1 00:00:05,240 --> 00:00:05,600 Speaker 1: Kyota. 2 00:00:05,720 --> 00:00:08,840 Speaker 2: I'm Chelsea Daniels and this is the Front Page, a 3 00:00:08,960 --> 00:00:16,880 Speaker 2: daily podcast presented by the New Zealand Herald. The official 4 00:00:16,920 --> 00:00:20,520 Speaker 2: cash rate has been cut by fifty basis points, bringing 5 00:00:20,560 --> 00:00:24,360 Speaker 2: it down to four point twenty five percent. This marks 6 00:00:24,440 --> 00:00:28,320 Speaker 2: the third consecutive cut to the OSER since August and 7 00:00:28,360 --> 00:00:31,600 Speaker 2: brings it to the lowest level since November. 8 00:00:31,080 --> 00:00:33,000 Speaker 1: Twenty twenty two. 9 00:00:33,360 --> 00:00:37,320 Speaker 2: With inflation also dropping last month to two point two percent. 10 00:00:37,840 --> 00:00:42,600 Speaker 2: Stats show an improving economy, but low spending is sparking 11 00:00:42,680 --> 00:00:44,800 Speaker 2: concerns that we aren't out. 12 00:00:44,560 --> 00:00:45,600 Speaker 1: Of the woods yet. 13 00:00:47,360 --> 00:00:49,880 Speaker 2: Today on the front Page, we're joined by a simplicity 14 00:00:50,000 --> 00:01:00,800 Speaker 2: cheap economist, Shamabil Yakob, to run through the numbers. So 15 00:01:01,040 --> 00:01:05,320 Speaker 2: the ocr has dropped fifty points to four point two 16 00:01:05,440 --> 00:01:06,200 Speaker 2: five percent. 17 00:01:06,440 --> 00:01:07,279 Speaker 1: Is that good news? 18 00:01:07,640 --> 00:01:10,440 Speaker 3: Well, it is good news, and it's expected news. The 19 00:01:10,480 --> 00:01:13,240 Speaker 3: economy is weak. Infleation is not a problem. The Reserve 20 00:01:13,280 --> 00:01:16,120 Speaker 3: Bank should be cutting interest rates because they're far too high. 21 00:01:16,480 --> 00:01:18,800 Speaker 1: What's the prediction for next year? Then, how low will 22 00:01:18,840 --> 00:01:19,520 Speaker 1: it actually go? 23 00:01:19,920 --> 00:01:22,400 Speaker 3: Probably can get down towards three percent, so there is 24 00:01:22,440 --> 00:01:26,320 Speaker 3: probably another one point two five percentage points of rate 25 00:01:26,400 --> 00:01:28,880 Speaker 3: cuts to come. They're probably going to wait to see 26 00:01:28,920 --> 00:01:32,480 Speaker 3: what happens over the busy Christmas period, and if the 27 00:01:32,480 --> 00:01:35,120 Speaker 3: economy continues to be weak, they will continue to cut rates. 28 00:01:35,240 --> 00:01:38,199 Speaker 2: So an Z cut most of its fixed home loan 29 00:01:38,400 --> 00:01:41,920 Speaker 2: interest rates ahead of yesterday's OCR decision, and straight off 30 00:01:42,000 --> 00:01:44,800 Speaker 2: the bat there, Kiwi Bank has cut its variable home 31 00:01:44,840 --> 00:01:48,760 Speaker 2: loan and business lending rates, ASB has dropped interest rates 32 00:01:48,760 --> 00:01:50,880 Speaker 2: across personal business and rural lending. 33 00:01:51,560 --> 00:01:53,240 Speaker 1: I mean, this has to be some good news ahead 34 00:01:53,240 --> 00:01:54,160 Speaker 1: of Christmas. 35 00:01:53,880 --> 00:01:58,120 Speaker 3: Right, Absolutely, we desperately need this good news. For the 36 00:01:58,160 --> 00:02:00,720 Speaker 3: last couple of years, people have been ref fixing their 37 00:02:00,760 --> 00:02:03,920 Speaker 3: mortgages from very cheap to very expensive rates, and we've 38 00:02:03,960 --> 00:02:06,880 Speaker 3: now just turned the corner and these lower interest rates 39 00:02:06,960 --> 00:02:08,960 Speaker 3: are going to give a lot of relief to people 40 00:02:09,000 --> 00:02:11,480 Speaker 3: who are refixing in the next year or so. So 41 00:02:11,639 --> 00:02:13,800 Speaker 3: absolutely good news, but it takes a little bit of 42 00:02:13,800 --> 00:02:14,880 Speaker 3: time for them to flow through. 43 00:02:15,320 --> 00:02:17,280 Speaker 1: How much time does it take to flow through do 44 00:02:17,320 --> 00:02:17,639 Speaker 1: you think? 45 00:02:17,800 --> 00:02:19,240 Speaker 2: And what kind of numbers are we going to be 46 00:02:19,240 --> 00:02:21,399 Speaker 2: looking at after this decision. 