October 20, 2025 • 21 mins
Inflation has risen even further.
Latest Stats NZ figures show inflation reached 3% in the year to September.
Economists had tipped to hit the top end of the Reserve Bank’s target band of between 1 and 3%.
But, some say the period of circa 3% could be short-lived.
At the same time, Labour has broken its silence on what it thinks will help the economy.
Today on The Front Page, NZ Herald business editor at large Liam Dann is with us to break down what all of this means for you, and your wallet.
Follow The Front Page on iHeartRadio, Apple Podcasts, Spotify or wherever you get your podcasts.
You can read more about this and other stories in the New Zealand Herald, online at nzherald.co.nz, or tune in to news bulletins across the NZME network.
Host: Chelsea Daniels
Editor/Producer: Richard Martin
Producer: Jane Yee
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:05):
Kiota.
Speaker 2 (00:06):
I'm Chelsea Daniels and this is the Front Page, a
daily podcast presented by the New Zealand Herald. Inflation has
risen even further. The latest stats and Z figures show
inflation reached three percent in the year to September. Economists
(00:27):
had it tipped to hit the top end of the
Reserve Bank's target band of between one and three percent,
but some say the period of circa three percent.
Speaker 3 (00:38):
Could be short lived.
Speaker 2 (00:39):
At the same time, labor has broken its silence on
what it thinks will help the economy today on the
front page, ends ed Herald Business Editor at Large Liam
dan Is with us to break down what all of
this means for you and your wallet. So, Liam, the
(01:00):
consumers price index increased three percent in the twelve months
to September. What has contributed to this increase?
Speaker 3 (01:09):
Yeah, so well, a few really basic things actually that
will make have made it feel like it's a lot
worse than three percent. So power prices is the real headline.
Eleven point three percent I think for the annual rate.
That was the highest annual increase we've had in New
(01:29):
Zealand since nineteen eighty nine, so thirty six years. So
that people really felt that. I mean, bear in mind
that we've been through this. This is stuff that we've
already had the headlines of people complaining about the power
prices and we're just now counting the costs. But we
had rates up eight point eight percent across the board roughly,
and they tend to get counted once a year in
(01:51):
the September quarter, so that's when we see them contribute.
Speaker 1 (01:55):
They're actually were up.
Speaker 3 (01:56):
Twelve something twelve percent the year earlier, but that's still
a lot. It's still a high increase. And food prices,
I think we're up four point six percent for the year,
so that's still ahead of the three percent. People obviously
have been feeling that with dairy prices, butter beef, some
of those things that are getting good export dollars for
New Zealand but are making it painful for shoppers and
(02:18):
for consumers in the short term. So when you look
at those three things, they're sort of unavoidable basics for
a lot of people, especially the power and the food,
and so yeah, that is a problem, but also it's
sort of seen by the Reserve Bank is sort of
a shorter term thing. So I think that three percent
(02:39):
number has landed where it was largely expected to be
and shouldn't cause too much problem for the Reserve Bank
for those looking to hopefully see another interest rate cut.
Speaker 2 (02:51):
Yeah, I mean I saw economists were kind of across
the board saying it was going to reach that top
end of the higher bracket that the Reserve wants to
kind of keep it into. Are you surprised that it's
not over three percent, to be honest.
Speaker 1 (03:05):
Yeah, it could have been. I mean.
Speaker 3 (03:08):
The other thing is, you know, those power prices. We
had a high wholesale price, there was weather conditions, but
we also had a thing that comes through. They do
a sort of a regulated price increase based on power
distribution costs and that comes through every five years. So
that's another one often there. So there's a reasonable you know,
(03:29):
there's a bit of an increase in tradable inflation, what
they call tradable inflation, which is those things that we
don't have much control over in the economy, food and
power and stuff, but non tradable which is in the
core of the economy, services, wages, what we're paying each other,
that is coming down. I mean, that's always a little
bit higher anyway, but it is coming down quite sharply
(03:51):
because the economy has been in such bad shape. So
I think economists could see that the things that push
prices down, recessionary forces that push prices down are sort
of happening. So I would say they're fairly confident that
this will be the peak of this cycle of inflation.
Speaker 2 (04:09):
In terms of how much aren't inflation is imported versus
domestically generated. What we would you say.
Speaker 3 (04:18):
To that, Well, that that is that split non tradable
and tradeable. So non tradable inflation tends to run a
bit higher, but that is coming off tradeable inflation, the
important inflation. We've had a pretty good year last year
on that, and that's come back with the food prices
(04:39):
and things, and so I think, but that some of
that tradeable inflation. I know we've got to be careful
because we tried to look through it after COVID and
it all exploded with inflation keeping on going and going.
But generally the Reserve Bank does look through that a
bit more because those are those international prices that are volatile.
