Latest / Best of Business / Brad Olsen: Infometrics Principal Economist unpacks the Half Year Economic and Fiscal Update

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Brad Olsen: Infometrics Principal Economist unpacks the Half Year Economic and Fiscal Update · Best of Business

• 0:09
  Speaker 1: You're listening to a podcast from Newstalks. The'd be follow
• 0:12
  Speaker 1: this and our wide range of podcasts now on iHeartRadio.
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  Speaker 2: We're talking about the half yearly economic and fiscal update
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  Speaker 2: to get an economics point of view on it. We're
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  Speaker 2: joined by brd Olsen, Infometrics chief executive and friend of
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  Speaker 2: the show, Get a brand Good afternoon.
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  Speaker 3: Any big surprises for you in today's announcement in a sense,
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  Speaker 3: not really.
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  Speaker 4: I mean, most of the economic indicators were going to
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  Speaker 4: be better, but they're not going to be quite as
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  Speaker 4: good as we expected when they were forecast at the budget.
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  Speaker 4: Probably the big surprise was a new fiscal indicator, the
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  Speaker 4: old obigal X, which talking to a colleague before, we
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  Speaker 4: think sounds like either a new edition of the iPhone
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  Speaker 4: or maybe a new Pokemon game. But apart from that,
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  Speaker 4: I mean, I think the big challenge though for the
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  Speaker 4: government we knew it was coming, we probably didn't have
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  Speaker 4: as good of a handle on how bad it was.
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  Speaker 4: It was just how much less money the government is
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  Speaker 4: going to bring in despite the economy recovering. I mean
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  Speaker 4: over the forecast period over the four years to mid
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  Speaker 4: twenty twenty eight. The government's now expecting to bring in
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  Speaker 4: thirteen billion dollars less in tax but also still spend
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  Speaker 4: nearly six billion dollars more on government services and similar
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  Speaker 4: that's a big gap that you have to borrow in
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  Speaker 4: the middle to pay for and that does make the
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  Speaker 4: government accounts look a whole lot worse than it might
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  Speaker 4: have been.
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  Speaker 2: Expecting any nervousness from you for next year, brad Olsen,
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  Speaker 2: it was long indicated survived till twenty twenty five, but
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  Speaker 2: that looks like it might be pushed out a bit
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  Speaker 2: further than that now.
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  Speaker 4: Well, I think the big challenge in the Treasury did
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  Speaker 4: highlight this as well. It was survived till twenty five.
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  Speaker 4: No one said it was survived till the first of
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  Speaker 4: January twenty twenty five, and then everything picks up immediately.
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  Speaker 4: It is going to be a bit of a slower burn,
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  Speaker 4: and even Treasury is highlighted that yes, there are better
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  Speaker 4: things to come, but no, they won't be quite as
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  Speaker 4: upbeat or as fast to recover as might have all expected.
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  Speaker 4: Productivity hasn't been growing, In fact, it's sort of been
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  Speaker 4: reversing back in some areas, and the expectations are for
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  Speaker 4: pretty subdued still growth next year it's growth. The Treasury
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  Speaker 4: now expects twenty twenty five GP to be up zero
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  Speaker 4: zero point five percent. That's again the turnaround front of
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  Speaker 4: the zero point two percent four or contraction we've seen
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  Speaker 4: in twenty in this year, but then a bit of
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  Speaker 4: a strong attack up in the year after twenty twenty six,
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  Speaker 4: they think is when the economy really gets going. So
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  Speaker 4: maybe it's survived for twenty five that thrive and twenty
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  Speaker 4: three point three percent growth though, guys, I mean that
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  Speaker 4: is that is pretty substantial. The challenge, of course for
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  Speaker 4: the government is that you know it won't be able
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  Speaker 4: to contribute a lot to that, and even with strong growth,
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  Speaker 4: doesn't get a lot of money. So you know i'd
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  Speaker 4: be if I'm them. I'm looking at the numbers and
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  Speaker 4: going better for the economy, but it's not reflected in
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  Speaker 4: my books, and that means that I'm still going to
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  Speaker 4: be spending a lot to service provide those services out
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  Speaker 4: to kiwis, but I'm not getting nearly as much as
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  Speaker 4: they want, and that's a problem for them.
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  Speaker 3: So survive to twenty five, then get your cacks in
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  Speaker 3: twenty six. Maybe that works.
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  Speaker 4: That's a better one.
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  Speaker 3: Now in your opinion. How much is this the world
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  Speaker 3: economy's fault with things that we can't control. How much
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  Speaker 3: is it this current government's fault, and how much is
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  Speaker 3: it the previous government's fault.
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  Speaker 4: I mean, look, everyone likes to plat politics with it,
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  Speaker 4: and and sure there's elements there. I mean, certainly you
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  Speaker 4: look at the level of government spending and where it
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  Speaker 4: will be into the future is still sort of unstainably
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  Speaker 4: higher than what it's been in the past. It was
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  Speaker 4: understandable during the pandemic and even to point during the
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  Speaker 4: high in flashing period, but coming out the other side
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  Speaker 4: when we try and find where the new sort of
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  Speaker 4: economic normal is, having that much spending really don't suggest
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  Speaker 4: that we are still not sort of cutting out our
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  Speaker 4: costs properly. You're right as well, the global conditions aren't fantastic.
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  Speaker 4: I see, you know with it, Germany that you know,
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  Speaker 4: lost their government overnight. Canada is in a bit of disarray.
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  Speaker 4: France has done the same thing recently. Long story short,
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  Speaker 4: Treasury did say that they expected that our trading partners
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  Speaker 4: will be growing, but still themselves not as fast as
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  Speaker 4: everyone wants, and so won't be sort of growing our
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  Speaker 4: exports as quickly as we might have liked it, does,
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  Speaker 4: I think just set the tone for a more difficult
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  Speaker 4: couple of years. And the challenges for the government is
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  Speaker 4: that they've got these conditions in front of them, some
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  Speaker 4: of which they can't do a whole lot about, which
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  Speaker 4: means I've got a very narrow number of choices to
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  Speaker 4: make that have some pretty big implications. It is going
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  Speaker 4: to be a very difficult period, I think for the
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  Speaker 4: government to figure out what it spends on, what it
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  Speaker 4: tries to save on, and what it actually wants to do.
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  Speaker 4: Because it doesn't have a lot of options it can
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  Speaker 4: spend a lot more. That's got to make a lot
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  Speaker 4: of other cuts in other areas to offset that. It's
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  Speaker 4: a narrow playing field that they've got in front of them.
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  Speaker 2: Brad, thank you very much for the expertise. As always,
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  Speaker 2: thank you catch up. So that is brand Olson Infometrics,
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  Speaker 2: Chief executive and economist.
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