March 17, 2025 • 9 mins
The Finance Minister's dropped a few crumbs on what's shaping this year's budget.
Nicola Willis will unveil her growth budget on May 22.
She says the public service won't get more funding, for doing the same thing.
Willis says there's only more money if people are going to benefit from additional services - or improved impact from those services.
But she says she won't be doing away with entire departments or agencies.
"That's not on the agenda for this budget, because the judgement that we've made at this stage is that it could end up costing us more in the short-term than we would deliver in savings."
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
Right now, Nikola, what this is the finance minister, Minister,
good evening, good evening, Ron, What do you make of
the services sector? This is down again after what it's
down after going up. We thought we were getting a
bit of relief, there was positive territory. Now it's down again.
And what do you think that says about our prospects
for growth?
Speaker 2 (00:17):
Well, as you say, it was expanding the month before
and then has come back a little bit. And I
think this is just what happens during a recovery. Things
do bounce around a little bit. What you want to
see is a trend of things getting better. So you've
got to look month to month and I hope that
it will be expanding in the next month. It's good
to see manufacturing was up again and that is expanding again.
That's really positive.
Speaker 1 (00:39):
There's been a lot of forecasts about global growth being
hit by Trump's trade terrifs. Have you had any advice
on the potential effect on New Zealand's economy.
Speaker 2 (00:46):
Yet, yes, I have. Look, there are a couple of effects.
The first is what you've seen in international debt and
bond markets is that the price of borrowing has gone up,
so there's no escaping that. For New Zealand, we're having
to borrow funds to service the debt we built up
during COVID, and so the interest fee on that is
likely to increase. The second thing that's harder to predict
(01:08):
is if we see a slow down in global growth,
how does that slow down effect New Zealand. Well, it
depends which markets it affects and whether our exports get
lower prices as a result, and that's very hard to know.
So our forecasters are looking into all of the detail
and I won't get their final assumptions on that after
a little while.
Speaker 1 (01:28):
Yet, what if they told you is top line potential
figures between what and what.
Speaker 2 (01:34):
They haven't given me those figures yet, Ryan, because they
are the first to say there are really dynamic effects here.
On the one hand, we might get some positive upside
in some markets where we might be getting higher prices. Perversely,
inflation can have a positive impact for some exports and
for some markets. On the other hand, if we see
decline in global growth, that could affect our trade position
(01:56):
as well. So they are very careful to say to me,
there's things on one side of the ledger, there's things
on the other side of the ledger will tell you
how we think it's all going to pan out later
on when we're closer to the budget for casts being
put to bed.
Speaker 1 (02:09):
Speaking of which, this is really putting the squeeze on you,
isn't it. You've got your debt servicing costs going up,
thank you Trump, and potentially your revenue via export revenue
taxes being cut at the same time. How do you
put a budget together?
Speaker 2 (02:26):
Well, it's a challenging time to put a budget together
because we are still in a mode of having to
consolidate our financial position after years of spending much more
than we earned, so we are in a tight environment.
We're also having to meet some really significant commitments. We
do need to increase our investment and defense and foreign
affairs capability. We do need to provide for some redress
(02:47):
for those survivors of abuse and state care, whom the
Royal Commission reported on last year. We need to big
uplift and funding for our health system. Our schools need
an uplift and funding. Our police need an uplift and
fund So our challenge is to meet all of those
costs within a tide operating environment. The only way we
will do that is by finding savings and areas where
(03:08):
we're not getting maximum impact for the public dollar. We've
been working on that for months, so we're in a
good position right now. I'm confident we'll deliver it to
New Zealander's priorities.
Speaker 1 (03:17):
Can you give us can you set us an expectation
of what exactly your cut?
Speaker 2 (03:22):
Look, what we've done is we've looked across government, both
at an individual department or agency level and at cross
government as a whole, and we've said, not just so much,
what are the areas that are completely wasteful, but where
are the areas where there was a good intention But actually,
when we measure it up in the cold light of day,
these dollars are not delivering as much as they could elsewhere.
(03:43):
So there's a number of areas we've looked at. Will
make them all clear on budget day. But one thing
is a theme of the budget, which is that the
public service isn't going to get more funding for doing
the same thing. There is only more funding if New
Zealanders are going to benefit from additional services or improved
impact from those services.
Speaker 1 (04:00):
Will you do away with entire departments or agencies.
Speaker 2 (04:05):
That's not on the agenda for this budget, because the
judgment that we've made at the stage is that could
end up costing us more in the short term than
we would deliverance savings.
Speaker 1 (04:15):
Okay, so you've got basically got to make a whole
bunch of cuts, which I think a lot of people
will completely understand at a time like this. What about
revenue measures? Can you rule out new revenue measures that
will hit people sneakily in the back pocket.
