December 17, 2024 • 7 mins
A promise the Government's eyeing-up growth as the light at the end of the economic tunnel.
Finance Minister Nicola Willis is vowing to keep cutting what she sees as wasteful spending.
The half year economic and fiscal update suggests books will remain in the red for longer than predicted.
Nicola Willis told Heather du Plessis-Allan it's going to be challenging, and the Government's making significant trade-offs.
She says we're looking to a path of growth with inflation under control and interest rates dropping.
LISTEN ABOVE
See omnystudio.com/listener for privacy information.
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
Is worse than expected. We're not going to be getting
to surplus anytime this decade. So the Government's changed the
way that we actually measure the surplus. Leaving our acc
makes it look a little bit better, gets us to
surplus by twenty twenty nine. Productivity is down, growth is down,
tax takers down. Only two things that are going up
is debt and interest repayments. Finance Minister Nichola Willis is
with us. Now, Hey Nikola, Hey.
Speaker 2 (00:19):
The other thing that's going up is growth next year.
Speaker 1 (00:21):
So that's a positive to zero point five percent.
Speaker 2 (00:24):
Yeah, and then it recovers beyond that. But after several
years bouncing along the bottom and recessionary conditions, that period
of sustained growth will feel a lot better. We do
need to drive it higher. That's a big focus for
the government.
Speaker 1 (00:35):
Look, I take your point, but we are still going
backwards per capita next year, aren't we. I mean, so
I'm literally going to be getting poorer.
Speaker 2 (00:41):
Oh look, there's no sugarcoating it. Yesterday, what the Treasury
presented was a tough set of books that represent significant
economic challenges for New Zealand. Now the government is going
to do the right things. One we're going to stick
to a medium term path of fiscal consolidation, being very
disciplined about the spending due and two get very serious
(01:01):
about addressing this productivity disease that New Zealand has been
suffering now for a couple of decades. So driving those
growth leaders is going to be essential for New Zealand
to pay down its debt and provide better opportunities for
its people.
Speaker 1 (01:15):
Why don't you cut harder so that we get to
surplus faster, so we pay down our debt faster.
Speaker 2 (01:20):
Because there are commitments that we have made to the
New Zealand people. One that we are going to keep
improving frontline services and that will require more resources plus schools,
for our health system, for our police. And two because
what we've said will do is do that in a
sensible way. So we will have to deliver savings in
order to provide those extra resources elsewhere. Just to make
(01:43):
sure that we're meeting frontline service demands will require significant
reprioritization across government. We're doing that work now. Actually, in
our last budget we deliver twenty three billion dollars worth
of savings. So I have conviction that we will be
able to deliver significance slending.
Speaker 1 (01:59):
I mean, if you look at the public consumption figures
you've owned that you were expecting to cut by one
point four percent, you've only cut by zero point two percent.
That's not even a cut.
Speaker 2 (02:08):
Well, the major factor there is that when, as when
any economy is smaller than it was forecast to be,
which is the case, then actually spending is proportion of
the economy looks larger. And so that brings me back
to the point I'm making, Yes, more disciplined about the spending.
That's important, but also driving growth is going to be
really relevant in these next few years.
Speaker 1 (02:28):
But regardless of the size of the economy, in real terms,
your spending is far higher than Grant Robinson's. You can't
be proud of that.
Speaker 2 (02:35):
We are having far less discretionary spending than he did.
So his operating allowances, that's the amount of discretionary additional
money you put in at each budget average more than
four billion dollars. We're sticking to a path where they
are only two point four billion dollars. They haven't been
that low since Steven Choice delivered a budget. So we
(02:56):
are sticking to a very disciplined path. It is true
that we could have much more significant reductions in spending.
The judgment that we have made is that that could
sacrifice the economic recovery and lead to diminishing frontline services,
and that's not the path we take.
Speaker 1 (03:13):
Nuically, you don't have to cut frontline services. Mean there
are a whole bunch of ministries and quangos in government
that are completely useless. You could cut them. You could
save a whole bunch of money.
Speaker 2 (03:21):
I can tell you Heather, we are after the wasteful spending.
We're going to have to be because that is the
only way that next year's budget will be able to
be delivered with such a low roof of spending. We
are going to have to cut more of the waste,
There's no question about it.
Speaker 1 (03:36):
I think probably what's going to happen is you're going
to be bombarded with comparisons with Argentina. Have you taken
a look at how hard they've cut and thought about
whether you should be doing the same thing.
