1 00:00:04,840 --> 00:00:07,920 Speaker 1: Curder. I'm Richard Martin in for Chelsea Daniels and this 2 00:00:08,000 --> 00:00:10,920 Speaker 1: is the Front Page, a daily podcast presented by the 3 00:00:10,960 --> 00:00:17,400 Speaker 1: New Zealand Herald. The government is set to cut billions 4 00:00:17,400 --> 00:00:20,079 Speaker 1: of dollars from spending at the upcoming budget as a 5 00:00:20,200 --> 00:00:25,400 Speaker 1: cost saving measure in these type financial conditions, But what 6 00:00:25,520 --> 00:00:28,080 Speaker 1: if there was a way to raise more revenue from 7 00:00:28,080 --> 00:00:31,960 Speaker 1: existing industries. Analysis from the NZED Herald has looked at 8 00:00:31,960 --> 00:00:35,720 Speaker 1: the black market or the informal economy. The industry is 9 00:00:35,760 --> 00:00:38,800 Speaker 1: dominated by cash in hand methods of payment that pass 10 00:00:38,880 --> 00:00:42,240 Speaker 1: by the tax system. INZED Herald, Head of Newsroom Data 11 00:00:42,320 --> 00:00:45,240 Speaker 1: Chris Knox has run the numbers and joins us today 12 00:00:45,280 --> 00:00:48,320 Speaker 1: on the Front Page to talk through just how much 13 00:00:48,520 --> 00:00:55,040 Speaker 1: the country is missing out on. So when you hear 14 00:00:55,160 --> 00:00:58,440 Speaker 1: about a black market or a hidden economy, the mind 15 00:00:58,480 --> 00:01:01,880 Speaker 1: immediately goes to all all kinds of sinister dealings. But 16 00:01:01,920 --> 00:01:04,440 Speaker 1: what actually falls under this umbrella? 17 00:01:04,640 --> 00:01:06,480 Speaker 2: So I guess the more that there's a kind of 18 00:01:06,720 --> 00:01:09,680 Speaker 2: a more boring and technical definition, which is that the 19 00:01:10,000 --> 00:01:13,080 Speaker 2: informal economy or the black market is every kind of 20 00:01:13,319 --> 00:01:16,280 Speaker 2: economic transaction that takes place that isn't recorded in the 21 00:01:16,280 --> 00:01:19,000 Speaker 2: official GDP of a country. You know that this can 22 00:01:19,040 --> 00:01:21,880 Speaker 2: be things like cash jobs. You know, so if someone 23 00:01:22,360 --> 00:01:25,480 Speaker 2: if you pay someone in cash to rip out your bathroom, 24 00:01:25,520 --> 00:01:28,399 Speaker 2: then that's not potentially not going to be recorded as 25 00:01:28,440 --> 00:01:33,319 Speaker 2: an official transaction obviously things like drug deals, buying black 26 00:01:33,360 --> 00:01:36,560 Speaker 2: market cigarette, but also you know, paying a babysitter if 27 00:01:36,600 --> 00:01:38,640 Speaker 2: you're just paying them in cash and that never gets 28 00:01:38,640 --> 00:01:40,160 Speaker 2: declared as income. 29 00:01:40,319 --> 00:01:42,280 Speaker 1: Do we know or do we have any sort of 30 00:01:42,280 --> 00:01:45,280 Speaker 1: indication as to what might be the biggest contributor in 31 00:01:45,280 --> 00:01:45,800 Speaker 1: New Zealand? 32 00:01:45,920 --> 00:01:48,320 Speaker 2: That isn't something that I was able to find any 33 00:01:48,440 --> 00:01:52,440 Speaker 2: kind of useful estimates on kind of what the makeup 34 00:01:52,480 --> 00:01:54,560 Speaker 2: of the different parts are. I guess what we found 35 00:01:54,760 --> 00:01:56,520 Speaker 2: was was we found an estimate of how big it 36 00:01:56,520 --> 00:02:00,600 Speaker 2: could be based on differences between income and expend and 37 00:02:00,680 --> 00:02:03,920 Speaker 2: kind of using the World Bank uses a model that 38 00:02:04,040 --> 00:02:06,160 Speaker 2: to look across a whole bunch of other countries, and 39 00:02:06,200 --> 00:02:08,680 Speaker 2: then there's a bunch of kind of I guess, like 40 00:02:08,760 --> 00:02:11,320 Speaker 2: little tidbits on here here's how big this part of 41 00:02:11,360 --> 00:02:13,760 Speaker 2: it might be. But I don't think anyone has a 42 00:02:13,800 --> 00:02:16,160 Speaker 2: good good handle on what the biggest bit. 43 00:02:16,200 --> 00:02:20,280 Speaker 1: Is because I saw there's like two models for estimating 44 00:02:20,400 --> 00:02:20,880 Speaker 1: Is that right? 