November 25, 2024 • 7 mins
The Finance Minister's foreshadowing an update on whether the Government's books are still on track for surplus in 2027-2028.
Nicola Willis will deliver the half yearly economic and fiscal update in about three weeks.
She says that will illustrate the latest forecasts for a surplus - and seemed to caution against unrealistic expectations.
"I've always been clear - I'm not going to chase a surplus at all costs. Forecasts move up and down. What I've committed to New Zealanders is that we will make sensible, prudent fiscal decisions to get the books back in balance over time."
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
And of course our finance minister is Nikola Willis Hi,
Nicola Hi.
Speaker 2 (00:04):
How much are we putting into that climate finance fund?
Speaker 3 (00:07):
Well, look, we haven't made a decision on that yet.
There's no set amount that we need to put in.
Each country decides its contribution. Our last current climate finance
commitment for twenty two to twenty five was one point
three billion. That obviously ends at the end of next
year and we'll then decide on our next commitment.
Speaker 1 (00:24):
That's one point three billion over three years, right, So
that's right, yeah, yeah, or three or four years or something,
because it works out at two hundred and thirty five. Now,
if the total package to the total package from the
rich countries to the poor countries has gone from one
hundred billion to five hundred billion, so it's up five times.
Is our contribution not naturally therefore going to go up
five times?
Speaker 3 (00:41):
Well, look, we will always do our part to support
global efforts on climate change and climate finance, but there
isn't a specific target or amount that each country must contribute.
So we as a cabinet need to weigh that contribution
against all of the other contributions we make in terms
of aid, in terms of development in terms of what
we're doing with our own own technology, research and science
(01:02):
here at home.
Speaker 2 (01:02):
Is it definitely going to go up?
Speaker 3 (01:05):
There's nothing definite heither. This is something for us to
assess as a cabinet and make choices.
Speaker 2 (01:10):
About can we make it go down?
Speaker 3 (01:12):
Well? As I said, look, our last contribution was one
point three over four. There are questions for us to
answer about do we want to make an annual contribution,
do we want to have that multi year contribution and
all of that things that were yet to step through.
I haven't even taken advice on it yet.
Speaker 2 (01:28):
What is this money being used for?
Speaker 3 (01:31):
Well, it goes towards those developing countries to help them
lower their emissions. So you think of the likes of
African countries that are still relying on coal power stations
helping them convert the basic argument being that some of
those countries haven't yet gone through the development that the
rest of the world has and being asked to make
(01:51):
the transition.
Speaker 2 (01:52):
Of keys exists the same. We're facing the same trouble.
Speaker 1 (01:55):
Right We've got a mountain of coal setting at Huntley
because we're also struggling with the transition. How can we
justify giving money away to help other people convert when
we ourselves are struggling, we need the money.
Speaker 3 (02:07):
Look, I'm sympathetic to the view that says we should
really make sure we're doing things right at home. But
this is a bit similar to the aid argument in general,
which is yes, in New Zealand, we still have challenges
in our own health system, our own education system. Yet
as global citizens, we recognize our role in making contributions
to countries that are far, far, far less well off
(02:30):
than we. We're just hard of being a global city.
Speaker 2 (02:32):
I take it the same principle.
Speaker 1 (02:33):
But if you think about our aid budget versus this,
how much is our aid budget versus what we're spending
on climate aid?
Speaker 3 (02:40):
Yeah, well this is obviously pretty big in proportion to
our aid budget. Our aid budget is still bigger. But
I and I in my mind do think of those
two buckets in a similar way. Both of them are
about our global contribution, and I think it's right. Your
point is right, we should be balancing up both of those.
How much are we giving an aid as a whole
and what proportion of that is climate aid?
Speaker 2 (03:01):
Jeez, okay, listen, when are you going to make a
decision on it.
Speaker 3 (03:05):
Well, we will have advice on it obviously ahead of
the budget because, as I say, the current Climate Client
Climate Finance commitment ends at the end of next year,
so we'll need to make a decision ahead of the budget.
