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Speaker 1: In time to catch up with Finance Minister Nichola Willis,

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Speaker 1: who's with us before the first cabinet meeting in the

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Speaker 1: first day of parliament for twenty twenty six. I bet

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Speaker 1: you won't be sleeping tonight. You will just be so excited, No.

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Speaker 2: Doubt I am excited. Of course we have been back

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Speaker 2: at work for a while, along with most of New Zealand.

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Speaker 2: But as you say, tomorrow at first formal cabinet meeting

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Speaker 2: and the reopening of parliament.

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Speaker 1: So what do you make of these inflation figures? I

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Speaker 1: think most of the analysts were picking a two point

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Speaker 1: seven percent. Three point one was the final number.

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Speaker 2: It is harder than was expected, and of course we

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Speaker 2: target inflation staying under three percent, and that's where we

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Speaker 2: want it to be over the medium term and where

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Speaker 2: it's been for more than a year now. Of course,

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Speaker 2: the Reserve Bank has been having its foot hard on

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Speaker 2: the accelerator with multiple reductions and the official cash rate

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Speaker 2: over recent months, and they always have the opportunity to

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Speaker 2: monitor the data as it's coming through and then determine

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Speaker 2: at what point they might ease their foot on the accelerator.

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Speaker 1: So most of the banks, I think that they might

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Speaker 1: ease the foot on the accelerator and start putting it

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Speaker 1: on the brake a little earlier than previously expected, maybe

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Speaker 1: even this year as opposed to twenty twenty seven. What

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Speaker 1: would be the political impact.

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Speaker 2: Well, the banks always monitor the data as it comes.

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Speaker 2: Then this is one data point. There will be many

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Speaker 2: over the next few months. It's likely that inflation will

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Speaker 2: come back into band and banks will factor that in

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Speaker 2: as well. Look, the Reserve Bank has a really important role.

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Speaker 2: It needs to keep inflation under three percent, and we

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Speaker 2: as a government really support them in that mandate because

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Speaker 2: it's the inflation that is the broadest driver of the

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Speaker 2: cost of living. At the same time, interest rate reductions

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Speaker 2: have been really important to recovering our economy after a

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Speaker 2: very difficult period. But it's always the case that as

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Speaker 2: the economy recovers, you do expect that eventually interest rates

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Speaker 2: do go up. They're now at very low levels compared

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Speaker 2: to where they were. You know, for context, under the

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Speaker 2: last government we had eleven interest rate hikes. On our watch,

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Speaker 2: their been nine productions.

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Speaker 1: So your first step, I think, in fact, the very

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Speaker 1: first piece of legislation your government pass was to return

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Speaker 1: the Reserve Bank to a single mandate from that previous

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Speaker 1: dual mandate. Does the single mandate focused on price stability

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Speaker 1: increase the likelihood that looking at a bit of surprised

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Speaker 1: data like this, the Reserve Bank would move faster to

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Speaker 1: start increasing interest rates.

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Speaker 2: I don't think so. It does mean that the Reserve

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Speaker 2: Bank would not be in a situation like it was

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Speaker 2: under the last government where inflation was outside of target

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Speaker 2: for three years and that was what led to the

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Speaker 2: cost of living crisis and we viewed that as unacceptable.

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Speaker 2: So the Reserve Bank has a mandate to look at

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Speaker 2: the medium term, so it will be analyzing all of

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Speaker 2: the data to say, well, are some of this just

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Speaker 2: a blip? These are transitory, temporary factors, what's really going

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Speaker 2: on underneath? Economists have noted that the core inflation indicators

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Speaker 2: are still in band and that some of these factors

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Speaker 2: are seasonal international airfares and the like. But look, it's

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Speaker 2: up for the Reserve Bank to analyze all of that

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Speaker 2: data and make its judgments accordingly.

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Speaker 1: So do you have a say on the election date?

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Speaker 2: I discussed that with the Prime Minister.

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Speaker 1: Yes, let me ask this, if you'd had this inflation

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Speaker 1: data before that decision was made? Would you have advocated

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Speaker 1: for a different date.

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Speaker 2: Look, the election date is really just about a bunch

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Speaker 2: of operational factors. So we looked at things like when

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Speaker 2: there were major sports matches, school holidays, all of those

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Speaker 2: sorts of things, and really the date just fell out

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Speaker 2: of that. It's much less of a political process than

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Speaker 2: some might imagine.

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Speaker 1: Really, I mean, sure, put it this way, if we

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Speaker 1: thought that interest rates were going to be significantly increasing

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Speaker 1: in the last quarter of this year, really more than

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Speaker 1: just a twenty five basis point increase, then surely there

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Speaker 1: would be political incentives not to have an election.

