Steven Joyce: Former Finance Minister previews the Pre-Election Economic and Fiscal Update
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How does the Pre-Election Economic and Fiscal Update guide election campaign promises?
So pre-food day, an opening of the government books, a legacy of the Ruth Richardson years, of course, designed to show us all the state of the place so we can weigh up the ensuing promises in an election campaign. So what do we get? Stephen Joyce, former finance minister, is with us. As a mechanism, put your campaign hat on as well, as a mechanism for a government to spruik what they've done, how important is today in the document?
Well, it's important for an election campaign because it's effectively an anchor for the parties, right? So it's the best one you've got. In these times, it could change... In six months' time, three months' time, Donald Trump says something else. But it's the best anchor that says this is where things are at today. And it makes all the parties actually talk about how they're going to pay for what they're talking about paying for.
So Labour needs to find $18 billion.
Can New Zealand’s budget reveal how Labour will fund its $18 billion plans?
Is there $18 billion in there today that we will be able to look and see and go, ah, that now makes sense to me? I suspect not.
But almost prepared to bet the farm on it. The simple fact is there's lots of things that are going to be more expensive. I mean, interest rate costs are going up. Bond rates around the world are going up. That's going to be more expensive. But I suspect listening to Nicola Willis over the weekend, it's going to look a bit better than it did at budget time, probably because the economy hasn't suffered as much as many people expected at budget time from the Iran war. But this is all short-term stuff. There's still going to be some pretty big challenges out
there.
Why might the economic outlook look better than expected, and what are the risks?
Indeed. So how much does she know, by the way, in terms of –
She'll
know pretty much all of it by now. Okay. And so would you expect it to be materially better – And we go, oh, my God, I didn't realize. Or it's just it's the difference between, you know, $4 billion and $3 billion.
I think it will be – it's got to be a bit better because you wouldn't say the things she said on the weekend if you didn't expect it to be better. I mean, you'd have to know that things were going to be more positive. So I think it will be more positive than many people think. But there's dangers on all sides with that too because suddenly the public thinks, oh, we're out of trouble and go and pay off student loans or do whatever it is that you want to do. And unfortunately –
How can the government reduce New Zealand’s rising public debt?
It doesn't really matter to some degree what the short-term situation is. Yes, potentially a vote of confidence in the government's economic management for the short-term, but the big questions are still out there, which is how do you get debt down? We're still going to be at 40-something percent net debt, which is high, right at the time when the world is actually looking at government debt and saying,
hmm, it's too high. I've asked everybody this question. Do you think people get that? Do people actually
understand it? Some people do. Some people don't. Some people don't want to.
Do voters understand the impact of government debt and spending?
Some people, it's about what's in it for them. That's democracy. There's a range of ways that people approach it. Some people just say, politicians are all in the trough and I'll just get what I can. Thanks very much. That's a view. I don't think it's a sensible view for your kids and your grandkids. I think the most important view is how How do governments control their spending and make sure that we're getting a sensible approach to running the government's
bill?
Why are people struggling despite economic growth, and how do inflation and COVID factor in?
Your view of this, having been around a while, this thing that we're in at the moment where if you look at the 2.6% GDP, for example, by any standard historically, it's a solid number, and yet we're miserable. Is that unique? Or have we always
sort of... No,
there's
two things going... Well, no, I don't think it's unique. I'm just old enough, as I think you are as well, just old enough to remember the inflationary times, the 70s and 80s. And people forget. And I remember just a few years ago, we were being told that inflation was dead and was never coming back. Inflation is pernicious. It's tough on people. Prices constantly going up.
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Chapters
6 chapters
1
How does the Pre-Election Economic and Fiscal Update guide election campaign promises?
0:00–0:48
2
Can New Zealand’s budget reveal how Labour will fund its $18 billion plans?
0:48–1:28
3
Why might the economic outlook look better than expected, and what are the risks?
1:28–2:11
4
How can the government reduce New Zealand’s rising public debt?
2:11–2:42
5
Do voters understand the impact of government debt and spending?
2:42–3:14
6
Why are people struggling despite economic growth, and how do inflation and COVID factor in?
3:14–4:24
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