1 00:00:00,120 --> 00:00:02,440 Speaker 1: The job's five point two, yes, lower than the fire 2 00:00:02,480 --> 00:00:05,040 Speaker 1: point three predicted. So the Finance Minister did the glass 3 00:00:05,080 --> 00:00:07,520 Speaker 1: half fall and bemow the miners, which is fair enough, 4 00:00:07,560 --> 00:00:09,319 Speaker 1: I guess Nichola Willis is back will us a very 5 00:00:09,320 --> 00:00:10,039 Speaker 1: good morning to you. 6 00:00:10,840 --> 00:00:11,520 Speaker 2: Good morning right. 7 00:00:11,720 --> 00:00:14,160 Speaker 1: I do worry as should you about Auckland though six 8 00:00:14,200 --> 00:00:18,479 Speaker 1: point one is a one big increase and two way 9 00:00:18,520 --> 00:00:20,360 Speaker 1: too high. 10 00:00:20,480 --> 00:00:23,320 Speaker 2: Yes it is, and that's why we are so focused 11 00:00:23,360 --> 00:00:26,200 Speaker 2: on making sure the conditions that are recovery in Auckland 12 00:00:26,239 --> 00:00:29,040 Speaker 2: are in place. We're doing six billion dollars worth of 13 00:00:29,360 --> 00:00:32,240 Speaker 2: public infrastructure projects ahead of Christmas that will be real 14 00:00:32,320 --> 00:00:36,720 Speaker 2: people in real jobs. Importantly, that lower interest rate means 15 00:00:36,720 --> 00:00:38,440 Speaker 2: that I think you are going to see some private 16 00:00:38,440 --> 00:00:42,280 Speaker 2: sector construction get going again. The lighted to see Auckland 17 00:00:42,320 --> 00:00:45,840 Speaker 2: Port expansion given the green light during the fast track process, 18 00:00:46,159 --> 00:00:49,640 Speaker 2: and that fast track process we'll see some big developments 19 00:00:49,680 --> 00:00:52,519 Speaker 2: occurring in the near future as well. That'll be a 20 00:00:52,560 --> 00:00:55,360 Speaker 2: bit of a help to Auckland. But overall, what we're 21 00:00:55,400 --> 00:00:58,280 Speaker 2: seeing here is what you always see after an economy 22 00:00:58,320 --> 00:01:01,440 Speaker 2: goes through a difficult period, which is that unemployment is 23 00:01:01,440 --> 00:01:03,800 Speaker 2: the last thing to get fixed because it does take 24 00:01:03,920 --> 00:01:06,440 Speaker 2: time for those lower interest rates to flow through into the. 25 00:01:06,400 --> 00:01:09,520 Speaker 1: Real economy, and that is one hundred percent correct. Trouble is, 26 00:01:09,800 --> 00:01:12,000 Speaker 1: it was supposed to be happening by now, and certainly 27 00:01:12,000 --> 00:01:13,959 Speaker 1: happening by the end of twenty five. And as an 28 00:01:14,000 --> 00:01:16,360 Speaker 1: economist on the program said, we can really look now 29 00:01:16,440 --> 00:01:18,800 Speaker 1: to twenty twenty six because yesterday was not the worst 30 00:01:18,840 --> 00:01:20,399 Speaker 1: of it. And I think you admitted that, didn't you. 31 00:01:21,280 --> 00:01:23,119 Speaker 2: Well, I'm going to push back on you because actually 32 00:01:23,160 --> 00:01:25,240 Speaker 2: in the first quarter of this year we had growth 33 00:01:25,240 --> 00:01:27,880 Speaker 2: at zero point eight percent, which annualized would be over 34 00:01:27,959 --> 00:01:32,560 Speaker 2: three percent. That was a wartime in Australia. Well, that 35 00:01:32,680 --> 00:01:34,400 Speaker 2: was four times the rate of growth that occurred in 36 00:01:35,280 --> 00:01:38,120 Speaker 2: the first quarter in Australia. It is actually a healthy 37 00:01:38,200 --> 00:01:41,040 Speaker 2: level of growth. Also, when you look at unemployment compared 38 00:01:41,040 --> 00:01:43,960 Speaker 2: to what was being forecast ahead of the election, not 39 00:01:44,080 --> 00:01:47,160 Speaker 2: as we are now eight thousand fewer people unemployed than 40 00:01:47,240 --> 00:01:50,080 Speaker 2: had been predicted. So we are coming in below the 41 00:01:50,120 --> 