47 00:02:21,960 --> 00:02:24,639 Speaker 3: Look, it usually takes somewhere between six and twelve months 48 00:02:24,680 --> 00:02:27,280 Speaker 3: before these interest rate cuts really kind of become broad 49 00:02:27,320 --> 00:02:31,040 Speaker 3: based better news for the economy. That's because the current 50 00:02:31,160 --> 00:02:33,840 Speaker 3: level of interest rates are still quite painful. They're quite high, 51 00:02:33,960 --> 00:02:37,160 Speaker 3: so people aren't borrowing and investing like we're doing during 52 00:02:37,160 --> 00:02:41,120 Speaker 3: good economic times. So we probably need to assume that 53 00:02:41,160 --> 00:02:43,079 Speaker 3: for the next three to six months things are still 54 00:02:43,120 --> 00:02:45,760 Speaker 3: going to remain a little bit painful. We'll initially get 55 00:02:45,800 --> 00:02:47,680 Speaker 3: just a better relief that people are not paying so 56 00:02:47,760 --> 00:02:51,000 Speaker 3: much when mortgages, and then eventually when interest rates get 57 00:02:51,080 --> 00:02:53,640 Speaker 3: low enough, we're going to start borrowing and investing again, 58 00:02:53,800 --> 00:02:55,320 Speaker 3: and that's when the party begins. 59 00:02:55,680 --> 00:02:58,240 Speaker 2: If you could explain to me, like I'm a five 60 00:02:58,320 --> 00:03:03,359 Speaker 2: year old, how cur rights then translate to a better economy, 61 00:03:03,520 --> 00:03:04,120 Speaker 2: could you do that? 62 00:03:04,639 --> 00:03:07,120 Speaker 3: Of course? So the OCI is kind of like the 63 00:03:07,120 --> 00:03:09,000 Speaker 3: interest rates from very short term money. You and I 64 00:03:09,040 --> 00:03:12,320 Speaker 3: don't borrow that money. But when the reserve Bank changes 65 00:03:12,360 --> 00:03:15,320 Speaker 3: the OCA, it also changes your floating mortgage rate. It 66 00:03:15,360 --> 00:03:18,200 Speaker 3: also changes your fixed mortgage rates, not by the same amount, 67 00:03:18,360 --> 00:03:21,400 Speaker 3: but it influences all those costs of borrowing for all 68 00:03:21,440 --> 00:03:24,120 Speaker 3: of us. And so when the reserve bank drives and 69 00:03:24,200 --> 00:03:26,440 Speaker 3: the cost of debt, it means that we are paying 70 00:03:26,520 --> 00:03:30,840 Speaker 3: less for that. And when we see less expensive debt, 71 00:03:31,160 --> 00:03:34,040 Speaker 3: when we see banks being more willing to lend, not 72 00:03:34,120 --> 00:03:36,400 Speaker 3: only do we get relieved from the debt we already have, 73 00:03:36,840 --> 00:03:38,960 Speaker 3: but we are willing to take on more new debt, 74 00:03:39,320 --> 00:03:41,800 Speaker 3: and so we are spending, We're investing, We've got more 75 00:03:41,840 --> 00:03:44,720 Speaker 3: spare cash, and it means there is just more money 76 00:03:44,920 --> 00:03:47,360 Speaker 3: going around in the economy. We all feel better. 77 00:03:49,880 --> 00:03:52,839 Speaker 4: Since August, the right has now been dropped one point 78 00:03:52,920 --> 00:03:56,240 Speaker 4: two five points, and this is welcome news for families 79 00:03:56,320 --> 00:04:00,320 Speaker 4: and businesses. For people with mortgages, the impact will course 80 00:04:00,400 --> 00:04:03,680 Speaker 4: depend on the size of their mortgage, whether they're floating 81 00:04:03,800 --> 00:04:07,040 Speaker 4: or fixed, and what rates they're currently on. But to 82 00:04:07,080 --> 00:04:10,320 Speaker 4: give one example, a family with a twenty five year, 83 00:04:10,400 --> 00:04:14,080 Speaker 4: five hundred thousand dollars mortgage could expect to be about 84 00:04:14,080 --> 00:04:17,720 Speaker 4: one hundred and eighty dollars a fortnight fetter off. 85 00:04:22,240 --> 00:04:26,400 Speaker 2: The OCR is obviously just one snapshot of the economy, right, 86 00:04:26,480 --> 00:04:30,039 Speaker 2: what other data have you seen recently that shows that 87 00:04:30,080 --> 00:04:32,320 Speaker 2: it's doing quite well well. 88 00:04:32,839 --> 00:04:35,839 Speaker 3: The OCR is very much the tool to try and 89 00:04:35,960 --> 00:04:38,240 Speaker 3: influence the economy. What's going into the rest of the 90 00:04:38,279 --> 00:04:40,719 Speaker 3: economy is we're just in a recession. We're quite late 91 00:04:40,760 --> 00:04:43,560 Speaker 3: stage in a recession. It's this is probably the deepest 92 00:04:43,600 --> 00:04:47,080 Speaker 3: and longest recession since the Global financial crisis, so you know, 93 00:04:47,120 --> 00:04:49,480 Speaker 3: the pain that people are feeling, the kind of bloom 94 00:04:49,520 --> 00:04:53,040 Speaker 3: that's out there entirely justified, but also as short lived. 