March 27, 2025 • 16 mins
The financial year is coming to an end, and that means from next Tuesday, a lot of Kiwis will be getting more money in their wallets.
April 1st is when the Annual General Adjustment takes place – when benefits and minimum wage increase to account for wage growth or inflation.
While benefits are getting a 2.22 percent rise, and Super and the Veterans Pension gets a 3.51 percent increase, minimum wage is only going up by 1.5 percent.
As people continue to feel the sting of cost of living, what impact will these changes have – and how well is our economy performing at the moment?
To talk us through it all, today on The Front Page we’re joined by NZ Herald business editor at large Liam Dann.
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
Sound Engineer/Producer: Richard Martin
Producer: Ethan Sills
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:06):
Kyota. I'm Chelsea Daniels and this is the Front Page,
a daily podcast presented by the New Zealand Herald. The
financial year is coming to an end and that means
from next Tuesday a lot of kiwis will be getting
more money in their wallets. April first is when the
annual General Adjustment takes place, when benefits and minimum wage
(00:30):
increases to account for wage growth or inflation. While benefits
are getting a two point two two percent rise and
Super and the Veteran's Pension gets a three point five
to one percent increase, minimum wage is only going up
by one point five percent As people continue to feel
the sting of the cost of living crisis. What impact
(00:51):
will these changes have and how well is our economy
performing at the moment? To talk us through it all
today on the Front Page where joined by Enzad Herald
Business Editor at Large Liam Dan. Liam, let's start with
the minimum wage. It's going up one point five percent
(01:14):
to twenty three dollars fifty. That's not in line with
inflation and instead in line with the NZ first National
Coalition agreement to moderate those increases. What sort of impact
is this lower increase than usual going to have? It
was two percent last year and it impacts between eighty
and one hundred and forty five thousand workers.
Speaker 2 (01:34):
Hey yeah, I mean it's a very deliberate thing to
take it up by lower than the rate of inflation,
because I guess the argument is, you know, I've had
some big minimum wage increases during the labor government period.
The argument is, whether it's you believe it or not,
that in doing that, they've increased business costs and added
to inflation, and you get into kind of a a
spiral of inflation where so you know, you're going to
(01:57):
the cafe to get coffee, if the workers there, if
the wages have gone up significantly, then you're paying more
for the coffee. Just that increases inflation, so your wages
have to go up to cover the inflation. And so
they're trying to push back against that inflationary spiral. I mean,
there'll be listeners who will point out that that seems
a bit unfair. You know, we're looking at the people
who are earning the lowest amounts in the economy. But
(02:19):
it's in a different environment to when minimum wages were
going up previously. We've got basically unemployment is rising. There's
a shortage of jobs, and so you'd imagine what we're
starting to see wage growth more diminished across the board,
So people aren't getting the wage rises they would have
got because they just don't have the ability to switch
job the same way. So I guess that is in
(02:42):
line with a trend for lower wage growth, and the
hope would be that people are still able to by
beating the inflationary cycle, getting the economy going, people are
able to get better jobs and they're more higher paying
jobs out there, So that'd be the government's logic for that.
Speaker 1 (02:56):
The other main increase is for the support for beneficiaries.
Raddle off some numbers for you here. Job seeker support
is going up roughly two point two two percent. For
sole parents, that's an increase of nine dollars to five
hundred and five dollars eighty For couples with children, that
increases seven dollars and six cents to three hundred and
(03:18):
twenty four dollars sixty one. For me bel over twenty
five without kids, those increases bring them to three hundred
and sixty one thirty one if single, and three hundred
and seven forty two if in a couple. For veterans
and those on super they're getting a three percent increase,
bringing it up to one thousand and seventy six dollars
(03:38):
and eighty four cents a fortnite and eight hundred and
twenty eight thirty four for those in couples. The government
has touted these increases as reflecting the cost of living,
but these happen every year, don't they.
Speaker 2 (03:51):
Yeah. I mean, look, they're basically in line with inflation
and a little bit pets, a little bit more generous for superinuitants.
But yeah, again, you've got a government that's struggling with
balancing the books, doesn't have a lot of money, is
actually dealing with more people on benefits because of the
situation with unemployment, so they're looking at a much higher cost.