Speaker 2 (03:15):
On the budget. Are you guys not going to hit
surplus in twenty seven to twenty eight.
Speaker 3 (03:19):
Well, look, I'm going to make an announcement about the
forecasts on the seventeenth of December. But you will have
seen that Treasury's chief economist last week pointed out that
there are lots of challenges to that position. The biggest
challenge being that we depend on the forecasts of the
growth in the economy. When the economy is smaller, there's
less revenue, makes it harder to get a surplus. And
(03:42):
what Treasury have basically had to do is readjust all
of their forecasts over successive forecasts. They essentially overestimated how
enduring the balance back after COVID would be, and we're
now in a long hangover. So the numbers are reflecting
that I can't control Treasury's forecast assumptions. What I can
can control and will control, is our government's discretionary spending decisions.
Speaker 1 (04:04):
Okay, but so it sounds to me like, so you're
going to make an announcement on December seventeen as to
whether you're going to hit that surplus or not.
Speaker 3 (04:11):
That's right. That's when I share the latest forecasts, which
will illustrate where that sits.
Speaker 1 (04:16):
Sounds to me like you guys are softening us up
for the fact that you're not going.
Speaker 3 (04:19):
To hit it. Well, look, I've always been clear. I'm
not going to chase a surplus at all costs. Forecasts
move up and down. What I've committed to New Zealander
is is that we will make sensible, prudent fiscal decisions
to get the books back in balance over time, and
we remain on that course.
Speaker 2 (04:36):
Which is which brings us to Robert McCulloch's column. Did
you read that last week when you were away?
Speaker 3 (04:43):
I did hear that? And let me can I can
I give a response to it, because my goodness. First
of all, he said that I do have another year
to prove myself. So that's good because no one promised
to solve the economy in year one. Then he said, look,
we're having low growth. Well look my view is you
we are, and that's my entire raison deetra. What we
(05:03):
committed was first get inflation and under control, get interest
rates coming down, deliver neutral X relief. We've done those things.
We are very focused on driving growth forward. Then he said,
and this was the curious bit, he said, oh, look,
she's not doing enough to break up monopoly powers. Well,
here is what I'd say to that I am different
from other finance ministers and that I have directly confronted
(05:25):
the major trading banks. I've said that I'm going to
do regulatory reform at the Reserve Bank. We have the
Parliamentary Select Committee inquiry going on. I am very determined
on that score, and I'd like to put this out
to Robert McCulloch. If he has more ideas on how
we can drive competition in the New Zealand economy to
break up some of these duopolies who are making too
(05:45):
much money out of New Zealanders, then I am up
for those ideas. I am a competition warrior. I love
markets that operate competitively and that is very much on
my agenda as a finance minister. I could keep going
through his points here this but I felt that I
had a response to each of them, and I basically thought, yep,
you ain't seen nothing yet. You one would to come.
Speaker 1 (06:06):
Oh well please, because as point is simply which gets
us back to the surplus thing. His point are simply
big talk not delivering right. And before the election, in
the campaign you were sneering at Labour's surplus of two
point one that they had projected, and you said you
were going to deliver two point nine. But when it
comes to the crunch, actually we don't have. That's not happening.
Speaker 3 (06:25):
Well, what we have done is dramatically reduced the rate
of expenditure growth. There's no question if labor were in
power now, the deficit would be a lot worse. Now.
I heard you talking on this point last week and
you said, look, she's actually still spending more than labor.
So I've gone back and I've looked at the records
going back to nineteen seventy two. So over more than
(06:47):
fifty years, there is only one ever example of government
spending going down in real dollar terms. Because of course,
each year population grows, there's inflation, there is wage growth,
and so what we we have done is rapidly halt
the rate of increase. That's the right thing to do.
We will continue on that course, But if the argument
(07:08):
is really that we should have slashed funding to below
the levels it was even while the population grew and
even while it was still high inflation, then I'd put
to you, actually, I'm a bit more compassionate than that,
because I do care about frontline service delivery.