Petrols and obvious one, but food, cobodity prices and some
(05:03):
of those other imports and things. They go up and
down a lot, and it would include power prices, and
that is some means that the Reserve Bank can ignore
those to some extent and it focuses on something called
core inflation, which is a measure of inflation where the
extremes cut off and looking at what it's how it's
tracking over the long term or medium to long term,
(05:25):
and they'll be more comfortable with.
Speaker 2 (05:26):
That, right, so the Reserve Bank doesn't seem too spooked
over there. Should we see another OCR cut next month?
Speaker 1 (05:34):
Yeah, I think we should.
Speaker 3 (05:35):
I think we probably will, whether that's it, and you know,
if the economy, you know, continues to sort of struggle
to get going and the recovery hasn't hasn't taken off,
we might Some economists see some risk of another cut
maybe in February, or that the Reserve Bank might do
fifty basis points in November, but.
Speaker 1 (05:57):
I don't know.
Speaker 3 (05:58):
I think there are some signs that it's things are
starting to turn. A lot of the bad news is
in the rear vision mirror. It's just the way we
collect data, so we're seeing it at the tail end.
You know, unemployment will rise probably in the next lot
of stats, and it will be ugly as well, so
you know it's a line call. But the Reserve Bank's
primary job now single mandate, is to look at inflation.
(06:20):
So I think probably one more cut and done, and
they should probably signal to New Zealanders that they feel
they're done, because that will encourage New Zealanders to lock
in their interest rates and actually take some of the
savings and we can all move forward a bit.
Speaker 4 (06:42):
Well, inflation is at three percent, it's within the band
of the Reserve Bank. Under labor it was at seven
point three percent, So we have broad inflation down and
just under eighty months or eighty months two years, and
that's making a big difference if you care about working
people and who are doing it really tough. You actually
met an economy well, and you make sure you get
spending under controls, so you get inflation under controls, so
(07:03):
you get interest rates down. That's exactly the path that
we've been putting in place. So yeah, they wreck the economy.
Speaker 1 (07:08):
Let's be clear.
Speaker 4 (07:09):
They just spent more, tax more, borrowed more, and they'll
continue to do more of that going forward. But that
is what caused the pain and suffering that New Zealanders
are experiencing up and down this country.
Speaker 2 (07:20):
When everyday New Zealand is here that inflation is at
the top of the target range, what does that actually
mean for them day to day.
Speaker 3 (07:30):
Well, it's all about those basics, the food and power, rents,
I mean, rents was actually quite promising. Rents had dropped
to two point six percent annual increase and if you
look at it what's happening month or month, it's really
almost flat to zero. There are parts of the country
where rents will be coming down, so that's moving with
(07:50):
the property market and with mortgage rates coming down and
house prices being subdued. But yeah, I think the trouble
is for New Zealanders who spend most of their income
to live, they feel inflation a lot more acutely.
Speaker 1 (08:02):
So if you're if you've.
Speaker 3 (08:03):
Got a lot of money and you've got a lot
of discretion around you know, most of your spending and
your core living expenses are only thirty forty fifty percent
of your total income, then it doesn't matter if it
goes up three percent or five percent. You've still got
all this discretion at the top end. But if you're
spending all your money on living, and particularly if those
basics have gone up by more than three percent, you know,
(08:26):
you feel it completely. You feel all the inflation, and
so it hurts poorer people harder. And look, I think
New Zealanders more or less didn't really get over the
inflation shop post COVID. We moved pretty quickly into a
period of higher dairy prices and meat prices and things.
And so you know, when you hear New Zealander is
(08:48):
talking about it, a lot of people still feel like
we've just had this one long cost of living crisis.
Speaker 2 (08:53):
Do you think the Reserve Bank's current approach strikes the
right balance between controlling inflation but then also supporting growth.
Speaker 1 (09:03):
I think so.
Speaker 3 (09:04):
I mean, there's an argument that they've been a bit
slow to get interest rates down. The difficulty is they
do have a single mandate. They've got a single target.
The government changed that they used to have a target
that have a mandate that said you should weigh up
unemployment and inflation and consider those things. I mean, all
central banks will consider the big picture. But then if
(09:25):
your number one job is inflation, you can't take the
risk that it goes above three percent and becomes embedded
and gets hard.
Speaker 1 (09:33):
You know, it's hard to.
Speaker 3 (09:34):
Get down and I think central banks around the world
are a little bit feeling a little bit shell shopped
after the inflation that we had post COVID when it
got up to seven nine percent and all that stuff,
and it got away on us, and they do not
want to have to go through that kind of cycle
again where we're having to sort of do things to
get on top of inflation. So they just had to
(09:54):
be a bit cautious, unfortunately, and they couldn't just sort
of slash and burn. But it's looking I think, despite
this number, in some ways, it's looking a bit safer
for them.
