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Speaker 1: A group of economists have written in open letters of

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Speaker 1: the Prime Minister asking him not to cut government spending now.

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Speaker 1: The group includes a former Treasury chief economist, a current

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Speaker 1: Union economist, a former union economist, and a former Reserve

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Speaker 1: Bank director and also Garnish Nana who's with us aganash

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Speaker 1: very well, thank you. What government spending cuts do you

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Speaker 1: want to see stopped?

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Speaker 2: Well, we've we've had the last budget which saw lots

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Speaker 2: of cuts and spending I think was about six or

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Speaker 2: seven percent they wanted and the signals are that there

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Speaker 2: is even more spending coming in this next budget round.

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Speaker 2: So we want to caught a hole to any more

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Speaker 2: cuts and spending while we take stock and just where

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Speaker 2: we are and what is the objective of all of us?

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Speaker 1: But don't we want the government to cut spending to

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Speaker 1: help the Reserve Bank bring down inflation? Sorry, you're cutting out,

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Speaker 1: I said, don't we worry. Don't we want the government

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Speaker 1: to cut spending to help the Reserve Bank bring down inflation?

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Speaker 2: Well, the Reserve Bank is doing quite well on its own,

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Speaker 2: assisted by the rest of the world and bringing down inflation.

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Speaker 1: The government debt as well.

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Speaker 2: Right, Well, that's arguable. But the point is should fiscal

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Speaker 2: policy be targeting inflation when we've already got the Reserve

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Speaker 2: Bank doing it. We want fiscal policy to do other things,

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Speaker 2: which is to focus on that external debt that seems

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Speaker 2: to be being ignored by many.

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Speaker 1: But to be fair, the Reserve Bank has asked, has

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Speaker 1: asked the government to assist them and in the fight

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Speaker 1: of inflation. Right, So if the Reserve bank's asking for

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Speaker 1: that assistance, so they not get it.

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Speaker 2: Well, the Reserve Bank has always asked, and that that's

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Speaker 2: not just this government, that's the previous one, as the

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Speaker 2: previous Reserve Bank governor as well. But the question is

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Speaker 2: should fiscal policy be targeting inflation? We've already got one

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Speaker 2: arm of government targeting inflation, and that's through interest rates.

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Speaker 2: Where what's left to target the other important things in

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Speaker 2: the economy that are necessary if we get beyond the

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Speaker 2: short term cycles and nish tackling the longer term issues.

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Speaker 1: What do you if you don't think fiscal policy should

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Speaker 1: fight inflation, what should fiscal policy do.

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Speaker 2: Well? Fiscal policy has got to help us get out

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Speaker 2: of this rut that we've been in fee decades around

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Speaker 2: productivity and export growth, because it's that external debt that

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Speaker 2: is the problem. I know New Zealanders love and governments

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Speaker 2: of all colors love to talk about government debt, but

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Speaker 2: we would love to talk about external debt because that

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Speaker 2: is the legacy and the burden that has literally been

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Speaker 2: passed on to next generation and so on. And that

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Speaker 2: external debt is not what we owe to the government

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Speaker 2: or what the government owes to us. It's what we

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Speaker 2: as a country owe to other countries. And that's the

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Speaker 2: important thing. And we don't see any addressing of that

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Speaker 2: or any con between what fiscal policy is currently doing

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Speaker 2: and that that bigger target that we need to address.

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Speaker 1: All Right, Ginnich, thank you, I appreciate your time. It's

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Speaker 1: going to on a former Productivity Commission chair for more

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Speaker 1: from Hither Duplessy Allen Drive. Listen live to News Talk

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