95 00:04:53,320 --> 00:04:55,520 Speaker 3: Once in a recession and the Reserve Bank is cutting 96 00:04:55,600 --> 00:04:58,120 Speaker 3: interest rates, we know things will get better. So right 97 00:04:58,160 --> 00:05:00,680 Speaker 3: now what we're seeing is people are spending the people 98 00:05:00,720 --> 00:05:03,320 Speaker 3: are investing less. We're not buying in something houses so much, 99 00:05:03,720 --> 00:05:06,200 Speaker 3: businesses are not investing so much, and they're not hiring 100 00:05:06,240 --> 00:05:08,440 Speaker 3: so much. So that's the kind of the I guess, 101 00:05:08,440 --> 00:05:11,440 Speaker 3: the anatomy of a recession. But once we kind of 102 00:05:11,440 --> 00:05:14,400 Speaker 3: work through this painful part, what we tend to start 103 00:05:14,440 --> 00:05:17,000 Speaker 3: to see is there is a return of hope. And 104 00:05:17,320 --> 00:05:20,520 Speaker 3: once people see that customers are coming back, orders are 105 00:05:20,560 --> 00:05:23,240 Speaker 3: coming back, we see the economy really starting to recover. 106 00:05:23,680 --> 00:05:26,160 Speaker 3: And so to me, the big story of the economy 107 00:05:26,240 --> 00:05:28,239 Speaker 3: right now is we're in the kind of late stage recession. 108 00:05:28,600 --> 00:05:30,479 Speaker 3: And when I look forward to twenty twenty five, I 109 00:05:30,520 --> 00:05:33,039 Speaker 3: start to feel quite optimistic that by the middle of 110 00:05:33,080 --> 00:05:35,880 Speaker 3: next year we should start to see some really good growth. 111 00:05:36,279 --> 00:05:39,599 Speaker 2: How concerning is it that we aren't actually spending as much? 112 00:05:39,760 --> 00:05:42,160 Speaker 2: What are the kind of flow on impacts of us 113 00:05:42,160 --> 00:05:43,960 Speaker 2: holding onto our money for so long. 114 00:05:44,480 --> 00:05:47,359 Speaker 3: Look, I mean it's not surprising, right The psychology of 115 00:05:47,520 --> 00:05:49,840 Speaker 3: not spending right now is pretty clear. You know, if 116 00:05:49,839 --> 00:05:51,840 Speaker 3: you don't have enough money, of course you can't spend it. 117 00:05:52,080 --> 00:05:54,560 Speaker 3: When you feel fearful of your job and career prospects, 118 00:05:54,720 --> 00:05:56,159 Speaker 3: of course you're not going to go out and spend. 119 00:05:56,400 --> 00:05:58,880 Speaker 3: If you can't borrow money or the cost of borrowing 120 00:05:58,920 --> 00:06:01,480 Speaker 3: is high, you're going to be really careful. So right now, 121 00:06:01,600 --> 00:06:04,840 Speaker 3: that reduction in spending and investing, that's really what a 122 00:06:04,880 --> 00:06:07,599 Speaker 3: recession is. A recession is not really going backwards. It's 123 00:06:07,640 --> 00:06:11,560 Speaker 3: all of us going I just don't feel comfortable going 124 00:06:11,600 --> 00:06:14,280 Speaker 3: out making big decisions right now. And so that's really 125 00:06:14,279 --> 00:06:16,680 Speaker 3: the impact right now of what people are behaving at 126 00:06:16,960 --> 00:06:19,960 Speaker 3: And the consequence of that is the retailers or the 127 00:06:20,000 --> 00:06:22,440 Speaker 3: businesses that rely on your spending your money with them, 128 00:06:22,839 --> 00:06:25,560 Speaker 3: they're going, oh, we have fewer customers, our costs are 129 00:06:25,560 --> 00:06:28,000 Speaker 3: still high, our profits are down. And that then goes 130 00:06:28,000 --> 00:06:31,800 Speaker 3: into the kind of cycle of businesses why I'm down. 131 00:06:32,040 --> 00:06:35,000 Speaker 3: They have fewer employees, they don't invest as much, and 132 00:06:35,040 --> 00:06:37,800 Speaker 3: that's what the recession is. So we're kind of just 133 00:06:37,839 --> 00:06:41,320 Speaker 3: describing I guess the current economy situation rather than anything else. 134 00:06:41,800 --> 00:06:44,000 Speaker 2: But you say next year it's most likely going to 135 00:06:44,000 --> 00:06:46,400 Speaker 2: be party time. Is that when we're all spending more money. 136 00:06:47,160 --> 00:06:51,000 Speaker 3: Eventually, Absolutely, and that's because we'll probably have worked through 137 00:06:51,000 --> 00:06:54,040 Speaker 3: this kind of this difficult economic period. We would have 138 00:06:54,080 --> 00:06:57,560 Speaker 3: gotten hold of our finances. You know, right now people 139 00:06:57,560 --> 00:07:00,560 Speaker 3: are really struggling with the financial situation. Right now, over 140 00:07:00,640 --> 00:07:03,320 Speaker 3: forty percent of New Zealanders are saying, oh, my finance 141 00:07:03,360 --> 00:07:05,520 Speaker 3: are worse today than they were a year ago, and 142 00:07:05,600 --> 00:07:08,120 Speaker 3: a lot of that is cost of living, higher mortgage rates. 