Speaker 2 (10:07):
You're always so optimistic, though you always try and stay optimistic.
I mean, realistically, is twenty twenty six going to be
better or are we still riding the wave up into
the end of twenty twenty six twenty and then entering
twenty twenty seven.
Speaker 3 (10:22):
Well it gets a bit painful, actually, because I try
to be optimistic, but it's just taking so long.
Speaker 1 (10:29):
Even this ra all's going to preak.
Speaker 3 (10:31):
Yeah, and you know you'll see my columns will swing
between pessimism and optimism. But I think it is the
conditions are all in place. Interest rates are low enough
now to start stimulating the economy. There is all that
export money coming in from the dairy industry, the meat industry,
Kiwi fruit, even tourism is starting to pick up a bit.
(10:53):
It's sort of almost back at pre COVID levels, which
was a you know, a pretty good earner for the country.
So those things really ought to shift the economy. There's
a big deficit in confidence, you know, people are businesses
are ware of investing, people are shell shocked.
Speaker 1 (11:13):
I think.
Speaker 3 (11:14):
Unfortunately, the lagging statistics are things like the jobs, labor
market liquidations. You know, you're going to still see negative headlines,
You're going to see more liquidations of businesses.
Speaker 1 (11:25):
Unfortunately, you're going.
Speaker 3 (11:26):
To see more layoffs and rising unemployment, and that will
sort of keep a dampner on things probably into twenty
twenty six, just because we won't get statistics you know,
through for the well if unemployment peaks early next year,
we won't see those statistics till the middle of next year.
(11:48):
And I think that's really what's you know, the cost
of living is one stress, and then the other one
is people not being secure in their jobs, and so
people need to be secure in their jobs to start
spending because the money coming back through lower mortgage rates,
is going into savings and paying down mortgage while people
are worry that their earnings might not be around where
(12:10):
they want them. So it's a slow thing to get
the momentum rolling and get the confidence back.
Speaker 1 (12:16):
But yeah, I think it will happen.
Speaker 5 (12:26):
As a parent with two young kids, I worry a
lot about what kind of future they are going to
inherit from us. Unemployment's going up, inflation is going back
up again. More and more New Zealanders are simply giving
up and leaving the country while our economy shrinks, businesses close,
and opportunities seem to be disappearing. We need to turn
(12:47):
that around. We need to create a future that young
New Zealanders will want to be part of. A reason
for our young New Zealanders to come home after their OI,
a reason for them to stay in New Zealand because
they know they can get good, well paid jobs that
will create the sort of opportunities that they deserve.
Speaker 2 (13:10):
All right, So the Labor Party has announced to this
New Zealand Future Fund, which it is calling its plan
to back New Zealand's potential and create secure, well paid
jobs across the country. It'll do that by investing in
New Zealand infrastructure and businesses, lift productivity and reinvest by
seeding capital from a number of Crown assets, independent governance
(13:33):
of that and protecting core assets from privatization.
Speaker 3 (13:39):
Not a small task, No, yeah, I mean it's a
it's a big concept. It's a concept that's not new
in a way. I mean, it's like, it's interesting. This
is their first bit of economic policy that they put
out and it's how I described This is going to
be administered by the New Zealand Superfund, which has got
(13:59):
you know, billions of billions of dollars and invests wisely
and sensibly around the world and in New Zealand, but
doesn't want to go crazy in New Zealand because it
has to have a balanced portfolio and keep making money.
But I think that Labour's pitching this these are my words,
is a kind of a side hustle for the Superfund,
so that the Superfund would have a sort of like
(14:23):
a if you think of a big money manager, a
big fund having a boutique fund off to the side
that is very specifically for New Zealand businesses that's smart innovation,
probably tech, but it doesn't specify that exactly. It could
be for infrastructure and so much more of a New
Zealand and kind of focus, and you sort of spin
(14:45):
that off to the side. You have it managed by
the superfund. You know, they look at countries like Singapore
do it and they've been very successful and have you know,
billions of dollars worth of assets. So it's possible that
what you could you the goal is that you actually
make money because you're investing in these companies and taking
(15:05):
a stake as well as providing capital and support for
them to get going and boost the New Zealand economy.
The critics will say, and there'll be a hard criticism
from say the act Party and because they see that
as government's picking winners and they look at the failures
over time of governments doing that and sometimes governments get
(15:26):
it wrong. Why is the government trying to pick one
company over another and decide which one. Well, mon't be
the politicians, it'll be a board of investors as part
of a state fund. But yeah, that's sort of ideologically
opposed to that. It would sit quite well with the
way New Zealand first looks at the world in terms
of a state controlled investment is sort of a mixed model.