45 00:02:21,000 --> 00:02:21,280 Speaker 3: Yeah. 46 00:02:21,680 --> 00:02:25,320 Speaker 2: I mean, when you look through the economic literature, it's 47 00:02:25,360 --> 00:02:28,840 Speaker 2: like anything there, there's many different approaches for trying to 48 00:02:28,960 --> 00:02:31,560 Speaker 2: estimate this, and obviously, from a kind of an intellectual 49 00:02:31,560 --> 00:02:33,880 Speaker 2: point of view, it's a fascinating problem, like how do 50 00:02:33,960 --> 00:02:37,480 Speaker 2: you figure out how big something is when by definition 51 00:02:37,560 --> 00:02:39,519 Speaker 2: you don't know how big it is. But there seems 52 00:02:39,520 --> 00:02:42,760 Speaker 2: to be two models that are used widely, I think 53 00:02:42,800 --> 00:02:46,240 Speaker 2: big part in part probably because they can be you know, 54 00:02:46,280 --> 00:02:48,360 Speaker 2: the World Banks applied them to one hundred and ninety 55 00:02:48,360 --> 00:02:51,280 Speaker 2: six different countries, which is a pretty big chunk of 56 00:02:51,720 --> 00:02:55,079 Speaker 2: all of the countries, so the models have to kind 57 00:02:55,080 --> 00:02:56,720 Speaker 2: of be you know, you can imagine there's some models 58 00:02:56,720 --> 00:02:59,400 Speaker 2: that would work really really well in Singapore because they 59 00:02:59,440 --> 00:03:01,280 Speaker 2: know so much of out their economy, but they wouldn't 60 00:03:01,320 --> 00:03:02,160 Speaker 2: apply to other countries. 61 00:03:02,360 --> 00:03:06,080 Speaker 1: Yeah, I guess does it take into account because culturally 62 00:03:06,120 --> 00:03:10,040 Speaker 1: as well, there's sort of differences between you know, certain 63 00:03:10,080 --> 00:03:12,520 Speaker 1: cultures might be more inclined to do those you know, 64 00:03:13,600 --> 00:03:16,080 Speaker 1: pain my fence, I'll pay you in X, Y Z 65 00:03:16,680 --> 00:03:19,840 Speaker 1: versus you know, other places where that's sort of not 66 00:03:19,919 --> 00:03:20,680 Speaker 1: part of the culture. 67 00:03:21,000 --> 00:03:22,480 Speaker 2: Yeah, I mean I think that those sort of things 68 00:03:22,520 --> 00:03:24,480 Speaker 2: will show up in the model but also the models, 69 00:03:25,240 --> 00:03:27,960 Speaker 2: you know that countries that have a GSC system probably 70 00:03:28,000 --> 00:03:31,480 Speaker 2: have less of an informal economy because they've managed to 71 00:03:31,520 --> 00:03:33,800 Speaker 2: capture a lot more of the transactions that take place 72 00:03:34,720 --> 00:03:38,480 Speaker 2: as part of you know, GST, Whereas if there's there's 73 00:03:38,480 --> 00:03:43,160 Speaker 2: no obligation to pay GSC on painting offense, then there's 74 00:03:43,200 --> 00:03:46,840 Speaker 2: even less chance of declaring it. GST fundamentally is just 75 00:03:47,000 --> 00:03:50,360 Speaker 2: trying to tax every single transaction that takes place, and 76 00:03:50,440 --> 00:03:53,280 Speaker 2: so that means that it's in the government's interests to 77 00:03:53,880 --> 00:03:58,640 Speaker 2: have systems in place for tracking every transaction that takes place. 78 00:03:58,760 --> 00:04:02,920 Speaker 2: And also if you don't report your GSC, then you know, 79 00:04:03,480 --> 00:04:05,400 Speaker 2: that's an offense that you can be prosecuted for. 80 00:04:05,760 --> 00:04:08,880 Speaker 1: Do we know on a global scale how big New 81 00:04:08,960 --> 00:04:11,840 Speaker 1: Zealand's informal economy is compared to the rest of the world. 