CAPTIONS BY LENA ERAKOVICH AND TOM CLARKE. CAPTIONS WERE MADE WITH THE SUPPORT OF NZ ON AIR. WWW.ABLE.CO.NZ COPYRIGHT ABLE 2025 TENA KOUTOU. NAU MAI, HAERE MAI ` WELCOME TO THE FIRST Q+A OF 2025. I'M JACK TAME. TODAY, AS THE U.S. ZIPS PAST THE AUSSIES TO BECOME OUR SECOND-BIGGEST EXPORT MARKET, WE ASK HOW NEW ZEALAND SHOULD HANDLE THE VOLATILITY OF DONALD TRUMP? IT'S AN ENVIRONMENT OF UNCERTAINTY THAT, YOU KNOW, JUST` WE COULD DO WITHOUT. WE'LL TAKE A LOOK AT THE INTENSIFYING GLOBAL AI COMPETITION, AND MEET THE NATIONAL MP WHO WANTS TO SEE 'COWARD PUNCHING' BECOME A STAND-ALONE OFFENCE. IT DOESN'T STOP EVERYONE STRAIGHT AWAY. ONCE A BILL LIKE THIS GETS INTO LEGISLATION, I THINK THE AWARENESS OF IT OVER TIME, UM... SHOULD PUT PEOPLE ON NOTICE. WE WILL HAVE THAT STORY FOR YOU SHORTLY. $9 BILLION ` BILLION WITH A 'B'. THAT'S THE ANNUAL VALUE OF THE U.S. MARKET FOR KIWI EXPORTERS, ACCORDING TO NEW NUMBERS FROM STATS NZ. BUT IF WE'VE LEARNT ANYTHING FROM THE FIRST FEW WEEKS OF DONALD TRUMP'S SECOND TERM, IT'S GOING TO BE AN UNPREDICTABLE AND VOLATILE RIDE. TIM GROSER IS THE FORMER TRADE MINISTER AND WAS NEW ZEALAND'S AMBASSADOR TO THE UNITED STATES IN THE FIRST TRUMP PRESIDENCY. KIA ORA. GOOD MORNING. KIA ORA. HOW DO YOU COMPARE THE START OF THIS TERM WITH YOUR EXPERIENCE AS AMBASSADOR DURING THE LAST TRump. PRESIDENCY? I DON'T THINK MUCH HAS CHANGED WITH HIM, AS AN EIGHT YEAR OLD, BUT THE ENVIRONMENT AROUND HIM CHANGED. I JUST CAME BACK FROM 10 DAYS IN WASHINGTON AND MET A NUMBER OF PEOPLE IN THE TRUMP SYSTEM ` THERE ARE SOME SOPHISTICATED PEOPLE AROUND HIM, BUT I THINK HE WILL BE RUTHLESS. I THINK PEOPLE ARE TAKING THIS SERIOUSLY. YOU MAY RECALL FROM LAST TIME, THE AXIS OF ADULTS ` THEY WILL BE PEOPLE AROUND THAT WORKAROUND, I DON'T THINK THAT WILL WORK. YOU WERE TALKING ABOUT RESISTANCE FROM WITHIN? RESISTANCE FROM THE TYPICAL COUNTRY CLUB LOT, THAT WON'T WORK. IT HAS THE POTENTIAL TO HAVE AN IMMEDIATE IMPACT ON THE NEW ZEALAND ECONOMY, LET'S CONSIDER THE TARIFFS ON CANADA, MEXICO AND CHINA. WHAT DID YOU MAKE OF THAT EPISODE WITH A STAND-OFF WHEN IT CAME TO CANADA? FIRST OF ALL, A GENERAL COMMENT THAT APPLIES eVERYTHING ` I THINK TRUMP FEELS INVINCIBLE, EVEN THOUGH IT WAS NOT A LANDSLIDE BUT WHEN HE ANNOUNCES A CREDIBLE 25% ON CANADA AND MEXICO, GENERAL MOTORS SAID YOU DO REALISE THAT THIS WILL CLOSE DOWN AUTOMOTIVE PRODUCTION WITHIN TWO WEEKS? THESE THINGS WILL OPPOSE THEMSELVES. IT IS ON US AND OUR FRIENDS TO SAY IT IS ALL BLUSTER AND INTERNAL POLITICS ` IT IS MORE FORMIDABLE THAN THAT, BUT THE REACTIONS TO THIS WILL START TO COME INTO PLAY. WAS IT ALL BLUSTER? NO I AM CONVINCED IT WASN'T, ON COLoMBIA, YOU MAY RECALL HE WANTED TO PUT IMMENSE PRESSURE ON COLUMBIA TO DEPORT IMMIGRANTS, BUT THE CANADIANS AND MEXICANS WERE ABSOLUTELY RESOLUTE, AND SAYING NO WAY. THERE WAS A RIPPLE THROUGH THE STOCK MARKET, IS THAT WHAT DONALD TRUMP IS MAKING DECISIONS BASED ON? WHO KNOWS, I THINK IT IS BASED ON HIS INSTINCTS ABOUT THE WAY THE WORLD WORKS ` IS PROBABLY NOT THE WAY THAT YOU AND I WOULD HAVE INSTINCTS ABOUT THE WAY THE WORLD WORKS. INFLATIONARY EXPECTATIONS HAVE JUMPED THE WHOLE POINT `� THESE OTHER REALITIES THAT WILL IMPOSE THEMSELVES ON THIS PRESIDENT, AS WELL AS A TSUNAMI OF CHALLENGES TO THE EXECUTIVE ORDERS. IT IS INEVITABLE THAT NEW ZEALAND WILL BE HIT BY TRADE POLICY? IT IS THE FINAL NAIL IN THE WTO PROCESS ` THERE IS A HUGE LONG-TERM AGENDA THAT FLOWS OUT OF THAT, LET'S NOT GO THERE YET. WE MAY NOT BE THE TARGET OF THE ADMINISTRATION, BUT BULLETS STILL RICOCHET ` THERE WILL BE COLLATERAL DAMAGE. WE PUT IN PLACE FEEL HARASSED, WE WILL NOT THE TARGET, BUT IT STILL INVOLVES US, IT WOULDN'T REALLY MATTER ` IT WAS ABOUT $200 MILLION WITH OF EXPORTS, AND WE FOUND ALTERNATIVES, BUT COLLATERAL DAMAGE, DEFINITELY. THE OTHER ISSUE IS GIVING SPACE TO PROTECTIONIST LOBBIES ` THEY TRY TO MAXIMISE THEIR POSITION IN THE MARKET, IF THEY CAN TAKE THE PROTECTION OUT, THEY WILL DO IT. THERE ARE VARIOUS THREATS, YOU WILL HEAR WHAT YOUR WINE GUYS THINK OF IT, BUT WE NEED TO BE THINKING ABOUT SAFEGUARD ACTION, ANTI-DUMPING ACTION ` THESE UNFAIR ACTIONS ARE GOING TO CREATE AN ATMOSPHERE THAT MAY STRESS OUR RELATIONSHIP WITH AUSTRALIA. NEW ZEALAND, I WAS THINKING ABOUT THIS, THE ADVICE ON THE FOREIGN MINISTER FROM FRANCE 100 YEARS AGO, CONFRONTING AMBASSADORS, SAYING STAY CALM, GENTLEMEN. BUT THANKS TO INCREDIBLY SUCCESSFUL BIPARTISAN POLICIES OVER THE LAST 50 YEARS, WE HAVE BUILT UP A NICE LITTLE INSURANCE POLICY CALLED THE FTA PATTERN. MOST RECENTLY IT WAS CONCLUDED BY TODD AND THE PRIME MINISTER AND THE UAE. WE HAVE A LOT OF INSURANCE POLICIES AND PLACE, NOW WE MAY JUST HAVE TO CASH THEM IN. WE NEED TO MEET THESE