I think they obviously felt politically that the minimum they
(04:13):
could do would be to match inflation and not have
those beneficiaries going backwards, because they really are some of
the poorest people out there. But yeah, look, it's in
a very tough environment for the government. They just don't
have a lot of money to spend, unless, of course,
they were to sort of change their debt limits and
all that sort of thing. But politically there's a lot
of pushback against that, a lot of concern about the
(04:34):
level of national debt. So they've got these constraints they
I guess, you know, it's a center right government. It's
really trying to restrict the sort of relative value of
benefits relative to work. I mean, they're trying to create jobs.
They're trying to create incentives for people to find jobs.
The flaw in the argument is the rising unemployment. They
(04:54):
need to be creating jobs so that there are alternatives
there for people on benefits, and se to be several
months away from that.
Speaker 1 (05:01):
People.
Speaker 2 (05:02):
You know, the economists don't see unemployment peaking until the
second half of this year, or perhaps perhaps earlier, perhaps
in the middle of this year, and then hopefully we'll
see some employment creation and a more flexible job market,
and that will mean that people have more opportunity.
Speaker 3 (05:19):
Our strong expectation is that those who are able to
work should work, and that more people who are working
and the fewer who are on welfare, the better for
them and their future, the better for their families, the
better for the economy, and the better for New Zealand.
We will do everything everything that we can to support
people off welfare and into work and ultimately a better
life for themselves and for their families. Under our government,
(05:41):
we are making clear our expectation that those who can
work should be taking all reasonable steps to find a job,
and those who do not will face consequences.
Speaker 1 (05:53):
And politically as well. I guess they're not going to
be losing any of their voter base by keeping beneficiary
increase is at a minimum.
Speaker 2 (06:00):
Hey, you'd imagine not a huge amount. I can't Politically,
I'm not sure what the split is for beneficiaries voting
for center right parties. But yeah, I mean there is
some politics to it. I mean it certainly they want
to be seen to be disincentivizing the benefits and encouraging
people to look for work, to get into work. That's
(06:21):
been a real mantra for the government. As I say,
just that slight flow in the problem that the unemployment
rate is rising, there are more people going on to
job seeker benefits because there isn't the employment being created
right now now. The government will argue I'm sure that
growth is coming, that we've seen the economy come out
of recession. The thing is, say this a lot. The
labor market tends to lag. It's one of the last
(06:42):
things to turn in an economic cycle. So, you know,
touch Wood hopeful that in the next few months will
see some progress there.
Speaker 1 (06:50):
Power prices are also going up a lot. Actually from Tuesday,
the average household's bill will go up by ten dollars
a month this year, and then for the next four
years it'll go up by five dollars a month. What's
happening behind the scenes to necessitate this change.
Speaker 2 (07:06):
Yeah, that's going to feel quite rough to a lot
of households. Well, there's a few different things. One is Transpower,
the lines company that looks after the national infrastructure grid,
has said that look at they've got to go up
by ten dollars a month, and so those charges will
be passed through to consumers via the power companies. So
that's part of it. But also some of the power
companies I've seen, for example, Mercury has said, you know,
(07:30):
because of other factors like needing to invest in more
power generation and invest in more you know, I guess
that means wind farms, solar, all that sort of stuff,
they need to put prices up. And also it's been
a relatively dry summer, so lakes are low, so the
wholesale prices are up a bit as well, so people
are going to I mean that's more more of a
gradual thing, but combined, people are going to feel that.
(07:51):
You know, people are still very sensitive about inflation. We
talked before about benefits going up by the inflation rate. Well,
you know, the inflation rate isn't just a uniform thing
that people experience. They experience it differently. And some people,
if they're paying a lot for power, and if they're
also facing increases for council rates and insurance bills, maybe
feeling like inflation is still a real problem and they're
(08:12):
really still feeling the cost of living crisis. The official
stats will tell you that it's back under control at
two point two percent an average two point two percent,
which is about where central banks want inflation to be.
But I think they really need to keep it down
there for a long time before people start to feel
like they've got through this sort of cost of living crunch.
I think generally people are feeling like there is still
(08:33):
a cost of living crisis out there.
Speaker 1 (08:45):
The interest on student loan payments is also going.
Speaker 2 (08:49):
Our pay Yeah. I don't think it's the interest so much,
it's the amount that you have to pay so while
you're in New Zealand, student loans are interest free. But
what they've got it done is there is an incremental
increase to the amount that you'll have to pay out
of your wages. So effectively they're saying to people that
you'll have to pay them back a little bit faster.
