Latest / Best of Business / Nicola Willis: Finance Minister on the pre-election opening of the Government books

Transcript

Nicola Willis: Finance Minister on the pre-election opening of the Government books · Best of Business

• 0:09
  Speaker 1: You're listening to a podcast from Newstalk ZB. Follow this
• 0:13
  Speaker 1: and our wide range of podcasts now on iHeartRadio.
• 0:16
  Speaker 2: Afternoon. The government books have been opened ahead of the
• 0:19
  Speaker 2: forecast and it is ahead of the election rather and
• 0:22
  Speaker 2: it's looking a lot better than even four months ago
• 0:24
  Speaker 2: at the budget. Surplus in 28-29 is bigger. It goes
• 0:27
  Speaker 2: from $ 2. 1 billion to $ 4 billion and we are forecast
• 0:30
  Speaker 2: to take on $ 15 billion less debt than previously expected.
• 0:34
  Speaker 2: The Finance Minister and Nationals Finance Spokesperson Nicola Willis is
• 0:37
  Speaker 2: with us now. Hi Nicola.
• 0:39
  Speaker 1: Hi, Heather.
• 0:39
  Speaker 2: You must be pleased with this.
• 0:42
  Speaker 3: Yeah, I am. I think that this is a testament
• 0:44
  Speaker 3: to New Zealanders' hard work and adaptability through what have
• 0:47
  Speaker 3: been difficult economic times. But we can now see it
• 0:50
  Speaker 3: bearing fruit. Growth, more jobs, incomes rising faster than prices,
• 0:54
  Speaker 3: balanced books and less debt. That's what we've been aiming for.
• 0:59
  Speaker 3: And we can set out a plan now that shows
• 1:01
  Speaker 3: that very clearly. So at this election, the choice is
• 1:04
  Speaker 3: pretty obvious. We can stick with this economic plan that
• 1:07
  Speaker 3: will deliver for New Zealanders, or we can put it
• 1:09
  Speaker 3: all at risk with people who want to put nine
• 1:11
  Speaker 3: new taxes and a wrecking ball through the economy.
• 1:14
  Speaker 2: Now that surplus, is that big enough at $ 4 billion
• 1:17
  Speaker 2: now in 28-29 for you to be able to upgrade
• 1:20
  Speaker 2: that for yourselves at this election from just an aim
• 1:23
  Speaker 2: to a promise?
• 1:25
  Speaker 3: Well, it's a commitment from the National Party that we
• 1:28
  Speaker 3: will return the books to surplus. And you're right, we've
• 1:31
  Speaker 3: got a bit of a buffer there because that surplus
• 1:34
  Speaker 3: now is significantly bigger than we were previously forecasting. And
• 1:39
  Speaker 3: it's based on real-time results. So the thing that might
• 1:43
  Speaker 3: have been missed in the pre-food today is that we've
• 1:46
  Speaker 3: actually revised down the deficit for the year that's been.
• 1:49
  Speaker 3: That's $ 3 billion smaller, $ 3. 4 billion smaller than Treasury had expected.
• 1:55
  Speaker 3: And this year's deficit, $ 4. 6 billion lower. So that just
• 2:00
  Speaker 3: gives us a much stronger foundation on which to make
• 2:02
  Speaker 3: projections for the future.
• 2:04
  Speaker 2: How sure are you that this is the last year
• 2:05
  Speaker 2: of the structural deficits?
• 2:08
  Speaker 3: Well, that's the advice Treasury have given me. When I
• 2:11
  Speaker 3: came in as Finance Minister, they said, look, the last
• 2:14
  Speaker 3: guys have left you with a structural deficit. It's not
• 2:16
  Speaker 3: going to fix itself. Decisive action is required. And that's
• 2:19
  Speaker 3: what we've spent three years doing. Very careful choices. In
• 2:23
  Speaker 3: order to invest in the things New Zealanders expect, more medicines,
• 2:27
  Speaker 3: more funding for health, more funding for our schools, we
• 2:30
  Speaker 3: have had to reprioritise from elsewhere. And we've delivered around
• 2:34
  Speaker 3: $ 12 billion to $ 13 billion elsewhere. worth of savings in
• 2:38
  Speaker 3: every budget so that we can eliminate that structural deficit.
• 2:42
  Speaker 2: Now, am I reading it right that Treasury stopped working
• 2:45
  Speaker 2: on the forecasts five weeks ago on August 21st?
• 2:50
  Speaker 3: Yeah, the economic forecasts were closed on the 21st of August.
• 2:56
  Speaker 3: And so they have to close it at that point
• 2:59
  Speaker 3: because then they have to do all of their quality
• 3:01
  Speaker 3: checks and that sort of thing. So it's always the
• 3:02
  Speaker 3: case that there are developments after the forecasts close. And
• 3:07
  Speaker 3: that's been one of my messages today. We can't just