82 00:04:11,920 --> 00:04:14,040 Speaker 2: Yes, So we're looking at these World Bank models, in 83 00:04:14,040 --> 00:04:18,440 Speaker 2: New Zealand comes out about eight or ninth smallest informal 84 00:04:18,480 --> 00:04:21,080 Speaker 2: economy in the world. That's obviously looking at it from 85 00:04:21,120 --> 00:04:22,960 Speaker 2: the point of view of what it is as a 86 00:04:23,000 --> 00:04:26,920 Speaker 2: percentage of the GDP. So these estimates seem to sit 87 00:04:26,960 --> 00:04:29,920 Speaker 2: at about between eleven and twelve percent of our official GDP, 88 00:04:30,120 --> 00:04:35,200 Speaker 2: and the smallest informal economy in the world is Switzerland, 89 00:04:35,240 --> 00:04:37,960 Speaker 2: which sits at about eight percent, so we're actually pretty 90 00:04:37,960 --> 00:04:38,480 Speaker 2: close to that. 91 00:04:40,440 --> 00:04:43,800 Speaker 4: There's many countries across the globe battle sky high inflation. 92 00:04:44,400 --> 00:04:48,080 Speaker 4: Here in Switzerland, a small mountainous nation in Western Europe, 93 00:04:48,279 --> 00:04:51,400 Speaker 4: the rise in prices has been far less dramatic. Have 94 00:04:51,560 --> 00:04:54,440 Speaker 4: you felt the effects of price rises and inflation over 95 00:04:54,480 --> 00:04:55,200 Speaker 4: the past year. 96 00:04:56,480 --> 00:04:59,560 Speaker 2: Not that much, to be honest, richmon or right most 97 00:04:59,600 --> 00:05:01,040 Speaker 2: of Okay. 98 00:05:01,120 --> 00:05:03,160 Speaker 4: You think Switzerland somehow got it a bit more right 99 00:05:03,240 --> 00:05:06,440 Speaker 4: than maybe the other places thin So inflation in Switzerland 100 00:05:06,520 --> 00:05:09,440 Speaker 4: hit a twenty nine year high of three point five 101 00:05:09,520 --> 00:05:13,760 Speaker 4: percent in twenty twenty two. While still high by Swiss standards, 102 00:05:13,960 --> 00:05:17,120 Speaker 4: it is well below the double digit inflation rates in 103 00:05:17,240 --> 00:05:21,840 Speaker 4: other advanced economies like the US, UK and Eurozone. 104 00:05:25,040 --> 00:05:25,440 Speaker 3: Do we know? 105 00:05:25,560 --> 00:05:28,880 Speaker 1: Is there anything special about Switzerland that's keeping their so small. 106 00:05:29,080 --> 00:05:33,120 Speaker 2: I think it's a combination of it's a pretty it's 107 00:05:33,120 --> 00:05:37,360 Speaker 2: a highly regulated country to live in, but also that 108 00:05:37,960 --> 00:05:41,359 Speaker 2: one of the ways to get a smaller informal economy 109 00:05:41,400 --> 00:05:44,520 Speaker 2: is to have a bigger formal economy. You could imagine 110 00:05:44,560 --> 00:05:47,560 Speaker 2: that there's a certain amount of transactions that kind of 111 00:05:47,560 --> 00:05:51,000 Speaker 2: inevitably happen between people that are always going to be informal. 112 00:05:51,200 --> 00:05:55,159 Speaker 2: But if you've got a massive Swiss banking system sitting 113 00:05:55,240 --> 00:05:58,840 Speaker 2: there as par generating an enormous portion of your GDP, 114 00:05:59,360 --> 00:06:04,280 Speaker 2: then percentage wise, you know, those little transactions are going on. 115 00:06:04,320 --> 00:06:07,320 Speaker 2: And that's actually what I think is happening. So the 116 00:06:07,440 --> 00:06:10,720 Speaker 2: United States has a smaller informal economy than New Zealand 117 00:06:10,760 --> 00:06:13,560 Speaker 2: as a percentage, And I think that's not so much 118 00:06:13,640 --> 00:06:16,919 Speaker 2: that there's less of and less there's less informal transactions 119 00:06:16,960 --> 00:06:20,120 Speaker 2: taking place in the US, but it's more that their 120 00:06:20,160 --> 00:06:24,839 Speaker 2: formal economy is simply enormous compared to ours, and a 121 00:06:24,920 --> 00:06:26,760 Speaker 2: kind of enormous amount of perposeon basis. 