1 00:00:00,040 --> 00:00:01,880 Speaker 1: Back to the business of the ocr cash rate now 2 00:00:01,920 --> 00:00:04,320 Speaker 1: at two point five could be lie by Christmas. Government 3 00:00:04,400 --> 00:00:06,760 Speaker 1: saw it as good news. Nikola will As, the Finance 4 00:00:06,800 --> 00:00:08,720 Speaker 1: Minister back with us. Good morning and good morning to 5 00:00:08,720 --> 00:00:10,920 Speaker 1: you mane the claim, I think it was from Labor yesterday. 6 00:00:10,960 --> 00:00:13,480 Speaker 1: The RB's doing the work for you, fair or not. 7 00:00:14,840 --> 00:00:18,040 Speaker 2: No, the RBNZ is doing its job, which is to 8 00:00:18,079 --> 00:00:21,800 Speaker 2: manage inflation and ensure stable output in the economy. And 9 00:00:21,960 --> 00:00:24,600 Speaker 2: I think that reducing the official cash rate by fifty 10 00:00:24,640 --> 00:00:27,440 Speaker 2: basis points is their logical reaction to the economic data 11 00:00:27,480 --> 00:00:28,040 Speaker 2: they are seeing. 12 00:00:28,240 --> 00:00:29,760 Speaker 1: Do you think there's more where that came from. 13 00:00:31,000 --> 00:00:33,920 Speaker 2: Well, they've certainly left that open in their statement, haven't they, 14 00:00:34,440 --> 00:00:36,960 Speaker 2: by saying that they will continue to monitor developments and 15 00:00:37,080 --> 00:00:40,240 Speaker 2: be prepared to go further. And that says you'd expect. 16 00:00:40,320 --> 00:00:43,159 Speaker 2: That's exactly their job, to keep monitoring developments and do 17 00:00:43,240 --> 00:00:45,920 Speaker 2: what's right to keep inflation down in the medium turn. 18 00:00:46,440 --> 00:00:48,680 Speaker 2: But consistent with what they're seeing happening in the economy. 19 00:00:48,680 --> 00:00:50,880 Speaker 1: Do you think inflation will breach three and if it does, 20 00:00:50,960 --> 00:00:51,560 Speaker 1: do you worry? 21 00:00:52,720 --> 00:00:55,360 Speaker 2: Well, that is what some of the forecasters are telling 22 00:00:55,440 --> 00:00:58,840 Speaker 2: us that it could in the first next three months. 23 00:00:59,200 --> 00:01:02,440 Speaker 2: Go over three, that would be temporary. What the Reserve 24 00:01:02,520 --> 00:01:05,200 Speaker 2: banker observing is there's a lot of capacity in the economy, 25 00:01:05,240 --> 00:01:08,000 Speaker 2: so they don't see the threat of inflation persisting at 26 00:01:08,000 --> 00:01:10,920 Speaker 2: that level. And what they were confidently predicting yesterday as 27 00:01:10,920 --> 00:01:13,200 Speaker 2: they expect it to come back down to that two 28 00:01:13,200 --> 00:01:15,520 Speaker 2: percent range in the first six months of the next year. 29 00:01:15,560 --> 00:01:17,639 Speaker 2: So that's what you want to see. A little blip's okay. 30 00:01:17,720 --> 00:01:21,720 Speaker 2: What's not okay is three years out of target as 31 00:01:21,720 --> 00:01:23,000 Speaker 2: it was under the last government. 32 00:01:23,360 --> 00:01:25,840 Speaker 1: That is true. Having said that, what worries me is 33 00:01:25,959 --> 00:01:28,039 Speaker 1: the three of its gets breached and I have no 34 00:01:28,120 --> 00:01:30,440 Speaker 1: doubt at will is not being driven by growth. It's 35 00:01:30,480 --> 00:01:33,240 Speaker 1: been driven by cost plus accounting and that still doesn't 36 00:01:33,240 --> 00:01:35,240 Speaker 1: appear to be contained, does it? And what do we 37 00:01:35,240 --> 00:01:35,840 Speaker 1: do about that? 38 00:01:36,200 --> 00:01:40,160 Speaker 2: Well, one of the major factors is literally those rates increases. 