1 00:00:00,240 --> 00:00:02,120 Speaker 1: Is worse than expected. We're not going to be getting 2 00:00:02,120 --> 00:00:05,120 Speaker 1: to surplus anytime this decade. So the Government's changed the 3 00:00:05,160 --> 00:00:07,600 Speaker 1: way that we actually measure the surplus. Leaving our acc 4 00:00:07,760 --> 00:00:09,160 Speaker 1: makes it look a little bit better, gets us to 5 00:00:09,160 --> 00:00:12,160 Speaker 1: surplus by twenty twenty nine. Productivity is down, growth is down, 6 00:00:12,200 --> 00:00:14,680 Speaker 1: tax takers down. Only two things that are going up 7 00:00:14,760 --> 00:00:17,599 Speaker 1: is debt and interest repayments. Finance Minister Nichola Willis is 8 00:00:17,600 --> 00:00:19,599 Speaker 1: with us. Now, Hey Nikola, Hey. 9 00:00:19,440 --> 00:00:21,400 Speaker 2: The other thing that's going up is growth next year. 10 00:00:21,440 --> 00:00:24,120 Speaker 1: So that's a positive to zero point five percent. 11 00:00:24,840 --> 00:00:27,440 Speaker 2: Yeah, and then it recovers beyond that. But after several 12 00:00:27,560 --> 00:00:30,880 Speaker 2: years bouncing along the bottom and recessionary conditions, that period 13 00:00:30,880 --> 00:00:33,000 Speaker 2: of sustained growth will feel a lot better. We do 14 00:00:33,080 --> 00:00:34,839 Speaker 2: need to drive it higher. That's a big focus for 15 00:00:34,880 --> 00:00:35,360 Speaker 2: the government. 16 00:00:35,640 --> 00:00:37,720 Speaker 1: Look, I take your point, but we are still going 17 00:00:37,720 --> 00:00:39,760 Speaker 1: backwards per capita next year, aren't we. I mean, so 18 00:00:39,800 --> 00:00:41,200 Speaker 1: I'm literally going to be getting poorer. 19 00:00:41,760 --> 00:00:45,599 Speaker 2: Oh look, there's no sugarcoating it. Yesterday, what the Treasury 20 00:00:45,680 --> 00:00:48,800 Speaker 2: presented was a tough set of books that represent significant 21 00:00:48,880 --> 00:00:51,880 Speaker 2: economic challenges for New Zealand. Now the government is going 22 00:00:51,920 --> 00:00:54,320 Speaker 2: to do the right things. One we're going to stick 23 00:00:54,360 --> 00:00:57,440 Speaker 2: to a medium term path of fiscal consolidation, being very 24 00:00:57,440 --> 00:01:01,680 Speaker 2: disciplined about the spending due and two get very serious 25 00:01:01,800 --> 00:01:04,920 Speaker 2: about addressing this productivity disease that New Zealand has been 26 00:01:04,920 --> 00:01:08,520 Speaker 2: suffering now for a couple of decades. So driving those 27 00:01:08,560 --> 00:01:11,560 Speaker 2: growth leaders is going to be essential for New Zealand 28 00:01:11,640 --> 00:01:14,399 Speaker 2: to pay down its debt and provide better opportunities for 29 00:01:14,440 --> 00:01:14,959 Speaker 2: its people. 30 00:01:15,080 --> 00:01:16,920 Speaker 1: Why don't you cut harder so that we get to 31 00:01:16,920 --> 00:01:19,039 Speaker 1: surplus faster, so we pay down our debt faster. 32 00:01:20,520 --> 00:01:23,280 Speaker 2: Because there are commitments that we have made to the 33 00:01:23,280 --> 00:01:25,959 Speaker 2: New Zealand people. One that we are going to keep 34 00:01:26,000 --> 00:01:29,800 Speaker 2: improving frontline services and that will require more resources plus schools, 35 00:01:30,160 --> 00:01:33,919 Speaker 2: for our health system, for our police. And two because 36 00:01:33,959 --> 00:01:36,000 Speaker 2: what we've said will do is do that in a 37 00:01:36,040 --> 00:01:38,480 Speaker 2: sensible way. So we will have to deliver savings in 38 00:01:38,560 --> 00:01:43,360 Speaker 2: order to provide those extra resources elsewhere. Just to make 39 00:01:43,400 --> 00:01:47,240 Speaker 2: sure that we're meeting frontline service demands will require significant 40 00:01:47,240 --> 00:01:51,200 Speaker 2: reprioritization across government. We're doing that work now. Actually, in 41 00:01:51,240 --> 00:01:54,200 Speaker 2: our last budget we deliver twenty three billion dollars worth 42 00:01:54,200 --> 00:01:57,080 Speaker 2: of savings. So I have conviction that we will be 43 00:01:57,120 --> 00:01:59,080 Speaker 2: able to deliver significance slending. 