July 7, 2025 • 6 mins
We ask an independent economist what he thinks the Reserve Bank will do ahead of tomorrow's OCR announcement. We also discuss Trump's tariffs, the Alliance Group capital raise and how we can fund National Super.
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Episode Transcript
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Speaker 1 (00:00):
He is opening the batting on the country today. Independent
economists Cameron Bagray and I'm not sure I want to
ask him this question because I think I know his
answer and I won't like it. Host see our announcement
from the Reserve Bank tomorrow. Cameron, surely, surely they've got
to drop the economy is stagnating.
Speaker 2 (00:17):
Well, the economy is still struggling. The Reserve Bank just
put out what's called their now cast, which is a
timely measurer of GDP, and it suggests the economy might
have taken a step backwards in the June quarter after
getting positive growth in the March in December twenty twenty
four quarter, So she's not plain sailing out there, and
(00:37):
those growth numbers suggest give it another tweak. But the
Rezerom Bank's got an inflation target and headline inflation has
started to move back up. Yeah, we've still seeing disinflationary
pressures from construction retailing still a pretty tough gig. But yea,
food prices are up. You have a look at medical charges,
electricity rates. There's an underlying sticky element to inflation that's
(01:01):
moving headline inflation and core inflation. Musics I think are
going to start to move back up. So if as
a reserve bank, I'll be pulling a David Longer and
stopping for a cup of tea and having a bit
of a weight and watch. Yeah.
Speaker 1 (01:11):
But under that scenario, and to my mind economics one
oh one, Cameron, so I can speak with some authority
on this, the cures worse than the disease.
Speaker 2 (01:21):
Well, I guess if you go back to the fundamental
problem that we've got with the New Zealand, if if
you want to grow a little bit faster and not
create inflation rey pressure, then you've got to have a
productive economy. And if I go back and have a
look at productivity growth ten years ago, average productivity growth
needs to be one point four percent every year. It's
now average zero point two zero point three percent or
(01:43):
so for the past decade. That's a fundamental problem where
your economy cannot grow through fast without creating inflationary pressure.
And when you see the experts as a share a
GDP tends to be the explicit that tends to be
more productive part of your economy. When that part is
a smaller part of your overall economy, then you take
(02:04):
a bit of a productivity hit. We need to get
that zero point two zero point three percent number back
up to one percent. Otherwise, a so called economical revival upturm.
It's not going to look too flash because we're just
going to create an inflation pressure on the other side,
and the reserve BP we're not like that.
Speaker 1 (02:20):
A lot of the money markets don't like Trump's latest
announcement on tariffs. We're a trading nation. Any imposition on
free trade around the world is not good for us.
Speaker 2 (02:31):
Put simply, no, it's not. And we're the tube international
roulet table, so we're beholding to what's going on around
the globe. We had a mighty tail and at New
Zealand's back over the sort of nineteen nineties, the two
thousand era where the world played nice. It was all
about globalization, outsourcing, connectivity, free trade agreements, all that sort
(02:54):
of stuff. We called it the Great Moderation because by
a large the globallycin the citizens, the countries, we all
got on reasonably well. What we're seeing now is it
a lot more self interest as opposed to group interest.
And that's an economic model or a scenario where globalization
is reversing. People are starting to look a lot more
(03:17):
about onshoing as opposed to offshoring. Security is a big theme.
Security and food energy technology. One of those plays into
U zealand strength in regard to the production of food.
So we've got to work out how we're going to
get more involved in this different economic environment. But power
based policies, anything to do with protectionism tends the favored
(03:40):
big countries over small countries, and unfortunately is not a
big country. We're a small one.
Speaker 1 (03:44):
What are you hearing about the capital raise for their
alliance group?
Speaker 2 (03:50):
Oh, there's rumors of Yeah. People told me that apparently
there were three outlets that are looking over it. But
I guess if I sit back and you look at
the bigger picture. We saw livestock slaughtering numbers for the
month of May twenty twenty five, and I think cares
cattles down ten to twenty percent on May twenty twenty four.
