Speaker 1: Kyota at Chelsea Daniels here, host of the Front Page.
Speaker 1: We're taking awek breakover summer, but to help build the gap,
Speaker 1: we're re issuing some of our most significant episodes of
Speaker 1: twenty twenty five on behalf of the Front Page team.
Speaker 1: Thanks for listening and we look forward to being back
Speaker 1: with you on January twelfth, twenty twenty six. Kyota, I'm
Speaker 1: Chelsea Daniels and this is the Front Page, a daily
Speaker 1: podcast presented by the New Zealand Herald. The Coalition government
Speaker 1: has unveiled its second budget. Over twenty billion dollars in
Speaker 1: savings has been found over the next four years, more
Speaker 1: than half from the controversial changes to our pay equity scheme.
Speaker 1: There are changes to keyw saver contributions, means testing for
Speaker 1: support for parents, and a major new tax incentive for businesses.
Speaker 1: Finance Minister Nikola Willis has said that it is a
Speaker 1: responsible budget, while Labor has called it an austerity budget
Speaker 1: that leaves women out and is stealing from our kids.
Speaker 2: To break down what all.
Speaker 1: Of this means for you today on the Front Page,
Speaker 1: we're joined by Enzid Herald Business Editor at Large Liam
Speaker 1: dan So. Nikola Willis has called this a growth budget.
Speaker 1: Labour's gone with austerity. If you had to pick a
Speaker 1: pithy one word descriptive of this budget, Liam, what would
Speaker 1: you go with?
Speaker 3: Oh, good question, sort of a tightrope balancing act something
Speaker 3: like that. It's a little bit of austerity and a
Speaker 3: little bit of growth, some big cuts to some things,
Speaker 3: and there's a big roll of the dice, for example,
Speaker 3: in terms of hoping that business is going to really
Speaker 3: grab this tax cut and invest for growth. So that's
Speaker 3: probably it's probably where they really rolled the dice big
Speaker 3: on that one. You know, I was wondering where's the
Speaker 3: growth coming from. They still had growth budget at the
Speaker 3: top of all the press releases, but you know, six
Speaker 3: six billion, six point four billion over four years. It's
Speaker 3: it's a significant break, especially if you think of a
Speaker 3: small business someone who's having to upgrade all their tools
Speaker 3: and you know, their transport and all that sort of
Speaker 3: stuff every five years or so. To get a twenty
Speaker 3: percent break when they do that, it could be quite
Speaker 3: a substantial amount of money for them. So it's an
Speaker 3: incentive to upgrade all the equipment earlier, you know, and
Speaker 3: make themselves more efficient and drive some productivity, which we're
Speaker 3: always talking about. So that's the idea. The theory is
Speaker 3: that that will mean the businesses will invest more in
Speaker 3: up to date technology, latest equipment, and they'll be more
Speaker 3: efficient and workers will be more productive and the economy
Speaker 3: will benefit because of that.
Speaker 1: The key we saver changes are one of the big
Speaker 1: changes here. Hey, tax payers will now get two hundred
Speaker 1: and sixty dollars and seventy two cents from the government,
Speaker 1: down from five hundred and twenty one. In return, employees
Speaker 1: and employers default contribution will rise to four percent from
Speaker 1: three percent, which is being phased in over the next
Speaker 1: three years. What sort of impact could that change have.
Speaker 3: Yeah, so the net outcome is that people would save
Speaker 3: more over the period of time. I mean the risk
Speaker 3: with cutting that tax break is so it's been cut
Speaker 3: by half, so you know, it was five hundred dollars
Speaker 3: a year. You can say, well, you've lost two hundred
Speaker 3: dollars a year, but you compound that over twenty years
Speaker 3: and you can do some maths and say that that's
Speaker 3: actually potentially taking you know, twenty thousand or whatever out
Speaker 3: of people's long term retirement savings. But that is more
Speaker 3: than compensated for by the increase to the contributions which
Speaker 3: will come out of the employee's pocket and the employer's pocket.
Speaker 3: But hopefully, you know, half a percent at a time
Speaker 3: won't be too onerous. It's sort of a step in
Speaker 3: the right direction in terms of lifting those investment rates.
Speaker 3: In Australia, they're up to twelve percent or something.
Speaker 1: For thirteen Now, yeah, man, and.
Speaker 3: Obviously that would sound horrendous to suddenly take an extra
Speaker 3: nine or ten percent out of your pay and for
Speaker 3: employers to have to pay that. But if you if
Speaker 3: you step your way there, gradually you know they've got
Speaker 3: four trillion dollars in their superannuation scheme. And we look
Speaker 3: across the tessman and say, why are they richer than us? Well,
Speaker 3: it was because they've saved the money and they've they've
Speaker 3: got all this money.
