Geof Nightingale: Independent tax expert on the economic outlook revealed in Treasury's half yearly economic and fiscal update

There’s a view growth is coming, despite a grim outlook for the New Zealand economy. 

The half year economic and fiscal update shows a surplus is not expected until at least 2029. 

Cost savings which have led to job cuts and re-prioritisation in the public sector this year are set to continue.  

Independent tax expert Geof Nightingale told Heather du Plessis-Allan there are green shoots of economic activity. 

He says unemployment's not as bad as it was, and wages are growing, both of which will help with our growth. 

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Episode Transcript

Speaker 1 (00:00):
Well, we were expecting the government's books to be bad,
but probably not as bad as they ended up being.
Surplus won't happen by twenty twenty eight that's now been
pushed out so far doesn't even show up in the
Treasury forecast, meaning it's going to be some time in
the twenty thirties and we're going to have to take
on twenty billion dollars worth of debt in the next
four years just to make the ends meet. Joining me
now is former PwC partner and independent tax expert Jeff Nightingale.

(00:21):
Good morning, Jeff, good morning. Here are you expecting this?

Speaker 2 (00:25):
Well, it's actually but grimmer than even we were expecting.
The economy has deteriorated faster in the last six months,
and I think many of us expected.

Speaker 1 (00:35):
So based on that. Given that that it's worse than
we expect, and we look at the figure showing that
we're going to grow somehow at three point three percent
and twenty twenty six, do you believe that, Yes.

Speaker 2 (00:43):
I do. I think growth is coming, interest rates coming down.
It's very important that there are green shoots of economic
activity that you can see around us. Unemployment's not as
bad as it was wages arising faster, and all of
those things will contribute to the growth. So I don't
think the growth forecasts are optimistic, too optimistic. But the

(01:07):
worrying trend is that the government expenditure is persistently higher
than the government revenue. So we're running efforts, as you said,
right through to twenty twenty nine.

Speaker 1 (01:16):
Yeah, I was just about to ask you about that.
Why do you think they can't get on top of
the expenditure.

Speaker 2 (01:21):
Yeah, Look, it's really hard. They've taken a lot of
political hits and used up a lot of political capital
to drive cuts in government expenditure. But what the forecast
shows that they're really not getting traction. And you know,
as you said in your opening, we're going to borrow
another fifty billion dollars over the next four years, and

(01:44):
you know most of that will be on operation expenditure
rather than capital expenditure. So you know, bad debt not
good debt. There's three big drivers that are really hard
to get on top of. What one has benefits in
the biggest component of dat is national super Second one
is the finance costs of the debt. We've already wrapped
up so that we're paying interest of about eight or

(02:05):
nine billion a year now. And then the third thing
is new spending just because of population increases and residual inflation,
you know, just to stand still, we have to spend more.
And so it's a pretty tough ask, and I think
what the forecast shows is they're not yet getting on
top of it.

Speaker 1 (02:21):
You're quite right, Jif. Thank you very much, Really appreciate
your expertise. Jef Nightingale Form PwC partner and independent tax experts.
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