122 00:06:27,160 --> 00:06:31,719 Speaker 1: Yeah. Interesting, it's funny this idea, because we're talking about 123 00:06:32,120 --> 00:06:36,279 Speaker 1: a babysitter making a few bucks cash for looking after 124 00:06:36,360 --> 00:06:40,800 Speaker 1: some kids and you know, a drug cartel committing fraud 125 00:06:41,240 --> 00:06:45,000 Speaker 1: laundering money in the same breath. But you know, clearly 126 00:06:45,000 --> 00:06:49,520 Speaker 1: there's sort of like a moral difference between those. How 127 00:06:49,520 --> 00:06:50,920 Speaker 1: do we draw a line between these? 128 00:06:51,120 --> 00:06:53,479 Speaker 2: I mean, yeah, I think they're obviously there is and 129 00:06:53,560 --> 00:06:56,600 Speaker 2: I think, yeah, there's In my mind, there's a pretty 130 00:06:56,600 --> 00:07:02,880 Speaker 2: clear continuum with babysitters at one end being morally kind 131 00:07:02,880 --> 00:07:06,800 Speaker 2: of not really a problem, and then you know you've 132 00:07:06,800 --> 00:07:09,479 Speaker 2: got you've got your drug cartles and things happening at 133 00:07:09,520 --> 00:07:12,440 Speaker 2: the other end, and then things like cash jobs or 134 00:07:12,560 --> 00:07:16,440 Speaker 2: under reporting of self employed income. I mean, from my point, 135 00:07:16,440 --> 00:07:17,840 Speaker 2: oviou sit somewhere in the middle of here. 136 00:07:28,640 --> 00:07:33,240 Speaker 1: Obviously nowhere has zero as their estimate. But like, is 137 00:07:33,280 --> 00:07:37,400 Speaker 1: that what I guess the government in an ideal world 138 00:07:37,440 --> 00:07:39,960 Speaker 1: would be aiming for, or is painting offense for a 139 00:07:39,960 --> 00:07:42,520 Speaker 1: few bucks not actually a problem? 140 00:07:42,680 --> 00:07:44,960 Speaker 2: I don't know. I don't think governments are ever going 141 00:07:45,000 --> 00:07:47,160 Speaker 2: to aim for zero. And I think also these these 142 00:07:47,200 --> 00:07:50,960 Speaker 2: economic models, they probably capture things that are inevitably not 143 00:07:51,400 --> 00:07:54,480 Speaker 2: going to be to be something that the government will 144 00:07:54,480 --> 00:07:57,600 Speaker 2: ever monitor or tax or capture. So one of the 145 00:07:57,600 --> 00:07:59,840 Speaker 2: things I've looked at with these models, and I've tried 146 00:07:59,880 --> 00:08:03,480 Speaker 2: to understand whether it's included in these models, and it 147 00:08:03,920 --> 00:08:06,119 Speaker 2: kind of full disclosure, I couldn't. But I have seen 148 00:08:06,160 --> 00:08:10,560 Speaker 2: in other economic modeling things like if you model the 149 00:08:10,680 --> 00:08:16,040 Speaker 2: unpaid work done by parents, then that becomes an enormous number. 150 00:08:16,520 --> 00:08:19,800 Speaker 2: Because it's relatively easy to sit down and work out 151 00:08:19,880 --> 00:08:23,440 Speaker 2: what the cost of raising a child is in the 152 00:08:23,480 --> 00:08:25,720 Speaker 2: sense of you've got to pay for schooling, you've got 153 00:08:25,760 --> 00:08:28,960 Speaker 2: to pay for feeding them, you've got to pay for 154 00:08:29,680 --> 00:08:33,000 Speaker 2: someone to look after them. If you basically want to 155 00:08:33,840 --> 00:08:37,360 Speaker 2: have a child and completely outsource raising that child to 156 00:08:37,440 --> 00:08:39,600 Speaker 2: nannies and that sort of thing, then it's pretty easy 157 00:08:39,600 --> 