(09:09):
I don't think it's a lot. I think it was
like something like a dollar twenty a week or something.
But that's possibly you could say a good thing because
you know, okay, it's another squeeze on your wallet on
the weekly basis, but not by a huge amount. But
it does mean that you're actually paying off the principle
faster and getting that loan under control. So I guess
the government is keen to get the balances down, so
they haven't adjusted the thresholds that would sort of keep
(09:31):
the extra payments from going up. They've left it there
so that you are having to pay a little bit more.
But yeah, if it helps people get their loans paid
off quicker, then that's not such a bad thing.
Speaker 1 (09:40):
And this one won't impact the average keyw but the
active investor plus visa is seeing some changes as well.
I believe what is that.
Speaker 2 (09:48):
This is part of a policy by the government to
effectively attract more wealthy people into New Zealand with the
hope that they'll be investing in the productive end of
theonomy and creating the jobs which we talked about needing earlier.
So they've introduced two new investment categories, Growth and Balanced.
(10:09):
And so if you've got a minimum investment of five
million dollars and prepared to put that into what they
consider sort of highly productive parts of the economy, so
like tech startups and all that sort of thing, investing
in New Zealand business basically, then there is a visa
a immigration visa category available to you to come and
(10:29):
live in New Zealand. There's also a sort of a
balanced category for investors over a five year term. The
growth ones over a three year term, the balanced one
allows you to have a bit more sort of boring investment,
so that includes property and bonds and things, but you've
got to bring in ten million dollars. And I guess
this is part of a view that you know, we
need some more dynamic capital in this economy. You know,
(10:51):
we've got the banks that will lend for housing and
for some business stuff, but we don't have a large
amount of capital that it's going into startups and new business,
and often that into the economy is finding it harder
to get money to get up and running, to get
things going. And so yeah, I guess the government's hoping
that that will bring in these kind of wealthy individuals
and they will be able to push along our productivity
(11:14):
in the economy.
Speaker 4 (11:17):
It is solid and the numbers do not lie. Not
only was it a positive number, but it was a
far bigger number than anyone was predicted. So let's take
the good news when it comes. Mike. There's always someone
who can think of a nancy negative way of looking
at it. But actually, this is an economy that has
been bouncing along the bottom for a very long time,
and now we are turning the corner. Let's celebrate that
(11:40):
it's set to continue. Let's have a positive mindset.
Speaker 1 (11:44):
Liam. All these cash boosts and changes are welcome for
the economy, I'm sure, But how is it actually performing
at the moment. We were in recession a few cycles ago,
and I understand from the last data we just weeaked
out of it.
Speaker 2 (11:58):
Oh it wasn't a bad it was the bad results.
There was zero point seven, So We definitely bounced out
of recession. We didn't bounce back to where we were previously,
because the two previous quarters saw the economy shrink by
about two point one percent. So we back up zero
point seven percent. We are hopefully on a path of
(12:19):
more sustained growth, so perhaps a few more quarters and
the economy will be as big as it was before
we went into recession. So it actually takes a while
to come back to that level. Yeah, so it's it's
still feels like a tough economy because you know, that
was a big recession. They were talking about it being
the biggest slump not counting the COVID crunch since since
nineteen ninety one, which was a really rough time. But
(12:40):
it is progress, so is it is a first step
on the path of recovery. So we have inflation under control,
hopefully again touchwood that doesn't flare up again. We've got
the economy out of recession. Really that the last piece
of the puzzle is probably jobs and to some extent,
confidence in the economy. So I think consumers in particular
are still feeling nervous about the state of the economy.
(13:02):
We've seen that in some consumer confidence surveys recently that
they just don't quite match where some of the other
more positive economic data is sitting. And I think that's
probably twofold one. That overhang of inflation. People still feeling
like even though the stats tell us inflation is under control,
it still feels like there is a cost of living issue.
And then it's that uncertainty around jobs. People aren't confident
(13:24):
about switching jobs. They may be worried about their own job,
and in fact some people are losing their jobs and
the numbers on job seeker is going up. So until
that piece comes into place, and I really, you know,
be hopeful that we see at peak and that some
of this positivity from growth coming back to the economy
(13:44):
flows through. So you know, it's a sort of cautiously
optimistic tone. Yeah, And of.