44 00:01:59,120 --> 00:02:01,480 Speaker 1: I mean, if you look at the public consumption figures 45 00:02:02,040 --> 00:02:04,480 Speaker 1: you've owned that you were expecting to cut by one 46 00:02:04,480 --> 00:02:06,520 Speaker 1: point four percent, you've only cut by zero point two percent. 47 00:02:06,560 --> 00:02:07,400 Speaker 1: That's not even a cut. 48 00:02:08,080 --> 00:02:10,919 Speaker 2: Well, the major factor there is that when, as when 49 00:02:10,919 --> 00:02:13,560 Speaker 2: any economy is smaller than it was forecast to be, 50 00:02:13,680 --> 00:02:17,239 Speaker 2: which is the case, then actually spending is proportion of 51 00:02:17,280 --> 00:02:19,960 Speaker 2: the economy looks larger. And so that brings me back 52 00:02:19,960 --> 00:02:22,600 Speaker 2: to the point I'm making, Yes, more disciplined about the spending. 53 00:02:22,680 --> 00:02:25,799 Speaker 2: That's important, but also driving growth is going to be 54 00:02:26,160 --> 00:02:29,240 Speaker 2: really relevant in these next few years. 55 00:02:28,000 --> 00:02:31,839 Speaker 1: But regardless of the size of the economy, in real terms, 56 00:02:31,880 --> 00:02:34,519 Speaker 1: your spending is far higher than Grant Robinson's. You can't 57 00:02:34,560 --> 00:02:35,120 Speaker 1: be proud of that. 58 00:02:35,880 --> 00:02:39,680 Speaker 2: We are having far less discretionary spending than he did. 59 00:02:39,760 --> 00:02:43,440 Speaker 2: So his operating allowances, that's the amount of discretionary additional 60 00:02:43,440 --> 00:02:46,359 Speaker 2: money you put in at each budget average more than 61 00:02:46,360 --> 00:02:49,560 Speaker 2: four billion dollars. We're sticking to a path where they 62 00:02:49,600 --> 00:02:52,399 Speaker 2: are only two point four billion dollars. They haven't been 63 00:02:52,400 --> 00:02:56,440 Speaker 2: that low since Steven Choice delivered a budget. So we 64 00:02:56,480 --> 00:03:00,919 Speaker 2: are sticking to a very disciplined path. It is true 65 00:03:00,919 --> 00:03:05,160 Speaker 2: that we could have much more significant reductions in spending. 66 00:03:05,200 --> 00:03:07,440 Speaker 2: The judgment that we have made is that that could 67 00:03:07,440 --> 00:03:12,000 Speaker 2: sacrifice the economic recovery and lead to diminishing frontline services, 68 00:03:12,080 --> 00:03:13,120 Speaker 2: and that's not the path we take. 69 00:03:13,240 --> 00:03:15,480 Speaker 1: Nuically, you don't have to cut frontline services. Mean there 70 00:03:15,520 --> 00:03:18,120 Speaker 1: are a whole bunch of ministries and quangos in government 71 00:03:18,160 --> 00:03:20,160 Speaker 1: that are completely useless. You could cut them. You could 72 00:03:20,160 --> 00:03:21,240 Speaker 1: save a whole bunch of money. 73 00:03:21,919 --> 00:03:25,080 Speaker 2: I can tell you Heather, we are after the wasteful spending. 74 00:03:25,120 --> 00:03:27,160 Speaker 2: We're going to have to be because that is the 75 00:03:27,200 --> 00:03:30,239 Speaker 2: only way that next year's budget will be able to 76 00:03:30,280 --> 00:03:32,720 Speaker 2: be delivered with such a low roof of spending. We 77 00:03:32,800 --> 00:03:34,640 Speaker 2: are going to have to cut more of the waste, 78 00:03:34,680 --> 00:03:35,640 Speaker 2: There's no question about it. 79 00:03:36,120 --> 00:03:37,680 Speaker 1: I think probably what's going to happen is you're going 80 00:03:37,680 --> 00:03:40,640 Speaker 1: to be bombarded with comparisons with Argentina. Have you taken 81 00:03:40,680 --> 00:03:42,440 Speaker 1: a look at how hard they've cut and thought about 82 00:03:42,440 --> 00:03:43,720 Speaker 1: whether you should be doing the same thing. 