1 00:00:05,519 --> 00:00:05,920 Speaker 1: Kiota. 2 00:00:06,040 --> 00:00:09,200 Speaker 2: I'm Chelsea Daniels and this is the Front Page, a 3 00:00:09,320 --> 00:00:17,200 Speaker 2: daily podcast presented by the New Zealand Herald. Inflation has 4 00:00:17,400 --> 00:00:22,400 Speaker 2: risen even further. The latest stats and Z figures show 5 00:00:22,520 --> 00:00:27,320 Speaker 2: inflation reached three percent in the year to September. Economists 6 00:00:27,400 --> 00:00:30,600 Speaker 2: had it tipped to hit the top end of the 7 00:00:30,640 --> 00:00:34,560 Speaker 2: Reserve Bank's target band of between one and three percent, 8 00:00:35,080 --> 00:00:38,400 Speaker 2: but some say the period of circa three percent. 9 00:00:38,200 --> 00:00:39,480 Speaker 3: Could be short lived. 10 00:00:39,800 --> 00:00:43,320 Speaker 2: At the same time, labor has broken its silence on 11 00:00:43,360 --> 00:00:47,280 Speaker 2: what it thinks will help the economy today on the 12 00:00:47,280 --> 00:00:50,920 Speaker 2: front page, ends ed Herald Business Editor at Large Liam 13 00:00:51,040 --> 00:00:53,640 Speaker 2: dan Is with us to break down what all of 14 00:00:53,640 --> 00:00:59,920 Speaker 2: this means for you and your wallet. So, Liam, the 15 00:01:00,280 --> 00:01:04,559 Speaker 2: consumers price index increased three percent in the twelve months 16 00:01:04,600 --> 00:01:08,840 Speaker 2: to September. What has contributed to this increase? 17 00:01:09,640 --> 00:01:13,320 Speaker 3: Yeah, so well, a few really basic things actually that 18 00:01:13,800 --> 00:01:18,520 Speaker 3: will make have made it feel like it's a lot 19 00:01:18,560 --> 00:01:22,360 Speaker 3: worse than three percent. So power prices is the real headline. 20 00:01:22,440 --> 00:01:25,839 Speaker 3: Eleven point three percent I think for the annual rate. 21 00:01:26,760 --> 00:01:29,800 Speaker 3: That was the highest annual increase we've had in New 22 00:01:29,920 --> 00:01:33,400 Speaker 3: Zealand since nineteen eighty nine, so thirty six years. So 23 00:01:33,720 --> 00:01:36,520 Speaker 3: that people really felt that. I mean, bear in mind 24 00:01:36,520 --> 00:01:38,240 Speaker 3: that we've been through this. This is stuff that we've 25 00:01:38,240 --> 00:01:40,959 Speaker 3: already had the headlines of people complaining about the power 26 00:01:41,000 --> 00:01:43,959 Speaker 3: prices and we're just now counting the costs. But we 27 00:01:44,040 --> 00:01:47,880 Speaker 3: had rates up eight point eight percent across the board roughly, 28 00:01:48,040 --> 00:01:51,280 Speaker 3: and they tend to get counted once a year in 29 00:01:51,320 --> 00:01:54,360 Speaker 3: the September quarter, so that's when we see them contribute. 30 00:01:55,160 --> 00:01:56,400 Speaker 1: They're actually were up. 31 00:01:56,800 --> 00:02:00,080 Speaker 3: Twelve something twelve percent the year earlier, but that's still 32 00:02:00,120 --> 00:02:03,280 Speaker 3: a lot. It's still a high increase. And food prices, 33 00:02:03,320 --> 00:02:05,560 Speaker 3: I think we're up four point six percent for the year, 34 00:02:05,560 --> 00:02:09,079 Speaker 3: so that's still ahead of the three percent. People obviously 35 00:02:09,080 --> 00:02:13,040 Speaker 3: have been feeling that with dairy prices, butter beef, some 36 00:02:13,080 --> 00:02:15,800 Speaker 3: of those things that are getting good export dollars for 37 00:02:15,840 --> 00:02:18,680 Speaker 3: New Zealand but are making it painful for shoppers and 38 00:02:18,680 --> 00:02:20,639 Speaker 3: for consumers in the short term. So when you look 39 00:02:20,639 --> 00:02:24,040 Speaker 3: at those three things, they're sort of unavoidable basics for 40 00:02:24,080 --> 00:02:26,519 Speaker 3: a lot of people, especially the power and the food, 41 00:02:27,040 --> 00:02:33,600 Speaker 3: and so yeah, that is a problem, but also it's 42 00:02:33,840 --> 00:02:35,760 Speaker 3: sort of seen by the Reserve Bank is sort of 43 00:02:36,120 --> 00:02:39,440 Speaker 3: a shorter term thing. So I think that three percent 44 00:02:39,560 --> 00:02:43,640 Speaker 3: number has landed where it was largely expected to be 45 00:02:43,960 --> 00:02:47,200 Speaker 3: and shouldn't cause too much problem for the Reserve Bank 46 00:02:47,320 --> 00:02:51,320 Speaker 3: for those looking to hopefully see another interest rate cut. 47 00:02:51,919 --> 00:02:54,480 Speaker 2: Yeah, I mean I saw economists were kind of across 48 00:02:54,480 --> 00:02:56,480 Speaker 2: the board saying it was going to reach that top 49 00:02:56,600 --> 00:03:00,520 Speaker 2: end of the higher bracket that the Reserve wants to 50 00:03:00,560 --> 00:03:03,040 Speaker 2: kind of keep it into. Are you surprised that it's 51 00:03:03,040 --> 00:03:05,279 Speaker 2: not over three percent, to be honest. 