December 15, 2025 • 6 mins
There’s a view that New Zealand's still a while away from being a 'rockstar' economy.
Half Year Economic and Fiscal Update documents are coming out early this afternoon, carrying key economic metrics.
Treasury's also releasing a Budget Policy Statement outlining priorities for upcoming spending.
Former Finance Minister Steven Joyce told Heather du Plessis-Allan it was a pretty average year for the economy, and next year looks to be better.
Joyce says getting core spending below 30% of GDP is the goal, but it won’t happen overnight.
He says Bill English spent eight years after the Canterbury quakes and the global financial crisis wrestling to get back into surplus.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
The government's going to open the books today with the
half year Economic and Fiscal update at one o'clock this afternoon.
Sounds like there is a chance we could yet be
surprised to the positive. But it sounds like there is
a chance that Nikola Willis is going to push the
surplus out. Yes again in Stephen Joy's former finance minister,
is with us in studio.
Speaker 2 (00:15):
Morning, Stephen, morning, how are you. I'm very well, Thank you,
Thanks so much for coming in.
Speaker 1 (00:18):
It's lovely to see you. Now, how do you rate
the chance she pushes out surplus?
Speaker 2 (00:22):
Oh?
Speaker 3 (00:22):
Look, she might. It doesn't matter too much either way.
And I say that, which just sounds weird. But as
Bill English used to say, you know, just getting to
surplus is it's like landing a seven four seven on
an aircraft carrier. The actual moment of arrival of surplus
one year earlier, one year later. This is such big
(00:43):
numbers that it's the difference between two very big numbers
as to whether you're actually in surplus. So I think
more the more important is the direction of travel. Is
are we bending down the cost of government? And is
revenue coming up now? Whether it's twenty seven, twenty twenty nine,
twenty nine, thirty. Finally, it's probably not going to make.
Speaker 2 (01:05):
You don't think the pace of travel is really important.
Speaker 3 (01:08):
To the pace of travel is very important. But one
year either way. My point is that one year either
way at all.
Speaker 1 (01:13):
But the reason I'm asking you that because because if
it happens again, it's not one year either way, it's
three years either way, because it will be that Nikola
has pushed it out by three years in total in
the space of two years, which I well.
Speaker 3 (01:25):
But again a couple of things. The size of the
increase of spending was phenomenal. I mean, if you look
at a graph which shows spending when I left office,
you know it was like twenty the debt was twenty
percent of GDP and now it's forty five, you know,
in the forties. So the amount of ramping up of
(01:46):
expenditure of the government I don't think has We've got
similar things in the living memory. So then you're going
to try and bend that down, and with the.
Speaker 2 (01:58):
Best remend it, why not cut it?
Speaker 1 (02:00):
It's gone up so fast, like up so high so fast,
can you not bring it down just as fast?
Speaker 3 (02:06):
And that's the that's the ruth Richardson argument, I know, absolutely,
and yeah, and you could do more, but you get
very quickly to teacher salaries and health salaries. That's because
they're big chunks, right, and you can do a bit
in the structure in Wellington, and they are I would
argue probably early on they should have done more, but
(02:29):
they were probably getting their heads around the whole place
because they were new. That's not an excuse, but I'm
just saying that it takes a while to wrestle the beast,
so they could have done more in that. But you know,
Wellington's Wellington's been in desperate negative economic straits for a
while even with what they've done, so it is it
is challenging to wrestle that machine down once it's got
(02:52):
up such a huge head of steam. Now it's currently
expenditures running about thirty two percent of about thirty two
percent of gen or it's heading towards that way now.
We had it down at about twenty nine, so it's
about three percent.
Speaker 2 (03:05):
Is that core expenditure, that's.
Speaker 3 (03:07):
Government expenditure, core expenditure, So that's got to get back
to around that under thirty level, and that does take time. Now,
if you remember, take Bill English's time as Finance Minister.
He had eight of the nine years I got. The
last one. He spent eight years after the Canterbury earthquakes
and the GFC wrestling that thing back into surplus. And
(03:29):
some of the commentators go on like he never had
a surplace. Well, he did all the hard work, and
they say, oh, Stephen Joyce had a surplus. Yeah, and
that was lucky because after the eight years of hard work,
I reaped the benefit of it. It takes a huge
amount of time. Now none of this has excuses. Yes,
I've got to keep the pressure on. But then on
the other side of the aisle there's you know, there's
an outfit that really wants to get back and to
spend some more money again, and you know they're trying
(03:52):
to be sensible about it, but the reality is they
would spend more. This is a big job to wrestle
this thing under control. Today is not going to make
anybody excited in a positive way. Taxpayers Union is going
to go out and it should be happening faster. The
Left will be either keeping very quiet or criticizing the
moves that have been made. So Nikola Willis has just
(04:14):
got to put her head down and this is the
hard yards, and the hard yards are going to run
for another couple of years.
Speaker 1 (04:19):
Yeah, okay, we've got also this week, excuse me, I've
got the GDP. And obviously we're expecting a big bounce
back in Q three after what was terrible in Q two,
But the revision of Q two I think might be
a really interesting yan as well. Are you expecting a
big revision here?