CHALLENGES WITH THE RIGHT AMOUNT OF FORCE. WHAT DID YOU LEARN FROM YOUR TIME AS AMBASSADOR ABOUT THE BEST WAY TO INFLUENCE THE MINISTRATION? I WILL COME FORWARD WITH AN INCREDIBLY UNORIGINAL OBSERVATION ` THE WHOLE GLOBAL RULES-BASED SYSTEM THAT I HAVE LIVED MY LIFE BY ` THIS HAS BEEN ERODED OVER A PERIOD OF YEARS. I DIDN'T START WITH THE TRUMP BUT IT IS ACCELERATED UNDER TRUMP, THE MOST IMPORTANT NORM WAS BROKEN WHEN PUTIN INVADED CRIMEA IN 2014. I WAS LITERALLY DETAINED AND MOSCOW AIRPORT, WHEN JOHN KEY ASKED ME TO LEAVE IMMEDIATELY. THE WTO HAS BEEN IN A PARLOUS STATE FOR MANY YEARS. HE IS WITHDRAWING FROM THE WTO AND THE PARIS AGREEMENT, SO THERE IS A BIG ISSUE HERE ABOUT WHAT DO WE AND THE COUNTRIES THAT ARE OUR NATURAL FRIENDS AND ALLIES DO ABOUT THIS? THIS IS A REALLY DEEP ISSUE THAT DESERVES CAREFUL REFLECTION. WITHOUT THE UNITED STATES SITTING BESIDE US, IT IS A VERY DIFFICULT MISSION TO ANSWER. DOES HE RESPOND TO STRENGTH> QUITE CLEARLY, BUT IS NOT SOMETHING THAT NEW ZEALAND CAN CONSIDER. CANADA, MEXICO, NORTH KOREA SOUTH KOREA, AUSTRALIA, NEW ZEALAND ` I WOULD EXPECT A SERIES OF CAREFUL DISCUSSIONS TO UNFOLD BETWEEN THOSE COUNTRIES ABOUT WHAT IS THE RIGHT RESPONSE. MY VIEW IS THAT WE ARE NOT IN A POSITION TO DO THIS BUT OTHER COUNTRIES, CANADA AND MEXICO, DO NEED TO SHOW SOME STRENGTH BUT ALSO NEED TO UNDERSTAND THAT THIS IS NOT COMPLETELY ABOUT TRUMP ` THERE ARE SERIOUS ABOUT'S IS A SYSTEM THAT HAVE NOT BEEN ADDRESSED THAT NEED TO BE ADDRESSED. WE WILL TALK ABOUT THOSE IN A MOMENT, I AM INTERESTED IN THIS COLLECTIVE RESPONSE IDEA, NEW ZEALAND IS NOT A POSITION TO PUSH BACK AGAINST THE US ` WHAT MIGHT THAT RESPONSE LOOK LIKE? DO YOU THINK A COLLECTIVE RESPONSE CAN BE A STRATEGY? HOW LOOK, TO BE COMPLETELY MUNDANE, IS A SERIES OF DIPLOMATIC EXCHANGES IN THE FIRST INSTANCE, TO SET OUT AN AGENDA THAT NEEDS TO BE ADDRESSED. AS TO THE EFFECTIVENESS, PROVIDED THERE IS ALSO A CLEAR SIGNAL TO MORE SENSIBLE PEOPLE AROUND THE TRUMP ADMINISTRATION ` WE HEAR, THAT SOME OF THE THINGS THAT HAVE BEEN RIDICULOUS, THEY COULD BE VERY HELPFUL, PEOPLE LIKE THE TREASURY SECRETARY, WHO A VERY BRIEFLY MET AT A NETWORKING FUNCTION FOR GAY REPUBLICANS ` AND THEN HAS TO DO WHAT A MAN HAS TO DO. INDEED, TIM. HOPEFULLY THIS WILL HELP STEER HIM AWAY FROM DESTRUCTION TO CREATIVE DESTRUCTION. IS IT TOTALLY ABSURD FOR ME TO SUGGEST THAT AS A RESPONSE TO A TARIFF OF 25% IS FOR THE EU, NEW ZEALAND, TO SAY IF YOU PICK ON ANYONE OF US, WE ARE GOING TO RESPOND? I DON'T THINK IT IS REALISTIC, WHEN WE ARE DEPENDING ON THE SECURITY OF THE UNITED STATES AND EUROPE ` MORE NUANCED, I HEAR YOU, I CALL IT A SWEET AND SOUR DISH. YOU SAY THERE ARE ISSUES THAT THE US ARE RIGHT TO BRING TO THE FORE. I DEEPLY BELIEVE THAT THE SETTING UP OF THE SUPREME COURT OF THE INTERNATIONAL SYSTEM AT THE END OF THE URUGUAY ROUND WAS A STEP TOO FAR. I THINK IF WE SENT THE UNITED STATES ` A MESSAGE FROM THE MOST IMPORTANT COUNTRIES BACKED BY USEFUL COUNTRIES LIKE NEW ZEALAND, SMALLER PLAYERS, THAT WOULD POSSIBLY HELP BUT YOU CANNOT DO THAT IN GENEVA AT THE MOMENT. AND WHAT AREAS IS NEW ZEALAND MOST VULNERABLE TO THE PRESIDENTS WRATH? HE WILL NOT BE DIRECTING HIS ROSTER WAS NEW ZEALAND IN ANY SENSE, WE WILL JUST BE COLLATERAL DAMAGE IN A BIGGER GAME. I THINK THE GENERIC PUSH., AND IT STARTED BEFORE TRUMP IN TERMS OF THE INCREASE OF DEFENCE SPENDING IS SOMETHING THAT IS WELL UNDERSTOOD BY THE PRIME MINISTER. WE HAVE TO HAVE A CREDIBLE ANSWER ON THAT. I AM NOT EXPECTING HIM TO PICK ON LITTLE NEW ZEALAND A LA COLOMBIA IS WHAT IS LIKE A FLY ON THE TABLE. YOU LOOK AT THE DEMANDS HE IS PUTTING ON OTHER NATO COUNTRIES ` SURELY THAT IS A SIGNIFICANT VULNERABILITY? OUR CONTRIBUTION IS ABSOLUTELY USEFUL TO US, ON FIVE EYES ` CYNICS DESCRIBE US AS THE BLINK, BUT I CAN TELL YOU THAT WHAT NEW ZEALAND DOES FROM TIME TO TIME IS VERY MUCH APPRECIATED BY ABIGAL IF THE VOLATILITY MEANS THAT THE WORLD IS LESS TRUSTFUL, HOW DOES THAT CHANGE THE DECISION-MAKING AROUND AUGUST PILLAR HOW DOES THAT CHANGE THE DECISION-MAKING AROUND AUKUS PILLAR TWO? I DON'T LIKE IT, BUT I THINK WE SHOULD JOIN IT ` IS LIKE THE REVERSE OF THE GROUCHO MARX PRINCIPAL, I WOULD NOT JOIN ANY CLUB THAT WOULD HAVE ME OF HIS MEMBER. WE SURE AS HELL NEED TO HANG ON WITH OUR FINGERTIPS ` A BRUTAL REALPOLITIK VIEW ` I DON'T LIKE IT, BUT I THINK WE SHOULD JOIN PILLAR 2, BECAUSE I THINK WE NEED TO HANG ON WITH OUR FINGERTIPS WITH COOPERATION WITH AUSTRALIA AND THE UNITED STATES. CAN WE TRUST THE UNITED STATES? MY MOTHER TAUGHT ME NOT TO TRUST ANYBODY, FARTHER THAN SELF-INTEREST. I KNOW A LOT OF NEW ZEALANDERS WILL BE CONCERNED ABOUT THE WITHDRAWAL FROM THE PARIS AGREEMENT. IS IT UNHELPFUL? NO, BUT I DO