Latest / Best of Business / Nicola Willis: Finance Minister unpacks cost-cutting measures as part of Budget 2025

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Nicola Willis: Finance Minister unpacks cost-cutting measures as part of Budget 2025 · Best of Business

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  Speaker 1: You're listening to a podcast from News Talks at B.
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  Speaker 1: How is the economy shaping up? Who is raking in
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  Speaker 1: the cash and who will be disappointed? In time to
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  Speaker 1: crunch the numbers and find out how it affects you.
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  Speaker 1: You It's heaven Dooth plus Allen Drive live from Parliament
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  Speaker 1: for Budget twenty twenty five with one New Zealand Used TALKSB.
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  Speaker 2: Good afternoon to the budget. You are going to have
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  Speaker 2: to contribute more to your key. We say that the
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  Speaker 2: government will put in less teenagers will no longer be
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  Speaker 2: able to get the doll and we now know that
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  Speaker 2: the pay Equity Scheme rejig has saved nearly thirteen billion dollars.
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  Speaker 2: The government has managed to deliver seven billion more for health,
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  Speaker 2: tax incentives for businesses to buy new equipment, plus two
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  Speaker 2: hundred million dollars to find some new gas. Nicola Willis
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  Speaker 2: is the Finance Minister and with us now Nikola, Hello.
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  Speaker 3: Hello here that it's great to be with you on person.
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  Speaker 2: It is lovely to have you. Thank you and thank
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  Speaker 2: you very much for racing through your speech to be here.
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  Speaker 2: Where's the growth in the growth budget. Where is it.
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  Speaker 3: Well, the growth is coming this year and accelerating into
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  Speaker 3: next year and beyond, averaging two point seven percent over
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  Speaker 3: the next little while, and much faster than we've had it.
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  Speaker 2: This is the export is doing it, and they going
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  Speaker 2: to do it whether you are there or not.
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  Speaker 3: What are you doing to add the Well, this investment
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  Speaker 3: boost policy is going to lift growth and it is
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  Speaker 3: going to lift GDP because what it says to every
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  Speaker 3: business about one percent over the next twenty years, but
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  Speaker 3: half of that over the next five years. Combine that
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  Speaker 3: with our other reforms, whether it's RMA reform, setting up
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  Speaker 3: invest New zealand encouraging foreign investment. We're doing things that
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  Speaker 3: are going to generate measurable growth. But Investment Boost is
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  Speaker 3: really important because what it says to every business listening
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  Speaker 3: right now is if you make an investment in a
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  Speaker 3: new as set, we are going to deduct the cost
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  Speaker 3: of that from your tax bill twenty percent deduction. So
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  Speaker 3: that's going to help your cash flow now. And if
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  Speaker 3: you are thinking about making an investment, do it because
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  Speaker 3: we're going to help you out. Because that would have
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  Speaker 3: cost more than eight and a half billion dollars a
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  Speaker 3: year Are you sure because that number is That is
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  Speaker 3: the advice that I received from Inland Revenue, and I
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  Speaker 3: trust them that I'm wore some of the bush costings
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  Speaker 3: that are out there at the.
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  Speaker 2: Moment not have paid for itself.
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  Speaker 3: Well. No, the advice was that it wouldn't because what
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  Speaker 3: it starts to do is incentivize investments that wouldn't stack
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  Speaker 3: up otherwise. Our advice was twenty percent is the sweet spot.
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  Speaker 3: That's where you get the most value for each dollar
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  Speaker 3: of tax revenue that you're losing. Go higher than that
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  Speaker 3: and you're not getting quite as much bang for.
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  Speaker 2: Bart because okay, so Trump himself did one hundred percent,
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  Speaker 2: Rishi Sunak did one hundred percent. The business community has
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  Speaker 2: called for accelerated depreciation, which I totally take is not
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  Speaker 2: exactly the same thing. But they want fifty percent. If
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  Speaker 2: all of this is above what you're doing. If you
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  Speaker 2: find out that twenty percent is not enough, will you
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  Speaker 2: rejig it?
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  Speaker 3: Well, these are the same people I think you'll find here,
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  Speaker 3: the who say get the books back and balance, and
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  Speaker 3: that is what we have to do. We have to
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  Speaker 3: get that balance between making sure there's a good tax
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  Speaker 3: incentive there but also being prudent about the fact that
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  Speaker 3: New Zealand has been in deficit since twenty nineteen. Debt
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  Speaker 3: has blown out by an extra hunt billion dollars. So
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  Speaker 3: I need to do all of this within it.
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  Speaker 2: If you're doing a little bit percent. The point of
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  Speaker 2: the twenty percent is to try to get people investing.
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  Speaker 2: If it doesn't work, there's no point in doing it.
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  Speaker 2: So would you rejig it?
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  Speaker 3: Well, the advice that I've received is that it will
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  Speaker 3: get people investing, that it's enough to make a meaningful difference.