00:08:42,760 Speaker 2: to work out what that costs. And so one way 158 00:08:42,800 --> 00:08:46,040 Speaker 2: of doing these economic models is to pick up that 159 00:08:46,120 --> 00:08:49,800 Speaker 2: type of transaction and say, well, there's this many children 160 00:08:49,840 --> 00:08:53,120 Speaker 2: in the world and so or this many children in 161 00:08:53,160 --> 00:08:55,840 Speaker 2: a country, So you know what the cost of raising 162 00:08:55,840 --> 00:08:59,120 Speaker 2: those children is, and you're not seeing the payments associated 163 00:08:59,160 --> 00:09:01,720 Speaker 2: with that. So then that's part of the black market. 164 00:09:02,240 --> 00:09:04,440 Speaker 2: Well that's part of an informal economy, you know, and 165 00:09:04,480 --> 00:09:07,080 Speaker 2: then that's like from a strictly kind of economic point 166 00:09:07,080 --> 00:09:09,360 Speaker 2: of view, that does make sense, but from any kind 167 00:09:09,360 --> 00:09:14,320 Speaker 2: of common sense, this is how we organize our lives, 168 00:09:14,320 --> 00:09:16,000 Speaker 2: it doesn't really you know, like I'm not going to 169 00:09:16,000 --> 00:09:17,600 Speaker 2: pay myself to raise my own child. 170 00:09:18,320 --> 00:09:21,559 Speaker 1: Yeah right. I saw that the ID is going after 171 00:09:21,640 --> 00:09:24,880 Speaker 1: the likes of plasterers and painters, and that makes sense 172 00:09:24,920 --> 00:09:27,040 Speaker 1: on paper, I guess, because the trades are sort of 173 00:09:27,040 --> 00:09:30,720 Speaker 1: one sector where you think about jobs just being done 174 00:09:30,720 --> 00:09:33,160 Speaker 1: with cash deals, whether that's true or not. But do 175 00:09:33,200 --> 00:09:34,199 Speaker 1: you think is that the right move? 176 00:09:34,480 --> 00:09:37,319 Speaker 2: I mean, it's an interesting something that I've been discussing 177 00:09:37,360 --> 00:09:39,199 Speaker 2: a lot with a couple of people around this is 178 00:09:39,559 --> 00:09:42,520 Speaker 2: there's kind of there's two things, right. There's the size 179 00:09:42,559 --> 00:09:47,040 Speaker 2: of the infall of economy, which I was actually relatively 180 00:09:47,080 --> 00:09:53,160 Speaker 2: surprised that, you know, the estimated loss of tax from 181 00:09:53,440 --> 00:09:56,680 Speaker 2: from underreporting of self blord income, which is essentially what 182 00:09:57,320 --> 00:10:00,480 Speaker 2: the IOD is trying to go after, is only about 183 00:10:00,480 --> 00:10:02,600 Speaker 2: eight hundred and fifty million, which is a big number, 184 00:10:02,760 --> 00:10:05,800 Speaker 2: but like you could you could imagine easily spending something 185 00:10:05,840 --> 00:10:08,760 Speaker 2: getting close to that to try and collect that. And 186 00:10:08,800 --> 00:10:11,040 Speaker 2: so I think I think that from the point of 187 00:10:11,120 --> 00:10:15,600 Speaker 2: view of an organization like the AID, they've got to 188 00:10:15,600 --> 00:10:18,960 Speaker 2: try and walk a sweet spot between, you know, not 189 00:10:19,120 --> 00:10:23,600 Speaker 2: creating systems that are that actually suppress economic activity and 190 00:10:23,640 --> 00:10:26,840 Speaker 2: also not spending crazy amounts of money on enforcement, but 191 00:10:27,000 --> 00:10:29,320 Speaker 2: also making sure that the vast majority of people to 192 00:10:29,360 --> 00:10:31,480 Speaker 2: actually pay their taxes are And so I think that 193 00:10:31,600 --> 00:10:35,160 Speaker 2: probably the approach of carrying out a few kind of 194 00:10:35,200 --> 00:10:40,839 Speaker 2: high profile inquiries and prosecutions works pretty well from the 195 00:10:40,880 --> 00:10:42,760 Speaker 2: point of view of actor. You want most people to 196 00:10:42,760 --> 00:10:45,960 Speaker 2: be worried that if they don't do their taxes properly 197 00:10:46,040 --> 00:10:47,680 Speaker 2: then they're going to get in trouble. But you don't 198 00:10:47,960 --> 00:10:49,920 Speaker 2: necessarily want to be spending all the money to make 199 00:10:49,920 --> 00:10:50,319 Speaker 2: that happen. 