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Just release the half yearly economic and fiscal update. Our political editor, Jason Woolves has been in the lockup. Get a, Jason, get a.

Just release the half yearly economic and fiscal update. Our political editor, Jason Woolves has been in the lockup. Get a, Jason, get a.

They've released me from the lock up, and here I be better.

They've released me from the lock up, and here I be better.

Than the locker. No, much worse than the locker. Think about my days back in England. So, Jason, how bad is our nation's fiscal situation?

Than the locker. No, much worse than the locker. Think about my days back in England. So, Jason, how bad is our nation's fiscal situation?

Oh?

Oh?

Look, you know Nikola Willis and the Finance and the Prime Minister. Rather, we're holding true to their downbeat beat forecast of what the economy was going to be looking like when Treasury opened its books. It is, it is grim reading and that was forecast. But I don't think we forecast anything like this. I mean, the main headline figure here is the expected surplus. That is how much extra money the government has after it's got its taxes and it's paid for all of the things such as healthcare, superannuation and or everything that a government does. Right that I was supposed to come into effect in twenty twenty seven. That's when the surplus was supposed to be happening. That's now being pushed out to beyond twenty thirty. Now, the budget cycles only go in these sort of one, two, three, four, five, six, sort of six yearly more really five yearly forecasts. When you're looking forward, I mean, we can see the twenty twenty five FORCAS here, twenty six, twenty seven, twenty eight, twenty nine. It goes out to twenty twenty nine on the obigal, which is essentially the measure of the surplus, surplus or the deficit, and it's at a deficit at the twenty twenty nine financial year. We can't see beyond that, so we technically don't know if it's going to be worse. So we can say at least twenty thirty is when the government is going to be sniffing a surplus. But there is a big butt here, you know that word that I just mentioned, Obergel. I won't give you the technical definition of this outside that is all you need to know. It's a surplus or a deficit. The government has, as I signaled, about forty five minutes ago or an hour ago, changed the way that it measures this, so it's taking out ACC's liabilities essentially ACC's deficit at the moment, ACC has a four point one billion dollar deficit. Now, what the government has done is they've essentially isolated that. They've ring fenced this deficit so it doesn't sit alongside the government surplus or deficit, which means that it's come up with a completely new measure that is four point one billion dollars better off. So by this new measure, and get this, this is what they're calling it. They're calling it so that the measure we have right now is called Obergel. What they're calling it is Obergel X, like it's the new iPhone or something like that. They've just class they've slapped an X on the end of it, and everything's going to be hunky dory. But by the twenty twenty nine financial year they're anticipating a one point nine billion dollar surplus by the ober Girl X measure. So in terms of the fiscals, you know, things are looking bad. Things are looking worse than the government expected. But hey, they've done a little bit of swanky pr here.

Look, you know Nikola Willis and the Finance and the Prime Minister. Rather, we're holding true to their downbeat beat forecast of what the economy was going to be looking like when Treasury opened its books. It is, it is grim reading and that was forecast. But I don't think we forecast anything like this. I mean, the main headline figure here is the expected surplus. That is how much extra money the government has after it's got its taxes and it's paid for all of the things such as healthcare, superannuation and or everything that a government does. Right that I was supposed to come into effect in twenty twenty seven. That's when the surplus was supposed to be happening. That's now being pushed out to beyond twenty thirty. Now, the budget cycles only go in these sort of one, two, three, four, five, six, sort of six yearly more really five yearly forecasts. When you're looking forward, I mean, we can see the twenty twenty five FORCAS here, twenty six, twenty seven, twenty eight, twenty nine. It goes out to twenty twenty nine on the obigal, which is essentially the measure of the surplus, surplus or the deficit, and it's at a deficit at the twenty twenty nine financial year. We can't see beyond that, so we technically don't know if it's going to be worse. So we can say at least twenty thirty is when the government is going to be sniffing a surplus. But there is a big butt here, you know that word that I just mentioned, Obergel. I won't give you the technical definition of this outside that is all you need to know. It's a surplus or a deficit. The government has, as I signaled, about forty five minutes ago or an hour ago, changed the way that it measures this, so it's taking out ACC's liabilities essentially ACC's deficit at the moment, ACC has a four point one billion dollar deficit. Now, what the government has done is they've essentially isolated that. They've ring fenced this deficit so it doesn't sit alongside the government surplus or deficit, which means that it's come up with a completely new measure that is four point one billion dollars better off. So by this new measure, and get this, this is what they're calling it. They're calling it so that the measure we have right now is called Obergel. What they're calling it is Obergel X, like it's the new iPhone or something like that. They've just class they've slapped an X on the end of it, and everything's going to be hunky dory. But by the twenty twenty nine financial year they're anticipating a one point nine billion dollar surplus by the ober Girl X measure. So in terms of the fiscals, you know, things are looking bad. Things are looking worse than the government expected. But hey, they've done a little bit of swanky pr here.

