Latest / Best of Business / Steven Joyce: former Finance Minister on New Zealand's GDP crashing harder than expected during September quarter

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Steven Joyce: former Finance Minister on New Zealand's GDP crashing harder than expected during September quarter · Best of Business

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  Speaker 1: You're listening to a podcast from newstalk ZEDB. Follow this
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  Speaker 2: I just want to know what Raylean found so funny,
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  Speaker 2: obviously not our GDP numbers which are out today, and
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  Speaker 2: I can tell you we're felled by a whopping one
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  Speaker 2: percent in Q three. Q two was revised down to
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  Speaker 2: a huge one point one percent. It was point two.
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  Speaker 2: This officially makes this the deepest recession bar lockdowns since
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  Speaker 2: nineteen ninety one. The Reserve Bank Governor Adrian or Well,
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  Speaker 2: we didn't ask him on the program. He's declined our
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  Speaker 2: interview requests. This evening, former Finance Minster Stephen Joyce is
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  Speaker 2: with me live though good evening.
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  Speaker 3: Hi, right, how are you.
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  Speaker 2: I'm well, thank you. What's your take on today's numbers.
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  Speaker 3: Well, I think some people have got some questions to answer,
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  Speaker 3: to be honest, including the Reserve Bank Governess. I'm not
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  Speaker 3: surprised you asked him on because what we're really seeing
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  Speaker 3: once again is that he was both heavy footed on
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  Speaker 3: the way up and heavy footed on the way down.
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  Speaker 3: And I think there is some legitimate questions to be asked.
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  Speaker 3: I can remember as quite recently him saying he's got
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  Speaker 3: it all under control, and that this is going to
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  Speaker 3: be a soft landing will quite clearly it wasn't. I
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  Speaker 3: think we've none about it for some time. Now we
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  Speaker 3: have the figures to confirm it.
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  Speaker 2: Yeah, we've all felt it. Do you think he should
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  Speaker 2: what should the government remove him? Should he go?
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  Speaker 3: I mean, well, no, I don't think the government should
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  Speaker 3: remove him, because I think once you start removing central
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  Speaker 3: bank governors, that's a mistake. But I think he does
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  Speaker 3: owe the country an explanation, but not just him. Frankly,
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  Speaker 3: I think we had a couple of things with the
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  Speaker 3: previous government. You know, they were very very similar on
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  Speaker 3: the fiscal side, so we had a panicked overdoing of
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  Speaker 3: the response on both fiscally and monetarily wise. And now
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  Speaker 3: we're reaping the rewards of that, which aren't very pleasant.
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  Speaker 3: And it's been a very very tough year, and so
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  Speaker 3: there are lots of questions to answer. I think we've
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  Speaker 3: had a six or seven year period where people have said, oh, well,
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  Speaker 3: the economy will just cope with whatever we throw at it,
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  Speaker 3: and that includes the COVID response, and some of that
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  Speaker 3: was necessary and some of it wasn't. And so now
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  Speaker 3: the reality is we need a period of time where
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  Speaker 3: we actually focus on growing this economy because quite clearly,
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  Speaker 3: when we treated the way we did in the last
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  Speaker 3: six or seven years, it gets really damaged and that
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  Speaker 3: it hurts every day news.
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  Speaker 2: We hammered the master Card, no doubt about it. But
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  Speaker 2: to be fear to Adriana and to the previous government.
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  Speaker 2: You look at Australia. You know, they're growing at what
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  Speaker 2: point eight percent this year, that's the slowest since the
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  Speaker 2: early nineties for them as well outside of COVID.
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  Speaker 3: Yeah, but they're growing, which makes it it's a much
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  Speaker 3: more pleasant experience. And I think a lot of people
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  Speaker 3: that have spent time in Australia recently. I haven't, but
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  Speaker 3: I know a lot of people that have would say
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  Speaker 3: it's a different vibe over there than it is in
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  Speaker 3: this country. At the moment, it's quite stark. And we
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  Speaker 3: can see that with the numbers moving to Australia. Is that,
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  Speaker 3: you know, it's once again seen as quite a big
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  Speaker 3: difference an opportunity for people than here. And you know,
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  Speaker 3: there's pretty people on the left that will seek to
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  Speaker 3: blame the current government for that, but actually, you know,
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  Speaker 3: this has been this has been set up over the
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  Speaker 3: last six or seven years.
