BRETT O'RILEY

23 May 2024
EMA CHIEF EXECUTIVE
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MORE REAL TALK FROM THE FINANCE MINISTER ABOUT THE STATE OF THE ECONOMY.

IN A PRE-BUDGET SPEECH TO THE EMPLOYERS AND MANUFACTURES ASSOCIATION, NICOLA WILLIS CONFIRMED THE GOVERNMENT HAD FOUND THE SAVINGS TO PAY FOR THE TAX CUTS.

BUT SHE WARNED THE BOOKS ARE STILL IN A STRUCTURAL DEFICIT - MEANING SPENDING IS OUTPACING TAX REVENUE.

SO MORE CUTS ARE ON THE WAY.

THE EMA'S CHIEF EXECUTIVE BRETT O'RILEY IS WITH US...

-HOW DID THE SPEECH GO DOWN?

-IS IT REFRESHING FOR THE MINISTER TO TALK IN REAL TERMS - NOT SUGAR COATING ANYTHING?

-HOW ARE BUSINESSES FEELING AT THE MOMENT? IT'S NOT JUST THIS BUDGET - BUT THE PLAN TO GET THINGS BACK ON TRACK?

-ARE THERE THINGS YOU WANT TO HEAR FROM THE GOVERNMENT THAT YOU'RE NOT AT THE MOMENT?

NEWSTALK ZB

The Finance Minister's again dampening expectations - before next week's Budget.

Addressing the Employers and Manufacturers Association in Auckland this afternoon, Nicola Willis has warned the Government faces a structural deficit.

That's the fact Government spending has way exceeded tax revenue -- and it's projected to continue without significant spending reforms.

Nicola Willis says it's about six billion dollars a year.

She says that's not sustainable long term, because it requires continual borrowing to cover expenses -- which leads to a never-ending debt spiral.

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A promise from the Finance Minister the Government will get the books in order.

Nicola Willis has delivered a speech to the Employers and Manufacturers Association - a week out from the Budget.

She says high inflation and high interest rates are top of mind.

She's confirmed they've hit their saving target for funding their tax package - but says more spending cuts are on the cards.

Willis says Kiwis need a clear and credible path out of this economic mess - which will come with a little relief today and hope for tomorrow.

STUFF

The government intends keeping a tight rein on spending in the future and maintaining an overall contractionary fiscal stance, the Finance Minister says.

Nicola Willis has spoken to the Employers and Manufacturers Association ahead of Budget 2024.

Bringing down high inflation and interest rates were among the government's priorities, Willis said.

Mentioning again the necessity of tax cuts, Willis said contrary to what her audience might have heard from some quarters, they would not require additional borrowing.

"Since tax relief will be fully paid for, it should actually - at the margin - take a bit of pressure off inflation, given that households may save some of their tax relief rather than spend it all.

"More importantly, we will be reining back spending in future years and maintaining an overall contractionary fiscal stance. Treasury has advised me that this means that interest rates could track lower than would otherwise be the case."

She said that lower interest rates would be important for every Kiwi with a mortgage and every business carrying debt.

"We will do our bit to support a lower interest-rate future."

She said all the economic pointers showed the country was experiencing "the hangover after the wild party".

"And, as everyone knows, the wilder the party, the longer and messier the hangover."

However, Kiwis had realistic expectations of what the government could do and did not expect it to wave "a magic wand".

"Instead, people are looking to us to show a clear, credible path out of this economic and fiscal mess. You are looking for a little relief today but most importantly you need that hope that tomorrow will be better. That's what our Budget will do."

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