Speaker 2 (03:44):
Well, I would start by saying that they did start
from a much much worse place than us. Their inflation
rates still on a monthly basis, is higher than our
annual inflation rate. So I think people need to bear
that in mind when they're making the comparison.
Speaker 1 (03:58):
Before versus our two point tio's not that much higher.
Speaker 2 (04:01):
Well, New Zealand, by comparison are looked at by international
fiscal institutions, is regarded as having a much better set
of books, a much better economic and fiscal path and.
Speaker 1 (04:12):
Turnaround is better than yours, isn't it.
Speaker 2 (04:15):
Well. I think that we need to be judged by
the results we deliver for New Zealanders, and what we
are looking to is a path with growth restored, with
inflation under control, which we've delivered in our first year,
interest rates dropping and ensuring as our said, that we
can continue to deliver good frontline services. So it's going
to be challenging either and we are making more significant
(04:36):
trade offs and reprioritizations the New Zealand has experienced for
several years. Just about every day round Parliament there's a
Labor Party or a Green Party politician screaming that we
shouldn't be reprioritizing things in the way that we are
pretending there's a magic money tree. But we're going to
stick stick to the course. It's the prudent, responsible thing
to do.
Speaker 1 (04:55):
Do you think that you can actually make surplus in
twenty twenty nine the new Obergallex X measure that you
use in CA. Can you actually meet that or we're
going to? Are we going to get there next year?
And we just gets posted again.
Speaker 2 (05:04):
In fact, our short term intention is to hit an
ober Garlex surplus in the twenty seven twenty eight year
that we're currently forecasting a small deficit that year, but
we intend to turn that into the surplus year.
Speaker 1 (05:18):
Do you reckon you're going to hit your operating allowance
next year?
Speaker 2 (05:22):
Yes? I do.
Speaker 1 (05:23):
And what's the plan to get us growing? Because obviously
cutting enough to get to surplus is one thing, but
actually getting the economy going again it's quite another challenge.
So what's the plan there?
Speaker 2 (05:33):
Yeah, well, there's five key things that we're focused on,
and I want to start by saying not all of
these things will lead to accelerated growth tomorrow, but you
do have to get your underlying foundations right. So one,
that's about education and schools. We've got to have better
equipped school leaders too. It's about overseas investment and trade,
allowing people to invest in New Zealand industries and jobs
(05:53):
and getting rid of that red tape three, it's about
actually getting rid of red tape across the economy that
told things back, including through better competitive frameworks in our
major industries. For it's about a smarter science system with
better regulation there and also more commercialization of the big
investments the government makes. And then finally about delivering infrastructure smarter,
partnering with the private sector using modern funding and financing tools.
(06:16):
All of those things is literally dozens, if not hundreds
of initiatives occurring across the ministries. Collectively, it will make
a difference. We are focused on how we earn it,
not just how we spend it.
Speaker 1 (06:28):
Do you think the foreign capital is the key here?
Speaker 2 (06:30):
I think that's going to be an important part of
New Zealand's future economics.
Speaker 1 (06:34):
How do you get it in?
Speaker 2 (06:36):
Well, one you process the applications to the Overseas Investment
Office a lot faster, which we've been doing. And two
you reform the Overseas Investment Act to welcome more investment.
Speaker 1 (06:46):
Bold Nickel like doing in Ireland, and dropping the corporate
tax rate.
Speaker 2 (06:51):
Well, the thing I worry about with doing that is
if I drop the corporate tax rate tomorrow, I'd also
be rewarding the big banks and the big tailcos and
very profitable companies with a windfull game. So it's how
you target at the extra investment you want because we're
not in a position where we can be giving away
revenue for free.
Speaker 1 (07:07):
Okay, Nicholas, and thank you very much. I really appreciate
your time. And Merry Christmas because I think it's probably
hopefully the last time we talk this year.
Speaker 2 (07:14):
Merry Christmas to you either, Okay.
Speaker 1 (07:17):
Only hopefully, because every time it's about bad economic news,
look after yourself and have a good time with your family.
That's Nicola Willis the Finance mins.
Speaker 2 (07:23):
For more from the Mic Asking Breakfast, listen live to
news talks it'd be from six am weekdays, or follow
the podcast on iHeartRadio.
Is worse than expected. We're not going to be getting
to surplus anytime this decade. So the Government's changed the
way that we actually measure the surplus. Leaving our acc
makes it look a little bit better, gets us to
surplus by twenty twenty nine. Productivity is down, growth is down,
tax takers down. Only two things that are going up
is debt and interest repayments. Finance Minister Nichola Willis is
with us. Now, Hey Nikola, Hey.