143 00:07:08,839 --> 00:07:10,760 Speaker 3: But when you look forward to the next twelve months, 144 00:07:10,920 --> 00:07:12,720 Speaker 3: you can see that inflation is not that much of 145 00:07:12,720 --> 00:07:14,800 Speaker 3: a problem. You can see that mortgage rates are going 146 00:07:14,840 --> 00:07:17,200 Speaker 3: to become cheaper, and we are going to see people 147 00:07:17,240 --> 00:07:20,600 Speaker 3: with better finances. And when people have better finances, they're 148 00:07:20,600 --> 00:07:22,440 Speaker 3: going to go out and do more. And that's really 149 00:07:22,440 --> 00:07:24,720 Speaker 3: what the economy is about. It's more of us doing 150 00:07:24,760 --> 00:07:30,480 Speaker 3: more things. 151 00:07:39,160 --> 00:07:44,320 Speaker 2: AB's latest housing confidence survey shows a net twenty four 152 00:07:44,360 --> 00:07:48,560 Speaker 2: percent of respondents expected house prices will rise in the 153 00:07:48,680 --> 00:07:51,880 Speaker 2: three months to October, up from a net thirteen percent 154 00:07:51,960 --> 00:07:53,160 Speaker 2: in the previous quarter. 155 00:07:53,840 --> 00:07:56,480 Speaker 1: Is this good news for the economy, Well. 156 00:07:56,360 --> 00:07:59,280 Speaker 3: Again, it's kind of people hoping that as the interest 157 00:07:59,360 --> 00:08:01,680 Speaker 3: rates come down, things will get better. So it's good 158 00:08:01,680 --> 00:08:03,320 Speaker 3: news and bad news, right, It's good news if you're 159 00:08:03,360 --> 00:08:05,800 Speaker 3: selling houses, it's bad news if you're buying houses. Over 160 00:08:05,840 --> 00:08:07,920 Speaker 3: the course of the last year and a half two years, 161 00:08:08,440 --> 00:08:11,280 Speaker 3: banks have been really careful about lending money. There's actually 162 00:08:11,280 --> 00:08:14,040 Speaker 3: not been that many mortgages being written, and a number 163 00:08:14,080 --> 00:08:17,000 Speaker 3: of houses selling has been really quite small. And as 164 00:08:17,040 --> 00:08:20,720 Speaker 3: interest rates become cheaper, as banks become more encouraged to 165 00:08:20,880 --> 00:08:23,720 Speaker 3: lend money, we are going to see more money chaseeing 166 00:08:23,720 --> 00:08:25,800 Speaker 3: those houses and that should drive prices high. 167 00:08:26,680 --> 00:08:31,560 Speaker 2: A big draw card for voters was nationals tax relief policy. 168 00:08:31,600 --> 00:08:35,480 Speaker 2: You kind of wrap up of tax bracket changes, family 169 00:08:35,600 --> 00:08:37,200 Speaker 2: tax credits, things like that. 170 00:08:37,520 --> 00:08:40,319 Speaker 1: Has this actually done anything for the economy? 171 00:08:40,880 --> 00:08:43,040 Speaker 3: Look, I mean, we've still had a recession and households 172 00:08:43,040 --> 00:08:46,200 Speaker 3: are still spending less. We can see that household spending 173 00:08:46,240 --> 00:08:49,400 Speaker 3: is still falling and people are still struggling. I guess 174 00:08:49,400 --> 00:08:51,760 Speaker 3: the counterfactual is they might have had even less money 175 00:08:51,760 --> 00:08:54,120 Speaker 3: to spend, and they might have spent even less in 176 00:08:54,160 --> 00:08:56,920 Speaker 3: the absence of the tax cuts. So it's a little 177 00:08:56,920 --> 00:08:58,880 Speaker 3: bit hard to kind of look at it and go, oh, 178 00:08:58,920 --> 00:09:01,800 Speaker 3: there has been no effect, but it's not clear that 179 00:09:01,840 --> 00:09:04,720 Speaker 3: those taxs have actually made any difference to the current recession, 180 00:09:05,120 --> 00:09:07,000 Speaker 3: because on the one hand, there is more money in 181 00:09:07,040 --> 00:09:10,600 Speaker 3: consumers hands, but on the other hand, the government investment 182 00:09:10,640 --> 00:09:12,640 Speaker 3: in government spending, which is also part of the economy, 183 00:09:12,720 --> 00:09:13,600 Speaker 3: has been a lot less. 184 00:09:13,960 --> 00:09:16,800 Speaker 2: And so do you expect that to perhaps change next 185 00:09:16,880 --> 00:09:19,559 Speaker 2: year with the next budget, because there have been whisperings 186 00:09:19,600 --> 00:09:23,079 Speaker 2: that this budget is going to be obviously economy focused 187 00:09:23,120 --> 00:09:26,319 Speaker 2: and focused on building on that government spending. 