Watch Live: Prime Minister Post Budget speech

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[00:33:41]tour. Prime Minister, distinguished guests, ladies and gentlemen, very warm greetings to you all and welcome to Westpak. It gives me great pleasure to welcome you all to this postbudget lunch today. So, let me start first by congratulating you, Prime Minister, and the Minister of Finance, for passing budget 2026. It's a challenging exercise under the best of circumstances. And as we look offshore at the geopolitical tensions and economic upheaval, it's fair to say that we all recognize that this is not the best of circumstances.

[00:34:16]As you so clearly articulated in your pre-budget speech, the world that we live in now has changed and we can no longer rely on the rules-based order that has been the status quo uh for trade and security for the last few decades.

[00:34:30]And we all know that we have to change uh respond to these changes in order to ensure that we remain a stable and prosperous nation or we risk getting swept away in the wake of major events.

[00:34:43]So for a small country that we all love perched on the edge of global supply chains, that means investing more in our economic and infrastructure resilience, bolstering our energy security, and securing and restoring our fiscal buffers. So we thought yesterday's budget is a reflection of this new reality. And there was a clear focus on returning the crown's books to surplus sooner, starting to reduce public debt, and making the most significant investment in infrastructure to date.

[00:35:12]What was equally clear in the budget is that the government cannot achieve these goals on its own. Individuals, communities, and businesses all have a critical role to play in building the resilience of our country to withstand forces beyond our control. Whether that's an energy crisis, an economic downturn, or a major natural hazard. The gas transition loan guarantee scheme is a brilliant example of how the public sector and private sector can work together to solve challenges for Alieroa, leveraging each other's strengths to make a real impact. But from our perspective, it's not just the approach of large entities working together which will make the difference.

[00:35:53]Through many generations, New Zealanders have demonstrated an ability to be very curious about the changes impacting Alier, to understand them, and to rapidly determine how to adapt our approach so we continue to thrive. One of the real privileges of my role is that I get to have conversations with customers large and small up and down the country across many sectors. And I continue to be inspired every day by the agility and resilience that our customers put into practice every day.

[00:36:24]And those inherent characteristics that we all have of resilience and agility have been ever more prevalent in those conversations that I have had in the past couple of months. And so my view is it's a great foundation upon which to build national resilience whatever the challenge we face. So speaking for the Westpak team we see our role as that of an enabler and a connector in this context. We want to continue to support families into homes, help startups get on their feet, unlock the enormous potential of the Moldi economy, support that energy transition and the development of muchneeded infrastructure, and of course, commercialize the innovation that Kiwis are famous for. We also want to provide, as you'd expect, the banking and wider solutions that help address the challenges we all face. So in short, we don't want to be regarded as simply a lender by our customers, but a critical partner at every personal and business life stage. Hey, Moana pocki eky na etwaka. A choppy sea can be navigated by the canoe and we're all in this walker together. We as a nation have withstood many monumentous events over the course of our history to stand where we are today. So choosing to be in the Walker together, demonstrating that that curiosity, agility, and leveraging everybody else each other's strengths will help us continue to thrive even in a choppy ocean. Nora, Tenoto, Tenoto, Kiora, Cotto, Cartau, Koto, and thank you, Katherine, for the warm welcome and setting the scene for today. Um, for those of you who I haven't had a chance to say hello to yet, my name is Sharon Lloyd, and I'm the chief executive of the circle here today. It is my absolute pleasure to welcome all of you here, our members, guests, friends of the circle, uh those of you here from government departments.

[00:38:22]Welcome.

[00:38:24]Uh it is my job to do the important housekeeping of course first. Health and safety bathrooms are located to your right at the end of the corridor. In the event of a fire or emergency, please follow all instructions from the Westpack staff. Please obviously do not use the lifts. Fire escapes for this level are located via the rear service corridor which is behind me. Uh the assembly point if we do have to evacuate is at the meeting point outside Slatterie and Suns which you all know as the old Brew on Key Street.

[00:38:54]Um should you require first aid, please advise a Westpack staff member. And lastly, of course, this is a smoke-free building. Uh Prime Minister, thank you for being here today. It is an absolute honor to host you again and to hear firsthand about the government's fiscal plan in the road ahead for Alteora. Um this is of course a flagship event in our calendar and it's a real honor to have you here with us again. It marks nearly two decades of tradition for the S circle and it serves as a platform to foster informed dialogue between the government and the business community.

[00:39:25]The circle is really proud to be a strategic partner alongside leaders shaping New Zealand's future. Our ro role is simply not to convene but to connect people, ideas and opportunities.

[00:39:36]We are really passionate about building meaningful relationships and helping connect ideas to action and that's what sits at the heart of what we do.

[00:39:46]This event would not be possible without the support of our partners and we are incredibly proud to partner with of course Westpak. Katherine, thank you for hosting us today and to Pip for being here as well. uh to Rob Aken and the team at Accenture and to Bridget Snelling and the team at Zero. Thank you all for your long-standing commitment to this lunchon. We're also really pleased to acknowledge the support of Adobe and warmly welcome Jason and your team here today. And postbudget wouldn't be what it is without our great friend Fran O' Sullivan. I'm sure she must sigh every time around this time of year when she gets the call from Sharon. Um but thank you for being here with us. As I said, this conversation wouldn't be the postbudget without you. Uh the f the format for today. In a moment we'll break for lunch and networking and then we'll return to a fireside conversation between the prime minister and Fran.

[00:40:33]Today is on the record. We welcome the media that are here today. And we also encourage all of your questions. There will be a microphone so that you can ask your questions of the prime minister. We just ask that you please introduce yourself and where you're from so he knows who he's speaking to. Uh so lunch is about to be served. Enjoy and we will reconvene in about 20 minutes time.

[00:40:52]Thank you.

[01:00:44]Everyone might get on.

[01:00:53]>> I might say you're looking to get on the way. Ask for what?

[01:01:01]>> Uh, excuse me. We're looking to get underway now.

[01:01:17]Thank you, Jordoto Couture. Uh, good afternoon. I hope you enjoyed your lunch and your networking.

[01:01:28]Uh, I'm Rob Bacon. I'm part of the Accenture New Zealand leadership team.