I would say, yeah, sounds like it. So obviously the opposition are going to push back on that. What about economists, Jason, do you think they'll look at that new way of calculating the operating balance and say, hang on a minute, that's a bit of trickery.

I would say, yeah, sounds like it. So obviously the opposition are going to push back on that. What about economists, Jason, do you think they'll look at that new way of calculating the operating balance and say, hang on a minute, that's a bit of trickery.

To be honest, the economists might even agree with something like this. I mean, if you look at actually what ACC is. The argument that Nicola Willis was making in there is that ACC is as an institution, it's set up to handle large deficits and then large as large surpluses. So if it's a bit down one year and then a bit up the other year, this fluctuation shouldn't be included in the surplus or the deficit measure because it's not something that politicians or lawmakers need to be across when it comes to making various different policies. For example, I mean ACC sort of has its liabilities to some degree ring fenced within there, So it doesn't really mean that this is Nicola Willis's argument that it should be part of the government's surplus or deficit measure. But you know, the opposition are going to standard the rooftops and they're going to cry, you've shifted the goalposts. You've shifted the goalposts. You've done something. It makes your books look better than they are by some creative accounting. Doesn't matter if it's technically correct, or if it is actually a more prudent way of measuring the ober gel in the first place, it just looks a little bit naff from the government, will be the opposition's argument.

To be honest, the economists might even agree with something like this. I mean, if you look at actually what ACC is. The argument that Nicola Willis was making in there is that ACC is as an institution, it's set up to handle large deficits and then large as large surpluses. So if it's a bit down one year and then a bit up the other year, this fluctuation shouldn't be included in the surplus or the deficit measure because it's not something that politicians or lawmakers need to be across when it comes to making various different policies. For example, I mean ACC sort of has its liabilities to some degree ring fenced within there, So it doesn't really mean that this is Nicola Willis's argument that it should be part of the government's surplus or deficit measure. But you know, the opposition are going to standard the rooftops and they're going to cry, you've shifted the goalposts. You've shifted the goalposts. You've done something. It makes your books look better than they are by some creative accounting. Doesn't matter if it's technically correct, or if it is actually a more prudent way of measuring the ober gel in the first place, it just looks a little bit naff from the government, will be the opposition's argument.

And what does this worsen expect result mean for every day in New Zealanders over the next few years.

And what does this worsen expect result mean for every day in New Zealanders over the next few years.

Well, it's the million dollar question, isn't it. But at the end of the day, I mean we did have the Treasury in front of the Select the Finance and Expenditure Select Committee a few weeks ago, and one of their top brass was saying, essentially, when you boil it down to it, when you push out a surplus, that essentially means that the Reserve Bank has to make further different decisions based on its official cash rate, and it might not be able to loosen that, ie, bring it down as quickly as it might have liked in the past. And as we know, the ocr is directly correlated to people's mortgage rates, so you can take about five steps from the government surplus to your own mortgage and technically there is some link there. In fact, it is probably quite a strong link, but we'll have to be quite down the track to realize that. The other thing Nikola Willis was at pains to point out today during the lockup was just how much worse things were than she expected in the budget. We talked earlier today about how we're expecting to see the New Zealand economy go back into a technical recession when we see those GDP numbers later this week, and that was top of her mind when she was talking about the New Zealand economy today. I mean she was talking about there are some good news here. I mean anybody that is invested in housing, or somebody there's got a house that they are running a loss on. I mean the house prices are expected to fall zero point one percentage points next year, then going up to five point three, then five point eight and then five point one by twenty twenty eight. So some good news on the housing market, and there's some other good news and employment. They're expecting unemployment to peak at five point four percent in June next year, in inflation to four below that two percent mark at some point next year because of lower oil prices.