52 00:03:05,919 --> 00:03:07,200 Speaker 1: Yeah, it could have been. I mean. 53 00:03:08,080 --> 00:03:11,120 Speaker 3: The other thing is, you know, those power prices. We 54 00:03:11,200 --> 00:03:14,520 Speaker 3: had a high wholesale price, there was weather conditions, but 55 00:03:14,520 --> 00:03:17,320 Speaker 3: we also had a thing that comes through. They do 56 00:03:17,360 --> 00:03:20,800 Speaker 3: a sort of a regulated price increase based on power 57 00:03:20,919 --> 00:03:23,440 Speaker 3: distribution costs and that comes through every five years. So 58 00:03:23,480 --> 00:03:29,359 Speaker 3: that's another one often there. So there's a reasonable you know, 59 00:03:29,400 --> 00:03:31,560 Speaker 3: there's a bit of an increase in tradable inflation, what 60 00:03:31,560 --> 00:03:35,040 Speaker 3: they call tradable inflation, which is those things that we 61 00:03:35,080 --> 00:03:37,880 Speaker 3: don't have much control over in the economy, food and 62 00:03:37,920 --> 00:03:41,000 Speaker 3: power and stuff, but non tradable which is in the 63 00:03:41,000 --> 00:03:44,160 Speaker 3: core of the economy, services, wages, what we're paying each other, 64 00:03:44,720 --> 00:03:48,000 Speaker 3: that is coming down. I mean, that's always a little 65 00:03:48,000 --> 00:03:51,120 Speaker 3: bit higher anyway, but it is coming down quite sharply 66 00:03:51,120 --> 00:03:53,600 Speaker 3: because the economy has been in such bad shape. So 67 00:03:53,640 --> 00:03:56,680 Speaker 3: I think economists could see that the things that push 68 00:03:56,720 --> 00:04:01,320 Speaker 3: prices down, recessionary forces that push prices down are sort 69 00:04:01,320 --> 00:04:06,560 Speaker 3: of happening. So I would say they're fairly confident that 70 00:04:07,000 --> 00:04:09,160 Speaker 3: this will be the peak of this cycle of inflation. 71 00:04:09,640 --> 00:04:15,360 Speaker 2: In terms of how much aren't inflation is imported versus 72 00:04:15,400 --> 00:04:18,400 Speaker 2: domestically generated. What we would you say. 73 00:04:18,240 --> 00:04:22,800 Speaker 3: To that, Well, that that is that split non tradable 74 00:04:22,839 --> 00:04:27,880 Speaker 3: and tradeable. So non tradable inflation tends to run a 75 00:04:27,880 --> 00:04:31,159 Speaker 3: bit higher, but that is coming off tradeable inflation, the 76 00:04:31,160 --> 00:04:36,159 Speaker 3: important inflation. We've had a pretty good year last year 77 00:04:36,200 --> 00:04:39,440 Speaker 3: on that, and that's come back with the food prices 78 00:04:39,480 --> 00:04:43,080 Speaker 3: and things, and so I think, but that some of 79 00:04:43,080 --> 00:04:45,200 Speaker 3: that tradeable inflation. I know we've got to be careful 80 00:04:45,240 --> 00:04:48,080 Speaker 3: because we tried to look through it after COVID and 81 00:04:48,120 --> 00:04:52,320 Speaker 3: it all exploded with inflation keeping on going and going. 82 00:04:52,360 --> 00:04:55,200 Speaker 3: But generally the Reserve Bank does look through that a 83 00:04:55,240 --> 00:04:58,200 Speaker 3: bit more because those are those international prices that are volatile. 84 00:04:59,200 --> 00:05:03,040 Speaker 3: Petrols and obvious one, but food, cobodity prices and some 85 00:05:03,120 --> 00:05:05,159 Speaker 3: of those other imports and things. They go up and 86 00:05:05,200 --> 00:05:08,000 Speaker 3: down a lot, and it would include power prices, and 87 00:05:09,040 --> 00:05:11,960 Speaker 3: that is some means that the Reserve Bank can ignore 88 00:05:12,000 --> 00:05:14,880 Speaker 3: those to some extent and it focuses on something called 89 00:05:14,920 --> 00:05:17,760 Speaker 3: core inflation, which is a measure of inflation where the 90 00:05:17,800 --> 00:05:21,600 Speaker 3: extremes cut off and looking at what it's how it's 91 00:05:21,640 --> 00:05:24,880 Speaker 3: tracking over the long term or medium to long term, 92 00:05:25,240 --> 00:05:26,520 Speaker 3: and they'll be more comfortable with. 93 00:05:26,520 --> 00:05:30,279 Speaker 2: That, right, so the Reserve Bank doesn't seem too spooked 94 00:05:30,320 --> 00:05:33,600 Speaker 2: over there. Should we see another OCR cut next month? 95 00:05:34,240 --> 00:05:35,280 Speaker 1: Yeah, I think we should. 