February 24, 2025 • 8 mins
The Finance Minister says it could take 15 years before Defence Force spending reaches a goal set out by the Prime Minister.
Christopher Luxon says he want the Government to get close to spending 2 percent of the country's GDP on defence.
It comes as Chinese naval ships run live firing round practice in the Tasman Sea.
Nicola Willis says it will take quite a few budgets to meet the 2 percent threshold.
"What we're working on is a defence capability plan that sets out what are the big investments we need to make to get our defence force ready - and that will take us out to 2040."
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
Right now. Nicola willis the Finance Minister. Good evening, Good evening, Ryn.
Great to have you on the show as always. Firstly
the defense spending stuff. Obviously, the Judiclons was on the
show Friday said, yeah, we want we basically want to
get to two percent. I mean that's going to take
a few budgets, isn't it.
Speaker 2 (00:17):
Yes, it will take a few budgets. What we're working
on is a defense capability plan that sets out what
are the big bits of kit, the big investments we
need to make to get our defense force ready, and
that will take us out to twenty forty. So it's
about what order you do things in, and it's about
increasing spending in every budget between now and then.
Speaker 1 (00:38):
Right So basically you'd try hit two percent by twenty
forty would be the goal.
Speaker 2 (00:43):
Well, the exact date at which we hit two percent
is a decision for cabinets, so I won't get ahead
of that.
Speaker 1 (00:48):
Fair enough, does this at all alter your new spending allowance?
Speaker 2 (00:54):
Look, this is always something that I've been factoring in
as I've been thinking about how we put the budget together,
and I'm confident that we will be able to build
our defense capability while sticking to the fiscal commitments we've.
Speaker 1 (01:06):
Made, which has remind two point three to two point
four billion.
Speaker 2 (01:09):
Wasn't two two point four billion dollar operating allowance?
Speaker 1 (01:12):
So that will stay and will include a commitment to
defense and increased commitment to defense. That's right, Ryan, Okay,
and then every year thereafter I suppose the thing is,
do you know what you want to spend it on
you or are we arbitrarily increasing the number for the
sake of it?
Speaker 2 (01:30):
Well, that's the great question, because that's exactly what we
didn't want to do, just commit to spending on whatever whenever.
So that's the detailed work that's been happening in the
background with the New Zealand Defense Force to be really
clear about what are the particular bits of kit that
will make us most useful to our ally Australia, that
will most be able to deliver the functions we want
in our part of the world. What do we need
(01:51):
for our workforce, what do we need for our infrastructure,
and what order should we do all of those things
in so that we do the most important priorities first
and roll that out in a way that's deliverable. Because
even if we had a magic money tree emerged tomorrow.
The Defense Force wouldn't be able to just suddenly purchase
a whole bunch of kit So we need to do
(02:11):
this in a way that's logical, reasonable and gets good value.
Speaker 1 (02:14):
The Overseas Investment Act stuff. Barbara Edmonds came out this
morning and said, well, she used the word fire sale
of our assets, and she also suggested that there'd be
problems with selling our water assets. Is that I've had
to read of the cabinet paper. It's very clear that
significant or strategically important businesses light Water would go through
a national interest test. So is this scare mungering or
(02:36):
what is this?
Speaker 2 (02:37):
Yeah, that's right. Look, I was really shocked by the
alarmist tone of her press release and it actually made
me think that there's either ignorance at play or she's
genuinely trying to scare New Zealanders, because Barbara should know
that New Zealand has one of the most restrictive overseas
investment regimes in the world, and it's actually choking cash
(02:59):
out of our economy. It's making it harder for renewable
energy to be built, it's making it harder for new
factories to be built, it's making it harder for businesses
to access funding. And we're simply talking about streamlining the process,
making it fast and less complex, making this a more
attractive people place for people to invest, while also very
much keeping in place protections around keyes yet's and very
(03:22):
much keeping in place the screening process to protect our
national security. So I you know, when Chicken Little cries
that the sky is going to fall, it makes it
harder next time to take them seriously. And I think
that's the territory that Barbara's got itself into.
Speaker 1 (03:37):
Will you ever tick do not return dividend on one
of these gen tailors. I spoke to Genesis on Friday.