[01:01:31]And on behalf of Accenture, it's my honor to welcome you to this afternoon's postbudget address and introduce the right honorable Christopher Luxen, the 42 42nd uh prime 42nd prime minister of New Zealand. Firstly, thank you Katherine and the whole Westpak team for hosting and thank you Sharon and the Trans Tasman business circle for running this event.

[01:01:52]The annual budget always invites reflection on where we are as a nation on the choices our government has made and what those choices mean for the businesses and communities we all represent.

[01:02:05]Yesterday, Finance Minister Nicola Willis delivered this government's third budget with a clear message of fiscal discipline, a return to surplus sooner than earlier forecast, and a focus on foundations that underpin a productive and growing economy, education, health, capital infrastructure, energy transition, cyber security, and public sector reform, including enhanced productivity with greater use of AI and digital tools.

[01:02:34]The budget has been positioned as having expenditure restraint and necessary prioritization in an uncertain and changeable environment.

[01:02:45]This afternoon, we have a unique opportunity not to hear a press release, not to read a Treasury summary, but to hear directly from the architect of this government's economic vision. A leader who brings to this role a combination of commercial acumen and political conviction.

[01:03:02]Before entering parliament, our guest speaker today spent over two decades in global business, including time as the chief executive for V New Zealand, leading one of the world's most admired airlines. His extensive professional background also includes 18 years of service at multinational consumer products giant Uni Lever. He understands what it takes to build confidence in uncertain times and he understands New Zealand's place in a rapidly shifting global economy.

[01:03:29]We certainly look forward to the conversation today and I'll now invite Prime Minister of New Zealand, the right honorable Chris Christopher Luxon to the stage to begin today's fireside chat with our facilitator, Frano Sullivan.

[01:03:47]Just give me that. Just give me that.

[01:03:51]It's all right. It's okay.

[01:03:54]Before I dive into the stage, >> you would have done a bit of stage diving in your time, Fredo Sullivan. But I knew at university.

[01:04:05]>> I knew you were going to try and put me off my game really early. Last year it was Oprah.

[01:04:11]>> But anyway, um, look, thank you so much.

[01:04:13]And, um, how do you feel about your third budget?

[01:04:16]>> Uh, really, really pleased. I mean um you know I think the messages have been well signaled. I think in the state of the nation uh speech I talked a lot about how we needed to actually have restraint and actually make that a virtue uh that it's very easy in an election year to sort of spend money but actually it's important that we have fiscal discipline and I think we've followed that through very well and I think people have understood it and I think they appreciated it and the the remarks at the state of the nation the way we're handling the fuel crisis we've signaled again the the balance that we're trying to strike uh coupled with the the security speech I gave a couple of weeks ago and then obviously the messaging through the budget period So, you know, let's be clear, we're in really hard times. Uh, I think all of us are over it. We've had crisis after crisis, not just in New Zealand, but around the world. Uh, I talked to different world leaders even this week and, you know, some of the challenges they're dealing with are some of the same challenges we have. We're coming through a pandemic. We're coming through inflation and recession. We're coming through weather events. We're coming through Trump's tariffs. We're coming through now a fuel crisis. And so again, what it's about is like your businesses, it's about your relative competitiveness and can you navigate that uh when there's 195 other countries in the world doing exactly the same thing?

[01:05:23]>> I mean, you've um um cho chosen restraint over stimulus. Yes. Um how do you feel New Zealanders are going to sort of work through quite a few more months of fiscal pain and particularly when you look at the Reserve Bank shadowing interest rate increases? Yeah, look, I think um we know it's difficult, but I think we really did internalize the mistakes of CO very well. I mean, you have to understand we were the second biggest spending country probably in the west. Uh as a result, we had a hell of a party and then we had a very big hangover that came after that. Uh and essentially that is because the cash cash bazooka got sort of spent around and um as a result we ended up with inflation and interest rates and a and a and a slowdown and then obviously unemployment. So I think we learned those lessons very well and we've signaled very strongly that we want to do as least damage to inflation and economic growth through this crisis. And what you've seen yesterday is yes the it's it's delayed but it's not derailed uh in terms of our fiscal plan and strategy and our idea is that this will pass uh ultimately uh although each day it seems like it's a it could go either way. uh and you know but we want to come back up on our foils very quickly and I think there are many other leaders I've spoken to around the world who've gone into deep deep uh cash bazooka spending and I think we'll make the mistakes that we made in co that actually meant that we were very slow coming out and well behind others uh and we want to come out of this quickly and get back up on our foils as quickly as we can. Yeah, I mean talking around some of the business community, I mean it seemed to be an element of political guile to the budget and you'd expect so with an election pending, but you know, you've got a smile on your face, but um >> it sounds like you call me a politician >> probably. So, so wedging labor when it comes to things like superanuation. I mean, your finance minister, she was right up on it about that had to be dealt to. And of course, um, you know, you kind of saw, um, Shane Jones's face.

[01:07:16]You know, the mua didn't say a thing.

[01:07:18]So, um, you know, how are you going to deal with that campaign on it? Cuz it did seem that she was flagging that up very strongly.

[01:07:26]>> Well, I think we've actually flagged it up over the last couple of months if I'm honest. Uh, you know, I guess if you're in my position, you know, we're really trying to fix the basics that Labor broke in my view. Uh, and you've seen us do a lot of that over the last two and a half years. But we are also quite a reforming government. I mean, we're taking on education reform, RMA reform.

[01:07:45]We know we've got to deal with savings and investment and a number of other things. The housing market and getting that balanced in the right way. Uh superanuation is one of those things that you're looking out the front windscreen of the car and you can see a bump a bit down the road. Uh we're at $25 billion today. Uh by the 2030 we'll be at $30 billion. We're growing about $2 billion incremental a year. uh on meeting that we have a deep deep commitment to universal superanuation uh absolutely but you've got to be sustainable and affordable so the question then is let's have a bit of a debate about that so I know it's a bit argy bargy with different parties having different views but I'd actually sooner have a a bigger conversation about a problem that we're going to have to deal with and we've got time and and just like you deal with it in a as a CEO or in a business sense you know we want visibility on that problem so that we can actually work out where we can find common ground politically to do the right thing by New Zealand and New Zealanders because it's not a deeply it shouldn't be an ideological issue. It's actually a New Zealand issue that's the country is going to have to deal with and successive governments of different colors or flavors will have to deal with. So why don't we talk about it uh and why don't we work out what that where if we can and we should try at least try to find some common ground around an issue like that. So, you know, we you've heard us talk about the need to lift, you know, contributions. Uh, as a national party, we've talked about that. We have views on uh policies that we'll take to an election that'll be quite credible, but every other party will do the same. And I don't I don't think it's a bad thing. I think that noise is actually talking about a problem and then we've got to find a solution to that problem. And I think you know in government coming in 5 years ago and government does something really badly which is we don't do problem definition great you know and we often have solutions roaming around or ideology roaming around in search of a problem to attach to. So >> yeah might I wouldn't get too caught up in the political noise. It's just us saying well that's one of the issues we're going to have to deal with. Uh in the same way we're going to have to deal with public sector reform. Uh the same way we're going to have to deal Yeah.