200 00:10:50,440 --> 00:10:53,000 Speaker 1: Yeah, because I guess, like, would the most effective way 201 00:10:53,559 --> 00:10:58,400 Speaker 1: to shrink this hidden economy be to crack down on 202 00:10:58,760 --> 00:11:01,160 Speaker 1: things like that? Or you know, should we be looking 203 00:11:01,200 --> 00:11:04,079 Speaker 1: at formalizing some of the informal stuff because you think 204 00:11:04,080 --> 00:11:07,240 Speaker 1: about like drugs, for instance, there was the legalizing cannabis 205 00:11:07,240 --> 00:11:09,439 Speaker 1: referendum in twenty twenty, and around that time there was 206 00:11:09,480 --> 00:11:12,800 Speaker 1: all these studies and reports that put the potential tax 207 00:11:12,840 --> 00:11:15,800 Speaker 1: revenue of that between four hundred and ninety million and 208 00:11:15,840 --> 00:11:19,160 Speaker 1: potentially two point eight billion dollars a year. So you know, 209 00:11:19,360 --> 00:11:22,439 Speaker 1: would formalizing some of these I guess, for lack of 210 00:11:22,440 --> 00:11:25,600 Speaker 1: a better term, be a potential big revenue draw there. 211 00:11:26,040 --> 00:11:29,559 Speaker 2: I mean, yeah, I guess the more the more transactions 212 00:11:29,559 --> 00:11:33,280 Speaker 2: you make that illegal, then the bigger your formal economy 213 00:11:33,320 --> 00:11:34,920 Speaker 2: is going to be, and you're going to decrease the 214 00:11:35,240 --> 00:11:38,200 Speaker 2: informal economy. I mean, I was actually quite surprised at 215 00:11:38,240 --> 00:11:42,120 Speaker 2: the police's most recently estimates that the profit from illegal 216 00:11:42,160 --> 00:11:44,680 Speaker 2: drugs is between five hundred and six hundred million a year. 217 00:11:45,400 --> 00:11:48,240 Speaker 2: I thought that was a relatively small number, particularly given 218 00:11:48,320 --> 00:11:52,240 Speaker 2: some of those other estimates of potential taxation from legalization. Yeah. 219 00:11:52,280 --> 00:11:54,520 Speaker 2: I think that all of those things are pretty hard 220 00:11:54,520 --> 00:11:56,120 Speaker 2: to figure out until we actually happened. 221 00:11:56,200 --> 00:11:58,480 Speaker 1: Yeah, tell, because I mean you look at cigarettes, which 222 00:11:58,520 --> 00:12:01,160 Speaker 1: have been taxed up with the wise and then they've 223 00:12:01,200 --> 00:12:03,520 Speaker 1: become a sort of big black market industry here as well. 224 00:12:03,559 --> 00:12:06,560 Speaker 1: So I guess maybe there is just no countering to 225 00:12:06,840 --> 00:12:08,080 Speaker 1: every possibility, no. 226 00:12:08,160 --> 00:12:10,960 Speaker 2: Exactly, Like like you could have, Yeah, you could imagine 227 00:12:11,040 --> 00:12:13,880 Speaker 2: being like, oh, well, we're going to legalize marijuana and 228 00:12:14,000 --> 00:12:17,760 Speaker 2: you know, tax adjoint it. I'm going to reveal that 229 00:12:17,920 --> 00:12:19,880 Speaker 2: I don't even know want to joint golf at the moment. 230 00:12:19,960 --> 00:12:21,720 Speaker 2: You know, you can tax adjoint at what, you know, 231 00:12:21,760 --> 00:12:23,520 Speaker 2: two hundred percent of what you'd have to pay on 232 00:12:23,559 --> 00:12:26,240 Speaker 2: the street currently, and then probably you wouldn't collect any 233 00:12:26,280 --> 00:12:28,400 Speaker 2: tax because people would just continue to go back to 234 00:12:28,440 --> 00:12:29,640 Speaker 2: the original dealers. Yeah. 235 00:12:29,800 --> 00:12:31,960 Speaker 1: I mean I guess that there's there's a whole podcast 236 00:12:32,080 --> 00:12:33,359 Speaker 1: just in that discussion. 