December 16, 2025 • 10 mins
Treasury's Half Year Economic and Fiscal Update shows more delay to getting the books back to black.
The deficit's expected to deepen to a depth of $16.9 billion and not narrow to $60 million dollars until 2029-30.
Economic growth is expected to be just 1.7% next year.
NZ Herald Business Editor Liam Dann told Kerre Woodham that the problem isn’t in how much we borrow, but the efficiency of government spending.
He says there's a big lack of trust in the government, as people would be able to cope with higher borrowing if it was going towards amazing infrastructure projects, but we haven’t seen that over the last decade.
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Episode Transcript
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Speaker 1 (00:06):
You're listening to the carry Wood of Morning's podcast from
News Talks.
Speaker 2 (00:10):
He'd be Business editor at large for The New Zealand
herold Liam Dan joins me, are.
Speaker 3 (00:15):
Hey, carry Well, what would you do? What would I do?
Speaker 2 (00:18):
Well?
Speaker 3 (00:18):
I mean I'm sort of on record with like getting
getting doing the right things around boosting our savings. So so,
which is what old mate was say, Yeah, yeah, yeah,
but but and yeah, staying very focused on not spending
too much or spending efficiently. That's the problem. It's not
it's not about how much we borrow or you know,
these big numbers are big numbers, but it's the efficiency
(00:41):
of government spending. And that's where I think there's a
big lack of trust in government. I think that's where
the Left falls down, is because people go, well, yeah,
we would cope with higher borrowing if we thought it
was all going to be going into amazing infrastructure and
things that was going to and we haven't seen that
over the past.
Speaker 2 (00:57):
And when you've got John Ryan, the Auditor General, who
I just thought was fabulous during COVID. He was the
only one that was really asking the questions and able
to get them to be accountable. When he's saying I
can't even evaluate it because I have no idea where
the money is gone. I don't know if it was
good for money, it's.
Speaker 3 (01:15):
Got to be We've got to got to see that
the money is being used efficiently. So so I tend
to be a bit moderate in terms of not not expecting,
not not wanting governments to do radical stuff, because then
if you get it wrong, you get it really wrong
as well. So but the thing about a moderate path,
which is what I guess Nichola Willis is advocating, certainly
(01:35):
in sort of phony your non non debates with Ruth
Richards and things, is that governments have to stick to
it and not flip flop around. And you know, so
you know, when you look at the deficit we're in, Yes,
there is a pathway back there we're taking on'm go
to get there. We need some bipartisan agreement to stick
to that. Yes, if we follow this pathway as laid
(01:58):
out by say Treasury or even the Finance minister, you know,
then then we can get there. But do people trust
that the government, this government's next iteration or the next
opposition government is going to stick to that pathway? They
don't At the moment, I.
Speaker 2 (02:15):
Don't know what I really do think that ideology is
the luxury of the wealthy. It really really is. It's
the luxury of the truly wealthy or the truly oppressed.
Like when you're just in the middle and trying to
get by, you don't have the luxury of ideologies. So
both of these centrist parties really do need to get
(02:36):
the country back on track before they can fanny around
with their ideology.
Speaker 3 (02:39):
Yeah, and some really you know, a really pragmatic approach.
You know, I always worry about being in the center
that you're it comes out wishy washy, and you don't
want to sort of be advocating to do nothing. It's
actually more a case of picking and choosing policies that
makes sense. So some policies don't appeal at all to
(03:00):
act for the right for ideological reasons, like compulsory saving.
They want freedom of choice, but you know, it's very
hard to get some people in the society to choose
to save. So I'm kind of an advocate for that.
But then other policies, you know, the left won't confront
(03:22):
the idea that maybe all the assets that the government
own aren't the best assets to own and that we
could look at selling some of them. You know, that's
off the table for the left and so.
Speaker 2 (03:33):
And maybe you could get by by working harder and
not just hiring thousands and thousands more bureaucrats.
