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May 28, 2025 10 mins

Christopher Luxon remains hopeful the latest cut in the OCR isn't the last. 

The Reserve Bank's dropped the Official Cash Rate 25 basis points to 3.25%, and is now forecasting it will reach a low of 2.9 percent in December. 

But the Monetary Policy Committee wasn't able to reach a unanimous decision to cut the cash rate. 

The Prime Minister told Mike Hosking Acting Governor Christian Hawkesby is dealing with a period of global uncertainty. 

He says there's a huge amount of volatility that Hawkesby is navigating, but the economy is turning a corner. 

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Episode Transcript

Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
So the illnesses are both to the Prime Minister's back
and Monday becomes Thursday. That's out, works chrystper luxemers. Well,
it's very good morning to you.

Speaker 2 (00:05):
Good to see him. Like, I know you're a gema
fiber and I would have been here with the has
mat on Monday and you wouldn't have liked it. So
I'm here on Thursdays.

Speaker 1 (00:11):
Well, I'm glad you're back and feeling better. So just
before the news we gave out the Auckland Chamber of
Commerce energy. There are energy concerns, first of all from business.
They're afraid to speak out. They believe they're being ripped
off by the gen tailors. They're afraid to speak out
in case when they go for contracts next time they're
going to be punished for that. Here's the more important part.
Fifty two percent of businesses say they've increased their prices

(00:34):
as a direct result of rising energy costs.

Speaker 2 (00:37):
Yeah. Look, I mean there's a number of things on energy.
I mean our immediate fixation is, you know, we've had
the oil and gas dam, which has meant that we're
now pushing more cold than we are gas, which is
not good. We've now done as several things in the
short term to make sure we don't have a repeat
of what we saw last year, which was, yeah, we
had some of the highest wholesale electricity prices in the
world at one point, and that led to people like

(00:57):
mills and high energy places doing it pretty tough. This year,
We've got a strategic coal reserve which we're building, which
is not what you want to have, but you need
to have it so you can keep the lights on,
keep the prices down. We've got clear processes around how
we get into the contingent lake storage if we need to,
and we'll continue to explore how we might do importation
of LERG directly into the system. So you know, I

(01:18):
just encourage suddenly the Organization Association to actually talk to
Simon Watt's about all those issues, because we are very
open to hearing about that. We're very open to seeing
what more we need to do. We can't have energy
be the constraint on the economy and economic growth.

Speaker 1 (01:32):
But this is part of the stubtails into what was
happening yesterday with the Reserve Bank and inflation. There are
still people passing on costs. We had the head of
the Ports of Auckland yesterday. I can't remember the number,
but it's a huge number, seventy percent or something like that.
They're increasing forward trucks to get into the port. He
argues two things. One, they want to try and jurymander
the traffic so there's not as much traffic in Auckland.
Come to a different slot. The other thing he wants
to do is hand back more money to the council

(01:53):
because the council owns the port. He's charging people more
money simply because he can, and energy arging people more
money simply because they can.

Speaker 2 (02:02):
Well, that has that mentality when you get inflation down
at two point two or two point five percent under
the three percent, that that we're expecting prices to stabilize
across the system. But we've seeing that in the macro.
We're seeing that in the macro inflation numbers, right are you?
Well you are because they're down at two point five
not seven.

Speaker 1 (02:17):
Well, they're trending up towards two point seven, towards the
top end of the band. That's the problem. My great
concern is that we're not getting the growth to drive
and if we had inflation from growth, fantastic. We're getting
inflation from people charging people more because they can.

Speaker 2 (02:30):
No. I think, no, we are seeing real growth in
the economy. You look at what's happened with you know
what you're seeing in dairy You look at red meat
another one point four billion, two billion dollars this coming year.
Look at horticulture grew twelve percent in the last twelve months,
up to eight billion dollars. Tourism growing at twenty three
percent in terms of sped. So it's a bit two
speed at the moment. But go around parts of the
country a Tago South and cannonading hawks.