[01:09:36]We've got two big structural challenges in New Zealand as as does every other country which is one is you've got this big shift in geopolitics from multi-ateral to multipolar and on the other hand you've got this massive technological uh change that's going to be the most uh disruptive exciting and challenging uh change of our generation.

[01:09:55]I I'll come back to the AI transformation and I've been reading a lot of what people like Jamie Diamond have been saying and he's been forecasting working weeks of 3.5 days and so somebody has to pick up the dividend from that. But just coming back to superanuation I was quite surprised in the budget where the national superan the sorry New Zealand super annuation fund uh the timing for draw downs was being pushed out.

[01:10:21]>> Yes.

[01:10:21]>> Push out the 25 >> 54. Now look, um, when that was introduced, uh, it was kind of sold to people like myself, the baby boomer generation, that it would be there to kind of start spilling out by the time we started drawing on it. But we're all going to be dead by then. So >> Fran, you're going to live forever. You and I have another 27 of these things to do together, I'm sure.

[01:10:45]>> That would be funny.

[01:10:47]Ramen when no seriously what was the um what was the thinking about that and and isn't that really going to become more of a sovereign wealth fund you know sort of not necessarily used for the original purposes but something else which will create dividends back to future government >> I think those are the kind of conversations that we've got to have as part of that broader superanuation conversation and that's why I say to you look we're we're early days in a in a problem that's coming at us So, I like the idea that, you know, you've talked about that as one potentiality. We've talked about a whole bunch of other things. You've heard age eligibility talked a lot about, >> but there's probably a lot of other ways to think about how we might solve this problem. And, um, I'd soon to sort of let those ideas come from you guys and from different sectors of the economy.

[01:11:33]And, you know, it's interesting, you know, Fraser Winter, good good friend of yours of mine, is he's done some deep thinking on Kiwi Saver 2.0. The retirement commissioner had some great ideas. I'm sure the political parties there'll be different thoughts as well and I think all of us just uh thinking through and getting a solution for New Zealand. But what we can't do is um sort of just keep our head in the sand and pretend it's not happening and I'd sooner actually put sunlight on a problem uh and see it as an opportunity to do something about it. Um a lot of you know if you think about the last few years of you know building up the future you know a lot of the conversations we had from many of you even before I came to politics about RMA reform example that is a massive reform from our government you know uh to do that in coalition in a hard time uh in a down cycle economically but to still determine that we're going to do that is quite bold and brave I reckon uh because it' be quite easy to play a different political game but that's important stuff you know uh the same with education reform. Yeah, I mean it's we're turning the system upside down because we have to. I mean we want our kids and they're not going to lose to kids in Singapore or Australia or Canada or Ireland frankly. Um and um so we are doing those things of building the future as well as fixing the broken system as well.

[01:12:42]>> Yeah. I mean what are you the most proud of from this budget?

[01:12:46]>> Um well actually for an MMP government it was a pretty collaborative collegial exercise. I know there'll be a bit of sport in the beltway and people bang on about that a bit but um actually you know quite a lot of alignment around what we need to do about maintaining that fiscal restraint and discipline which is very difficult to do. Um there'll be some in the room that will say Chris you're going too slow and you need hard austerity and you should be tougher and cut harder and do all that stuff. But having looked at history you know you put the car into reverse and there's a lot of pain and suffering for Kiwis if we did that. The British experience would show you that. Equally, on the other side, people say you got to stimulate, stimulate, stimulate. And we've seen that. It's just spend more, tax more, borrow more because every spending is either tax or or borrowing.

[01:13:28]It's as simple as that. And we're right up against the the debt uh position of where we want to be. And we got to pay that down and bend that down. You're seeing that in the budget uh going forward. So we're finding that third way through which is actually being you know sensible to say it's about daily, weekly, yearly discipline of how we run government and manage the show that we actually to generate those 50 billion of savings is really hard. Uh but we've done 50 billion in three years and that's enabled us now to invest in frontline services, education, healthcare, um you know law and order and other things. Equally by having fiscal discipline I think when you look out in the world you know the banks are going to start asking western economies quite rightly about the sustainability of their fiscal strategies and plans and so you know the fact that we are in surplus in 2028 uh when you think about our friends across the ditch I think they may be in 2036 if they're lucky and others around the world you know you're going to have to demonstrate credibility fiscally and financially to that to that community of banks internationally uh which we need going forward forward. So for us it's just it's like a turn I mean as I said before it's a it is a turnaround job we're doing and you just got to wrestle your way through and deal and sequence your way through out of the hole to a much better place.

[01:14:41]>> I mean can I just challenge you a little bit on that given >> you want me to go harder don't you?

[01:14:46]>> I do. Given the rapidity of the um types of crises we faced in the last few years.

[01:14:52]>> Yeah.

[01:14:52]>> Why haven't you gone harder on the fiscal side? because I think we would have caused more pain and suffering and I think you're trying to find the balance of getting that right and I I hear that a lot you know Chris I would have thought you would have gone much harder um and know I've determined we've determined that that's the the best balance through I I looked at what happened in the UK with the austerity approach uh with Cameron uh I've seen what's happened with the labor approach that we're all dealing with that hangover and pain now um and I think actually just good management uh as you would with a running a company just that you actually make sure you're getting it sorted and and working your way through it is actually the better way through and you're starting to see that now surplus in 28 bending the percentage um of of GDP as debt uh coming down. Do you feel confident on the Treasury forecasts around that? Because it does seem to be quite a bit.