188 00:09:27,000 --> 00:09:29,360 Speaker 3: Not really. I don't think there's going to be much 189 00:09:29,360 --> 00:09:32,120 Speaker 3: good news in the next budget either. So this government 190 00:09:32,160 --> 00:09:34,640 Speaker 3: is very focused on fiscal austerity. That means they want 191 00:09:34,679 --> 00:09:38,200 Speaker 3: to spend less money. And when the government spends less money, 192 00:09:38,280 --> 00:09:40,800 Speaker 3: those parts of the economy that are reliant on government 193 00:09:40,840 --> 00:09:43,679 Speaker 3: spending will be smaller. Now, the question is if the 194 00:09:43,720 --> 00:09:46,720 Speaker 3: government spends less, will somebody else spend more money? Well, 195 00:09:46,760 --> 00:09:49,520 Speaker 3: not in health or infrastructure or education, right, That's just 196 00:09:49,559 --> 00:09:52,280 Speaker 3: not how it works. So my sense is that actually 197 00:09:52,360 --> 00:09:54,160 Speaker 3: government will remain a bit of a headwind to the 198 00:09:54,200 --> 00:09:56,560 Speaker 3: economy and the recovery next year is going to be 199 00:09:56,640 --> 00:09:59,240 Speaker 3: much more about the private sector. It's in spite of 200 00:09:59,320 --> 00:10:02,120 Speaker 3: the government, we'll have a recovery rather than because of. 201 00:10:02,640 --> 00:10:05,959 Speaker 2: Would we see benefits to say, if we start partnering 202 00:10:06,040 --> 00:10:09,440 Speaker 2: with private entities to build things like roads and bridges 203 00:10:09,520 --> 00:10:10,280 Speaker 2: and such. 204 00:10:10,520 --> 00:10:15,040 Speaker 3: Well, I think there are cases and stages when that's possible. 205 00:10:15,120 --> 00:10:19,640 Speaker 3: So infrastructure investment is extraordinarily expensive, and a lot of infrastructure, 206 00:10:19,679 --> 00:10:22,679 Speaker 3: like you know, like a normal motorway, it's quite difficult 207 00:10:22,720 --> 00:10:24,400 Speaker 3: to get money out of it. Right. We don't pay 208 00:10:24,400 --> 00:10:26,800 Speaker 3: tolls or anything like that, so it's not easy to 209 00:10:26,800 --> 00:10:30,080 Speaker 3: get private money into that. But there will be other 210 00:10:30,120 --> 00:10:34,120 Speaker 3: types of assets, like tolled roads or at least buildings. 211 00:10:34,400 --> 00:10:37,240 Speaker 3: Those kinds of things are absolutely possible to be done 212 00:10:37,280 --> 00:10:40,400 Speaker 3: with private money, and private money can do a lot 213 00:10:40,440 --> 00:10:42,320 Speaker 3: of that, so the government can get on with doing 214 00:10:42,360 --> 00:10:44,480 Speaker 3: all the other things that you and I want, right, 215 00:10:44,520 --> 00:10:47,200 Speaker 3: we want to make sure we have good hospitals, good schools, 216 00:10:47,440 --> 00:10:49,880 Speaker 3: good roads, good bridges and some of those things. I 217 00:10:49,880 --> 00:10:52,120 Speaker 3: think there's only one buyer and that's the government, and 218 00:10:52,120 --> 00:10:54,480 Speaker 3: there's a bunch of things where private sector can be involved, 219 00:10:54,600 --> 00:10:56,800 Speaker 3: and we should free things up and let them at it. 220 00:10:57,120 --> 00:10:59,440 Speaker 3: Particularly with kivsav I mean I'm a bit conflicted because 221 00:10:59,440 --> 00:11:02,360 Speaker 3: I work for it. Keev server, but qvserver money could 222 00:11:02,400 --> 00:11:04,720 Speaker 3: absolutely find quite a lot of the infrastructure in New 223 00:11:04,800 --> 00:11:07,920 Speaker 3: Zealand and it's the perfect fit. Kiis saving for New 224 00:11:08,000 --> 00:11:09,000 Speaker 3: Zealand's infrastructure. 225 00:11:09,080 --> 00:11:10,880 Speaker 1: Why don't we do that already? Do you think? 226 00:11:11,120 --> 00:11:13,720 Speaker 3: Well, I think it will happen, and it partly hasn't 227 00:11:13,720 --> 00:11:18,400 Speaker 3: happened because one, we haven't had many government infrastructure assets 228 00:11:18,679 --> 00:11:20,720 Speaker 3: that could be invested in easily. They're not kind of 229 00:11:20,880 --> 00:11:24,160 Speaker 3: packaged up in a way that works well. And also 230 00:11:24,800 --> 00:11:27,320 Speaker 3: the way that we have our rules and regulations set 231 00:11:27,360 --> 00:11:29,679 Speaker 3: up for kivserver made it a little bit difficult for 232 00:11:29,800 --> 00:11:32,440 Speaker 3: some for most to kind of justify doing that, and 233 00:11:32,480 --> 00:11:35,000 Speaker 3: those rules are currently being looked at very closely by 234 00:11:35,040 --> 00:11:37,720 Speaker 3: Minister Bailey and others. And so I think by the 235 00:11:37,720 --> 00:11:39,840 Speaker 3: time we can roll around to twenty twenty five, we 236 00:11:39,920 --> 00:11:42,400 Speaker 3: are going to see a lot of those barriers being removed. 