1 00:00:00,080 --> 00:00:02,200 Speaker 1: With me. In the studio we have the Finance Minister 2 00:00:02,279 --> 00:00:05,040 Speaker 1: Nicolo Willis Nicola. Hello, hello, he thanks for coming in, 3 00:00:05,160 --> 00:00:07,360 Speaker 1: great to be with you. What brought you up to Auckland? 4 00:00:07,400 --> 00:00:09,760 Speaker 2: Was it the I We did a press conference with 5 00:00:09,800 --> 00:00:11,480 Speaker 2: the Prime Minister and I had some meetings with some 6 00:00:11,560 --> 00:00:12,800 Speaker 2: Auckland based business. 7 00:00:12,480 --> 00:00:14,760 Speaker 1: And very good. Okay, Now do you agree with the 8 00:00:14,760 --> 00:00:16,479 Speaker 1: Prime Minister and what he said this morning that the 9 00:00:16,480 --> 00:00:17,760 Speaker 1: Reserve Bank should have cut sooner? 10 00:00:17,960 --> 00:00:21,079 Speaker 2: Well, I think he was making a retrospective comment. And 11 00:00:21,120 --> 00:00:23,440 Speaker 2: if you went and talked to the Monetary Policy Committee 12 00:00:23,440 --> 00:00:26,040 Speaker 2: today and said, knowing what you now know, could you 13 00:00:26,079 --> 00:00:28,160 Speaker 2: have done things differently? You might find quite a few 14 00:00:28,200 --> 00:00:30,320 Speaker 2: of them would say, well, maybe would have done things differently. 15 00:00:30,400 --> 00:00:32,400 Speaker 1: Do you know fortunate that because you know that? 16 00:00:32,600 --> 00:00:36,000 Speaker 2: Well, Unfortunately, the Monetary Policy Committee, when they make decisions, 17 00:00:36,040 --> 00:00:38,440 Speaker 2: don't get the joy of being retrospective. They have to 18 00:00:38,479 --> 00:00:41,040 Speaker 2: deal with what's happening in real time and they've often 19 00:00:41,080 --> 00:00:43,440 Speaker 2: got uncertain data. They're trying to predict a bit about 20 00:00:43,479 --> 00:00:46,599 Speaker 2: what the future will show. And what they clearly decided 21 00:00:46,640 --> 00:00:50,320 Speaker 2: at their last rate announcement was actually things have panned 22 00:00:50,360 --> 00:00:53,080 Speaker 2: out worse than we had imagined and therefore, more stimulus 23 00:00:53,200 --> 00:00:55,960 Speaker 2: is required and we need to lodge in another action 24 00:00:56,040 --> 00:00:56,440 Speaker 2: in the rate. 25 00:00:56,840 --> 00:00:59,160 Speaker 1: It's not trampling on their independence because it's talking about 26 00:00:59,160 --> 00:01:00,760 Speaker 1: what they've done rather than what they share. 27 00:01:00,840 --> 00:01:03,600 Speaker 2: Exactly. If the Prime Minister had said this is what 28 00:01:03,640 --> 00:01:06,440 Speaker 2: they should do next time, that would have been an overstep. 29 00:01:06,520 --> 00:01:09,160 Speaker 2: He did not say that. He said reprospectively, things have 30 00:01:09,240 --> 00:01:12,240 Speaker 2: played out differently than the Monetary Policy Committee might have imagined. 31 00:01:12,280 --> 00:01:15,600 Speaker 1: What about your involvement with the Capital Requirements review? Is 32 00:01:15,640 --> 00:01:16,800 Speaker 1: that overstepping the independent? 33 00:01:16,880 --> 00:01:20,759 Speaker 2: Absolutely not, because under the legislation, I get to issue 34 00:01:20,760 --> 00:01:23,840 Speaker 2: what's called a financial policy remit, and in that financial 35 00:01:23,840 --> 00:01:27,000 Speaker 2: policy remint I specifically asked that the Reserve Bank give 36 00:01:27,040 --> 00:01:31,280 Speaker 2: more emphasis to banking competition and efficiency. They've picked that up. 37 00:01:31,760 --> 00:01:34,039 Speaker 2: I also wrote them a letter of expectations about what 38 00:01:34,080 --> 00:01:36,640 Speaker 2: that might involve. They've picked that up and consistent with 39 00:01:36,680 --> 00:01:39,920 Speaker 2: their legislative requirements, they've said, okay, well, that's one of 40 00:01:39,920 --> 00:01:42,880 Speaker 2: the factors we'll consider here. They've also considered the Commerce 41 00:01:42,880 --> 00:01:47,960 Speaker 2: Commission's inquiry, they've considered Parliament's inquiry, developments that have happened internationally, 42 00:01:48,360 --> 00:01:52,000 Speaker 2: and the evolving deposit compensation scheme here. So all of 43 00:01:52,040 --> 00:01:54,600 Speaker 2: those factors contributed to the Reserve Bank doing a review 44 00:01:54,640 --> 00:01:55,320 Speaker 2: of capital settings. 