Nicola Willis, fresh off the tarmac, bringing with her global fiscal lessons

Sunday, 31 August 2025

Back from London, Nicola Willis inadvertently took the Prime Minister’s spot in Parliament, sharing microphones and taking questions, as MPs and media scrambled. She later joked about the mix-up and the speculation she could be New Zealand’s next PM.

A week and a bit ago Finance Minister Nicola Willis, freshly back from a trip to the US and Europe, walked past a group of journalists on her way to a National Party caucus meeting.

She looked refreshed and took to the prime minister’s carefully laid out mic stand to talk to reporters.

Although the story later became how she had taken the PM’s spot in front of the cameras and upstaged him - Willis said it was both accidental and a bit embarrassing - she actually fronted up to answer questions about her recent trip abroad.

A couple of days later the Sunday Star-Times found itself up in Willis’ seventh floor Beehive office to ask some questions about her northern hemisphere sojourn.

Despite the often punishing schedule of senior politicians when they travel abroad, they are also a de-facto work holiday from the relentless demand of ministerial life - answering questions every day about the various domestic problems of the nation, the problems in your portfolio and how you are going to fix them - not to mention parliamentary duty and appointments.

Trips overseas are often a chance to rise above the day-to-day politics and get a bit of perspective back. While a number of her male colleagues are battling mid-term waistlines and lighter pallors, Willis came back looking terrific - as if she’d been on an actual holiday and enthused about what she had learned overseas.

Finance Minister Nicola Willis with UK Chancellor of the Exchequer, Rachel Reeves, London in August 2025.

The finance minister spent the trip meeting international investors and institutions that hold New Zealand assets, or more pointedly: its debt. Willis enthused that those institutions are convinced that the fiscal consolidation that has been embarked upon by the Government is well received and credible.

“The key goal of the visit was, on the one hand, to reaffirm and reinforce the really important economic partnerships between New Zealand and the UK and the US … the other core purpose was to meet with investors, both those who purchase government bonds and debt, and those who are interested in investing in New Zealand assets, infrastructure, businesses and their view on New Zealand economy,” Willis told the Star-Times.

“So on the bond ratings front, and on the investors and government bonds, they were keen to scrutinise the fiscal consolidation path that we have laid out, and to test: is that viable? Are you sticking to it? Is it real?

“And I was able to demonstrate that … it is real, and that we're on that path. And they were very convinced by that and very reinforcing of the approach we're taking.”

Finance minister Nicola Willis is focused on growth, but she says NZ’s not the only country struggling with it. She thinks AI could help.

She also said there were clearly market concerns around the world that having run up very high levels of debt during the Covid pandemic (often on wage subsidy-type policies during lockdowns), many Governments around the world were now grappling with the very same thing New Zealand is: on wrestling the nation’s finances back into some sort of shape.

“And the essential view being, look, if you stick to the path you're on, we think that's really sensible … to get the books back into surplus over the economic cycle, your debt target - that all looks really sensible. Can you please just stick to it?”

Even a glance across the Tasman, an economy which seems to be sucking up New Zealand workers at the moment, is staring down the fallout of the massive debt run up and a decade of fiscal deficits as federal and state governments continue to underwrite Australian job creation through deficit spending with a challenging productivity outlook.

Willis was very alive to the fact that her problems are far from hers alone.

“We're all grappling with the same challenge of declining levels of productivity growth, and planning reform just kept on coming up - that that's definitely what people want to see in the UK.”

During the trip, Willis met with UK Chancellor of the exchequer, Rachel Reeves (the equivalent of the finance minister).

Britain's Prime Minister Keir Starmer and Chancellor of the Exchequer Rachel Reeves in May. Although they may be politically different, the UK’s Labour and NZ’s National Coalition are stuck with stiff fiscal rules and wresting with where to pump money.

“I think her situation is more challenging than mine,” Willis said, also joking that she had lost her voice during the Reeves meting and could only produce sound with the right pitch of whisper.

Of all the governments around the world - and despite being on opposite sides of the political divide - UK Labour is in a similar situation to the NZ Coalition Government. They’ve set themselves stiff fiscal rules to stick to and are wrestling with where to cut spending in order to pump money into areas such as health. Willis has coalition partners, Reeves has a sceptical back bench.

“In a meeting like that, you first celebrate the economic relationship … and the shared history and reaffirmation of all the positivity there, and then a discussion about our joint efforts to drive growth without just using lazy fiscal levers. So she's in the same position, which is that she can't just be pump-priming the economy - that is completely unsustainable,” Willis said.

“So quite a lot of commonality there, in terms of what's going to drive growth over the next five years, and then in terms of the fiscal story, just an acknowledgement of the challenge of consolidating Crown finances after a period of massive spending expansion and the challenges that presents.”

Nicola Willis during a Bloomberg Radio interview in New York, US on August 14.

Willis also came back with a hefty dose of US optimism around productivity. The US economy throughout the Obama, Trump and Biden years has continued to be an incredible productivity story. The ability of that economy to innovate and grow remains a big drive of global growth - even with the Trump tariffs.

“It's a story of success that I'd love to translate effectively to New Zealanders,” Willis said.

“This really wealthy economy in which people have far higher incomes than New Zealanders and in many senses, have a more affordable cost of living as a result.

“What's actually behind that is a story of genuine productivity-driven economic growth, and that productivity has been about innovation and business dynamism and high levels of investment, and that is ultimately what creates wealthier economies.”

And, in common with just about any corporate leader, Willis has returned with a renewed focus on AI and is now giving some active thought to how Government can help New Zealand business with the adoption of AI.

“…because I think we are an economy of small businesses.

‘Our AI story isn't going to be about having the next Meta. Our AI story is going to be about unlocking more productivity in our small firms by giving them the gift of a release from some of the tasks they currently spend hours on.. and then they can spend that time, that human time, instead, on thinking about how to do innovation, about doing things in new ways.

“Because if you are a plumber in West Auckland, AI has the potential to completely strip the noise and hours out of what you do, for your payroll management, for your scheduling, for your invoicing, for how you're monitoring your customer trends, and a lot of those tasks at the moment are both time consuming, often not done as well as they could be.”

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