Speaker 1: This is not austerity.
Speaker 4: In fact, it is what you do to avoid austerity
Speaker 4: because getting the books in shape ensures New Zealand has
Speaker 4: financial security and choices.
Speaker 1: Into the future.
Speaker 4: That's right, And as I am about to set out,
Speaker 4: savings in this budget have allowed us to make much
Speaker 4: needed investments in health and education, law and order and
Speaker 4: rebuilding our defense force.
Speaker 1: Yeah. Well, New Zealanders are notoriously bad savers and kei
Speaker 1: we savor for a lot of us is our main investments.
Speaker 1: So is this government telling people to pull their bootstraps
Speaker 1: up and put some more effid in.
Speaker 3: Yeah, I guess a little bit. You know, it's it's
Speaker 3: a bit of that. I mean, there's there's a bit
Speaker 3: of that all through this budget. It's definitely nature to
Speaker 3: Wellington Business editor said it called it the true blue budget.
Speaker 3: Is it is very much some ideological or political decisions.
Speaker 3: They are like no more dolls for the eighteen to
Speaker 3: nineteen year olds. Parents have to look after them or
Speaker 3: they have to have to go back to study. If
Speaker 3: you can't get a job, you've got to be studying
Speaker 3: otherwise you're in You're still responsibility of their parents to
Speaker 3: pay for That was quite a big change.
Speaker 1: If I was short sighted as well, because I mean
Speaker 1: going to UNI for some people immediately out of school
Speaker 1: that it isn't an option for some people or in
Speaker 1: some people's minds it isn't.
Speaker 3: No, I guess you know, there are other things you
Speaker 3: could be looking for apprenticeships or looking for more vocational
Speaker 3: training and things, but you know they have to make
Speaker 3: sure the pathways are there.
Speaker 1: To do that.
Speaker 3: My concern would be for some of those communities where
Speaker 3: unemployment is endemic and mum and dad are unemployed. But
Speaker 3: I can see you know that that true blue bit
Speaker 3: is that. I guess that from the right wing political perspective,
Speaker 3: it's to try and push people to get motivated and
Speaker 3: go and look after themselves. But it could be quite
Speaker 3: a shock in the short term for some people.
Speaker 1: The investment boost tax is a one as well. You
Speaker 1: mentioned it before. Business is allowed to deduct twenty percent
Speaker 1: of the cost of new assets immediately from their tax
Speaker 1: will income on top of normal depreciation. Essentially, this means
Speaker 1: a lower tax bill and it's believed that over twenty
Speaker 1: years this could increase the level of GDP by one
Speaker 1: percent and wages by one point five percent. How big
Speaker 1: of a deal is this change, given how long term
Speaker 1: those benefits are.
Speaker 3: I was just talking with an economist, Christina Long from
Speaker 3: enzi Are, and she wasn't that impressed with it, like
Speaker 3: in terms of the overall transformative nature of it, But
Speaker 3: I think it is. It's sort of a move in
Speaker 3: the right direction to try and lift the productivity of
Speaker 3: New Zealand. So we have this reputation for being having
Speaker 3: a low productivity rate in the country in this country,
Speaker 3: and there are many reasons, but one of the reasons
Speaker 3: that it has been identified is that we just don't
Speaker 3: invest to the same level in the latest technology, new equipment,
Speaker 3: the stuff that makes each worker be able to generate
Speaker 3: more output. You know, if you go to Germany then
Speaker 3: it's all robotic factories and all that sort of stuff.
Speaker 3: And so anything that incentivizes businesses to invest, it should
Speaker 3: incentivize them perhaps to take a risk, expand a bit more.
Speaker 3: That's what they want, that's what they talk about when
Speaker 3: they say going for growth. It will be interesting to
Speaker 3: see because that you know, employees and Manufacturers Association, Business
Speaker 3: end Z, they've been lobbying for this for a long time.
Speaker 3: They've finally got it. I think businesses will kind of
Speaker 3: have to put their money where their mouth is now
Speaker 3: and get out there and do it. You'd hope, and
Speaker 3: you'd hope that it has some payoff it. It's also
Speaker 3: going to be you're going to get that twenty percent
Speaker 3: break on your new buying a new forklift. Anyway where
Speaker 3: you get a twenty percent break on it, that is
Speaker 3: kind of a stimulus. So that's where people say this
Speaker 3: is an austerity budget or not, arguing that that this
Speaker 3: is a little bit of stimulus into the economy. So
Speaker 3: you know, one point whatever billion a year over four years.
