Nicola Willis: Finance Minister hopeful surplus will be achieved by 2029 following half-year update

The Finance Minister's still aiming for a surplus this decade, despite today's bleak economic news.

Treasury's Half Year Economic and Fiscal Update shows more delay to getting the books back to black. 

The deficit's expected to deepen more to a high of $16.9 billion and not narrow to $60 million dollars until 2029-30.

Nicola Willis says a 2029 surplus is very achievable.

"What that will take is just a small revision to the growth upwards, combined with fiscal discipline. And those are two things that our Government is committed to." 

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Episode Transcript

Speaker 1 (00:00):
First, the government's going to stay in debt longer than
it thought it would back in May. This is the
hayfer that's come out today. The surplus delayed again for
another year out to twenty thirty. We won't start paying
down our debt in this country until then. Growth is
coming on but slower than expected. So back points six
percent four twenty four to twenty five, Ford, three point

(00:21):
three for twenty five twenty six, and three percent for
twenty six twenty seven, Tariffs, inflation, tourism, numbers, population, all
contributing factors. Nicola Willis is the Finance Minister. Good evening,
Good evening, Do you take responsibility for our lackluster growth?

Speaker 2 (00:39):
I take responsibility for turning it around, and what we
have shared in today's forecasts is accelerating growth next year,
low inflation growth throughout the forecast period, two hundred and
seventy thousand jobs being created, low interest rates in all
the conditions for New Zealanders to get ahead.

Speaker 1 (00:57):
Labour wants you to take responsibility for the fact that
we haven't had significant or meaningful growth in the last year.
You've been the Minister of growth all that time. Do
you take accountability well?

Speaker 2 (01:08):
In Treasury's assessment the effect of Donald Trump's tariff announcement
in April on our economy was significant, and of course
it came off the back of what was already a
difficult recovery following Labour's period of sky high inflation and
the very high interest rates that were used to arrest that.
It's significant that even in the midst of that, the

(01:29):
government has taken pro growth measures, including, for example, the
Investment boost tax policy to encourage business investment, moves to
replace the Resource Management Act, to cap rates, to ensure
that we can deliver more housing, to boost tourism. We've
been at it as a government taking pro growth measures
and maintaining fiscal discipline, which is something that you won't

(01:51):
hear Labour talking about.

Speaker 1 (01:53):
So when it comes to pushing the surplus out and
this says basically, you won't achieve it when you have
the fiscal tension that you want to achieve it. But
you're saying you will stick to twenty twenty nine not
twenty thirty. How do you do that when the books
say you can't.

Speaker 2 (02:07):
Well, a forecasts do show us reaching a surplus over
this period, and the question is whether we get there
in twenty nine or twenty thirty. The twenty nine deficit
that's being forecast relative is very small, and so I
remain confident that we can get there. What that will
take is just a small revision to the growth upwards,

(02:30):
combined with fiscal discipline, and those are two things that
our government has committed to. So we're sticking to our
surplus target.

Speaker 1 (02:36):
You've committed to keeping new borrowing to two point four
billion dollars next year. Given we're not bringing in as
much cash as we had hoped, would it not be
prudent to cut that figure further?

Speaker 2 (02:47):
No, because that is what is required to ensure we
can make the investments needed to increase health service delivery,
to ensure our schools have the resources they need to
pay their teachers and deliver learning, that our police have
the resources they need on the front line, and to
continue our build and defense force capability. It's a very
small number, though, relative to recent budgets ran to give

(03:11):
you a sense of context, in the twenty twenty two
budget under the previous government, new operating spending was nine
point seven billion a year. We're proposing two point four,
So this is a much more modest level of spending
than was the case under the previous government, and we
can achieve it by continuing our rigor around, constantly finding
savings and efficiency.

Speaker 1 (03:32):
There's a vicious cycle thing that happens here, isn't there
When the economy does bad, people leave. When people leave,
we can't tax some fifty thousand fewer taxpayers in the
country than expect it. How do you turn that? How
long does it take to turn that around?

Speaker 2 (03:44):
Well, I was really pleased to see the most recent
update from Stats which showed the number of people leaving
is actually the lowest in three years, and so that
is starting to turn around. On the latest stats, the
census starter updated the underlying assumptions on popular and yes
that is slightly lower. But I'm confident that as our
economy recovers, as there are more jobs available which is

(04:06):
being forecast, as there's more growth and comes arising, that
more New Zealanders will see they can have a great
future here and they will choose to stay.

Speaker 1 (04:15):
You've said in your speech today, there are a lot
of things the government can't control. Do you as a
party and labor both need to be a little more
honest with New Zealanders about what it is you actually
can fix and what you can't, because I feel like
we're getting taken for a ride. One of you says
we will get we will fix this, the other says
we will fix that, and actually then you turn around

(04:36):
when the books come out and say it's not fixable,
it's not in our hands.

Speaker 2 (04:41):
Well, I disagree with that. I do think there is
a lot that we can control. We can control our
discretionary spending decisions and the impact that has on inflation
and therefore interest rates. I stand by our track record
in that regard. We can control whether the policies we
deliver a pro growth or anti growth. And in that sense,

(05:02):
we've said yes to replacing the Resource Management Act. We've
said yes to tax relief, we've said yes to backing businesses,
which are all the things consistent with supporting growth in
this economy. On the other hand, my opponents on the
other side consistently say no to those things, and so
they have to take responsibility for those positions.

Speaker 1 (05:22):
Minister, appreciate your time. That's Nicola Willis, Finance Minister. For
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