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Steven Joyce: Former Finance Minister ahead of Treasury's Half Year Economic and Fiscal Update · The SME Stream

• 0:00
  Speaker 1: The government's going to open the books today with the
• 0:01
  Speaker 1: half year Economic and Fiscal update at one o'clock this afternoon.
• 0:05
  Speaker 1: Sounds like there is a chance we could yet be
• 0:07
  Speaker 1: surprised to the positive. But it sounds like there is
• 0:09
  Speaker 1: a chance that Nikola Willis is going to push the
• 0:11
  Speaker 1: surplus out. Yes again in Stephen Joy's former finance minister,
• 0:14
  Speaker 1: is with us in studio.
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  Speaker 2: Morning, Stephen, morning, how are you. I'm very well, Thank you,
• 0:17
  Speaker 2: Thanks so much for coming in.
• 0:18
  Speaker 1: It's lovely to see you. Now, how do you rate
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  Speaker 1: the chance she pushes out surplus?
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  Speaker 2: Oh?
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  Speaker 3: Look, she might. It doesn't matter too much either way.
• 0:26
  Speaker 3: And I say that, which just sounds weird. But as
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  Speaker 3: Bill English used to say, you know, just getting to
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  Speaker 3: surplus is it's like landing a seven four seven on
• 0:36
  Speaker 3: an aircraft carrier. The actual moment of arrival of surplus
• 0:40
  Speaker 3: one year earlier, one year later. This is such big
• 0:43
  Speaker 3: numbers that it's the difference between two very big numbers
• 0:46
  Speaker 3: as to whether you're actually in surplus. So I think
• 0:49
  Speaker 3: more the more important is the direction of travel. Is
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  Speaker 3: are we bending down the cost of government? And is
• 0:56
  Speaker 3: revenue coming up now? Whether it's twenty seven, twenty twenty nine,
• 1:02
  Speaker 3: twenty nine, thirty. Finally, it's probably not going to make.
• 1:05
  Speaker 2: You don't think the pace of travel is really important.
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  Speaker 3: To the pace of travel is very important. But one
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  Speaker 3: year either way. My point is that one year either
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  Speaker 3: way at all.
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  Speaker 1: But the reason I'm asking you that because because if
• 1:15
  Speaker 1: it happens again, it's not one year either way, it's
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  Speaker 1: three years either way, because it will be that Nikola
• 1:19
  Speaker 1: has pushed it out by three years in total in
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  Speaker 1: the space of two years, which I well.
• 1:25
  Speaker 3: But again a couple of things. The size of the
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  Speaker 3: increase of spending was phenomenal. I mean, if you look
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  Speaker 3: at a graph which shows spending when I left office,
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  Speaker 3: you know it was like twenty the debt was twenty
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  Speaker 3: percent of GDP and now it's forty five, you know,
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  Speaker 3: in the forties. So the amount of ramping up of
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  Speaker 3: expenditure of the government I don't think has We've got
• 1:51
  Speaker 3: similar things in the living memory. So then you're going
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  Speaker 3: to try and bend that down, and with the.
• 1:58
  Speaker 2: Best remend it, why not cut it?
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  Speaker 1: It's gone up so fast, like up so high so fast,
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  Speaker 1: can you not bring it down just as fast?
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  Speaker 3: And that's the that's the ruth Richardson argument, I know, absolutely,
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  Speaker 3: and yeah, and you could do more, but you get
• 2:15
  Speaker 3: very quickly to teacher salaries and health salaries. That's because
• 2:19
  Speaker 3: they're big chunks, right, and you can do a bit
• 2:21
  Speaker 3: in the structure in Wellington, and they are I would
• 2:25
  Speaker 3: argue probably early on they should have done more, but
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  Speaker 3: they were probably getting their heads around the whole place
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  Speaker 3: because they were new. That's not an excuse, but I'm
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  Speaker 3: just saying that it takes a while to wrestle the beast,
• 2:37
  Speaker 3: so they could have done more in that. But you know,
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  Speaker 3: Wellington's Wellington's been in desperate negative economic straits for a
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  Speaker 3: while even with what they've done, so it is it
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  Speaker 3: is challenging to wrestle that machine down once it's got
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  Speaker 3: up such a huge head of steam. Now it's currently
• 2:56
  Speaker 3: expenditures running about thirty two percent of about thirty two
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  Speaker 3: percent of gen or it's heading towards that way now.
• 3:02
  Speaker 3: We had it down at about twenty nine, so it's
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  Speaker 3: about three percent.
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  Speaker 2: Is that core expenditure, that's.
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  Speaker 3: Government expenditure, core expenditure, So that's got to get back
• 3:09
  Speaker 3: to around that under thirty level, and that does take time. Now,
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  Speaker 3: if you remember, take Bill English's time as Finance Minister.