83 00:03:44,040 --> 00:03:47,120 Speaker 2: Well, I would start by saying that they did start 84 00:03:47,160 --> 00:03:50,320 Speaker 2: from a much much worse place than us. Their inflation 85 00:03:51,160 --> 00:03:53,720 Speaker 2: rates still on a monthly basis, is higher than our 86 00:03:53,760 --> 00:03:56,480 Speaker 2: annual inflation rate. So I think people need to bear 87 00:03:56,480 --> 00:03:58,720 Speaker 2: that in mind when they're making the comparison. 88 00:03:58,800 --> 00:04:01,120 Speaker 1: Before versus our two point tio's not that much higher. 89 00:04:01,640 --> 00:04:04,680 Speaker 2: Well, New Zealand, by comparison are looked at by international 90 00:04:04,680 --> 00:04:08,240 Speaker 2: fiscal institutions, is regarded as having a much better set 91 00:04:08,240 --> 00:04:12,400 Speaker 2: of books, a much better economic and fiscal path and. 92 00:04:12,360 --> 00:04:14,720 Speaker 1: Turnaround is better than yours, isn't it. 93 00:04:15,600 --> 00:04:18,040 Speaker 2: Well. I think that we need to be judged by 94 00:04:18,040 --> 00:04:20,400 Speaker 2: the results we deliver for New Zealanders, and what we 95 00:04:20,440 --> 00:04:23,560 Speaker 2: are looking to is a path with growth restored, with 96 00:04:23,640 --> 00:04:26,120 Speaker 2: inflation under control, which we've delivered in our first year, 97 00:04:26,440 --> 00:04:29,839 Speaker 2: interest rates dropping and ensuring as our said, that we 98 00:04:29,920 --> 00:04:32,520 Speaker 2: can continue to deliver good frontline services. So it's going 99 00:04:32,560 --> 00:04:36,440 Speaker 2: to be challenging either and we are making more significant 100 00:04:36,920 --> 00:04:40,719 Speaker 2: trade offs and reprioritizations the New Zealand has experienced for 101 00:04:40,760 --> 00:04:43,480 Speaker 2: several years. Just about every day round Parliament there's a 102 00:04:43,560 --> 00:04:47,120 Speaker 2: Labor Party or a Green Party politician screaming that we 103 00:04:47,160 --> 00:04:49,720 Speaker 2: shouldn't be reprioritizing things in the way that we are 104 00:04:49,880 --> 00:04:52,279 Speaker 2: pretending there's a magic money tree. But we're going to 105 00:04:52,279 --> 00:04:54,760 Speaker 2: stick stick to the course. It's the prudent, responsible thing 106 00:04:54,800 --> 00:04:55,120 Speaker 2: to do. 107 00:04:55,120 --> 00:04:56,840 Speaker 1: Do you think that you can actually make surplus in 108 00:04:56,880 --> 00:04:59,560 Speaker 1: twenty twenty nine the new Obergallex X measure that you 109 00:04:59,640 --> 00:05:01,480 Speaker 1: use in CA. Can you actually meet that or we're 110 00:05:01,480 --> 00:05:02,960 Speaker 1: going to? Are we going to get there next year? 111 00:05:02,960 --> 00:05:04,080 Speaker 1: And we just gets posted again. 112 00:05:04,720 --> 00:05:08,000 Speaker 2: In fact, our short term intention is to hit an 113 00:05:08,040 --> 00:05:11,400 Speaker 2: ober Garlex surplus in the twenty seven twenty eight year 114 00:05:12,120 --> 00:05:16,279 Speaker 2: that we're currently forecasting a small deficit that year, but 115 00:05:16,360 --> 00:05:18,720 Speaker 2: we intend to turn that into the surplus year. 116 00:05:18,839 --> 00:05:20,760 Speaker 1: Do you reckon you're going to hit your operating allowance 117 00:05:20,800 --> 00:05:21,200 Speaker 1: next year? 118 00:05:22,080 --> 00:05:22,680 Speaker 2: Yes? I do. 119 00:05:23,360 --> 00:05:25,600 Speaker 1: And what's the plan to get us growing? Because obviously 120 00:05:26,120 --> 00:05:28,240 Speaker 1: cutting enough to get to surplus is one thing, but 121 00:05:28,279 --> 00:05:31,320 Speaker 1: actually getting the economy going again it's quite another challenge. 122 00:05:31,320 --> 00:05:32,120 Speaker 1: So what's the plan there? 