They said, all you need to do is click do
not return dividend, reinvest it into new generation, and we'll
do just that.
Speaker 2 (03:50):
Well, my focus is what do I do to get
cheaper prices for New Zealand electricity users? And what do
I do about we've got secure electricus?
Speaker 1 (03:57):
Your generation would help right, Well, that.
Speaker 2 (04:00):
Would raise a number of other questions about how you
would then make sure that that return dividend actually ended
up in your bank account and the bank account of
other New Zealanders with cheaper bills and so there'd be
quite a few steps to go through to make sure
that we were confident that that money that we were
giving back to the gent tailor was actually going to
end up in cheaper electricity prices. So I'd want to
(04:20):
step through all of that first. There is no question
for me we need to do more in this area
to make sure that people are getting a better deal
out of our electricity system. And we will have more
to say about it actually in the coming.
Speaker 1 (04:33):
Days about are the electricity sector announcements you'll the sort
of raiser gang or the committee that's been looking at that,
not raise a gang, forgive me, that's coming out in
the next couple of days.
Speaker 2 (04:45):
That's right. The Competition Task Force will have more to say.
Speaker 1 (04:48):
Okay, good to note now, Andrew Bailey is can you
help explain this to us because it seems odd like
he's a minister. One minute, he literally just touches the arm.
There's nothing aggressive going on, he says, what's going on there?
Speaker 2 (05:06):
Well, as he said today, concerns were raised with him
about an incident in which his behavior towards a staff
member was overbearing. He had those concerns animated as concerns
communicated to him. His reflection on that was that he
had taken the discussion too far, that he was wrong
to have placed his hand on their upper arm, that
(05:27):
it was inappropriate, and he made the decision that he
hadn't met the standards of behavior that he thinks should
be expected of a minister, offered his resignation and that
has been accepted.
Speaker 1 (05:37):
Okay. The disaster insurance levy tell us we're not going
to be on the hook for another five or even
one thousand dollars a year.
Speaker 2 (05:44):
Well, this is yet to be decided. We're consulting on it.
The basic issue is, right now we don't have enough
money in the kitty if there was a major natural hasard,
a major earthquake. So this is the old EQC, and
as it is, it only has five hundred and fifty
million in its kitty, and if there was a big
(06:05):
earthquake tomorrow, it would need two point one billion to
cover those initial costs before it could then go out
for reinsurance. So what has been consulted on by David
Seymour is how could we build that up over time?
Obviously we won't be able to do it overnight, so
that we actually can give new Zealand as confidence that
the government will have the money it needs when the
next big one strikes.
Speaker 1 (06:26):
You're consulting on tax changes tax exemptions, I should say,
for the charities, including the Lights of Destiny Church, you're
saying you would stop their exemption, and we are asking
for us to see what we think about that. Is
that the gist of it all.
Speaker 2 (06:42):
As if shed previously, my focus is, yes, you want good,
strong charities that are doing public good to be exempt
from taxation. That's a positive thing. But I'm concerned about
the fairness and integrity of that regime, and I want
to avoid people avoiding tax that they should pay. So
we have canvassed a number of issues, the idea of
put out a discussion document to get feedback on. One
(07:03):
of them is this issue where charity businesses are currently
exempt from income tax and we're asking the question, well,
actually should they, in fact, if they're running a commercial
business be subject to income taxes. We're also looking at
this issue of donor controlled charities, where a family potentially
have a foundation that they control and may not actually
(07:26):
be directly contributing to a charitable purpose. So there's a
number of detailed issues we want to get people's feedback
on should we fix these things? And as I say,
my focus is it's got to be fair, it's got
to have integrity, because otherwise people doubt whether or not
those exemptions for charities should even be there in the
first place. And I think in most cases they should be.
But where there's bad behavior, we've got to give the
(07:48):
ID the tools it needs to crack down on it.
Speaker 1 (07:51):
All Right, Hey, just had a thought, lucks your bosses
off to Vietnam or he's potentially on a plane already,
and Winston Peters is over, says who's in charge of
the moment.
