Steven Joyce: Former Finance Minister on the government's deficit growing by $3.4 billion

Former Finance Minister Steven Joyce says there are some things worth celebrating amidst a grim outlook on the economy.  

Treasury documents show the Crown's deficit has grown $3.4 billion dollars in the year to June, to $12.9 billion.  

Spending is outpacing income despite revenue increasing by $14 billion. 

Steven Joyce told Mike Hosking that recovery will be tough, but there are some positives shining through. 

He said that while the country’s net debt doubled post-Covid, we’ve got inflation under control. 

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Episode Transcript

Speaker 1 (00:00):
So to the state of the old economy, and despite
the so called green shoots and brighter days ahead, yesterday's
Crown Account numbers remind us it's all still a mess.
The deficit blew out to twelve point nine billion. They
thought it was going to be eleven. This is the
year to June, Health, New Zealand and a se see
your major issues. Former Finance Minister Stephen Joyce's with us.

Speaker 2 (00:14):
Good morning, Wanning Mike, how are you very well? Thank you?

Speaker 1 (00:18):
Revenues up, but then so are expenses. Is that a
reputational issue potentially for a conservative government.

Speaker 2 (00:24):
Nah, I don't think so at the stage. It would
be if it continued for a long time, you know,
for a couple another couple of years. We just got
to be thankful. I think that the revenue did go
up because I think the expectation is that the revenue
would drop, and indeed the tax take around companies and
individuals dropped. The quirk of it was with interest rates

(00:47):
going up, the people that paid tax on their interest
paid more, obviously, and so that pushed the revenue up
on that side. But it's still a pretty pretty bleak
picture and the challenge for the government will be is
that won't continue. The interest won't keep rising now because
interest rates have now turned, so that contribution to revenue

(01:10):
increases won't happen. So once again it comes back to
a story of needing growth to boost that tax take.
Otherwise we'll be chasing our tail downwards for a while yet,
which is the normal method. By the way, you come
out of a recession. Everybody else will feel better before
the government books look better, and we had that, and
we had that in twenty nine to twelve. You know,
poor Bill was constantly reporting back that despite improvements in

(01:36):
the general economy, that it was taking time to turn
the fiscal books around. And that's just the white works.

Speaker 1 (01:40):
The surplus by twenty eight is that still real?

Speaker 2 (01:44):
Well, it could be, but it's going to depend. It's
going to depend a lot on growth. I mean, people
forget we've paid a massive price. I mean, congratulations, My
conflation has been beaten and in the period post COVID,
we've doubled the country's net debt, We've flattened the economy.
But by god, we've got inflation under control. So you know,

(02:05):
we should celebrate ironically that. But it's a it's a
big drive back from here and.

Speaker 1 (02:11):
The ACC questions and the health questions are they answerable
questions or an ACC in particular, have we got something
to be worried about.

Speaker 2 (02:18):
A CC's it's a sort of classic problem. I think
that the that the entitlements if you like, or the
or the payouts increased during the labor government, they soften
the criteria that always puts a acc ACC's footing worse.

(02:38):
And what generally comes in and we had to do
the same thing as your government comes in and has
to tighten the criteria and put up the ACC levies
to get the books back and balance. Unfortunately, that's the
cycle that occurs on the health side. Well with you
begin it's it's a proof that health New Zealanders is
not a solution. It's just another way of counting the beans.

(03:01):
And it's a new bureaucracy over the other bureaucracy, and
there's some real work to be done to improve productivity.
It's not about reducing health spending, which some of the
political critics get into. No government reduces health spending. It's
just about how effective that spending is going to be.

(03:22):
And we yet to see anything out of this new
system which will deliver that productivity.

Speaker 1 (03:27):
Saw that Nicholas shekeled herself with does she asked for
trouble on that. Given it's already spent and we're not
even into next year.

Speaker 2 (03:34):
It's going to be very tough. And that's why you're
seeing the sorts of decisions we're seeing. And I heard
the CTU guys saying that it's terrible. You know, we
shouldn't have cut ferries. I shouldn't cut you know, it
shouldn't have recalculated the needn hospital and everything like that.
But there's a reason for that, and that's because you've
doubled debt in six years and now you're running a

(03:56):
deficit of twelve point nine billion. The answer to his
questquestion as well, you should have got your mate Grant
to be under much greater control three or four years ago,
and maybe we wouldn't be having to make these sorts
of decisions now. If the country is having to make,
that's tough, and I think it's going to be hard
for it to do that number next year. But actually
what's the alternative?

Speaker 1 (04:15):
Good question? Well, the nice to catch up with your
Stephen Joyce, former Finance Ministry.

Speaker 2 (04:19):
For more from the mic, asking Breakfast.

Speaker 1 (04:22):
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