(04:10):
Sheep lambs were down thirty to forty percent on May
twenty four. Overall numbers with down sort of thirty percent.
The lines gets through capitalized, is it going to do
anything to sort out the overcapacity within the sector. The
answer is no, there's still a structural problem there that
needs to be addressed.
Speaker 1 (04:29):
Now I see the NBR as reporting Irish company Dawn
Meats might put in a significant investment and they'll need
one as well. So really interesting we' when I watch
the space one more to quickly finish on. It's a
bit of a topic desure at the moment. I talked
to Antonio Watson on the show yesterday about this. This
is national super Do we raise the age of eligibility
(04:51):
or do we means test it or do we just
not be brave and sit where we are and go
slowly broke.
Speaker 2 (04:59):
Well, we don't go broke because at the end of
the day, we'll be able believers that we can pull.
And that's either either crunch other parts of expenditure, so education,
police defense won't be grown up as a shary GDP,
there'll be declining as a shary GDP to increasing YU
(05:19):
zeal on superannuation sort of costs, or else we increase taxes.
But there we cannot continue to pile on the credit
card and the form of debts, so at some state
we're gonna have to buy the bullock. Now, my personal
view is at the retirement age needs to get linked
to life expectancy and I also believe that at the
end of the day that the wealthy state's there for
(05:40):
the needing, not the greedy. You know, people don't like
that sort of phrase, but the end of the day,
you know, there's the money go around here. And at
the moment, we're pumping more money into the gray force,
iron us one superinnuation than what we are pumping into
the entire education sector acrossing is one. Now, I challenge
anybody just think, think whether that makes common sense, because
(06:01):
it makes no sense to me that we're pumping more
and more money into the grave force and that's coming
with the expense of the future workforce.
Speaker 1 (06:07):
Cameron Bagriy always good to get your opinion. I hope
you're wrong on that OCR announcement tomorrow we will wait
and see. Thanks for your time, all the best, genty
He is opening the batting on the country today. Independent
economists Cameron Bagray and I'm not sure I want to
ask him this question because I think I know his
answer and I won't like it. Host see our announcement
from the Reserve Bank tomorrow. Cameron, surely, surely they've got
to drop the economy is stagnating.
Speaker 2 (00:17):
Well, the economy is still struggling. The Reserve Bank just
put out what's called their now cast, which is a
timely measurer of GDP, and it suggests the economy might
have taken a step backwards in the June quarter after
getting positive growth in the March in December twenty twenty
four quarter, So she's not plain sailing out there, and
(00:37):
those growth numbers suggest give it another tweak. But the
Rezerom Bank's got an inflation target and headline inflation has
started to move back up. Yeah, we've still seeing disinflationary
pressures from construction retailing still a pretty tough gig. But yea,
food prices are up. You have a look at medical charges,
electricity rates. There's an underlying sticky element to inflation that's
(01:01):
moving headline inflation and core inflation. Musics I think are
going to start to move back up. So if as
a reserve bank, I'll be pulling a David Longer and
stopping for a cup of tea and having a bit
of a weight and watch. Yeah.
Speaker 1 (01:11):
But under that scenario, and to my mind economics one
oh one, Cameron, so I can speak with some authority
on this, the cures worse than the disease.
Speaker 2 (01:21):
Well, I guess if you go back to the fundamental
problem that we've got with the New Zealand, if if
you want to grow a little bit faster and not
create inflation rey pressure, then you've got to have a
productive economy. And if I go back and have a
look at productivity growth ten years ago, average productivity growth
needs to be one point four percent every year. It's
now average zero point two zero point three percent or
(01:43):
so for the past decade. That's a fundamental problem where
your economy cannot grow through fast without creating inflationary pressure.