Speaker 2 (08:02):
David Seymour will be in charge of the acting Prime Minister.
Speaker 1 (08:05):
Thanks for your time, Minister. Nichola Willison's the Finance Minister.
With us for more from Hither Duplessy Allen Drive. Listen
live to news talks. It'd be from four pm weekdays,
or follow the podcast on iHeartRadio.
Right now. Nicola willis the Finance Minister. Good evening, Good evening, Ryn.
Great to have you on the show as always. Firstly
the defense spending stuff. Obviously, the Judiclons was on the
show Friday said, yeah, we want we basically want to
get to two percent. I mean that's going to take
a few budgets, isn't it.
Speaker 2 (00:17):
Yes, it will take a few budgets. What we're working
on is a defense capability plan that sets out what
are the big bits of kit, the big investments we
need to make to get our defense force ready, and
that will take us out to twenty forty. So it's
about what order you do things in, and it's about
increasing spending in every budget between now and then.
Speaker 1 (00:38):
Right So basically you'd try hit two percent by twenty
forty would be the goal.
Speaker 2 (00:43):
Well, the exact date at which we hit two percent
is a decision for cabinets, so I won't get ahead
of that.
Speaker 1 (00:48):
Fair enough, does this at all alter your new spending allowance?
Speaker 2 (00:54):
Look, this is always something that I've been factoring in
as I've been thinking about how we put the budget together,
and I'm confident that we will be able to build
our defense capability while sticking to the fiscal commitments we've.
Speaker 1 (01:06):
Made, which has remind two point three to two point
four billion.
Speaker 2 (01:09):
Wasn't two two point four billion dollar operating allowance?
Speaker 1 (01:12):
So that will stay and will include a commitment to
defense and increased commitment to defense. That's right, Ryan, Okay,
and then every year thereafter I suppose the thing is,
do you know what you want to spend it on
you or are we arbitrarily increasing the number for the
sake of it?
Speaker 2 (01:30):
Well, that's the great question, because that's exactly what we
didn't want to do, just commit to spending on whatever whenever.
So that's the detailed work that's been happening in the
background with the New Zealand Defense Force to be really
clear about what are the particular bits of kit that
will make us most useful to our ally Australia, that
will most be able to deliver the functions we want
in our part of the world. What do we need
(01:51):
for our workforce, what do we need for our infrastructure,
and what order should we do all of those things
in so that we do the most important priorities first
and roll that out in a way that's deliverable. Because
even if we had a magic money tree emerged tomorrow.
The Defense Force wouldn't be able to just suddenly purchase
a whole bunch of kit So we need to do
(02:11):
this in a way that's logical, reasonable and gets good value.
Speaker 1 (02:14):
The Overseas Investment Act stuff. Barbara Edmonds came out this
morning and said, well, she used the word fire sale
of our assets, and she also suggested that there'd be
problems with selling our water assets. Is that I've had
to read of the cabinet paper. It's very clear that
significant or strategically important businesses light Water would go through
a national interest test. So is this scare mungering or
(02:36):
what is this?
Speaker 2 (02:37):
Yeah, that's right. Look, I was really shocked by the
alarmist tone of her press release and it actually made
me think that there's either ignorance at play or she's
genuinely trying to scare New Zealanders, because Barbara should know
that New Zealand has one of the most restrictive overseas
investment regimes in the world, and it's actually choking cash
(02:59):
out of our economy. It's making it harder for renewable
energy to be built, it's making it harder for new
factories to be built, it's making it harder for businesses
to access funding. And we're simply talking about streamlining the process,
making it fast and less complex, making this a more
attractive people place for people to invest, while also very
much keeping in place protections around keyes yet's and very
(03:22):
much keeping in place the screening process to protect our
national security. So I you know, when Chicken Little cries
that the sky is going to fall, it makes it
harder next time to take them seriously. And I think
that's the territory that Barbara's got itself into.
Speaker 1 (03:37):
Will you ever tick do not return dividend on one
of these gen tailors. I spoke to Genesis on Friday.
They said, all you need to do is click do
not return dividend, reinvest it into new generation, and we'll
do just that.