[01:15:40]>> It's funny. I mean, uh the forecasts go in our favor and everyone criticizes them and then uh when they go the other way, no one does. But uh it's um Look, no, it is. And I and we get to, you know, I think we've you've you've seen it actually in terms of you know, we in April, we had our biggest uh trade surplus we'd had of about $2 billion.

[01:15:57]>> So for the first for the 12 months, we've had 12 billion dollars of of export growth. uh for the first time in five years we now export more than we import and April was the biggest uh trade surplus we've ever had in the history of New Zealand in the middle of a crisis. Um I look at our trade to the US to China to all those places irrespective of tariffs you know uh you know tourism's up 9% international education's up 11% 12 billion growth in exports um primary industries on fire tech industry doing incredibly well um so you know that that part of that engine is working quite well we've certainly got challenges in building and construction and um uh particularly in Oakland here and that's interest rates but also us need a we need a better management of the infrastructure development and management in the country and be more strategic than the sort of boom bus model that we've been running for a bit.

[01:16:46]>> Yeah. I mean just coming back to AI and clearly what you're indicating with the public service is transformative and bold. Do you do you can you just give us a little bit of context of that but also why stop there? What will you try and lead across New Zealand? And I take you back to when you were um chair of the former PM's uh business advisory council and the great amount of work you did on the future of work and and various stuff which got shelved.

[01:17:13]>> Yeah, it did. And um you know that yeah, we've talked about the future of work and we've talked about AI coming for a long time now. Many of us in the room did some quite deep thinking about that including you, Fran. And you know we it's now here. Uh so you know I talked to friends in America who are running large companies uh where I worked for a long time and you know there's a bit of AI washing if I'm honest bad businesses that need disruption and blame AI but actually there is genuine also massive technological impacts coming and that's the vast majority of it.

[01:17:42]>> So it's here uh it's maybe not we may be lagging a little bit in New Zealand but it's it's coming and so it's it's not let's keep talking about it. You've actually got to do something about it. I am quite um underwhelmed a little bit with the adoption of AI tools particularly in our small medium enterprises and I know Katherine's doing a great job with her customers of trying to sort of facilitate those conversations. Rob's doing the same at Accenture. Obviously Zero's a great uh partner in that and doing some good work there. But you know when you look at our small medium enterprises our top 10% you know seven times more productive than their bottom 10% and that's really to do with the adoption of technology. um from a zero survey from a we way we while ago. So I think and when I go to chambers of commerce or business associations I get the owners to put their hands up and say who's using claude personally. Uh very few very few and so um we're going to have to have the courage to disrupt our own businesses and our own models otherwise they're going to get disrupted. So I think in the business world you don't need government to write an AI strategy.

[01:18:40]you need to crack on and build kick-ass companies uh and work out how you do better customer service, more commercial performance um and better cultural dynamics inside your businesses with those tools. Having said all that, I think the massive opportunity is to transform government. You know, we are not going to be the leaders in large language models. We want to be the best in the world in the application of AI to use cases and government period. And I look at Estonia, I look at the UAE, I look at Singapore, and I look at New South Wales as good models for that. Um, and it's really quite exciting because you sit there and you go, today there's a 32-y old mom with an 11 and 9year-old, and a nine-year-old needs eyeglasses and she's got to go to an MSD site, a Ministry of Health site. Um, you want to go get a mortgage, you got to prove ID and and and income. So, you go to Ird and DIA. Uh, that takes forever. you want to do a resource consent, you know, for goodness sake, why can't we just do that in a more 2026 way versus 1995 way?

[01:19:37]Uh, so government is well off the pace in terms of uh understanding the power of digitization to deliver better customer service to the public of New Zealand. And I I come at it from a different view which is we are going to have to simplify the agencies and the ministries quite seriously in terms of an organizational design. Um, I think we can simplify quite a lot there. We've got a lot of duplication, a lot of regulatory bodies. We've created a lot of bureaucracy as a consequence. So that's one part of it. But there's no point doing an org design if you don't think about the customer experience for the public of New Zealand. And therefore, large service organizations, technology enabled, focused on the public with customer service, you can get more effective, more efficient, um, and makes about better place for the best and the brightest in the country to come and work.

[01:20:21]>> So who's who's going to lead this global test pad, if you like? Well, you got to wait uh cuz we'll have to get into that in term two. So, um but you know, you've seen us foreshadow already, you know, what we're talking about with respect to um you know, the public sector reform we announced as part of this budget. But I I'm really excited about that. I think, you know, we've sent bits of my team to different parts of the world. We brought different parts of the world that are good at that into government to get our people thinking about it. Um we're going to need your help and some of you in the room because, you know, government won't disrupt itself. Um uh and uh we're going to need some outside in provocation uh to help us get through that as well. So we may well reach out to some of the people in this room uh to help us do that task as well.

[01:21:02]>> But it's exciting.

[01:21:03]>> Oh, great. Um >> I'll just say sorry last thing on that is that there's always talk of like universal basic income and all that stuff.

[01:21:08]>> Yeah.

[01:21:09]>> But I think if you just take a a zoom out, New Zealand has such a big opportunity to actually get the productivity gains first and foremost of AI. It's interesting in New Zealand science there's a bit more fear about the discussion of AI rather than actually realizing there's all this opportunity that yes so for without doubt there is regulation that's going to be needed multilateral we should be working on that with Australia with other countries likeminded all that good stuff but for a country that sat for 30 years in the bottom quarter of economic productivity under successive governments you know um adoption of technology is one of the five things that we have to do to lift our collective wealth uh and and improve our prosperity So um that's an exciting challenge. So I think we got to flip our minds a bit and actually go into that with great expectation, ambition, aspiration, positivity. Yes, we're well aware of of the evils and the challenges around it, but um we need to solve that and work that up with our with our friends and good regulatory frameworks.

[01:22:03]>> Yeah, I think our friend from JP Morgan was kind of indicating a um dividend for ordinary folk not to have to work so hard but still get paid the same. Is that going to happen really though?

[01:22:14]Well, I just not interested in the debate because until I see the productivity gains first and foremost, let's just let's let's walk before we start running uh and get ahead of ourselves because >> how would you apply it to your own job?

[01:22:25]>> Uh well, I got some great ideas, Fran, but but no, I mean, it is I think it's actually incumbent upon all of us as as leaders to get familiar with the tools.