Speaker 3 (03:38):
Yeah right, And that's that's true too. I mean, you know,
that comes down to efficient government spending. And so I guess,
you know, I think both parties should be looking at
where they put the money in terms of what the
government is trying to do. Even if it is trying
to do the you know, more welfare based stuff, it's
(03:58):
still got to be delivering.
Speaker 2 (04:01):
And I mean, you know, Nicola Willis has to get
reelected or her part has to get reelected, otherwise it's pointless.
Speaker 3 (04:08):
Well that that sort of over that sort of the
overarching thing of everything, isn't it. And that's part of
the problem that you know, I'm sympathetic because I can
write all the nuanced articles I like about GDP coming
up and about how it's not a perfect measure and
we should put it in context. But just like that,
I have to sell a news story on on on
(04:29):
Thursday morning tomorrow, and so I have to write a
big headline about GDP.
Speaker 2 (04:33):
Yeah, so GDP is going to be good, you're.
Speaker 3 (04:35):
Picking Yeah, yeah, well the economists it's a bounce, so
you know. But but you know, the recovery has has started.
It's more a case that the recovery evaporator or fell
off a cliff in the second second quarter or the
start of this year. And it really damaged confidence because
when you've when you've had a recovery start to get going,
(04:56):
everyone tells you that you've got a recovery happening, and
then they pull the rug out. That's the worst. It's
like watching a cricket match where you think you're coasting
to a win and then it, you know, it piece
from the Jaws'd rather be losing from the start, you know,
And so so that that really damaged confidence. That's what
we saw in those treasury numbers in the HIFU. It
(05:17):
wasn't a huge surprise to anyone. The Treasury only updates
every six months, so they were updating from May. They
hadn't been able to factor in all that negative stuff
to this point. Now they factor it in. Of course,
the government's taken less tax revenue because the economy has
been slower, and then that pushes the deficit up makes
(05:39):
the deficit worse and creates some difficult choices for the
finance minister. And obviously people will have their own view
as to how hard or not she should go. I mean,
you know, the Taxpayers Union and Ruth Richardson are saying
quite clearly she needs to go harder.
Speaker 2 (05:54):
They're a ginger group, and yeah, yeah, Ruth Richardson needs
to pipe down. You know, things were done differently back
in her day.
Speaker 3 (06:02):
I think, I mean, I think it played pretty well
for Nikola Willison away because I think a lot of
people still remember how tough it was in the early nineties. Yes,
they did have to get control of the economy, but
you know, unemployment up to eleven percent, youth unemployment up
into the twenties. And I was a youth at that
time and I did go through that, and so I
(06:23):
have an emotional bias, but you know, it was it
was pretty grim until the late nineties, and so if
the government slashed and burned in reaction to that second quarter,
it's only going to extend the time that it takes
for the economy to recover. So it's sort of a
catch twenty two balancing act. And you know, so again
(06:46):
coming back to that point. I think you know that
there's a pathway there back to surplus, but governments have
got to stick to it. So if we take a
slow and steady approach, we have to be consistent and
slow and steady and not flip flop around. And you know, not,
as you say, we go back to sort of big
spending in areas that we just can't afford.
Speaker 2 (07:07):
Can I ask you why the Herald runs columns from
Matthew Houghton? I mean, what is.
Speaker 3 (07:13):
The point I enjoy I enjoy Matthew's columns, But.
Speaker 2 (07:17):
He's got so much baggage, Like he is so anti well,
I mean because he was involved in a failed coup.
Speaker 3 (07:27):
Well, I mean he's he was involved in politics to
a greater extent as we're talking here. He's a he's
a philosophy lecturer in Mongolia at the right.
Speaker 2 (07:37):
And how many other columns would you publish from no,
I mean from philosophy professors and mongolia.
Speaker 3 (07:43):
Yeah, he has a specific point of view, but it's look,
it's one that a number of people on the economic
spectrum share, So there is a there is. It's not
an economist, he's not an economists. He's a doctor of philosophy,
so he's very good at arguing, and he's he's he's
a pretty good writer too, and he's funny. So those
(08:05):
things are are deeming. But I just think, but.
Speaker 2 (08:08):
A philosophy professor from Mongolia commenting on our books.
