Latest / Early Edition with Ryan Bridge / Brad Olsen: Infometrics Principal Economist ahead of the Half Year Economic and Fiscal Update

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Brad Olsen: Infometrics Principal Economist ahead of the Half Year Economic and Fiscal Update · Early Edition with Ryan Bridge

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  Speaker 1: Later today, the government's going to open their books and
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  Speaker 1: let us take a look inside. It's called the High
• 0:05
  Speaker 1: Food the half year, the Economic and Fiscal Update. How
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  Speaker 1: much money did the government get in in tax and
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  Speaker 1: how are they spending it. It'll give us a clearer
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  Speaker 1: idea of just how back on track we are. Brad
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  Speaker 1: Olsen is the Infometric's chief executive and Josy Now hallo, Brad,
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  Speaker 1: good morning. So what do you reckon? Is going to
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  Speaker 1: be good news or bad news? I mean there's a
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  Speaker 1: lot of people talking that the third quarter was pretty good.
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  Speaker 2: That's right. We have started to see a number of
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  Speaker 2: I guess economic indicators that have started to show a
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  Speaker 2: tune up, which is important. But of course the Treasury
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  Speaker 2: would have done their forecast based on what we head
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  Speaker 2: up until the second quarter, which was certainly a more
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  Speaker 2: challenging period for the economy. Realistically, the economic recovery that
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  Speaker 2: Treasury had been expecting through the course of twenty twenty
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  Speaker 2: five hasn't been going as quickly as expected, and so
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  Speaker 2: really from the High Food today, we're expecting a bit
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  Speaker 2: of a downgrade head to what they said in the
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  Speaker 2: budget in terms of how quickly the economic momentum is rebuilding,
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  Speaker 2: and of course with that economic recovery taking longer, it
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  Speaker 2: means that the government's not able to raise quite as
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  Speaker 2: much tax revenue it's not seen as much spending or
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  Speaker 2: anything else, but also has often had to incur higher expenses,
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  Speaker 2: you know, higher benefit claims and similar Long story short,
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  Speaker 2: it probably means that the government has been in a
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  Speaker 2: forecast to spend more and earn a little bit less
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  Speaker 2: than we probably thought back at the budget.
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  Speaker 1: This is the thing, isn't it. The tax the tax income,
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  Speaker 1: the revenue that is, that's about a bit where we're
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  Speaker 1: actually fathing. Because you can cut costs and government spending
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  Speaker 1: as much as you like, but if of course your
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  Speaker 1: revenue is going down as well, you end out just standing.
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  Speaker 2: Still exactly, and I mean standing still in some senses,
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  Speaker 2: would still be not a bad position. As it is.
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  Speaker 2: We know, and this has of course been a big
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  Speaker 2: point of contention in the last couple of weeks, that
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  Speaker 2: we're still effectively having to borrow to pay for ongoing
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  Speaker 2: spending over the next couple of years. You know, we're
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  Speaker 2: in deficit. The government books are indeficit until the late
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  Speaker 2: twenty twenties. On the government's preferred measure there the over
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  Speaker 2: gar x, and of course that means that New Zealand's
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  Speaker 2: debt over time continues to accumulate. Now, the difficulty and
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  Speaker 2: the challenge there is that at the same time as
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  Speaker 2: clearly it would be better to be in a surplus,
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  Speaker 2: there is also the difficulty of a lot of decisions
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  Speaker 2: that have been made over the last couple of years
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  Speaker 2: that have to continue to be funded. And unless you
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  Speaker 2: are willing to take some pretty serious services and similar
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  Speaker 2: away from people, that's sort of where the balancing act is.
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  Speaker 2: And so one of the questions we're trying to work
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  Speaker 2: out for ourselves today looking through the numbers, is what
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  Speaker 2: does the government do heading into an election your budget
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  Speaker 2: twenty twenty six. You know, sometimes there expectations from some
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  Speaker 2: quarters for more of a spend up, but if the
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  Speaker 2: government books aren't looking quite as slash, there's also a
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  Speaker 2: reasonable expectation that the government might say, look, we were
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  Speaker 2: going to spend X amount of money, but now we're
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  Speaker 2: going to spend less than that to try and keep
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  Speaker 2: a bit more control there. It is a fine balancing act.
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  Speaker 1: Absolutely. If you had to bet on Nikola versus Ruth Hoodwin.
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  Speaker 2: I don't like getting into that one. I mean, put
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  Speaker 2: it this way, I'm a lot more interested in the
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  Speaker 2: actual numbers and where they've gone. I mean, one of
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  Speaker 2: the challenges of the last couple of years is given
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  Speaker 2: how high wage inflation previously has been, one of the
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  Speaker 2: reasons you've seen an increase in government spending over the
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  Speaker 2: last couple of years is because the single biggest line
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  Speaker 2: item New Zealand, sooper continues to go up. I mean, Andrew,
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  Speaker 2: we still spend more money on New Zealand Super each
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  Speaker 2: and every year than the entire education budget in New Zealand. Like,
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  Speaker 2: in terms of making changes, that's probably the biggest difficulty.
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  Speaker 2: You can make little nips and bucks here and there
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  Speaker 2: when it comes to the budget, but really unless you're
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  Speaker 2: going to hit some of those biggest spending items, and
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  Speaker 2: they're generally in that sort of social area, the likes
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  Speaker 2: of superannuation and summer, you really aren't going to touch
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  Speaker 2: the sides in terms of the big spending challenges.
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  Speaker 1: Thank you, Brad Olsen from informt For more from Early
• 4:02
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• 4:05
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