Brad Olsen: Infometrics Principal Economist on the Government saving $1 billion after hitting housing targets early

The Government will make major savings over the coming years by outperforming on its housings goals. 

Last year, it aimed to reduce the number of people in emergency housing by 75 percent in 2030 compared to December 2023. 

However the target was achieved before the end of last year. 

Infometrics Principal Economist explains what this could mean for the upcoming Budget.

LISTEN ABOVE

See omnystudio.com/listener for privacy information.

Episode Transcript

Speaker 1 (00:00):
Now we're getting a bit of a better idea about
how Nikola Willis is going to fund her budget. Later
this month, we learned that the government today will save
one billion dollars over four years because it's hitting its
housing target early, and then potentially more than ten billion
dollars over four years will be saved from this pay
equity system overhaul. Brad Olson's informetric sen Principal economists, Hey,
Brad Good, evening, what do you make of these two savings?

(00:21):
I mean, they're reasonably big, aren't they very big?

Speaker 2 (00:25):
I feel like it's we're back to the future a
little bit when you know we're starting to talk in
billions of dollars again for just two line items. But
again you know that they are quite substantial, and I
think also particularly when you look at the likes of
the pay equity claims. The Minister's Cabinet paper highlights that
already the settlements are costing government one point five to

(00:45):
five billion dollars per year with a number of claims
still in the system. That of course was going to
go up and so there is now quite a change.
The Prime Minister has profiled billions of dollars of savings
although it's not abundantly clear right. The second how big
that number is the fact that we've got sort of
such big savings. I think also goes into what we
heard from the Finance Minister last week when the operating

(01:08):
allowance was cut back, and that that operating allowance is
a net figure. It's the total additional funding that the
government can spend. It's not only just sort of a
straight up edition though. It's a net figure. And so
with the government now finding a number of additional savings
across a few areas, across housing, now across pay equity,

(01:28):
that does free up more funding for the government to
do other things overall.

Speaker 1 (01:33):
Yeah, I mean, if we're talking about more than ten
billion dollars in one line item over four years, and
a billion dollars and another line item, that makes that
one point three billion dollars in the operating allowance suddenly
make a little bit more sense, doesn't it.

Speaker 2 (01:46):
It certainly gives the government more options going forward. I mean,
for the likes of the pay equity settlements. Again, I
don't think they would have necessarily have been booked to
have started all of them immediately at once, but obviously
with some of the numbers that are being thrown about
and without any real detail there that the cabinet paper
is not surprisingly silent on the dollar figures. Those have

(02:10):
been fairly well reducted as budget sensitive, but again they
do there are big changes that will happen over time,
and given that the government does have very limited funding
room and has a lot of stuff that they want
to be able to spend on, this does look like
it is all part of trying to make the numbers
work and what is a difficult set of circumstances. The
economic figures have been more challenging. Treasury is likely to

(02:34):
downgrade economic expectations going forward. That means less revenue for
the government and so that does require money to come
from somewhere else to allow all of the big expectations
to still be funded.

Speaker 1 (02:44):
Yes, now, what about the employment stats they're out tomorrow.
What are you expecting.

Speaker 2 (02:49):
We do expect the unemployment will be increasing further. I
think the broadn census is around sort of five point
three percent. That is the highest and nearly a decade
and obviously I think highlights what everyone's seeing out there
that times are still quite tough. People are struggling to
find jobs and We saw that with some of the
filled jobs data out over the last week as well.

(03:12):
Even those increases to the unemployment rate and similar they
make government's life harder as well. From a financial perspective,
the number of people on jobs, he can benefits and
similar continues to increase, and so all of those are
further cost that the government has to pay for. So
we are in a very difficult time in the economy.
Were of course being hit with the uncertainty from the tariffs.

(03:32):
We're starting to see some other areas of the economy
still show some promise the primary sector and similar. Mortgage
rates are falling for a number of households, but there's
still a level of concern I think amongst households because
the jobs market is not quite as easy and you
see that with consumer confidence. Despite the fact that interest
rates are coming down in cost of living challenges should

(03:52):
be easier for households, the numbers still suggest that households
are still pretty reluctant to be too optimistic. So a
lot of challenges out there. The governments facing fiscal challenges,
households are still facing financial challenges, difficult, challenging conditions all round.

Speaker 1 (04:06):
Yeah, Brad, thanks very much really appreciated Brad Olson, principal
economist at Infometrics. For more from Heather Duplessy Allen Drive,
listen live to News Talks at B from four pm weekdays,
or follow the podcast on iHeartRadio