Speaker 1 (13:49):
Course the ocr was cut further last month. What are
economists predicting in terms of more cuts at the moment,
especially now that Adrian Or is out as a Reserve
Bank governor.
Speaker 2 (14:00):
Yeah, I mean it was interesting to see the governor go.
It was a big story, but I don't think it'll
change the outlook for the Reserve Bank in the near future.
They've sort of penciled in a twenty five basis point
cut next month and then another one in May, and
that might be where they pause, so you know, so
that's another fifty basis points to come out. But economists
are saying, well, it's not necessarily going to drop mortgage
(14:23):
rates that much further because they're already priced in.
Speaker 3 (14:26):
There.
Speaker 2 (14:26):
Some movement on international borrowing costs also also affecting things,
so in some ways, you know, it might be getting
to the point where some of the best mortgage rates
we're going to see for a while out there now
or very soon. And an interesting phenomenon economists have noticed
is that there is a really high percentage in historic
terms for New Zealand of people on either floating mortgage
(14:48):
rates or on really short term fixed rates because people
have been holding off fixing longer because they're hoping that
the rates will come down further. And that's probably made
sense for the last few months. That means that there's
actually a lot of people who aren't yet getting the
full benefit of the rates cuts. They're they're sort of
holding off locking in and to take the benefit. They
want to wait until they sort of get the best deal.
And I think it will become apparent to more people
(15:10):
that it's time to lock in fairly soon. I mean,
I don't want to pick it exactly, but you know,
we'll see a lot of people locking into those lower rates,
and so that's where money's going back into people's pockets,
and that's really going to help assist with the recovery.
So we haven't yet seen it boost house prices much,
for example, and then and that may be to do
with people holding off on booking in those lower rates.
(15:32):
But you know, some of the things we've talked about
for April one this year, certainly not as much money
coming back to people, some things like the power prices,
money coming out of people's pockets. But if we see
a large number of mortgage holders fixing on lower rates
over the next few months, then that's going to be
a lot more money coming into the households and that
should hopefully boost consumer confidence and add to the momentum
(15:53):
in the economy, which is just still pretty fragile at
the moment.
Speaker 1 (15:57):
Thanks for joining us, Liam, Cheers. That's it for this
episode of the Front Page. You can read more about
today's stories and extensive news coverage at enzdherld dot co
dot MZ. The Front Page is produced by Ethan Sills
and Richard Martin, who is also a sound engineer. I'm
(16:20):
Chelsea Daniels. Subscribe to the Front Page on iHeartRadio or
where if you get your podcasts, and tune in on
Monday for another look behind the headlines.
Kyota. I'm Chelsea Daniels and this is the Front Page,
a daily podcast presented by the New Zealand Herald. The
financial year is coming to an end and that means
from next Tuesday a lot of kiwis will be getting
more money in their wallets. April first is when the
annual General Adjustment takes place, when benefits and minimum wage
(00:30):
increases to account for wage growth or inflation. While benefits
are getting a two point two two percent rise and
Super and the Veteran's Pension gets a three point five
to one percent increase, minimum wage is only going up
by one point five percent As people continue to feel
the sting of the cost of living crisis. What impact
(00:51):
will these changes have and how well is our economy
performing at the moment? To talk us through it all
today on the Front Page where joined by Enzad Herald
Business Editor at Large Liam Dan. Liam, let's start with
the minimum wage. It's going up one point five percent
(01:14):
to twenty three dollars fifty. That's not in line with
inflation and instead in line with the NZ first National
Coalition agreement to moderate those increases. What sort of impact
is this lower increase than usual going to have? It
was two percent last year and it impacts between eighty
and one hundred and forty five thousand workers.
Speaker 2 (01:34):
Hey yeah, I mean it's a very deliberate thing to
take it up by lower than the rate of inflation,
because I guess the argument is, you know, I've had
some big minimum wage increases during the labor government period.
