Nicola Willis: Finance Minister on slashing the operating allowance

The Government is set to half its operating allowance, through a $1b cut in the upcoming budget.

It means a small number of government departments will receiveadditional funding this year.

Finance Minister Nicola Willis talks to Heather du Plessis-Allan about the cut.

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Episode Transcript

Speaker 1 (00:00):
Hello, am I right in thinking you've actually got no
money because you've set aside one point three billion for
operating allowance, but you've already spent most of that on
health with the one point four billion promise last year,
plus with the Farmac money for the new medicine, So
you actually already in deficit, aren't you.

Speaker 2 (00:16):
No, we've got plenty of money for the things we need,
which include health, which include education, which include defense, because
we've gone through the other tens of billions of dollars
of government spending that just goes on and on, and
we've reviewed it to say, what is no longer the
highest priority are the areas where we can make savings,
where we can shave things off, things that haven't delivered

(00:37):
what they said they would, so that we can take
those dollars and then invest them in today's priorities. Actually,
that's what should happen at every budget. Last budget we
did that, we found twenty three billion dollars worth of savings.
This budget, we've done that such that we're going to
be able to make the investments New Zealanders need to
see by reprioritizing from elsewhere, and that's going to stop

(00:58):
the borrowing get out of control. And that's really important
right now, Heather.

Speaker 1 (01:03):
How much money have you managed to save?

Speaker 2 (01:06):
Well, I'm not going to give you that figure today,
but we've saved enough that we now don't need to
spend as much extra cash and do as much extra
borrowing as would have been the case. And that means
that we're still on track to get the books back
in balance. Now after all of the Trump staff and
the global events that have been occurring. Treasury said to me,

(01:26):
if you stick to the old allowance, you won't get
the books back in balance within the forecast period. You'll
keep accumulating debt. And I don't think that would have
been responsible, because that is the kind of conditions that
makes New Zealand very economically unstable. It drives up inflation, interestrates,
and ultimately it's debt that our kids need to repay.

(01:46):
So we've stuck to the strategy and been responsible.

Speaker 1 (01:49):
You haven't saved enough to get us into surplus, have you.

Speaker 2 (01:52):
We are forecasting at this point a very small surplus
in twenty twenty nine.

Speaker 1 (02:00):
Managing to cut some of the spending by doing means
testing of things like best start payments, winter energy payments,
can we save a contributions.

Speaker 2 (02:08):
Well, we've stuck to our coalition commitments and those are
spelt out clearly. So, for example, the Prime Minister confirmed
that he wouldn't be doing anything with the winter energy payment,
so there have been some guardrails around what we've looked at,
and we've asked ourselves these two questions. One is this
worth borrowing to pay for? Two? Are we absolutely certain

(02:32):
these dollars couldn't be invested for more impact and our
health service and our schools and supporting businesses to grow
and targeted cost of living relief? So those questions have
informed our savings decisions.

Speaker 1 (02:44):
Any means testing at all being introduced.

Speaker 2 (02:48):
Well, you'll have to wait and see at the budgets
savings we're delivering. We've been really careful to make sure
that the proposals we're putting forward are fair and are affordable,
and they'll all meet that.

Speaker 1 (03:00):
So that's a yes, isn't it. There will be means testing.

Speaker 2 (03:03):
Well, of course, we have means testing across government right now,
which is basically that people on much highering comes often
don't need as much support as people on lower incomes
and people on hiringcomes. Of course, aren't eligible for all
of the same supports as lower income New Zealanders are.

Speaker 1 (03:22):
Is there any tweaks to the emissions trading scheme at all?

Speaker 2 (03:27):
That is not something that is in the budget.

Speaker 1 (03:31):
Okay, Nicholas, thank you.

Speaker 2 (03:32):
Now we're playing the rule and role out game.

Speaker 1 (03:34):
Well and I will stop it immediately.

Speaker 2 (03:36):
Thanks.

Speaker 1 (03:37):
Thank you very much for your time. Appreciate it.

Speaker 2 (03:40):
Thank you for more from Hither duplessy Ellen Drive.

Speaker 1 (03:43):
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