Speaker 3 (04:34):
Not particularly, And the quarterly figures do bounce around a lot.
We know it was a pretty average year. We know
next year is going to be better. The question is
how much?
Speaker 2 (04:43):
What do you think.
Speaker 3 (04:44):
I think it'll be a bit better. There's a couple
of things that worry me. There's the American economy and
something weird happening there, because there's plenty weird happening at
the moment, so that's a possibility. And then the other
one that worries me a little bit as the state
of the energy sector. And I think we've gone quiet
on that because it's summer and it's not an issue.
But I suspect we're going to have more challenges with
(05:05):
electricity prices and availability of energy at a reasonable price,
and that's going to be a bit of a handbrake
on the economic recovery. But I think overall will get better.
But it's not going to help the government's fiscal books
yet because that's all that's all trailing, So the tax
take and the decline and things like benefit payments doesn't
(05:26):
happen until the economy's really back on its feet, So
the government's not going to reap the benefit of that
next year yet.
Speaker 2 (05:32):
So would you say next year is good?
Speaker 1 (05:34):
Because this is Simon Bridges argument is that yep, we're
going to have an improvement, but it is not going
to be blockbuster, and you need to good your loins
and calm your farm.
Speaker 2 (05:41):
It's going to feel a bit hard.
Speaker 3 (05:42):
It won't be a blockbuster, but it will feel pretty
good relative for the last year.
Speaker 2 (05:45):
I think it will feel good.
Speaker 3 (05:46):
We'll feel a lot better than the last three years. Now.
It's been really tough. A lot of businesses have done
it really really tough over the last three or four
years since COVID. Basically they had that sugar rush and
they had problem with supply and you know a lot
of balance sheets have been very baddy damage and that's
one of the reasons we haven't gone well out of
this last recession is that a lot of companies had
(06:09):
much worse balance sheets than they had, say after the GFC,
and so they've struggled to get on their feet and
invest in the future. They're now starting to do that.
Confidence is starting to build. But yeah, it's going to
be it's going to be better, but not it's not
going to be a rockstar economy to call corn of Rods.
Speaker 2 (06:27):
Not for a while, but hopefully soon. Now, have you
got anything nice planned for summer?
Speaker 3 (06:30):
Yeap, sit on a beach, have the family around for
Christmas and all and normal stuff.
Speaker 2 (06:35):
Brilliant.
Speaker 1 (06:35):
I'm so pleased to hear it. You take yourself a
lovely break and thank you for coming in, Stephen. Great
to chat to you.
Speaker 2 (06:39):
Steven Joyce, former finance ministers.
Speaker 3 (06:42):
For more from the Mic Asking Breakfast, listen live to
news talks that'd be from six am weekdays, or follow
the podcast on iHeartRadio.
The government's going to open the books today with the
half year Economic and Fiscal update at one o'clock this afternoon.
Sounds like there is a chance we could yet be
surprised to the positive. But it sounds like there is
a chance that Nikola Willis is going to push the
surplus out. Yes again in Stephen Joy's former finance minister,
is with us in studio.
Speaker 2 (00:15):
Morning, Stephen, morning, how are you. I'm very well, Thank you,
Thanks so much for coming in.
Speaker 1 (00:18):
It's lovely to see you. Now, how do you rate
the chance she pushes out surplus?
Speaker 2 (00:22):
Oh?
Speaker 3 (00:22):
Look, she might. It doesn't matter too much either way.
And I say that, which just sounds weird. But as
Bill English used to say, you know, just getting to
surplus is it's like landing a seven four seven on
an aircraft carrier. The actual moment of arrival of surplus
one year earlier, one year later. This is such big
(00:43):
numbers that it's the difference between two very big numbers
as to whether you're actually in surplus. So I think
more the more important is the direction of travel. Is
are we bending down the cost of government? And is
revenue coming up now? Whether it's twenty seven, twenty twenty nine,
twenty nine, thirty. Finally, it's probably not going to make.
Speaker 2 (01:05):
You don't think the pace of travel is really important.
Speaker 3 (01:08):
To the pace of travel is very important. But one
year either way. My point is that one year either
way at all.
Speaker 1 (01:13):
But the reason I'm asking you that because because if
it happens again, it's not one year either way, it's
three years either way, because it will be that Nikola
has pushed it out by three years in total in
the space of two years, which I well.
Speaker 3 (01:25):
But again a couple of things. The size of the
increase of spending was phenomenal. I mean, if you look
at a graph which shows spending when I left office,
you know it was like twenty the debt was twenty
percent of GDP and now it's forty five, you know,
in the forties. So the amount of ramping up of
(01:46):
expenditure of the government I don't think has We've got
similar things in the living memory. So then you're going
to try and bend that down, and with the.
Speaker 2 (01:58):
Best remend it, why not cut it?
Speaker 1 (02:00):
It's gone up so fast, like up so high so fast,
can you not bring it down just as fast?
