December 16, 2025 • 8 mins
The Government insists it has a plan to turn the economy around.
Treasury's Half Year Economic and Fiscal Update shows the country is first forecast to be in the black by 2029-2030.
The Finance Minister has admitted the country is borrowing money to pay the interest bill on the debt.
Nicola Willis told Heather du Plessis Allan that bill is about $9 billion a year.
She says around 80% of borrowing over the next few years will be for capital assets like hospitals, schools, and roads.
There may also be more cuts to the public service as they aim to get back down to surplus.
Economic growth is expected to be just 1.7% next year, and Willis says there's still room for efficiency in the public service.
She will be sending letters out to her cabinet colleagues to give them ideas on where they can make some savings.
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Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
So as predicted, Nikola Willis has pushed out surplus again,
which makes it the third year of delay in only
two years of this government being in office. The country's
now forecast to first be in the black and twenty
twenty nine, twenty thirty. So let's talk to the finance minister.
High Nicola, Good morning, Heather. Just clear this up for me.
Are we borrowing right now as a country just to
pay our interest bill on the debt?
Speaker 2 (00:20):
We are paying in part to pay the interest bill
on the debt, which is pretty big. It's more than
nine billion dollars a year, thank you Labor. But as
we look over the next few years, around eighty percent
of our borrowing is for capital investments, so that's an
infrastructure unlike hospitals, schools and roads, so assets that we
will have for the future. Regardless, we need to get
that borrowing down, which means we need to get the
(00:42):
books back in balance, and that's what the government has
a plan to do.
Speaker 1 (00:45):
Okay, So why not run a zero budget like Bill.
Speaker 2 (00:47):
English did, because we do have pressing needs, for example,
to invest more in the health system to allow for
a growing and aging population and the demands that people
have to double the capability of our defense force, as
we have committed to our security partners to ensure that schools,
(01:07):
teachers and the like have a little bit more funding
to keep the lights on and keep doing their work.
So those frontline services require more funding just to stand still.
And we have committed as a government that we will
be delivering effective frontline services and making the funding commitments
needed to support that.
Speaker 1 (01:25):
I mean, he had the same pressing needs, didn't he,
And he still managed to cut enough to run a
zero budget a couple of times.
Speaker 2 (01:31):
That's right, and we are doing a similar thing to
him in that in order to fund all of the
commitments that we have made, we will need to keep
finding ongoing savings and reprioritization. That's been our habit over
our first two budgets, in which collectively we've delivered forty
three billion dollars worth of savings. Now, of course, those
savings have allowed us to deliver tax relief to working people,
(01:53):
but also to increase funding to a number of services,
doing things like increasing the number of frontline police offices.
Speaker 1 (02:00):
Do you think that you've cut everything that you can,
Is all the fat gone?
Speaker 2 (02:05):
No? I think we have to be pressing for.
Speaker 1 (02:07):
On what ongoing fat can you see?
Speaker 2 (02:12):
Well, I still think that there's room for more efficiency
in the public service. I have, together with ministers, identified
other areas where we think, look, are we getting in
our value for money to the taxpayer? There? Like what not?
Convinced well, I will be taking a number of options
to cabinet. I don't want to get ahead of my
cabinet colleagues until we've made those choices. But the way
(02:34):
I run a budget is I send letters out to
my colleagues saying, here's some ideas for where I think
you could make some savings. Come back to me with
what that would look like. And by the way, in
a few cases, here's an idea for where you might
need some more before.
Speaker 1 (02:47):
I mean, for a start, why have you not cut nearly,
not even a fraction really of what Jacinda and Grant
piled in in terms of public servants.
Speaker 2 (02:58):
Well, we have cut both the absolute number of public
side how many more than by more than two thousand
from its peak. Let me out all that down.
Speaker 1 (03:09):
How many go exactly how many? It's important to say
how many they added? They added more than fourteen thousand,
and you've only cut.
Speaker 2 (03:17):
Two that's right. Our focus has been making sure that
we reduce the number of people and back office roles.
So the numbers there have come down quite a lot
more dramatically, whether that's admin staff, managers, policy analysts. But
we have increased, for example, the number of corrections officers,
that is, the number of people in our prisons because
we're locking up criminals for longer when they violently offend
(03:40):
against people. So while some of those roles have increased
on the front line, the back office has been shrunk
pretty sick. To be fair, there's more work we can
do there, to be fair.
