August 26, 2025 • 7 mins
The Prime Minister ponders the positive effects Fonterra’s $3.2 billion capital return sugar hit could have for the rural economy. Plus, whether he overstepped the mark by chewing the ear of the Reserve Bank? We also ask what an acceptable economic growth rate is, and whether Todd McClay wasted his time talking tariffs in Washington.
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Episode Transcript
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Speaker 1 (00:00):
Wednesdays on the Country, The PM kicks off the show,
Christopher Luxen, do you agree with your mentor John Keith,
that's where Fonterra goes. New Zealand goes on. How much
of a boost will the three point two billion dollar
capital return from Fonterra, So it's farmers shareholders be for
the New Zealand economy.
Speaker 2 (00:19):
Good afternoon, Well, good afternoon, Jam, You're good to be
with you as always. Look, there's no doubt about it.
I just think the last week have been really good
news for agriculture. Again. You've got the three point two
billion out of the three point eight billion sale coming
straight back and being returned to Shahold of Farmers. That's
going to be a massive boost. You know it's going
to be. It's a really snifkin amount of money. And
more importantly, it's the right strategy for Fonterra to be
(00:41):
pushing out on the business to business side of things,
or the food service side of the things where there's
better margins and that's what's been helping. You had another
fifteen cent rise i think to the global dairy price
and then we had a twenty five basic point interest
rate cut and also the Reserve Bank coming out with
proposals based off our FEC Primary Industry Selectmmittee inquiry saying, look,
they're going to look at risk adjustment for key sectors
(01:03):
meaning agriculture, but also you know, potentially lighten those capital
rule requirements on banks, which actually will put it down
with pressure interest rates again. So you know, I think
that's been I think all of that is really good.
And certainly if you're in the South Island primary industries rural,
you're feeling some effects of growth, which is excellent. But
if you're sitting in Auckland, it's still very tough.
Speaker 1 (01:23):
No one likes the corrector. It's actually up to four
point two billion dollars now that we've got the bigger
deal across the line.
Speaker 2 (01:30):
Yes, of course he's at another four undred million on top.
Speaker 1 (01:32):
Yes, good news, look well done you and it's about time.
But did you overstep the mark talking about the Reserve Bank?
Did you get into Christian Hawksby's air Did you chew
it big time?
Speaker 2 (01:46):
No? Look, I've seen all the communes about it. But yeah,
the thing i'd say up front, and I said it
in that interview with Mike Hosking as well, was that
look respect the independens the Reserve Bank. I don't direct
them on monetary policy, but we do have a very
formal meeting, you know, every couple of months with the
Reserve Bank governor, the Minister of Finance and myself, and
it's an opportunity, frankly, for us to each exchange our review,
(02:08):
you know, our prospectives and what we're in, our views
on the economy, and what we think we're seeing. They're
always pretty engaging compensations that occasionally pretty robust, but they're
pretty They're very useful exchanges. And you know, I understand
my role, which is I'm here to drive fiscal policy.
They are there to drive monetary policy. We need the
two working in sync, which has happened you know the
(02:29):
time of my government. We can have lots of you know,
they also have good access to data. They talk to
a bunch of different stakeholders. I'm essentially one of those
stakeholders and I find them engaging, useful conversations. But I
don't direct them to tell or tell them what to do.
I can't do that under law. And also, frankly, our
governors know that, and they are pretty independent and they
(02:50):
wouldn't do so under any prime minister. Doing that in
New Zealand, past or present or future.
Speaker 1 (02:55):
Reserve banks a bit of a shambles. Really, I'm looking
at the doubling the Auckland Office had. This is despite
cutting a fifth of its staff, a fourteen point five
million dollar fit out. I mean, they're basically a whole
lot of nerds setting they could sit in the basement
somewhere and do the same job.
Speaker 2 (03:14):
Yeah, that was utterly unacceptable because I don't think any
kV would find that spending on office space for two
hundred staff or or some of the two hundred staff
acceptable at all. But basically that is sort of a
little bit of the problem that I've inherited, right, that
is a legacy of the previous governments. They have five
year funding agreements between the government and the Reserve Bank
of New Zealand, and that presided over a massive increase
(03:34):
in the bank's funding but also massive increase in staff numbers.