00:01:53,840 Speaker 2: worst case scenarios. Doesn't thing. We're satisfied and we have 42 00:01:54,040 --> 00:01:55,840 Speaker 2: to push all of those things that are going to 43 00:01:55,840 --> 00:01:59,200 Speaker 2: support growth. We're having a export lead recovery. That dairy 44 00:01:59,280 --> 00:02:03,440 Speaker 2: price is hi. Our exporters are continuing to persevere and 45 00:02:03,520 --> 00:02:06,360 Speaker 2: access in your markets, get good value, and the government 46 00:02:06,400 --> 00:02:08,960 Speaker 2: for albert is cutting through the red and green cape. 47 00:02:08,960 --> 00:02:13,239 Speaker 2: We're ensuring that those public sector construction projects are getting underway. 48 00:02:13,360 --> 00:02:16,320 Speaker 2: We've got that investment, this tax policy which is giving 49 00:02:16,360 --> 00:02:19,520 Speaker 2: businesses confidence and a reason to invest and grow, and 50 00:02:19,560 --> 00:02:21,919 Speaker 2: we are going to keep at it. This country has 51 00:02:22,120 --> 00:02:26,600 Speaker 2: great prospects. We buy, make and sell things that the 52 00:02:26,639 --> 00:02:29,360 Speaker 2: world wants. We do it really well, we do it 53 00:02:29,400 --> 00:02:31,800 Speaker 2: really efficiently. That will continue to be the case. We 54 00:02:31,800 --> 00:02:33,280 Speaker 2: don't need a bit of migo bay. 55 00:02:33,639 --> 00:02:35,880 Speaker 1: I agree, so well argued, and you're right, you're one 56 00:02:35,919 --> 00:02:37,640 Speaker 1: hundred percent correct. But your zero point eight and this 57 00:02:37,680 --> 00:02:39,560 Speaker 1: is where you get too political. Zero point eight was 58 00:02:39,600 --> 00:02:41,519 Speaker 1: Q one. Q two I doubt will be much above 59 00:02:41,680 --> 00:02:44,160 Speaker 1: zero and Q three is a problem as well, which 60 00:02:44,160 --> 00:02:46,680 Speaker 1: off sets you. Let's time zero point eight times four 61 00:02:46,720 --> 00:02:48,960 Speaker 1: and come to three point two, because life don't work 62 00:02:49,000 --> 00:02:49,320 Speaker 1: that way. 63 00:02:49,400 --> 00:02:53,880 Speaker 2: Nikoler, Well, look, I agree with you. I am very 64 00:02:53,919 --> 00:02:57,320 Speaker 2: aware that Q two has been challenging, and you know 65 00:02:57,480 --> 00:03:01,440 Speaker 2: Liberation Day in April mark of Q two, and it 66 00:03:01,600 --> 00:03:05,160 Speaker 2: is no question I've spoken to many business people who 67 00:03:05,200 --> 00:03:09,120 Speaker 2: took caution from that who've been very nervous about it, 68 00:03:09,200 --> 00:03:12,200 Speaker 2: and that will have affected confidence, investment intentions, all of 69 00:03:12,200 --> 00:03:14,600 Speaker 2: those things. I think I do have a job to do, 70 00:03:14,800 --> 00:03:18,640 Speaker 2: which is to say, yes, it's not great to have tariffs, 71 00:03:18,639 --> 00:03:21,560 Speaker 2: but actually, relatives to the rest of the world, we're okay. 72 00:03:21,680 --> 00:03:24,519 Speaker 2: Our exporters are very resilient. They are continuing to grow 73 00:03:24,560 --> 00:03:28,400 Speaker 2: their volumes, and so let's not overdo how bad the 74 00:03:28,440 --> 00:03:30,840 Speaker 2: Trump tariffs are going to be for New Zealand and 75 00:03:31,000 --> 00:03:33,120 Speaker 2: let it knock our confidence. I think that's what you 76 00:03:33,240 --> 00:03:36,040 Speaker 2: saw into too. It will be reflected in the real data. 77 00:03:36,200 --> 00:03:39,000 Speaker 2: I agree, but I still have great confidence that the 78 00:03:39,040 --> 00:03:40,680 Speaker 2: fundamentals in the economy are good. 79 00:03:40,760 --> 00:03:42,960 Speaker 1: Here's your next problem. Wages at two point four and 80 00:03:43,000 --> 00:03:44,880 Speaker 1: now below inflation, we're going backwards. 