Speaker 2 (04:31):
Well, have already been very open that we are currently
consulting on changes to the charities system, the way that
charities attacks. We want to keep the charity system strong,
but there are a few integrity issues that are popped
up there. So that is on our revenue agenda. But look,
I'm acutely conscious that the cost of living is the
number one concern for most key we so we're working
(04:52):
very hard to make sure this is a budget that
helps their back pocket, doesn't harm it.
Speaker 1 (04:55):
So no more no extra levy increases, you know, no
tourist visitor levy increases, no congestion charging in this one,
No bed tax is coming for the councils, no motor
vehicle charge increases, nothing like that.
Speaker 2 (05:13):
Well, there's no bed tax or anything novel like that.
I think what I would say is that across government
there's always work being done on where levees are set
in various areas. So that's not a specific budget initiative
that I've taken, but that work goes on throughout the
year under any government.
Speaker 1 (05:30):
The bad text one in particular.
Speaker 2 (05:32):
You mean, no, I'm not. I'm not. I'm ruling that
out at this point. That's not going to be in
my budget. But what I mean is in terms of
levees across government, So the charges that government agencies fund
for their services, those are constantly being reviewed. They're not
specific to a budget process.
Speaker 1 (05:49):
Right, so at the budget none of them will go up.
Speaker 2 (05:54):
The budget will make very clear what we are doing,
and I'm not going to I'm not.
Speaker 1 (06:01):
This is what you're going to have to do, isn't it,
Because as you said, your borrowing costs are going up,
you were lumped with the debt by the last lot,
and we're not going to have as much tax revenue
because Trump's coming to gobble some of our profits.
Speaker 2 (06:12):
Look, as I say, Ryan, I'm very clear that the
goal on the budget is to make it easier for
everyday Keiwi's not harder, and so I am very allergic
to costs that fall on every day kiwiks, and my
budget will reflect that.
Speaker 1 (06:26):
Hey, the defense spending, we know that you want to
get to two percent of GDP. We've had Jutic Colins
on saying that they want to get the Obviously it's
a matter of time. Much of that I'm assuming will
be capital spending. Does that mean that it won't come
out of your operating and how does that work?
Speaker 2 (06:41):
Well, it's a combination of both. So on the one hand,
we do need to make sure that the Defense Force
has the funding it needs day to day to pay
for its increasing costs and everything from ammunition to sending
soldiers over on deployment to the pay for soldiers and
recruiting people in specialist roles. So we do expect to
continue to increase the operating funding for the defense forces.
(07:04):
It's also capital funding. As you know, we've got a
lot of kit we need to replace, from planes to
ships to drones and everything in between. So that will
be a big part of the capability plan that we're
putting together is what pieces of kit do we need
in what order and how does it all come together, well,
not in one budget. Our plan is about what do
we need to do over successive budgets to increase our
(07:28):
investment over time and make sure we have a fully
capable defense force.
Speaker 1 (07:33):
The average salary public servants the Public Service Commission, the
average salary one hundred and fifty five thousand a year
at the Social Investment Agency one hundred and forty nine thousand,
the Ministry for Regulation ironically one hundred and forty eight
thousand dollars corrections is the lowest salary eighty six thousand
for your average. Are we getting value for money here?
(07:55):
And why does this keep going up? Why is there
more money going to public servants under you than Rob
ground Robertson.
Speaker 2 (08:01):
Well, across the public service as a whole, the median
income is eighty eight thousand, nine hundred. Now that compares
to what I'm advised is the average pay for a
frontline nurse. Once you include their overtime, they get paid
around one hundred and twenty five thousand. And there are
more than twenty nine thousand nurses employed within our public service.
(08:23):
So yes, there are some policy analysts and some agencies
getting paid a bit more than that, But our view
is that ensuring that you have a really great frontline
public service is where the focus should be. And you
will have seen that overall the numbers and the public
service have reduced on our watch, and that reflects the
fact that we want more resources going to those frontline
(08:44):
roles teachers, nurses and the like and less bound up
in Wellington.
Speaker 1 (08:49):
Would you be announcing like a twenty percent savinget target
for this budget for some agencies that sort of you know,
that sort of thing you did the first time round.
Speaker 2 (08:58):
That's not an announcement I'm going to make. But we've
made it really clear to every agency that if they
want to do new things, and they all have lots
of bright ideas well, the first thing they should do
is go and find out what's not working, stop doing it,
and use those savings to fund the bright new ideas.
That's the way businesses work, that's the way households work.
We expect the public service to be acting the same way.
Speaker 1 (09:20):
All right, Nichola Wills really appreciate your time this evening.