Well, it's the million dollar question, isn't it. But at the end of the day, I mean we did have the Treasury in front of the Select the Finance and Expenditure Select Committee a few weeks ago, and one of their top brass was saying, essentially, when you boil it down to it, when you push out a surplus, that essentially means that the Reserve Bank has to make further different decisions based on its official cash rate, and it might not be able to loosen that, ie, bring it down as quickly as it might have liked in the past. And as we know, the ocr is directly correlated to people's mortgage rates, so you can take about five steps from the government surplus to your own mortgage and technically there is some link there. In fact, it is probably quite a strong link, but we'll have to be quite down the track to realize that. The other thing Nikola Willis was at pains to point out today during the lockup was just how much worse things were than she expected in the budget. We talked earlier today about how we're expecting to see the New Zealand economy go back into a technical recession when we see those GDP numbers later this week, and that was top of her mind when she was talking about the New Zealand economy today. I mean she was talking about there are some good news here. I mean anybody that is invested in housing, or somebody there's got a house that they are running a loss on. I mean the house prices are expected to fall zero point one percentage points next year, then going up to five point three, then five point eight and then five point one by twenty twenty eight. So some good news on the housing market, and there's some other good news and employment. They're expecting unemployment to peak at five point four percent in June next year, in inflation to four below that two percent mark at some point next year because of lower oil prices.

A note that Nichola Willis ruled out selling state owned assets in this term of government. Was that a surprise that she put that line in the scene today, not really a surprise.

A note that Nichola Willis ruled out selling state owned assets in this term of government. Was that a surprise that she put that line in the scene today, not really a surprise.

I mean, it was a good line of questioning from one of the reporters in there, but it's just not nationals, you know, for lack of a better term vibe. I mean, if she would have come out and say this is what we're doing in terms of looking to sell the silverware to pay for the mortgage, then I think it would have raised a few eyebrows. But what she did is she at a is she was at pains to point out the operating the operating allowance, which is essentially how much an extra new money the government has to play with every single budget will remain at very low levels traditionally a lot lower than the Grant Robertson era of fiscal prudency, I would say, but a lot of listeners would probably push back on that of Grant Robertson's time in the Treasury Office in the Treasury benches. But she's essentially saying that when we look at that number, it doesn't take into account the massive amounts of savings the government will have to do when it's putting together the budget. She's really really really playing down any expectations of anything new and shiny when it comes to the budget next year, essentially saying you will only be able to get new budget initiatives for your departments if it's an emergency. Anything else, don't count on it. Nikola Willis is not having any of it.

I mean, it was a good line of questioning from one of the reporters in there, but it's just not nationals, you know, for lack of a better term vibe. I mean, if she would have come out and say this is what we're doing in terms of looking to sell the silverware to pay for the mortgage, then I think it would have raised a few eyebrows. But what she did is she at a is she was at pains to point out the operating the operating allowance, which is essentially how much an extra new money the government has to play with every single budget will remain at very low levels traditionally a lot lower than the Grant Robertson era of fiscal prudency, I would say, but a lot of listeners would probably push back on that of Grant Robertson's time in the Treasury Office in the Treasury benches. But she's essentially saying that when we look at that number, it doesn't take into account the massive amounts of savings the government will have to do when it's putting together the budget. She's really really really playing down any expectations of anything new and shiny when it comes to the budget next year, essentially saying you will only be able to get new budget initiatives for your departments if it's an emergency. Anything else, don't count on it. Nikola Willis is not having any of it.

Now.

Now.

I know the answer to this question, Jason, But as the previous government taking any responsibility for their contribution to the nation's fiscal problems, or are they just putting the boat in for political gain.

I know the answer to this question, Jason, But as the previous government taking any responsibility for their contribution to the nation's fiscal problems, or are they just putting the boat in for political gain.

Listen, we're going to hear from the opposition in about twenty minutes before they go into the house. But I would imagine that's exactly what they're going to do. I mean they will, we will ask them. We'll hang on a second. Nikola Willis has been very candid here about your participation in what the books like look like. Now. I mean, the thing is, and I will say this in the previous government's defense, and it's something like that. This government seems to have abnesia over is COVID nineteen. They never seem to mention it. It's just like everything is really bad and they don't go into the detail. Why. Yes, the previous government did make a lot of alarming spending decisions. Yes, things absolutely got out of control on a lot of levels. But we can't forget the sheer economic hit that COVID had on not just the New Zealand economy but the government books as well, and that's going to take a long time to fix. And I don't think it's all necessarily the last government's problem. I do think that they for sure deserve a lot of blame and scrutiny for the way that they handled it, But let's remember that it was a pretty big, unprecedented economic event.