[01:22:36]You know, it's interesting. Um you know you we were in Singapore recently some of you in the room with us and you know you talked to the ministry of minister of foreign affairs there Vivian Balakrishna one of the great foreign affairs ministers that I I know quite well and are good friends with and I respect tremendously. You know he openly talks about having his minister of foreign affairs assistant with them. He shares his git code as to how he's worked up his AI uh agent uh out there in the public domain and it's quite acceptable. Everyone goes, "Oh, that's good. He's that's great. as a modern guy using modern technology to help him do his job much better. uh whereas my lovely friends in the media would be asking me and my opposition friends as to well you know did you use AI was that was that used anyway well for collection of data and um you know how we may organize um you know administration you know there just huge benefits right fantastic >> you didn't quite answer my question >> no I didn't I no I mean there's also >> no seriously I mean >> no but on the administration side there's huge gains right I mean if you think about >> um I'm a very digital person I I don't have a lot of paperwork but I you know Simon would understand you go into government and there's a big paper system and you go gee is this is I don't think it's changed since 1985 uh this is the paper goes everywhere and uh there's lots of people you know a parliamentary library these days has got you know take the time you put a request in to do some analysis and some research on something well you go to claude and you can get probably a pretty good answer run an agent through it and you're sort of roughly roughly a good starting point anyway >> just coming back to one of the planks of the budget which is infrastructure.

[01:24:10]>> Yeah.

[01:24:11]>> Talk us about the thinking on that. It does seem to be going at a slower pace than what you might have hoped for when you came into government.

[01:24:18]>> Yeah. Everything goes slow than what I want to cuz I'm grossly impatient. But um the the the thinking on infrastructure is I think we've been really tactical in our management of infrastructure. You know that we actually haven't thought always about what's the right operating system to make it all work. And again, when you spend time in other small advanced countries and you think about how they do that conversation, it's quite different. So, if you're in Singapore, it's a 50-year long-term plan about where the growth is going to go. Uh, in fact, you can go to the Museum of Urban Development, you can see where that development will take place. Uh, you go to other countries, it's 30 years. And that's what we were trying to have as a conversation in Oakland for example just on housing growth as to where we think that growth should be in the next 30 years so that we can put hospitals and schools and roads and do that rather than farmland gets reszoned as as residential. There's an immediate uplift for the property owner. Subdivision gets whacked in and we haven't done any master planning around where Simeon's hospitals go or where um the schools go uh the roading and all that stuff. So we I I love the Australian model, the the New South Wales model where actually you have an independent infrastructure commission that actually identifies the priority of projects for the next 30 years. Then as to which government's in or out, it's not a conversation whether we're doing Cambridge to Perry for goodness sake, it's a road uh um that's just the priority list that's already well established independently of the politicians and then it's just a question of how you fund that that becomes the topic uh of the day based off where you are economically.

[01:25:45]Separately, we've also created the National Infrastructure Funding and Financing Company, NIFCO, as we call it, because there are different types of projects that are suited to partnering with public private partnerships. Not every project's like that, but some are.

[01:25:58]And we need, we've only done seven or eight of them. Uh, and we need to think a bit more about how we can use sovereign wealth capital to partner with core infrastructure to get it built quicker to get the gains uh out to the people much faster as well. And that's also then linked to the work of invest New Zealand which we've formed to go out and attract sovereign wealth money to New Zealand given we're in the bottom of the OECD in terms of foreign direct investment and capital coming into the country. So I think we need scaffolding that actually helps us manage it in a more strategic way and a master planning way so that then when otherwise we sort of just have discussions on individual projects for years. I I was very struck.

[01:26:37]You know, we spent six years talking about Oakland light rail in this country. We probably spent the better end of $300 million. Not a single meter of track was laid. Not a single route was determined and the project's now dead. So what was that all about?

[01:26:51]Because actually in Quebec, they went off and built a light rail project probably started a year after us and within 5 years their people are using that service today. So we have to get better and more strategic with infrastructure management and there are good models for us to steal with pride and apply into the New Zealand context and quickly catch that up but it's challenging.

[01:27:11]>> You highlighted an issue which is spending too much money and not getting value. Yes.

[01:27:16]>> I mean one of the issues with um a number of our projects has been they haven't come in on time and they've certainly come in way over budget. So how do you get a shift so that we get value for money that we actually start producing and growing and building infrastructure >> to international norms?

[01:27:33]>> Yeah, that's that's you hit the mark. So I'm a big believer, you probably worked out as a turnaround kind of person. I need it to be what's the problem I'm trying to solve? What's the common sense plan? And what are the outcomes that we're looking to achieve? So on infrastructure, our problem is we actually are spending in the top 10% but we're in the bottom 10% of the effectiveness and delivery of that infrastructure. And we are also woeful on asset management. So we don't do repairs and maintenance and renewals in the ways that we should do. I'm sorry I'm talking bluntly. Uh but actually it's really important when you're trying to solve something if you're not clear about a problem in the definition you can't put the plan and therefore get the results if you're not prepared to call it out. So I agree with you Fran. I think it's not just a funding question and that's why we've got the partnerships with sovereign wealth the public private models all those things we hope to get more bipartisan support and literacy to be built around but there are genuine questions about cost as well you know we we have a you know kanga um you know that was building houses at 15% above the market rate uh we can build a classroom in this country when we came to power half the size of this room uh for $1.2 2 million. Well, we've now standardized that. 65% of those classrooms are standardized. We've have the cost. We can do now 232 more classrooms in this budget uh as and 10 new school upgrades uh with the same amount of money essentially. Uh so there is better management on the cost side that's needed. The I'm asking NZTA and Chris Bishop what's the dollar cost per kilometer to build a road in New Zealand versus what's the say OECD benchmark or what I would expect uh from other small advanced countries. So we got to work the cost side. We've got to work the revenue side. Um, but we need better scaffolding that's independent of politicians and better long-term planning. I I was very struck by water care. You know, three waters has been a big problem in New Zealand. If you're in Australia where water's scarce, they have about 5% leakage out of their pipes. We run it probably about 20% because we've got lots of water. Um, but we've also managed those assets poorly.

[01:29:33]Like really poorly. It's a classic case of poor asset management. And when you create water care that's separate from the council balance sheet separated and this isn't sexy stuff to explain to the it's not retail politics but it's actually important to get the wiring and and the in and the system right. Um all of a sudden now waterare has visibility.

