1 00:00:00,040 --> 00:00:03,640 Speaker 1: Of New Zealand's financial troubles confirmed today and things look 2 00:00:03,720 --> 00:00:06,800 Speaker 1: even worse than we fared. There's no surplus in sight 3 00:00:06,960 --> 00:00:08,959 Speaker 1: and the books will stay in the read until at 4 00:00:09,080 --> 00:00:12,239 Speaker 1: least twenty twenty nine, and that's only thanks for a 5 00:00:12,280 --> 00:00:16,800 Speaker 1: bit of accounting trickery that will see ACC's deficit removed 6 00:00:16,920 --> 00:00:19,680 Speaker 1: from the books. The Finance Minister, Nicola Willis is with 7 00:00:19,720 --> 00:00:21,439 Speaker 1: me on the show. Minister, thank you very much for 8 00:00:21,480 --> 00:00:24,439 Speaker 1: your time. On a scale of one to ten, where 9 00:00:24,440 --> 00:00:26,280 Speaker 1: do you put this? How bad do you put this? 10 00:00:27,120 --> 00:00:29,120 Speaker 2: Oh? Well, look, this is a tough set of books, 11 00:00:29,160 --> 00:00:32,640 Speaker 2: there's no question about it. We've seen a downgrade in 12 00:00:32,680 --> 00:00:36,320 Speaker 2: the forecast assumptions that Treasury were making prior to the election. 13 00:00:36,400 --> 00:00:40,159 Speaker 2: They were essentially too optimistic before the election and that 14 00:00:40,200 --> 00:00:42,879 Speaker 2: has an impact both on the growth rate we're expecting, 15 00:00:42,880 --> 00:00:45,599 Speaker 2: the revenue we're going to receive, and our path back 16 00:00:45,640 --> 00:00:47,840 Speaker 2: to getting the books back in balance. But we remain 17 00:00:47,880 --> 00:00:51,159 Speaker 2: resolute what we need to do now is keep that 18 00:00:51,159 --> 00:00:54,800 Speaker 2: fiscal discipline, that careful spending going and really drive growth 19 00:00:54,800 --> 00:00:57,480 Speaker 2: across the economy. The good news is that's what we're doing, 20 00:00:57,560 --> 00:01:00,800 Speaker 2: and there is a forecast recovery to sustained growth next year, 21 00:01:00,840 --> 00:01:02,440 Speaker 2: and that's exactly what New Zealand needs. 22 00:01:02,520 --> 00:01:05,360 Speaker 1: Yeah, but on a per capita basis, it's down point 23 00:01:05,440 --> 00:01:08,080 Speaker 1: six percent next year. It's hardly thrived till twenty five. 24 00:01:09,080 --> 00:01:12,240 Speaker 2: Look, we've inherited a very tough set of economic conditions, 25 00:01:12,360 --> 00:01:16,679 Speaker 2: and as we look ahead, we are seeing the scars 26 00:01:16,760 --> 00:01:19,840 Speaker 2: that were left by the huge spending policies of the 27 00:01:19,880 --> 00:01:22,120 Speaker 2: last government in the wake of COVID. They set us 28 00:01:22,160 --> 00:01:24,760 Speaker 2: on a path that was not sustainable. We've now got 29 00:01:24,760 --> 00:01:26,480 Speaker 2: the tough job of cleaning it up and we're going 30 00:01:26,520 --> 00:01:28,920 Speaker 2: to get on and do exactly that. The good news 31 00:01:28,959 --> 00:01:31,399 Speaker 2: is New Zealanders have elected a government that's up to 32 00:01:31,440 --> 00:01:32,000 Speaker 2: this task. 33 00:01:32,200 --> 00:01:35,959 Speaker 1: You're spending less than they were, but you're still spending more. 34 00:01:36,360 --> 00:01:39,920 Speaker 1: You're still borrowing more and not cutting as much. In 35 00:01:39,959 --> 00:01:42,320 Speaker 1: other words, we're still having You know, our borrowing is 36 00:01:42,319 --> 00:01:44,680 Speaker 1: going to go up sixteen percent, Our government debt is 37 00:01:44,680 --> 00:01:47,720 Speaker 1: going to go up sixteen percent at assuing of bonds. 38 00:01:47,960 --> 00:01:50,480 Speaker 1: Because of this, it's four times more than the economist's thought. 39 00:01:51,200 --> 00:01:53,800 Speaker 2: The important thing there is that is not the result 40 00:01:53,880 --> 00:01:57,440 Speaker 2: of any fiscal or policy decisions the government's taken. That 41 00:01:57,600 --> 00:02:00,160 Speaker 2: is the result of adjust months, and the treasure is 42 00:02:00,200 --> 00:02:04,200 Speaker 2: forecast assumptions about long run productivity and the size of 43 00:02:04,200 --> 00:02:06,560 Speaker 2: the recession we've been in. So what we're doing is 44 00:02:06,600 --> 00:02:09,280 Speaker 2: controlling what we. 45 00:02:08,880 --> 00:02:12,079 Speaker 1: But you haven't responded with fiscal policy changes. 