• 3:09
  Speaker 3: bank these forecasts. We're living in a very uncertain world.
• 3:13
  Speaker 3: And what I worry about is politicians who want to
• 3:16
  Speaker 3: spend these gains before they've actually been delivered. So this
• 3:21
  Speaker 3: is a time to keep careful economic management going.
• 3:25
  Speaker 2: The point of asking you that question is five weeks ago,
• 3:28
  Speaker 2: the price of Brent crude was about US $ 12 less
• 3:31
  Speaker 2: than it is now, and bond yields were about 30
• 3:34
  Speaker 2: basis points lower, which does mean that these assumptions are
• 3:37
  Speaker 2: slightly out of date already, aren't they?
• 3:40
  Speaker 3: Yes, those are risks, but they're quite small on the margin.
• 3:45
  Speaker 3: So with that yield change, for example, because actually we're
• 3:50
  Speaker 3: only issuing a small proportion of debt this year, Treasury
• 3:55
  Speaker 3: tell me that the increase in the yield is worth
• 3:58
  Speaker 3: around about $ 50 million of interest costs this year. And yes,
• 4:03
  Speaker 3: petrol prices have gone up since the forecast went to bed.
• 4:06
  Speaker 3: That will put a small bit of pressure on inflation.
• 4:09
  Speaker 3: around 0.1% is Treasury's estimate. So these are changes that
• 4:13
  Speaker 3: have happened. You do have to allow for them, but
• 4:16
  Speaker 3: none of them put the surplus or debt reduction at risk.
• 4:19
  Speaker 2: Are you going to campaign on tax cuts?
• 4:22
  Speaker 3: Well, today is about setting out the progress we've made
• 4:26
  Speaker 3: on our plan. And what my priority is, is delivering
• 4:30
  Speaker 3: this surplus. Why? Because I'm determined that we get New
• 4:35
  Speaker 3: Zealand's debt down so that our country isn't exposed to
• 4:39
  Speaker 3: what is an increasingly volatile world. And so those are
• 4:42
  Speaker 3: nationals budget responsibility rules. We have to deliver on those
• 4:46
  Speaker 3: before we start dishing out the dividend. But look, in
• 4:50
  Speaker 3: the future, when there are surpluses, That provides government with choices,
• 4:55
  Speaker 3: and those are about investing in frontline services, paying down
• 4:59
  Speaker 3: more debt, and being able to give working people more
• 5:02
  Speaker 3: of what they earn.
• 5:04
  Speaker 2: Okay, and so let's be clear, because you didn't say no,
• 5:06
  Speaker 2: which means I'm going to assume it's a yes, you're
• 5:08
  Speaker 2: going to campaign on tax cuts, and those tax cuts
• 5:10
  Speaker 2: will be tax bracket adjustments, and they will only be
• 5:14
  Speaker 2: once you hit surplus, which is 28, 29. Is that
• 5:16
  Speaker 2: going to work to say to people, hang in there,
• 5:18
  Speaker 2: and you're going to get marginal tax cuts in about
• 5:21
  Speaker 2: three years' time? Would people vote for that?
• 5:24
  Speaker 3: Well, I didn't say no, but I also didn't say
• 5:26
  Speaker 3: yes either. And we will make our fiscal plan very
• 5:31
  Speaker 3: clear in this election campaign. But what I'm saying to
• 5:35
  Speaker 3: you today and what I want all New Zealanders to
• 5:37
  Speaker 3: know is that we will not put the surplus at risk.
• 5:42
  Speaker 3: There's only one group of parties promising to do that,
• 5:46
  Speaker 3: and those are the parties coalescing around Labour. And I
• 5:50
  Speaker 3: can also make a very clear commitment, we will not
• 5:52
  Speaker 3: be adding any new taxes, we will not be increasing
• 5:56
  Speaker 3: existing taxes. So that's a very clear choice for New Zealanders,
• 6:00
  Speaker 3: a plan that delivers less debt that can be afforded
• 6:04
  Speaker 3: and that can be paid for without new taxes, and
• 6:08
  Speaker 3: that is National's plan, or a Labour plan which involves
• 6:11
  Speaker 3: more debt, more borrowing and more taxes.
• 6:15
  Speaker 2: Are you regretting ruling out opportunity based on those five
• 6:18
  Speaker 2: bottom lines today?
• 6:20
  Speaker 1: No.
• 6:21
  Speaker 2: Okay.
• 6:21
  Speaker 3: 5.13.
• 6:22
  Speaker 2: Thank you very much, Nicola Willis, Finance Minister, National Party
• 6:24
  Speaker 2: Finance Spokesperson.
• 6:26
  Speaker 1: For more from Newstalk ZB, listen live, on air or
• 6:29
  Speaker 1: online and keep our shows with you wherever you go
• 6:32
  Speaker 1: with our podcasts on iHeartRadio.