123 00:05:33,400 --> 00:05:35,919 Speaker 2: Yeah, well, there's five key things that we're focused on, 124 00:05:35,960 --> 00:05:37,800 Speaker 2: and I want to start by saying not all of 125 00:05:37,800 --> 00:05:40,520 Speaker 2: these things will lead to accelerated growth tomorrow, but you 126 00:05:40,600 --> 00:05:43,440 Speaker 2: do have to get your underlying foundations right. So one, 127 00:05:43,480 --> 00:05:46,479 Speaker 2: that's about education and schools. We've got to have better 128 00:05:46,520 --> 00:05:50,279 Speaker 2: equipped school leaders too. It's about overseas investment and trade, 129 00:05:50,320 --> 00:05:53,920 Speaker 2: allowing people to invest in New Zealand industries and jobs 130 00:05:53,920 --> 00:05:56,920 Speaker 2: and getting rid of that red tape three, it's about 131 00:05:56,960 --> 00:05:59,080 Speaker 2: actually getting rid of red tape across the economy that 132 00:05:59,160 --> 00:06:02,760 Speaker 2: told things back, including through better competitive frameworks in our 133 00:06:02,800 --> 00:06:05,800 Speaker 2: major industries. For it's about a smarter science system with 134 00:06:05,960 --> 00:06:08,719 Speaker 2: better regulation there and also more commercialization of the big 135 00:06:08,760 --> 00:06:12,760 Speaker 2: investments the government makes. And then finally about delivering infrastructure smarter, 136 00:06:12,960 --> 00:06:16,680 Speaker 2: partnering with the private sector using modern funding and financing tools. 137 00:06:16,760 --> 00:06:20,400 Speaker 2: All of those things is literally dozens, if not hundreds 138 00:06:20,400 --> 00:06:24,240 Speaker 2: of initiatives occurring across the ministries. Collectively, it will make 139 00:06:24,279 --> 00:06:26,680 Speaker 2: a difference. We are focused on how we earn it, 140 00:06:26,839 --> 00:06:28,000 Speaker 2: not just how we spend it. 141 00:06:28,040 --> 00:06:29,880 Speaker 1: Do you think the foreign capital is the key here? 142 00:06:30,720 --> 00:06:33,000 Speaker 2: I think that's going to be an important part of 143 00:06:33,040 --> 00:06:34,320 Speaker 2: New Zealand's future economics. 144 00:06:34,360 --> 00:06:35,080 Speaker 1: How do you get it in? 145 00:06:36,440 --> 00:06:40,680 Speaker 2: Well, one you process the applications to the Overseas Investment 146 00:06:40,680 --> 00:06:42,760 Speaker 2: Office a lot faster, which we've been doing. And two 147 00:06:42,880 --> 00:06:46,120 Speaker 2: you reform the Overseas Investment Act to welcome more investment. 148 00:06:46,480 --> 00:06:49,359 Speaker 1: Bold Nickel like doing in Ireland, and dropping the corporate 149 00:06:49,440 --> 00:06:49,840 Speaker 1: tax rate. 150 00:06:51,080 --> 00:06:53,000 Speaker 2: Well, the thing I worry about with doing that is 151 00:06:53,000 --> 00:06:55,360 Speaker 2: if I drop the corporate tax rate tomorrow, I'd also 152 00:06:55,400 --> 00:06:57,840 Speaker 2: be rewarding the big banks and the big tailcos and 153 00:06:58,000 --> 00:07:00,800 Speaker 2: very profitable companies with a windfull game. So it's how 154 00:07:00,880 --> 00:07:04,120 Speaker 2: you target at the extra investment you want because we're 155 00:07:04,120 --> 00:07:05,760 Speaker 2: not in a position where we can be giving away 156 00:07:05,800 --> 00:07:06,560 Speaker 2: revenue for free. 157 00:07:07,480 --> 00:07:09,720 Speaker 1: Okay, Nicholas, and thank you very much. I really appreciate 158 00:07:09,760 --> 00:07:12,160 Speaker 1: your time. And Merry Christmas because I think it's probably 159 00:07:12,240 --> 00:07:13,920 Speaker 1: hopefully the last time we talk this year. 160 00:07:14,920 --> 00:07:17,640 Speaker 2: Merry Christmas to you either, Okay. 161 00:07:17,440 --> 00:07:19,760 Speaker 1: Only hopefully, because every time it's about bad economic news, 162 00:07:19,760 --> 00:07:21,560 Speaker 1: look after yourself and have a good time with your family. 163 00:07:21,720 --> 00:07:23,360 Speaker 1: That's Nicola Willis the Finance mins. 164 00:07:23,880 --> 00:07:26,760 Speaker 2: For more from the Mic Asking Breakfast, listen live to 165 00:07:26,880 --> 00:07:29,960 Speaker 2: news talks it'd be from six am weekdays, or follow 166 00:07:30,000 --> 00:07:31,560 Speaker 2: the podcast on iHeartRadio.