Thanks so much for being with me. Thank you for more.
Speaker 2 (09:26):
From Heather Duplessy Allen Drive Listen live to news talks.
Speaker 1 (09:30):
It'd be from four pm weekdays, or follow the podcast
on iHeartRadio
Right now, Nikola, what this is the finance minister, Minister,
good evening, good evening, Ron, What do you make of
the services sector? This is down again after what it's
down after going up. We thought we were getting a
bit of relief, there was positive territory. Now it's down again.
And what do you think that says about our prospects
for growth?
Speaker 2 (00:17):
Well, as you say, it was expanding the month before
and then has come back a little bit. And I
think this is just what happens during a recovery. Things
do bounce around a little bit. What you want to
see is a trend of things getting better. So you've
got to look month to month and I hope that
it will be expanding in the next month. It's good
to see manufacturing was up again and that is expanding again.
That's really positive.
Speaker 1 (00:39):
There's been a lot of forecasts about global growth being
hit by Trump's trade terrifs. Have you had any advice
on the potential effect on New Zealand's economy.
Speaker 2 (00:46):
Yet, yes, I have. Look, there are a couple of effects.
The first is what you've seen in international debt and
bond markets is that the price of borrowing has gone up,
so there's no escaping that. For New Zealand, we're having
to borrow funds to service the debt we built up
during COVID, and so the interest fee on that is
likely to increase. The second thing that's harder to predict
(01:08):
is if we see a slow down in global growth,
how does that slow down effect New Zealand. Well, it
depends which markets it affects and whether our exports get
lower prices as a result, and that's very hard to know.
So our forecasters are looking into all of the detail
and I won't get their final assumptions on that after
a little while.
Speaker 1 (01:28):
Yet, what if they told you is top line potential
figures between what and what.
Speaker 2 (01:34):
They haven't given me those figures yet, Ryan, because they
are the first to say there are really dynamic effects here.
On the one hand, we might get some positive upside
in some markets where we might be getting higher prices. Perversely,
inflation can have a positive impact for some exports and
for some markets. On the other hand, if we see
decline in global growth, that could affect our trade position
(01:56):
as well. So they are very careful to say to me,
there's things on one side of the ledger, there's things
on the other side of the ledger will tell you
how we think it's all going to pan out later
on when we're closer to the budget for casts being
put to bed.
Speaker 1 (02:09):
Speaking of which, this is really putting the squeeze on you,
isn't it. You've got your debt servicing costs going up,
thank you Trump, and potentially your revenue via export revenue
taxes being cut at the same time. How do you
put a budget together?
Speaker 2 (02:26):
Well, it's a challenging time to put a budget together
because we are still in a mode of having to
consolidate our financial position after years of spending much more
than we earned, so we are in a tight environment.
We're also having to meet some really significant commitments. We
do need to increase our investment and defense and foreign
affairs capability. We do need to provide for some redress
(02:47):
for those survivors of abuse and state care, whom the
Royal Commission reported on last year. We need to big
uplift and funding for our health system. Our schools need
an uplift and funding. Our police need an uplift and
fund So our challenge is to meet all of those
costs within a tide operating environment. The only way we
will do that is by finding savings and areas where
(03:08):
we're not getting maximum impact for the public dollar. We've
been working on that for months, so we're in a
good position right now. I'm confident we'll deliver it to
New Zealander's priorities.
Speaker 1 (03:17):
Can you give us can you set us an expectation
of what exactly your cut?
Speaker 2 (03:22):
Look, what we've done is we've looked across government, both
at an individual department or agency level and at cross
government as a whole, and we've said, not just so much,
what are the areas that are completely wasteful, but where
are the areas where there was a good intention But actually,
when we measure it up in the cold light of day,
these dollars are not delivering as much as they could elsewhere.
(03:43):
So there's a number of areas we've looked at. Will
make them all clear on budget day. But one thing
is a theme of the budget, which is that the
public service isn't going to get more funding for doing
the same thing. There is only more funding if New
Zealanders are going to benefit from additional services or improved
impact from those services.
Speaker 1 (04:00):
Will you do away with entire departments or agencies.
Speaker 2 (04:05):
That's not on the agenda for this budget, because the
judgment that we've made at the stage is that could
end up costing us more in the short term than
we would deliverance savings.
Speaker 1 (04:15):
Okay, so you've got basically got to make a whole
bunch of cuts, which I think a lot of people
will completely understand at a time like this. What about
revenue measures? Can you rule out new revenue measures that
will hit people sneakily in the back pocket.