And the unfortunate Minister of Finance doesn't personally approve the
bank's expenditure. That's the job of the Governor and also
the Reserve Bank Board. You might remember a month ago,
we know we have a new five year funding agreement
that we have negotiated with the board that has lowered
expenses by twenty five percent and it's half the capital
(03:54):
budget that the Reserve Bank wanted. So we now expect
the Bank, frankly, to explore options to g right revenue
from that space in Auckland and face to sudden lease
or do other things then Soviet.
Speaker 1 (04:06):
I'm reading from the New Zealand Herald. Trade Minister Todd
McLay confirms New Zealand's concerns over US tariff's fall on
the affairs. Was it a waste of an affair sending
him to Washington?
Speaker 2 (04:19):
No, absolutely not. I mean you've got to have daily,
ongoing relationships with trade ministers all around the world, and
you know, really what happened there was that he was
invited by his counterpart, Jennison Greer, he gets on very
well with He has a good personal relationship as well
as professional one, and that was really an ongoing relationship
and around you know, and dialogue, which is really important. So, yes,
(04:41):
we can disagree on tariffs, and we do. We know
the President's very fixed on his views and it's unlikely
to change. But even so there are still things like
non tariff trade barriers to discuss in particular around dairy
and and other things that you know are just normal
everyday business that you know Todd has done a good
job on I think in the first year, just to
give you a feel for I think I got rid
of almost seven hundred million dollars worth of non tariff
(05:02):
barriers across our different trading relationships. So you know that's
important that we just haven't ongoing dialar We can agree
to disagree on the tariff situation and we'll continue to
make our position clear on that, but also we've got
to crack on and actually work through other trade issues
as well, and that's important that those relationships are in place.
Speaker 1 (05:20):
Growth rates for the New Zealand economy two point four
percent this year, three point one percent next year. What's
an acceptable growth rate?
Speaker 2 (05:29):
Well, I mean, essentially the forecast is still on track
for what we took what we've talked about back at
the budget, which is two point seven percent average over
that each of the four years in the plan ahead,
and that creates about two hundred and forty thousand extra
job So you know, the story, Jamie's quite interesting because
we got some growth in quarter four last year before Christmas,
(05:50):
we got really quite good growth in the first January
February March this year. Then we had Independence Day in April,
and it's not so much the bipartisan trade between New
Zealand and the year less it's impacted because it's still
up six or seven percent, But what it actually is
is just the uncertainty, the chaos at that causes and
the loss of confidence and sentiment, and we certainly felt
that through that three month period April May June, so
(06:13):
I suspect the economy came back a bit. But we're
now growing the economy again this quarter, and as we
go onto the last quarter of the year, which will
be October November December, we're expecting strong in good growth
there as well. So you know, it has been too speed.
We're all South Island. Primary industry is great, growing strongly. Auckland,
Wellington more challenge, but we've got manufacturing something to come on.
(06:35):
File thinks I think to the investment boost, we've got
a heap of infrastructure projects, which of course drives lots
of activity for tradees and others involved in those projects.
So you know, I think the outlook is still really
is very promising. And honestly, I know it's been a
very difficult and tough time as we've dealt with the recession,
dealt with the COVID hangover, dealt with international tariffs. But
actually New Zealand I think is incredibly well positioned for
(06:57):
the future.
Speaker 1 (06:57):
What are you hearing finally about Stuart Nash stand for
New Zealand first, will Winston? Will Winston stand for it?
Will Shane be jealous?
Speaker 2 (07:07):
Well? They sound like perfectly good questions to put Winston
when your next talk to them. But I've just focused
on my own party people, and then I'm focusing on
the New Yenged people. They're being Prime Minister.
Speaker 1 (07:19):
Well, I'm glad you said you're not focused on getting
the barnacles off the boat, because we've banned that on
this show.
Speaker 2 (07:26):
I got to bring you a new cliche, don't I.