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Speaker 2: At the same time, Well, I look at it a

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Speaker 2: different way, Jack, which is what is the big risk

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Speaker 2: at this election that people re elect a labor led

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Speaker 2: government that has a proven track record of doing so

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Speaker 2: much wasteful spending that they turbo charge inflation and turbid

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Speaker 2: turbo charge interest rate hikes. So actually my view is,

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Speaker 2: of course I want to see stable inflation. I'm really

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Speaker 2: delighted for all those first home buys who are entering

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Speaker 2: the market as rates come down, and for those mortgage

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Speaker 2: holders who've got a bit more breathing space in their

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Speaker 2: household budget. I do not take it For granted, government

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Speaker 2: has a role to play in ensuring we're disciplined about

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Speaker 2: our own spending, and I think people will have to

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Speaker 2: analyze very carefully the spending promises of other parties and

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Speaker 2: consider what that might mean for inflation and interest rates.

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Speaker 1: What did Anna Breeman say to you in her apology?

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Speaker 2: Look, we had a discussion immediately after she signed the statement,

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Speaker 2: and I reiterated to her that she should feel free

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Speaker 2: to call me any time of day and that we

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Speaker 2: will always ensure that she gets a broad range of

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Speaker 2: advice on international matters. She did convey to me that

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Speaker 2: she'd offered an apology to Winston Peters and that in

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Speaker 2: future she would take exactly that course of action. She'd

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Speaker 2: let me know and she'd seek advice.

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Speaker 1: So was it naivety? Do you think?

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Speaker 2: I think that she was in the urgency of a

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Speaker 2: moment in which she had been asked to make a

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Speaker 2: decision on a very late night phone call. And as

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Speaker 2: I've said, I've just reiterated to her, do not hesitate

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Speaker 2: to give me a call. That's what New Zealand does

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Speaker 2: expect from me.

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Speaker 1: Why does it matter, though, shouldn't she? I mean, given

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Speaker 1: the Reserve Bank is independent. Why does she have to

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Speaker 1: check in with the government to see if it's okay

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Speaker 1: with you.

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Speaker 2: It's not so much that she has to check in

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Speaker 2: to see whether it's okay with me, it's that we

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Speaker 2: need to be informed because anything we do or say

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Speaker 2: internationally obviously has implications for ministers and the government as

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Speaker 2: a whole, and it is also our job to make

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Speaker 2: sure that she has access to all of the information

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Speaker 2: and perspectives she might want it bear in mind when

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Speaker 2: she's making that decision. I'm not sure that it would

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Speaker 2: have led to a different decision or how she would

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Speaker 2: affected it, but that's just good process. Jack.

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Speaker 1: I know that many of your colleagues have spent a

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Speaker 1: lot of time on the ground supporting the community. The

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Speaker 1: Prime Minister was at the vigil at Mount mong Anui

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Speaker 1: last night. How have you found watching these awful events

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Speaker 1: of the last few.

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Speaker 2: Days just harrowing? I feel so deeply for the families involved.

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Speaker 2: I've locked my kids in the eye several times over

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Speaker 2: the last few days and just said, I just feel

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Speaker 2: so grateful that you guys are okay, and I just

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Speaker 2: feel so devastated for the parents and families who've lost

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Speaker 2: loved ones and have gone through that awful period of

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Speaker 2: not knowing and then getting the worst possible news. It's

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Speaker 2: every family's worst nightmare.

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Speaker 1: Yeah, yeah, it's hideous, and just to try and think

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Speaker 1: for a moment about what those families must be experiencing. Obviously,

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Speaker 1: the response there is the priority at the moment, but

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Speaker 1: there are going to be never to be questions for

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Speaker 1: various inquiries, but also questions about adaptation processes from here

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Speaker 1: on out. Is it your sense at the moment that

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Speaker 1: councils and land owners across the country have appropriately accounted

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Speaker 1: for the landslip and landslide risks that they may have

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Speaker 1: in their property Going forward.

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Speaker 2: I think there'll be a mixed response from region to region,

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Speaker 2: council to council, and one of the aspects of our

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Speaker 2: replacement for the Resource Management Act is giving much clearer

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Speaker 2: national direction on how councils need to plan for hazards

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Speaker 2: ie where they allow development to occur and what mitigations

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Speaker 2: they take. So that work is going to be important

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Speaker 2: because New Zealand can expect more extreme climatic events over

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Speaker 2: the coming years and so council and government and communities

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Speaker 2: all have a role in preparing for that.

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Speaker 1: Hey, we appreciate your time. Good luck tomorrow. But the

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Speaker 1: day one of everyone being back, I know you've been

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Speaker 1: back at work for a bit.

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Speaker 2: Everyone enjoys the first day of school, don't.

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Speaker 1: They now looking forward to it. Thanks for your time,

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Speaker 1: we appreciate it. That's Finance Minister Nikola Willis.

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Speaker 2: For more from Hither Duplessy Allen Drive, listen live to

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Speaker 2: news talks.

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Speaker 1: It'd be from four pm weekdays, or follow the podcast

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Speaker 1: on iHeartRadio