46 00:02:13,160 --> 00:02:16,320 Speaker 2: We have responded strongly to the fiscal situation at budget 47 00:02:16,320 --> 00:02:19,800 Speaker 2: time by reducing our not just tring allowances. 48 00:02:19,520 --> 00:02:22,280 Speaker 1: Not this time. Why haven't you, given the books have 49 00:02:22,320 --> 00:02:25,400 Speaker 1: deteriorated so much between budget and now, have you not 50 00:02:25,560 --> 00:02:27,200 Speaker 1: changed your fiscals now? 51 00:02:27,520 --> 00:02:30,079 Speaker 2: Well, I've always said that I'm not going to overreact 52 00:02:30,120 --> 00:02:32,440 Speaker 2: to changes in the forecasts up or down, and that 53 00:02:32,480 --> 00:02:37,360 Speaker 2: we are deliberately taking a medium turn sustainable approach to 54 00:02:37,400 --> 00:02:40,760 Speaker 2: fiscal consolidation. You're right, there is an alternative with more 55 00:02:40,760 --> 00:02:43,959 Speaker 2: aggressive short term measures, like a big increase in tax 56 00:02:44,120 --> 00:02:46,640 Speaker 2: or big slashing to spending. And the judgment we've made 57 00:02:46,720 --> 00:02:49,000 Speaker 2: is actually that would come at a cost both to 58 00:02:49,040 --> 00:02:52,720 Speaker 2: the economy and its recovery, but also to New Zealanders. 59 00:02:52,720 --> 00:02:55,639 Speaker 2: So ours is a balanced course that we're charting. It's 60 00:02:55,639 --> 00:02:58,200 Speaker 2: still going to be challenging, it's still going to involve 61 00:02:58,240 --> 00:03:00,840 Speaker 2: significant trade offs in order to put the extra spending 62 00:03:00,919 --> 00:03:04,760 Speaker 2: into health, into education and to the police into areas 63 00:03:04,800 --> 00:03:06,880 Speaker 2: that really need it. We're going to have to reprioritize 64 00:03:06,919 --> 00:03:09,400 Speaker 2: lower value spending from other parts of government and really 65 00:03:09,480 --> 00:03:11,920 Speaker 2: keep a lid on that in a way that hasn't 66 00:03:11,919 --> 00:03:14,240 Speaker 2: been the case in recent years. So you are going 67 00:03:14,280 --> 00:03:16,480 Speaker 2: to see a much more fiscally disciplined approach. 68 00:03:16,160 --> 00:03:18,760 Speaker 1: From US Taxpayers Union says. The fact is, despite the 69 00:03:18,800 --> 00:03:21,480 Speaker 1: government being elected on a platform of cutting spending, Nickela 70 00:03:21,520 --> 00:03:24,720 Speaker 1: Withllus continues to spend even more than Grant Robertson and 71 00:03:24,840 --> 00:03:26,760 Speaker 1: kick the fiscal can down the road. 72 00:03:27,760 --> 00:03:30,760 Speaker 2: Well, I would just put my operating allowances up against 73 00:03:30,760 --> 00:03:34,000 Speaker 2: his any day of the week. They are the lowest 74 00:03:34,080 --> 00:03:38,760 Speaker 2: they've been since twenty seventeen. That's our discretionary spending. The 75 00:03:38,840 --> 00:03:42,520 Speaker 2: last budget, we delivered twenty three billion dollars worth of 76 00:03:42,600 --> 00:03:45,080 Speaker 2: savings and we did that with just a few months 77 00:03:45,240 --> 00:03:47,360 Speaker 2: to find them. We've now had a year. We're going 78 00:03:47,400 --> 00:03:49,640 Speaker 2: to find more savings and it's important that we do 79 00:03:49,800 --> 00:03:53,440 Speaker 2: because everyone needs to remember that the money doesn't come 80 00:03:53,480 --> 00:03:55,440 Speaker 2: from a magic tree at the bottom of the garden. 81 00:03:55,520 --> 00:03:58,120 Speaker 2: It comes from New Zealander's pockets, and we're a government 82 00:03:58,280 --> 00:04:00,520 Speaker 2: that wants to make sure that we keep the finances 83 00:04:00,880 --> 00:04:03,480 Speaker 2: in good order. But we do it by being disciplined 84 00:04:03,480 --> 00:04:04,320 Speaker 2: about our own spending. 85 00:04:04,640 --> 00:04:08,640 Speaker 1: Excluding the ACC deficit from your books makes them look better. 