Speaker 2 (07:21):
Okay, Nichola, thank you. I really appreciate your time. That's
Nicola Willis, the Finance Minister. For more from Heather Duplessy
Allen Drive, Listen live to news talks. It'd be from
four pm weekdays, or follow the podcast on iHeartRadio.
And of course our finance minister is Nikola Willis Hi,
Nicola Hi.
Speaker 2 (00:04):
How much are we putting into that climate finance fund?
Speaker 3 (00:07):
Well, look, we haven't made a decision on that yet.
There's no set amount that we need to put in.
Each country decides its contribution. Our last current climate finance
commitment for twenty two to twenty five was one point
three billion. That obviously ends at the end of next
year and we'll then decide on our next commitment.
Speaker 1 (00:24):
That's one point three billion over three years, right, So
that's right, yeah, yeah, or three or four years or something,
because it works out at two hundred and thirty five. Now,
if the total package to the total package from the
rich countries to the poor countries has gone from one
hundred billion to five hundred billion, so it's up five times.
Is our contribution not naturally therefore going to go up
five times?
Speaker 3 (00:41):
Well, look, we will always do our part to support
global efforts on climate change and climate finance, but there
isn't a specific target or amount that each country must contribute.
So we as a cabinet need to weigh that contribution
against all of the other contributions we make in terms
of aid, in terms of development in terms of what
we're doing with our own own technology, research and science
(01:02):
here at home.
Speaker 2 (01:02):
Is it definitely going to go up?
Speaker 3 (01:05):
There's nothing definite heither. This is something for us to
assess as a cabinet and make choices.
Speaker 2 (01:10):
About can we make it go down?
Speaker 3 (01:12):
Well? As I said, look, our last contribution was one
point three over four. There are questions for us to
answer about do we want to make an annual contribution,
do we want to have that multi year contribution and
all of that things that were yet to step through.
I haven't even taken advice on it yet.
Speaker 2 (01:28):
What is this money being used for?
Speaker 3 (01:31):
Well, it goes towards those developing countries to help them
lower their emissions. So you think of the likes of
African countries that are still relying on coal power stations
helping them convert the basic argument being that some of
those countries haven't yet gone through the development that the
rest of the world has and being asked to make
(01:51):
the transition.
Speaker 2 (01:52):
Of keys exists the same. We're facing the same trouble.
Speaker 1 (01:55):
Right We've got a mountain of coal setting at Huntley
because we're also struggling with the transition. How can we
justify giving money away to help other people convert when
we ourselves are struggling, we need the money.
Speaker 3 (02:07):
Look, I'm sympathetic to the view that says we should
really make sure we're doing things right at home. But
this is a bit similar to the aid argument in general,
which is yes, in New Zealand, we still have challenges
in our own health system, our own education system. Yet
as global citizens, we recognize our role in making contributions
to countries that are far, far, far less well off
(02:30):
than we. We're just hard of being a global city.
Speaker 2 (02:32):
I take it the same principle.
Speaker 1 (02:33):
But if you think about our aid budget versus this,
how much is our aid budget versus what we're spending
on climate aid?
Speaker 3 (02:40):
Yeah, well this is obviously pretty big in proportion to
our aid budget. Our aid budget is still bigger. But
I and I in my mind do think of those
two buckets in a similar way. Both of them are
about our global contribution, and I think it's right. Your
point is right, we should be balancing up both of those.
How much are we giving an aid as a whole
and what proportion of that is climate aid?
Speaker 2 (03:01):
Jeez, okay, listen, when are you going to make a
decision on it.
Speaker 3 (03:05):
Well, we will have advice on it obviously ahead of
the budget because, as I say, the current Climate Client
Climate Finance commitment ends at the end of next year,
so we'll need to make a decision ahead of the budget.
Speaker 2 (03:15):
On the budget. Are you guys not going to hit
surplus in twenty seven to twenty eight.