45 00:01:55,400 --> 00:01:57,080 Speaker 1: Would you plead you appreciate it? Would you accept you 46 00:01:57,080 --> 00:01:59,240 Speaker 1: guys at towing the line on the independence thing. 47 00:01:59,520 --> 00:02:02,480 Speaker 2: I think we are supporting the Reserve Bank to be 48 00:02:02,640 --> 00:02:06,520 Speaker 2: independent because that's very important and we want to safeguard that. 49 00:02:06,560 --> 00:02:08,280 Speaker 1: And well, do you have a preference on which of 50 00:02:08,280 --> 00:02:09,920 Speaker 1: the two outcomes come from the review. 51 00:02:10,360 --> 00:02:12,839 Speaker 2: No, I'm not going to take a preference on that because. 52 00:02:12,600 --> 00:02:13,760 Speaker 1: I think it was a trick question. 53 00:02:13,919 --> 00:02:16,200 Speaker 2: Yeah, because I think it's important that the Reserve Bank 54 00:02:16,240 --> 00:02:19,519 Speaker 2: do this transparent feedback process to understand from the different 55 00:02:19,639 --> 00:02:22,360 Speaker 2: players involved, how would that affect them. Would it have 56 00:02:22,440 --> 00:02:24,680 Speaker 2: the impact they think it would on competition on the 57 00:02:24,680 --> 00:02:27,480 Speaker 2: price of lending, because what their report today says is 58 00:02:27,919 --> 00:02:30,720 Speaker 2: they think under all of these scenarios it will lower 59 00:02:30,760 --> 00:02:33,680 Speaker 2: the cost of borrowing for New Zealanders, lower it more 60 00:02:33,760 --> 00:02:38,320 Speaker 2: in particular segments, including some parts of residential mortgages, agricultural lending, 61 00:02:38,320 --> 00:02:42,320 Speaker 2: community housing providers, and that all things being equal, that 62 00:02:42,400 --> 00:02:44,960 Speaker 2: could actually be a supporter of more economic growth in 63 00:02:45,000 --> 00:02:48,679 Speaker 2: the future. So those are positive things. The detail is 64 00:02:48,720 --> 00:02:52,320 Speaker 2: where it counts. It's their job to understand that detail 65 00:02:52,360 --> 00:02:54,080 Speaker 2: and to make decisions on it. 66 00:02:54,200 --> 00:02:56,440 Speaker 1: Now, have you heard about our confusion about when your 67 00:02:56,480 --> 00:02:57,959 Speaker 1: supermarket announcement is coming. 68 00:02:58,040 --> 00:02:59,399 Speaker 2: I haven't heard about that confusion. 69 00:02:59,520 --> 00:03:01,560 Speaker 1: But you see, to us, you said it would come 70 00:03:01,600 --> 00:03:03,560 Speaker 1: at the end of the quarter, which is the end 71 00:03:03,600 --> 00:03:08,040 Speaker 1: of August. But the quarter ends at the end of September. Correct, 72 00:03:08,120 --> 00:03:10,040 Speaker 1: So is the supermarket announcement coming at the end of 73 00:03:10,080 --> 00:03:11,280 Speaker 1: the August or the end of the quarter? 74 00:03:11,360 --> 00:03:13,560 Speaker 2: Well, the Prime Minister's made clear it will happen this quarter, 75 00:03:13,600 --> 00:03:15,760 Speaker 2: which I view as the end of September. But I'm 76 00:03:15,800 --> 00:03:17,359 Speaker 2: not going to reveal on the show today when that 77 00:03:17,440 --> 00:03:19,720 Speaker 2: announcement will happen. What I will tell you, though he's 78 00:03:19,760 --> 00:03:22,440 Speaker 2: a little exclusive, is that when I announce it, it's not 79 00:03:22,480 --> 00:03:24,760 Speaker 2: going to be the grand silver bullet to solve all 80 00:03:24,840 --> 00:03:27,720 Speaker 2: supermarket issues. What it will be is an update on 81 00:03:27,800 --> 00:03:29,920 Speaker 2: the work that we have been doing as you know. 82 00:03:30,280 --> 00:03:32,120 Speaker 1: No, it's an announcement of an announcement. 