39 00:01:40,240 --> 00:01:44,320 Speaker 2: They are having an outsize impact on the overall inflation basket. 40 00:01:44,360 --> 00:01:47,560 Speaker 2: While you're seeing inflation actually falling for a number of categories, 41 00:01:47,600 --> 00:01:52,120 Speaker 2: prices falling in real terms, rates disproportionately are pushing up 42 00:01:52,160 --> 00:01:54,080 Speaker 2: that overall number. And that's why where you're hard at 43 00:01:54,080 --> 00:01:57,040 Speaker 2: work are looking at proposals for a rates cap because 44 00:01:57,040 --> 00:02:00,240 Speaker 2: we can't let councils keep holding the economy me to 45 00:02:00,320 --> 00:02:01,160 Speaker 2: ransom in that way. 46 00:02:01,360 --> 00:02:04,040 Speaker 1: No. I was watching question Time again yesterday Prime ministers 47 00:02:04,120 --> 00:02:07,960 Speaker 1: suggesting there's growth in Q three. I'm not sure he's correct, 48 00:02:08,080 --> 00:02:09,919 Speaker 1: are you. Well? 49 00:02:09,919 --> 00:02:12,679 Speaker 2: Obviously there's always a mixture of data, but the Treasury 50 00:02:12,760 --> 00:02:16,000 Speaker 2: continue to tell me that's their forecast, and that's that's 51 00:02:16,000 --> 00:02:19,320 Speaker 2: currently the Reserve Bank put out yesterday. Yes based on 52 00:02:19,360 --> 00:02:21,520 Speaker 2: the data they're seeing, they're still predicting that. What you 53 00:02:21,560 --> 00:02:24,200 Speaker 2: saw the Reserve Banks say yesterday is that they still 54 00:02:24,200 --> 00:02:26,640 Speaker 2: think there will be growth having occurred in Q three, 55 00:02:26,840 --> 00:02:29,640 Speaker 2: if a little more muted than was being expected. But 56 00:02:29,639 --> 00:02:32,320 Speaker 2: there's a mixture of data and so we will see. 57 00:02:32,440 --> 00:02:34,800 Speaker 1: And because the Nzier the stuff that they looked at, 58 00:02:34,840 --> 00:02:36,959 Speaker 1: the last thing they looked at yesterday before they made 59 00:02:36,960 --> 00:02:40,200 Speaker 1: their decision said flat at best, contraction at worst. 60 00:02:40,919 --> 00:02:43,520 Speaker 2: Can I just point out something really important about that survey. 61 00:02:44,000 --> 00:02:47,640 Speaker 2: It does not directly survey agriculture, and that is a 62 00:02:47,639 --> 00:02:51,400 Speaker 2: sector that is of course enjoying exceptionally strong revenues overall 63 00:02:52,240 --> 00:02:55,760 Speaker 2: outright and relative to other sectors. So that survey is 64 00:02:55,880 --> 00:02:58,880 Speaker 2: very important, it is relevant, but it doesn't include that 65 00:02:58,960 --> 00:03:01,080 Speaker 2: sector and I'm sure that the bank factored that in 66 00:03:01,120 --> 00:03:01,480 Speaker 2: as well. 67 00:03:01,919 --> 00:03:04,440 Speaker 1: How worried about the labor line are you? They rolled 68 00:03:04,480 --> 00:03:07,400 Speaker 1: it out yesterday as well. And that is that, rightly 69 00:03:07,480 --> 00:03:09,320 Speaker 1: or wrongly, people in the poll came out to back 70 00:03:09,360 --> 00:03:12,360 Speaker 1: it up. Rightly