Speaker 2 (00:19):
The other thing that's going up is growth next year.
Speaker 1 (00:21):
So that's a positive to zero point five percent.
Speaker 2 (00:24):
Yeah, and then it recovers beyond that. But after several
years bouncing along the bottom and recessionary conditions, that period
of sustained growth will feel a lot better. We do
need to drive it higher. That's a big focus for
the government.
Speaker 1 (00:35):
Look, I take your point, but we are still going
backwards per capita next year, aren't we. I mean, so
I'm literally going to be getting poorer.
Speaker 2 (00:41):
Oh look, there's no sugarcoating it. Yesterday, what the Treasury
presented was a tough set of books that represent significant
economic challenges for New Zealand. Now the government is going
to do the right things. One we're going to stick
to a medium term path of fiscal consolidation, being very
disciplined about the spending due and two get very serious
(01:01):
about addressing this productivity disease that New Zealand has been
suffering now for a couple of decades. So driving those
growth leaders is going to be essential for New Zealand
to pay down its debt and provide better opportunities for
its people.
Speaker 1 (01:15):
Why don't you cut harder so that we get to
surplus faster, so we pay down our debt faster.
Speaker 2 (01:20):
Because there are commitments that we have made to the
New Zealand people. One that we are going to keep
improving frontline services and that will require more resources plus schools,
for our health system, for our police. And two because
what we've said will do is do that in a
sensible way. So we will have to deliver savings in
order to provide those extra resources elsewhere. Just to make
(01:43):
sure that we're meeting frontline service demands will require significant
reprioritization across government. We're doing that work now. Actually, in
our last budget we deliver twenty three billion dollars worth
of savings. So I have conviction that we will be
able to deliver significance slending.
Speaker 1 (01:59):
I mean, if you look at the public consumption figures
you've owned that you were expecting to cut by one
point four percent, you've only cut by zero point two percent.
That's not even a cut.
Speaker 2 (02:08):
Well, the major factor there is that when, as when
any economy is smaller than it was forecast to be,
which is the case, then actually spending is proportion of
the economy looks larger. And so that brings me back
to the point I'm making, Yes, more disciplined about the spending.
That's important, but also driving growth is going to be
really relevant in these next few years.
Speaker 1 (02:28):
But regardless of the size of the economy, in real terms,
your spending is far higher than Grant Robinson's. You can't
be proud of that.
Speaker 2 (02:35):
We are having far less discretionary spending than he did.
So his operating allowances, that's the amount of discretionary additional
money you put in at each budget average more than
four billion dollars. We're sticking to a path where they
are only two point four billion dollars. They haven't been
that low since Steven Choice delivered a budget. So we
(02:56):
are sticking to a very disciplined path. It is true
that we could have much more significant reductions in spending.
The judgment that we have made is that that could
sacrifice the economic recovery and lead to diminishing frontline services,
and that's not the path we take.
Speaker 1 (03:13):
Nuically, you don't have to cut frontline services. Mean there
are a whole bunch of ministries and quangos in government
that are completely useless. You could cut them. You could
save a whole bunch of money.
Speaker 2 (03:21):
I can tell you Heather, we are after the wasteful spending.
We're going to have to be because that is the
only way that next year's budget will be able to
be delivered with such a low roof of spending. We
are going to have to cut more of the waste,
There's no question about it.
Speaker 1 (03:36):
I think probably what's going to happen is you're going
to be bombarded with comparisons with Argentina. Have you taken
a look at how hard they've cut and thought about
whether you should be doing the same thing.
Speaker 2 (03:44):
Well, I would start by saying that they did start
from a much much worse place than us. Their inflation
rates still on a monthly basis, is higher than our
annual inflation rate. So I think people need to bear
that in mind when they're making the comparison.
Speaker 1 (03:58):
Before versus our two point tio's not that much higher.
Speaker 2 (04:01):
Well, New Zealand, by comparison are looked at by international
fiscal institutions, is regarded as having a much better set
of books, a much better economic and fiscal path and.
Speaker 1 (04:12):
Turnaround is better than yours, isn't it.
Speaker 2 (04:15):
Well. I think that we need to be judged by
the results we deliver for New Zealanders, and what we
are looking to is a path with growth restored, with
inflation under control, which we've delivered in our first year,
interest rates dropping and ensuring as our said, that we
can continue to deliver good frontline services. So it's going
to be challenging either and we are making more significant
(04:36):
trade offs and reprioritizations the New Zealand has experienced for
several years. Just about every day round Parliament there's a
Labor Party or a Green Party politician screaming that we
shouldn't be reprioritizing things in the way that we are
pretending there's a magic money tree. But we're going to
stick stick to the course. It's the prudent, responsible thing
to do.