Speaker 3 (08:12):
Yeah, I mean really. The thing about that view, and
it's the Ruth richards In view too, is I think
it's a valid view and it helps frame where we
are on the debate. You know how the debate works,
So this is an option you can you can some
people are very concerned about debt and the deficit. And
(08:32):
it's weird because I'm arguing the point that I'm more
moderate personally. But that view has some validity because we
are at risk of another if another big downturn hits
before we get the books back into order, if we
have another massive earthquake, you know, New Zealand is vulnerable. Also,
I think that view comes with the kind of fear
(08:54):
that we're in a downward spiral, which which I don't share.
I think, you know, there are sensible people ultimately, as
much as they don't sound like it. Our politicians do
have an understanding of you know, the basics of economics,
and they are trying to get re elected, but they
(09:14):
do realize, at least in the major parties, what has
to be done to ensure that we don't get ratings
downgrades and head into that sort of third world downward
spiral of of you know, debt default and all that
sort of stuff. So I think when push comes to show,
things will get done. And you know, there's an unfortunate habit.
(09:37):
Probably it's a human habit, but it's a habit of
New Zealand governments and New Zealander is to leave things
to the last minute. When things really hit the fan
will take the action and until then.
Speaker 2 (09:49):
She'll right mate for a walk on the beach.
Speaker 3 (09:51):
And it's pretty good. And you know, so New Zealand's
a nice place to be and you can you can
defer problems by you know, getting out and about and
enjoying life because it still has that and we'll always
have that. We could we could probably be a third
world country and still be a nice place for many people.
I mean, you go to some you know, because we're
a Pacific island. And there's a debate there between those
(10:15):
who think, you know, the previous caller, you know, the
economic powerhouse. Do we need to turn New Zealand into
a Switzerland of the South seas or is that just
not what the New Zealand people want. Are we are
kind of a Pacific island where people are like a
laid back lifestyle, but we want to maintain we want
(10:35):
to do the right things to maintain a developed world,
first world mentality lifestyle.
Speaker 2 (10:41):
Well, we'll argue that tomorrow and we talked to you
about the GDP tomorrow as well. Thank you very much,
Liam Dan, New Zealand Herald Business Editor at Large.
Speaker 1 (10:49):
For more from Kerry Wood and Mornings, listen live to
news talks that'd be from nine am weekdays, or follow
the podcast on iHeartRadio.
You're listening to the carry Wood of Morning's podcast from
News Talks.
Speaker 2 (00:10):
He'd be Business editor at large for The New Zealand
herold Liam Dan joins me, are.
Speaker 3 (00:15):
Hey, carry Well, what would you do? What would I do?
Speaker 2 (00:18):
Well?
Speaker 3 (00:18):
I mean I'm sort of on record with like getting
getting doing the right things around boosting our savings. So so,
which is what old mate was say, Yeah, yeah, yeah,
but but and yeah, staying very focused on not spending
too much or spending efficiently. That's the problem. It's not
it's not about how much we borrow or you know,
these big numbers are big numbers, but it's the efficiency
(00:41):
of government spending. And that's where I think there's a
big lack of trust in government. I think that's where
the Left falls down, is because people go, well, yeah,
we would cope with higher borrowing if we thought it
was all going to be going into amazing infrastructure and
things that was going to and we haven't seen that
over the past.
Speaker 2 (00:57):
And when you've got John Ryan, the Auditor General, who
I just thought was fabulous during COVID. He was the
only one that was really asking the questions and able
to get them to be accountable. When he's saying I
can't even evaluate it because I have no idea where
the money is gone. I don't know if it was
good for money, it's.
Speaker 3 (01:15):
Got to be We've got to got to see that
the money is being used efficiently. So so I tend
to be a bit moderate in terms of not not expecting,
not not wanting governments to do radical stuff, because then
if you get it wrong, you get it really wrong
as well. So but the thing about a moderate path,
which is what I guess Nichola Willis is advocating, certainly
(01:35):
in sort of phony your non non debates with Ruth
Richards and things, is that governments have to stick to
it and not flip flop around. And you know, so
you know, when you look at the deficit we're in, Yes,
there is a pathway back there we're taking on'm go
to get there. We need some bipartisan agreement to stick
to that. Yes, if we follow this pathway as laid
(01:58):
out by say Treasury or even the Finance minister, you know,
then then we can get there. But do people trust
that the government, this government's next iteration or the next
opposition government is going to stick to that pathway? They
don't At the moment, I.