96 00:05:35,520 --> 00:05:40,240 Speaker 3: I think we probably will, whether that's it, and you know, 97 00:05:40,600 --> 00:05:45,000 Speaker 3: if the economy, you know, continues to sort of struggle 98 00:05:45,040 --> 00:05:47,520 Speaker 3: to get going and the recovery hasn't hasn't taken off, 99 00:05:47,839 --> 00:05:51,480 Speaker 3: we might Some economists see some risk of another cut 100 00:05:51,520 --> 00:05:53,640 Speaker 3: maybe in February, or that the Reserve Bank might do 101 00:05:53,720 --> 00:05:56,200 Speaker 3: fifty basis points in November, but. 102 00:05:57,680 --> 00:05:58,080 Speaker 1: I don't know. 103 00:05:58,120 --> 00:06:01,120 Speaker 3: I think there are some signs that it's things are 104 00:06:01,800 --> 00:06:04,800 Speaker 3: starting to turn. A lot of the bad news is 105 00:06:04,800 --> 00:06:06,440 Speaker 3: in the rear vision mirror. It's just the way we 106 00:06:06,480 --> 00:06:08,960 Speaker 3: collect data, so we're seeing it at the tail end. 107 00:06:09,160 --> 00:06:12,080 Speaker 3: You know, unemployment will rise probably in the next lot 108 00:06:12,120 --> 00:06:14,400 Speaker 3: of stats, and it will be ugly as well, so 109 00:06:14,600 --> 00:06:17,480 Speaker 3: you know it's a line call. But the Reserve Bank's 110 00:06:17,560 --> 00:06:20,680 Speaker 3: primary job now single mandate, is to look at inflation. 111 00:06:20,920 --> 00:06:24,760 Speaker 3: So I think probably one more cut and done, and 112 00:06:24,760 --> 00:06:27,280 Speaker 3: they should probably signal to New Zealanders that they feel 113 00:06:27,279 --> 00:06:30,040 Speaker 3: they're done, because that will encourage New Zealanders to lock 114 00:06:30,120 --> 00:06:33,080 Speaker 3: in their interest rates and actually take some of the 115 00:06:33,120 --> 00:06:37,160 Speaker 3: savings and we can all move forward a bit. 116 00:06:42,839 --> 00:06:45,160 Speaker 4: Well, inflation is at three percent, it's within the band 117 00:06:45,200 --> 00:06:47,760 Speaker 4: of the Reserve Bank. Under labor it was at seven 118 00:06:47,800 --> 00:06:50,800 Speaker 4: point three percent, So we have broad inflation down and 119 00:06:50,880 --> 00:06:54,320 Speaker 4: just under eighty months or eighty months two years, and 120 00:06:54,320 --> 00:06:56,520 Speaker 4: that's making a big difference if you care about working 121 00:06:56,600 --> 00:06:59,840 Speaker 4: people and who are doing it really tough. You actually 122 00:06:59,880 --> 00:07:01,640 Speaker 4: met an economy well, and you make sure you get 123 00:07:01,640 --> 00:07:03,760 Speaker 4: spending under controls, so you get inflation under controls, so 124 00:07:03,800 --> 00:07:06,000 Speaker 4: you get interest rates down. That's exactly the path that 125 00:07:06,040 --> 00:07:08,839 Speaker 4: we've been putting in place. So yeah, they wreck the economy. 126 00:07:08,880 --> 00:07:09,480 Speaker 1: Let's be clear. 127 00:07:09,520 --> 00:07:11,880 Speaker 4: They just spent more, tax more, borrowed more, and they'll 128 00:07:11,880 --> 00:07:14,360 Speaker 4: continue to do more of that going forward. But that 129 00:07:14,480 --> 00:07:16,480 Speaker 4: is what caused the pain and suffering that New Zealanders 130 00:07:16,480 --> 00:07:18,000 Speaker 4: are experiencing up and down this country. 131 00:07:20,680 --> 00:07:24,320 Speaker 2: When everyday New Zealand is here that inflation is at 132 00:07:24,320 --> 00:07:28,120 Speaker 2: the top of the target range, what does that actually 133 00:07:28,240 --> 00:07:29,640 Speaker 2: mean for them day to day. 134 00:07:30,760 --> 00:07:34,880 Speaker 3: Well, it's all about those basics, the food and power, rents, 135 00:07:35,040 --> 00:07:37,559 Speaker 3: I mean, rents was actually quite promising. Rents had dropped 136 00:07:37,560 --> 00:07:39,800 Speaker 3: to two point six percent annual increase and if you 137 00:07:39,840 --> 00:07:43,280 Speaker 3: look at it what's happening month or month, it's really 138 00:07:43,320 --> 00:07:46,000 Speaker 3: almost flat to zero. There are parts of the country 139 00:07:46,040 --> 00:07:50,720 Speaker 3: where rents will be coming down, so that's moving with 140 00:07:50,800 --> 00:07:53,080 Speaker 3: the property market and with mortgage rates coming down and 141 00:07:53,120 --> 00:07:56,800 Speaker 3: house prices being subdued. But yeah, I think the trouble 142 00:07:56,880 --> 00:07:59,440 Speaker 3: is for New Zealanders who spend most of their income 143 00:07:59,520 --> 00:08:02,000 Speaker 3: to live, they feel inflation a lot more acutely. 