NOT THINK IT WILL HAVE A LARGE IMPACT, IT WILL HAVE A LARGE IMPACT IN TERMS OF FINANCING, BUT IN TERMS OF EMISSIONS` YOU ARE TALKING ABOUT THE US PULLING OUT OF THE PARIS AGREEMENT? PROCEDURALLY, IT WILL NOT TAKE THREE YEARS THIS TIME. US EMISSIONS HAVE DECLINED BY ONE THIRD WHILE THE ECONOMY HAS INCREASED BY , THEY HAVE COMPLETELY DECOUPLED THEIR EMISSIONS FROM GROWTH. THEY NEVER JOINED KYOTO ` IT WAS THROWN OUT IN A PROXY VOTE BY THE U.S. SENATE 95-0. THE REASON IS BECAUSE 80% OF EMISSIONS IN THE UNITED STATES COME FROM ENERGY AND THE BIGGEST FACTOR, THERE HAS BEEN OTHER FACTORS SUCH AS OUTSOURCING EMISSIONS, INTENSIVE MANAGEMENR BUT THE SINGLE BIGGEST FACTOR HAS BEEN A SWITCH TO NATURAL GAS. CLIMATE CHANGE FANATICS HATE THIS, THEY THINK WE CAN JUST SWITCH, BUT WHEN THE LIGHTS GO OUT, THE GOVERNMENT OF THE DAY GETS THROWN OUT. DO I THINK ELON MUSK WILL SAY WE WILL GO BACK TO COMBUSTION ENGINES ` I BELIEVE THE WORLD HAS WORKED THIS OUT, AND WE ARE ON AN IRREVERSIBLE PATH TO DECARBONISE THE WORLD ECONOMY. YOU SAID AT THE START THAT IN RESPONDING TO THE PRESIDENT, NEW ZEALAND NEEDS TO LEAN INTO ITS TRADE RELATIONSHIPS WITH OTHER COUNTRIES ` YOU WERE TRAINER SO WHEN WE TRIED TO GET A FREE TRADE AGREEMENT WITH INDIA, ULTIMATELY IT WAS UNSUCCESSFUL, FIRST TIME ROUND, WHAT CAN WE LIVE FROM THAT EXPERIENCE? I SUPPORT 100% WHAT TODD AND THE PRIME MINISTER ARE TRYING TO DO. INDIA IS A REALLY TRICKY CUSTOMER WHEN IT COMES TO TRADE. PHIL GOFF HAD A AGO, I HAD A GO WITH JOHN KEYS STRONG SUPPORT, WE DID NOT THROW THE INDIANS OUT OF THE GIANT REGIONAL COMPREHENSIVE AGREEMENT ` THE SOUTHEAST ASIA'S GOT SO FRUSTRATED WITH THE INDIANS, I LOVE THE INDIANS, AND THEY ARE HUGELY IMPORTANT, OBVIOUSLY. I THINK A MORE LIMITED DEAL MIGHT BE POSSIBLE, BUT COMPREHENSIVE FREE TRADE, IMPOSSIBLE, I THINK WE COULD GET SOMETHING THAT WOULD ADD A LITTLE BIT TO OUR ARSENAL AND WE SHOULD GO FOR IT. THANK YOU SO MUCH FOR YOUR TIME. RIGHT NOW, THE NEW ZEALAND DOLLAR IS WEAK AGAINST THE GREENBACK, WHICH IS GREAT FOR KIWI EXPORTERS. BUT MANY ARE ALL TOO AWARE THAT A SURPRISE ANNOUNCEMENT FROM THE PRESIDENT, A WHIM OR A FANCY, COULD PUT UP TRADE BARRIERS IN AN INSTANT. FOR EXAMPLE, CONSIDER THE NEW ZEALAND WINE INDUSTRY ` WORTH JUST OVER $2B, AND DEPENDENT ON THEIR AMERICAN CUSTOMERS.W HERE'S REPORTER WHENA OWEN. (UPBEAT MUSIC) IN MARLBOROUGH VINEYARDS, IT'S THE COUNTDOWN TO HARVEST. (UPBEAT MUSIC CONTINUES) CLEANING, CLEANING, CLEANING ` YOU KNOW, GETTING PREPARED, AND THEN WE'VE GOT OUR VINTAGE CREW FOR THE NEW VINTAGE ARRIVING IN ABOUT THREE WEEKS' TIME. OK. SO IT'S THE CALM BEFORE THE STORM. WINE EXECUTIVES LIKE STEVE ROSS AT WHITEHAVEN HOPES GETTING THE VINTAGE IN IS THE ONLY STORM ON THE HORIZON ` THERE'S CONCERN AROUND THE VINEYARDS ABOUT U.S. TRADE MOVES. ABSOLUTELY, A LOT OF TALK ` I THINK THE GENERAL THEME, THOUGH, IS ` LOOK, NO ONE REALLY KNOWS. WHITEHAVEN HAS A KEEN INTEREST IN WHAT'S GOING ON WITH U.S. TRADE, BECAUSE, OF ALL THE NEW ZEALAND WINE GROWERS, IT HAS THE HIGHEST PROPORTION OF WINE SHIPPED TO THE U.S. MARKET, AND IS THE NUMBER ONE NEW ZEALAND WINE THERE IN THE HIGHER PRICE CATEGORY. WE'RE DEFINITELY MINDFUL OF WHAT'S GOING ON. LOOK, IT'S A BIT HARD TO KNOW WHETHER NEW ZEALAND DIRECTLY WOULD BE TARGETED IN ANY WAY, BUT, LOOK, COLLATERAL DAMAGE COULD BE SIGNIFICANT IF OTHER` IF OTHER TRADING PARTNERS WERE TARGETED. SO AT THE MOMENT WE'RE JUST` WE JUST DON'T KNOW. IT'S` IT'S` IT'S AN ENVIRONMENT OF UNCERTAINTY THAT, YOU KNOW, JUST` WE COULD DO WITHOUT. ALMOST 90% OF THE WINE PRODUCED IN NEW ZEALAND IS EXPORTED, AND THE GREATEST PROPORTION OF THAT GOES TO THE UNITED STATES. FUN FACT ` THE TEXANS APPARENTLY LOVE OUR SAUVIGNON BLANC. (STOMPING COUNTRY MUSIC) SOUTHERN USA IS A FANTASTIC MARKET, AND MAYBE IT'S THE HOT WEATHER, BUT THEY DEFINITELY ENJOY THEIR MARLBOROUGH SAUVIGNON BLANC. AROUND THE CORNER AT CLOUDY BAY VINEYARD, THEY'RE PREPPING FOR A HUGE MONTH ` THE LOCAL WINE AND FOOD FESTIVAL, THEN THE HARVEST... AND THEN IT'S OUR 40TH BIRTHDAY, SO WE'RE` 40 YEARS SINCE CLOUDY BAY KICKED OFF? 40 YEARS OF CLOUDY BAY. SO WE'VE GOT GUESTS COMING FROM ALL OVER THE WORLD, JOURNALISTS, SOMMELIERS, COMING FOR, TWO DAYS OF, UH` FUN, HOPEFULLY ` CELEBRATION. COMING FROM THE U.S. TOO? COMING FROM THE U.S. AS WELL, YEAH. HOW IMPORTANT IS THE U.S. MARKET TO CLOUDY BAY? INCREDIBLY. IT'S OUR NUMBER ONE MARKET. IT'S A GROWTH MARKET STILL, WHICH IS REALLY EXCITING. IT'S SUCH A BIG TERRITORY AND EVERY SINGLE STATE IS DIFFERENT, SO IT'S LIKE DEALING WITH LOTS OF DIFFERENT MARKETS. WE ALWAYS HAVE TO LOOK AT WHAT'S GOING ON GLOBALLY, POLITICALLY, AND OBVIOUSLY, WITH THE STATES, IT IS OUR MOST IMPORTANT MARKET, SO ANY CHANGES THAT THEY