Speaker 2 (04:31):
Well, have already been very open that we are currently
consulting on changes to the charities system, the way that
charities attacks. We want to keep the charity system strong,
but there are a few integrity issues that are popped
up there. So that is on our revenue agenda. But look,
I'm acutely conscious that the cost of living is the
number one concern for most key we so we're working
(04:52):
very hard to make sure this is a budget that
helps their back pocket, doesn't harm it.
Speaker 1 (04:55):
So no more no extra levy increases, you know, no
tourist visitor levy increases, no congestion charging in this one,
No bed tax is coming for the councils, no motor
vehicle charge increases, nothing like that.
Speaker 2 (05:13):
Well, there's no bed tax or anything novel like that.
I think what I would say is that across government
there's always work being done on where levees are set
in various areas. So that's not a specific budget initiative
that I've taken, but that work goes on throughout the
year under any government.
Speaker 1 (05:30):
The bad text one in particular.
Speaker 2 (05:32):
You mean, no, I'm not. I'm not. I'm ruling that
out at this point. That's not going to be in
my budget. But what I mean is in terms of
levees across government, So the charges that government agencies fund
for their services, those are constantly being reviewed. They're not
specific to a budget process.
Speaker 1 (05:49):
Right, so at the budget none of them will go up.
Speaker 2 (05:54):
The budget will make very clear what we are doing,
and I'm not going to I'm not.
Speaker 1 (06:01):
This is what you're going to have to do, isn't it,
Because as you said, your borrowing costs are going up,
you were lumped with the debt by the last lot,
and we're not going to have as much tax revenue
because Trump's coming to gobble some of our profits.
Speaker 2 (06:12):
Look, as I say, Ryan, I'm very clear that the
goal on the budget is to make it easier for
everyday Keiwi's not harder, and so I am very allergic
to costs that fall on every day kiwiks, and my
budget will reflect that.
Speaker 1 (06:26):
Hey, the defense spending, we know that you want to
get to two percent of GDP. We've had Jutic Colins
on saying that they want to get the Obviously it's
a matter of time. Much of that I'm assuming will
be capital spending. Does that mean that it won't come
out of your operating and how does that work?
Speaker 2 (06:41):
Well, it's a combination of both. So on the one hand,
we do need to make sure that the Defense Force
has the funding it needs day to day to pay
for its increasing costs and everything from ammunition to sending
soldiers over on deployment to the pay for soldiers and
recruiting people in specialist roles. So we do expect to
continue to increase the operating funding for the defense forces.
(07:04):
It's also capital funding. As you know, we've got a
lot of kit we need to replace, from planes to
ships to drones and everything in between. So that will
be a big part of the capability plan that we're
putting together is what pieces of kit do we need
in what order and how does it all come together, well,
not in one budget. Our plan is about what do
we need to do over successive budgets to increase our
(07:28):
investment over time and make sure we have a fully
capable defense force.
Speaker 1 (07:33):
The average salary public servants the Public Service Commission, the
average salary one hundred and fifty five thousand a year
at the Social Investment Agency one hundred and forty nine thousand,
the Ministry for Regulation ironically one hundred and forty eight
thousand dollars corrections is the lowest salary eighty six thousand
for your average. Are we getting value for money here?
(07:55):
And why does this keep going up? Why is there
more money going to public servants under you than Rob
ground Robertson.
Speaker 2 (08:01):
Well, across the public service as a whole, the median
income is eighty eight thousand, nine hundred. Now that compares
to what I'm advised is the average pay for a
frontline nurse. Once you include their overtime, they get paid
around one hundred and twenty five thousand. And there are
more than twenty nine thousand nurses employed within our public service.
(08:23):
So yes, there are some policy analysts and some agencies
getting paid a bit more than that, But our view
is that ensuring that you have a really great frontline
public service is where the focus should be. And you
will have seen that overall the numbers and the public
service have reduced on our watch, and that reflects the
fact that we want more resources going to those frontline
(08:44):
roles teachers, nurses and the like and less bound up
in Wellington.
Speaker 1 (08:49):
Would you be announcing like a twenty percent savinget target
for this budget for some agencies that sort of you know,
that sort of thing you did the first time round.
Speaker 2 (08:58):
That's not an announcement I'm going to make. But we've
made it really clear to every agency that if they
want to do new things, and they all have lots
of bright ideas well, the first thing they should do
is go and find out what's not working, stop doing it,
and use those savings to fund the bright new ideas.
That's the way businesses work, that's the way households work.
We expect the public service to be acting the same way.
Speaker 1 (09:20):
All right, Nichola Wills really appreciate your time this evening.
Thanks so much for being with me. Thank you for more.
Speaker 2 (09:26):
From Heather Duplessy Allen Drive Listen live to news talks.
Speaker 1 (09:30):
It'd be from four pm weekdays, or follow the podcast
on iHeartRadio
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