(15:50):
It's capitalism, but it's you know, with a state involvement
in capitalism.
Speaker 1 (15:56):
Well, I was going to.
Speaker 2 (15:56):
Say, the vibe really does give New Zealand first, not
the party, but putting New Zealand first, right, Winston would
quite like.
Speaker 1 (16:04):
Yeah, I mean, I think that'll work.
Speaker 3 (16:06):
I mean, in fact, even National could probably cope with
this kind of policy if it didn't have to have
act as a side partner. Because you hear Christopher Luxen
talk about countries like Singapore and Ireland. You know, all
these countries that have accelerated their growth with investment and innovation,
and Singapore is a classic example of one where they
(16:27):
really they save money and they put money back into
their own economy and their own tech companies and startups.
And you know, dare I say, it's kind of a
you know, it's not the communist Chinese, but it's a
very modern China does it very intensely as well. Modern
modern Chinese economy is very focused on picking winners special
(16:51):
zones where they build industry up and they put government
money into it. And it's it's a kind of a
sort of mixed model capitalism with the state involved. I mean, yeah,
this isn't a sort of a revolutionize the whole economy.
It's a very specific fund. I guess you know, it's
it's something that could work, and you leverage off the
(17:12):
superfund which has got this infrastructure for investment. So you
keep it very market focused and keep the disciplines there
to make sure that you're you're not just throwing money
at things, you're actually investing things in things that will
deliver a return. It's it's a high risk, higher risk
area of investment once you get in the closer you
(17:33):
get to seed funding. You know, it's like venture capital,
and you're you're you're investing in companies at a very
early stage, so there's a higher rate of failure. But
when one takes off and really does well, like literally
takes off like a rocket lab or going to say,
it can go on to be worth billions. So so
(17:53):
you know that the private investors that do that tend
to have a large portfolio. You need to sort of
maybe invest fifty things and if one or two of
them take off, you'll actually make your money back because
you've structured things in a very clever way. And that's
what this would need to do. It would need to
be very focused on sort of market disciplines and have
(18:15):
a really good investment.
Speaker 1 (18:17):
Team.
Speaker 3 (18:18):
And it's a good idea. I mean, I think that's
something that.
Speaker 2 (18:22):
Well, it's something that we've looked to Australia. Australia uses
the super Fun in much more diverse ways than we do, right,
And it's something that economists have been in toying with
for years.
Speaker 3 (18:33):
I mean, Labors mentioned the Ossie version and how they
do it, and they've talked also about pushing the New
Zealand super Fun to do a bit more infrastructure and
some of those things. And it does do a decent chunk,
but its primary job is to earn money for our
retirement savings, so it has to say a bit more
balanced and this is probably a way to sort of
(18:55):
silo out.
Speaker 1 (18:58):
This more sort of New Zealand focused.
Speaker 3 (19:01):
Innovative end steps. Yeah yeah, yeah, yeah, So I mean promising.
I mean I could, as I say, it's something that
could be a bipartisan thing. Act would hate it, so
I can't imagine national getting on board with it. But
I could imagine somewhere down the line if a Labor
government introduced this, it wouldn't be removed.
Speaker 1 (19:21):
Put it that way.
Speaker 2 (19:23):
Well, Hopkins has said that Luxe and I quote has
no plan for our economy and that he is relying
on house prices, the Reserve Bank and foreign investors to
turn everything around. What do you make of that statement.
Speaker 1 (19:36):
Well, that's sort of a plan.
Speaker 3 (19:40):
The foreign you know, the foreign investment thing is part
of the plan that they are trying to so I think,
you know, to be fair to luxel and that there
is he would argue that there's very much a plan.
They want to get the New Zealand economy into good
shape by dealing with some of the first issues, making
(20:00):
it a safe, stable place to invest and then get
out and a tract foreign investment. So they believe that
foreign investment can really do a lot of the job
that I guess they was talking about with this, and
there is a way to do it.
Speaker 1 (20:15):
That's the way Ireland's done it.
Speaker 3 (20:16):
So you probably could just about go, well, there's a
Singapore model and there's an Irish model. This government hasn't
got the money to quite do a full Irish model
because it involves cutting taxes for foreign investors, but it's
definitely trying to make it New Zealand more attractive for
foreign investment. They you know, I think it's a bit
unfair to say they're just relying on house prices because
(20:36):
you listen to Chris Bishop, he's sticking to his guns
that the flat to falling house prices are a good thing.
So look, the reality is house prices come back. It
probably helps the economy and helps the government. But I
don't think they're pushing that too hard. I mean, they've
been prepared to wear a fairly big downturn, so you know, look,
(20:58):
is there enough of a plan? Well, that's highly debatable,
but I think some of that was rhetoric from Chris Hipkins.