I think you need a new one.
Speaker 1 (07:29):
I think you need a new one each week. Look,
thank you very much for your time, really appreciate it.
Speaker 2 (07:33):
Great, real you, Jamie. Take care
Wednesdays on the Country, The PM kicks off the show,
Christopher Luxen, do you agree with your mentor John Keith,
that's where Fonterra goes. New Zealand goes on. How much
of a boost will the three point two billion dollar
capital return from Fonterra, So it's farmers shareholders be for
the New Zealand economy.
Speaker 2 (00:19):
Good afternoon, Well, good afternoon, Jam, You're good to be
with you as always. Look, there's no doubt about it.
I just think the last week have been really good
news for agriculture. Again. You've got the three point two
billion out of the three point eight billion sale coming
straight back and being returned to Shahold of Farmers. That's
going to be a massive boost. You know it's going
to be. It's a really snifkin amount of money. And
more importantly, it's the right strategy for Fonterra to be
(00:41):
pushing out on the business to business side of things,
or the food service side of the things where there's
better margins and that's what's been helping. You had another
fifteen cent rise i think to the global dairy price
and then we had a twenty five basic point interest
rate cut and also the Reserve Bank coming out with
proposals based off our FEC Primary Industry Selectmmittee inquiry saying, look,
they're going to look at risk adjustment for key sectors
(01:03):
meaning agriculture, but also you know, potentially lighten those capital
rule requirements on banks, which actually will put it down
with pressure interest rates again. So you know, I think
that's been I think all of that is really good.
And certainly if you're in the South Island primary industries rural,
you're feeling some effects of growth, which is excellent. But
if you're sitting in Auckland, it's still very tough.
Speaker 1 (01:23):
No one likes the corrector. It's actually up to four
point two billion dollars now that we've got the bigger
deal across the line.
Speaker 2 (01:30):
Yes, of course he's at another four undred million on top.
Speaker 1 (01:32):
Yes, good news, look well done you and it's about time.
But did you overstep the mark talking about the Reserve Bank?
Did you get into Christian Hawksby's air Did you chew
it big time?
Speaker 2 (01:46):
No? Look, I've seen all the communes about it. But yeah,
the thing i'd say up front, and I said it
in that interview with Mike Hosking as well, was that
look respect the independens the Reserve Bank. I don't direct
them on monetary policy, but we do have a very
formal meeting, you know, every couple of months with the
Reserve Bank governor, the Minister of Finance and myself, and
it's an opportunity, frankly, for us to each exchange our review,
(02:08):
you know, our prospectives and what we're in, our views
on the economy, and what we think we're seeing. They're
always pretty engaging compensations that occasionally pretty robust, but they're
pretty They're very useful exchanges. And you know, I understand
my role, which is I'm here to drive fiscal policy.
They are there to drive monetary policy. We need the
two working in sync, which has happened you know the
(02:29):
time of my government. We can have lots of you know,
they also have good access to data. They talk to
a bunch of different stakeholders. I'm essentially one of those
stakeholders and I find them engaging, useful conversations. But I
don't direct them to tell or tell them what to do.
I can't do that under law. And also, frankly, our
governors know that, and they are pretty independent and they
(02:50):
wouldn't do so under any prime minister. Doing that in
New Zealand, past or present or future.
Speaker 1 (02:55):
Reserve banks a bit of a shambles. Really, I'm looking
at the doubling the Auckland Office had. This is despite
cutting a fifth of its staff, a fourteen point five
million dollar fit out. I mean, they're basically a whole
lot of nerds setting they could sit in the basement
somewhere and do the same job.
Speaker 2 (03:14):
Yeah, that was utterly unacceptable because I don't think any
kV would find that spending on office space for two
hundred staff or or some of the two hundred staff
acceptable at all. But basically that is sort of a
little bit of the problem that I've inherited, right, that
is a legacy of the previous governments. They have five
year funding agreements between the government and the Reserve Bank
of New Zealand, and that presided over a massive increase
(03:34):
in the bank's funding but also massive increase in staff numbers.