or wrongly, people tend to believe what 71 00:03:12,440 --> 00:03:14,720 Speaker 1: they're telling them, and that is that you've bollocked this 72 00:03:14,800 --> 00:03:17,600 Speaker 1: economy and the facts back that up. How do you 73 00:03:17,760 --> 00:03:18,280 Speaker 1: counter that? 74 00:03:19,440 --> 00:03:21,919 Speaker 2: Well? First of all, I meet intelligent New Zealanders every week. 75 00:03:21,960 --> 00:03:24,680 Speaker 2: Case Statami, Gosh, they really did trash the place, didn't they. 76 00:03:24,760 --> 00:03:27,440 Speaker 2: You are having to do a very very difficult tidy up, 77 00:03:27,440 --> 00:03:30,200 Speaker 2: but thank goodness you're there. And second of all, I 78 00:03:30,280 --> 00:03:33,639 Speaker 2: remain completely confident, Mike that this economy will be back 79 00:03:33,680 --> 00:03:35,880 Speaker 2: to strong growth by the time we go to the polls. 80 00:03:35,920 --> 00:03:38,240 Speaker 2: And that's ultimately what New Zealanders will judge us on, 81 00:03:38,560 --> 00:03:41,160 Speaker 2: as well as what are the alternative policies on off 82 00:03:41,160 --> 00:03:45,040 Speaker 2: because so far they've suggested a higher inflation target, more taxes, 83 00:03:45,160 --> 00:03:47,560 Speaker 2: and more borrowing. New Zealanders are smart enough to know 84 00:03:47,600 --> 00:03:48,200 Speaker 2: that won't work. 85 00:03:48,480 --> 00:03:51,520 Speaker 1: Well. It'll be an interesting year, I guess. On related matters. 86 00:03:51,520 --> 00:03:54,200 Speaker 1: Have you read the newsroom piece on Adrin or's restraint 87 00:03:54,240 --> 00:03:58,040 Speaker 1: of trade. I did read that your conclusion. 88 00:03:59,440 --> 00:04:01,200 Speaker 2: That it says said it is, which is that the 89 00:04:01,240 --> 00:04:04,880 Speaker 2: Reserve Bank had an employment agreement which was agreed under 90 00:04:04,880 --> 00:04:08,720 Speaker 2: the last minister. They applied that to the negotiation of 91 00:04:08,760 --> 00:04:10,440 Speaker 2: the exit agreement with Adrian or. 92 00:04:11,200 --> 00:04:13,680 Speaker 1: The summation I got out of it. In the Zeichbarm 93 00:04:13,760 --> 00:04:16,240 Speaker 1: guy they keep quoting there is no scenario for a 94 00:04:16,400 --> 00:04:18,320 Speaker 1: restraint of trade and what it was really about was 95 00:04:18,360 --> 00:04:21,559 Speaker 1: shutting him up, And there might be some sensitivity around 96 00:04:21,600 --> 00:04:23,480 Speaker 1: some of the things that he might have said, should 97 00:04:23,520 --> 00:04:25,039 Speaker 1: he not have been shut up, and that might have 98 00:04:25,080 --> 00:04:26,440 Speaker 1: involved you in your government. 99 00:04:27,680 --> 00:04:30,320 Speaker 2: No, I don't think so, because that restraint of trade 100 00:04:30,360 --> 00:04:34,000 Speaker 2: cause was negotiated in there when he was first appointed, 101 00:04:34,040 --> 00:04:36,400 Speaker 2: it was there under Grunt Robertson. It's actually been a 102 00:04:36,440 --> 00:04:40,400 Speaker 2: feature of previous governor employment relationships. So they were literally 103 00:04:40,520 --> 00:04:43,440 Speaker 2: following the letter of the agreement, which means that no 104 00:04:43,440 --> 00:04:45,440 Speaker 2: matter what the terms were of his exit, he would 105 00:04:45,440 --> 00:04:48,320 Speaker 2: have that six months restraint of trade. So I think 106 00:04:48,320 --> 00:04:50,880 Speaker 2: that was an overread of what are pretty plain facts. 