BRING IN IN TERMS OF TARIFF WILL HAVE AN IMPACT ON US. WE JUST HAVE TO HOPE THAT THE GOVERNMENT HERE CAN WORK WITH THEIRS. WE'RE OBVIOUSLY TALKING TO THE NEW ZEALAND GOVERNMENT ` HEARING REPORTS FROM THEM. PHILIP GREGAN IS THE CEO OF NEW ZEALAND WINEGROWERS. NEITHER MEXICO OR CANADA ARE BIG EXPORTERS OF WINE TO THE U.S., SO, IN MARKET, THAT'S, UM` IN THE U.S., IT'LL HAVE LITTLE IMPACT. I THINK, UM` THERE ARE POSSIBLE RETALIATORY ACTIONS THAT MIGHT COME FROM THE CANADIANS AND THE MEXICANS TO U.S. WINE, UM... BUT WE CAN` ALL WE CAN DO IS WAIT AND SEE. WE HAVE SEEN IT IN THE PAST WITH` IN CHINA, WHEN, PARTICULARLY, THEY WERE NOT TAKING IN AUSTRALIAN EXPORTS, THAT WE DID SEE A BOUNCE IN NEW ZEALAND BEING POPULAR AND AVAILABLE IN CHINA AT THAT POINT. YOU NEVER REALLY WANT TO, KIND OF, UH` TAKE JOY IN OTHER PEOPLE'S MISFORTUNE, THOUGH, BECAUSE YOU NEVER KNOW, YOU KNOW ` KARMA CAN COME AND GET YOU. (UPBEAT MUSIC) THE LAST FIVE YEARS HAS BEEN PRETTY UP AND DOWN FOR THE WINE INDUSTRY HERE. COVID WAS GOOD FOR LOCAL SALES, BUT THEY WERE LEFT WITH TOO MUCH STOCK, AND, CREEPING UP OVER THE LAST DECADE, A SOFTENING OF DEMAND INTERNATIONALLY AS NEW GENERATIONS HAVE MORE CHOICE. BUT RECENTLY, THERE HAVE BEEN SOME POSITIVES. THE NEW ZEALAND DOLLAR HAS COME DOWN QUITE A BIT AGAINST THE U.S., SO THAT'S A POSITIVE. IT'S BEEN REFLECTED IN THE` IN A RISE IN THE PRICE THAT OUR WINERIES ARE ACTUALLY RECEIVING IN THE HAND FROM PAYMENTS FROM THE U.S., SO THAT'S A BIG PLUS. (CHATTER, LAUGHTER) AND, JUST BEFORE CHRISTMAS, A SURPRISE SURGE IN SALES OF NEW ZEALAND WHITE WINE IN OUR SECOND BIGGEST WINE EXPORT MARKET, THE UK. IN THE FOUR WEEKS LEADING UP TO BOXING DAY, NEW ZEALAND WINE WAS THE BIGGEST WHITE WINE CATEGORY, SO WE WERE AHEAD OF AUSTRALIA AND FRANCE AND ITALY ` SO THERE WAS MORE NEW ZEALAND WINE SOLD BY VALUE IN THE UK HAN ANY OTHER COUNTRY. THAT'S A FANTASTIC ACHIEVEMENT. NOBODY CAN MAKE SAUVIGNON BLANC LIKE MARLBOROUGH CAN. AFTER THE BREAK ON Q+A ` A CHINESE MODEL BLOWS UP THE GLOBAL AI RACE. WHAT WILL THE DEEPSEEK DISRUPTION MEAN FOR ARTIFICIAL INTELLIGENCE IN 2025? CHEAPER, FASTER, SMARTER ` 2025 IS BEING HERALDED BY MANY TECH EXPERTS AS A YEAR IN WHICH DISRUPTION FROM ARTIFICIAL INTELLIGENCE BEGINS TO SUBSTANTIALLY IMPACT THE GLOBAL ECONOMY. BUT WHILE THE U.S HAS BEEN WIDELY SEEN BUT WHILE THE U.S. HAS BEEN WIDELY SEEN AS LEADING AND DOMINATING THE GENERATIVE AI RACE, A SURPRISE DEVELOPMENT HAS UPSET THE AI APPLE CART. (UPBEAT ELECTRONIC WORLD MUSIC) IT LOOKS KIND OF LIKE CHATGPT, AND FOR THE MOST PART, IT ANSWERS LIKE CHATGPT ` SOMETIMES EVEN BETTER. BUT CHINESE-ENGINEERED DEEPSEEK WAS APPARENTLY MADE AT A FRACTION OF THE COST OF U.S. CHATBOTS, AND WITHOUT THE WHIZZ-BANG COMPUTER CHIPS WHICH HAVE BEEN CRITICAL FOR AI DESIGN. THIS REALLY GOES TO SHOW THAT NECESSITY IS THE MOTHER OF INVENTION, AS THE OLD SAYING GOES ` IS THEY DON'T NECESSARILY HAVE THE TENS OF BILLIONS OF DOLLARS THAT SOME OF THESE COMPANIES IN THE U.S. HAVE. WHEN DEEPSEEK'S OPEN-SOURCE MODEL WAS RELEASED LAST MONTH, IT SENT U.S. TECH STOCKS TUMBLING. CHIPMAKER NVIDIA LOST $1 TRILLION VALUE IN A DAY, AS DEEPSEEK BECAME THE NUMBER-ONE DOWNLOADED APP IN THE WORLD. (UPBEAT ELECTRONIC WORLD MUSIC) THERE ARE SOME NOTABLE LIMITS TO THE CHATBOT ` IT WON'T SAY BAD THINGS ABOUT CHINESE PRESIDENT XI JINPING, OR ANSWER QUESTIONS ABOUT TIANANMEN SQUARE. ALREADY, CONCERNS OVER ITS OPERATION AND DATA ACCESS HAVE SEEN DEEPSEEK BANNED FROM GOVERNMENT DEVICES IN AUSTRALIA, AND FOR AN AMERICAN AI INDUSTRY THAT THOUGHT IT WAS WAY AHEAD OF CHINESE COMPETITION, DEEPSEEK IS CAUSE FOR A DEEP RE-EVALUATION. SEAN GOURLEY IS THE FORMER CEO OF SAN FRANCISCO-BASED PRIMER AI. HE'S BEEN BACK HOME THIS WEEK ` GOOD MORNING. WHAT IS YOUR ASSESSMENT OF THE DEEP SEEK MODEL AND WHAT IT MEANS FOR THE AI CONTEXT? NICE BIT OF ENGINEERING. FIRST TIME WE HAVE SEEN A CHINESE COMPANY PUSH THE ENGINEERING. IT IS IMPORTANT TO MAKE A DISTINCTION BETWEEN ENGINEERING TO REPLICATE A MODEL CHEAPLY OR ENGINEERING TO MAKE A NEW TYPE OF ARCHITECTURE. THEY MADE THE SYSTEM MORE EFFICIENT. THE TRUTH IS THAT FOR ALL OF US PLAYING IN THIS SPACE, THERE IS A LOT OF EFFICIENCIES TO BE HAD. IT IS INTERESTING THAT CHINA MADE THE JUMP. I THINK A LOT OF PEOPLE HAVEN'T BEEN FOLLOWING WHAT IS GOING ON IN AI. IT IS LIKE IMPROVING THE CAR RATHER THAN INVENTING THE CAR FROM SCRATCH. IT IS MAKING THE CAR MORE EFFICIENT. YOU CAN GET MORE RETURNS FOR LESS MONEY. WHAT DOES IT MEAN FOR THOSE ASSUMPTIONS THAT UNDERLIE A LOT OF STOCK MARKET ACTIVITY THAT THE USA WAS AHEAD OF CHINA WITH REGARDS TO AI? THE AMOUNT OF UNDERSTANDING THAT THE USA MARKET ANALYSTS HAVE, IT IS PRETTY SMALL. THEY ARE TRADING ON A HIGHLY