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Speaker 1: Rare insight from the chief executive before that, though chief

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Speaker 1: Executive of Treasury leaving a job shortly exit interview. This

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Speaker 1: is Caroly McLish, doctor says changes are required to address

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Speaker 1: the crownd structural deficit. She's arguing for a higher retirement

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Speaker 1: age and introducing a capital gains tax. The former Reserve

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Speaker 1: Bank economist Michael Riddell's with us on this Michael Morning,

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Speaker 1: Is she broadly right?

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Speaker 2: I was just probably right about the structural deficit. And

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Speaker 2: structural deficits don't fix themselves. They need hard choices about

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Speaker 2: things that governments don't want to do. You can't just

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Speaker 2: nip and tuck cut a feedback office staff out to

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Speaker 2: solve those problems. It's become quite a serious issue in

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Speaker 2: the last few years.

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Speaker 1: What is the structural deficit?

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Speaker 2: What a structural deficit just means one that won't go

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Speaker 2: away by itself. So you have when the economy turns

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Speaker 2: down and we have a recession like you have at

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Speaker 2: the moment, it's natural that revenue tax revenue drops away

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Speaker 2: want the recession temporarily. A structural deficit is when the

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Speaker 2: economy recovers, are you back to balance or back to surplus?

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Speaker 2: If you're not, and that's the situation that we're in now.

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Speaker 2: The economy could recover back to trend growth and we'd

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Speaker 2: still be left with a large deficit, and one that

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Speaker 2: only is going to get worse next decade. There's the

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Speaker 2: precious of an aging population on health and superannuation spending worse.

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Speaker 1: Why don't governments run their lives the way we run

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Speaker 1: ourll liies?

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Speaker 2: Broadly well, Zelan governments had a pretty good record for

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Speaker 2: twenty years of doing so under both national and labor

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Speaker 2: and it's really hard to understand the last five or

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Speaker 2: six years, you know, Adernam Robertson, before COVID was still

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Speaker 2: running surpluses. COVID displaced things. There was a lot of

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Speaker 2: spending that had to happen because of the COVID shutdown.

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Speaker 2: But then we never got back to discipline spending after that,

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Speaker 2: and once you lose that discipline, it's really hard to

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Speaker 2: regain it. And Treasurrey is partly at fault for that.

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Speaker 2: I mean, their advice until too late in the peace

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Speaker 2: to Grant Robertson was that it was okay, there was

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Speaker 2: room for further increases in spending, even after the worst

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Speaker 2: of COVID was over right.

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Speaker 1: So when you talk about a capital gains tax and

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Speaker 1: the retirement age, you're talking not only fiscal but politics.

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Speaker 1: Is anyone bold enough if they were going to run

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Speaker 1: the argument, to actually run it and go for a

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Speaker 1: vote and take that risk or not well.

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Speaker 2: I mean National has campaigned in the last two or

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Speaker 2: three elections for very slowly raising the retirement age. New

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Speaker 2: Zealand first is the block. They're an absolute no on this.

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Speaker 2: Later back in twenty fourteen, campaigned on it. I think

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Speaker 2: almost everyone recognizes in sort of policy circles that it's

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Speaker 2: good and sensible and necessary and overdue adjustment. What will

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Speaker 2: enable someone finally to make the move, I'm not sure.

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Speaker 2: Maybe it takes into the crisis. Cheminal gains tax is

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Speaker 2: one of those where there's sort of a lot more

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Speaker 2: genuine difference of view as whether it's fair and right

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Speaker 2: and also whether it all raise much revenue. A lot

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Speaker 2: of the capital gains in the last few years has

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Speaker 2: been house price inflation, but christ Bishop tells us the

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Speaker 2: housing reforms are going to cut US prices, so they

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Speaker 2: might not be much revenue there.

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Speaker 1: Well, we'll see what happens. Always a pleasure Michael Michael Raddell,

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Speaker 1: former Reserve Bank economists. For more or from the Mic

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Speaker 1: Asking Breakfast, listen live to News Talks at B from

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