Speaker 2 (02:15):
Don't know what I really do think that ideology is
the luxury of the wealthy. It really really is. It's
the luxury of the truly wealthy or the truly oppressed.
Like when you're just in the middle and trying to
get by, you don't have the luxury of ideologies. So
both of these centrist parties really do need to get
(02:36):
the country back on track before they can fanny around
with their ideology.
Speaker 3 (02:39):
Yeah, and some really you know, a really pragmatic approach.
You know, I always worry about being in the center
that you're it comes out wishy washy, and you don't
want to sort of be advocating to do nothing. It's
actually more a case of picking and choosing policies that
makes sense. So some policies don't appeal at all to
(03:00):
act for the right for ideological reasons, like compulsory saving.
They want freedom of choice, but you know, it's very
hard to get some people in the society to choose
to save. So I'm kind of an advocate for that.
But then other policies, you know, the left won't confront
(03:22):
the idea that maybe all the assets that the government
own aren't the best assets to own and that we
could look at selling some of them. You know, that's
off the table for the left and so.
Speaker 2 (03:33):
And maybe you could get by by working harder and
not just hiring thousands and thousands more bureaucrats.
Speaker 3 (03:38):
Yeah right, And that's that's true too. I mean, you know,
that comes down to efficient government spending. And so I guess,
you know, I think both parties should be looking at
where they put the money in terms of what the
government is trying to do. Even if it is trying
to do the you know, more welfare based stuff, it's
(03:58):
still got to be delivering.
Speaker 2 (04:01):
And I mean, you know, Nicola Willis has to get
reelected or her part has to get reelected, otherwise it's pointless.
Speaker 3 (04:08):
Well that that sort of over that sort of the
overarching thing of everything, isn't it. And that's part of
the problem that you know, I'm sympathetic because I can
write all the nuanced articles I like about GDP coming
up and about how it's not a perfect measure and
we should put it in context. But just like that,
I have to sell a news story on on on
(04:29):
Thursday morning tomorrow, and so I have to write a
big headline about GDP.
Speaker 2 (04:33):
Yeah, so GDP is going to be good, you're.
Speaker 3 (04:35):
Picking Yeah, yeah, well the economists it's a bounce, so
you know. But but you know, the recovery has has started.
It's more a case that the recovery evaporator or fell
off a cliff in the second second quarter or the
start of this year. And it really damaged confidence because
when you've when you've had a recovery start to get going,
(04:56):
everyone tells you that you've got a recovery happening, and
then they pull the rug out. That's the worst. It's
like watching a cricket match where you think you're coasting
to a win and then it, you know, it piece
from the Jaws'd rather be losing from the start, you know,
And so so that that really damaged confidence. That's what
we saw in those treasury numbers in the HIFU. It
(05:17):
wasn't a huge surprise to anyone. The Treasury only updates
every six months, so they were updating from May. They
hadn't been able to factor in all that negative stuff
to this point. Now they factor it in. Of course,
the government's taken less tax revenue because the economy has
been slower, and then that pushes the deficit up makes
(05:39):
the deficit worse and creates some difficult choices for the
finance minister. And obviously people will have their own view
as to how hard or not she should go. I mean,
you know, the Taxpayers Union and Ruth Richardson are saying
quite clearly she needs to go harder.
Speaker 2 (05:54):
They're a ginger group, and yeah, yeah, Ruth Richardson needs
to pipe down. You know, things were done differently back
in her day.