144 00:08:02,080 --> 00:08:03,640 Speaker 1: So if you're if you've. 145 00:08:03,480 --> 00:08:05,920 Speaker 3: Got a lot of money and you've got a lot 146 00:08:05,960 --> 00:08:08,440 Speaker 3: of discretion around you know, most of your spending and 147 00:08:08,480 --> 00:08:12,400 Speaker 3: your core living expenses are only thirty forty fifty percent 148 00:08:12,440 --> 00:08:14,840 Speaker 3: of your total income, then it doesn't matter if it 149 00:08:14,880 --> 00:08:17,200 Speaker 3: goes up three percent or five percent. You've still got 150 00:08:17,200 --> 00:08:19,440 Speaker 3: all this discretion at the top end. But if you're 151 00:08:19,480 --> 00:08:22,720 Speaker 3: spending all your money on living, and particularly if those 152 00:08:22,720 --> 00:08:25,240 Speaker 3: basics have gone up by more than three percent, you know, 153 00:08:26,560 --> 00:08:29,440 Speaker 3: you feel it completely. You feel all the inflation, and 154 00:08:29,480 --> 00:08:33,120 Speaker 3: so it hurts poorer people harder. And look, I think 155 00:08:33,160 --> 00:08:37,360 Speaker 3: New Zealanders more or less didn't really get over the 156 00:08:37,360 --> 00:08:41,240 Speaker 3: inflation shop post COVID. We moved pretty quickly into a 157 00:08:41,280 --> 00:08:45,680 Speaker 3: period of higher dairy prices and meat prices and things. 158 00:08:46,000 --> 00:08:48,199 Speaker 3: And so you know, when you hear New Zealander is 159 00:08:48,200 --> 00:08:49,960 Speaker 3: talking about it, a lot of people still feel like 160 00:08:50,000 --> 00:08:53,040 Speaker 3: we've just had this one long cost of living crisis. 161 00:08:53,600 --> 00:08:57,160 Speaker 2: Do you think the Reserve Bank's current approach strikes the 162 00:08:57,280 --> 00:09:01,960 Speaker 2: right balance between controlling inflation but then also supporting growth. 163 00:09:03,240 --> 00:09:04,600 Speaker 1: I think so. 164 00:09:04,640 --> 00:09:06,600 Speaker 3: I mean, there's an argument that they've been a bit 165 00:09:06,640 --> 00:09:09,600 Speaker 3: slow to get interest rates down. The difficulty is they 166 00:09:09,600 --> 00:09:12,000 Speaker 3: do have a single mandate. They've got a single target. 167 00:09:12,000 --> 00:09:14,160 Speaker 3: The government changed that they used to have a target 168 00:09:14,200 --> 00:09:18,120 Speaker 3: that have a mandate that said you should weigh up 169 00:09:18,240 --> 00:09:21,800 Speaker 3: unemployment and inflation and consider those things. I mean, all 170 00:09:21,800 --> 00:09:24,960 Speaker 3: central banks will consider the big picture. But then if 171 00:09:25,040 --> 00:09:28,640 Speaker 3: your number one job is inflation, you can't take the 172 00:09:28,760 --> 00:09:32,160 Speaker 3: risk that it goes above three percent and becomes embedded 173 00:09:32,200 --> 00:09:32,920 Speaker 3: and gets hard. 174 00:09:33,000 --> 00:09:34,120 Speaker 1: You know, it's hard to. 175 00:09:34,040 --> 00:09:36,680 Speaker 3: Get down and I think central banks around the world 176 00:09:36,840 --> 00:09:39,520 Speaker 3: are a little bit feeling a little bit shell shopped 177 00:09:39,520 --> 00:09:42,720 Speaker 3: after the inflation that we had post COVID when it 178 00:09:42,720 --> 00:09:45,280 Speaker 3: got up to seven nine percent and all that stuff, 179 00:09:45,600 --> 00:09:47,280 Speaker 3: and it got away on us, and they do not 180 00:09:47,360 --> 00:09:50,400 Speaker 3: want to have to go through that kind of cycle 181 00:09:50,440 --> 00:09:52,400 Speaker 3: again where we're having to sort of do things to 182 00:09:52,400 --> 00:09:54,840 Speaker 3: get on top of inflation. So they just had to 183 00:09:54,840 --> 00:09:59,160 Speaker 3: be a bit cautious, unfortunately, and they couldn't just sort 184 00:09:59,200 --> 00:10:03,400 Speaker 3: of slash and burn. But it's looking I think, despite 185 00:10:03,400 --> 00:10:07,040 Speaker 3: this number, in some ways, it's looking a bit safer 186 00:10:07,040 --> 00:10:07,360 Speaker 3: for them. 187 00:10:07,960 --> 00:10:12,120 Speaker 2: You're always so optimistic, though you always try and stay optimistic. 188 00:10:12,200 --> 00:10:15,600 Speaker 2: I mean, realistically, is twenty twenty six going to be 189 00:10:15,600 --> 00:10:18,640 Speaker 2: better or are we still riding the wave up into 190 00:10:19,040 --> 00:10:21,720 Speaker 2: the end of twenty twenty six twenty and then entering 191 00:10:21,760 --> 00:10:22,560 Speaker 2: twenty twenty seven. 192 00:10:22,679 --> 00:10:25,640 Speaker 3: Well it gets a bit painful, actually, because I try 193 00:10:25,640 --> 00:10:27,640 Speaker 3: to be optimistic, but it's just taking so long. 194 00:10:29,360 --> 00:10:31,160 Speaker 1: Even this ra all's going to preak. 