237 00:11:42,440 --> 00:11:45,319 Speaker 3: So you know, watch this space. My projection is over 238 00:11:45,360 --> 00:11:47,719 Speaker 3: the course of the next ten years we will see 239 00:11:47,760 --> 00:11:52,320 Speaker 3: a significant escalation in KEYVY servers investing in New Zealand's infrastructure. 240 00:11:56,960 --> 00:11:59,480 Speaker 5: The most obvious takeaway from a double cut like this 241 00:11:59,600 --> 00:12:01,240 Speaker 5: one of the back of all of the fast cutting 242 00:12:01,240 --> 00:12:03,840 Speaker 5: that's already taken place in the last few weeks is 243 00:12:03,840 --> 00:12:07,439 Speaker 5: that our economy is kind of stuffed. As Kiwibank points out, 244 00:12:07,720 --> 00:12:11,760 Speaker 5: hardship withdrawals from Kiwisaver have spiked from ten million dollars 245 00:12:11,760 --> 00:12:14,800 Speaker 5: in January last year to thirty eight million dollars in 246 00:12:14,840 --> 00:12:17,320 Speaker 5: October this year. Now, those withdrawals are not easy to make. 247 00:12:17,360 --> 00:12:19,600 Speaker 5: You don't just rock up to your Kiwi Saver provider 248 00:12:19,640 --> 00:12:21,600 Speaker 5: and go you have some cash. Thanks. You've got to 249 00:12:21,600 --> 00:12:23,319 Speaker 5: be in big financial stock and you've got to be 250 00:12:23,360 --> 00:12:25,040 Speaker 5: able to prove it and only then do they give 251 00:12:25,080 --> 00:12:28,160 Speaker 5: you the money. 252 00:12:29,600 --> 00:12:32,520 Speaker 2: Last week, a group of economists, and I might say 253 00:12:32,720 --> 00:12:36,000 Speaker 2: many of them left leaning, wrote to the Prime Minister 254 00:12:36,120 --> 00:12:40,480 Speaker 2: and Finance Minister to critique the government's approach, mainly for 255 00:12:40,640 --> 00:12:42,400 Speaker 2: drawing out the recession. 256 00:12:42,920 --> 00:12:44,720 Speaker 1: Where do you stand on this, Well. 257 00:12:44,600 --> 00:12:47,440 Speaker 3: I mean it's just evidence, right. So over the course 258 00:12:47,480 --> 00:12:49,760 Speaker 3: of this financial year, so the year to June twenty 259 00:12:49,760 --> 00:12:52,319 Speaker 3: twenty five, the government will be sucking out four percent 260 00:12:52,360 --> 00:12:55,559 Speaker 3: of GDP through reduction and government spending. So the government 261 00:12:55,600 --> 00:12:58,319 Speaker 3: is leaning against the economy. But we should not be surprised. 262 00:12:58,559 --> 00:13:02,160 Speaker 3: This is exactly what the government stayed when they were 263 00:13:02,400 --> 00:13:05,280 Speaker 3: out there looking to get elected. They said we will 264 00:13:05,280 --> 00:13:08,880 Speaker 3: cut taxes and we will cut spending. That was the promise, 265 00:13:09,000 --> 00:13:10,920 Speaker 3: and that's what they're doing. So I don't know why 266 00:13:11,000 --> 00:13:13,160 Speaker 3: people are surprised by what the government is doing, because 267 00:13:13,280 --> 00:13:16,120 Speaker 3: it's exactly as it was signaled. Now the impact on 268 00:13:16,160 --> 00:13:19,480 Speaker 3: the economy is absolutely the government is taking money out 269 00:13:19,520 --> 00:13:22,160 Speaker 3: of the economy, and that is making the recession deeper 270 00:13:22,200 --> 00:13:25,440 Speaker 3: and longer. The econ one to one prescription during a 271 00:13:25,480 --> 00:13:29,600 Speaker 3: recession is the government should pump prime the economy, especially 272 00:13:29,640 --> 00:13:33,560 Speaker 3: by investing in infrastructure. We haven't seen that yet. The 273 00:13:33,679 --> 00:13:35,840 Speaker 3: challenge here, of course, is that there's only a three 274 00:13:35,920 --> 00:13:38,320 Speaker 3: year window for any government to do what it wants 275 00:13:38,360 --> 00:13:41,720 Speaker 3: to do, and this government, again came on the back 276 00:13:41,720 --> 00:13:44,920 Speaker 3: of a promise to reduce government spending, and you have 277 00:13:45,000 --> 00:13:47,640 Speaker 3: to do it in those three year window in the window. 