Finance Minister Nicola Willis has made it clear she is staying in the role. Photo: RNZ / Mark Papalii
An economist says the finance minister has not been a responsible manager for the country's finances.
But Nicola Willis is shrugging off calls to resign, saying Prime Minister Christopher Luxon has confidence in her and the plan to revive the economy.
University of Auckland Matthew Abel chair of macroeconomics Robert MacCulloch has joined with former finance minister Sir Roger Douglas in calling for Willis to step aside.
"She has no plan, she's saying other plans don't meet with her satisfaction. All she can do is either slash public services, slash spending on hospital and public services, or cut public services in future years," MacCulloch said.
He was commenting after it was revealed on Thursday the economy had shrunk 0.9 percent in the June quarter, much worse than economists had been expecting.
Robert MacCulloch Photo: Supplied
He told Morning Report Treasury was forecasting public debt to blow out to 100 percent of GDP within several decades, and Willis had not done anything significant to stop this happening.
"That's why the economy is tanking, and why many Kiwis are leaving the country."
MacCulloch said investors had lost confidence in the country.
Willis should have implemented a compulsory savings scheme as was done by former Australian prime minister and treasurer Paul Keating in the mid-1990s.
"Aussies are retiring now with ten times the amount of money of Kiwis. The average balance in their scheme is $350,000, the average balance in Kiwisaver is $35,000."
He said Australia's savings pot has around $4 trillion in it. Contributions come from employers and from stopping subsidies from the "richest 10 percent".
"That saving creates an enormous pool of capital which in many countries then can be drawn on for investment, for infrastructure for building hospitals. The key is, we don't have the savings to do that in this country."
No plans for slashing
But Willis said her plan will work, and the government was sticking to it.
She wouldn't be slashing public services, and economists and international debt rating agencies have agreed with the government's plan.
Willis disagreed with MacCulloch's claim investors had lost confidence, saying this quarter's GDP result was only a setback.
"My job is to set out to investors what we are doing with our fiscal path over the next five years. We've done that, we've shown a path to reducing debt, getting the books back in surplus and investors have endorsed that path."
Willis said the calls for her to resign "didn't even come up" in her discussion with Luxon last night.
"I speak with the Prime Minister about the economy just about every day and certainly every week and we are aligned."
When asked whether job cuts in the public service or tax cuts to personal income tax and to landlords was the right approach, Willis said it was.
"Without the tax reduction we delivered to New Zealanders, workers would be materially, significantly worse off right now. And we know, when we talk to Kiwis they say that actually they want to see income growth, and that's what our policies support."
She said the government will continue investing in frontline services, while spending efficiently.
"Yes we will stick to the plan. What our plan is about is gradually consolidating a massive structural deficit, left to us by the last government, who spent like drunken sailors.
"We've illustrated with our plan we can get back to surplus, we can get the debt to curve down, while also ensuring growth and activity in the economy."
Sign up for Ngā Pitopito Kōrero, a daily newsletter curated by our editors and delivered straight to your inbox every weekday