Speaker 3 (02:06):
And that's the that's the ruth Richardson argument, I know, absolutely,
and yeah, and you could do more, but you get
very quickly to teacher salaries and health salaries. That's because
they're big chunks, right, and you can do a bit
in the structure in Wellington, and they are I would
argue probably early on they should have done more, but
(02:29):
they were probably getting their heads around the whole place
because they were new. That's not an excuse, but I'm
just saying that it takes a while to wrestle the beast,
so they could have done more in that. But you know,
Wellington's Wellington's been in desperate negative economic straits for a
while even with what they've done, so it is it
is challenging to wrestle that machine down once it's got
(02:52):
up such a huge head of steam. Now it's currently
expenditures running about thirty two percent of about thirty two
percent of gen or it's heading towards that way now.
We had it down at about twenty nine, so it's
about three percent.
Speaker 2 (03:05):
Is that core expenditure, that's.
Speaker 3 (03:07):
Government expenditure, core expenditure, So that's got to get back
to around that under thirty level, and that does take time. Now,
if you remember, take Bill English's time as Finance Minister.
He had eight of the nine years I got. The
last one. He spent eight years after the Canterbury earthquakes
and the GFC wrestling that thing back into surplus. And
(03:29):
some of the commentators go on like he never had
a surplace. Well, he did all the hard work, and
they say, oh, Stephen Joyce had a surplus. Yeah, and
that was lucky because after the eight years of hard work,
I reaped the benefit of it. It takes a huge
amount of time. Now none of this has excuses. Yes,
I've got to keep the pressure on. But then on
the other side of the aisle there's you know, there's
an outfit that really wants to get back and to
spend some more money again, and you know they're trying
(03:52):
to be sensible about it, but the reality is they
would spend more. This is a big job to wrestle
this thing under control. Today is not going to make
anybody excited in a positive way. Taxpayers Union is going
to go out and it should be happening faster. The
Left will be either keeping very quiet or criticizing the
moves that have been made. So Nikola Willis has just
(04:14):
got to put her head down and this is the
hard yards, and the hard yards are going to run
for another couple of years.
Speaker 1 (04:19):
Yeah, okay, we've got also this week, excuse me, I've
got the GDP. And obviously we're expecting a big bounce
back in Q three after what was terrible in Q two,
But the revision of Q two I think might be
a really interesting yan as well. Are you expecting a
big revision here?
Speaker 3 (04:34):
Not particularly, And the quarterly figures do bounce around a lot.
We know it was a pretty average year. We know
next year is going to be better. The question is
how much?
Speaker 2 (04:43):
What do you think.
Speaker 3 (04:44):
I think it'll be a bit better. There's a couple
of things that worry me. There's the American economy and
something weird happening there, because there's plenty weird happening at
the moment, so that's a possibility. And then the other
one that worries me a little bit as the state
of the energy sector. And I think we've gone quiet
on that because it's summer and it's not an issue.
But I suspect we're going to have more challenges with
(05:05):
electricity prices and availability of energy at a reasonable price,
and that's going to be a bit of a handbrake
on the economic recovery. But I think overall will get better.
But it's not going to help the government's fiscal books
yet because that's all that's all trailing, So the tax
take and the decline and things like benefit payments doesn't
(05:26):
happen until the economy's really back on its feet, So
the government's not going to reap the benefit of that
next year yet.
Speaker 2 (05:32):
So would you say next year is good?
Speaker 1 (05:34):
Because this is Simon Bridges argument is that yep, we're
going to have an improvement, but it is not going
to be blockbuster, and you need to good your loins
and calm your farm.
Speaker 2 (05:41):
It's going to feel a bit hard.
Speaker 3 (05:42):
It won't be a blockbuster, but it will feel pretty
good relative for the last year.
Speaker 2 (05:45):
I think it will feel good.
Speaker 3 (05:46):
We'll feel a lot better than the last three years. Now.
It's been really tough. A lot of businesses have done
it really really tough over the last three or four
years since COVID. Basically they had that sugar rush and
they had problem with supply and you know a lot
of balance sheets have been very baddy damage and that's
one of the reasons we haven't gone well out of
this last recession is that a lot of companies had
(06:09):
much worse balance sheets than they had, say after the GFC,
and so they've struggled to get on their feet and
invest in the future. They're now starting to do that.
Confidence is starting to build. But yeah, it's going to
be it's going to be better, but not it's not
going to be a rockstar economy to call corn of Rods.
Speaker 2 (06:27):
Not for a while, but hopefully soon. Now, have you
got anything nice planned for summer?
Speaker 3 (06:30):
Yeap, sit on a beach, have the family around for
Christmas and all and normal stuff.
Speaker 2 (06:35):
Brilliant.
Speaker 1 (06:35):
I'm so pleased to hear it. You take yourself a
lovely break and thank you for coming in, Stephen. Great
to chat to you.
Speaker 2 (06:39):
Steven Joyce, former finance ministers.
Speaker 3 (06:42):
For more from the Mic Asking Breakfast, listen live to
news talks that'd be from six am weekdays, or follow
the podcast on iHeartRadio.
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