195 00:10:31,240 --> 00:10:34,240 Speaker 3: Yeah, and you know you'll see my columns will swing 196 00:10:34,320 --> 00:10:39,280 Speaker 3: between pessimism and optimism. But I think it is the 197 00:10:39,320 --> 00:10:42,320 Speaker 3: conditions are all in place. Interest rates are low enough 198 00:10:42,320 --> 00:10:45,080 Speaker 3: now to start stimulating the economy. There is all that 199 00:10:45,160 --> 00:10:48,520 Speaker 3: export money coming in from the dairy industry, the meat industry, 200 00:10:49,240 --> 00:10:53,080 Speaker 3: Kiwi fruit, even tourism is starting to pick up a bit. 201 00:10:53,120 --> 00:10:55,960 Speaker 3: It's sort of almost back at pre COVID levels, which 202 00:10:56,040 --> 00:10:59,040 Speaker 3: was a you know, a pretty good earner for the country. 203 00:10:59,080 --> 00:11:05,080 Speaker 3: So those things really ought to shift the economy. There's 204 00:11:05,120 --> 00:11:09,960 Speaker 3: a big deficit in confidence, you know, people are businesses 205 00:11:09,960 --> 00:11:12,600 Speaker 3: are ware of investing, people are shell shocked. 206 00:11:13,400 --> 00:11:13,839 Speaker 1: I think. 207 00:11:14,240 --> 00:11:19,120 Speaker 3: Unfortunately, the lagging statistics are things like the jobs, labor 208 00:11:19,160 --> 00:11:23,199 Speaker 3: market liquidations. You know, you're going to still see negative headlines, 209 00:11:23,200 --> 00:11:25,640 Speaker 3: You're going to see more liquidations of businesses. 210 00:11:25,720 --> 00:11:26,600 Speaker 1: Unfortunately, you're going. 211 00:11:26,520 --> 00:11:31,080 Speaker 3: To see more layoffs and rising unemployment, and that will 212 00:11:31,080 --> 00:11:34,959 Speaker 3: sort of keep a dampner on things probably into twenty 213 00:11:35,040 --> 00:11:39,800 Speaker 3: twenty six, just because we won't get statistics you know, 214 00:11:39,880 --> 00:11:44,120 Speaker 3: through for the well if unemployment peaks early next year, 215 00:11:44,160 --> 00:11:47,440 Speaker 3: we won't see those statistics till the middle of next year. 216 00:11:48,480 --> 00:11:51,080 Speaker 3: And I think that's really what's you know, the cost 217 00:11:51,120 --> 00:11:53,880 Speaker 3: of living is one stress, and then the other one 218 00:11:53,960 --> 00:11:57,000 Speaker 3: is people not being secure in their jobs, and so 219 00:11:57,040 --> 00:11:58,959 Speaker 3: people need to be secure in their jobs to start 220 00:11:58,960 --> 00:12:02,920 Speaker 3: spending because the money coming back through lower mortgage rates, 221 00:12:03,040 --> 00:12:07,360 Speaker 3: is going into savings and paying down mortgage while people 222 00:12:08,080 --> 00:12:10,640 Speaker 3: are worry that their earnings might not be around where 223 00:12:10,640 --> 00:12:13,880 Speaker 3: they want them. So it's a slow thing to get 224 00:12:13,880 --> 00:12:16,320 Speaker 3: the momentum rolling and get the confidence back. 225 00:12:16,400 --> 00:12:19,320 Speaker 1: But yeah, I think it will happen. 226 00:12:26,400 --> 00:12:29,480 Speaker 5: As a parent with two young kids, I worry a 227 00:12:29,520 --> 00:12:31,880 Speaker 5: lot about what kind of future they are going to 228 00:12:31,920 --> 00:12:35,959 Speaker 5: inherit from us. Unemployment's going up, inflation is going back 229 00:12:36,040 --> 00:12:39,439 Speaker 5: up again. More and more New Zealanders are simply giving 230 00:12:39,520 --> 00:12:43,840 Speaker 5: up and leaving the country while our economy shrinks, businesses close, 231 00:12:44,200 --> 00:12:47,760 Speaker 5: and opportunities seem to be disappearing. We need to turn 232 00:12:47,800 --> 00:12:51,000 Speaker 5: that around. We need to create a future that young 233 00:12:51,080 --> 00:12:54,360 Speaker 5: New Zealanders will want to be part of. A reason 234 00:12:54,480 --> 00:12:57,880 Speaker 5: for our young New Zealanders to come home after their OI, 235 00:12:58,240 --> 00:13:01,360 Speaker 5: a reason for them to stay in New Zealand because 236 00:13:01,360 --> 00:13:04,400 Speaker 5: they know they can get good, well paid jobs that 237 00:13:04,520 --> 00:13:07,400 Speaker 5: will create the sort of opportunities that they deserve. 238 00:13:10,000 --> 00:13:12,440 Speaker 2: All right, So the Labor Party has announced to this 239 00:13:12,760 --> 00:13:17,200 Speaker 2: New Zealand Future Fund, which it is calling its plan 240 00:13:17,360 --> 00:13:21,920 Speaker 2: to back New Zealand's potential and create secure, well paid 241 00:13:22,000 --> 00:13:25,080 Speaker 2: jobs across the country. It'll do that by investing in 242 00:13:25,120 --> 00:13:29,760 Speaker 2: New Zealand infrastructure and businesses, lift productivity and reinvest by 243 00:13:29,840 --> 00:13:33,679 Speaker 2: seeding capital from a number of Crown assets, independent governance 244 00:13:33,960 --> 00:13:37,800 Speaker 2: of that and protecting core assets from privatization. 