LEVERAGED BET THAT WE THINK THAT THE USA COMPANIES ARE GOING TO WIN THE ARMS RACE. BUT WE ARE NOT SURE. DEEP SEEK FIGURED OUT THAT YOU CAN DO A LOT OF STUFF THAT OPEN AI DO CHEAPER. BUT IF YOU HAVE THE CHIPS THAT OPEN AREA HAVE HAVE, YOU CAN MAKE IT SMARTER. MOST OF US USING THESE SYSTEMS CAN'T DISTINCTION BETWEEN HIGH SCHOOL PHYSICS, UNIVERSITY PHYSICS, AND PHD PHYSICS. AS YOU GO UP THE COMPUTER SCALING CURVE, THESE THINGS GET SMARTER AND SMARTER. AMERICA HAS HAD EXPORT CONTROLS ON THOSE POWERFUL CHIPS THAT ARE SUPPOSEDLY SO CRITICAL TO THE EAI RACE. WHAT DOES THIS SAY TO THE EFFECTIVENESS OF THAT? DEEP SEEK IS RUNNING THIS OF A VERY LARGE NUMBER, ESTIMATES OF TENS OF THOUSANDS. THE MOST ADVANCED NVIDIA CHIPS, THEY WERE PROBABLY SMUGGLED THROUGH MALAYSIA. THESE WERE THE CHIPS THAT WERE BANNED BY THE BIDEN ADMINISTRATION. WITHOUT THE CHIPS, THEY COULDN'T HAVE DONE WHAT THEY ARE DOING. THEY HAVE BEEN WORKING TO GET AROUND THESE THINGS BY MAKING COMPUTATIONS MORE EFFICIENT, WHICH IS WHAT YOU DO IF YOU DON'T HAVE THE CHIPS. I THINK THE SANCTIONS ARE WORKING, BUT CHINA IS DOING EVERYTHING IN ITS POWER TO MAKE THE CALCULATIONS LESS DEPENDENT ON RAW COMPUTER POWER. TO THAT POINT, IS THERE A POTENTIAL FOR PERVERSE OUTCOMES BY PUTTING EXPORT RESTRICTIONS ON THOSE CHIPS. FROM AN AMERICAN PERSPECTIVE, IS IT BETTER TO KEEP THE EXPORTS IN PLACE, HIS THAT INCENTIVISE CHINA? OR INVADE TAIWAN? IF YOU CAN'T GET ACCESS TO THE CHIPS AND GET A DECENT YIELD, YOU HUNDRED KILOMETRES OFF THE COAST THERE IS AT THE CENTRE OF 90% OF ALL THE CHIPS IN THE WORLD, TAIWAN, TMC. THIS IS THE HEART OF THE AI INDUSTRY. IT IS WITHIN CHINA'S SPHERE OF INDUSTRY. AUSTRALIA HAS BANNED DEEP SEEK FROM ALL GOVERNMENT DEVICES. NEW ZEALAND OFFICIALS HAVE BEEN WARNED TO BE WARY ABOUT USING IT. WHY SHOULD WE SEE DEEP SEEK AS ANY MORE OF A RISK THAN ANY OTHER GENERATIVE AI MODEL? I THINK THE IDEA IS THAT YOU DON'T GO TO WAR IF YOU DON'T CONTROL YOUR ENERGY SUPPLY CHAIN. IF YOU CAN'T PUT GAS IN YOUR PLACE, DON'T GO TO WAR. AS THE WAR BECOMES MORE AI ENABLED, YOU DON'T GO TO WAR IF YOU DON'T SUPPLY THE CHAIN. IF YOU LOOK AT THIS AT A WESTERN VERSUS CHINA DIVIDE, YOU ARE GOING TO SEE THE FIRST THING DON'T RUN YOUR WAR MACHINE OFF THE BASIS OF A CHINESE AI SYSTEM. FOR AN INDIVIDUAL, IT IS UP TO YOU. DO YOU WANT TO BE TOLD A POLITICALLY SENSITIVE VIEW OF THE WORLD, OR DO YOU WANT SOMETHING A BIT MORE ENGAGED? YOU WERE THE CEO OF PRIMER AI FOR ABOUT EIGHT YEARS. IN ADDITION TO YOUR EXPERIENCE, YOU STUDIED THE MATHEMATICS OF CONFLICT. HOW DO YOU THINK ABOUT AI IN THE CONTEXT OF WARFARE? THAT GOES INTO THE FRAMING OF A TECHNOLOGICAL OFFSET, WHICH SAYS THAT IF YOU HAVE A TECHNOLOGY THAT IS SO CAPABLE IT RENDERS THE OPPONENT WITHOUT THE TECHNOLOGY DEFEATED, THE FIRST WAS NUCLEAR WEAPONS, THE SECOND STEALTH WEAPONS, THE THIRD IS ARTIFICIAL INTELLIGENCE. THIS MEANS THERE IS AN ARMS RACE TO ESTABLISH GLOBAL AI DOMINANCE. WHOEVER GETS THIS IS VERY LIKELY TO BE RUNNING THE MOST COMPETENT MILITARY IN THE WORLD. THEORETICALLY, ANY OPPONENT DIDN'T HAVE AI DOMINANCE WOULD RATIONALLY NOT WANT TO ENTER WITH A PARTY THAT DID. THEY WOULD TRY AND THEY WOULD BE VERY, VERY QUICKLY DEFEATED. THIS IS DO I HAVE THE RIGHT AI SYSTEMS TO RUN DRONES AND TAKE DOWN A CARRIER SYSTEM IN THE SOUTH CHINA SEA? IS AI BEING USED IN THE BATTLEFIELD? WE ARE SEEING THE EARLY STAGE OF IN UKRAINE. WE ARE SEEING AUTONOMOUS CONTROL SYSTEMS FOR DRONES TO BE ABLE TO AVOID A ELECTROMAGNETIC WARFARE. NEITHER RUSSIA NOR UKRAINE RAI SUPER POWERS. THEY ARE ENGAGED, AND WE'LL SEE A LOT OF IT, BUT REALLY, THE ACTION IS BETWEEN NEW ZEALAND` NOT NEW ZEALAND. BETWEEN AMERICA AND CHINA. IF WE DO SEE AN INCREASE OF AI IMPLICATIONS IN THE UKRAINIAN CONTEXT, WHAT WOULD THAT LOOK LIKE? DRONES. HISTORIANS WILL LOOK BACK AT THE UKRAINE CONFLICT AS A HISTORIC CONFLICT, EVERYBODY HAS A DRONE. DRONES ARE FIGHTING DRONES IN THE AIR. PEOPLE ARE JAMMING THE SIGNALS BECAUSE THEY ARE SO EFFECTIVE. YOU HAVE A VR HEADSET AND DRIVING THESE FIRST PERSON SHOOTERS THROUGH LITERAL SPACE. TO DEFEND AGAINST THIS, YOU JAM THE SIGNALS. SO WE WILL SEE INCREASINGLY AUTONOMOUS SIGNALS. THEY ARE DRAGGING KILOMETRES OF FIBRE-OPTIC CABLE BEHIND THE DRONES SO THEY CAN KEEP OPERATING THEM, THE MOST FOR EFFECTIVE WAY IS AUTONOMOUS WAY. THAT IS GOING TO BE INTERESTING. THERE MUST BE BIG ETHICAL IMPLICATIONS FOR THIS. IF YOU ARE IN A FOXHOLE AND YOU HAVE GOT RUSSIAN TROOPS SURROUNDING YOU, WHAT ARE YOU GOING TO DO? WILL USE THE SYSTEM THAT GETS YOU OUT ALIVE OR WILL YOU USE THE SYSTEM THAT SAYS ETHICALLY, I AM NOT GOING TO TOUCH THIS? PEOPLE ARE GOING TO USE WHAT KEEPS THEM ALIVE. WE WILL SEE MORE AUTONOMOUS SYSTEMS IN UKRAINE. THAT IS