Speaker 1 (03:50):
That when we look at these numbers that you talk
about the front the front line does not increase by
anything like fourteen or twelve thousand.
Speaker 2 (03:59):
Well, it didn't owe the time that labor were an offer.
Speaker 1 (04:02):
What I'm saying to you is you're fudging it slightly
by suggesting that you have cut really, really deep and
then increased the front line by a lot, you haven't.
Speaker 2 (04:09):
Actually, Well, we have cut the number of back office
roles while also reducing the bill for external consultants and
contractors by around nine hundred million over the past couple
of years. For the again for context, the last national government.
All they did was cap the number of public servants.
They certainly didn't reduce it in quite terms. What about
what we've achieved so far?
Speaker 1 (04:30):
What about the free year of university to students, which
which has been criticized. It's a flop, It doesn't encourage enrollment.
Why don't you cut that?
Speaker 2 (04:38):
Well, we've done what we said we would in our
coalition agreement with New Zealand first, which was we took
the very ineffective first year at fees free and we
made it final years fees free. So you only get
those free fees if you actually.
Speaker 1 (04:51):
Have you asked to Winston? Have you asked Winston if
he would be okay with you cutting it all together.
Speaker 2 (04:57):
I'm happy to put that question to him.
Speaker 1 (05:00):
Oh have you not put that question to him? Nikola?
I've been asking you about this for two.
Speaker 2 (05:03):
Years because the way the coalition agreement works is the
commitments as they are in writing, is the commitments as
we deliver them, and so the commitment there in the
coalition agreement.
Speaker 1 (05:13):
Now he wanted it move from the first to the
third year because having it in the first year is stupid.
But he might be open to cutting it all together.
And if you did that, you would say about a
billion dollars and four years.
Speaker 2 (05:23):
It's a question that I'm happy to put to him.
Speaker 1 (05:25):
Okay, why don't you end the national ticketing system?
Speaker 2 (05:28):
Right?
Speaker 1 (05:28):
Because Wellington's doing it itself now, it's spending five point
five mil on it, but you're in line to spend
one point four bill. Why not cut it?
Speaker 2 (05:36):
Well? I agree that that is an absolutely tormented project.
It's another one of the hospital passes that we've inherited.
That is something that Chris Bishop, as Transport Minister, is
looking very carefully at because, like you, he can think
of a few better uses for more than a billion dollars,
and so he is examining keyfully whether that's a spend
(05:56):
that we should be doing.
Speaker 1 (05:57):
Okay, have you thought about stopping the welfare that you're
giving to parents who are earning combined more than two
hundred thousand dollars a year.
Speaker 2 (06:05):
Well, primarily that comes through working for families for which
support increases when people.
Speaker 1 (06:12):
Have this is your family boost, right?
Speaker 2 (06:15):
Well, no, family boost is, yes, a payment that is
available to some people earning that amount in some circumstances,
if they have particularly high early childhood education.
Speaker 1 (06:25):
Why not cut it. If you're on two hundred thousand,
you've got enough.
Speaker 2 (06:27):
Money because we're actually investing around about exactly what we
campaigned on investing. In that policy. We made a commitment
to working parents who have very high early childhood education
costs that we would refund a portion of those and
we're keeping that commitment.
Speaker 1 (06:42):
Yeah, okay, have you thought about maybe income testing the
winter energy payment because there are people who are getting
getting using it to warm the pool.
Speaker 2 (06:49):
Well, the Prime Minister sent out a commitment card prior
to the election and one of the commitments he made
was not to reduce the winter winter Energy payment for superinuitance.
You'll see a theme here, which is where we've made
commitments to the New Zealand people, we think it's important
we keep them. And that's relevant not just for this
three years, it's actually relevant for the next.
Speaker 1 (07:09):
Sections changed change and the superlus has been pushed out
by three years and maybe you need to start breaking
some promises and not wasting so much cash.
Speaker 2 (07:18):
And we are forecasting a return to surplus and the
biggest risk to that is the election of a labor
government who have shown no inclination to do any ongoing
efficiency or savings. And so what I need to do
is ensure that our government is keeping its commitments to
people that it made and its campaign pledges, while also
doing an absolutely consistent drive for more savings. And there
(07:41):
will be more opportunities at the next election for people
to set out their store. And I tell you this,
the stare of the National Party is going to be
far more fiscally disciplined than Labor have ever dreamed of
even pretending to be.