Speaker 1: Well, basically the people who are holding off buying that
Speaker 1: forklift now have an incentive to do so more so
Speaker 1: than before.
Speaker 3: Yeah, and the true blue bit, the sort of the
Speaker 3: right leaning bit is saying, well, the stimulatory part, the
Speaker 3: bit where we putting a bit a bit cash back
Speaker 3: into the economy. You could put it in the pockets
Speaker 3: of consumers. Consumers might go out and just spend a
Speaker 3: little bit, They might drink and eat a little bit more,
Speaker 3: which is, you know, maybe good for the short term
Speaker 3: health of the economy and hospitality. But if you give
Speaker 3: it to the businesses and they invest in the machinery
Speaker 3: of the economy the business world, you know, that's a
Speaker 3: positive long term that means that they ultimately should be
Speaker 3: able to grow bigger, make more money, employ more people.
Speaker 3: You've got to believe, I mean, I'm trying to be
Speaker 3: a political here. You've got to believe that business and
Speaker 3: capitalism is going to do the job for you to
Speaker 3: back this, and obviously this government very clearly does.
Speaker 5: So.
Speaker 1: I reckon means testing is one of the themes of
Speaker 1: this budget. Hey, government, can we save a contributions are
Speaker 1: now going to stop if you earn one hundred and
Speaker 1: eighty thousand dollars a year or more and for the
Speaker 1: best start tax credits that will become income tested. So
Speaker 1: starting at families on seventy nine thousand dollars a year,
Speaker 1: is that a smart move from the government.
Speaker 3: Well, I mean some people argue that it's difficult and complex.
Speaker 3: You know, you're adding another layer of complexity to have
Speaker 3: to means test everything. I guess it seems like a
Speaker 3: really a fairly generous bar one hundred and eighty thousand
Speaker 3: when you're talking about five hundred dollars here or there.
Speaker 3: You know, I think if you could afford to top
Speaker 3: up your own key, we savior to some extent of it.
Speaker 3: That's the case.
Speaker 2: Rich people like getting more money, though.
Speaker 3: Everyone likes getting more money. Yeah, I wonder. I mean,
Speaker 3: it's interesting because they might get a bit better at
Speaker 3: you know, the machinery of means testing. And you know
Speaker 3: where does that lead?
Speaker 6: Well?
Speaker 3: Maybe maybe you know that they've talked about whether we
Speaker 3: should be means testing superannuation, so that if you're actually
Speaker 3: still learning while you're getting the retirement pension. You could
Speaker 3: be means tested, and that's considered quite difficult to do well.
Speaker 3: Perhaps if for governments some getting better at means testing
Speaker 3: because they're doing it for some other things, it becomes
Speaker 3: part and parcel of what they do. But yeah, they
Speaker 3: mean test already for student allowances and things like that,
Speaker 3: So I guess there is mechanisms in place.
Speaker 6: Yeah.
Speaker 3: I mean it's all about clawing back a little bit
Speaker 3: of money here and there, isn't it. I mean that's
Speaker 3: what the finance ministers had to do. They've clawed back
Speaker 3: a large chunk from the pay equity sort of reversal,
Speaker 3: and then they're clrawing back bits and pieces everywhere else
Speaker 3: to get a few billion here and a few billion.
Speaker 1: There seventy nine thousand dollars a year for a family.
Speaker 1: Though that's quite low, isn't it.
Speaker 6: It is?
Speaker 3: The argument is with a real right when government would
Speaker 3: even want that benefit there in the first place. So
Speaker 3: they've put a means test in so it's really just
Speaker 3: the poorest people, I guess that are going to get it.
Speaker 1: So last year's budget was all about putting more money
Speaker 1: into our wallets with tax cuts and other savings. Is
Speaker 1: there anything in this budget that looks like it will
Speaker 1: help ease the cost of living? Or have we moved
Speaker 1: on from that buzz term Now there's support for working
Speaker 1: for families and supercar holders, but it doesn't feel like
Speaker 1: a massive support budget.
Speaker 3: No, this is not a support budget. And I don't
Speaker 3: know you'd call it austerity or not. It's probably depends
Speaker 3: on your political colors, but it's it's certainly from from
Speaker 3: that point of view. You know, it was just that
Speaker 3: tax break for business, which may be a little bit stimulatory,
Speaker 3: but for ordinary consumers there isn't any stimulus. And and
Speaker 3: I don't want to kickstart the inflation again. They don't
Speaker 3: want to get back growing the economy just by putting
Speaker 3: money into it, is what they're saying. Well, that's what
Speaker 3: the last government did. We're not doing that. We need
Speaker 3: it to come from the ground up, needs to come
Speaker 3: from business and export earnings and all that sort of stuff.