Speaker 1 (02:52):
But go around parts of the country if you having
drinks with Christian hawks we last night, because here's here's
his problem. So yes, that part of the economy is brilliant, fantastic.
Couldn't be Go downtown Auckland, downtown Welling. Still tough, it's
not happening.

Speaker 2 (03:03):
I agree with you. I agree. That's what I'm saying
to you. We've been through a tough time. We are
turning the corner because at least you've got you've got
change happening. You've got some growth happening in different parts
of the sector. I think there's there's starting to be
some growth and manufacturing and services, which is good.

Speaker 1 (03:16):
Well there's no growth, no, no, no, you can't, don't, don't, don't, misleaders.
There's growth and manufacturing multi month growth and manufacturing's no
growth in services and there hasn't been for ages.

Speaker 2 (03:24):
Well, we did earlier in the year have some start
to growth and it's not as negative as it once was.
But we've got growth coming in that space. I'm just
saying to you it's a natural recovery, which is that
you've got two speed at the moment where you've got
something it's doing really well, some parts not. It will
come to Auckland last well.

Speaker 1 (03:40):
But here's where Christian's got the problem. And I don't
know whether it's his fault of whether it's the mandates fault,
but he's talking and I liken it to ten people
in the room and he's going, we need to raise
one hundred bucks. And the dairy farmer number one goes,
I've got a hundred bucks. We're cool, and he goes, fantastic.
Economy is right and it's not right. And so yesterday's
busy saying that there are no more cuts coming because
we're right and we're not right.

Speaker 2 (04:01):
Well, I think. I think my read of it is
this huge amount of volatility going forward that he's you know,
that he's trying to navigate. I presume I would expect
that we would want to see continued interest rate cuts
over the period.

Speaker 1 (04:12):
That's not what he was saying.

Speaker 2 (04:12):
Yes, the second bit, the second bit I just say
is that you know the economy is coming, you know
we are, we are genuinely turning the corner. Now. The
points of fair one which you're making, which is how
do you make sure it's a much more even that
everyone feels that, right, that's natural, but where you've been,
where we've been, and then you're trying to get to
where we're getting to, which is more consistent growth across
the whole all sectors in the economy. I think things

(04:34):
for example, I think, honestly, things like investment boosts are
going to go really well good. Honestly, like the number
of people I spoken to the last that's been the
highlight of the budget. When you go talk to small
mini enterprises in East Tamicky yesterday, that are you know,
small businesses wanting to invest two hundred thousand dollars in
a C and C machine. That's five times more productive
than the one they've currently got. I was in a
place day before yesterday they had equipment from nineteen forty

(04:56):
eight there, you know, And it's just and it's just
that that twenty percent just means that it just makes
those proposals, those business cases cash flow positive and therefore
they pull those forward. I reckon, you're going to see
a mass of field days, you know this this year,
with people buying tractors and headers and also.

Speaker 1 (05:10):
But once again, that's a reflection of the rule of
the concours through.

Speaker 2 (05:14):
No, I know, it.

Speaker 1 (05:15):
Doesn't flow through to Queen Street unless you're a bank.

Speaker 2 (05:18):
But it will ultimately, right, it is, it is, it
is starting to when you look at our export led
growth that's actually been happening, which is what you want
to see. You know, we've had twenty one percent growth
of the UK at twenty eight percent growth the EU.

Speaker 1 (05:31):
You know.

Speaker 2 (05:31):
I weve got core core sectors growing really well, Tourism,
education coming back strongly. Those are things that start to
give you confidence that That's why I say, confidently we
are turning the corner.

Speaker 1 (05:41):
Good.

Speaker 2 (05:41):
All right, I hope you're right, but I know what
you're saying. It's got to be even.

