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Speaker 1: The government harving the operating allowance and this budget to

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Speaker 1: one point three billion it was two point four billion

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Speaker 1: billions and savings will be found to fund new stuff, health, education, cops, defense,

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Speaker 1: They're all getting a boost, according to the minister yesterday.

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Speaker 1: Labour's finance spokesperson Barbara Evans will be this morning. Barbara,

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Speaker 1: Good morning, Good morning, Ryan.

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Speaker 2: How are you.

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Speaker 1: I'm very well, thank you. Good to have you on.

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Speaker 1: Did you see that note from ASB last night. They're

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Speaker 1: perking interest rates I'll have to go lower to do

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Speaker 1: more of the heavy lifting for growth. What do you

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Speaker 1: make of it?

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Speaker 2: Yeah, that I've seen that commentary a little bit as

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Speaker 2: well online from different economists and that's really to help

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Speaker 2: stimulate the economy and growth. So if that's the case,

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Speaker 2: I mean, I know the Reserve Bank governor or, the

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Speaker 2: previous guy said that there'll be two cuts before the

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Speaker 2: middle of the year. So the Financial Stability Report will

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Speaker 2: come out next week, so it'll be interesting to see

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Speaker 2: where they land.

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Speaker 1: That would be a good thing, though, wouldn't it. I mean,

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Speaker 1: if you have the Reserve Bank doing more of the

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Speaker 1: heavy lifting bringing our mortgage rates down so we're not

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Speaker 1: so poor, is that not a good outcome.

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Speaker 2: Yeah, that is a good outcome if you've got a

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Speaker 2: mortgage and if you rent, obviously, but it's very much

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Speaker 2: clear that it's most the economy is not growing.

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Speaker 1: Yeah yeah, yeah, I know. But I mean, well, who's

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Speaker 1: is at the moment? I suppose that's the problem, isn't it.

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Speaker 1: So the surplus that's what we want to get to, right,

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Speaker 1: and this is why she's she's cut the operating allowance

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Speaker 1: because she wants to get that surplus by twenty twenty nine.

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Speaker 1: Is that not a laudable goal?

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Speaker 2: Well, it comes down to what are the choices she's

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Speaker 2: going to have to make to get to that surplus.

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Speaker 2: So again we've had concerns around productivity. We want to

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Speaker 2: make sure that they're smart investment. You know, it's really

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Speaker 2: clear and New Zealand does have a productivity issue in

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Speaker 2: some of those key areas like innovation, research and development.

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Speaker 2: That's we're smart governments clotally.

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Speaker 1: But we've had those problems for thirty years now, haven't we.

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Speaker 1: If we're looking at the here and now, surely the

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Speaker 1: bigger issue is the debt. You know, debt to GDP

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Speaker 1: is forty percent heading to forty five. It's twice what

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Speaker 1: it was pre COVID. Borrowing costs are going up. You know,

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Speaker 1: what do we do if we have an earthquake? What

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Speaker 1: do we do if there's a cyclone? You know, we've

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Speaker 1: got Trump and his terrace. We're a small trading nation.

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Speaker 1: When is a good time to get to surplus and

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Speaker 1: start paying down debt? Barbara?

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Speaker 2: Yeah, And the point is key that as long as

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Speaker 2: the economy is growing, your deet to GEDDP measure will fall.

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Speaker 2: So that's the really important part to it. You know,

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Speaker 2: labor had a surplus before we went into COVID in

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Speaker 2: twenty nineteen of seven billion dollars. And you're right, you

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Speaker 2: put the umbrella up when you need to when there's

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Speaker 2: a pandemic, when there was a cyclone, So it's making

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Speaker 2: sure you have that headroom.

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Speaker 1: Was there a little too much umbrella, do you think?

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Speaker 2: Well, we had to invest to keep people in jobs.

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Speaker 2: We had the lowest COVID mortality rate in the world.

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Speaker 2: You know, we had record low employment when Treasury was

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Speaker 2: forecasting economic But it.

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Speaker 1: Was all have to be paid for at some point,

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Speaker 1: which is what's happening now, isn't it. I mean, that's

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Speaker 1: the lesson we've learned, Barbara.

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Speaker 2: And that's the interesting thing is that actually we only

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Speaker 2: went into a recession last year. We were actually still

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Speaker 2: growing in the Treasury hang said that to.

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Speaker 1: Me, the Treasury chief economists. Sorry, so that again, the

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Speaker 1: Treasury chief economist told you that the growth that.

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Speaker 2: We had been growing, we still had actual marginal growth

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Speaker 2: post COVID And actually we only went into recession the

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Speaker 2: last three quarters of the last financial year.

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Speaker 1: Yeah, everybody knows that. But you're not saying that's just

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Speaker 1: because we had a national government, are you? No?

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Speaker 2: Always saying that this is where choices really matter.

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Speaker 1: But the choices houses.

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Speaker 2: You keep construction workers in jobs, you build homes, Governments

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Speaker 2: pulling back at a time when they should be investing.

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Speaker 1: But you guys went to Hundi, didn't you, And you

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Speaker 1: mentioned the fact we were growing, but inflation was through

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Speaker 1: the roof. We had to bring that under control. That's

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Speaker 1: what's happening.

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Speaker 2: Now And that goes to your earlier around the Reserve

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Speaker 2: Bank having to do a lot of that heavy lifting.

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Speaker 2: And they believe that they needed to hike interest rates

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Speaker 2: up to bring inflation down because that's their mandate. So

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Speaker 2: seeing that, asb the commentators are saying well, they think

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Speaker 2: interest rates are going to drop further. That's the Reserve

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Speaker 2: Bank doing.

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Speaker 1: Their job, all right. I really appreciate you coming on

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Speaker 1: the show as always, Barbara Edmonds, Labour's finance spokesperson. For

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Speaker 1: more from Early Edition with Ryan Bridge, listen live to

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