278 00:13:48,080 --> 00:13:49,840 Speaker 3: So I think it's very much that it was a 279 00:13:49,840 --> 00:13:52,559 Speaker 3: political reason in terms of why they're pursuing this policy, 280 00:13:52,840 --> 00:13:54,680 Speaker 3: and the recession just happened to come at a time 281 00:13:54,679 --> 00:13:56,920 Speaker 3: that was very inconvenient for their program. 282 00:13:57,000 --> 00:13:59,760 Speaker 2: So the only reason you're saying that the government may 283 00:13:59,840 --> 00:14:01,120 Speaker 2: be drawing out. 284 00:14:00,960 --> 00:14:04,240 Speaker 1: The recession would be to look better in the end. 285 00:14:05,080 --> 00:14:06,880 Speaker 3: They're doing it because they made a promise of what 286 00:14:06,920 --> 00:14:09,120 Speaker 3: they wanted to achieve when in government, and they're doing that. 287 00:14:09,360 --> 00:14:12,000 Speaker 3: So I think I don't think they're sitting there going, oh, 288 00:14:12,040 --> 00:14:14,079 Speaker 3: we want to have a really terrible recession, because nobody 289 00:14:14,120 --> 00:14:18,160 Speaker 3: wants that. But I think the motivation is political in 290 00:14:18,240 --> 00:14:21,040 Speaker 3: that we promised that we would do this in terms 291 00:14:21,080 --> 00:14:23,760 Speaker 3: of government spending, and that's what they're doing. So in 292 00:14:23,800 --> 00:14:27,320 Speaker 3: my mind, it's not really an economic rationale or economic 293 00:14:27,400 --> 00:14:30,200 Speaker 3: reason why they're doing this. It's a political rationale in 294 00:14:30,320 --> 00:14:32,480 Speaker 3: terms of what they wanted to achieve in their term 295 00:14:32,520 --> 00:14:33,040 Speaker 3: in government. 296 00:14:33,600 --> 00:14:36,840 Speaker 2: Yesterday we also had news of more health and Z 297 00:14:37,280 --> 00:14:42,160 Speaker 2: jobs cuts coming. That letter to the Economists spoke about 298 00:14:42,200 --> 00:14:45,480 Speaker 2: the long term impacts of these public cuts on the economy. 299 00:14:45,880 --> 00:14:48,840 Speaker 1: How worried are you about all of these cuts? 300 00:14:49,320 --> 00:14:52,040 Speaker 3: Yeah? Look, it is always difficult, right because on the 301 00:14:52,040 --> 00:14:54,520 Speaker 3: one you can have two truths that are together. One 302 00:14:54,560 --> 00:14:57,040 Speaker 3: is that there can be public sector efficiency against and 303 00:14:57,080 --> 00:14:59,600 Speaker 3: the other is we can cut in the wrong places. 304 00:15:00,160 --> 00:15:02,080 Speaker 3: And so right now, what we've got as a reduction 305 00:15:02,120 --> 00:15:04,760 Speaker 3: in headcount, and it's pretty broad. There is not a 306 00:15:04,800 --> 00:15:08,040 Speaker 3: lot of thought around what type of capacity we're losing. 307 00:15:08,120 --> 00:15:12,520 Speaker 3: Is it wasteful employment, wasteful spending that we're cutting or 308 00:15:12,600 --> 00:15:15,120 Speaker 3: is it all kinds of spending, Because the reality is 309 00:15:15,120 --> 00:15:17,360 Speaker 3: that we need to cut all types of spending. You 310 00:15:17,400 --> 00:15:19,480 Speaker 3: are going to cut out some of the good stuff 311 00:15:19,520 --> 00:15:21,520 Speaker 3: as well as the band staff. So to me, that's 312 00:15:21,560 --> 00:15:26,240 Speaker 3: probably the bigger concern is the lack of deliberate identification 313 00:15:26,400 --> 00:15:28,560 Speaker 3: of the kinds of things that you want to root 314 00:15:28,600 --> 00:15:30,200 Speaker 3: out and the kinds of things you want to do 315 00:15:30,280 --> 00:15:33,680 Speaker 3: more of. And our public sector is actually under quite 316 00:15:33,680 --> 00:15:35,640 Speaker 3: a bit of strain. Particularly the health sector has been 317 00:15:35,680 --> 00:15:39,240 Speaker 3: through a huge amount of disruption through the pandemic, and 318 00:15:39,320 --> 00:15:42,200 Speaker 3: we are faced with a sector that we are still 319 00:15:42,240 --> 00:15:44,800 Speaker 3: going to need. Right we have an aging population, which 320 00:15:45,200 --> 00:15:47,960 Speaker 3: means that we're going to need lots more health services, 321 00:15:48,480 --> 00:15:52,160 Speaker 3: and weakening or disrupting the health system really does expose 322 00:15:52,240 --> 00:15:54,400 Speaker 3: us to a lot of future and long term risks. 