Speaker 3: So yeah, I don't think we expected much support for people.
Speaker 3: I'm sure the government would argue that inflation is more
Speaker 3: or less under control. I know right now everyone's panicking
Speaker 3: about the price of butter and there's some cheese. Yeah, yeah,
Speaker 3: don't forget cheese. But basically, you know, weirdly, when dairy
Speaker 3: products are going through the roof like that, that's good
Speaker 3: news for New Zealand. I mean, there's money coming into
Speaker 3: the countries, and economists think that overall inflation will stay
Speaker 3: relatively subdued. A few of those key commodity products that
Speaker 3: are accepted, you know, that are having a bit of
Speaker 3: a moment, but the core inflation economy, because of higher unemployment,
Speaker 3: wages coming off, it's expected to stay pretty subdued. So
Speaker 3: nobody's ever going to say, hey, the cost of living
Speaker 3: is great, but it shouldn't be the same sort of
Speaker 3: issue that it was. And I don't think national would
Speaker 3: ideologically support the kind of just payments to people to
Speaker 3: cope with it anyway, because they would argue that that
Speaker 3: would just exacerbate the inflation.
Speaker 1: Well, you mentioned the pay equity changes that's dominated the
Speaker 1: political discourse for a few weeks. Now, now that we've
Speaker 1: learned that nearly thirteen billion over four years has been saved,
Speaker 1: is it a win for the government. So the average
Speaker 1: person on the street, that's a pretty big number to
Speaker 1: attach a saving.
Speaker 3: Two Yeah, well, I mean, I guess, you know, it
Speaker 3: has kind of opened up the budget for the government
Speaker 3: to do the things they wanted to do, So, you know,
Speaker 3: I think didn't David Seymour get in trouble for saying that.
Speaker 1: Brook van Velden saved the budget.
Speaker 3: Yeah, well it kind of has.
Speaker 1: Right.
Speaker 3: Whether it's a win for the government, well, we'll have
Speaker 3: to wait and see, because I think it's going to
Speaker 3: be a hot topic for a while to come, because
Speaker 3: you know, just just at a superficial level politically, money
Speaker 3: for businesses and it's coming out of the potential wage
Speaker 3: increases that could have gone to some of the poorest workers,
Speaker 3: female workers and female industries and often caring for the
Speaker 3: most vulnerable people in society. So you've got a pretty
Speaker 3: stark contrast there, and that's something for the opposition to
Speaker 3: work with and say, hey, you know, why are we
Speaker 3: giving this money to businesses. They're going to have to
Speaker 3: really sell this kind of productivity argument and it's not
Speaker 3: necessarily a simple, simple sales job. So I think the
Speaker 3: government will still be up against it politically for a
Speaker 3: few more weeks. I think they're hoping that it'll all
Speaker 3: just roll on and that maybe by the time we
Speaker 3: get to an election, but I've spoken to a few
Speaker 3: women who think it might not.
Speaker 5: This House has no confidence in the government because it
Speaker 5: has chosen to pay for its budget by cutting the
Speaker 5: future wages of working women. Mister Speaker Nichola Willis's pre
Speaker 5: budget's been got at half right. This was a scramble
Speaker 5: without the lollies. A budget that has scrambled the government's finances,
Speaker 5: tried a whole lot of smoke and mirrors to hide
Speaker 5: where their cuts are being made, and to try and
Speaker 5: confuse New Zealanders with the idea that they'll be better
Speaker 5: off when for a lot of key we families, this
Speaker 5: budget is nothing but bad news.
Speaker 1: Well, in terms of infrastructure, we've had some investments in
Speaker 1: rail military equipment, and billion dollars on hospitals upgrades and maintenance.
Speaker 1: Just under a billion dollars of capital and operating spending
Speaker 1: on new classrooms, two hundred and nineteen million on recovery
Speaker 1: work on cyclone damaged roads. Does this feel like a
Speaker 1: good infrastructure spend? I ask this only because the Herald
Speaker 1: editorial on Budget Day said that it is unacceptable for
Speaker 1: some of us to have seen our quality of life
Speaker 1: fall because of a lack of basic infrastructure.