And the unfortunate Minister of Finance doesn't personally approve the
bank's expenditure. That's the job of the Governor and also
the Reserve Bank Board. You might remember a month ago,
we know we have a new five year funding agreement
that we have negotiated with the board that has lowered
expenses by twenty five percent and it's half the capital
(03:54):
budget that the Reserve Bank wanted. So we now expect
the Bank, frankly, to explore options to g right revenue
from that space in Auckland and face to sudden lease
or do other things then Soviet.
Speaker 1 (04:06):
I'm reading from the New Zealand Herald. Trade Minister Todd
McLay confirms New Zealand's concerns over US tariff's fall on
the affairs. Was it a waste of an affair sending
him to Washington?
Speaker 2 (04:19):
No, absolutely not. I mean you've got to have daily,
ongoing relationships with trade ministers all around the world, and
you know, really what happened there was that he was
invited by his counterpart, Jennison Greer, he gets on very
well with He has a good personal relationship as well
as professional one, and that was really an ongoing relationship
and around you know, and dialogue, which is really important. So, yes,
(04:41):
we can disagree on tariffs, and we do. We know
the President's very fixed on his views and it's unlikely
to change. But even so there are still things like
non tariff trade barriers to discuss in particular around dairy
and and other things that you know are just normal
everyday business that you know Todd has done a good
job on I think in the first year, just to
give you a feel for I think I got rid
of almost seven hundred million dollars worth of non tariff
(05:02):
barriers across our different trading relationships. So you know that's
important that we just haven't ongoing dialar We can agree
to disagree on the tariff situation and we'll continue to
make our position clear on that, but also we've got
to crack on and actually work through other trade issues
as well, and that's important that those relationships are in place.
Speaker 1 (05:20):
Growth rates for the New Zealand economy two point four
percent this year, three point one percent next year. What's
an acceptable growth rate?
Speaker 2 (05:29):
Well, I mean, essentially the forecast is still on track
for what we took what we've talked about back at
the budget, which is two point seven percent average over
that each of the four years in the plan ahead,
and that creates about two hundred and forty thousand extra
job So you know, the story, Jamie's quite interesting because
we got some growth in quarter four last year before Christmas,
(05:50):
we got really quite good growth in the first January
February March this year. Then we had Independence Day in April,
and it's not so much the bipartisan trade between New
Zealand and the year less it's impacted because it's still
up six or seven percent, But what it actually is
is just the uncertainty, the chaos at that causes and
the loss of confidence and sentiment, and we certainly felt
that through that three month period April May June, so
(06:13):
I suspect the economy came back a bit. But we're
now growing the economy again this quarter, and as we
go onto the last quarter of the year, which will
be October November December, we're expecting strong in good growth
there as well. So you know, it has been too speed.
We're all South Island. Primary industry is great, growing strongly. Auckland,
Wellington more challenge, but we've got manufacturing something to come on.
(06:35):
File thinks I think to the investment boost, we've got
a heap of infrastructure projects, which of course drives lots
of activity for tradees and others involved in those projects.
So you know, I think the outlook is still really
is very promising. And honestly, I know it's been a
very difficult and tough time as we've dealt with the recession,
dealt with the COVID hangover, dealt with international tariffs. But
actually New Zealand I think is incredibly well positioned for
(06:57):
the future.
Speaker 1 (06:57):
What are you hearing finally about Stuart Nash stand for
New Zealand first, will Winston? Will Winston stand for it?
Will Shane be jealous?
Speaker 2 (07:07):
Well? They sound like perfectly good questions to put Winston
when your next talk to them. But I've just focused
on my own party people, and then I'm focusing on
the New Yenged people. They're being Prime Minister.
Speaker 1 (07:19):
Well, I'm glad you said you're not focused on getting
the barnacles off the boat, because we've banned that on
this show.
Speaker 2 (07:26):
I got to bring you a new cliche, don't I.
I think you need a new one.
Speaker 1 (07:29):
I think you need a new one each week. Look,
thank you very much for your time, really appreciate it.
Speaker 2 (07:33):
Great, real you, Jamie. Take care
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