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  Speaker 2: I think when we had the HAIFU on Tuesday and
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  Speaker 2: Nichola Willis came on the show, I was asking her
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  Speaker 2: about whether she was going to go deeper and harder
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  Speaker 2: with the cuts given the state of the books. I mean,
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  Speaker 2: we're borrowing, We're not even going to get to start
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  Speaker 2: paying back any of that COVID debt until we get
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  Speaker 2: to surplus, which is not going to be until the
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  Speaker 2: twenty thirties, So why not cut deeper? Does today's numbers
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  Speaker 2: kind of signal why she's got a real balancing act
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  Speaker 2: on her hands here?
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  Speaker 3: Oh, she absolutely has a You know, I think I've
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  Speaker 3: felt that it's going to end up a bit like
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  Speaker 3: this ever since, ever since she got the job, because
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  Speaker 3: the numbers. I think the numbers were always looking at
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  Speaker 3: being harder to balance than it was for us when
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  Speaker 3: we came in after the GFC, and that was hard enough, frankly,
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  Speaker 3: And I've I thought she's been in a difficult position
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  Speaker 3: ever since she's taken on the job because it was
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  Speaker 3: always going to be worse and Treasury's projections forward are
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  Speaker 3: always going to deteriorate at the stage of the cycle
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  Speaker 3: at some point they'll turn and they'll say, oh, well,
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  Speaker 3: things will get better because Treasury Treasury has a habit
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  Speaker 3: of drawing lines from where we are and saying, oh,
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  Speaker 3: it's just going to get terrible. So I don't think
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  Speaker 3: it necessarily is going to be as bad as they say,
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  Speaker 3: but it's bad enough. And now that we're talking debt
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  Speaker 3: to GDP ratios of getting towards the high forties percent,
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  Speaker 3: the difficulty, Yeah, that's right. And the difficulty with that
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  Speaker 3: is is you can make the argument that that's not
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  Speaker 3: the end of the world, but we're only one big
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  Speaker 3: sort of natural shock away from being another ten percent.
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  Speaker 3: On top of that, God forbid something else happens, but
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  Speaker 3: it does tend to happen from time to time in
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  Speaker 3: this country. So we do need to get under control.
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  Speaker 3: And that means the current government is probably going to
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  Speaker 3: have to push harder than they expected to do some things.
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  Speaker 3: It's not just cutting costs, so that's the significant part
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  Speaker 3: of it. It's moving faster to grow the economy and
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  Speaker 3: to encourage investment, and they've done quite a lot in
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  Speaker 3: this first year. But actually they need to have a
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  Speaker 3: break and come back and go harder again because we
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  Speaker 3: need to for example, don't just talk about attracting investment,
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  Speaker 3: is take some steps to actually attract some investment. Now
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  Speaker 3: they've done a bit in the RMA space, but I'm
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  Speaker 3: talking about overseas investment as well, because the infrastructure pipeline
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  Speaker 3: can't happen without overseas investment. We don't have any dough
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  Speaker 3: and getting a lot of investment in the private sector
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  Speaker 3: businesses will involve overseas investment as well, So we need
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  Speaker 3: to stop talking about that and actually doing it. So
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  Speaker 3: there's a bunch of things that they're going to have
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  Speaker 3: to move faster on in the new year, and that's
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  Speaker 3: difficult because you're in a coalition and all the easy
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  Speaker 3: stuff has been done the fact, but everybody's agreed on
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  Speaker 3: the things that have been done and so far, then
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  Speaker 3: we're seeing with the theories, the theories and so on
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  Speaker 3: that he is Sonali things they all have to become.
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  Speaker 3: You on overseas investment.
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  Speaker 2: And a few handbrakes in the passenger seat too. Thank
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  Speaker 2: you very much for coming on the program. Great to
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  Speaker 2: have you on as always, Stephen Joyce, former Finance minist.
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