Speaker 2: So if we're saving thirty billion dollars, shouldn't we be
Speaker 2: getting something a bit more out of it? Yeah, I mean,
Speaker 2: this is the spending is fairly basic. It's the kind
Speaker 2: of keeping things running, coping with the higher population, more
Speaker 2: people living in certain areas, needing, needing the schools, making
Speaker 2: sure that the hospitals can cope. And I imagine it's
Speaker 2: still going to be plenty of people saying that this
Speaker 2: is still going to be an incredibly tight budget for
Speaker 2: health and education regardless. So this is where the government
Speaker 2: is caught on the spending front. And the argument would
Speaker 2: come back to debt and borrowing because the tax takes
Speaker 2: down issues about how quickly it's going to come back
Speaker 2: and start putting more money into the government coffers. They're
Speaker 2: up against it, and so what are the options, Well,
Speaker 2: you cut or you borrow, And of course the opposition
Speaker 2: is saying, well, we could afford to borrow more, and
Speaker 2: depends who you talk to, you know we could, but
Speaker 2: that might be taking a higher level of risk, and
Speaker 2: some people feel like taking at the moment, we could
Speaker 2: probably technically afford to borrow more. But I think one
Speaker 2: of the issues that politically holds this government back and
Speaker 2: a lot of people who voted for them, is the
Speaker 2: sense that governments can actually spend that money. Well, so
Speaker 2: after what we've been through with all the borrowing and
Speaker 2: spending to get through COVID, but then all all sorts
Speaker 2: of other stuff that was planned on the infrastructure front
Speaker 2: and hasn't happened, people are skeptical about the ability of
Speaker 2: governments to deliver if they borrow more money. So I
Speaker 2: think that's a big part of the debate around borrowing more.
Speaker 3: You know, New Zealand is a country that has to
Speaker 3: be ready for the next earthquake, or the next major
Speaker 3: natural disaster, or the next big international shock. So I'm
Speaker 3: kind of pleased to see Nicola willis being prudent there
Speaker 3: and hopefully, you know, building for the future. I'm not
Speaker 3: as gloomy as as some other commentators. If you've talked
Speaker 3: to Matthew Hooton or someone like that, they think.
Speaker 1: It's pretty gloomy there all day livestream.
Speaker 6: Yeah, until the government is prepared to cut superannuation and
Speaker 6: tertiary healthcare, basically this country is heading towards bankruptcy. None
Speaker 6: of this stakes into account the problems that we've known
Speaker 6: about for thirty or forty years, that Kicken from twenty thirty,
Speaker 6: we're going to start that period about fifty percent of
Speaker 6: GDP work than we expected at the end of the
Speaker 6: era of reform under the Bulger, Shipley and Clark governments.
Speaker 3: He would argue that we're in real trouble, say in
Speaker 3: the next ten years, if we don't take some really
Speaker 3: radical action and cut back even harder. So the alternative
Speaker 3: is to bet on the growth. And so I think
Speaker 3: the government is rolling the dice, betting on business to
Speaker 3: grow this economy and betting I guess or hoping that
Speaker 3: you know that the boom and the primary sector keeps going,
Speaker 3: they can get tourism back. Yeah, those are the things
Speaker 3: that need to happen.
Speaker 1: Well, ultimately, Liam, do you think this budget is going
Speaker 1: to be a winner with voters or is it a
Speaker 1: bit too middle of the road.
Speaker 3: Yeah, it it could be a difficult cell. But it
Speaker 3: is the middle budget, you know, so that the first
Speaker 3: budget in power in the three year term, you've kind
Speaker 3: of got to deliver all these promises that you made,
Speaker 3: so that's pretty costly. Second budget is the one that
Speaker 3: might as well be the most unpopular budget, and it's
Speaker 3: the one that people might forget because you've got another
Speaker 3: one coming up in election year where you can maybe
Speaker 3: put something a little bit more like whatever. For Nicholas said,
Speaker 3: no lolly scramble is I'm not sure that budgets are
Speaker 3: meant to be a lolly scramble, but a lolly or two.
Speaker 6: Yeah.
Speaker 3: I think I think this budget probably is quite a
Speaker 3: hard sell. I mean, the business community will be quite
Speaker 3: happy and they'll be excited about it, and there'll be
Speaker 3: lots of discussion about growth and maybe maybe it's you know,
Speaker 3: from a confidence point of view, that will be quite good.
Speaker 3: But for the wider public, I think it's probably a
Speaker 3: tough sell.
Speaker 1: Thanks for joining us, Liam, cheers. That's it for this
Speaker 1: episode of The Front Page. You can read more about
Speaker 1: today's stories and extensive news coverage at enzidherld dot co
Speaker 1: dot MZ.
Speaker 2: The Front Page is produced by Ethan.
Speaker 1: Sells and Richard Martin, who is also our sound engineer.
Speaker 1: I'm Chelsea Daniels. Subscribe to the Front Page on iHeartRadio
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