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Speaker 1: So good news for mortgage holders. The official cash rate

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Speaker 1: yesterday dropped by fifty basis points. It's down to three

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Speaker 1: point seventy five percent. The question is will the banks

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Speaker 1: pass it on? Well, banks have already started doing that,

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Speaker 1: and Finance Minister Nichola Willis joins me. Now, hello, Nicola, Hi,

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Speaker 1: how are you. I'm good good news for us, good

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Speaker 1: news for mortgage holders. What does it say about our economy?

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Speaker 2: Well, it says that things are going to get better

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Speaker 2: for New Zealanders who are worried about the cost of

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Speaker 2: learning because their mortgages are going to get cheaper. And

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Speaker 2: the Reserve Bank is confirming the view that the economy

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Speaker 2: is going to grow this year, which means more people

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Speaker 2: on jobs, more business is doing well, and more wealth.

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Speaker 1: And in our economy this is true. The Reserve Bank has

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Speaker 1: made it clear that there will be more cuts. Do

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Speaker 1: you believe that because there is an argument that we

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Speaker 1: shouldn't be going to heart right now, considering the global situation,

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Speaker 1: considering the baked in non tradable inflation that we've got.

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Speaker 1: You know, we see rate rises the whole time, we

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Speaker 1: see water rises the whole time. Do you belie that

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Speaker 1: there will be more cuts.

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Speaker 2: Well, the Reserve Bank is forecasting more cuts, that's very clear.

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Speaker 2: They see that interrast rate reductions will continue for the

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Speaker 2: year ahead, and that's based on their view that New

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Speaker 2: Zealand has inflation under control, which is very good news

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Speaker 2: for all New Zealanders. It means less price rises and

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Speaker 2: it also means that interest rates can keep coming down.

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Speaker 2: So if you've got a mortgage or you're a small business,

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Speaker 2: interest rates are going to keep dropping.

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Speaker 1: So is the fact that inflation is now under control.

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Speaker 1: Who should get the credit? Is it because of your

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Speaker 1: policies and your fiscal management or is it just the

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Speaker 1: consequence of the Reserve bank squeeze of money supply over

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Speaker 1: the past two years.

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Speaker 2: Well, the Reserve Bank has the decision making power when

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Speaker 2: it comes to reducing interest rates. All we can do

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Speaker 2: is the government is make it easier for them, and

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Speaker 2: we have since coming to government, we have been disciplined

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Speaker 2: about government spending. We went through a period as a

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Speaker 2: country where the government was spending more than it ever

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Speaker 2: has even while inflation was driving to generational high as

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Speaker 2: it was up at more than seven percent, and the

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Speaker 2: government kept on spending, and that makes it hard for

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Speaker 2: the Reserve Bank produced infrastrates. So now it's in a

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Speaker 2: different point of the cycle where it can look at

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Speaker 2: a government that's saying, well, be restrained, please just drop

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Speaker 2: interest rates, and.

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Speaker 1: They are yes, Well, there's good spending and there's bad spending.

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Speaker 1: And I know. Over the weekend, Engineering New Zealand and

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Speaker 1: Philip Templar wrote a piece complaining about the lack of

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Speaker 1: spending on any infrastructure and the fact that because there

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Speaker 1: is no investment from the government in our infrastructure, we

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Speaker 1: are losing our best and brightest engineers to Australia and

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Speaker 1: the rebuild in America. So the question is when will

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Speaker 1: you start spending.

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Speaker 2: Well, one of the things that drives me in politics

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Speaker 2: is wanting new skilled New Zealanders to stay here in

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Speaker 2: this great country. The factor is that we are spending

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Speaker 2: more on infrastructure than the previous government was forecasting to do.

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Speaker 2: We are continuing to invest in building hospitals and building

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Speaker 2: schools and building roads and we will keep doing so.

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Speaker 2: We need to also paint a better future for New

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Speaker 2: Zealanders and that is why we are so focused on

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Speaker 2: growing the economy so that we can create better opportunities

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Speaker 2: than the years ahead.

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Speaker 1: Are we building roads, Yes, we are.

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Speaker 2: I mean, we just last week opened the new road

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Speaker 2: in the Hawk's Bay. We've got new roads happening in

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Speaker 2: christ Church. We've got new roads of national significance happening

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Speaker 2: across the country. We've got a record investment in the

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Speaker 2: National Land Transport Fund so that we can build roads

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Speaker 2: that will make a difference to New Zealander who can

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Speaker 2: meet from one region to another.

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Speaker 1: Those roads were ordered by another regime. What I'm asking is,

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Speaker 1: what are you going to do?

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Speaker 2: No, we have announced new projects, Andrew.

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Speaker 1: Yes, but I'm just doing the light rail thing with you.

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Speaker 1: If you know what I mean. You know we announce projects,

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Speaker 1: but it's not a project until a side has turned.

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Speaker 2: Well, you are making a very good point, which is

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Speaker 2: we did cancel fantasy projects. I don't think anyone in

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Speaker 2: Auckland thought light rail was actually going to happen. Yes,

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Speaker 2: there are a lot of people involved in designing it,

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Speaker 2: but it wasn't ever going to happen. And similarly with

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Speaker 2: the Lake Conslow hydro project, that was never going to

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Speaker 2: happen either. We're focusing our resources on projects we will

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Speaker 2: actually open, and that's roads of national significance, that's big hospitals,

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Speaker 2: that schools. We're doing things where we invest the resources

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Speaker 2: and projects we will fund and we will di liver.

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Speaker 1: Okay, yes you're cutting the spending, but you're still having

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Speaker 1: to continue the borrowing because we have so we have

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Speaker 1: huge interest payments. Our dollar has had a year long

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Speaker 1: slide downward, and I want to know what's that doing

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Speaker 1: to our debt and its repayment and our economy.

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Speaker 2: Well, we have a flexible exchange rate, and the plus

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Speaker 2: side of that is it means that when our dollar

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Speaker 2: is coming down, our exporters get more for their exporting

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Speaker 2: and so if you're a dairy farmer or you're a

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Speaker 2: sheep farmer right now, there is a plus side to that. Overall,

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Speaker 2: it means that our exchange rate is adjusting to the

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Speaker 2: circumstances that are happening around the world. New Zealand just

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Speaker 2: needs to keep doing what it's always done well, which

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Speaker 2: is selling our beautiful, amazing products around the world for

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Speaker 2: good prices, and we will keep doing that.

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Speaker 1: Nikola Willis Finance Minister. I thank you for your time today.

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