And when you see the experts as a share a
GDP tends to be the explicit that tends to be
more productive part of your economy. When that part is
a smaller part of your overall economy, then you take
(02:04):
a bit of a productivity hit. We need to get
that zero point two zero point three percent number back
up to one percent. Otherwise, a so called economical revival upturm.
It's not going to look too flash because we're just
going to create an inflation pressure on the other side,
and the reserve BP we're not like that.
Speaker 1 (02:20):
A lot of the money markets don't like Trump's latest
announcement on tariffs. We're a trading nation. Any imposition on
free trade around the world is not good for us.
Speaker 2 (02:31):
Put simply, no, it's not. And we're the tube international
roulet table, so we're beholding to what's going on around
the globe. We had a mighty tail and at New
Zealand's back over the sort of nineteen nineties, the two
thousand era where the world played nice. It was all
about globalization, outsourcing, connectivity, free trade agreements, all that sort
(02:54):
of stuff. We called it the Great Moderation because by
a large the globallycin the citizens, the countries, we all
got on reasonably well. What we're seeing now is it
a lot more self interest as opposed to group interest.
And that's an economic model or a scenario where globalization
is reversing. People are starting to look a lot more
(03:17):
about onshoing as opposed to offshoring. Security is a big theme.
Security and food energy technology. One of those plays into
U zealand strength in regard to the production of food.
So we've got to work out how we're going to
get more involved in this different economic environment. But power
based policies, anything to do with protectionism tends the favored
(03:40):
big countries over small countries, and unfortunately is not a
big country. We're a small one.
Speaker 1 (03:44):
What are you hearing about the capital raise for their
alliance group?
Speaker 2 (03:50):
Oh, there's rumors of Yeah. People told me that apparently
there were three outlets that are looking over it. But
I guess if I sit back and you look at
the bigger picture. We saw livestock slaughtering numbers for the
month of May twenty twenty five, and I think cares
cattles down ten to twenty percent on May twenty twenty four.
(04:10):
Sheep lambs were down thirty to forty percent on May
twenty four. Overall numbers with down sort of thirty percent.
The lines gets through capitalized, is it going to do
anything to sort out the overcapacity within the sector. The
answer is no, there's still a structural problem there that
needs to be addressed.
Speaker 1 (04:29):
Now I see the NBR as reporting Irish company Dawn
Meats might put in a significant investment and they'll need
one as well. So really interesting we' when I watch
the space one more to quickly finish on. It's a
bit of a topic desure at the moment. I talked
to Antonio Watson on the show yesterday about this. This
is national super Do we raise the age of eligibility
(04:51):
or do we means test it or do we just
not be brave and sit where we are and go
slowly broke.
Speaker 2 (04:59):
Well, we don't go broke because at the end of
the day, we'll be able believers that we can pull.
And that's either either crunch other parts of expenditure, so education,
police defense won't be grown up as a shary GDP,
there'll be declining as a shary GDP to increasing YU
(05:19):
zeal on superannuation sort of costs, or else we increase taxes.
But there we cannot continue to pile on the credit
card and the form of debts, so at some state
we're gonna have to buy the bullock. Now, my personal
view is at the retirement age needs to get linked
to life expectancy and I also believe that at the
end of the day that the wealthy state's there for
(05:40):
the needing, not the greedy. You know, people don't like
that sort of phrase, but the end of the day,
you know, there's the money go around here. And at
the moment, we're pumping more money into the gray force,
iron us one superinnuation than what we are pumping into
the entire education sector acrossing is one. Now, I challenge
anybody just think, think whether that makes common sense, because
(06:01):
it makes no sense to me that we're pumping more
and more money into the grave force and that's coming
with the expense of the future workforce.
Speaker 1 (06:07):
Cameron Bagriy always good to get your opinion. I hope
you're wrong on that OCR announcement tomorrow we will wait
and see. Thanks for your time, all the best, genty
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