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  Speaker 3: I mean, think about it. If you're a trading and
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  Speaker 3: you go and buy a ute tomorrow, you've now got
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  Speaker 3: a twenty percent deduction on the cost of that against
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  Speaker 3: your text bill. You'll be paying less tax this year.
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  Speaker 3: That's good news.
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  Speaker 2: Okay, Why not cut the government contributions to everyone's kei
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  Speaker 2: saber altogether because it's done its job, hasn't it?
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  Speaker 3: Because our judgment was that on balance, that contribution is
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  Speaker 3: enough to give some people the nudge into saving who
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  Speaker 3: might not otherwise, and it keeps people in the scheme
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  Speaker 3: even if they go through a period where they can't
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  Speaker 3: afford to make their own contributions. Knowing that the government's
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  Speaker 3: going to give them that extra cash.
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  Speaker 2: Helps the moloyment the employer's contribution.
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  Speaker 3: Do that, Yeah, But to get the employer contribution, of course,
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  Speaker 3: you have to make your own contribution. And some people
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  Speaker 3: will for a time withdrawal from the scheme or stop
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  Speaker 3: their own contributions, but on balance they might keep going
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  Speaker 3: if that subsidy is there. Look, basically we thought that
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  Speaker 3: if you keep it there at that level, there's still
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  Speaker 3: a little nudge to keep people in, but it's much
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  Speaker 3: more affordable.
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  Speaker 2: Earning one hundred and seventy nine thousand dollars a year
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  Speaker 2: doesn't need a government contribution, do they.
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  Speaker 3: Well, we cut it off at one hundred and eighty.
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  Speaker 3: If you're sending one hundred and eighty or more, you
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  Speaker 3: will now not get that contribution at all, and everyone's
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  Speaker 3: contribution is halved. We think it's about right.
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  Speaker 2: Okay, now on the kids off the doll you'll take
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  Speaker 2: the teenagers off the doll but you're going to do
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  Speaker 2: a parental test. What's the test.
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  Speaker 3: Well, we are still finalizing the details of the policy,
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  Speaker 3: but the basic concept is that this is actually about
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  Speaker 3: helping parents. Because I have met parents who say, look,
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  Speaker 3: I've got a nineteen year old who spends all day
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  Speaker 3: on the couch playing keep playing PlayStation and it's pretty
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  Speaker 3: difficult because you the government send them a check each fortnight.
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  Speaker 3: So we've got the same expectation most mums and dads do,
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  Speaker 3: which as kids should be in training, in an apprenticeship
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  Speaker 3: or in work and if they're not, they can't get
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  Speaker 3: the visit.
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  Speaker 2: And it makes perfect sense. But how are you going
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  Speaker 2: to test the parents? What is it?
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  Speaker 3: Is it?
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  Speaker 2: Well, it means is it InCom.
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  Speaker 3: We except there will have to be some exceptions where
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  Speaker 3: for whatever reason, there's been a family break down and
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  Speaker 3: so it's not reasonable to expect that the parents are
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  Speaker 3: in a position to support their teenager. But we are
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  Speaker 3: going to work on the details of that and we're
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  Speaker 3: looking forward to making more announcements.
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  Speaker 2: About are you going to income test? Is that what
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  Speaker 2: it's about?
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  Speaker 3: Well, that might be part of the test, but we
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  Speaker 3: need to make sure it's tight enough that not everyone's
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  Speaker 3: getting an exception, because we genuinely want to get those
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  Speaker 3: kids into work and training. We know that if you
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  Speaker 3: start on a benefit at that age, on average, you're
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  Speaker 3: going to spend more than fifteen years on a benefit,
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  Speaker 3: So that is bad news for everyone.
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  Speaker 2: So these kids, they manage to get the doll right,
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  Speaker 2: so they don't get they're off the doll of the single.
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  Speaker 2: But if they get married or in a civil union
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  Speaker 2: or in a de factor relationship, they will continue to
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  Speaker 2: get the dolls. They're just going to get the girlfriend around,
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  Speaker 2: aren't they.
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  Speaker 3: Well, I don't know. I don't think you'll find that
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  Speaker 3: many of these young people will be jumping into marriage.
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  Speaker 2: No, but they don't have to be very nicola. They
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  Speaker 2: just have to be in a de facto relationship.
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  Speaker 3: Well, look, all of these are the things that we're
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  Speaker 3: going to test with the policy. We need to move
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  Speaker 3: in with you absolutely right. Hither we need to make
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  Speaker 3: sure that this policy sends very strong signals and that
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  Speaker 3: we get the details right. And I've got faith in
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  Speaker 3: Luise Upstince she'll do that.
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  Speaker 2: Are you going to change the rules about the de
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  Speaker 2: facto stuff?
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  Speaker 3: Then, well, we're going to make sure that this policy
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  Speaker 3: incentivizes teenagers to get into worker education and we'll do
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  Speaker 3: what we have to do with the rules to ensure
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  Speaker 3: that's the case.