The argument is, whether it's you believe it or not,
that in doing that, they've increased business costs and added
to inflation, and you get into kind of a a
spiral of inflation where so you know, you're going to
(01:57):
the cafe to get coffee, if the workers there, if
the wages have gone up significantly, then you're paying more
for the coffee. Just that increases inflation, so your wages
have to go up to cover the inflation. And so
they're trying to push back against that inflationary spiral. I mean,
there'll be listeners who will point out that that seems
a bit unfair. You know, we're looking at the people
who are earning the lowest amounts in the economy. But
(02:19):
it's in a different environment to when minimum wages were
going up previously. We've got basically unemployment is rising. There's
a shortage of jobs, and so you'd imagine what we're
starting to see wage growth more diminished across the board,
So people aren't getting the wage rises they would have
got because they just don't have the ability to switch
job the same way. So I guess that is in
(02:42):
line with a trend for lower wage growth, and the
hope would be that people are still able to by
beating the inflationary cycle, getting the economy going, people are
able to get better jobs and they're more higher paying
jobs out there, So that'd be the government's logic for that.
Speaker 1 (02:56):
The other main increase is for the support for beneficiaries.
Raddle off some numbers for you here. Job seeker support
is going up roughly two point two two percent. For
sole parents, that's an increase of nine dollars to five
hundred and five dollars eighty For couples with children, that
increases seven dollars and six cents to three hundred and
(03:18):
twenty four dollars sixty one. For me bel over twenty
five without kids, those increases bring them to three hundred
and sixty one thirty one if single, and three hundred
and seven forty two if in a couple. For veterans
and those on super they're getting a three percent increase,
bringing it up to one thousand and seventy six dollars
(03:38):
and eighty four cents a fortnite and eight hundred and
twenty eight thirty four for those in couples. The government
has touted these increases as reflecting the cost of living,
but these happen every year, don't they.
Speaker 2 (03:51):
Yeah. I mean, look, they're basically in line with inflation
and a little bit pets, a little bit more generous for superinuitants.
But yeah, again, you've got a government that's struggling with
balancing the books, doesn't have a lot of money, is
actually dealing with more people on benefits because of the
situation with unemployment, so they're looking at a much higher cost.
I think they obviously felt politically that the minimum they
(04:13):
could do would be to match inflation and not have
those beneficiaries going backwards, because they really are some of
the poorest people out there. But yeah, look, it's in
a very tough environment for the government. They just don't
have a lot of money to spend, unless, of course,
they were to sort of change their debt limits and
all that sort of thing. But politically there's a lot
of pushback against that, a lot of concern about the
(04:34):
level of national debt. So they've got these constraints they
I guess, you know, it's a center right government. It's
really trying to restrict the sort of relative value of
benefits relative to work. I mean, they're trying to create jobs.
They're trying to create incentives for people to find jobs.
The flaw in the argument is the rising unemployment. They
(04:54):
need to be creating jobs so that there are alternatives
there for people on benefits, and se to be several
months away from that.
Speaker 1 (05:01):
People.
Speaker 2 (05:02):
You know, the economists don't see unemployment peaking until the
second half of this year, or perhaps perhaps earlier, perhaps
in the middle of this year, and then hopefully we'll
see some employment creation and a more flexible job market,
and that will mean that people have more opportunity.
Speaker 3 (05:19):
Our strong expectation is that those who are able to
work should work, and that more people who are working
and the fewer who are on welfare, the better for
them and their future, the better for their families, the
better for the economy, and the better for New Zealand.
We will do everything everything that we can to support
people off welfare and into work and ultimately a better
life for themselves and for their families. Under our government,
(05:41):
we are making clear our expectation that those who can
work should be taking all reasonable steps to find a job,
and those who do not will face consequences.
Speaker 1 (05:53):
And politically as well. I guess they're not going to
be losing any of their voter base by keeping beneficiary
increase is at a minimum.
Speaker 2 (06:00):
Hey, you'd imagine not a huge amount. I can't Politically,
I'm not sure what the split is for beneficiaries voting
for center right parties. But yeah, I mean there is
some politics to it. I mean it certainly they want
to be seen to be disincentivizing the benefits and encouraging
people to look for work, to get into work. That's
(06:21):
been a real mantra for the government. As I say,
just that slight flow in the problem that the unemployment
rate is rising, there are more people going on to
job seeker benefits because there isn't the employment being created
right now now. The government will argue I'm sure that
growth is coming, that we've seen the economy come out
of recession. The thing is, say this a lot. The
labor market tends to lag. It's one of the last
(06:42):
things to turn in an economic cycle. So, you know,
touch Wood hopeful that in the next few months will
see some progress there.
Speaker 1 (06:50):
Power prices are also going up a lot. Actually from Tuesday,
the average household's bill will go up by ten dollars
a month this year, and then for the next four
years it'll go up by five dollars a month. What's
happening behind the scenes to necessitate this change.
