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Speaker 1: So the theme of yesterday was with inflation at two

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Speaker 1: point two percent, it's over or is it? I mean,

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Speaker 1: questions remain around the non tradable figure, which is four

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Speaker 1: point nine and still an issue. I would have thought

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Speaker 1: then the question of what the Reserve Bank does next month.

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Speaker 1: Of course, Finance Minister Nikola willis with us.

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Speaker 2: Good morning, Good morning mate.

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Speaker 1: As you were celebrating yesterday as well you might because

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Speaker 1: you're the finance minister and a politician. Can I suggest

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Speaker 1: to you it never had to be this bad. We've

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Speaker 1: had three recessions, tens of thousands of people out of

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Speaker 1: work and a shed load of people bail on the country.

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Speaker 1: It could have been done better, couldn't it look look like?

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Speaker 2: I'm absolutely with you. There is no question that the

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Speaker 2: last government fueled inflation. They are excessive spending meant that

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Speaker 2: inflation stayed higher for longer, which meant the Reserve Bank

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Speaker 2: then pranked interest rates higher than would otherwise have had

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Speaker 2: to have been the case, and we are feeling the

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Speaker 2: pain of that in our economy now. There was no

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Speaker 2: question about that. But I need to look forward because

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Speaker 2: my job is to set the conditions for future growth,

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Speaker 2: and I have said one of the consistent things growing

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Speaker 2: economies around the world have as they have low stifle inflation,

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Speaker 2: that allows for interest rates to be reasonable, That allows

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Speaker 2: businesses to borrow, that allows mortgages to have the people

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Speaker 2: with mortgages to have spare cash. So we have set

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Speaker 2: the conditions for growth. So it was a great day, right.

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Speaker 1: What's neutral for a cash rate? Do you reckon?

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Speaker 2: Look that that depends. There are lots of factors that

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Speaker 2: go into it. What people across the world are saying.

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Speaker 1: Give me a number for numbers of New Zealand job.

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Speaker 2: No, No, I'm not going to I'm not going to

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Speaker 2: do Adrian's job. You know, we've had this discussion before.

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Speaker 2: I don't do that job. He does his job.

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Speaker 1: Well, that's part of the problem though, Hence my first

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Speaker 1: question is it does he do his job with three recessions?

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Speaker 2: Look, there is no question as I said that New

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Speaker 2: Zealand has come through a very difficult time. We've had

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Speaker 2: highly restrictive monetary policy, but of course that followed a

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Speaker 2: period in which we had highly loose monetary policy, in

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Speaker 2: which we did huge amounts of money printing quantitative easing,

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Speaker 2: where late rates were kept low for a very long time.

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Speaker 2: And I've been openly critical in the past of the

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Speaker 2: Reserve Bank's decision making following COVID, where I think it

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Speaker 2: was very very loose in its monetary policy combined with

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Speaker 2: very loose fiscal policy from the government, and that did

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Speaker 2: lead to a situation which has taken a long time

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Speaker 2: to unwind. It's been free and a half years.

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Speaker 1: Yes, I know, but the here and now, which is

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Speaker 1: where you are right now, fifty or seventy five, and

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Speaker 1: if it's seventy five, that's tantamount to admission of a mistake.

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Speaker 1: He's overcooked, it isn't it. I'm worried about the number.

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Speaker 1: The number was lower than what they expected, and I

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Speaker 1: just wonder if it's still going down too low, too slow.

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Speaker 2: Well, look, here's the way I look at it. When

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Speaker 2: I look ahead to the next the next decision in November,

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Speaker 2: what is the Reserve Bank governor going to be looking at.

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Speaker 2: He's going to be looking at how the economy is

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Speaker 2: functioning and how monetary policy is transmitting through and if

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Speaker 2: he chooses to reduce interest rates further, that will be

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Speaker 2: good for many many businesses who will then think, yep,

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Speaker 2: I'm going to actually borrow and I'm going to expand

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Speaker 2: and I'm going to buy that new machinery and I'm

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Speaker 2: going to start that overseas market. So I need to

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Speaker 2: look forward, and I know that the conditions we need

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Speaker 2: for the growth that will lead to the hir incomes

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Speaker 2: the better choices that I want New Zealanders to have

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Speaker 2: is low, stable inflation, interest rates coming down.

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Speaker 1: So mate, since we last talked, you open those books.

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Speaker 1: I can't remember your word, but it was sober or

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Speaker 1: depressing or miserable or something one sixty seven billion in

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Speaker 1: but you're spending one to eighty Why are you spending

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Speaker 1: so much money when you don't have it as a

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Speaker 1: conservative chancellor?

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Speaker 2: Because we had one of the most extreme increases in

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Speaker 2: government spending that New Zealand has seen under the last government.

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Speaker 2: It went from under thirty percent or like twenty percent

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Speaker 2: of the gross domestic product up to as god as

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Speaker 2: high as thirty four percent. And we are now unwinding that.

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Speaker 2: And that is not something that we can do immediately

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Speaker 2: overnight without causing massive pain to New Zealanders. But we

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Speaker 2: have set out a plan that sees us unwinding that

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Speaker 2: over time real restraint with the smallest operating allowance. Since

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Speaker 2: Stephen Joe lower operating allowances in the future, that will

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Speaker 2: require us to keep making pretty difficult choices to put

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Speaker 2: the lid down. That's important that we do it for

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Speaker 2: New Zealand because actually having well managed finances that ensure

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Speaker 2: that we're not racking up huge amounts of debt is

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Speaker 2: important for the way we're viewed internationally. It's important for

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Speaker 2: the interest rates New Zealand is pay. It's important for

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Speaker 2: my kids so that they don't look at me in

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Speaker 2: the eye and say, Mum, you throw all the debt

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Speaker 2: at us. So we are working on that. We are

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Speaker 2: doing it gradually, we are doing it responsibly, We're doing

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Speaker 2: it the right way.

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Speaker 1: Give it between in ten seconds. You worried about ACC.

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Speaker 2: I do want to see ACC managing its costs much better.

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Speaker 2: ACC contributes to New Zealand's deficit considerably. But also when

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Speaker 2: ACC is not managing its costs well, every single worker

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Speaker 2: pays a higher levy and I don't like those costs

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Speaker 2: continuing to go up five percent every year or more

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Speaker 2: when it comes to some of the fees. So yeah,

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Speaker 2: we're taking a good hard look at ACC, make sure

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Speaker 2: that it is well run and that they are keeping

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Speaker 2: their costs down.

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Speaker 1: As indeed will we because we've got the the head

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Speaker 1: of BASc on after seven thirty Appreciate time, Nikola will

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Speaker 1: the Swineance Ministers. For more from the mic Asking Breakfast,

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