Speaker 3 (03:19):
Well, look, I'm going to make an announcement about the
forecasts on the seventeenth of December. But you will have
seen that Treasury's chief economist last week pointed out that
there are lots of challenges to that position. The biggest
challenge being that we depend on the forecasts of the
growth in the economy. When the economy is smaller, there's
less revenue, makes it harder to get a surplus. And
(03:42):
what Treasury have basically had to do is readjust all
of their forecasts over successive forecasts. They essentially overestimated how
enduring the balance back after COVID would be, and we're
now in a long hangover. So the numbers are reflecting
that I can't control Treasury's forecast assumptions. What I can
can control and will control, is our government's discretionary spending decisions.
Speaker 1 (04:04):
Okay, but so it sounds to me like, so you're
going to make an announcement on December seventeen as to
whether you're going to hit that surplus or not.
Speaker 3 (04:11):
That's right. That's when I share the latest forecasts, which
will illustrate where that sits.
Speaker 1 (04:16):
Sounds to me like you guys are softening us up
for the fact that you're not going.
Speaker 3 (04:19):
To hit it. Well, look, I've always been clear. I'm
not going to chase a surplus at all costs. Forecasts
move up and down. What I've committed to New Zealander
is is that we will make sensible, prudent fiscal decisions
to get the books back in balance over time, and
we remain on that course.
Speaker 2 (04:36):
Which is which brings us to Robert McCulloch's column. Did
you read that last week when you were away?
Speaker 3 (04:43):
I did hear that? And let me can I can
I give a response to it, because my goodness. First
of all, he said that I do have another year
to prove myself. So that's good because no one promised
to solve the economy in year one. Then he said, look,
we're having low growth. Well look my view is you
we are, and that's my entire raison deetra. What we
(05:03):
committed was first get inflation and under control, get interest
rates coming down, deliver neutral X relief. We've done those things.
We are very focused on driving growth forward. Then he said,
and this was the curious bit, he said, oh, look,
she's not doing enough to break up monopoly powers. Well,
here is what I'd say to that I am different
from other finance ministers and that I have directly confronted
(05:25):
the major trading banks. I've said that I'm going to
do regulatory reform at the Reserve Bank. We have the
Parliamentary Select Committee inquiry going on. I am very determined
on that score, and I'd like to put this out
to Robert McCulloch. If he has more ideas on how
we can drive competition in the New Zealand economy to
break up some of these duopolies who are making too
(05:45):
much money out of New Zealanders, then I am up
for those ideas. I am a competition warrior. I love
markets that operate competitively and that is very much on
my agenda as a finance minister. I could keep going
through his points here this but I felt that I
had a response to each of them, and I basically thought, yep,
you ain't seen nothing yet. You one would to come.
Speaker 1 (06:06):
Oh well please, because as point is simply which gets
us back to the surplus thing. His point are simply
big talk not delivering right. And before the election, in
the campaign you were sneering at Labour's surplus of two
point one that they had projected, and you said you
were going to deliver two point nine. But when it
comes to the crunch, actually we don't have. That's not happening.
Speaker 3 (06:25):
Well, what we have done is dramatically reduced the rate
of expenditure growth. There's no question if labor were in
power now, the deficit would be a lot worse. Now.
I heard you talking on this point last week and
you said, look, she's actually still spending more than labor.
So I've gone back and I've looked at the records
going back to nineteen seventy two. So over more than
(06:47):
fifty years, there is only one ever example of government
spending going down in real dollar terms. Because of course,
each year population grows, there's inflation, there is wage growth,
and so what we we have done is rapidly halt
the rate of increase. That's the right thing to do.
We will continue on that course, But if the argument
(07:08):
is really that we should have slashed funding to below
the levels it was even while the population grew and
even while it was still high inflation, then I'd put
to you, actually, I'm a bit more compassionate than that,
because I do care about frontline service delivery.
Speaker 2 (07:21):
Okay, Nichola, thank you. I really appreciate your time. That's
Nicola Willis, the Finance Minister. For more from Heather Duplessy
Allen Drive, Listen live to news talks. It'd be from
four pm weekdays, or follow the podcast on iHeartRadio.
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