Speaker 1 (07:54):
All Right, Nichola, thank you very much for your time,
Have a lovely day. Nichola will as Finance Minister. For
more from the mic Hosking Breakfast, listen live to News
Talks at b from six am weekdays, or follow the
podcast on iHeartRadio.
So as predicted, Nikola Willis has pushed out surplus again,
which makes it the third year of delay in only
two years of this government being in office. The country's
now forecast to first be in the black and twenty
twenty nine, twenty thirty. So let's talk to the finance minister.
High Nicola, Good morning, Heather. Just clear this up for me.
Are we borrowing right now as a country just to
pay our interest bill on the debt?
Speaker 2 (00:20):
We are paying in part to pay the interest bill
on the debt, which is pretty big. It's more than
nine billion dollars a year, thank you Labor. But as
we look over the next few years, around eighty percent
of our borrowing is for capital investments, so that's an
infrastructure unlike hospitals, schools and roads, so assets that we
will have for the future. Regardless, we need to get
that borrowing down, which means we need to get the
(00:42):
books back in balance, and that's what the government has
a plan to do.
Speaker 1 (00:45):
Okay, So why not run a zero budget like Bill.
Speaker 2 (00:47):
English did, because we do have pressing needs, for example,
to invest more in the health system to allow for
a growing and aging population and the demands that people
have to double the capability of our defense force, as
we have committed to our security partners to ensure that schools,
(01:07):
teachers and the like have a little bit more funding
to keep the lights on and keep doing their work.
So those frontline services require more funding just to stand still.
And we have committed as a government that we will
be delivering effective frontline services and making the funding commitments
needed to support that.
Speaker 1 (01:25):
I mean, he had the same pressing needs, didn't he,
And he still managed to cut enough to run a
zero budget a couple of times.
Speaker 2 (01:31):
That's right, and we are doing a similar thing to
him in that in order to fund all of the
commitments that we have made, we will need to keep
finding ongoing savings and reprioritization. That's been our habit over
our first two budgets, in which collectively we've delivered forty
three billion dollars worth of savings. Now, of course, those
savings have allowed us to deliver tax relief to working people,
(01:53):
but also to increase funding to a number of services,
doing things like increasing the number of frontline police offices.
Speaker 1 (02:00):
Do you think that you've cut everything that you can,
Is all the fat gone?
Speaker 2 (02:05):
No? I think we have to be pressing for.
Speaker 1 (02:07):
On what ongoing fat can you see?
Speaker 2 (02:12):
Well, I still think that there's room for more efficiency
in the public service. I have, together with ministers, identified
other areas where we think, look, are we getting in
our value for money to the taxpayer? There? Like what not?
Convinced well, I will be taking a number of options
to cabinet. I don't want to get ahead of my
cabinet colleagues until we've made those choices. But the way
(02:34):
I run a budget is I send letters out to
my colleagues saying, here's some ideas for where I think
you could make some savings. Come back to me with
what that would look like. And by the way, in
a few cases, here's an idea for where you might
need some more before.
Speaker 1 (02:47):
I mean, for a start, why have you not cut nearly,
not even a fraction really of what Jacinda and Grant
piled in in terms of public servants.
Speaker 2 (02:58):
Well, we have cut both the absolute number of public
side how many more than by more than two thousand
from its peak. Let me out all that down.
Speaker 1 (03:09):
How many go exactly how many? It's important to say
how many they added? They added more than fourteen thousand,
and you've only cut.
Speaker 2 (03:17):
Two that's right. Our focus has been making sure that
we reduce the number of people and back office roles.
So the numbers there have come down quite a lot
more dramatically, whether that's admin staff, managers, policy analysts. But
we have increased, for example, the number of corrections officers,
that is, the number of people in our prisons because
we're locking up criminals for longer when they violently offend
(03:40):
against people. So while some of those roles have increased
on the front line, the back office has been shrunk
pretty sick. To be fair, there's more work we can
do there, to be fair.
Speaker 1 (03:50):
That when we look at these numbers that you talk
about the front the front line does not increase by
anything like fourteen or twelve thousand.
Speaker 2 (03:59):
Well, it didn't owe the time that labor were an offer.
Speaker 1 (04:02):
What I'm saying to you is you're fudging it slightly
by suggesting that you have cut really, really deep and
then increased the front line by a lot, you haven't.
