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Speaker 1: It was a solid piece of good news. I thought anyway,

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Speaker 1: the government wanted and probably needed it as well. We're

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Speaker 1: out of recession. Q four zero point seven. Are we

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Speaker 1: on our way? The Finance Minister Nikola will is with us.

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Speaker 1: Very good morning to you.

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Speaker 2: Good morning mate.

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Speaker 1: I was surprised. I don't know if you read the

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Speaker 1: media or not, but there's a lot of misery around

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Speaker 1: the number. I think Radio New Zealand said we crawled out.

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Speaker 1: I mean, zero point seven's a solid number. If you

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Speaker 1: annualize it out, it's almost three percent.

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Speaker 2: It is solid and the numbers do not lie. Not

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Speaker 2: only was it a positive number, but it was a

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Speaker 2: far bigger number than anyone was predicting. So let's take

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Speaker 2: the good news when it comes. Mike. There's always someone

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Speaker 2: who can think of a nancy negative way of looking

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Speaker 2: at it, But actually, this is an economy that has

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Speaker 2: been bouncing along the bottom for a very long time,

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Speaker 2: and now we are turning the corner. Let's celebrate that

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Speaker 2: it's set to continue. Let's have a positive mindset.

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Speaker 1: Well, that was my next question. Is it set to continue?

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Speaker 1: Q one, what's your sense of it? Manufacturing back into

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Speaker 1: negative consumers, manufacturing expanding sorry, consumer into negative though. Have

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Speaker 1: we got continued growth.

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Speaker 2: Yes, those tailwinds of tourism up, dairy doing well, our

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Speaker 2: agricultural export is doing well. That is set to continue.

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Speaker 2: But we're also going to see households I think, getting

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Speaker 2: more of their household budget able to be spent because

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Speaker 2: they're going to be switching on to lower mortgage rates.

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Speaker 2: So that should continue to flow through into the economy.

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Speaker 2: And the consensus across the forecasters is growth accelerates this year,

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Speaker 2: which is exactly what we need because that's when people

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Speaker 2: are going to start feeling genuinely better off.

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Speaker 1: Okay, are we reliant on too few industries? Mind you,

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Speaker 1: that's an age old question I suppose, isn't it.

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Speaker 2: No, I don't think so. I visited this week a

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Speaker 2: business in Toronga who are doing some of the best

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Speaker 2: automated vehicles in the world, drones and the like, exporting

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Speaker 2: around the world, being bought by international defense forces. They're

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Speaker 2: doing that from New Zealand. I went to Auckland University

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Speaker 2: yesterday where they are producing medical devices that are world

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Speaker 2: leading businesses that are growing. So. Yes, we've got dairy, Yes,

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Speaker 2: we've got tourism. They're fantastic. We shouldn't. We shouldn't be

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Speaker 2: sad about that. But we've got other industries coming along

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Speaker 2: as well.

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Speaker 1: Our current account, though, which was a number also out

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Speaker 1: this week at six point two percent of GDP, is bollocks.

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Speaker 1: When does that get addressed? And in your mind, what

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Speaker 1: is addressed?

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Speaker 2: Well, it is getting better, So that's the first thing

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Speaker 2: i'd say there because of that growth and the tourism

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Speaker 2: numbers in the terms of trade being better, the prices

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Speaker 2: we're getting for our goods being better, that is improving.

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Speaker 2: The challenge we have is we do have a lot

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Speaker 2: of multinational business is here, including banks, so their funds

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Speaker 2: do get repatriated back to those countries, and so that

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Speaker 2: is always a challenge to our current account. But what

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Speaker 2: we want to see is export is exporting more for

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Speaker 2: higher prices, and actually that is set to continue.

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Speaker 1: Yeah, it is. And so exports increased by almost let's

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Speaker 1: call it seven hundred million in the December quarter to

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Speaker 1: eighteen and a half billion. But our imports increased as well.

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Speaker 1: Are we importing too much stuff or do we just

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Speaker 1: not make enough stuff so therefore we have to import stuff.

