The Country 20/08/25: Christopher Luxon talks to Jamie Mackay

The PM ponders this afternoon’s OCR announcement, whether even strong economic growth can get the Govt’s finances back on track, Winston kicking Mallard to touch, Nicola’s power play and dad dancing!

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Episode Transcript

Speaker 1 (00:00):
Wednesdays on the Country, the PM kicks off the show.
It's official cash rate announcement to day. And I know
Prime Minister Christopher Luxon you can't say anything about this,
but let me put some words into your mouth. If acting,
I think he's still acting. Reserve Bank Governor Christian Hawk
speed drops it as we expect, by twenty five basis points,

(00:22):
but then he indicates that's where he's going to stop.
That is surely trouble for the economy.

Speaker 2 (00:29):
Look, I think when you look at a lot of
the economist reports, and you look at a lot of
even what the Reserve Bank said in their last meeting,
I get the sense that there's still downward momentum needed
on interest rates as well. So let's see what he
does today. As you quite rightly identify, Jamie, I can't
comment on it given the independence of the Reserve Bank,
but we certainly want to see a downward track on

(00:51):
interest rates. We've got inflation down. It's well within the
band now of the one to three percent. It will
float around a bit like it could hit three sent
in the next quarter. But you know what the bank
looks at is what's called medium term inflation and that's
how they base their assessment of interest rates. And so
you know, we're doing everything we can fiscally to get
inflation down. That durnes interest rates down. That gets the

(01:13):
growth up and running, and it gets people into work,
and that's that's the plan.

Speaker 1 (01:16):
There was an interesting column in the Herald yesterday that
said the economy's officially suffering from long COVID as opposed
to a COVID hangover, and the author Jan and I've
forgotten the name, for the second day in a row
said strong economic growth alone won't be enough to get
the government's finances back on track. And I know you're
going to disagree with this one as well. So she

(01:39):
was basically saying that there's only two solutions, more spending
cuts or increased taxes.

Speaker 2 (01:44):
Now I disagree. I mean, if you look at the
forecasts for the next four years, we're basically, you know there,
even today, the banks of economists are still projecting that
will grow the economy on average at two point seven percent,
just under three percent, and there's two hundred and forty
jobs that will be crowded off the back of that growth.
What New Zealand really needs is growth. I mean, this

(02:04):
is the harsh reality. You may not like it. I
don't like it, but that's the inheritance I got. You
got the biggest recession back since the early nineties. You
ended up with a COVID hangover because of that sixty
six billion dollar that was spent that we didn't get
anything for. And that is is a Treasury said last
week's you know, ended up driving making the cost living
worse and actually really upsetting our fiscal track and our

(02:27):
financial track for decades ahead. You know, that's the reality
of what we're trying to work our way through. You know,
we had good growth, if you remember at the end
of last year, we had really good growth in the
first quarter of this year, and then we had Liberation
Day in April with mister Trump. And as a result,
it's not that our bilateral trade is smacked around as much.
It's actually the fact that there's a loss of confidence
and sentiments, you know, because in business people don't want

(02:48):
to invest. That doesn't drive growth, and that's happening all
around the world at the moment, not just here in
the run. So that's all we got to work.

Speaker 1 (02:55):
Out way and good political news this week, Winston has
kicked Trevor Mallard to touch not before time? Why didn't
you do it earlier?

Speaker 2 (03:03):
Well, those are decisions that the Minister Foreign Affairs makes
about ambassadorial appointments across the across the world. I think
Winston's had a pretty principled line, which is that actually
politicians have formed politicians versus career diplomats. We're better off
with career diplomats in general, and so I think that's
been a strong, a strong principle of his. But look,
I mean, those are questions you have to treat to him.

Speaker 1 (03:25):
Mall that is the least diplomatic man in the world.

Speaker 2 (03:30):
I hear you, brother, But those the calls for the
ministert to making. I fully trust with them to make
the right call. So I'll leave it.

Speaker 1 (03:38):
You're happy to be the MPCE and how wrong or
on that one? A couple of the lighthearted ones or
are they lighthearted? To finish? On Nikola making the power
play for your job? And of course the dad dancing
with hippocines.

Speaker 2 (03:50):
What were you thinking, Nate, when you got a thousand
people in a room and the presenter calls you up
on stage? Is not much hiding nowhere to hide? I
thought well By. Partisanship doesn't break out much, and there's
not much I agree with chrisip Comes on percifically about
how to run an economy. But if we're both going down,
when miles will go down together? So I thought, and.

Speaker 1 (04:10):
You did, and you did? What about Nicholas power play?
Was that just a Freudian slip and accident in time?

Speaker 2 (04:17):
No, it was just really unfair. I think the only
the media beat up, you know, basically how Ittt started
yesterday was that she came and you know, we have
to go to a caucus run and all the press
gallery down here in Wellington, you know, just grab us
as we're going through what's called the tiles part of
Parliament and whoever gets their first, you know, it's in
front of the microphones and so I don't know, but
I don't know how it happened. I actually haven't followed
the story, to be honest too much. You know, we're

(04:39):
pretty focused on what we've got to do, which is
Sixtus economy, and that's what we're focused on.

Speaker 1 (04:43):
Well, the Reserve Bank could go a long way today
by dropping it this afternoon, which they will, and then
dropping it another couple of times. Those are my words,
not yours, Prime Minister, thanks as always for your time.

Speaker 2 (04:54):
Great to be with you, Jamie, you have a great week, mate,