245 00:13:39,240 --> 00:13:44,800 Speaker 3: Not a small task, No, yeah, I mean it's a 246 00:13:44,880 --> 00:13:48,320 Speaker 3: it's a big concept. It's a concept that's not new 247 00:13:48,360 --> 00:13:51,160 Speaker 3: in a way. I mean, it's like, it's interesting. This 248 00:13:51,200 --> 00:13:53,240 Speaker 3: is their first bit of economic policy that they put 249 00:13:53,240 --> 00:13:56,439 Speaker 3: out and it's how I described This is going to 250 00:13:56,440 --> 00:13:59,400 Speaker 3: be administered by the New Zealand Superfund, which has got 251 00:13:59,600 --> 00:14:04,959 Speaker 3: you know, billions of billions of dollars and invests wisely 252 00:14:05,040 --> 00:14:07,760 Speaker 3: and sensibly around the world and in New Zealand, but 253 00:14:07,800 --> 00:14:09,720 Speaker 3: doesn't want to go crazy in New Zealand because it 254 00:14:09,760 --> 00:14:12,200 Speaker 3: has to have a balanced portfolio and keep making money. 255 00:14:13,040 --> 00:14:16,360 Speaker 3: But I think that Labour's pitching this these are my words, 256 00:14:16,360 --> 00:14:18,840 Speaker 3: is a kind of a side hustle for the Superfund, 257 00:14:19,360 --> 00:14:23,160 Speaker 3: so that the Superfund would have a sort of like 258 00:14:23,200 --> 00:14:25,440 Speaker 3: a if you think of a big money manager, a 259 00:14:25,440 --> 00:14:28,160 Speaker 3: big fund having a boutique fund off to the side 260 00:14:28,680 --> 00:14:35,880 Speaker 3: that is very specifically for New Zealand businesses that's smart innovation, 261 00:14:37,360 --> 00:14:40,600 Speaker 3: probably tech, but it doesn't specify that exactly. It could 262 00:14:40,640 --> 00:14:42,960 Speaker 3: be for infrastructure and so much more of a New 263 00:14:43,000 --> 00:14:45,200 Speaker 3: Zealand and kind of focus, and you sort of spin 264 00:14:45,240 --> 00:14:46,800 Speaker 3: that off to the side. You have it managed by 265 00:14:46,800 --> 00:14:51,440 Speaker 3: the superfund. You know, they look at countries like Singapore 266 00:14:51,520 --> 00:14:55,640 Speaker 3: do it and they've been very successful and have you know, 267 00:14:56,400 --> 00:14:58,760 Speaker 3: billions of dollars worth of assets. So it's possible that 268 00:14:58,800 --> 00:15:02,040 Speaker 3: what you could you the goal is that you actually 269 00:15:02,080 --> 00:15:05,600 Speaker 3: make money because you're investing in these companies and taking 270 00:15:05,600 --> 00:15:08,720 Speaker 3: a stake as well as providing capital and support for 271 00:15:08,760 --> 00:15:11,000 Speaker 3: them to get going and boost the New Zealand economy. 272 00:15:12,240 --> 00:15:16,120 Speaker 3: The critics will say, and there'll be a hard criticism 273 00:15:16,240 --> 00:15:19,600 Speaker 3: from say the act Party and because they see that 274 00:15:19,640 --> 00:15:23,760 Speaker 3: as government's picking winners and they look at the failures 275 00:15:23,760 --> 00:15:26,880 Speaker 3: over time of governments doing that and sometimes governments get 276 00:15:26,920 --> 00:15:29,560 Speaker 3: it wrong. Why is the government trying to pick one 277 00:15:29,600 --> 00:15:32,520 Speaker 3: company over another and decide which one. Well, mon't be 278 00:15:32,560 --> 00:15:36,720 Speaker 3: the politicians, it'll be a board of investors as part 279 00:15:36,760 --> 00:15:40,720 Speaker 3: of a state fund. But yeah, that's sort of ideologically 280 00:15:40,720 --> 00:15:42,960 Speaker 3: opposed to that. It would sit quite well with the 281 00:15:43,000 --> 00:15:45,240 Speaker 3: way New Zealand first looks at the world in terms 282 00:15:45,280 --> 00:15:50,320 Speaker 3: of a state controlled investment is sort of a mixed model. 283 00:15:50,800 --> 00:15:55,400 Speaker 3: It's capitalism, but it's you know, with a state involvement 284 00:15:55,480 --> 00:15:56,240 Speaker 3: in capitalism. 285 00:15:56,320 --> 00:15:57,000 Speaker 1: Well, I was going to. 286 00:15:56,960 --> 00:15:59,800 Speaker 2: Say, the vibe really does give New Zealand first, not 287 00:15:59,800 --> 00:16:04,000 Speaker 2: the party, but putting New Zealand first, right, Winston would 288 00:16:04,040 --> 00:16:04,560 Speaker 2: quite like. 289 00:16:04,840 --> 00:16:06,400 Speaker 1: Yeah, I mean, I think that'll work. 290 00:16:06,440 --> 00:16:10,080 Speaker 3: I mean, in fact, even National could probably cope with 291 00:16:10,280 --> 00:16:12,000 Speaker 3: this kind of policy if it didn't have to have 292 00:16:12,080 --> 00:16:14,880 Speaker 3: act as a side partner. Because you hear Christopher Luxen 293 00:16:14,920 --> 00:16:19,800 Speaker 3: talk about countries like Singapore and Ireland. You know, all 294 00:16:19,800 --> 00:16:24,840 Speaker 3: these countries that have accelerated their growth with investment and innovation, 295 00:16:24,960 --> 00:16:27,360 Speaker 3: and Singapore is a classic example of one where they 296 00:16:27,400 --> 00:16:30,640 Speaker 3: really they save money and they put money back into 297 00:16:30,640 --> 00:16:35,160 Speaker 3: their own economy and their own tech companies and startups. 