237 00:12:34,520 --> 00:12:34,720 Speaker 4: Yeah. 238 00:12:34,800 --> 00:12:41,640 Speaker 3: Yeah, So our medicinal products for cannabis are ridiculously expensive. 239 00:12:41,679 --> 00:12:44,439 Speaker 3: We're talking hundreds of dollars each month for a patient, 240 00:12:44,559 --> 00:12:50,120 Speaker 3: So over ninety percent of patients aren't accessing through legitimate sources. 241 00:12:50,120 --> 00:12:53,280 Speaker 3: They're continuing to go to the illicit market to obtain it, 242 00:12:53,600 --> 00:12:56,559 Speaker 3: Which is really the conundrum we have here is that 243 00:12:56,640 --> 00:13:00,760 Speaker 3: patients are among these people who are either being prosecutors 244 00:13:00,920 --> 00:13:04,240 Speaker 3: or living with the constant fear of prosecution because they 245 00:13:04,320 --> 00:13:08,960 Speaker 3: cannot access the expense of hard to get legitimate products, 246 00:13:09,040 --> 00:13:11,720 Speaker 3: they turn into the black market and facing prosecution. 247 00:13:15,000 --> 00:13:17,800 Speaker 1: Depending on who you ask, we're either in a recession 248 00:13:17,920 --> 00:13:21,960 Speaker 1: or we're rapidly heading for one. So historically, does that 249 00:13:22,000 --> 00:13:25,319 Speaker 1: mean we're sort of starting We're going to see estimates 250 00:13:25,400 --> 00:13:29,640 Speaker 1: on the size of hidden economies growing as people turn 251 00:13:29,720 --> 00:13:32,679 Speaker 1: more to side hustles and freelancing. And I guess these 252 00:13:32,720 --> 00:13:35,160 Speaker 1: days as well. I mean I've seen people online talking 253 00:13:35,160 --> 00:13:38,000 Speaker 1: about turning to crypto to avoid taxes as well. 254 00:13:38,360 --> 00:13:42,040 Speaker 2: Yeah, I mean cryptos obviously potentially has the pen being 255 00:13:42,160 --> 00:13:45,160 Speaker 2: quite a big part of a hidden economy. But to 256 00:13:45,480 --> 00:13:49,640 Speaker 2: your original question, that turns out that that's actually what 257 00:13:49,640 --> 00:13:52,120 Speaker 2: most of the economics papers in this space are written about, 258 00:13:52,320 --> 00:13:54,920 Speaker 2: is trying to work out what are the relationships between 259 00:13:54,960 --> 00:13:58,200 Speaker 2: the formal economy and informal economy, and I think, like 260 00:13:58,280 --> 00:14:02,120 Speaker 2: almost everything, the current kind of state of the answer 261 00:14:02,200 --> 00:14:04,920 Speaker 2: seems to be it depends. So certainly, there have been 262 00:14:04,920 --> 00:14:08,920 Speaker 2: a bunch of times where people have observed that countries 263 00:14:08,920 --> 00:14:11,880 Speaker 2: have gone into recession and there's been a big kind 264 00:14:11,920 --> 00:14:14,599 Speaker 2: of almost boom, if you like, in the informal economy 265 00:14:14,720 --> 00:14:17,520 Speaker 2: because people have forced to work there. But in other 266 00:14:17,600 --> 00:14:21,960 Speaker 2: cases that doesn't happen because basically so much money is 267 00:14:22,000 --> 00:14:25,080 Speaker 2: sucked out of the formal economy that it doesn't matter 268 00:14:25,120 --> 00:14:27,240 Speaker 2: if you turn to the informal economy. There's still a 269 00:14:27,280 --> 00:14:29,720 Speaker 2: lot less money there. You can imagine that, you know, 270 00:14:29,840 --> 00:14:33,240 Speaker 2: like if we're in a serious recession, then people are 271 00:14:33,280 --> 00:14:35,560 Speaker 2: not going to be doing bathroom renovations, whether they're cash 272 00:14:35,640 --> 00:14:38,760 Speaker 2: jobs or otherwise are and so you know that's going 273 00:14:38,800 --> 00:14:41,240 Speaker 2: to then decrease that part of the informal economy. 