Latest / Best of Business / Nicola Willis: Finance Minister on the potential impact of Donald Trump's tariffs

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Nicola Willis: Finance Minister on the potential impact of Donald Trump's tariffs · Best of Business

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  Speaker 1: You're listening to a podcast from News Talk ZEDB. Follow
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  Speaker 2: Right now, Nicola, what is fine, it's mister, good evening,
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  Speaker 2: Good evening, Ryn, Good to have you on the show.
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  Speaker 2: The defense plan that we've had announced today. So how
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  Speaker 2: much of this because I spoke to Juith Collins earlier
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  Speaker 2: she said it's about twelve billion dollars, three billion of
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  Speaker 2: depreciation then nine billion left over over four years. How
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  Speaker 2: much of it is capital versus operational expenditure? How much
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  Speaker 2: are we spending on helicopters and things as opposed to
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  Speaker 2: day to day.
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  Speaker 3: Well, it will be a mixture of the two. And
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  Speaker 3: you'll see our first announcements in that regard in this budget,
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  Speaker 3: and you'll see a clear commitment from us to meeting
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  Speaker 3: the commitments we've made in the Defense Capability Plan. It
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  Speaker 3: strikes the right balance between on the one hand, providing
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  Speaker 3: a meaningful response to what's clearly a deteriorating security environment,
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  Speaker 3: but also being deliverable and being affordable and compatible with
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  Speaker 3: our FISK strategy. So every investment will be made on
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  Speaker 3: a budget by budget basis, because we still have to
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  Speaker 3: see a good business case for each individual item of kit.
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  Speaker 3: But we're confident that we can deliver the plan as
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  Speaker 3: envisaged in the Capability Plan within our budget constraints.
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  Speaker 2: So you what within your operating.
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  Speaker 3: Allowance the combination of our capital and operating allowance, And
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  Speaker 3: of course, what people often forget is that our operating
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  Speaker 3: allowance is not just the money that we've put aside
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  Speaker 3: for new spending, it's also any reprioritization that occurs across
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  Speaker 3: government that frees out funding for our more pressing priorities.
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  Speaker 3: And our pressing priorities include defense, education, health, and our
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  Speaker 3: law and order. So those will continue to be priorities
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  Speaker 3: in future budgets totally.
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  Speaker 2: But you've got to understand, I mean, your operating alliance
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  Speaker 2: is what two and a half billion, and then you're
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  Speaker 2: talking here about, due to Colin's numbers, two point twenty
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  Speaker 2: five billion a year.
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  Speaker 3: But remember ran of Care, we also have a we
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  Speaker 3: also have a capital allowance of more than that of
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  Speaker 3: three point sixty five billion indicatively, although that will fluctuate
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  Speaker 3: from year to year. And so between those two allowances
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  Speaker 3: and our commitment to ongoing reprioritization and savings, we've judged
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  Speaker 3: that this plan is compatible with our fiscal strategy, and
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  Speaker 3: as I say, the proof of that will be in
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  Speaker 3: this upcoming budget, where you'll see a significant commitment in
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  Speaker 3: defense spending alongside us keeping to our fiscal strategy keeping
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  Speaker 3: within those allowances.
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  Speaker 2: Will there be reprioritization from aid money.
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  Speaker 3: That is not in the plan to fund the Defense
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  Speaker 3: Capability Plan, but of course the Minister of Foreign Affairs
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  Speaker 3: on an ongoing way will always be looking to get
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  Speaker 3: the maximum value out of our aid investment offshore.
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  Speaker 2: There will be a lot of people who'd be disappointed,
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  Speaker 2: particularly in the Pacific, if we're ripping aid out while
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  Speaker 2: the States is too.
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  Speaker 3: I say that is not part of our plan to
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  Speaker 3: deliver on the Defense Capability Plan. We're not proposing to
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  Speaker 3: reprioritize AID funding towards the Defense Capability.
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  Speaker 2: Plan, and we're not going to have to borrow for
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  Speaker 2: the defense plan. We're not going to have to delay
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  Speaker 2: surplus because of it. Either.