323 00:15:54,800 --> 00:15:56,960 Speaker 2: Well, the government keeps saying that all these cuts are 324 00:15:56,960 --> 00:16:00,000 Speaker 2: coming from back room bureaucrasy. 325 00:16:00,280 --> 00:16:01,280 Speaker 1: Do you not believe them? 326 00:16:01,800 --> 00:16:06,280 Speaker 3: Well, again, it's I don't know what backroom bureaucracy is, 327 00:16:06,320 --> 00:16:09,400 Speaker 3: because you know, health is not delivered just by doctors. 328 00:16:09,640 --> 00:16:12,160 Speaker 3: It is a team effort. There is a whole apparatus 329 00:16:12,160 --> 00:16:15,040 Speaker 3: that has to work together to deliver these things. And again, 330 00:16:15,080 --> 00:16:18,000 Speaker 3: I think it's that being deliberate about really identifying It's 331 00:16:18,040 --> 00:16:19,920 Speaker 3: too simple to just say these are good jobs and 332 00:16:20,000 --> 00:16:21,640 Speaker 3: these are bad jobs. You have to be a lot 333 00:16:21,640 --> 00:16:24,320 Speaker 3: more deliberate about identifying waste and getting rid of that 334 00:16:24,600 --> 00:16:27,200 Speaker 3: and growing the stuff that actually delivers. There's good outcomes, 335 00:16:27,240 --> 00:16:30,480 Speaker 3: good services that New Zealanders want and deserve. So now 336 00:16:30,480 --> 00:16:32,600 Speaker 3: I do have some quite a lot of resistance to 337 00:16:32,640 --> 00:16:35,480 Speaker 3: the idea that just cutting people from head office or 338 00:16:35,720 --> 00:16:38,200 Speaker 3: support services is going to get better outcomes, because that 339 00:16:38,320 --> 00:16:39,400 Speaker 3: is absolutely not true. 340 00:16:39,760 --> 00:16:42,840 Speaker 2: We're coming up to the end of the year. What 341 00:16:42,920 --> 00:16:46,280 Speaker 2: does twenty twenty five look like to us. You've said, 342 00:16:46,520 --> 00:16:47,600 Speaker 2: get ready for a party. 343 00:16:48,360 --> 00:16:50,520 Speaker 3: I think a bit of a cul shower first before 344 00:16:50,560 --> 00:16:53,800 Speaker 3: the party. But absolutely, look, I think the Christmas period 345 00:16:53,840 --> 00:16:55,120 Speaker 3: is still going to be a bit hard, So please 346 00:16:55,160 --> 00:16:57,120 Speaker 3: look out for each other, look after yourself, because I 347 00:16:57,160 --> 00:16:59,320 Speaker 3: think Christmas period we put a lot of pressure on 348 00:16:59,320 --> 00:17:01,880 Speaker 3: ourselves and there's a lot of demands to spend money 349 00:17:01,880 --> 00:17:04,160 Speaker 3: and do things, and you really got to be really 350 00:17:04,240 --> 00:17:07,080 Speaker 3: I think, confident and take a lot of care in 351 00:17:07,160 --> 00:17:09,679 Speaker 3: what you do. But once we come out to the 352 00:17:09,680 --> 00:17:11,439 Speaker 3: other side, I think we'll start to see some of 353 00:17:11,480 --> 00:17:15,400 Speaker 3: those positive signs starting to build, but it will take 354 00:17:15,400 --> 00:17:17,160 Speaker 3: a little bit of time, so I don't think we're 355 00:17:17,160 --> 00:17:19,280 Speaker 3: going to see those really good times really kicking in 356 00:17:19,560 --> 00:17:22,080 Speaker 3: until the middle of next year. But once that starts, 357 00:17:22,119 --> 00:17:24,240 Speaker 3: I think things will feel a hell of a lot better. 358 00:17:24,400 --> 00:17:26,359 Speaker 3: It's been a long time coming. It's been a long, 359 00:17:26,440 --> 00:17:29,639 Speaker 3: deep recession. But when that recovery comes, boy, we should 360 00:17:29,640 --> 00:17:30,880 Speaker 3: all go out and enjoy it. 361 00:17:31,600 --> 00:17:34,320 Speaker 1: Thanks for joining us, Shamabel, Thanks Chelsea. 362 00:17:38,560 --> 00:17:41,679 Speaker 2: That's it for this episode of The Front Page. You 363 00:17:41,720 --> 00:17:45,520 Speaker 2: can read more about today's stories and extensive news coverage 364 00:17:45,560 --> 00:17:49,600 Speaker 2: at enzdherld dot co dot nz. The Front Page is 365 00:17:49,600 --> 00:17:53,359 Speaker 2: produced by Ethan Sills and Richard Martin, who is also 366 00:17:53,520 --> 00:17:54,600 Speaker 2: our sound engineer. 367 00:17:55,080 --> 00:17:56,600 Speaker 1: I'm Chelsea Daniels. 368 00:17:57,160 --> 00:18:00,320 Speaker 2: Subscribe to The Front Page on iHeartRadio or ref you 369 00:18:00,400 --> 00:18:01,360 Speaker 2: get your podcasts 370 00:18:01,680 --> 00:18:05,480 Speaker 1: And tune in tomorrow for another look behind the headlines.