Speaker 2 (21:06):
Thanks for joining us, Liam Jeers. That's it for this
episode of The Front Page. You can read more about
today's stories and extensive news coverage at enzidherld dot co
dot nz. The Front Page is produced by Jane Ye
and Richard Martin, who is also our editor. I'm Chelsea Daniels.
(21:28):
Subscribe to the Front Page on iHeartRadio or wherever you
get your podcasts, and tune in tomorrow for another look
behind the headlines.
Kiota.
Speaker 2 (00:06):
I'm Chelsea Daniels and this is the Front Page, a
daily podcast presented by the New Zealand Herald. Inflation has
risen even further. The latest stats and Z figures show
inflation reached three percent in the year to September. Economists
(00:27):
had it tipped to hit the top end of the
Reserve Bank's target band of between one and three percent,
but some say the period of circa three percent.
Speaker 3 (00:38):
Could be short lived.
Speaker 2 (00:39):
At the same time, labor has broken its silence on
what it thinks will help the economy today on the
front page, ends ed Herald Business Editor at Large Liam
dan Is with us to break down what all of
this means for you and your wallet. So, Liam, the
(01:00):
consumers price index increased three percent in the twelve months
to September. What has contributed to this increase?
Speaker 3 (01:09):
Yeah, so well, a few really basic things actually that
will make have made it feel like it's a lot
worse than three percent. So power prices is the real headline.
Eleven point three percent I think for the annual rate.
That was the highest annual increase we've had in New
(01:29):
Zealand since nineteen eighty nine, so thirty six years. So
that people really felt that. I mean, bear in mind
that we've been through this. This is stuff that we've
already had the headlines of people complaining about the power
prices and we're just now counting the costs. But we
had rates up eight point eight percent across the board roughly,
and they tend to get counted once a year in
(01:51):
the September quarter, so that's when we see them contribute.
Speaker 1 (01:55):
They're actually were up.
Speaker 3 (01:56):
Twelve something twelve percent the year earlier, but that's still
a lot. It's still a high increase. And food prices,
I think we're up four point six percent for the year,
so that's still ahead of the three percent. People obviously
have been feeling that with dairy prices, butter beef, some
of those things that are getting good export dollars for
New Zealand but are making it painful for shoppers and
(02:18):
for consumers in the short term. So when you look
at those three things, they're sort of unavoidable basics for
a lot of people, especially the power and the food,
and so yeah, that is a problem, but also it's
sort of seen by the Reserve Bank is sort of
a shorter term thing. So I think that three percent
(02:39):
number has landed where it was largely expected to be
and shouldn't cause too much problem for the Reserve Bank
for those looking to hopefully see another interest rate cut.
Speaker 2 (02:51):
Yeah, I mean I saw economists were kind of across
the board saying it was going to reach that top
end of the higher bracket that the Reserve wants to
kind of keep it into. Are you surprised that it's
not over three percent, to be honest.
Speaker 1 (03:05):
Yeah, it could have been. I mean.
Speaker 3 (03:08):
The other thing is, you know, those power prices. We
had a high wholesale price, there was weather conditions, but
we also had a thing that comes through. They do
a sort of a regulated price increase based on power
distribution costs and that comes through every five years. So
that's another one often there. So there's a reasonable you know,
(03:29):
there's a bit of an increase in tradable inflation, what
they call tradable inflation, which is those things that we
don't have much control over in the economy, food and
power and stuff, but non tradable which is in the
core of the economy, services, wages, what we're paying each other,
that is coming down. I mean, that's always a little
bit higher anyway, but it is coming down quite sharply
(03:51):
because the economy has been in such bad shape. So
I think economists could see that the things that push
prices down, recessionary forces that push prices down are sort
of happening. So I would say they're fairly confident that
this will be the peak of this cycle of inflation.
Speaker 2 (04:09):
In terms of how much aren't inflation is imported versus
domestically generated. What we would you say.
Speaker 3 (04:18):
To that, Well, that that is that split non tradable
and tradeable. So non tradable inflation tends to run a
bit higher, but that is coming off tradeable inflation, the
important inflation. We've had a pretty good year last year
on that, and that's come back with the food prices
(04:39):
and things, and so I think, but that some of
that tradeable inflation. I know we've got to be careful
because we tried to look through it after COVID and
it all exploded with inflation keeping on going and going.
But generally the Reserve Bank does look through that a
bit more because those are those international prices that are volatile.
Petrols and obvious one, but food, cobodity prices and some
(05:03):
of those other imports and things. They go up and
down a lot, and it would include power prices, and
that is some means that the Reserve Bank can ignore
those to some extent and it focuses on something called
core inflation, which is a measure of inflation where the
extremes cut off and looking at what it's how it's
tracking over the long term or medium to long term,
(05:25):
and they'll be more comfortable with.