Speaker 2 (04:09):
Actually, Well, we have cut the number of back office
roles while also reducing the bill for external consultants and
contractors by around nine hundred million over the past couple
of years. For the again for context, the last national government.
All they did was cap the number of public servants.
They certainly didn't reduce it in quite terms. What about
what we've achieved so far?
Speaker 1 (04:30):
What about the free year of university to students, which
which has been criticized. It's a flop, It doesn't encourage enrollment.
Why don't you cut that?
Speaker 2 (04:38):
Well, we've done what we said we would in our
coalition agreement with New Zealand first, which was we took
the very ineffective first year at fees free and we
made it final years fees free. So you only get
those free fees if you actually.
Speaker 1 (04:51):
Have you asked to Winston? Have you asked Winston if
he would be okay with you cutting it all together.
Speaker 2 (04:57):
I'm happy to put that question to him.
Speaker 1 (05:00):
Oh have you not put that question to him? Nikola?
I've been asking you about this for two.
Speaker 2 (05:03):
Years because the way the coalition agreement works is the
commitments as they are in writing, is the commitments as
we deliver them, and so the commitment there in the
coalition agreement.
Speaker 1 (05:13):
Now he wanted it move from the first to the
third year because having it in the first year is stupid.
But he might be open to cutting it all together.
And if you did that, you would say about a
billion dollars and four years.
Speaker 2 (05:23):
It's a question that I'm happy to put to him.
Speaker 1 (05:25):
Okay, why don't you end the national ticketing system?
Speaker 2 (05:28):
Right?
Speaker 1 (05:28):
Because Wellington's doing it itself now, it's spending five point
five mil on it, but you're in line to spend
one point four bill. Why not cut it?
Speaker 2 (05:36):
Well? I agree that that is an absolutely tormented project.
It's another one of the hospital passes that we've inherited.
That is something that Chris Bishop, as Transport Minister, is
looking very carefully at because, like you, he can think
of a few better uses for more than a billion dollars,
and so he is examining keyfully whether that's a spend
(05:56):
that we should be doing.
Speaker 1 (05:57):
Okay, have you thought about stopping the welfare that you're
giving to parents who are earning combined more than two
hundred thousand dollars a year.
Speaker 2 (06:05):
Well, primarily that comes through working for families for which
support increases when people.
Speaker 1 (06:12):
Have this is your family boost, right?
Speaker 2 (06:15):
Well, no, family boost is, yes, a payment that is
available to some people earning that amount in some circumstances,
if they have particularly high early childhood education.
Speaker 1 (06:25):
Why not cut it. If you're on two hundred thousand,
you've got enough.
Speaker 2 (06:27):
Money because we're actually investing around about exactly what we
campaigned on investing. In that policy. We made a commitment
to working parents who have very high early childhood education
costs that we would refund a portion of those and
we're keeping that commitment.
Speaker 1 (06:42):
Yeah, okay, have you thought about maybe income testing the
winter energy payment because there are people who are getting
getting using it to warm the pool.
Speaker 2 (06:49):
Well, the Prime Minister sent out a commitment card prior
to the election and one of the commitments he made
was not to reduce the winter winter Energy payment for superinuitance.
You'll see a theme here, which is where we've made
commitments to the New Zealand people, we think it's important
we keep them. And that's relevant not just for this
three years, it's actually relevant for the next.
Speaker 1 (07:09):
Sections changed change and the superlus has been pushed out
by three years and maybe you need to start breaking
some promises and not wasting so much cash.
Speaker 2 (07:18):
And we are forecasting a return to surplus and the
biggest risk to that is the election of a labor
government who have shown no inclination to do any ongoing
efficiency or savings. And so what I need to do
is ensure that our government is keeping its commitments to
people that it made and its campaign pledges, while also
doing an absolutely consistent drive for more savings. And there
(07:41):
will be more opportunities at the next election for people
to set out their store. And I tell you this,
the stare of the National Party is going to be
far more fiscally disciplined than Labor have ever dreamed of
even pretending to be.
Speaker 1 (07:54):
All Right, Nichola, thank you very much for your time,
Have a lovely day. Nichola will as Finance Minister. For
more from the mic Hosking Breakfast, listen live to News
Talks at b from six am weekdays, or follow the
podcast on iHeartRadio.
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