Speaker 2 (07:06):
Yeah, that's going to feel quite rough to a lot
of households. Well, there's a few different things. One is Transpower,
the lines company that looks after the national infrastructure grid,
has said that look at they've got to go up
by ten dollars a month, and so those charges will
be passed through to consumers via the power companies. So
that's part of it. But also some of the power
companies I've seen, for example, Mercury has said, you know,
(07:30):
because of other factors like needing to invest in more
power generation and invest in more you know, I guess
that means wind farms, solar, all that sort of stuff,
they need to put prices up. And also it's been
a relatively dry summer, so lakes are low, so the
wholesale prices are up a bit as well, so people
are going to I mean that's more more of a
gradual thing, but combined, people are going to feel that.
(07:51):
You know, people are still very sensitive about inflation. We
talked before about benefits going up by the inflation rate. Well,
you know, the inflation rate isn't just a uniform thing
that people experience. They experience it differently. And some people,
if they're paying a lot for power, and if they're
also facing increases for council rates and insurance bills, maybe
feeling like inflation is still a real problem and they're
(08:12):
really still feeling the cost of living crisis. The official
stats will tell you that it's back under control at
two point two percent an average two point two percent,
which is about where central banks want inflation to be.
But I think they really need to keep it down
there for a long time before people start to feel
like they've got through this sort of cost of living crunch.
I think generally people are feeling like there is still
(08:33):
a cost of living crisis out there.
Speaker 1 (08:45):
The interest on student loan payments is also going.
Speaker 2 (08:49):
Our pay Yeah. I don't think it's the interest so much,
it's the amount that you have to pay so while
you're in New Zealand, student loans are interest free. But
what they've got it done is there is an incremental
increase to the amount that you'll have to pay out
of your wages. So effectively they're saying to people that
you'll have to pay them back a little bit faster.
(09:09):
I don't think it's a lot. I think it was
like something like a dollar twenty a week or something.
But that's possibly you could say a good thing because
you know, okay, it's another squeeze on your wallet on
the weekly basis, but not by a huge amount. But
it does mean that you're actually paying off the principle
faster and getting that loan under control. So I guess
the government is keen to get the balances down, so
they haven't adjusted the thresholds that would sort of keep
(09:31):
the extra payments from going up. They've left it there
so that you are having to pay a little bit more.
But yeah, if it helps people get their loans paid
off quicker, then that's not such a bad thing.
Speaker 1 (09:40):
And this one won't impact the average keyw but the
active investor plus visa is seeing some changes as well.
I believe what is that.
Speaker 2 (09:48):
This is part of a policy by the government to
effectively attract more wealthy people into New Zealand with the
hope that they'll be investing in the productive end of
theonomy and creating the jobs which we talked about needing earlier.
So they've introduced two new investment categories, Growth and Balanced.
(10:09):
And so if you've got a minimum investment of five
million dollars and prepared to put that into what they
consider sort of highly productive parts of the economy, so
like tech startups and all that sort of thing, investing
in New Zealand business basically, then there is a visa
a immigration visa category available to you to come and
(10:29):
live in New Zealand. There's also a sort of a
balanced category for investors over a five year term. The
growth ones over a three year term, the balanced one
allows you to have a bit more sort of boring investment,
so that includes property and bonds and things, but you've
got to bring in ten million dollars. And I guess
this is part of a view that you know, we
need some more dynamic capital in this economy. You know,
(10:51):
we've got the banks that will lend for housing and
for some business stuff, but we don't have a large
amount of capital that it's going into startups and new business,
and often that into the economy is finding it harder
to get money to get up and running, to get
things going. And so yeah, I guess the government's hoping
that that will bring in these kind of wealthy individuals
and they will be able to push along our productivity
(11:14):
in the economy.
Speaker 4 (11:17):
It is solid and the numbers do not lie. Not
only was it a positive number, but it was a
far bigger number than anyone was predicted. So let's take
the good news when it comes. Mike. There's always someone
who can think of a nancy negative way of looking
at it. But actually, this is an economy that has
been bouncing along the bottom for a very long time,
and now we are turning the corner. Let's celebrate that
(11:40):
it's set to continue. Let's have a positive mindset.
Speaker 1 (11:44):
Liam. All these cash boosts and changes are welcome for
the economy, I'm sure, But how is it actually performing
at the moment. We were in recession a few cycles ago,
and I understand from the last data we just weeaked
out of it.