83 00:03:32,160 --> 00:03:35,200 Speaker 2: No. No, there will be deliberate and specific actions that 84 00:03:35,240 --> 00:03:36,520 Speaker 2: you have not heard about before. 85 00:03:36,680 --> 00:03:40,080 Speaker 1: Okay, but you're definitely tempering our expectations, aren't you. 86 00:03:40,200 --> 00:03:43,280 Speaker 2: I'm not going to be announcing an international supermarket chain 87 00:03:43,960 --> 00:03:46,720 Speaker 2: with facts stores is going to be opening up next month. 88 00:03:46,720 --> 00:03:48,600 Speaker 2: All right, so when do we get the big silver bullet? 89 00:03:48,720 --> 00:03:49,520 Speaker 1: Do we get one? 90 00:03:49,760 --> 00:03:52,360 Speaker 2: Well, what we have to do is create the conditions 91 00:03:52,560 --> 00:03:57,880 Speaker 2: in which a new entrant or an existing player feel 92 00:03:57,960 --> 00:04:01,160 Speaker 2: that they can expand. Now that is a commercial decision 93 00:04:01,200 --> 00:04:04,560 Speaker 2: for that entity. I think the government's job is to say, Okay, 94 00:04:04,960 --> 00:04:06,840 Speaker 2: what is the red teap tape that would stop you 95 00:04:06,880 --> 00:04:08,880 Speaker 2: doing that? What are the regulatory barriers, what is the 96 00:04:08,960 --> 00:04:12,400 Speaker 2: uncertainty about the competition framework that might prevent you? If 97 00:04:12,440 --> 00:04:14,720 Speaker 2: we can clear all of that out of the way 98 00:04:15,440 --> 00:04:18,599 Speaker 2: and we turn up best stressed, what then would stop you? 99 00:04:19,080 --> 00:04:20,680 Speaker 2: And so that's the approach. 100 00:04:21,120 --> 00:04:22,800 Speaker 1: Me like, you're never going to give us a silver bullet, 101 00:04:22,800 --> 00:04:24,440 Speaker 1: and there's going to be no big announcement. It's just 102 00:04:24,480 --> 00:04:25,520 Speaker 1: going to be laying the groundwork. 103 00:04:25,640 --> 00:04:28,200 Speaker 2: Well, we are making very good progress and we have 104 00:04:28,400 --> 00:04:30,120 Speaker 2: a number of irons in the fire, and I'll be 105 00:04:30,160 --> 00:04:32,800 Speaker 2: looking forward to making an update on it, But not today. 106 00:04:32,560 --> 00:04:36,400 Speaker 1: This quarter though, not right? And who are these merchants 107 00:04:36,440 --> 00:04:38,800 Speaker 1: of misery and doom and doom say it? 108 00:04:39,560 --> 00:04:41,719 Speaker 2: Well, I'm a little bit frustrated by the way that 109 00:04:41,720 --> 00:04:44,320 Speaker 2: that has been taken out of context. My point was 110 00:04:44,360 --> 00:04:47,400 Speaker 2: that the Reserve Bank have given forecasts about the economic 111 00:04:47,440 --> 00:04:50,880 Speaker 2: future in which they say they see unemployment falling, they 112 00:04:50,920 --> 00:04:54,520 Speaker 2: see growth coming back and inflation stabilizing. My point was 113 00:04:54,800 --> 00:04:58,159 Speaker 2: it's not me saying that the Reserve Bank are independent. 114 00:04:58,160 --> 00:05:01,680 Speaker 2: They're politically neutral, as we've just discussed, and so those 115 00:05:01,720 --> 00:05:03,600 Speaker 2: who say, oh, no, we don't believe that, we don't 116 00:05:03,600 --> 00:05:06,680 Speaker 2: believe it. You know, sometimes they are coming from a 117 00:05:06,680 --> 00:05:10,960 Speaker 2: politically motivated perspective to say that. Equally, I get it. 118 00:05:11,240 --> 00:05:14,320 Speaker 2: New Zealanders have been through an incredibly tough few years 119 00:05:14,680 --> 00:05:16,320 Speaker 2: and for some of them it feels like there have 120 00:05:16,360 --> 00:05:17,400 Speaker 2: been a few false storms. 121 00:05:17,680 --> 00:05:19,760 Speaker 1: Who well, there have been a lot of false storms, 122 00:05:19,760 --> 00:05:21,240 Speaker 1: aren't they? But who are these doomsayers? 123 00:05:21,560 --> 00:05:23,320 Speaker 2: Are the people on the other side of me in Parliament. 