86 00:04:09,360 --> 00:04:11,880 Speaker 1: But is it the right thing to do? Treasury says no. 87 00:04:13,080 --> 00:04:15,760 Speaker 2: Well, actually, there's been an independent economist who has just 88 00:04:15,800 --> 00:04:19,119 Speaker 2: come out. He's from B and Z and he makes 89 00:04:19,120 --> 00:04:21,799 Speaker 2: the point that ACC is a self funded Crown entity 90 00:04:22,560 --> 00:04:25,120 Speaker 2: and that fiscal policy should not be adjusted to compensate 91 00:04:25,200 --> 00:04:28,120 Speaker 2: for what should be a long run thing. And he 92 00:04:28,160 --> 00:04:30,440 Speaker 2: agrees with that stance. So it's not just me who 93 00:04:30,480 --> 00:04:33,320 Speaker 2: thinks this is sensible. This is about saying, look, ACC 94 00:04:33,440 --> 00:04:35,360 Speaker 2: is a long run insurance scheme. It needs to fund 95 00:04:35,400 --> 00:04:39,960 Speaker 2: itself over the long term. It's inappropriate to make immediate 96 00:04:40,520 --> 00:04:42,640 Speaker 2: changes to our fiscal policy in the next four years 97 00:04:42,640 --> 00:04:45,480 Speaker 2: to compensate for a deficit or surplus in any one year. 98 00:04:45,600 --> 00:04:48,520 Speaker 1: Are there other government agencies in similar positions that you 99 00:04:48,520 --> 00:04:51,120 Speaker 1: could look to pick off and take out and improve 100 00:04:51,120 --> 00:04:51,960 Speaker 1: the look of the books. 101 00:04:52,360 --> 00:04:55,320 Speaker 2: We're not going to do that. This was the result 102 00:04:55,400 --> 00:04:58,719 Speaker 2: of a review. No, we're happy with our the Garleex measure. 103 00:04:58,760 --> 00:05:01,120 Speaker 2: That's going to be what we're going to target. We're 104 00:05:01,120 --> 00:05:04,800 Speaker 2: targeting a surplus in twenty seven twenty eight financial year 105 00:05:05,320 --> 00:05:08,080 Speaker 2: by this measure, we think that's the appropriate way to 106 00:05:08,160 --> 00:05:10,720 Speaker 2: measure the government's spending balance. 107 00:05:10,800 --> 00:05:13,640 Speaker 1: Minister, when will people feel like When are we going 108 00:05:13,640 --> 00:05:16,920 Speaker 1: to feel like we're actually getting somewhere as a country, 109 00:05:17,080 --> 00:05:19,240 Speaker 1: because we haven't felt like that in a very long time, 110 00:05:19,520 --> 00:05:22,120 Speaker 1: and next year we're looking at and we're not even 111 00:05:22,160 --> 00:05:24,600 Speaker 1: looking at growth on a per capita next year. It's 112 00:05:24,640 --> 00:05:26,840 Speaker 1: not until the year after that we get to experience 113 00:05:26,880 --> 00:05:27,920 Speaker 1: that again, that feeling. 114 00:05:28,720 --> 00:05:31,560 Speaker 2: Yeah, I totally get what you're saying. New Zealand has 115 00:05:31,560 --> 00:05:35,479 Speaker 2: been through an incredibly tough time. But what we know 116 00:05:35,640 --> 00:05:37,960 Speaker 2: now is that for the first time in a long while, 117 00:05:38,360 --> 00:05:43,160 Speaker 2: we're now forecasting a consolidated period of growth, a sustained 118 00:05:43,279 --> 00:05:45,599 Speaker 2: period from growth, and that upturn has been a long 119 00:05:45,680 --> 00:05:48,799 Speaker 2: time coming, but it is now happening. And that means 120 00:05:48,800 --> 00:05:51,599 Speaker 2: that businesses and households are expected to be investing and 121 00:05:51,640 --> 00:05:55,760 Speaker 2: spending more, that we are expecting the economy to be growing. Now. 122 00:05:55,800 --> 00:05:58,360 Speaker 2: I want to drive that harder. I'm not happy with 123 00:05:58,480 --> 00:05:59,760 Speaker 2: just saying, oh, well, there's going to be a sick 124 00:05:59,800 --> 00:06:04,040 Speaker 2: look return. That's why the government's driving our agenda of 125 00:06:04,200 --> 00:06:07,680 Speaker 2: doing things like fast track legislation to get development and 126 00:06:07,760 --> 00:06:11,440 Speaker 2: progress underway. That's why we're fixing the basics in our schools. 127 00:06:11,480 --> 00:06:15,080 Speaker 2: It's why we are taking new approaches to infrastructure investment, 128 00:06:15,120 --> 00:06:18,679 Speaker 2: getting sensible about overseas investment, because all of those things 129 00:06:18,800 --> 00:06:23,039 Speaker 2: cumulatively improve the productive capacity of our economy and that's 130 00:06:23,040 --> 00:06:26,200 Speaker 2: actually where more income comes from. That's where more opportunities 131 00:06:26,240 --> 00:06:27,080 Speaker 2: come from. 132 00:06:27,080 --> 00:06:28,680 Speaker 1: Minister, thank you very much for your time. That is 133 00:06:28,720 --> 00:06:31,640 Speaker 1: the Finance Minister Nicola Willis on the HAIFU results that 134 00:06:31,640 --> 00:06:34,719 Speaker 1: have come out today in the Budget Policy statement. For 135 00:06:34,800 --> 00:06:38,080 Speaker 1: more from Hither Duplicy Alan Drive, listen live to news 136 00:06:38,160 --> 00:06:41,039 Speaker 1: talks it'd be from four pm weekdays, or follow the 137 00:06:41,080 --> 00:06:42,680 Speaker 1: podcast on iHeartRadio.