

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Speaker 3: I mean, it was a good line of questioning from

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Speaker 3: one of the reporters in there, but it's just not nationals,

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Speaker 3: you know, for lack of a better term vibe. I mean,

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Speaker 3: if she would have come out and say this is

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Speaker 3: what we're doing in terms of looking to sell the

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Speaker 3: silverware to pay for the mortgage, then I think it

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Speaker 3: would have raised a few eyebrows. But what she did

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Speaker 3: is she at a is she was at pains to

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Speaker 3: point out the operating the operating allowance, which is essentially

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Speaker 3: how much an extra new money the government has to

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Speaker 3: play with every single budget will remain at very low

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Speaker 3: levels traditionally a lot lower than the Grant Robertson era

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Speaker 3: of fiscal prudency, I would say, but a lot of

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Speaker 3: listeners would probably push back on that of Grant Robertson's

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Speaker 3: time in the Treasury Office in the Treasury benches. But

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Speaker 3: she's essentially saying that when we look at that number,

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Speaker 3: it doesn't take into account the massive amounts of savings

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Speaker 3: the government will have to do when it's putting together

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Speaker 3: the budget. She's really really really playing down any expectations

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Speaker 3: of anything new and shiny when it comes to the

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Speaker 3: budget next year, essentially saying you will only be able

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Speaker 3: to get new budget initiatives for your departments if it's

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Speaker 3: an emergency. Anything else, don't count on it. Nikola Willis

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Speaker 3: is not having any of it.

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Speaker 2: Now.

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Speaker 4: I know the answer to this question, Jason, But as

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Speaker 4: the previous government taking any responsibility for their contribution to

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Speaker 4: the nation's fiscal problems, or are they just putting the

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Speaker 4: boat in for political gain.

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Speaker 3: Listen, we're going to hear from the opposition in about

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Speaker 3: twenty minutes before they go into the house. But I

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Speaker 3: would imagine that's exactly what they're going to do. I

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Speaker 3: mean they will, we will ask them. We'll hang on

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Speaker 3: a second. Nikola Willis has been very candid here about

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Speaker 3: your participation in what the books like look like. Now.

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Speaker 3: I mean, the thing is, and I will say this

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Speaker 3: in the previous government's defense, and it's something like that.

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Speaker 3: This government seems to have abnesia over is COVID nineteen.

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Speaker 3: They never seem to mention it. It's just like everything

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Speaker 3: is really bad and they don't go into the detail. Why. Yes,

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Speaker 3: the previous government did make a lot of alarming spending decisions. Yes,

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Speaker 3: things absolutely got out of control on a lot of levels.

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Speaker 3: But we can't forget the sheer economic hit that COVID

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Speaker 3: had on not just the New Zealand economy but the

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Speaker 3: government books as well, and that's going to take a

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Speaker 3: long time to fix. And I don't think it's all

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Speaker 3: necessarily the last government's problem. I do think that they

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Speaker 3: for sure deserve a lot of blame and scrutiny for

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Speaker 3: the way that they handled it, But let's remember that

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Speaker 3: it was a pretty big, unprecedented economic event.

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Speaker 2: Yeah, he's sir. Nichola Willis previously signaled she was looking

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Speaker 2: at requiring charities that are really businesses to pay more tax.

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Speaker 2: Was more set about that when she hopes to bring

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Speaker 2: that legislation in how much they can expect to get

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Speaker 2: from that, Well, she.

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Speaker 3: Was hinting that that was coming on budget day. I

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Speaker 3: mean she's talked about this charities tax for some time now.

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Speaker 3: And another number that was quite baffling to somebody that

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Speaker 3: isn't a millionaire like myself, is that New Zealand between

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Speaker 3: the budget and between today's update, there has been thirteen

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Speaker 3: billion dollars less of tax revenue over that time. So

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Speaker 3: that's less money that the Finance minister has to play

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Speaker 3: with or to fund new initiatives, and what she was

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Speaker 3: talking about was a number of new initiatives, whether they

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Speaker 3: be on the quote revenue gathering side of things. Now,

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Speaker 3: revenue gathering is just an economic way of saying tax increases.

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Speaker 3: She was very clear it wasn't anything along the lines

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Speaker 3: of a capital gains tax, and it certainly wouldn't be

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Speaker 3: an increase in income tax or anything to that degree,

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Speaker 3: given the fact that the government has just pulled that down.

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Speaker 3: But she said she'd be looking at a charity's tax.

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Speaker 3: She's talked about value capture. When you have a new

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Speaker 3: highway built in the house, prices around the new highway

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Speaker 3: subsequently go up. She's talked about that, and she was

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Speaker 3: very candid about a foreign buyers tax. Now this has

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Speaker 3: been ruled out by one Winston Raymond Peters in the

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Speaker 3: coalition negotiations, but she said, you know, if Winston's willing

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Speaker 3: to change his mind this government or with her. She

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Speaker 3: was very specific to take off her Finance minister hat

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Speaker 3: and put on her National Party spokesperson hat. She was

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Speaker 3: very specific in saying if Winston wanted to reverse the

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Speaker 3: way that he looking at that she would be very

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Speaker 3: open to looking into a foreign buyers tax.

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Speaker 2: Very interesting, Jason, well done, Thank you very much.

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Speaker 3: Thanks Mack, I'll talk to you later.

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Speaker 2: That is News Talks. He be Political editor Jason Walls.

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