Speaker 2 (03:50):
Well, my focus is what do I do to get
cheaper prices for New Zealand electricity users? And what do
I do about we've got secure electricus?
Speaker 1 (03:57):
Your generation would help right, Well, that.
Speaker 2 (04:00):
Would raise a number of other questions about how you
would then make sure that that return dividend actually ended
up in your bank account and the bank account of
other New Zealanders with cheaper bills and so there'd be
quite a few steps to go through to make sure
that we were confident that that money that we were
giving back to the gent tailor was actually going to
end up in cheaper electricity prices. So I'd want to
(04:20):
step through all of that first. There is no question
for me we need to do more in this area
to make sure that people are getting a better deal
out of our electricity system. And we will have more
to say about it actually in the coming.
Speaker 1 (04:33):
Days about are the electricity sector announcements you'll the sort
of raiser gang or the committee that's been looking at that,
not raise a gang, forgive me, that's coming out in
the next couple of days.
Speaker 2 (04:45):
That's right. The Competition Task Force will have more to say.
Speaker 1 (04:48):
Okay, good to note now, Andrew Bailey is can you
help explain this to us because it seems odd like
he's a minister. One minute, he literally just touches the arm.
There's nothing aggressive going on, he says, what's going on there?
Speaker 2 (05:06):
Well, as he said today, concerns were raised with him
about an incident in which his behavior towards a staff
member was overbearing. He had those concerns animated as concerns
communicated to him. His reflection on that was that he
had taken the discussion too far, that he was wrong
to have placed his hand on their upper arm, that
(05:27):
it was inappropriate, and he made the decision that he
hadn't met the standards of behavior that he thinks should
be expected of a minister, offered his resignation and that
has been accepted.
Speaker 1 (05:37):
Okay. The disaster insurance levy tell us we're not going
to be on the hook for another five or even
one thousand dollars a year.
Speaker 2 (05:44):
Well, this is yet to be decided. We're consulting on it.
The basic issue is, right now we don't have enough
money in the kitty if there was a major natural hasard,
a major earthquake. So this is the old EQC, and
as it is, it only has five hundred and fifty
million in its kitty, and if there was a big
(06:05):
earthquake tomorrow, it would need two point one billion to
cover those initial costs before it could then go out
for reinsurance. So what has been consulted on by David
Seymour is how could we build that up over time?
Obviously we won't be able to do it overnight, so
that we actually can give new Zealand as confidence that
the government will have the money it needs when the
next big one strikes.
Speaker 1 (06:26):
You're consulting on tax changes tax exemptions, I should say,
for the charities, including the Lights of Destiny Church, you're
saying you would stop their exemption, and we are asking
for us to see what we think about that. Is
that the gist of it all.
Speaker 2 (06:42):
As if shed previously, my focus is, yes, you want good,
strong charities that are doing public good to be exempt
from taxation. That's a positive thing. But I'm concerned about
the fairness and integrity of that regime, and I want
to avoid people avoiding tax that they should pay. So
we have canvassed a number of issues, the idea of
put out a discussion document to get feedback on. One
(07:03):
of them is this issue where charity businesses are currently
exempt from income tax and we're asking the question, well,
actually should they, in fact, if they're running a commercial
business be subject to income taxes. We're also looking at
this issue of donor controlled charities, where a family potentially
have a foundation that they control and may not actually
(07:26):
be directly contributing to a charitable purpose. So there's a
number of detailed issues we want to get people's feedback
on should we fix these things? And as I say,
my focus is it's got to be fair, it's got
to have integrity, because otherwise people doubt whether or not
those exemptions for charities should even be there in the
first place. And I think in most cases they should be.
But where there's bad behavior, we've got to give the
(07:48):
ID the tools it needs to crack down on it.
Speaker 1 (07:51):
All Right, Hey, just had a thought, lucks your bosses
off to Vietnam or he's potentially on a plane already,
and Winston Peters is over, says who's in charge of
the moment.
Speaker 2 (08:02):
David Seymour will be in charge of the acting Prime Minister.
Speaker 1 (08:05):
Thanks for your time, Minister. Nichola Willison's the Finance Minister.
With us for more from Hither 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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