Kerre Woodham: What will it take to bring NZ out of its funk?

Finance Minister Nicola Willis all but invoked the old adage ‘the beatings will continue until morale improves’, when commenting on the state of the economy yesterday. In a stand up with Prime Minister Christopher Luxon after the Reserve Bank cut the OCR by 25 basis points to 3%, she blamed the sluggish economy on doomsayers from the opposition benches who were talking the economy down, and all but instructed Kiwi households to be more jolly.  

“I'm always conscious that households listen to merchants of misery everyday, most of whom sit on the opposition benches, who like to be doomsayers and talk down the New Zealand economy. I think it's been a really tough time for Kiwi families, there's absolutely no denying that, but we kind of have a choice – do we talk ourselves into an ongoing funk? Or do we look ahead and recognise that things will get better?” 

“People need to feel it, and I fully appreciate that. You know, some parts of New Zealand are feeling it, and other parts are not.”  

So that was Nicola Willis and Christopher Luxon. All well and good, but on the same day she told us to pull up our socks and perk up, Fletcher Building announced a $419 million loss. Kitchen Things, a premium appliance store that goes back to 1986, announced it was closing 12 stores (there is a Kitchen Things in Hamilton that's trading by itself and doing very well and would appreciate the support) and they asked ASB to appoint receivers. And Carter Holt Harvey is proposing to close its Nelson sawmill with the loss of 142 jobs.  

Willis and the rest of her government are exasperated and frustrated that things have not got better faster. When you're elected on your promise to turn things around, voters, not unreasonably, expect to see results. And yes, it was always going to be a big job, but they said they were up to the task, that they could do it. I don't think it is the opposition benches being doomsayers. They've done their damage. They're not saying much of anything at all. Labour knows all it has to do is stay schtum – the moment it opens its mouth and gets into trouble. So all they're doing is watching the Government trying to put its shoulder behind the big, sluggish beast that is the economy, and they're shoving it, and they're pushing it, and you've got the Finance Minister out the front dangling her carrots saying come on, up you get New Zealand economy, let's get cracking. And it's hibernating. It's in hibernation and it's not moving. And that must be very frustrating.  

There's a very good piece by Danyl McLauchlan in the New Zealand Listener, where he says at the moment the Coalition Government really only has itself to blame. I put that same question to Christopher Luxon when he was in. You're just waiting for the economic cycle. You're not doing anything magical or brilliant or wonderful. Yes, I like what you're doing with education very much. I like what you're doing with law and order very much. But when it comes to the economy, so far all I can see is that you're waiting for the natural cycle. There's not a lot going on. The Reserve Bank is confident lower interest rates will eventually help that inert, sluggish economy get off the front porch and start moving. It's identified numerous reasons why the cuts it's delivered in a year haven't spurred as much growth as some expected. That said, the Chief Economist Paul Conway said yesterday it's not our job to grow the economy. We're here for price stability. He said if you want to get growth going in the long run, it's about improving productivity in the economy. Monetary policy is not the instrument for that. We're about controlling demand to keep inflation low and stable. Don't look at us, he was basically saying, there is only so much that we can do. And sure, by lowering interest rates, by lowering the cash rate, thereby allowing banks to lower mortgage interest rates, that will leave some people who are coming up to setting mortgages with a bit more money in their pockets. It will allow some people to borrow money a bit more easily.  

But what is it going to take? I think people are a bit shell shocked after the past four years. And it is an economy of two halves – some people are doing really, really, really well, and good on them. But others, their pay packet arrives in their account and whoosh out it goes. You think you're getting ahead and then in comes the rates bill, or the insurance bill, or school fees, or what have you, and there is no extra for households to be jolly on. Others who might have got their noses ahead and have seen business start to pick up don't want to go through that again, so they're stockpiling like sensible squirrels. There was a lovely woman who rang in a couple of days ago and she was in painting and decorating. She said, I love people having money. I love people who've earned a lot of money, and have worked hard, and been lucky, or

Episode Transcript

Speaker 1 (00:06):
You're listening to the Carrywood and Mornings podcast from News Talks.

Speaker 2 (00:10):
He'd be. Finance Minister Nichola Willis all but invoked the
old adage the beatings will continue until morale improves. When
commenting on the state of the economy yesterday in a
stand up with Prime Minister Christopher Luxen after the Reserve
Bank cut the ocr by twenty five basis points to
three percent, she blamed the sluggish economy on doomsayers from

(00:34):
the opposition benchers who were talking the economy down, and
all but instructed Kiwi households to be more jolly.

Speaker 3 (00:42):
I am was conscious that households listen to merchants of misery
every day, most of them sit on the opposition poetic language.
Are you too like to be doomsayers and talk down
the New Zealand economy. I think it's been a really
tough time for chevy families. There's absolutely no denying that.
But we kind of have a choice. Do we talk

(01:03):
ourselves into an ongoing funk? Do we look ahead and
recognize that things will get better.