[01:29:53]It can borrow five times its revenue versus the council at two and a half or whatever. Um it can now build a pipeline of projects. It can do long-term debt funding. uh and those assets, those Italian tunnelers that were doing the interceptor now don't leave the country.

[01:30:06]They can actually roll on into a next project because there's a pipeline of projects that come. So that's all really super exciting because you go, man, that is all solvable stuff with all the people in this room, with all the talent that's here um all the talents in government um in the community. We we can solve these issues. We just have to do the work and and and focus on delivery uh not just talk. Now, the prime minister has graciously um agreed to take questions from you all. Um there is a mic. Um not all of you, but enough.

[01:30:36]>> I was I was hoping Steve was going to break into his Friday night karaoke.

[01:30:41]>> Well, you can, >> but not quite yet. Um there is a mic.

[01:30:45]And if you would just um please stand up and and give your name just so you can be properly addressed.

[01:30:52]Right. Who's gonna start this one off before I start shoulder tapping people?

[01:30:58]Roger Gray.

[01:31:00]>> No.

[01:31:02]>> Right.

[01:31:02]>> Hey, how are you, mate?

[01:31:07]>> At AUT >> and leading literary author.

[01:31:12]>> Just give us the story for the group of people who aren't in this room. I'm thinking particularly about our 30,000 young people at AUT.

[01:31:19]>> Yeah.

[01:31:20]>> What what is this budget? I'll ask you what is it in it what is in it for them but what's the story you want them to see in this budget about their present and their future.

[01:31:29]>> Yeah. Look, I want them to understand that in a world of chaos and it's incredible a lot of uncertainty out there that actually we're going to try and have influence over where that world order sort of goes and that chaos kind of goes from multipolar. It's not quite settled yet. We'll work with our our friends on that. But as I said in the last few weeks, you know, that is that we, you know, we we can't control everything, but we can control what we can control. And what we can control is actually building a stronger nation here at home. And it is actually fixing these practical things that we talked about.

[01:31:59]And it is actually genuinely building out those things that we need for the future. So, you know, the work on education is really important to me because, you know, when you come to government and half the kids aren't over 45% of kids go to school 90% of the time, uh, not great. uh because you know when the kids are in Canada and in Ireland and places that we think are similar to us uh they're much higher when we find out half our kids are not the standard they need to be at on math on reading going into high school 80% aren't the stand they need to be on mathematics that is the problem that I've spoken to Erica and David about which is attendance maths literacy and numeracy so that when they come to your institution they're coming through much better qualified able to go out into the workforce that's why we didn't wait for the second term to do the NCAA I said let's go out uh because we we've had a lot of focus on primary, intermediate, into secondary schools and obviously we're trying to reset into tertiary uh as we go forward from here. But I want young people to say if this is a country that actually is the best country on planet earth, I can work hard, I can get ahead, I am safe in my house, my home and my community and actually I'm going to get a great worldass education and actually I've got awesome healthcare that actually supports me and my family and my parents as I get older.

[01:33:06]Interestingly, a lot of media conversation about the brain drain and people leaving New Zealand uh the last 12 months. 9% return in Kiwis coming home, 6% less Kiwis leaving. Last month, I think was our second lowest month of departures we've had since 2023, early 2023, late 2022. So, you know, it's turning out that when you do go to Australia, the house prices are a lot more expensive. There is higher levels of inflation. You got your stamp duty on top. Actually, it's a very competitive job market. um you know your education's got to stack up and you've got uh folk you this morning I was on a on doing a breakfast meeting and five trades spoke to me as I went out of my car into the building and two of them had just come back one from Ellis Springs one from Newcastle so you know if we build that proposition you know that's what we really want to see is that they should feel that they can build a future here that they will get rewarded if they work hard um they will be able to raise their families here in a way and that's what we're trying to do that's that's why I came 5 years ago is because we have an awesome is an awesome country. I mean we have I look out there in a world of chaos. There's 195 countries and you got to back New Zealand. I mean we we are in the right part of the world. Twothirds of the middle class is going to be in our region by 2030. Twothirds of the global economic growth is happening in the Indoacific. We've got a you know massive amount of natural resources.

[01:34:21]We've got really strong social and democratic institutions. Uh we've got really really smart worldass people. So uh and we're a safe haven in a world of chaos uh for investment. So all of that just says to me there's a proposition in there that should be really good for our young people to say for our kids and our grandkids this is a place you can have a great future and better than what we had. That's the work of all of us. It's not just me as prime minister or government. I'm as I've said to you guys before I believe very strongly it's not a parent child relationship. I think there are genuinely three actors in our society government business community and we actually all do different things and we've got to work in a complimentary collaborative way to solve those problems and realize those opportunities. So it's um exciting. It's a nationbuilding project that we've got to recommmit ourselves to. You would have heard me say, you know, it's about broad national security and that's a sense of financial uh security, which is what this budget and fiscal responsibility is trying to do. It's about energy independence. It's about our defense and international engagements. It's about social cohesion.

[01:35:19]Uh we got to keep working at all of those things. Uh but social cohesion doesn't come from me from the top down necessarily. It comes from all of us at a grassroots level building stronger communities.

[01:35:28]>> Any any more questions? Sorry, that's your nice way of saying >> run up the back.

[01:35:33]>> You could talk for >> Yeah, I'm so pleased.

[01:35:36]>> I got so much work to do. We got so much work to do. It's good. Prime Minister David Een, um you referenced a number of countries that are benchmarks for you, which is really pleasing to see. I'd like to suggest another benchmark.

[01:35:47]Um over over last week, UK announced that they had over a million young people >> who were not in active training, education or in jobs. saw that >> 600,000 unemployed term >> trending >> upwards. So one in eight going to one in six. What lessons can you pull out of the UK which increasingly looks like a country that's not working. What lessons can we pull out of the UK to make sure we don't make the same mistakes?