81 00:03:45,960 --> 00:03:48,640 Speaker 2: Well, you're using a different measure where I use the 82 00:03:48,680 --> 00:03:51,960 Speaker 2: average hourly earnings measure, which allows for the fact that 83 00:03:52,000 --> 00:03:55,240 Speaker 2: people get promotions and change jobs. That roads were five 84 00:03:55,240 --> 00:03:56,040 Speaker 2: percent in the part. 85 00:03:56,200 --> 00:03:59,640 Speaker 1: Yeah, well, if you're changing, Nicholas, this is your two 86 00:03:59,680 --> 00:04:02,080 Speaker 1: pit again. I'm just looking at the numbers yesterday. Two 87 00:04:02,080 --> 00:04:05,040 Speaker 1: point four is below the rate of inflation that you 88 00:04:05,160 --> 00:04:07,120 Speaker 1: know people are going to use that against you. We 89 00:04:07,160 --> 00:04:08,240 Speaker 1: are going backwards. 90 00:04:08,960 --> 00:04:11,440 Speaker 2: Well, there are two measures that you can use. The 91 00:04:11,480 --> 00:04:13,920 Speaker 2: measure you're using as a valid measure. The measure i'm 92 00:04:13,960 --> 00:04:17,000 Speaker 2: referring to allows for the fact that people switch jobs 93 00:04:16,960 --> 00:04:19,600 Speaker 2: to take promotions. The exciting thing in their mic that 94 00:04:19,640 --> 00:04:22,360 Speaker 2: I'm sure you're welcome is that it's being driven by 95 00:04:22,520 --> 00:04:25,720 Speaker 2: private sector wage growth. For a change. We've had a 96 00:04:25,760 --> 00:04:28,040 Speaker 2: period in which a lot of the wage growth that 97 00:04:28,200 --> 00:04:32,440 Speaker 2: was occurring was through collective bargaining or through what pay 98 00:04:32,520 --> 00:04:36,000 Speaker 2: equity settlements and the like, which was the taxpayer paying 99 00:04:36,040 --> 00:04:38,800 Speaker 2: public servants more. We now have a situation where it's 100 00:04:38,839 --> 00:04:42,320 Speaker 2: the private sector that is able to pay its employees more. 101 00:04:42,320 --> 00:04:45,599 Speaker 2: That's more sustainable economy because when the private sector is 102 00:04:45,640 --> 00:04:48,000 Speaker 2: choosing to pay their workers more, not only does that 103 00:04:48,040 --> 00:04:50,039 Speaker 2: mean that they are feeling profitable, but it also means 104 00:04:50,080 --> 00:04:53,839 Speaker 2: we're creating real, sustainable wage growth. So I take a 105 00:04:53,839 --> 00:04:56,120 Speaker 2: positive from that. But I'm with you. We do want 106 00:04:56,120 --> 00:04:58,960 Speaker 2: to drive all of those measures higher. But it is 107 00:04:59,040 --> 00:05:01,039 Speaker 2: not my job to talk to this economy. It's my 108 00:05:01,200 --> 00:05:04,040 Speaker 2: job to look at the real data, what's telling us 109 00:05:04,040 --> 00:05:05,239 Speaker 2: the positive things that are happening. 110 00:05:05,320 --> 00:05:07,400 Speaker 1: Okay, now, now we're going to run into trouble with 111 00:05:07,440 --> 00:05:09,880 Speaker 1: each other again, because I'm at least in part blamed, Well, 112 00:05:09,920 --> 00:05:12,719 Speaker 1: I'm blaming the RB. I think Christian Hawksby spends too 113 00:05:12,800 --> 00:05:15,240 Speaker 1: much time in a room, and he's wrong and he 114 00:05:15,320 --> 00:05:18,240 Speaker 1: will it's two point five as neutral. He needs at 115 00:05:18,279 --> 00:05:20,960 Speaker 1: least three more cuts and they've undercooked this and that's 116 00:05:20,960 --> 00:05:22,840 Speaker 1: not helping. You tell me I'm wrong. 117 00:05:23,000 --> 00:05:26,520 Speaker 2: Well, well, every bank economist seems to agree with you, Mike, 118 00:05:26,600 --> 00:05:28,400 Speaker 2: which is there saying in a couple of weeks the 119 00:05:28,560 --> 00:05:32,560 Speaker 2: Reserve Bank needs to reduce interest rates again before casting 120 00:05:32,600 --> 00:05:35,360 Speaker 2: at least another reduction by the end of the year, 121 00:05:35,760 --> 00:05:39,080 Speaker 2: and on the real data, that would be in line 122 00:05:39,080 --> 00:05:41,680 Speaker 2: with the Reserve Bank continuing with its track, which has 123 00:05:41,800 --> 00:05:44,719 Speaker 2: continued to be that they should be reducing the official 124 00:05:44,760 --> 00:05:48,200 Speaker 2: test rate. Now, obviously they're independent, they make those decisions. 