Listen, we're going to hear from the opposition in about twenty minutes before they go into the house. But I would imagine that's exactly what they're going to do. I mean they will, we will ask them. We'll hang on a second. Nikola Willis has been very candid here about your participation in what the books like look like. Now. I mean, the thing is, and I will say this in the previous government's defense, and it's something like that. This government seems to have abnesia over is COVID nineteen. They never seem to mention it. It's just like everything is really bad and they don't go into the detail. Why. Yes, the previous government did make a lot of alarming spending decisions. Yes, things absolutely got out of control on a lot of levels. But we can't forget the sheer economic hit that COVID had on not just the New Zealand economy but the government books as well, and that's going to take a long time to fix. And I don't think it's all necessarily the last government's problem. I do think that they for sure deserve a lot of blame and scrutiny for the way that they handled it, But let's remember that it was a pretty big, unprecedented economic event.

Yeah, he's sir. Nichola Willis previously signaled she was looking at requiring charities that are really businesses to pay more tax. Was more set about that when she hopes to bring that legislation in how much they can expect to get from that, Well, she.

Yeah, he's sir. Nichola Willis previously signaled she was looking at requiring charities that are really businesses to pay more tax. Was more set about that when she hopes to bring that legislation in how much they can expect to get from that, Well, she.

Was hinting that that was coming on budget day. I mean she's talked about this charities tax for some time now. And another number that was quite baffling to somebody that isn't a millionaire like myself, is that New Zealand between the budget and between today's update, there has been thirteen billion dollars less of tax revenue over that time. So that's less money that the Finance minister has to play with or to fund new initiatives, and what she was talking about was a number of new initiatives, whether they be on the quote revenue gathering side of things. Now, revenue gathering is just an economic way of saying tax increases. She was very clear it wasn't anything along the lines of a capital gains tax, and it certainly wouldn't be an increase in income tax or anything to that degree, given the fact that the government has just pulled that down. But she said she'd be looking at a charity's tax. She's talked about value capture. When you have a new highway built in the house, prices around the new highway subsequently go up. She's talked about that, and she was very candid about a foreign buyers tax. Now this has been ruled out by one Winston Raymond Peters in the coalition negotiations, but she said, you know, if Winston's willing to change his mind this government or with her. She was very specific to take off her Finance minister hat and put on her National Party spokesperson hat. She was very specific in saying if Winston wanted to reverse the way that he looking at that she would be very open to looking into a foreign buyers tax.

Was hinting that that was coming on budget day. I mean she's talked about this charities tax for some time now. And another number that was quite baffling to somebody that isn't a millionaire like myself, is that New Zealand between the budget and between today's update, there has been thirteen billion dollars less of tax revenue over that time. So that's less money that the Finance minister has to play with or to fund new initiatives, and what she was talking about was a number of new initiatives, whether they be on the quote revenue gathering side of things. Now, revenue gathering is just an economic way of saying tax increases. She was very clear it wasn't anything along the lines of a capital gains tax, and it certainly wouldn't be an increase in income tax or anything to that degree, given the fact that the government has just pulled that down. But she said she'd be looking at a charity's tax. She's talked about value capture. When you have a new highway built in the house, prices around the new highway subsequently go up. She's talked about that, and she was very candid about a foreign buyers tax. Now this has been ruled out by one Winston Raymond Peters in the coalition negotiations, but she said, you know, if Winston's willing to change his mind this government or with her. She was very specific to take off her Finance minister hat and put on her National Party spokesperson hat. She was very specific in saying if Winston wanted to reverse the way that he looking at that she would be very open to looking into a foreign buyers tax.

Very interesting, Jason, well done, Thank you very much.

Very interesting, Jason, well done, Thank you very much.

Thanks Mack, I'll talk to you later.

Thanks Mack, I'll talk to you later.

That is News Talks. He be Political editor Jason Walls.

That is News Talks. He be Political editor Jason Walls.

For more from News Talks B listen live on air or online, and keep our shows with you wherever you go with our podcasts on iHeartRadio

For more from News Talks B listen live on air or online, and keep our shows with you wherever you go with our podcasts on iHeartRadio