[01:36:12]>> Yeah. So look, I think there's five things we have to do to make this place prosperous and set it up for the young people. First and foremost, you have to front the problems and get a plan in place to build out a world-class education system. The second thing is we have to apply more uh science technology innovation to everything that we're doing. Um if you look at the success uh matter of Fonta, it's been all that R&D egg tech applied that has led to superior premium products being sold around the world in record numbers. Uh then I look at other sectors that are still in the commodity end of the of the equation and there hasn't been the applied technology. Um and we love to say that New Zealander invented that and isn't that great? uh low emission ry grass uh but it'll be an Australian or American that will convert convert it into a a 10 billion dollar company and we can't have that. So we have to commercialize the science technology and innovation sector and the model that I've taken out of there is Ireland and so we're putting the Irish model in with the crown research institutes that we've just changed the the universities ultimately and the and the business R&D.

[01:37:15]Those three things need to come together because we're about 19th in the world per capita on R&D spent but about 46 on commercialization. So we know there's a huge opportunity in that that second bucket. The third bucket is really modern reliable infrastructure. That's why we got 7 billion going into this budget. It's much higher than we anticipated. It's not about more debt uh a permanent track on debt. It's just a recognition that we have to build out that infrastructure uh and that that that you're seeing that across the system. The third, the fourth thing is we have to get rid of the red tape.

[01:37:46]Something happened. I left this country at 24 and I came back, you know, 16 years later and we've turned it into a country of bureaucrats. You know, the RMA uh is costing us 1.3 billion a year and it's doubled. At the time has doubled and we have district councils, regional council, central government.

[01:38:03]I'm saying central government's got to be efficient. It's got to have public sector reform. We're going to knock on the head the regional councils as part of an accompanying pack of of the RMA reforms. The RMA reforms are designed the new laws to get us to have half the, you know, 50% less consents essentially from what we have today. And it's been challenged by fasttrack to try and say there's a different way of doing things if you choose to do it that way. And then the last bit is trade and investment. You know, we have to get out in the world and hustle and we have to be able to build security and trade at the same time. They're very linked these days. And I think you know not I won't make pay you know make a specific comment on on the UK. I actually spoke to Starama just two nights ago. Um but um you know all all countries in the world are wrestling with very similar challenges. You know the macro thematics are the pandemic changed quite a lot of trust in government and institutions.

[01:38:53]The technological revolution and and and the technological disruption and dislocation that's coming from that.

[01:38:59]There were winners and losers out of globalization. um you know uh you've you've had distrust in media, you got the massive rise of social media and eco chambers and so all of those pressures are sitting in every country. They're sitting here in New Zealand as well. Um but I think you know fundamentally if we can do those five things to how we lift the prosperity piece uh as well as obviously deal uh work our way through some of those challenges.

[01:39:22]>> It's obviously quite a serious issue which worries a lot of people particularly our young people and growing unemployment there as well. Um just >> sorry I just say on that that's why we changed fees free this year. I know some of you in the room will be a bit annoyed about it if you've got kids but you know how on earth does a cleaner or a retail worker end up paying the university fees of some millionaire's kids. You know that's not right. So we looked at that policy. We had some clear goals. Can it get more kids into tertiary education more vulnerable kids? Um and and it didn't work either with it first year last year. So we've stopped that and we put money into trades training. uh so much more trades academy at high school 20,000 kids doubling it to 20,000 that's a much better use of that funding so I think we have to think through the apprenticeship we have to think through vocational education um as a way of getting those needs uh into work but the other side is I've always taken a lot of criticism because I've also said I'm sorry if you're 18 and 19 coming out of high school and you haven't got a plan to go into work education or training I'm sorry the alternative is not to go on the unemployment benefit um we were in a perverse situation in this country under Labor where we had 3.2% unemployment and 60,000 more people went on unemployment benefit at a time of sector and regional job shortages across the whole country. So we have to say to young people it's not acceptable, you know, and so as a result, we're not going to be allowing 18 and 19 year olds to drift onto unemployment. They have to have a plan to get into education training because if they're on under the age of 25, they're on welfare for an average of 18 years. and we love those kids and we care about those kids and that's not a pathway for them to languish them out on welfare. We have to do better than that. So I think the challenge is a fair one which is I think we do need to do more uh to to get that chain from but if but if you're 13 and you read like an 11y old no wonder you don't want to go to school and as a result that limits your possibilities down the road. So we have to I said we have to make quite tough choices. You know, we are changing the system. So, we're damn well going to teach our kids to read one way, same way every day. The same standard. We will have standardized reporting, which we've now implemented.

[01:41:25]We've done a bunch of stuff to say that's the way we got to do it.

[01:41:29]>> Um, >> any more questions from the floor? Yes.

[01:41:34]Uh, it's media. I'll have to wait.

[01:41:37]>> Hi, I'm James Ryan from Genesis. Um, great to hear the plan. Uh, what are the biggest risks you see that keep you up at night that could derail the plan?

[01:41:46]Um, I I I actually just think it's about ambition, aspiration, and positivity, to be honest. And it might sound a bit naive, but you know, um, you here's the deal. I mean, the New South Wales, average New South Wales person's 30% wealthier than the average Kiwi. Uh, we're going to play Ireland and rugby this year, but the average Irish person is now twice as wealthy as the average Kiwi. We just came back from Singapore and they're three times as wealthy as the average New Zealander, the average Singaporean. And when you're wealthier, you get twice as many doctors, twice as many nurses, twice as many teachers. So, you know, it's about uh we all collectively together need to go on this journey to say, "Damn it, we are going to build a kick-ass country for our kids and our grandkids." You know, we don't want to turn this place into a second world country. Uh you you don't just automatically maintain first world status. You have to work at that. You have to keep determining. It's not just given to you. You have to make the case for it and you have to build it. Um so, yeah, there's I I don't I honestly think there should be no excuses for why we can't do well. And I don't see it's it's ourselves that's going to limit ourselves. You know, if you want to debate and discuss things for four or 10, you know, 10, you know, Roger's wanting to build two new jetties out of Oakland port. Uh Taranga is our biggest export port in the country. We've spent 10 years discussing somewhere between Harpu District Council and the port company. Uh the problems with building a couple of jetties at a port that's our biggest export port in the in the country. Um well we've done chosen consciously or unconsciously to do that to ourselves. Um and actually you know that's the only limit I think that we actually have um is is ourselves and the self limits that we put on on ourselves.

[01:43:19]>> Uh any more questions from the business guests before we go to media? Yep.

[01:43:28]Anyone else? Oh you go >> Peter.

[01:43:32]Yep.