Speaker 2 (05:26):
That, right, so the Reserve Bank doesn't seem too spooked
over there. Should we see another OCR cut next month?
Speaker 1 (05:34):
Yeah, I think we should.
Speaker 3 (05:35):
I think we probably will, whether that's it, and you know,
if the economy, you know, continues to sort of struggle
to get going and the recovery hasn't hasn't taken off,
we might Some economists see some risk of another cut
maybe in February, or that the Reserve Bank might do
fifty basis points in November, but.
Speaker 1 (05:57):
I don't know.
Speaker 3 (05:58):
I think there are some signs that it's things are
starting to turn. A lot of the bad news is
in the rear vision mirror. It's just the way we
collect data, so we're seeing it at the tail end.
You know, unemployment will rise probably in the next lot
of stats, and it will be ugly as well, so
you know it's a line call. But the Reserve Bank's
primary job now single mandate, is to look at inflation.
(06:20):
So I think probably one more cut and done, and
they should probably signal to New Zealanders that they feel
they're done, because that will encourage New Zealanders to lock
in their interest rates and actually take some of the
savings and we can all move forward a bit.
Speaker 4 (06:42):
Well, inflation is at three percent, it's within the band
of the Reserve Bank. Under labor it was at seven
point three percent, So we have broad inflation down and
just under eighty months or eighty months two years, and
that's making a big difference if you care about working
people and who are doing it really tough. You actually
met an economy well, and you make sure you get
spending under controls, so you get inflation under controls, so
(07:03):
you get interest rates down. That's exactly the path that
we've been putting in place. So yeah, they wreck the economy.
Speaker 1 (07:08):
Let's be clear.
Speaker 4 (07:09):
They just spent more, tax more, borrowed more, and they'll
continue to do more of that going forward. But that
is what caused the pain and suffering that New Zealanders
are experiencing up and down this country.
Speaker 2 (07:20):
When everyday New Zealand is here that inflation is at
the top of the target range, what does that actually
mean for them day to day.
Speaker 3 (07:30):
Well, it's all about those basics, the food and power, rents,
I mean, rents was actually quite promising. Rents had dropped
to two point six percent annual increase and if you
look at it what's happening month or month, it's really
almost flat to zero. There are parts of the country
where rents will be coming down, so that's moving with
(07:50):
the property market and with mortgage rates coming down and
house prices being subdued. But yeah, I think the trouble
is for New Zealanders who spend most of their income
to live, they feel inflation a lot more acutely.
Speaker 1 (08:02):
So if you're if you've.
Speaker 3 (08:03):
Got a lot of money and you've got a lot
of discretion around you know, most of your spending and
your core living expenses are only thirty forty fifty percent
of your total income, then it doesn't matter if it
goes up three percent or five percent. You've still got
all this discretion at the top end. But if you're
spending all your money on living, and particularly if those
basics have gone up by more than three percent, you know,
(08:26):
you feel it completely. You feel all the inflation, and
so it hurts poorer people harder. And look, I think
New Zealanders more or less didn't really get over the
inflation shop post COVID. We moved pretty quickly into a
period of higher dairy prices and meat prices and things.
And so you know, when you hear New Zealander is
(08:48):
talking about it, a lot of people still feel like
we've just had this one long cost of living crisis.
Speaker 2 (08:53):
Do you think the Reserve Bank's current approach strikes the
right balance between controlling inflation but then also supporting growth.
Speaker 1 (09:03):
I think so.
Speaker 3 (09:04):
I mean, there's an argument that they've been a bit
slow to get interest rates down. The difficulty is they
do have a single mandate. They've got a single target.
The government changed that they used to have a target
that have a mandate that said you should weigh up
unemployment and inflation and consider those things. I mean, all
central banks will consider the big picture. But then if
(09:25):
your number one job is inflation, you can't take the
risk that it goes above three percent and becomes embedded
and gets hard.
Speaker 1 (09:33):
You know, it's hard to.
Speaker 3 (09:34):
Get down and I think central banks around the world
are a little bit feeling a little bit shell shopped
after the inflation that we had post COVID when it
got up to seven nine percent and all that stuff,
and it got away on us, and they do not
want to have to go through that kind of cycle
again where we're having to sort of do things to
get on top of inflation. So they just had to
(09:54):
be a bit cautious, unfortunately, and they couldn't just sort
of slash and burn. But it's looking I think, despite
this number, in some ways, it's looking a bit safer
for them.
Speaker 2 (10:07):
You're always so optimistic, though you always try and stay optimistic.
I mean, realistically, is twenty twenty six going to be
better or are we still riding the wave up into
the end of twenty twenty six twenty and then entering
twenty twenty seven.
Speaker 3 (10:22):
Well it gets a bit painful, actually, because I try
to be optimistic, but it's just taking so long.