298 00:16:35,160 --> 00:16:37,240 Speaker 3: And you know, dare I say, it's kind of a 299 00:16:37,800 --> 00:16:41,320 Speaker 3: you know, it's not the communist Chinese, but it's a 300 00:16:41,400 --> 00:16:45,960 Speaker 3: very modern China does it very intensely as well. Modern 301 00:16:46,000 --> 00:16:51,760 Speaker 3: modern Chinese economy is very focused on picking winners special 302 00:16:51,840 --> 00:16:55,120 Speaker 3: zones where they build industry up and they put government 303 00:16:55,200 --> 00:16:59,080 Speaker 3: money into it. And it's it's a kind of a 304 00:16:59,160 --> 00:17:03,800 Speaker 3: sort of mixed model capitalism with the state involved. I mean, yeah, 305 00:17:03,960 --> 00:17:06,720 Speaker 3: this isn't a sort of a revolutionize the whole economy. 306 00:17:06,760 --> 00:17:10,160 Speaker 3: It's a very specific fund. I guess you know, it's 307 00:17:10,320 --> 00:17:12,919 Speaker 3: it's something that could work, and you leverage off the 308 00:17:12,960 --> 00:17:16,600 Speaker 3: superfund which has got this infrastructure for investment. So you 309 00:17:16,720 --> 00:17:21,520 Speaker 3: keep it very market focused and keep the disciplines there 310 00:17:21,560 --> 00:17:24,560 Speaker 3: to make sure that you're you're not just throwing money 311 00:17:24,600 --> 00:17:28,120 Speaker 3: at things, you're actually investing things in things that will 312 00:17:28,160 --> 00:17:31,520 Speaker 3: deliver a return. It's it's a high risk, higher risk 313 00:17:31,640 --> 00:17:33,520 Speaker 3: area of investment once you get in the closer you 314 00:17:33,560 --> 00:17:36,680 Speaker 3: get to seed funding. You know, it's like venture capital, 315 00:17:36,720 --> 00:17:39,120 Speaker 3: and you're you're you're investing in companies at a very 316 00:17:39,160 --> 00:17:43,040 Speaker 3: early stage, so there's a higher rate of failure. But 317 00:17:43,400 --> 00:17:46,440 Speaker 3: when one takes off and really does well, like literally 318 00:17:46,480 --> 00:17:49,600 Speaker 3: takes off like a rocket lab or going to say, 319 00:17:51,240 --> 00:17:53,600 Speaker 3: it can go on to be worth billions. So so 320 00:17:53,800 --> 00:17:56,480 Speaker 3: you know that the private investors that do that tend 321 00:17:56,520 --> 00:17:58,840 Speaker 3: to have a large portfolio. You need to sort of 322 00:17:58,840 --> 00:18:01,680 Speaker 3: maybe invest fifty things and if one or two of 323 00:18:01,720 --> 00:18:04,000 Speaker 3: them take off, you'll actually make your money back because 324 00:18:04,000 --> 00:18:06,880 Speaker 3: you've structured things in a very clever way. And that's 325 00:18:07,440 --> 00:18:09,840 Speaker 3: what this would need to do. It would need to 326 00:18:09,880 --> 00:18:15,000 Speaker 3: be very focused on sort of market disciplines and have 327 00:18:15,080 --> 00:18:16,560 Speaker 3: a really good investment. 328 00:18:17,720 --> 00:18:18,040 Speaker 1: Team. 329 00:18:18,280 --> 00:18:21,560 Speaker 3: And it's a good idea. I mean, I think that's 330 00:18:21,600 --> 00:18:22,120 Speaker 3: something that. 331 00:18:22,280 --> 00:18:25,119 Speaker 2: Well, it's something that we've looked to Australia. Australia uses 332 00:18:25,160 --> 00:18:29,480 Speaker 2: the super Fun in much more diverse ways than we do, right, 333 00:18:29,840 --> 00:18:32,280 Speaker 2: And it's something that economists have been in toying with 334 00:18:32,720 --> 00:18:33,679 Speaker 2: for years. 335 00:18:33,760 --> 00:18:36,640 Speaker 3: I mean, Labors mentioned the Ossie version and how they 336 00:18:36,640 --> 00:18:39,199 Speaker 3: do it, and they've talked also about pushing the New 337 00:18:39,320 --> 00:18:42,439 Speaker 3: Zealand super Fun to do a bit more infrastructure and 338 00:18:42,480 --> 00:18:45,040 Speaker 3: some of those things. And it does do a decent chunk, 339 00:18:45,080 --> 00:18:48,960 Speaker 3: but its primary job is to earn money for our 340 00:18:49,000 --> 00:18:52,159 Speaker 3: retirement savings, so it has to say a bit more 341 00:18:52,200 --> 00:18:55,439 Speaker 3: balanced and this is probably a way to sort of 342 00:18:55,920 --> 00:18:56,760 Speaker 3: silo out. 343 00:18:58,080 --> 00:19:01,600 Speaker 1: This more sort of New Zealand focused. 