125 00:05:48,279 --> 00:05:52,839 Speaker 2: But independent economists can't see any day other than down 126 00:05:53,040 --> 00:05:55,120 Speaker 2: for interest rates, and I see that as a positive. 127 00:05:56,080 --> 00:05:58,920 Speaker 1: Well, is it? Because my argument would be if they'd 128 00:05:58,960 --> 00:06:01,400 Speaker 1: been more nimble, if they'd been more in touch with 129 00:06:01,440 --> 00:06:04,120 Speaker 1: the economy, the real economy, not just wants and numbers, 130 00:06:04,160 --> 00:06:06,880 Speaker 1: they would have felt it, seen it and acted sooner. 131 00:06:07,000 --> 00:06:09,800 Speaker 1: In acting sooner, it would have turbo charged the place better. 132 00:06:11,160 --> 00:06:14,279 Speaker 2: Well, you've heard my criticisms of the Reserve banks decision 133 00:06:14,320 --> 00:06:18,360 Speaker 2: making after COVID. I think they overdid it then and 134 00:06:18,360 --> 00:06:21,800 Speaker 2: then we're reasonably slow to recover. But at this point, 135 00:06:22,320 --> 00:06:24,960 Speaker 2: what we can see is they've got options, got the 136 00:06:25,000 --> 00:06:29,279 Speaker 2: ability to move down. And that's what everyone's expecting to see. 137 00:06:29,440 --> 00:06:31,240 Speaker 1: Yeah, I couldn't do your job. I'd be in as 138 00:06:31,279 --> 00:06:33,159 Speaker 1: a year, I'd be giving and what for? By now? 139 00:06:33,520 --> 00:06:36,800 Speaker 1: The thing that worries me. Do you see these numbers yesterday? 140 00:06:36,800 --> 00:06:38,760 Speaker 1: The number of kids leaving school with no as in, 141 00:06:38,880 --> 00:06:42,920 Speaker 1: no qualifications teny six hundred. We've got sixteen percent of 142 00:06:43,000 --> 00:06:46,680 Speaker 1: kids leaving school with not a single thing that will 143 00:06:46,720 --> 00:06:48,359 Speaker 1: help them for the rest of their lives. How's that? 144 00:06:48,600 --> 00:06:51,760 Speaker 2: And that is why Erica Standard is on a massive 145 00:06:51,880 --> 00:06:56,000 Speaker 2: mission to bring back basic literacy, numeracy, reading, writing, maths 146 00:06:56,000 --> 00:06:59,200 Speaker 2: into our schools. She's rolling out those textbooks, she's rolling 147 00:06:59,240 --> 00:07:02,920 Speaker 2: out that structure curriculum. We're very serious about it. That's 148 00:07:02,920 --> 00:07:06,080 Speaker 2: why we're replacing MCA. We know that if you have 149 00:07:06,200 --> 00:07:09,760 Speaker 2: children leaving school without those basics, that is a fiscal 150 00:07:09,760 --> 00:07:13,600 Speaker 2: disaster and economic disaster. Frankly, it's a moral disaster. So 151 00:07:13,800 --> 00:07:15,960 Speaker 2: this idea that schools should be a pick a pass 152 00:07:16,000 --> 00:07:18,120 Speaker 2: adventure where we just talk about well being all day. 153 00:07:18,120 --> 00:07:20,920 Speaker 2: We've rejected that. We're going back to the orthodoxy, back 154 00:07:20,960 --> 00:07:24,239 Speaker 2: to the basics that actually equip young New Zealanders for life. 155 00:07:24,320 --> 00:07:26,520 Speaker 1: I hope it works. Nice to see you, Nichola Willis, 156 00:07:26,560 --> 00:07:27,360 Speaker 1: Finance Minister. 157 00:07:28,000 --> 00:07:30,920 Speaker 2: For more from the Mic Asking Breakfast, listen live to 158 00:07:31,000 --> 00:07:34,080 Speaker 2: news talks that'd be from six am weekdays, or follow 159 00:07:34,120 --> 00:07:35,680 Speaker 2: the podcast on iHeartRadio.