Speaker 2 (01:10):
People need to feel it, and I fully appreciate that
you know some parts of zee and feeling it and
other parts are not so. That was Nikola Willis and
Christopher Luxen after the Reserve Bank cut the ocr all
well and good, but on the same day she told
us to pull up our socks and perk up. Letcher

(01:30):
Building announced a four hundred and nineteen million dollar loss.
Kitchen Things, a premium appliant store that goes back to
nineteen eighty six, announced it was closing twelve stores. There
is a Kitchen Things in Hamilton that's trading by itself
and doing very well, thank you very much, and would
appreciate the sport. They are st asb to appoint receivers
and Carter Holt Harvey is proposing to close it's Nelson

(01:53):
saw Mill with the loss of one hundred and forty
two jobs. Willis and the rest of her government are
exasperated and frustrated that things have not got better faster.
When you're elected on your promise to turn things around,
though voters not unreasonably expect to see results, and yes,

(02:14):
it was always going to be a big job, but
they said they were up to the task, that they
could do it. I don't think it is the opposition
benches being doomsayers. They've done their damage. They're not saying
much of anything at all. Labour knows all it has
to do is stage still the moment it opens its

(02:36):
mouth and gets into trouble. So all they're doing is
watching the government trying to put its shoulder behind the
big sluggish beast that is the economy, and they're shoving
it and they're pushing it. And you've got the Finance
Minister out the front dangling a carrots and come on up,
you get New Zealand economy. Let's get cracking. And it's hibernating.

(03:00):
It's in hibernation and it's not moving and that must
be very But there's a very good piece by Donald mcgloughlin,
I believe in the New Zealand Listener where he says,
at the moment, the coalition government really only has itself
to blame. And I put that same question to Christopher
Luxen when he was in you're just waiting for the

(03:21):
economic cycle. You're not doing anything magical or brilliant or wonderful. Yes,
I like what you're doing with education very much. I
like what you're doing with law and order very much.
But when it comes to the economy, so far, all
I can see is that you're waiting for the natural cycle.
There's not a lot going on. The Reserve Bank is

(03:43):
confident lower interest rates will eventually help that inert, sluggish
economy get off the front porch and start moving. It's
identified numerous reasons why the cuts it's delivered in a
year haven't spurred as much growth as some expected. That
said the Chief economist, Paul Conway said, yes to day.

(04:07):
It's not our job to grow the economy. We're here
for price stability. He said, if you want to get
growth going in the long run, it's about improving productivity
in the economy. Monetary policy is not the instrument for that.
We're about controlling demand to keep inflation low and stable.
Don't look at us. He was basically saying, there is

(04:27):
only so much that we can do. And sure by
lowering interest rates, by lowering the cash rate, thereby allowing
banks to lower mortgage interest rates, that will leave some
people who are coming up to setting mortgages with a
bit more money in their pockets. It will allow some
people to borrow money a bit more easily. But what

(04:52):
is it going to take. I think people are a
bit shell shocked after the past four years, and it
is an economy of two halves. Some people are doing
really really really well, and good on them, But others
their paypacket arrives and it's like those little jump jets

(05:14):
that land on the big aircraft carriers in the middle
of the ocean and bounce straight off. There's your paypacket
into your account, whosh out it goes. You think you're
getting ahead, and then in comes the rate spill, or
in comes the insurance spill, or in comes you know,
school fees or what have you. There is no extra

(05:37):
for households to be jolly on. Others who might have
got their noses ahead and have seen business start to
pick up, think I don't want to go through that again.
So they're stockpiling like sensible squirrels. They're putting their little
nuts in a corner so that they've got a stockpile
so that they don't have to starve like that again.

(06:00):
There was a really lovely woman who I think she
rang in a couple of days ago, and she was
in the painting and decorating, and she said, I love
people having money. I love people who've earned a lot
of money and have worked hard and you know, been
lucky or however, They've got their money because they spend
it with us, and without them spending we don't have

(06:21):
a company. I don't have a business. Love rich people,
she said, And that's right. I mean you've got to
have that extra money so that the money go round
can continue. And right now people either don't have that money,
or if they do, they're a bit nervous about spending it.

(06:44):
God bless rich people who are go you. So I
would love to hear from you. If you are in business,
if you are a member of a key we household,
where are you at? Are you in a funk? I
don't think I'm being talked down by the opposition. That's
not how I feel. They're not ruining my buzz. They're

(07:08):
not dragging me down. I just need to get ahead
of the rates and the insurance. The mortgage rates have
come down a bit, so that's good. I think twenty
six will be okay, but that won't be any thanks
to the government or what it's done. To be perfectly honest.

Speaker 1 (07:28):
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