124 00:05:23,360 --> 00:05:25,120 Speaker 2: They tend to come from the Greens and Labor And 125 00:05:25,120 --> 00:05:27,440 Speaker 2: if you were to believe Chloe s Harborough and Barbara Edmonds, 126 00:05:27,440 --> 00:05:29,400 Speaker 2: it doesn't matter what the government does. The end of 127 00:05:29,400 --> 00:05:30,080 Speaker 2: the world isn't I. 128 00:05:30,160 --> 00:05:32,680 Speaker 1: Because because how it's been interpreted is that you're saying 129 00:05:32,720 --> 00:05:34,919 Speaker 1: everything is two is just absolutely fine. 130 00:05:35,400 --> 00:05:37,120 Speaker 2: Not my view. Heither not my view. 131 00:05:37,160 --> 00:05:38,760 Speaker 1: You acknowledge it's tough out there. 132 00:05:38,600 --> 00:05:43,760 Speaker 2: Absolutely very tough. And particularly for some businesses. Particularly I 133 00:05:43,800 --> 00:05:46,640 Speaker 2: think of those small businesses who had to struggle through COVID, 134 00:05:46,640 --> 00:05:48,760 Speaker 2: often took on a lot of debt to stay open 135 00:05:48,800 --> 00:05:52,120 Speaker 2: and keep staff on, went through very big price spikes, 136 00:05:52,160 --> 00:05:54,480 Speaker 2: then got hit with high interest rates on the debt 137 00:05:54,560 --> 00:05:57,440 Speaker 2: they had outstanding, and are now struggling to keep going. 138 00:05:57,880 --> 00:06:00,919 Speaker 2: I do think that actually it is my responsibility to 139 00:06:00,960 --> 00:06:03,240 Speaker 2: look those businesses in the eye, as well as the 140 00:06:03,279 --> 00:06:06,360 Speaker 2: many households who depend on them, and say I can 141 00:06:06,440 --> 00:06:08,800 Speaker 2: with confidence tell you that the steps the government is 142 00:06:08,880 --> 00:06:12,479 Speaker 2: taking mean that we can forecast that conditions will be 143 00:06:12,560 --> 00:06:15,680 Speaker 2: objectively better. That is the case, and I think it's 144 00:06:15,720 --> 00:06:18,360 Speaker 2: important that I give them that sense of hope and purpose. 145 00:06:18,720 --> 00:06:20,320 Speaker 2: At the same time, I don't deny it whether you 146 00:06:20,360 --> 00:06:22,599 Speaker 2: are a big business a small business. In New Zealand household, 147 00:06:22,839 --> 00:06:24,760 Speaker 2: there are many people who continue to do it tough, 148 00:06:24,800 --> 00:06:26,200 Speaker 2: and they very much on our minds. 149 00:06:26,279 --> 00:06:28,880 Speaker 1: Okay, cool, Now do you agree with Chris Bishop that 150 00:06:28,920 --> 00:06:30,599 Speaker 1: it is a good thing that house prices are falling. 151 00:06:31,400 --> 00:06:33,760 Speaker 2: I agree with him that house prices needed to fall 152 00:06:33,800 --> 00:06:36,240 Speaker 2: from where they were. They went up thirty percent in 153 00:06:36,320 --> 00:06:40,960 Speaker 2: a year that is obviously objectively unsustainable, both from a 154 00:06:41,000 --> 00:06:44,280 Speaker 2: financial stability perspective, but also just from a what kind 155 00:06:44,320 --> 00:06:45,840 Speaker 2: of a New Zealand do we want to live up? 156 00:06:45,880 --> 00:06:48,080 Speaker 2: Because I'm with him, I want this to be a 157 00:06:48,080 --> 00:06:52,000 Speaker 2: property owning democracy in which normal working people look forward 158 00:06:52,040 --> 00:06:54,119 Speaker 2: to owning their own home. And so what that's about 159 00:06:54,240 --> 00:06:57,400 Speaker 2: is the ratio of incomes to house prices that had 160 00:06:57,440 --> 00:06:59,120 Speaker 2: become unsustainable in New Zealand. 161 00:06:59,160 --> 00:07:00,920 Speaker 1: But also we're putting on my into the wrong stuff. 162 00:07:01,320 --> 00:07:04,440 Speaker 2: Well, we want to see a productive economy being driven 163 00:07:04,520 --> 00:07:07,800 Speaker 2: by real growth, not just New Zealand's trading houses with 164 00:07:07,960 --> 00:07:08,400 Speaker 2: each So. 165 00:07:08,360 --> 00:07:11,480 Speaker 1: Do you think like I do, that house prices will 166 00:07:11,520 --> 00:07:14,040 Speaker 1: never again increase at the rate that they were, not 167 00:07:14,080 --> 00:07:16,680 Speaker 1: even during COVID, during the weird years, but even before that, 168 00:07:16,720 --> 00:07:18,560 Speaker 1: when they were galloping along at a good rate. I 169 00:07:18,560 --> 00:07:19,760 Speaker 1: don't think that ever happens again. 