UKRAINE, BUT YOU SAY THE REAL BATTLE FOR GLOBAL AI DOMINANCE IS BETWEEN THE USA AND CHINA. WHAT WINNING THAT RACE MEAN? WE WILL GO FROM HUMAN DRIVEN SYSTEMS TO COMPUTER-DRIVEN SYSTEMS. IF YOU HAVE BEEN FOLLOWING IT, IT IS LIKE HUMAN VERSUS MACHINE BUT FOR DOGFIGHTING. THE MACHINES ARE KICKING THE ARSES OF THE HUMANS. MACHINES FLY AEROPLANES BETTER THAN HUMANS. THE NEXT STEP IS GOING TO BE SWARMS, SO INSTEAD OF HAVING ONE AEROPLANE YOU ARE GOING TO HAVE THOUSANDS. CHINA HAVE BEEN PUTTING THESE DEMONSTRATIONS ON. IF YOU STICK A SMALL PAYLOAD ON THAT AND GIVE IT AUTONOMY, AND THEN YOU SAY WE ARE GOING TO PUT THAT IN A MAJOR FRIGATE. THE FRIGATE IS NOT GOING TO HAVE A CHANCE TO DEFEND ITSELF. HOW FAR AWAY AWAY FROM THAT TECHNOLOGY? WITHIN A DECADE. HE WARNED THE US CHAMBER OF COMMERCE THAT THERE IS A LACK OF COLLABORATION BETWEEN TECH SECTORS IN THE USA IN CONTRAST TO CHINA ` HAS THAT CHANGED? IN 2016 WHEN WE STARTED PRIMER THERE WAS THREE OF US. START UP COMPANIES SERVING USA. THE LICENCE TO OPERATE IN SILICON VALLEY TO BUILD FOR DEFENCE WAS VERY HARD TO COMBINE. THAT HAS CHANGED. WE CAN POINT TO THE DAY WHEN RUSSIA INVADED UKRAINE, WHEN MISSILES WERE GOING THROUGH APARTMENT BUILDINGS IN JEFF, SILICON VALLEY WOKE UP AND SAID IT IS SOMETHING THAT WE CAN'T TOUCH, IT IS SOMETHING WE MUST DO. NOW YOU ARE SEEING COMPANIES FUNDING LOW-COST CRUISE MISSILE COMPANIES, YOU ARE SEEING SILICON VALLEY REALISE THAT THE VALUES THAT THEY LOVE AND HOLD AND CHERISH I'M NOT FREE. THEY HAVE TO BE DEFENDED. YOU ARE GOING TO SEE A HUGE AMOUNT OF SCALING OF THE RELATIONSHIP BETWEEN WASHINGTON AND SILICON VALLEY. YOU ARE SAYING THAT BEFORE THE UKRAINE WAR BEGAN, THE MOST RECENT ITERATION, BEFORE THAT BEGAN, THE SOCIAL LICENCE WAS SUCH THAT SILICON VALLEY ENGINEERS EFFECTIVELY DIDN'T WANT TO WORK ON PROJECTS THAT HAD A DEFENCE APPLICATION? GOOGLE'S EMPLOYERS WORKED OUT ON ONE. THEY SAID IF WE DO THIS, WE WILL NOT WORK FOR YOU. YOU ARE SITTING THERE SAYING THAT WE WE WILL NOT WORK ON THE FENCE. THERE IS A FEEL STUNNING THERE, AND I THINK IT'S A VERY STRONG PRINCIPLE TO SAY THAT YOU ARE GOING TO WORK ON THE PROBLEM THAT MATTERS THE MOST, AND WHEN YOU LOOK AT THE WORLD WHEN IT IS CHANGING, DEFENCE IS IMPORTANT AND TECHNOLOGY IS DICTATING WHO HAS THE POWER. HOW SHOULD THE IMPACT OF AI TECHNOLOGY'S IMPACT HOW NEW ZEALAND THINKS ABOUT DEFENCE? IF WE DON'T JOIN PELLET TO, WE HAVE GOT TO DEVELOP IT OURSELVES. THE LIKELIHOOD OF THAT HAPPENING IS ALMOST 0. IF WE DON'T JOIN THIS, WE ARE EFFECTIVELY THE CAVALRY ON HORSEBACK DEFENDING AGAINST THE TANK. NEW ZEALAND HAS A CHOICE ` EITHER REJOIN THAT, WE DEVELOP IT, WHICH IS NOT GOING TO HAPPEN, OR WE RESIGN OURSELVES TO EFFECTIVELY HAVING NO MILITARY FORCE. WHY DO WE NEED IT? BECAUSE YOUR OPPONENTS, IF THEY HAVE IT, THEY ARE GOING TO DESTROY YOU WITHIN MINUTES. WE WILL SET OUR HUMAN DRIVEN SYSTEMS, AND THE SWARM WILL COME AT US, AND AWAY IT GOES. IF YOU DON'T HAVE A TECHNOLOGICAL EDGE, YOUR WEAPONS THAT YOU USED TO DEFEND YOURSELF WILL BE DEFEATED BY THOSE THAT DO HAVE IT. WE WILL EFFECTIVELY SCUTTLE THE MILITARY, OR WE WILL JOIN AUKUS. OVER THE NEXT 12 TO 24 MONTHS, HOW DISRUPTIVE WILL AIB FOR THE AVERAGE NEW ZEALANDERS? MOST PEOPLE WILL FEEL IT WITH THEIR KIDS IN SCHOOL. IT WILL DO THEIR HOMEWORK FOR THEM. EVERYTHING WE CAN TEACH IN SCHOOLS AT THE MOMENT CAN BE DONE AT A BETTER LEVEL THAN A CHEAP SYSTEM THAT CAN PRODUCE THE ANSWERS. THAT WILL BE FOR GRADUATES IN UNIVERSITIES AS WELL. THE SECOND THING THEY WILL EXPERIENCE IF THEY WILL BE GIVEN A TASK AT WORK AND THEY WILL LOOK SIDEWAYS AND SAY, ' I'M JUST GOING TO GIVE IT TO THE MACHINE TO DO IT.' AND THEY'RE NOT GOING TO TELL THEIR BOSS BECAUSE THEY WILL BE LOOKING AND THINKING IF THE MACHINE CAN DO IT, WHY AM I WORKING HERE? WE KNOW THAT THE MACHINES WILL DO MOST OF THE THINGS THAT WE CAN DO, BUT WE DON'T WANT TO TELL ANYONE BECAUSE WE MIGHT DISRUPT OURSELVES OUT OF A JOB. SO YOU ARE SEEING AN UNWINDING OF A KNOWLEDGE-BASED ECONOMY THAT IS DRIVEN THE EVERYDAY LIVES OF MANY NEW ZEALANDERS BEING QUICKLY REPLACED BY MACHINES THAT ARE COMPETENT, CHEAPER, AND DON'T GO TO SLEEP. NEW ZEALAND IS TINY IN THE GLOBAL CONTEXT POPULATION -WISE, BUT OTHER THINGS THAT NEW ZEALAND CAN BE DOING TO INFLUENCE VA BUT OTHER THINGS THAT NEW ZEALAND CAN BE DOING TO INFLUENCE AI ADVANCES? WE NEED TO CONNECT TO SILICON VALLEY. WE ARE QUITE CLOSE TIMEWISE TO THEM. STEP NUMBER TWO IS WE NEED TO GO THROUGH AND START TO THINK ABOUT BRINGING AI INTO THE DEFENCE COMPANIES WE HAVE A NEW ZEALAND. THE THIRD BED IS WE NEED TO START REIMAGINING WHAT ECONOMIES ARE GOING TO LOOK LIKE WHEN AI CAN DO MOST OF THE JOBS. SO GOOD TO SPEAK. WE COULD GO FOR HOURS. SEAN GOURLEY. IF YOU