107 00:04:50,880 --> 00:04:53,640 Speaker 1: All right, appreciate your time. The Finance Minister, Nikola Willison. 108 00:04:53,760 --> 00:04:56,599 Speaker 1: That was interesting, wasn't the nzier thing. I didn't realize 109 00:04:56,600 --> 00:05:00,120 Speaker 1: they didn't really do agriculture. The next questioning obvious I 110 00:05:00,160 --> 00:05:02,719 Speaker 1: would have thought, is why not anyway? The article I 111 00:05:02,839 --> 00:05:04,960 Speaker 1: reference is a very good one by Jonathan Milne in 112 00:05:04,960 --> 00:05:08,960 Speaker 1: the Newsroom website or what question mark ex Reserve Bank 113 00:05:09,000 --> 00:05:12,440 Speaker 1: Governor's tenuous restraint of trade payout. It's, as all things 114 00:05:12,440 --> 00:05:15,320 Speaker 1: are generally on the newsroom site, a lengthy old piece. 115 00:05:16,240 --> 00:05:17,960 Speaker 1: But he goes, we don't exactly know what all his 116 00:05:18,000 --> 00:05:20,880 Speaker 1: clause is meant to restrain him from doing. After all, 117 00:05:20,880 --> 00:05:22,799 Speaker 1: in two thousand and two, the former governor Don Brash 118 00:05:22,839 --> 00:05:24,520 Speaker 1: walked out the door at Number two the Terraces held 119 00:05:24,560 --> 00:05:26,680 Speaker 1: a press conference announcing he'd be seeking election as a 120 00:05:26,720 --> 00:05:29,000 Speaker 1: National Party MP. That same year. Three months later, as 121 00:05:29,000 --> 00:05:31,840 Speaker 1: an MP, or walked out the door March Fire, but 122 00:05:31,920 --> 00:05:34,080 Speaker 1: his term as governor didn't end until much thirty won 123 00:05:34,120 --> 00:05:36,480 Speaker 1: That took his six month restraint period through to the 124 00:05:36,520 --> 00:05:40,440 Speaker 1: thirtieth of September. So this Zichbalm guy that keep referencing 125 00:05:40,440 --> 00:05:43,440 Speaker 1: in the article says he can see no scenario in 126 00:05:43,480 --> 00:05:46,120 Speaker 1: which a restraint of trade would apply. The answer is none, 127 00:05:46,520 --> 00:05:48,840 Speaker 1: and that is not an insignificant sum that we're talking 128 00:05:48,839 --> 00:05:51,680 Speaker 1: about the half million dollars or thereabouts masquerading as a 129 00:05:51,680 --> 00:05:55,320 Speaker 1: restraint of trade. Adrian or had confidential information, but more 130 00:05:55,320 --> 00:05:57,760 Speaker 1: to the point, he was a party to the unsavory 131 00:05:57,839 --> 00:06:01,599 Speaker 1: proceedings before his departure. There was such a heightened level 132 00:06:01,640 --> 00:06:05,000 Speaker 1: of sensitivity around the circumstances of his departure and what 133 00:06:05,279 --> 00:06:09,599 Speaker 1: prompted it that they tried to seal it off. Doom 134 00:06:09,760 --> 00:06:11,960 Speaker 1: doo doo. Anyway, I read the whole article and make 135 00:06:12,040 --> 00:06:13,080 Speaker 1: up your own mind. 136 00:06:13,120 --> 00:06:16,039 Speaker 2: For more from The Mic Asking Breakfast, listen live to 137 00:06:16,160 --> 00:06:19,200 Speaker 2: News Talks at B from six am weekdays, or follow 138 00:06:19,240 --> 00:06:20,839 Speaker 2: the podcast on iHeartRadio.