Speaker 2 (11:58):
Oh it wasn't a bad it was the bad results.
There was zero point seven, So We definitely bounced out
of recession. We didn't bounce back to where we were previously,
because the two previous quarters saw the economy shrink by
about two point one percent. So we back up zero
point seven percent. We are hopefully on a path of
(12:19):
more sustained growth, so perhaps a few more quarters and
the economy will be as big as it was before
we went into recession. So it actually takes a while
to come back to that level. Yeah, so it's it's
still feels like a tough economy because you know, that
was a big recession. They were talking about it being
the biggest slump not counting the COVID crunch since since
nineteen ninety one, which was a really rough time. But
(12:40):
it is progress, so is it is a first step
on the path of recovery. So we have inflation under control,
hopefully again touchwood that doesn't flare up again. We've got
the economy out of recession. Really that the last piece
of the puzzle is probably jobs and to some extent,
confidence in the economy. So I think consumers in particular
are still feeling nervous about the state of the economy.
(13:02):
We've seen that in some consumer confidence surveys recently that
they just don't quite match where some of the other
more positive economic data is sitting. And I think that's
probably twofold one. That overhang of inflation. People still feeling
like even though the stats tell us inflation is under control,
it still feels like there is a cost of living issue.
And then it's that uncertainty around jobs. People aren't confident
(13:24):
about switching jobs. They may be worried about their own job,
and in fact some people are losing their jobs and
the numbers on job seeker is going up. So until
that piece comes into place, and I really, you know,
be hopeful that we see at peak and that some
of this positivity from growth coming back to the economy
(13:44):
flows through. So you know, it's a sort of cautiously
optimistic tone. Yeah, And of.
Speaker 1 (13:49):
Course the ocr was cut further last month. What are
economists predicting in terms of more cuts at the moment,
especially now that Adrian Or is out as a Reserve
Bank governor.
Speaker 2 (14:00):
Yeah, I mean it was interesting to see the governor go.
It was a big story, but I don't think it'll
change the outlook for the Reserve Bank in the near future.
They've sort of penciled in a twenty five basis point
cut next month and then another one in May, and
that might be where they pause, so you know, so
that's another fifty basis points to come out. But economists
are saying, well, it's not necessarily going to drop mortgage
(14:23):
rates that much further because they're already priced in.
Speaker 3 (14:26):
There.
Speaker 2 (14:26):
Some movement on international borrowing costs also also affecting things,
so in some ways, you know, it might be getting
to the point where some of the best mortgage rates
we're going to see for a while out there now
or very soon. And an interesting phenomenon economists have noticed
is that there is a really high percentage in historic
terms for New Zealand of people on either floating mortgage
(14:48):
rates or on really short term fixed rates because people
have been holding off fixing longer because they're hoping that
the rates will come down further. And that's probably made
sense for the last few months. That means that there's
actually a lot of people who aren't yet getting the
full benefit of the rates cuts. They're they're sort of
holding off locking in and to take the benefit. They
want to wait until they sort of get the best deal.
And I think it will become apparent to more people
(15:10):
that it's time to lock in fairly soon. I mean,
I don't want to pick it exactly, but you know,
we'll see a lot of people locking into those lower rates,
and so that's where money's going back into people's pockets,
and that's really going to help assist with the recovery.
So we haven't yet seen it boost house prices much,
for example, and then and that may be to do
with people holding off on booking in those lower rates.
(15:32):
But you know, some of the things we've talked about
for April one this year, certainly not as much money
coming back to people, some things like the power prices,
money coming out of people's pockets. But if we see
a large number of mortgage holders fixing on lower rates
over the next few months, then that's going to be
a lot more money coming into the households and that
should hopefully boost consumer confidence and add to the momentum
(15:53):
in the economy, which is just still pretty fragile at
the moment.
Speaker 1 (15:57):
Thanks for joining us, Liam, Cheers. That's it for this
episode of the Front Page. You can read more about
today's stories and extensive news coverage at enzdherld dot co
dot MZ. The Front Page is produced by Ethan Sills
and Richard Martin, who is also a sound engineer. I'm
(16:20):
Chelsea Daniels. Subscribe to the Front Page on iHeartRadio or
where if you get your podcasts, and tune in on
Monday for another look behind the headlines.
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