Speaker 3 (06:02):
I think, I mean, I think it played pretty well
for Nikola Willison away because I think a lot of
people still remember how tough it was in the early nineties. Yes,
they did have to get control of the economy, but
you know, unemployment up to eleven percent, youth unemployment up
into the twenties. And I was a youth at that
time and I did go through that, and so I
(06:23):
have an emotional bias, but you know, it was it
was pretty grim until the late nineties, and so if
the government slashed and burned in reaction to that second quarter,
it's only going to extend the time that it takes
for the economy to recover. So it's sort of a
catch twenty two balancing act. And you know, so again
(06:46):
coming back to that point. I think you know that
there's a pathway there back to surplus, but governments have
got to stick to it. So if we take a
slow and steady approach, we have to be consistent and
slow and steady and not flip flop around. And you know, not,
as you say, we go back to sort of big
spending in areas that we just can't afford.
Speaker 2 (07:07):
Can I ask you why the Herald runs columns from
Matthew Houghton? I mean, what is.
Speaker 3 (07:13):
The point I enjoy I enjoy Matthew's columns, But.
Speaker 2 (07:17):
He's got so much baggage, Like he is so anti well,
I mean because he was involved in a failed coup.
Speaker 3 (07:27):
Well, I mean he's he was involved in politics to
a greater extent as we're talking here. He's a he's
a philosophy lecturer in Mongolia at the right.
Speaker 2 (07:37):
And how many other columns would you publish from no,
I mean from philosophy professors and mongolia.
Speaker 3 (07:43):
Yeah, he has a specific point of view, but it's look,
it's one that a number of people on the economic
spectrum share, So there is a there is. It's not
an economist, he's not an economists. He's a doctor of philosophy,
so he's very good at arguing, and he's he's he's
a pretty good writer too, and he's funny. So those
(08:05):
things are are deeming. But I just think, but.
Speaker 2 (08:08):
A philosophy professor from Mongolia commenting on our books.
Speaker 3 (08:12):
Yeah, I mean really. The thing about that view, and
it's the Ruth richards In view too, is I think
it's a valid view and it helps frame where we
are on the debate. You know how the debate works,
So this is an option you can you can some
people are very concerned about debt and the deficit. And
(08:32):
it's weird because I'm arguing the point that I'm more
moderate personally. But that view has some validity because we
are at risk of another if another big downturn hits
before we get the books back into order, if we
have another massive earthquake, you know, New Zealand is vulnerable. Also,
I think that view comes with the kind of fear
(08:54):
that we're in a downward spiral, which which I don't share.
I think, you know, there are sensible people ultimately, as
much as they don't sound like it. Our politicians do
have an understanding of you know, the basics of economics,
and they are trying to get re elected, but they
(09:14):
do realize, at least in the major parties, what has
to be done to ensure that we don't get ratings
downgrades and head into that sort of third world downward
spiral of of you know, debt default and all that
sort of stuff. So I think when push comes to show,
things will get done. And you know, there's an unfortunate habit.
(09:37):
Probably it's a human habit, but it's a habit of
New Zealand governments and New Zealander is to leave things
to the last minute. When things really hit the fan
will take the action and until then.
Speaker 2 (09:49):
She'll right mate for a walk on the beach.
Speaker 3 (09:51):
And it's pretty good. And you know, so New Zealand's
a nice place to be and you can you can
defer problems by you know, getting out and about and
enjoying life because it still has that and we'll always
have that. We could we could probably be a third
world country and still be a nice place for many people.
I mean, you go to some you know, because we're
a Pacific island. And there's a debate there between those
(10:15):
who think, you know, the previous caller, you know, the
economic powerhouse. Do we need to turn New Zealand into
a Switzerland of the South seas or is that just
not what the New Zealand people want. Are we are
kind of a Pacific island where people are like a
laid back lifestyle, but we want to maintain we want
(10:35):
to do the right things to maintain a developed world,
first world mentality lifestyle.
Speaker 2 (10:41):
Well, we'll argue that tomorrow and we talked to you
about the GDP tomorrow as well. Thank you very much,
Liam Dan, New Zealand Herald Business Editor at Large.
Speaker 1 (10:49):
For more from Kerry Wood and Mornings, listen live to
news talks that'd be from nine am weekdays, or follow
the podcast on iHeartRadio.
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