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  Speaker 3: Well, we can deliver it compatible with our current fiscal strategy,
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  Speaker 3: which as you know, is to get the books back
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  Speaker 3: in balance within the forecast period. Is to ensure that
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  Speaker 3: over time we're getting our debt back down, and to
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  Speaker 3: ensure that we're reducing our overall spending as a proportion
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  Speaker 3: of our economy, our government spending, so it's compatible with
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  Speaker 3: all of those objectives you can imagine. I have worked
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  Speaker 3: very carefully through it to make sure that it is
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  Speaker 3: affordable and deliverable, and I'm satisfied that it is, as
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  Speaker 3: is the Cabinet that this is a very important priority.
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  Speaker 3: It is if you look around the world, we're all
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  Speaker 3: giving to do it.
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  Speaker 2: I guess it's how important. Is it important enough that
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  Speaker 2: you're willing to borrow more in order to get there.
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  Speaker 2: I think that's what people will be wanting to know,
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  Speaker 2: beyond what.
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  Speaker 3: We were already proposing in our fiscal strategy. I think
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  Speaker 3: it's important to remember that right now the country is
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  Speaker 3: running a deficit, so we are borrowing right now. So
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  Speaker 3: I'm not pretending that that's not occurring. It is occurring.
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  Speaker 3: Our plan is to get the books back and balance
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  Speaker 3: over the next few years. We're working hard to do that,
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  Speaker 3: but in a sustainable way, because we don't want to
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  Speaker 3: crash the economy on the way through.
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  Speaker 2: The terriffs from Donald Trump that are coming through, and
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  Speaker 2: it's going to be more of an indirect effect on us,
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  Speaker 2: but have you had any hard numbers get in terms
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  Speaker 2: of estimates from officials about what it might do to us.
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  Speaker 3: Look, I have been getting ongoing updates from official situation
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  Speaker 3: updates because obviously this is a significant global economic event
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  Speaker 3: which still has uncertain implications, but undoubtedly profound implications for
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  Speaker 3: New Zealand. We will finalize our economic forecasts, which then
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  Speaker 3: feed into the budget in the next few days. I
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  Speaker 3: expect to be briefed on them soon. Of course, the
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  Speaker 3: major effect is the that global growth is going to
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  Speaker 3: be lower than had been predicted. That has a run
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  Speaker 3: on effect for New Zealand's growth projections, and so you
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  Speaker 3: will expect that to be reflected in our budget updates.
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  Speaker 3: And I am going to continue to be updated on that,
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  Speaker 3: and I do intend to keep New Zealand as updated
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  Speaker 3: on the significant material developments for our economy.
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  Speaker 2: Can you update us some what your officials are telling you.
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  Speaker 3: Yes, what they're telling me is that it is likely
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  Speaker 3: that the tariffs are going to reduce overall estimates of
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  Speaker 3: global growth and that that will therefore reduce our forecast
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  Speaker 3: growth in the New Zealand economy, which, as you can
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  Speaker 3: work out, means potentially less revenue for New Zealand, which
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  Speaker 3: is obviously a significant economic effect that we need to
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  Speaker 3: be prepared for, and we are prepared. We are aware,
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  Speaker 3: we're keeping it monitored, We're prepared, and we also resolute
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  Speaker 3: that now more than ever, it's important that we be
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  Speaker 3: backing our exporters, that we be backing our DEMEA stick
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  Speaker 3: growth settings, and that we retain confidence in the New
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  Speaker 3: Zealand Investment Proposition, which remains strong. We're a multilateral trading
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  Speaker 3: country with many options for where we send our products
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  Speaker 3: with a stable.
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  Speaker 2: Economic environment, what by how much?
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  Speaker 3: By how much?
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  Speaker 2: In relation to what to our growth?
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  Speaker 3: As I say, Ryan, I haven't had the precise update
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  Speaker 3: in terms of the financial forecasts that will be in
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  Speaker 3: the budget, but I expect to be updated on that
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  Speaker 3: over the coming days.
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  Speaker 2: But are they giving you estimates? They must be giving
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  Speaker 2: you estimates, like you know, half a percent of GDP
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  Speaker 2: for the next year or something. I mean, they must
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  Speaker 2: be giving you some kind of number. And if they are,
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  Speaker 2: why don't we get to know?