Speaker 1 (10:29):
Even this ra all's going to preak.
Speaker 3 (10:31):
Yeah, and you know you'll see my columns will swing
between pessimism and optimism. But I think it is the
conditions are all in place. Interest rates are low enough
now to start stimulating the economy. There is all that
export money coming in from the dairy industry, the meat industry,
Kiwi fruit, even tourism is starting to pick up a bit.
(10:53):
It's sort of almost back at pre COVID levels, which
was a you know, a pretty good earner for the country.
So those things really ought to shift the economy. There's
a big deficit in confidence, you know, people are businesses
are ware of investing, people are shell shocked.
Speaker 1 (11:13):
I think.
Speaker 3 (11:14):
Unfortunately, the lagging statistics are things like the jobs, labor
market liquidations. You know, you're going to still see negative headlines,
You're going to see more liquidations of businesses.
Speaker 1 (11:25):
Unfortunately, you're going.
Speaker 3 (11:26):
To see more layoffs and rising unemployment, and that will
sort of keep a dampner on things probably into twenty
twenty six, just because we won't get statistics you know,
through for the well if unemployment peaks early next year,
we won't see those statistics till the middle of next year.
(11:48):
And I think that's really what's you know, the cost
of living is one stress, and then the other one
is people not being secure in their jobs, and so
people need to be secure in their jobs to start
spending because the money coming back through lower mortgage rates,
is going into savings and paying down mortgage while people
are worry that their earnings might not be around where
(12:10):
they want them. So it's a slow thing to get
the momentum rolling and get the confidence back.
Speaker 1 (12:16):
But yeah, I think it will happen.
Speaker 5 (12:26):
As a parent with two young kids, I worry a
lot about what kind of future they are going to
inherit from us. Unemployment's going up, inflation is going back
up again. More and more New Zealanders are simply giving
up and leaving the country while our economy shrinks, businesses close,
and opportunities seem to be disappearing. We need to turn
(12:47):
that around. We need to create a future that young
New Zealanders will want to be part of. A reason
for our young New Zealanders to come home after their OI,
a reason for them to stay in New Zealand because
they know they can get good, well paid jobs that
will create the sort of opportunities that they deserve.
Speaker 2 (13:10):
All right, So the Labor Party has announced to this
New Zealand Future Fund, which it is calling its plan
to back New Zealand's potential and create secure, well paid
jobs across the country. It'll do that by investing in
New Zealand infrastructure and businesses, lift productivity and reinvest by
seeding capital from a number of Crown assets, independent governance
(13:33):
of that and protecting core assets from privatization.
Speaker 3 (13:39):
Not a small task, No, yeah, I mean it's a
it's a big concept. It's a concept that's not new
in a way. I mean, it's like, it's interesting. This
is their first bit of economic policy that they put
out and it's how I described This is going to
be administered by the New Zealand Superfund, which has got
(13:59):
you know, billions of billions of dollars and invests wisely
and sensibly around the world and in New Zealand, but
doesn't want to go crazy in New Zealand because it
has to have a balanced portfolio and keep making money.
But I think that Labour's pitching this these are my words,
is a kind of a side hustle for the Superfund,
so that the Superfund would have a sort of like
(14:23):
a if you think of a big money manager, a
big fund having a boutique fund off to the side
that is very specifically for New Zealand businesses that's smart innovation,
probably tech, but it doesn't specify that exactly. It could
be for infrastructure and so much more of a New
Zealand and kind of focus, and you sort of spin
(14:45):
that off to the side. You have it managed by
the superfund. You know, they look at countries like Singapore
do it and they've been very successful and have you know,
billions of dollars worth of assets. So it's possible that
what you could you the goal is that you actually
make money because you're investing in these companies and taking
(15:05):
a stake as well as providing capital and support for
them to get going and boost the New Zealand economy.
The critics will say, and there'll be a hard criticism
from say the act Party and because they see that
as government's picking winners and they look at the failures
over time of governments doing that and sometimes governments get
(15:26):
it wrong. Why is the government trying to pick one
company over another and decide which one. Well, mon't be
the politicians, it'll be a board of investors as part
of a state fund. But yeah, that's sort of ideologically
opposed to that. It would sit quite well with the
way New Zealand first looks at the world in terms
of a state controlled investment is sort of a mixed model.
(15:50):
It's capitalism, but it's you know, with a state involvement
in capitalism.
Speaker 1 (15:56):
Well, I was going to.
Speaker 2 (15:56):
Say, the vibe really does give New Zealand first, not
the party, but putting New Zealand first, right, Winston would
quite like.
Speaker 1 (16:04):
Yeah, I mean, I think that'll work.