WANT TO CONTACT Q+A TEAM, PLEASE KORERO MAI. FLICK US AN EMAIL AT QandA@tvnz.co.nz. UP NEXT ` WE'RE IN NEW LYNN, WHERE NATIONAL'S MP GIVES US THE SELL ON HIS BISCUIT-TIN MEMBER'S BILL. THE MEMBER'S BILL BALLOT GIVES ANY MP WHO ISN'T A MINISTER THE OPPORTUNITY TO PUT FORWARD A BILL FOR CONSIDERATION AND DEBATE. AS WELL AS A CHANCE TO CHANGE THE LAW, THE BISCUIT-TIN BALLOT IS A WAY FOR MPs TO PRIORITISE AN ISSUE DEAR TO THEIR RESPECTIVE HEARTS. THIS YEAR ON Q+A, WE WANT TO GIVE MPS WHO WE DON'T NECESSARILY HEAR FROM AS REGULARLY A CHANCE TO SHOW US WHERE THEIR PRIORITIES LIE. IN OUR FIRST EDITION, NATIONAL MP PAULO GARCIA TELLS US ABOUT HIS BILL ` THE COWARD PUNCH CAUSING INJURY OR DEATH AMENDMENT BILL. I'M PAULO GARCIA. I'M A NATIONAL PARTY MP FOR NEW LYNN, AND THE TITLE OF THE BILL IS CRIMES (COWARD PUNCH) AMENDMENT BILL. (MOODY MUSIC) THE PURPOSE OF THE MEMBER'S BILL IS TO ESTABLISH THE CRIME OF A` WHAT IS A COWARD PUNCH. A COWARD PUNCH IS SOMETHING THAT IS` OR A KING HIT ` IS A HIT ON A PERSON WHO IS UNABLE TO DEFEND HIMSELF, OR WHO WOULD NOT HAVE SEEN IT COMING. (MOODY MUSIC CONTINUES) UP-AND-COMING MIXED MARTIAL ARTS FIGHTER FAU VAKE HAS DIED A WEEK AFTER HE WAS ALLEGEDLY STRUCK BY A COWARD PUNCH IN CENTRAL AUCKLAND. HE WAS KILLED BY A PUNCH TO THE SIDE OF HIS HEAD, WHICH HE HAD NOT EXPECTED AND DID NOT SEE COMING, AND HE HAD FALLEN TO THE GROUND AND HAD CRACKED HIS SKULL, AND` AND DIED, YOU KNOW, IN A FEW DAYS. THE IMPORTANCE OF MAKING A COWARD PUNCH A SPECIFIC OFFENCE IS SO THAT PROSECUTION AND THE JUDGES DO NOT HAVE TO GO THROUGH HAVING TO PROVE INTENT IN THE RESULTING DEATH OR SERIOUS INJURY. IT HAS BEEN HISTORICALLY THE CAUSE HAVING TO PROVE INTENT HAS BEEN THE CAUSE OF NON-CONVICTIONS, OR PEOPLE NOT GOING THROUGH A PROPER PROCESS WHERE THEY ARE CONVICTED OF THE COWARD PUNCH. I THINK, UH... IT DOESN'T STOP EVERYONE STRAIGHT AWAY. ONCE A BILL LIKE THIS GETS INTO LEGISLATION, I THINK THE AWARENESS OF IT OVER TIME, UM... SHOULD PUT PEOPLE ON NOTICE, KNOWING THAT COWARD PUNCHES ARE THROWN BY A... A PROFILE OF OFFENDER, THAT COULD LEAD US TO THINK THAT THEY WON'T THINK IT THROUGH ` THEY DON'T THINK IT THROUGH, BUT I BELIEVE THAT OVER TIME, COWARD PUNCHES WILL REDUCE BECAUSE OF A GENERAL AWARENESS THAT IT IS PUNISHED, AND IT IS EASILY ESTABLISHED. THAT'S MP PAULO GARCIA. JUST SO YOU KNOW, AS WELL AS WATCHING OUR SHOW LIVE, YOU CAN CATCH US ON TVNZ+. IT'S WHERE YOU CAN FIND ALL OF Q+A'S WORK, PLUS THE BEST OF TVNZ'S NEWSROOM. AFTER THE BREAK ` CHRISTOPHER LUXON SAYS HE'S RELENTLESSLY FOCUSED ON GROWTH, SO COULD CHANGES TO THE CORPORATE TAX RATE BE ON THE CARDS? THIS YEAR IS ALL ABOUT GROWTH, GROWTH, GROWTH. GROWTH, GROWTH` GOING FOR GROWTH. GROWTH. ...UNLOCK GROWTH. GROWTH. GROWTH` ...GROW OUR ECONOMY FASTER. PRIME MINISTER CHRISTOPHER LUXON AND FINANCE MINISTER NICOLA WILLIS HAVE MADE IT CLEAR ` THE GOVERNMENT'S FOCUS FOR 2025 BOILS DOWN TO ONE WORD. AT THE MOMENT, NEW ZEALAND IS TRACKING BEHIND MOST COMPARABLE COUNTRIES IN ECONOMIC GROWTH, AND DATA RELEASED THIS WEEK SHOWS UNEMPLOYMENT ROSE BY 30,000 PEOPLE LAST YEAR, THE HIGHEST ANNUAL INCREASE IN 15 YEARS. IN THE LEAD-UP TO MAY'S BUDGET, ONE OF THE CHANGES BEING CONSIDERED UNDER THE GOVERNMENT'S GROWTH AGENDA IS A CHANGE TO NEW ZEALAND'S CORPORATE TAX RATE. HAVE A LOOK AT THIS ` AT 28%, NEW ZEALAND HAS ONE OF THE HIGHEST CORPORATE TAX RATES IN THE OECD. OF THESE 38 COMPARABLE ECONOMIES, ONLY FIVE HAVE A CORPORATE TAX RATE HIGHER THAN NEW ZEALAND'S, AND EXCEPT FOR AUSTRALIA, ALL OF THOSE HAVE MUCH LOWER GDP PER CAPITA. IT'S ALSO WORTH NOTING AUSTRALIA HAS A SPECIAL RATE FOR SMES WHICH IS LOWER THAN NEW ZEALAND'S. ROBIN OLIVER FROM OLIVER SHAW IS AN EXPERT IN TAX ECONOMICS AND IS WITH US THIS MORNING. IN BROAD TERMS, HOW IMPORTANT IS A COUNTRIES CORPORATE TAX RATE TO ECONOMIC GROWTH? IT IS IMPORTANT PART OF THE TAX SYSTEM. IF WE WANT TO GROW THE ECONOMY, WE HAVE GOT TO GET MORE INVESTMENT, WHICH INCREASES ACTIVITY AND WAGES AND MAKES US BETTER OFF. IF WE TAX INVESTMENT AND BUSINESS INCOME HIGHER, WE ARE NOT GOING TO GET IT. YOU POINTED OUT WE HAVE GOT A VERY HIGH TAX RATE COMPARED TO OECD. 28%. THEY AVERAGED 24%, 25%. SMALLER COMMIES LIKE OURS ARE GENERALLY QUITE LOWER. THE PRIME MINISTER POINTS TO SINGAPORE AND IRELAND AS SUCCESSFUL COUNTRIES. WE ARE 28. WE ARE NOT IN THE BALLPARK TO BE COMPETITIVE. WISE NEW ZEALAND HIGH IN COMPARISON TO OTHER SIMILAR COUNTRIES? AND WHY YOU THINK THAT IN STIFLING INVESTMENT AND INNOVATION? IT IS A CHOICE WE MADE, WORRYING ABOUT FAIRNESS ISSUES AND DISTRIBUTION OF INCOME. YOU TAKE THE IRISH AND THE SINGAPOREANS, THEY HAVE DECIDED TO HAVE A LOW TAX ON INVESTMENT ON BUSINESS INCOME. THEY SEE THAT AS INCREASING