[01:43:36]Are you doing media here or later?

[01:43:38]>> Yeah.

[01:43:39]>> Thanks, Prime Minister. It's great to hear the acknowledgement of the productivity improvements that are possible from digital innovation. I know just within Dataccom, we made some pretty hard decisions this year to invest in this area.

[01:43:53]>> Uh but to get the real success, you've got to have access, I guess, to the the tools and the tech. You got to redesign the way you do the work, and then you've got to support the people change. Do you think we're doing enough or or could we do more perhaps in the public sector to support the the realization of the gains that we're seeking?

[01:44:08]>> Yeah, we're not doing nearly enough. Uh and as I said, the public sector is a case in point where I think we're stuck 20 years behind the corporate world if I'm really honest about it. We're just not on on point enough. Um so that's why I think is a big part of the public sector reform is not just reorganizing government for the sake of reorganization. it's actually applying technology with that reorganization to get a more efficient effective service out to people. So, you know, short answer is no. Um, and that's why we're going to need to get transference between the political uh arm of of our of our country and the and the business arm and the community arm. We need more movement so that we can learn from each other and and get some of that outside in thinking to to change and disrupt the system. But, um, you know, as I said before, big work to do in public sector.

[01:44:57]Uh, I've got time for one more question from the business people here. Anyone?

[01:45:04]No one down this end? Come on.

[01:45:08]>> We're all clear on the plan. You just want to get to your long weekend. Is that the Is that the guy?

[01:45:13]>> Okay.

[01:45:13]>> All right, Steve. If you can lead us off, mate, with the karaoke standard that you've got, that would be great.

[01:45:18]>> No, no, not yet. Um just just um you know finally just sort of talking about um you know you've you've laid out I guess the start of a plan for a second term but um if you do get a second term of the coalition presumably the same makeup um what is >> it doesn't have to be you can two ticks blue and make my life a hell of a lot easier.

[01:45:41]>> Good. All right good.

[01:45:43]>> Okay assuming big assumption that you do get that. What is the most difficult um uh reform that you would feel you had a mandate to go ahead with?

[01:45:52]>> Um I think the biggest thing will actually be the continued implementation of the RMA. Uh that is the single biggest piece of red tape that's holding us all back. Um and we've got the fast track in place to challenge it and to eat it from the inside out. We're putting the new RMA reforms which should be law by August, but it'll be the working out of that in the second term and the execution of that. And I'm, you know, it's not just always about new um reforms. It's actually about the execution that's important, too. So, I think executing RMA, continuing to drive and see education results come through with all the reforms that we've got going on there. Public sector reform coupled with embracing uh AI across the both business, government, and the community. Uh and getting the technological benefits to drive that productivity growth, I think will be really critical. Um and it's really doable, right? I mean, these are all solvable problems if we they're hard.

[01:46:42]They're difficult and they're tough, but there's no reason why we shouldn't set ourselves some pretty big ambition. At least go for it. And um and we owe it to our kids and our grandkids to do exactly that.

[01:46:52]>> Thank you, Prime Minister.

[01:46:54]>> Good to be with you, Fran.

[01:46:55]>> It's now my pleasure to invite Bridget Snelling from Zero to come up and give the vote of a thanks.

[01:47:02]>> Oh, what's happened to the taken it away?

[01:47:11]Oh, >> can we get some cones out quickly, please?

[01:47:25]>> Well, Takoto, I'm Bridget Stelling, country manager of zero here in Alto in New Zealand. Isn't this such a great event? I have to say, Sharon and Trans Tasman business circle team, you do such a good job. We um we love this event every year and thank you Prime Minister and Fran for another excellent fireside chat. Prime Minister, thank you for your openness. It's um it's such a privilege to be here and to be able to hear all of this the day after budget at Zero. We are all about small and mediumsiz enterprises. It's at the heart of everything we do. And I think this budget we can I guess call a back to basics budget uh with a strong focus on fiscal discipline which will provide reassurance for businesses in these ongoing challenging times. There are some positives for SME in the budget.

[01:48:13]The incremental tax changes are genuinely useful. The infrastructure pipeline creates opportunities for trades and construction businesses and the investment in the trades academy will improve talent pipeline for SMEES in certain industries. I guess on the flip side uh with Kiwi Saver ACC and the wage costs rising simultaneously, the pressure on small businesses will remain significant in 2026. And without any specific support for our SME economy, the budget leaves our SME largely to navigate these rising costs on their own, which means they will more than ever need to lean on financial digital tools to help them with strong financial management required. They'll need to leverage new and improving technologies.

[01:48:59]And Prime Minister, you referenced this with AI because we are in an agentic era where digital tools don't just support businesses, but in fact can help them run their business. And for SMEES, that is transformative. It means doing more with less, freeing up time to make smarter decisions and unlocking new pathways to growth. AI, cloud computing, data analytics are all reshaping how businesses operate. And when used well, they can drive innovation. They can open up new markets and help our businesses stay resilient in an unpredictable world. But realizing that does take more than just access to technology. It requires investment in skills, in training, and in people. Giving small businesses the confidence to adopt these tools and in turn turn their potential into performance. So we are seeing steps in the right direction from the government with the extension of the AI pilot for SMEES but there is more to do and as always prime minister uh we would encourage the government to be bolder in supporting small businesses to adopt new technologies and uplift capability because this will help us unlock broader economic gains and sustain productivity which we need to ensure New Zealand is well positioned for the future.

[01:50:13]Uh before we close I'd like to thank Katherine. Thank you for your mi and warm welcome which set the tone so well.

[01:50:19]Uh to Robert, thank you so much for your insights into the evolving business landscape. To Fran again, thank you for guiding today's discussion. And to our prime minister, the right honorable Christopher Luxon, thank you again for sharing your time and vision with us.

[01:50:32]And of course, thanks Sharon. As I said before, uh we would like to present you prime minister with a token of our appreciation for joining us today. This is titled the next chapter. It's an artwork uh that is given as a gift for your contribution to the circles program and it's a handprinted etching that has been created by the circles creative director Thea Weiss who is an extremely talented Australian print maker and painter. Uh and last but not least, thank you to all of you for showing up today. It's always great to have conversation and connection. Uh we all have a role to play in shaping our country to be stronger and more innovative. Nami, have a great long weekend.