Speaker 3 (16:06):
I mean, in fact, even National could probably cope with
this kind of policy if it didn't have to have
act as a side partner. Because you hear Christopher Luxen
talk about countries like Singapore and Ireland. You know, all
these countries that have accelerated their growth with investment and innovation,
and Singapore is a classic example of one where they
(16:27):
really they save money and they put money back into
their own economy and their own tech companies and startups.
And you know, dare I say, it's kind of a
you know, it's not the communist Chinese, but it's a
very modern China does it very intensely as well. Modern
modern Chinese economy is very focused on picking winners special
(16:51):
zones where they build industry up and they put government
money into it. And it's it's a kind of a
sort of mixed model capitalism with the state involved. I mean, yeah,
this isn't a sort of a revolutionize the whole economy.
It's a very specific fund. I guess you know, it's
it's something that could work, and you leverage off the
(17:12):
superfund which has got this infrastructure for investment. So you
keep it very market focused and keep the disciplines there
to make sure that you're you're not just throwing money
at things, you're actually investing things in things that will
deliver a return. It's it's a high risk, higher risk
area of investment once you get in the closer you
(17:33):
get to seed funding. You know, it's like venture capital,
and you're you're you're investing in companies at a very
early stage, so there's a higher rate of failure. But
when one takes off and really does well, like literally
takes off like a rocket lab or going to say,
it can go on to be worth billions. So so
(17:53):
you know that the private investors that do that tend
to have a large portfolio. You need to sort of
maybe invest fifty things and if one or two of
them take off, you'll actually make your money back because
you've structured things in a very clever way. And that's
what this would need to do. It would need to
be very focused on sort of market disciplines and have
(18:15):
a really good investment.
Speaker 1 (18:17):
Team.
Speaker 3 (18:18):
And it's a good idea. I mean, I think that's
something that.
Speaker 2 (18:22):
Well, it's something that we've looked to Australia. Australia uses
the super Fun in much more diverse ways than we do, right,
And it's something that economists have been in toying with
for years.
Speaker 3 (18:33):
I mean, Labors mentioned the Ossie version and how they
do it, and they've talked also about pushing the New
Zealand super Fun to do a bit more infrastructure and
some of those things. And it does do a decent chunk,
but its primary job is to earn money for our
retirement savings, so it has to say a bit more
balanced and this is probably a way to sort of
(18:55):
silo out.
Speaker 1 (18:58):
This more sort of New Zealand focused.
Speaker 3 (19:01):
Innovative end steps. Yeah yeah, yeah, yeah, So I mean promising.
I mean I could, as I say, it's something that
could be a bipartisan thing. Act would hate it, so
I can't imagine national getting on board with it. But
I could imagine somewhere down the line if a Labor
government introduced this, it wouldn't be removed.
Speaker 1 (19:21):
Put it that way.
Speaker 2 (19:23):
Well, Hopkins has said that Luxe and I quote has
no plan for our economy and that he is relying
on house prices, the Reserve Bank and foreign investors to
turn everything around. What do you make of that statement.
Speaker 1 (19:36):
Well, that's sort of a plan.
Speaker 3 (19:40):
The foreign you know, the foreign investment thing is part
of the plan that they are trying to so I think,
you know, to be fair to luxel and that there
is he would argue that there's very much a plan.
They want to get the New Zealand economy into good
shape by dealing with some of the first issues, making
(20:00):
it a safe, stable place to invest and then get
out and a tract foreign investment. So they believe that
foreign investment can really do a lot of the job
that I guess they was talking about with this, and
there is a way to do it.
Speaker 1 (20:15):
That's the way Ireland's done it.
Speaker 3 (20:16):
So you probably could just about go, well, there's a
Singapore model and there's an Irish model. This government hasn't
got the money to quite do a full Irish model
because it involves cutting taxes for foreign investors, but it's
definitely trying to make it New Zealand more attractive for
foreign investment. They you know, I think it's a bit
unfair to say they're just relying on house prices because
(20:36):
you listen to Chris Bishop, he's sticking to his guns
that the flat to falling house prices are a good thing.
So look, the reality is house prices come back. It
probably helps the economy and helps the government. But I
don't think they're pushing that too hard. I mean, they've
been prepared to wear a fairly big downturn, so you know, look,
(20:58):
is there enough of a plan? Well, that's highly debatable,
but I think some of that was rhetoric from Chris Hipkins.
Speaker 2 (21:06):
Thanks for joining us, Liam Jeers. That's it for this
episode of The Front Page. You can read more about
today's stories and extensive news coverage at enzidherld dot co
dot nz. The Front Page is produced by Jane Ye
and Richard Martin, who is also our editor. I'm Chelsea Daniels.
(21:28):
Subscribe to the Front Page on iHeartRadio or wherever you
get your podcasts, and tune in tomorrow for another look
behind the headlines.
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