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  Speaker 3: Well, of course, it depends on what they estimate the
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  Speaker 3: decline and global GDP will be. For reference, Treasury research
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  Speaker 3: in the past has indicated that if there's a one
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  Speaker 3: percent decline in global GDP that can reduce New Zealand
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  Speaker 3: GDP by up to zero point three percent, But of
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  Speaker 3: course there's a number of other factors in there, because
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  Speaker 3: it depends on our commodity prices, and it depends on
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  Speaker 3: how much we think we will be exposed to that
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  Speaker 3: global GDP impact, and it depends on the estimate of
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  Speaker 3: what they think the global GDP impact will be. And
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  Speaker 3: as you appreciate, everyone around the world still waiting to
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  Speaker 3: work out what is the impact of global GDP complicated picture.
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  Speaker 2: I understand that. Okay, so we're predicted to grow what
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  Speaker 2: is it, one point four percent this year and then
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  Speaker 2: two point seven this is off memory in twenty twenty six.
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  Speaker 2: Will are the numbers you're hearing enough to put us
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  Speaker 2: back in recession?
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  Speaker 3: No, I haven't heard anything that makes me think that's
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  Speaker 3: the case at this stage. But as I say, this
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  Speaker 3: is a developing situation, and so what we need to
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  Speaker 3: do is remain aware of what is happening and then
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  Speaker 3: be analyzing what that means for New Zealand. But no,
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  Speaker 3: I don't think that's the case. And of course there
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  Speaker 3: have been other factors since those previous forecasts were out.
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  Speaker 3: Some of which have been positive factors. So there's ups
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  Speaker 3: and downs, overs and unders, and I intend to keep
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  Speaker 3: people updated.
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  Speaker 2: The elder situation. You had any update.
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  Speaker 3: From them, No, I haven't. Of course, we have requested
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  Speaker 3: that they respond to our request for their interest in
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  Speaker 3: our market, and look, there's no guarantee that they will respond.
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  Speaker 3: I'd be very keen to see them do so, along
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  Speaker 3: with Little who are another hard discounter who internationally where
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  Speaker 3: they invented markets, have brought grocery prices down. But ultimately
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  Speaker 3: whether they respond to New Zealand's call is up to them,
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  Speaker 3: not up to me.
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  Speaker 2: Have you have you specifically aim? It seems old that
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  Speaker 2: I mean, they're the big one you want and they
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  Speaker 2: haven't even replied. Have they done it? Have they just
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  Speaker 2: seen you on on? Have they left you on scene?
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  Speaker 3: No? To be clear, my officials have been asked to
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  Speaker 3: write to them requesting that they respond to our request
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  Speaker 3: for information process and I haven't. Well, I have rock with.
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  Speaker 2: Out of supermarkets. This is not the way to go
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  Speaker 2: about it, Nikola.
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  Speaker 3: Look, I disagree, Ryan, because there's still a few weeks
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  Speaker 3: to go on the process and we'll have an update
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  Speaker 3: at the end of the process as to whether or
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  Speaker 3: not they've responded.
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  Speaker 2: Now Adrian, or how come your press secretary prepped you
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  Speaker 2: for a question about Adrian or raising his voice?
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  Speaker 3: Oh? Look, I wouldn't read too much into that. That's
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  Speaker 3: just press secretaries imagining the sorts of questions that I
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  Speaker 3: might get asked.
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  Speaker 2: Did they often imagine that people raise their voice and
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  Speaker 2: meetings with you? Or was it just Adrian?
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  Speaker 3: I think that this is just press secretaries anticipating you,
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  Speaker 3: Wiley journalists and the broad range of questions that you
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  Speaker 3: ask in a range of circumstances, and getting me prepared
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  Speaker 3: for questions I might be asked.
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  Speaker 2: Did he ever raise his voice with you?
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  Speaker 3: No, as you can imagine, we had robust exchanges, as
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  Speaker 3: I do with a range of officials, But I don't
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  Speaker 3: recall him raising his voice.
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  Speaker 2: And you would. I'm assuming Why could a medical school
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  Speaker 2: very quickly there is apparently going to be an announcement
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  Speaker 2: on this or cabinet was making a decision or discussing
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  Speaker 2: it today? Is that correct?
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  Speaker 3: A cabinet hasn't made a decision on that matter. As
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  Speaker 3: you know, we are considering a detailed business case in
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  Speaker 3: the future. We haven't had that discussion yet.
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  Speaker 2: Okay, really, appreciate your time, Minister. Thank you very much.
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  Speaker 2: Nichola Willis, Finance Minister.
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