170 00:07:20,000 --> 00:07:22,960 Speaker 2: Well, our government is trying to correct the imbalances that 171 00:07:23,040 --> 00:07:25,480 Speaker 2: allowed that to occur, which in our view was that 172 00:07:25,520 --> 00:07:28,960 Speaker 2: we artificially in New Zealand constrained the amount of land 173 00:07:28,960 --> 00:07:32,400 Speaker 2: available for housing. The Resource Management Act became a massive 174 00:07:32,480 --> 00:07:35,640 Speaker 2: stop sign when it came to doing a new housing development, 175 00:07:35,680 --> 00:07:38,280 Speaker 2: when it came to building an apartment, and it slowed 176 00:07:38,320 --> 00:07:40,360 Speaker 2: down the supply of housing so that even when interest 177 00:07:40,440 --> 00:07:43,080 Speaker 2: rates were really low, there were lots of people wanting 178 00:07:43,120 --> 00:07:44,760 Speaker 2: to buy houses. No one could build quickly. 179 00:07:44,960 --> 00:07:47,480 Speaker 1: So you're doing what you can basically as a government 180 00:07:47,560 --> 00:07:49,760 Speaker 1: also to stop house prices increasing at the rate that 181 00:07:49,760 --> 00:07:51,720 Speaker 1: they were, which is a steady little tick along for years. 182 00:07:51,760 --> 00:07:54,080 Speaker 2: Well, what we're doing is what we can mean that 183 00:07:54,160 --> 00:07:57,160 Speaker 2: housing supply can respond to actual demands, so that with 184 00:07:57,240 --> 00:08:00,600 Speaker 2: a growing population, we're building enough houses for everyone. So 185 00:08:00,640 --> 00:08:04,080 Speaker 2: you don't get a situation where you have unsustainable rent increases, 186 00:08:04,440 --> 00:08:06,640 Speaker 2: where you have growing numbers of people depending on the 187 00:08:06,680 --> 00:08:09,840 Speaker 2: government for housing, where you have house prices being so 188 00:08:10,000 --> 00:08:12,920 Speaker 2: out of control that normal people on an average wage 189 00:08:12,960 --> 00:08:15,520 Speaker 2: can't even dream of owning a house. Now, what the 190 00:08:15,600 --> 00:08:18,000 Speaker 2: Treasury forecast is we are going to continue to see 191 00:08:18,040 --> 00:08:21,160 Speaker 2: moderate house price growth over the coming years. And I 192 00:08:21,200 --> 00:08:23,080 Speaker 2: know that that will be of some comfort to those 193 00:08:23,120 --> 00:08:25,080 Speaker 2: people who are sitting there looking at the big mortgage 194 00:08:25,120 --> 00:08:27,880 Speaker 2: that they racked up when prices were very high. But 195 00:08:28,000 --> 00:08:31,480 Speaker 2: over time, the best thing for New Zealand is that 196 00:08:31,520 --> 00:08:34,760 Speaker 2: we actually have house prices which are sustainable. 197 00:08:35,080 --> 00:08:38,040 Speaker 1: Yeah, totally. Did Sumon have a boy or a girl? 198 00:08:38,800 --> 00:08:41,320 Speaker 2: He had a boy? Did he Yeah, indeed he did. 199 00:08:41,920 --> 00:08:44,400 Speaker 2: He's got two boys and two girls now, which I 200 00:08:44,400 --> 00:08:46,480 Speaker 2: happen to think is the perfect arrange because you. 201 00:08:46,440 --> 00:08:48,679 Speaker 1: Have this arrangement too. This is good. Hey, thank you 202 00:08:48,800 --> 00:08:51,200 Speaker 1: very much. Nicola really appreciated. Nichola will is the financement. 203 00:08:51,200 --> 00:08:53,040 Speaker 1: It's a sixteen past six. 204 00:08:53,920 --> 00:08:54,319 Speaker 2: Thank you. 205 00:08:56,520 --> 00:08:59,680 Speaker 1: For more from Heather duplessy Ellen Drive. Listen live to 206 00:08:59,760 --> 00:09:02,800 Speaker 1: new Talks. It'd be from four pm weekdays, or follow 207 00:09:02,880 --> 00:09:04,640 Speaker 1: the podcast on iHeartRadio.