274 00:14:41,360 --> 00:14:45,080 Speaker 1: So we've got a budget day coming up next week. 275 00:14:45,240 --> 00:14:48,600 Speaker 1: So how likely is it, you know, we're talking about money, 276 00:14:48,640 --> 00:14:51,600 Speaker 1: where money is going. How likely is it that the 277 00:14:51,640 --> 00:14:54,360 Speaker 1: government's going to actually sort of try to tackle this 278 00:14:54,480 --> 00:14:56,600 Speaker 1: in some way as a way of balancing the books. 279 00:14:56,600 --> 00:14:59,400 Speaker 2: I guess yeah. So interestingly, last week when I was 280 00:15:00,160 --> 00:15:03,040 Speaker 2: driving ahead on the radio that Inland Revenue just announced 281 00:15:03,080 --> 00:15:05,240 Speaker 2: that it has discovered one hundred and fifty million in 282 00:15:05,360 --> 00:15:10,240 Speaker 2: unpaid taxes from property developers and investors. So it certainly 283 00:15:10,280 --> 00:15:15,880 Speaker 2: seems like that there's some effort being put into trying 284 00:15:15,920 --> 00:15:19,280 Speaker 2: to recover some of this tax. And yes, wouldn't surprise 285 00:15:19,360 --> 00:15:22,000 Speaker 2: me if the government kind of wants to push a 286 00:15:22,040 --> 00:15:25,800 Speaker 2: bit more or maybe you know, give the AID more capability, 287 00:15:25,840 --> 00:15:28,320 Speaker 2: more power to go after some of these areas, because 288 00:15:28,640 --> 00:15:31,680 Speaker 2: in some ways, you know, I think that it's reasonable 289 00:15:31,680 --> 00:15:34,680 Speaker 2: to assume that we're not ever going to be kind 290 00:15:34,720 --> 00:15:38,480 Speaker 2: of have a smaller hidden economy than Switzerland, but also 291 00:15:38,920 --> 00:15:41,040 Speaker 2: there might be a billion or two dollars just sitting 292 00:15:41,080 --> 00:15:44,160 Speaker 2: there to be found with a bit of work. 293 00:15:44,360 --> 00:15:46,760 Speaker 1: Yeah, should we be looking at sort of growing out 294 00:15:46,880 --> 00:15:49,680 Speaker 1: GDP rather than trying to look at shrinking our head 295 00:15:49,680 --> 00:15:50,280 Speaker 1: in economy? 296 00:15:50,440 --> 00:15:55,000 Speaker 2: I mean growth, They shrinking their head a economies you know, 297 00:15:55,040 --> 00:15:58,760 Speaker 2: inevitably bound, whereas growing our economy I think, you know, 298 00:15:59,000 --> 00:16:02,760 Speaker 2: like a one percent increase in the formal economy is 299 00:16:02,880 --> 00:16:06,320 Speaker 2: essentially another billion dollars in tax. So I think that 300 00:16:06,600 --> 00:16:08,640 Speaker 2: in many ways that would be an easier direction to 301 00:16:08,720 --> 00:16:10,880 Speaker 2: go if we could just figure out how to go 302 00:16:10,920 --> 00:16:11,520 Speaker 2: in that direction. 303 00:16:11,720 --> 00:16:17,440 Speaker 1: Thanks for joining us, Chris Nors, You're welcome. That's it 304 00:16:17,560 --> 00:16:20,120 Speaker 1: for this episode of the Front Page. You can read 305 00:16:20,160 --> 00:16:24,120 Speaker 1: more about today's stories and extensive news coverage at inzidherld 306 00:16:24,200 --> 00:16:27,320 Speaker 1: dot co dot nzet. The Front Page is produced by 307 00:16:27,400 --> 00:16:30,840 Speaker 1: Ethan Sills and I'm Richard Martam. Subscribe to the Front 308 00:16:30,880 --> 00:16:34,120 Speaker 1: Page on iHeartRadio or wherever you get your podcasts, and 309 00:16:34,280 --> 00:16:37,560 Speaker 1: tune in tomorrow for another look behind the headlines.