INVESTMENT, INCREASING PRODUCTIVITY. IN NEW ZEALAND'S CASE, EVERY 1% INCREASE IN GDP, WE GET $1.5 BILLION OF REVENUE. SO THEY GO FOR GROWTH; WE HAVE DECIDED TO GO FOR MORE EQUALITY AND BEING POOR AS A RESULT. YOU HAVE ESTIMATED THAT EVERY PERCENTAGE POINT OF CORPORATE TAX BRINGS IN ABOUT ONE THIRD OF $1 BILLION OF REVENUE. GIVEN THE FISCAL RESTRAINT THAT NEW ZEALAND FACE, CAN WE AFFORD TO LOWER THE CORPORATE TAX RATE? THAT IS A CHALLENGE, AND THE FISCAL CONSTRAINTS THAT WE HAVE ARE CERTAINLY CHALLENGING. IF WE REDUCE OUR CORPORATE TAX RATE FROM 28 TO 25, THAT IS $1.28 BILLION LAST. THAT IS NOT GOING TO CUT THE MUSTARD. WE HAVE LOST ALL OF THAT REVENUE. IF WE GO DOWN TO SAY 18, THAT IS $4 BILLION OF REVENUE. YOU CAN SAY THAT WE WILL GO FOR GROWTH AND WE WILL GET THAT 1.5 BILLION AND 1% OF GDP, BUT THAT WILL TAKE TIME. SO THE GOVERNMENT HAS GOT CHOICES, NEW ZEALAND HAS GOT CHOICES. YOU CAN TAKE A RISK ON THE FISCAL SIDE, BUT I THINK MORE LOGICALLY, YOU WOULD NEED TO LOOK AT OTHER OPTIONS AS WELL, FOCUS ON INBOUND INVESTMENT, WHERE THE TAX SYSTEM IS REALLY DAMAGING, ATTRACTING GLOBALLY MOBILE TALENT. THE FILE INVESTMENT FUND SCHEME AND SO FORTH, OR ALLOW MORE REDUCTIONS OR INVESTMENT PLANTING MACHINERY. I WILL ASK YOU ABOUT SOME OF THOSE OPTIONS IN A MOMENT, BUT TO GO BACK TO THAT POINT YOU ARE MAKING ABOUT TINKERING, IF YOU LIKE, ABOUT OUR CORPORATE TAX RATE, EFFECTIVELY YOU WERE SAYING IN ORDER TO MEANINGFULLY DRIVE INVESTMENT AND INNOVATION, YOU HAVE GOT TO GO HARD OR GO HOME, BUT IF YOU WERE TO DO THAT, PRESUMABLY THERE WOULD BE A LAG IN TERMS OF ACTUAL REVENUE, BECAUSE ONCE YOU MADE THE CHANGE WOULD HAVE TO WAIT FOR THE INNOVATION AND INVESTMENT TO COME THROUGH, WHICH WOULD TAKE YEARS. A BIT OF A MIX AND TOP COSMETIC SURGERY IS NOT GOING TO DO IT. YOU HAVE GOT TO GO BOLD. BECAUSE OF THE FISCAL POSITION, YOU HAVE GOT TO LOOK AT BEING TARGETED WHICH WOULD COST YOU LESS, BUT THEN GO ON THE ROAD TO ACTUALLY BECOMING INTERNATIONALLY COMPETITIVE ALONG WITH SINGAPORE AND IRELAND. TALK US THROUGH SOME OF THOSE OPTIONS ON WHAT DO YOU THINK MIGHT BE ALTERNATIVE OPTIONS FOR DRIVING ECONOMIC GROWTH IN THE SHORT-TERM? DECREASING THE TAXES WE PUT ON INBOUND INVESTMENT, SO FOREIGNERS COMING HERE; WE HAVE WHAT IS OFTEN PERCEIVED TO BE PENAL TAXES ON THEM. WE DON'T ALLOW INTEREST DEDUCTIONS. IF YOU ALLOWED MORE OF THAT, THAT WOULD HELP, PARTICULARLY IN INFRASTRUCTURE AREAS. WE CAN LOOK AT THE FILE INVESTMENT FUND SCHEME, WHICH THE GOVERNMENT IS LOOKING AT. WE CAN LOOK AT MAKING IT MORE ATTRACTIVE TO INVEST IN PLANT AND MACHINERY. WE DON'T WANT PEOPLE INVESTING JUST INLAND. HOW WOULD YOU MAKE THAT SWITCH? HOW WOULD YOU MAKE INVESTMENTS IN MORE PRODUCTIVE ASSETS IN RESIDENTIAL PROPERTY? AT THE MOMENT, WE ALLOW A DEDUCTION FOR IF YOU ARE INVESTING IN A $1 MILLION PLANT, WE ONLY ALLOWED 10% OF THAT TO BE DEDUCTED, OR 5% EVERY YEAR. BUSINESSES ARE LOOKING AT A FIVE YEAR PERSPECTIVE, SO WRITE IT OFF OVER FIVE YEARS, 20% EVERY YEAR, RATHER THAN 5% OR 10%. THAT WOULD COST YOU $500 MILLION, SOMETHING LIKE THAT, POSSIBLY MORE DURABLE FISCALLY. FAR THEIR BIGGER STRUCTURAL CHANGES THAT YOU THINK WOULD DRIVE ECONOMIC GROWTH OVER THE LONGER TERM CHANGES THE GST INCOME TAX? I'M NOT A POLITICIAN, BUT IF I HAD A FREE REIN, I WOULD CHANGE THE MIX BETWEEN GST AND INCOME TAX. AT THE MOMENT IT IS TWO THIRDS INCOME TAX ONE THIRD INCOME TAX. I WOULD GO TO THIRDS GST ONE THIRD INCOME TAX. THAT WOULD ALLOW US TO REDUCE OUR RATES ON THAT, BUT THAT WOULD BE A 28% GST RATE. IT IS GOING TO BE DIFFICULT TO PERSUADE THE PUBLIC THAT THEIR FOOD COSTS ARE GOING TO GO UP BY THAT AMOUNT. THESE ARE REAL SOCIAL ISSUES NEW ZEALAND HAS TO CONFRONT AND STOP WHINGING ABOUT YOUR NEXT-DOOR NEIGHBOUR HAS MADE A CAPITAL GAIN AND START THINKING ABOUT DO WE WANT TO GO FOR GROWTH AND ALL THE BENEFITS THAT GO THAT? OR DO WE GO FOR MORE EQUAL SOCIETY AND BE POOR AS A RESULT? THE REGAL NORTH OR SOUTH? YOU COULD ARGUE BOTH WAYS. WE HAVE GONE FOR BEING POOR. IT WILL BE FASCINATING TO SEE WHAT WILL BE DECIDED WHEN IT COMES TO THESE BIG DECISIONS BEING MADE. THANKS, ROBIN. HEI AKUANEI ` Q+A IS BACK AFTER THE BREAK. SO YOU KNOW, AS WELL AS WATCHING THE SHOW LIVE, YOU CAN LISTEN TO Q+A AS A PODCAST. YOU MIGHT ALREADY BE LISTENING TO US NOW, IN WHICH CASE, CHUR. IF YOU WANT TO FIND US AS A PODCAST, JUST SEARCH NZ Q+A WHEREVER YOU GET YOUR PODCASTS. KUA MUTU ` THAT'S Q+A FOR THIS WEEK. FROM THE Q+A TEAM, THANKS FOR WATCHING, AND NGA MIHI KI A KOUTOU I NGA KARERE ` THANKS FOR YOUR FEEDBACK. HEI TERA WIKI ` WE'LL SEE YOU NEXT SUNDAY AT 9AM. CAPTIONS BY LENA ERAKOVICH AND TOM CLARKE. CAPTIONS WERE MADE WITH THE SUPPORT OF NZ ON AIR. WWW.ABLE.CO.NZ COPYRIGHT ABLE 2025