Latest / Best of Business / Ganesh Nana: former Productivity Commission Chair on the open letter saying Government policies are dragging out recession

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Ganesh Nana: former Productivity Commission Chair on the open letter saying Government policies are dragging out recession · Best of Business

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  Speaker 1: You're listening to a podcast from News Talks. There'd be
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  Speaker 2: A group of economists have written in open letters of
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  Speaker 2: the Prime Minister asking him not to cut governments spending now.
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  Speaker 2: The group includes a former Treasury chief economist, a current
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  Speaker 2: union economist, a former union economist, and a former Reserve
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  Speaker 2: Bank director and also Garnish Nana who's with us, Aganesh
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  Speaker 2: very well, thank you. What government spending cuts do you
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  Speaker 2: want to see stopped?
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  Speaker 3: Well, we've we've had the last budget which saw lots
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  Speaker 3: of cuts and spending I think it was about six
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  Speaker 3: or seven percent they wanted, and the signals are that
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  Speaker 3: there is even more spending coming in this next budget round.
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  Speaker 3: So we want to call it a hole to any
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  Speaker 3: more cuts and spending while we take stock of just
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  Speaker 3: where we are and what is the objective of all
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  Speaker 3: of us.
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  Speaker 2: But don't we want the government to cut spending to
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  Speaker 2: help the Reserve Bank bring down inflation?
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  Speaker 3: Sorry, you're cutting out, I said.
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  Speaker 2: Don't we worry? Don't we want the government to cut
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  Speaker 2: spending to help the Reserve bank bring down inflation?
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  Speaker 3: Well, the Reserve Bank is doing quite well on its own,
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  Speaker 3: assisted by the rest of the world, and bringing down inflation.
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  Speaker 2: And the government debt as well.
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  Speaker 3: Right, Well, that's arguable. But the point is, should fiscal
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  Speaker 3: policy be targeting inflation when we've already got the Reserve
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  Speaker 3: Bank doing it. We want fiscal policy to do other things,
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  Speaker 3: which is to focus on that external debt that seems
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  Speaker 3: to be being ignored by many.
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  Speaker 2: But to be fair, the Reserve Bank has asked, has
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  Speaker 2: asked the government to assist them and in the fight
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  Speaker 2: of inflation. Right, So if the Reserve bank's asking for
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  Speaker 2: that assistance, so they not get it.
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  Speaker 3: Well, the Reserve Bank has always asked, and that's not
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  Speaker 3: just this government, that's the previous one. It's the previous
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  Speaker 3: Reserve Bank governor as well. But the question is should
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  Speaker 3: fiscal policy be targeting inflation? We've already got one arm
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  Speaker 3: of government targeting inflation, and that's through interest rates. What's
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  Speaker 3: left to target the other important things in the economy
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  Speaker 3: that are necessary if we get beyond the short term
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  Speaker 3: cycles and actually tackling the longer term issues.
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  Speaker 2: What do you if you don't think fiscal policy should
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  Speaker 2: fight inflation, what should fiscal policy do.
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  Speaker 3: Well? Fiscal policy has got to help us get out
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  Speaker 3: of this rut that we've been in fee decades around
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  Speaker 3: productivity and export growth, because it's the external debt that
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  Speaker 3: is the problem. I know New Zealanders love and governments
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  Speaker 3: of all colors love to talk about government debt, but
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  Speaker 3: we will love to talk about external debt because that
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  Speaker 3: is the legacy and the burden that has literally been
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  Speaker 3: passed on to next generation and so on. And that
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  Speaker 3: external debt is not what we owe to the government,
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  Speaker 3: to what the government owes to us. It's what we
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  Speaker 3: as a country owe to other countries. And that's the
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  Speaker 3: important thing. And we don't see any addressing of that
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  Speaker 3: or any con between what fiscal policy is currently doing
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  Speaker 3: and that that bigger target that we need to address.
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  Speaker 2: All right, Ginnis, thank you, I appreciate your time. It's
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  Speaker 2: Goes on, a former Productivity commissioned chair.
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