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  Speaker 3: He had eight of the nine years I got. The
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  Speaker 3: last one. He spent eight years after the Canterbury earthquakes
• 3:26
  Speaker 3: and the GFC wrestling that thing back into surplus. And
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  Speaker 3: some of the commentators go on like he never had
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  Speaker 3: a surplace. Well, he did all the hard work, and
• 3:33
  Speaker 3: they say, oh, Stephen Joyce had a surplus. Yeah, and
• 3:35
  Speaker 3: that was lucky because after the eight years of hard work,
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  Speaker 3: I reaped the benefit of it. It takes a huge
• 3:41
  Speaker 3: amount of time. Now none of this has excuses. Yes,
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  Speaker 3: I've got to keep the pressure on. But then on
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  Speaker 3: the other side of the aisle there's you know, there's
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  Speaker 3: an outfit that really wants to get back and to
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  Speaker 3: spend some more money again, and you know they're trying
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  Speaker 3: to be sensible about it, but the reality is they
• 3:55
  Speaker 3: would spend more. This is a big job to wrestle
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  Speaker 3: this thing under control. Today is not going to make
• 4:01
  Speaker 3: anybody excited in a positive way. Taxpayers Union is going
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  Speaker 3: to go out and it should be happening faster. The
• 4:08
  Speaker 3: Left will be either keeping very quiet or criticizing the
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  Speaker 3: moves that have been made. So Nikola Willis has just
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  Speaker 3: got to put her head down and this is the
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  Speaker 3: hard yards, and the hard yards are going to run
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  Speaker 3: for another couple of years.
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  Speaker 1: Yeah, okay, we've got also this week, excuse me, I've
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  Speaker 1: got the GDP. And obviously we're expecting a big bounce
• 4:25
  Speaker 1: back in Q three after what was terrible in Q two,
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  Speaker 1: But the revision of Q two I think might be
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  Speaker 1: a really interesting yan as well. Are you expecting a
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  Speaker 1: big revision here?
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  Speaker 3: Not particularly, And the quarterly figures do bounce around a lot.
• 4:38
  Speaker 3: We know it was a pretty average year. We know
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  Speaker 3: next year is going to be better. The question is
• 4:42
  Speaker 3: how much?
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  Speaker 2: What do you think.
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  Speaker 3: I think it'll be a bit better. There's a couple
• 4:45
  Speaker 3: of things that worry me. There's the American economy and
• 4:50
  Speaker 3: something weird happening there, because there's plenty weird happening at
• 4:52
  Speaker 3: the moment, so that's a possibility. And then the other
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  Speaker 3: one that worries me a little bit as the state
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  Speaker 3: of the energy sector. And I think we've gone quiet
• 5:00
  Speaker 3: on that because it's summer and it's not an issue.
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  Speaker 3: But I suspect we're going to have more challenges with
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  Speaker 3: electricity prices and availability of energy at a reasonable price,
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  Speaker 3: and that's going to be a bit of a handbrake
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  Speaker 3: on the economic recovery. But I think overall will get better.
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  Speaker 3: But it's not going to help the government's fiscal books
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  Speaker 3: yet because that's all that's all trailing, So the tax
• 5:22
  Speaker 3: take and the decline and things like benefit payments doesn't
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  Speaker 3: happen until the economy's really back on its feet, So
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  Speaker 3: the government's not going to reap the benefit of that
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  Speaker 3: next year yet.
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  Speaker 2: So would you say next year is good?
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  Speaker 1: Because this is Simon Bridges argument is that yep, we're
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  Speaker 1: going to have an improvement, but it is not going
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  Speaker 1: to be blockbuster, and you need to good your loins
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  Speaker 1: and calm your farm.
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  Speaker 2: It's going to feel a bit hard.
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  Speaker 3: It won't be a blockbuster, but it will feel pretty
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  Speaker 3: good relative for the last year.
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  Speaker 2: I think it will feel good.
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  Speaker 3: We'll feel a lot better than the last three years. Now.
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  Speaker 3: It's been really tough. A lot of businesses have done
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  Speaker 3: it really really tough over the last three or four
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  Speaker 3: years since COVID. Basically they had that sugar rush and
• 5:59
  Speaker 3: they had problem with supply and you know a lot
• 6:01
  Speaker 3: of balance sheets have been very baddy damage and that's
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  Speaker 3: one of the reasons we haven't gone well out of
• 6:06
  Speaker 3: this last recession is that a lot of companies had
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  Speaker 3: much worse balance sheets than they had, say after the GFC,
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  Speaker 3: and so they've struggled to get on their feet and
• 6:15
  Speaker 3: invest in the future. They're now starting to do that.
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  Speaker 3: Confidence is starting to build. But yeah, it's going to
• 6:21
  Speaker 3: be it's going to be better, but not it's not
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  Speaker 3: going to be a rockstar economy to call corn of Rods.
• 6:27
  Speaker 2: Not for a while, but hopefully soon. Now, have you
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  Speaker 2: got anything nice planned for summer?
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  Speaker 3: Yeap, sit on a beach, have the family around for
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  Speaker 3: Christmas and all and normal stuff.
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  Speaker 2: Brilliant.
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  Speaker 1: I'm so pleased to hear it. You take yourself a
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  Speaker 1: lovely break and thank you for coming in, Stephen. Great
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  Speaker 1: to chat to you.
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  Speaker 2: Steven Joyce, former finance ministers.
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• 6:48
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