Speaker 1 (04:55):
Do you think that you can actually make surplus in
twenty twenty nine the new Obergallex X measure that you
use in CA. Can you actually meet that or we're
going to? Are we going to get there next year?
And we just gets posted again.
Speaker 2 (05:04):
In fact, our short term intention is to hit an
ober Garlex surplus in the twenty seven twenty eight year
that we're currently forecasting a small deficit that year, but
we intend to turn that into the surplus year.
Speaker 1 (05:18):
Do you reckon you're going to hit your operating allowance
next year?
Speaker 2 (05:22):
Yes? I do.
Speaker 1 (05:23):
And what's the plan to get us growing? Because obviously
cutting enough to get to surplus is one thing, but
actually getting the economy going again it's quite another challenge.
So what's the plan there?
Speaker 2 (05:33):
Yeah, well, there's five key things that we're focused on,
and I want to start by saying not all of
these things will lead to accelerated growth tomorrow, but you
do have to get your underlying foundations right. So one,
that's about education and schools. We've got to have better
equipped school leaders too. It's about overseas investment and trade,
allowing people to invest in New Zealand industries and jobs
(05:53):
and getting rid of that red tape three, it's about
actually getting rid of red tape across the economy that
told things back, including through better competitive frameworks in our
major industries. For it's about a smarter science system with
better regulation there and also more commercialization of the big
investments the government makes. And then finally about delivering infrastructure smarter,
partnering with the private sector using modern funding and financing tools.
(06:16):
All of those things is literally dozens, if not hundreds
of initiatives occurring across the ministries. Collectively, it will make
a difference. We are focused on how we earn it,
not just how we spend it.
Speaker 1 (06:28):
Do you think the foreign capital is the key here?
Speaker 2 (06:30):
I think that's going to be an important part of
New Zealand's future economics.
Speaker 1 (06:34):
How do you get it in?
Speaker 2 (06:36):
Well, one you process the applications to the Overseas Investment
Office a lot faster, which we've been doing. And two
you reform the Overseas Investment Act to welcome more investment.
Speaker 1 (06:46):
Bold Nickel like doing in Ireland, and dropping the corporate
tax rate.
Speaker 2 (06:51):
Well, the thing I worry about with doing that is
if I drop the corporate tax rate tomorrow, I'd also
be rewarding the big banks and the big tailcos and
very profitable companies with a windfull game. So it's how
you target at the extra investment you want because we're
not in a position where we can be giving away
revenue for free.
Speaker 1 (07:07):
Okay, Nicholas, and thank you very much. I really appreciate
your time. And Merry Christmas because I think it's probably
hopefully the last time we talk this year.
Speaker 2 (07:14):
Merry Christmas to you either, Okay.
Speaker 1 (07:17):
Only hopefully, because every time it's about bad economic news,
look after yourself and have a good time with your family.
That's Nicola Willis the Finance mins.
Speaker 2 (07:23):
For more from the Mic Asking Breakfast, listen live to
news talks it'd be from six am weekdays, or follow
the podcast on iHeartRadio.
Popular Podcasts
Dateline NBC
Current and classic episodes, featuring compelling true-crime mysteries, powerful documentaries and in-depth investigations. Special Summer Offer: Exclusively on Apple Podcasts, try our Dateline Premium subscription completely free for one month! With Dateline Premium, you get every episode ad-free plus exclusive bonus content.
The Breakfast Club
The World's Most Dangerous Morning Show, The Breakfast Club, With DJ Envy, Jess Hilarious, And Charlamagne Tha God!
Crime Junkie
Does hearing about a true crime case always leave you scouring the internet for the truth behind the story? Dive into your next mystery with Crime Junkie. Every Monday, join your host Ashley Flowers as she unravels all the details of infamous and underreported true crime cases with her best friend Brit Prawat. From cold cases to missing persons and heroes in our community who seek justice, Crime Junkie is your destination for theories and stories you won’t hear anywhere else. Whether you're a seasoned true crime enthusiast or new to the genre, you'll find yourself on the edge of your seat awaiting a new episode every Monday. If you can never get enough true crime... Congratulations, you’ve found your people. Follow to join a community of Crime Junkies! Crime Junkie is presented by audiochuck Media Company.