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  Speaker 2: Okay, Now you have saved in this financial year five
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  Speaker 2: billion dollars. Why not take that money and put it
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  Speaker 2: towards the debt and pay down the.
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  Speaker 3: Debt, because the price that every New Zealander would have
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  Speaker 3: to pay for that is fewer health services, schools getting
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  Speaker 3: cuts to their funding, and real terms, I wouldn't have
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  Speaker 3: money to pay teachers more, the police wouldn't get the
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  Speaker 3: resources that they need to keep our communities safe, and
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  Speaker 3: our defense force would continue its slide to becoming that
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  Speaker 3: more a back. So there are investments that need to
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  Speaker 3: be made hither and we are funding them from savings.
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  Speaker 3: That's the responsible way.
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  Speaker 2: Have you cut the final year free tertiary education yet?
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  Speaker 3: No? We have? Why not because we had a coalition
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  Speaker 3: commitment between the three parties that we would keep it
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  Speaker 3: for the final year.
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  Speaker 2: Who wants it?
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  Speaker 3: Well, I think New Zealand first were pretty keen on
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  Speaker 3: it staying there. And look, it's a much narrower policy
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  Speaker 3: than it was heither. It used to be that everyone
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  Speaker 3: was getting a free first year to have a place.
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  Speaker 2: It's a waste of money and.
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  Speaker 3: Now only get it if you get all the way
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  Speaker 3: to the end of your degree. You've finished your degree
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  Speaker 3: and you get that final.
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  Speaker 2: So you could have saved that money. You could have
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  Speaker 2: put that towards something else. Like paying the debt and
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  Speaker 2: paying down the debt you could have not done, the
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  Speaker 2: tweaks to the working for families, It's a bunch of
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  Speaker 2: stuff you could have done.
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  Speaker 3: I'm really proud. Actually last budget we delivered twenty three
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  Speaker 3: billion dollars worth of savings. This budget twenty one billion dollars.
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  Speaker 2: Worth of savings. Our budget at all.
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  Speaker 3: But our budget is being funded from savings, whereas we
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  Speaker 3: had a government over the past six years in twenty
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  Speaker 3: twenty two, spent more than nine billion dollars.
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  Speaker 2: Do worry about reminding us how crappy they is.
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  Speaker 3: So we are really bringing things much tighter, and what
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  Speaker 3: we're showing in our boxes that we're going to get
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  Speaker 3: them back in balance. We're going to be bringing spending
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  Speaker 3: government spending down as a proportion of the economy. We're
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  Speaker 3: going to be bending that debt.
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  Speaker 2: Because you are not bringing down government spending, you continue
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  Speaker 2: to spend. In every single day that you continue to spend,
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  Speaker 2: you are adding to our national debt.
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  Speaker 3: But we're putting dollars in the right places because there
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  Speaker 3: are some investments that if we make them today, are
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  Speaker 3: going to make us more productive tomorrow. I take the
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  Speaker 3: education system as an example, if kids are achieving more
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  Speaker 3: at school, they are going to be better workers. I
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  Speaker 3: look at the health service. If we don't have good
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  Speaker 3: health services for people, then that's actually a real push
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  Speaker 3: push factor that is going to be a problem for
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  Speaker 3: many New Zealanders. So always striking that balance. How can
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  Speaker 3: we make sure we're funding the public services that are needed,
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  Speaker 3: but we're also keeping the books in order. Of course,
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  Speaker 3: the alternative, Heather, there is an alternative. That's my friend,
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  Speaker 3: mister Hipkins. He thinks what we should do is get
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  Speaker 3: rid of all ideas that there is a limit to
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  Speaker 3: debt and we should just borrow, borrow, borrow, tax, tax, tax,
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  Speaker 3: and that'll mean everything's okay and it's rainbows and uniforms. Well,
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  Speaker 3: we've rejected that approach.
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  Speaker 2: That's for sure. Luxon has labeled in mister Bojangles.
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  Speaker 3: He has indeed labeled because he's a flip flopper. He
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  Speaker 3: just goes from one foot to the next. You know,
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  Speaker 3: one day he's all raging, wanting to bring back the
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  Speaker 3: old peg Woody regime. The next day he's not so
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  Speaker 3: sure and maybe he needs to change. One day he's
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  Speaker 3: saying that Barbara Edmonds is a great finance spokesperson the
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  Speaker 3: next day is throwing her under the bus and saying
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  Speaker 3: that we shouldn't listen to her when she talks about debt,
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  Speaker 3: fiscal plans or anything.
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  Speaker 2: And we are here to talk about you today. Thank you.
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  Speaker 2: I appreciate it very much. Thank you for your time,
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  Speaker 2: and thanks for coming here.
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  Speaker 3: Great to be on the show here.
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  Speaker 2: Thank a lot us the Finance Minister.
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