Nicola Willis: Finance Minister on the decision to reduce the operating allowance by $300 million for the next Budget
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What led to the reduction of the operating allowance to $2.1 billion?
This fuel, travel, aviation, tourism, cutting services, all that sort of stuff. So we'll get back into that after 8 o'clock. Meantime, we're 23 minutes away from 8. You can't say the government isn't trying to cut their cloth in these war-ridden, economically messy times, can you? I mean, the Prime Minister, as part of this pre-budget roadshow yesterday, revealed the operating allowance is now down to $2.1 billion. Most of us thought it was tight at $2.4. Nicola Willis is charged with keeping within the margins, and she's with us. Morning.
Good morning, Mike.
How did you land on the 300, 2.4 to 2.1? Could it have been 200 or 800 or 900? I mean, how did it work?
How is the government identifying savings in tough economic times?
Well, I've always said that those operating allowances I signal in advance are a ceiling, not a floor. And so as we've been putting together the budget, we've always been aiming to spend as little new money as possible. Everyone's aware a bunch of stuff came at us from sideways in the form of the fuel crisis, which has created extra pressures for the government in terms of our need to provide additional support to businesses. low-income working families, the need to put buffers aside for the extra fuel costs across government. But we have worked very hard as a group of ministers to identify, okay, in these tough times when the books could get a battering if we're not careful, Let's make sure we're looking for savings in every government agency, every government department.
Ministers have done a good job and those savings have allowed us to supplement what we can invest so that we can meet the really important pressures in the health system, making sure we're still rebuilding our defence force. the priorities that really matter. And so ultimately, that's meant we've trimmed that operating allowance back to $2.1 billion, which makes real sense in a time when I think getting the books back in order is more important than ever. We're in an uncertain world. No one owes us a living. And we can't just keep racking up debt on the credit card.
What investments are prioritized to drive growth and affordability?
No. It increasingly leaves you, though, with a reliance on efficiencies and chair shuffling to solve problems, doesn't it? And that becomes difficult.
It means that we have to be very careful about the choices we make. And gone are the days, I think, when political campaigns will be about what new spending program you can design to dish out more lolly in a creative way. We're now in a time where the task for sensible leaders is to say, what are the investments required to drive the things that will support growth and living standards and affordability into the future. And that's why, of course, we've made that decision. Actually, the fees-free program, it doesn't cut it in this new age. It's not delivering results. That is investment that should be made elsewhere and things that really matter. And there have been choices like that throughout this budget process.
I get the, you're not going to tell me, but Luxon gave it away to a degree. You're saving some of that money. So in other words, you're not taking all of the fees-free money and sticking it in trades. You're saving some. Are you saving most or a bit?
Well, some of it is supporting our ability to invest in the health system and the education system and other areas. And a portion of it will be used to support trades training, which we think is critically important for getting more young people into good jobs, but not all of it.
No, I say, but my argument is not that I disagree with you because I don't, but what's the difference between a government giving money to an employer to train a sparky versus the government giving money to a university to train a doctor?
Well, wait and see the actual announcement because the bit I'd just highlight is it's not all about workplace-based training. It's not all about apprenticeships.
How does the government plan to manage health system pressures?
Actually, what happens in schools is really important in our view. And so that is part of the policy announcement we'll make in due course.
The great contest of ideas interests me. So yesterday, just yesterday, Hipkins was saying you're not doing enough.
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Chapters
5 chapters
1
What led to the reduction of the operating allowance to $2.1 billion?
0:00–0:33
2
How is the government identifying savings in tough economic times?
0:33–1:54
3
What investments are prioritized to drive growth and affordability?
1:54–3:38
4
How does the government plan to manage health system pressures?
3:38–7:00
5
What is the significance of the fees-free program in the current budget?
7:00–9:49
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