344 00:19:01,280 --> 00:19:05,520 Speaker 3: Innovative end steps. Yeah yeah, yeah, yeah, So I mean promising. 345 00:19:05,560 --> 00:19:07,399 Speaker 3: I mean I could, as I say, it's something that 346 00:19:07,440 --> 00:19:10,280 Speaker 3: could be a bipartisan thing. Act would hate it, so 347 00:19:10,320 --> 00:19:14,679 Speaker 3: I can't imagine national getting on board with it. But 348 00:19:14,840 --> 00:19:17,480 Speaker 3: I could imagine somewhere down the line if a Labor 349 00:19:17,520 --> 00:19:21,119 Speaker 3: government introduced this, it wouldn't be removed. 350 00:19:21,560 --> 00:19:22,160 Speaker 1: Put it that way. 351 00:19:23,040 --> 00:19:26,560 Speaker 2: Well, Hopkins has said that Luxe and I quote has 352 00:19:26,680 --> 00:19:29,680 Speaker 2: no plan for our economy and that he is relying 353 00:19:29,680 --> 00:19:33,359 Speaker 2: on house prices, the Reserve Bank and foreign investors to 354 00:19:33,440 --> 00:19:36,880 Speaker 2: turn everything around. What do you make of that statement. 355 00:19:36,760 --> 00:19:38,200 Speaker 1: Well, that's sort of a plan. 356 00:19:40,720 --> 00:19:44,720 Speaker 3: The foreign you know, the foreign investment thing is part 357 00:19:44,720 --> 00:19:48,640 Speaker 3: of the plan that they are trying to so I think, 358 00:19:48,680 --> 00:19:50,760 Speaker 3: you know, to be fair to luxel and that there 359 00:19:50,840 --> 00:19:53,200 Speaker 3: is he would argue that there's very much a plan. 360 00:19:53,240 --> 00:19:57,520 Speaker 3: They want to get the New Zealand economy into good 361 00:19:57,560 --> 00:20:00,880 Speaker 3: shape by dealing with some of the first issues, making 362 00:20:00,920 --> 00:20:03,760 Speaker 3: it a safe, stable place to invest and then get 363 00:20:03,760 --> 00:20:06,000 Speaker 3: out and a tract foreign investment. So they believe that 364 00:20:06,320 --> 00:20:09,720 Speaker 3: foreign investment can really do a lot of the job 365 00:20:09,760 --> 00:20:13,960 Speaker 3: that I guess they was talking about with this, and 366 00:20:14,080 --> 00:20:15,000 Speaker 3: there is a way to do it. 367 00:20:15,040 --> 00:20:16,240 Speaker 1: That's the way Ireland's done it. 368 00:20:16,280 --> 00:20:17,920 Speaker 3: So you probably could just about go, well, there's a 369 00:20:17,920 --> 00:20:22,040 Speaker 3: Singapore model and there's an Irish model. This government hasn't 370 00:20:22,080 --> 00:20:23,840 Speaker 3: got the money to quite do a full Irish model 371 00:20:23,880 --> 00:20:27,960 Speaker 3: because it involves cutting taxes for foreign investors, but it's 372 00:20:28,000 --> 00:20:31,880 Speaker 3: definitely trying to make it New Zealand more attractive for 373 00:20:31,880 --> 00:20:34,359 Speaker 3: foreign investment. They you know, I think it's a bit 374 00:20:34,440 --> 00:20:36,560 Speaker 3: unfair to say they're just relying on house prices because 375 00:20:36,560 --> 00:20:39,200 Speaker 3: you listen to Chris Bishop, he's sticking to his guns 376 00:20:39,200 --> 00:20:43,360 Speaker 3: that the flat to falling house prices are a good thing. 377 00:20:43,000 --> 00:20:48,280 Speaker 3: So look, the reality is house prices come back. It 378 00:20:48,280 --> 00:20:50,679 Speaker 3: probably helps the economy and helps the government. But I 379 00:20:50,680 --> 00:20:53,560 Speaker 3: don't think they're pushing that too hard. I mean, they've 380 00:20:53,560 --> 00:20:58,120 Speaker 3: been prepared to wear a fairly big downturn, so you know, look, 381 00:20:58,840 --> 00:21:02,159 Speaker 3: is there enough of a plan? Well, that's highly debatable, 382 00:21:02,240 --> 00:21:06,080 Speaker 3: but I think some of that was rhetoric from Chris Hipkins. 383 00:21:06,560 --> 00:21:11,719 Speaker 2: Thanks for joining us, Liam Jeers. That's it for this 384 00:21:11,840 --> 00:21:15,160 Speaker 2: episode of The Front Page. You can read more about 385 00:21:15,200 --> 00:21:19,639 Speaker 2: today's stories and extensive news coverage at enzidherld dot co 386 00:21:19,960 --> 00:21:23,879 Speaker 2: dot nz. The Front Page is produced by Jane Ye 387 00:21:23,880 --> 00:21:28,520 Speaker 2: and Richard Martin, who is also our editor. I'm Chelsea Daniels. 388 00:21:28,960 --> 00:21:32,159 Speaker 2: Subscribe to the Front Page on iHeartRadio or wherever you 389 00:21:32,200 --> 00:21:35,880 Speaker 2: get your podcasts, and tune in tomorrow for another look 390 00:21:35,960 --> 00:21:37,120 Speaker 2: behind the headlines.