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Speaker 2: Well, we do have to import stuff because we can't

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Speaker 2: manufacture all of the sophisticated goods o New Zealand consumers want.

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Speaker 2: But what I'm really encouraged to see is that we

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Speaker 2: are selling more offshore too. That's the book I think

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Speaker 2: we really need to focus on, is that export lead

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Speaker 2: recovery having Our export is selling more products to more

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Speaker 2: markets at higher prices, and that is happening. Our flexible dollar,

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Speaker 2: our floating exchange rate is obviously helping with that. It's

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Speaker 2: ensuring that our exporters remain competitive. And look, I think

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Speaker 2: there's a positive story there.

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Speaker 1: Okay, does the zero point seven on GDP give you

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Speaker 1: hope that the tail of the jobs which lags, of course,

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Speaker 1: might end a little bit or peak a little bit

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Speaker 1: sooner than we thought, or it is what it is.

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Speaker 2: Well, we have seen the forecasts for unemployment coming off

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Speaker 2: a little bit since we came to government. As you've said,

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Speaker 2: employment is the last thing to recover when an economy

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Speaker 2: goes through a time like New Zealand has. The forecasts

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Speaker 2: are that it will peak halfway through the year and

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Speaker 2: then it's going to get better in the second half

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Speaker 2: of the year. That's consistent with what I'm seeing in

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Speaker 2: the economy, which is that we are seeing that many

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Speaker 2: firms are continuing to hire, and we are seeing that

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Speaker 2: they're still demand for a lot of workers across a

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Speaker 2: lot of industry. So I think with the stronger number

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Speaker 2: off the back of last year, we could get a

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Speaker 2: pretty positive impact for employment as well.

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Speaker 1: I'm not sure this is in your wheelhouse, but I'm

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Speaker 1: reading yesterday in Australia, the Americans have got hold of

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Speaker 1: the Australian beef situation. So the Australians export a lot

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Speaker 1: of beef to America. We export a lot of beef

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Speaker 1: to America as well. The Americans are not happy with

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Speaker 1: the Australians because it's not reciprocated. They've come up with

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Speaker 1: a whole bunch of reasons why they can't import a

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Speaker 1: lot of American beef. Are we in that cart as

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Speaker 1: well or not?

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Speaker 2: I don't think that we are. I want to be

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Speaker 2: diplomatic about other countries' trade disputes, but one thing New

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Speaker 2: Zealand has always done well as we play by the

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Speaker 2: rules internationally. We have low tariffs. We don't use non

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Speaker 2: tariff barriers to try and exclude people from our market,

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Speaker 2: and so that does position us well visa the US

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Speaker 2: because we're not doing naughty things, Mike, So we don't

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Speaker 2: have anything to get caught out on. And we also

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Speaker 2: around the world have a number of trading relationships where

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Speaker 2: we're well respected. So while the global picture on trade

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Speaker 2: isn't the one that I would prefer, within it, New

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Speaker 2: Zealand's well positioned.

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Speaker 1: Okay, just one more thing, your business of the Reserve Bank,

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Speaker 1: the amount of money the retail banks have to put

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Speaker 1: to one side under the Adrian or regime, and your

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Speaker 1: desire to do something about that, where are you at

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Speaker 1: with that?

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Speaker 2: Well, Look, my observation is a simple one, which is

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Speaker 2: that everyone said when those higher capteradequacy ratios were put

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Speaker 2: on that it could dampen GDP, restrict lending and add

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Speaker 2: to interest rates. So I think it's timely that the

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Speaker 2: Parliamentary Select Committee is now examining that and asking whether

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Speaker 2: that has happened. The Reserve Bank will be presented to

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Speaker 2: that Select Committee next week, and I think it's very

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Speaker 2: important that they have their say about what's going on,

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Speaker 2: because of course, ultimately they have options about whether or

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Speaker 2: not they continue to do this ramp up that has

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Speaker 2: been the case in recent years.

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Speaker 1: All right, appreciate you Tilling. You have a Good Weekend,

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Speaker 1: Nichola Willis, who is the Finance Minister.

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Speaker 2: For more from the Mic Asking Breakfast, listen live to

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