Speaker 1 (05:44):
It's got to be more whole, just to wrap up
the Christian Hawksby thing, because it was ironic. I saw
you and Nicola yet again come out as you do
as you should and go interest rate cuts, fantastic money
flowing into the economy. If there are no more interest
rates cuts, which is what I got from Hawksby yesterday,
because neutral on it, then what are you going to say?

Speaker 2 (06:01):
Yeah, well, I mean it didn't take that as there's
no more cuts coming.

Speaker 1 (06:06):
She's neutral.

Speaker 2 (06:06):
You wouldn't have a clue. Yeah, But that doesn't mean
that they're not coming, right, I mean, but that aside.
I mean, the cool thing is that we've seen a
two point two five percent reduction and interest rates. If
you got a five hundred thousand dollars mortgage, that's three
hundred dollars a fortnight you've got back in your pocket.
You're spending back in the economy, as we talked about before,
strengthening retail economy, centering hospitality. I think the point I
was trying to make yesterday, which you know, the opposition

(06:28):
like to say, oh, well, you've got nothing to do
with it. It's all about the Reserve Bank. And the
point is you go took to any reserve bank governor
across the world, or any economists, and we had a
situation where fiscal and monetary policy did not work together
to actually deal with the challenges we had. You had ultimately,
you know, or eventually decided to stop printing money and
put the foot on the brakes, and meanwhile Hipkins carried
on with a foot on the accelerator, sprang it all over.

Speaker 1 (06:50):
Yeah, he did, he hawks. We let you down on
that yesterday because the question was reasonably clear, and you
said that you were spending all lack of spending had
nothing to do with at night that I'm assuming you
mean in retro.

Speaker 2 (06:58):
The way the economists think of our externalities that might
be affected.

Speaker 1 (07:02):
It's got to do with that.

Speaker 2 (07:03):
You have to have those two working together. And it's interesting.
I saw some great charts from Sharon Zola showing exactly
that where that when it got disjointed, the volatility, and
you know, you put an excel same time cars on
the ditch, and that's what happened exactly.

Speaker 1 (07:15):
Brian Roach and you and I have talked about this
a number of times. I think, without blowing my own trump,
and I've been proved to be right. This this this
business of leaking in the public service. They don't like you,
they're out to get you. Well, they may not like us.
The point is we have a politically neutral public service.
No you don't know, well, the old bunch of leakers.

Speaker 2 (07:32):
Well, we've got some leakers, I mean, I think, and
the problem is those leaks actually undermine the actual other
people in the public service are actually very very good
and I think that's pretty unfair. So I don't know
whether it's more or less than what other governments have
encountered about it. Well, I mean, we've just got to
keep reiterating the point, and we've got to keep investigating
them when they happen if we can. But because I'm
more worried about what it does to undermine the public service. Now,

(07:54):
the question is you can in a democracy, you can
do wholesale regime change like you do in the US
when government comes in at the political appointees. Even in
Australia there's a period of time where there's political appointments
made early in a new government. I don't think New
Zealanders want that. They like the idea of a politically
neutral public service. I think we've got relatively few leaks.

(08:15):
I know, you know, it's frustrating when you see it,
but the bottom line is compared to the amount of
work we're doing. I mean, we turned fifty two bills
into law last year in our first year, first part
of the year, I mean, that's that's incredible. No one's
done that for age. It's more work I think in
half a term than people have done in two terms
in recent history. So you know, there's a lot of
threeput going through and I just think it's disappointing because

(08:36):
it undermines the public service. And I think, you know,
that's such a for Brian's.

Speaker 1 (08:39):
Get it Errick Stamford into you. Is that a beata?

Speaker 2 (08:42):
I mean it personally it is. I mean, she could
have expressed herself better get it. But what she was
really saying was she gets hit with a whole bunch
of unsolicited emails from people all over the world wanting
to come to New Zealand and plead their case. You know,
in this case, it was to her personal emails. That's
just not right. You know, she was dealing with that
issue and saying the volume of what she's got, but

(09:02):
you know, there's no you know, I'm very relaxed about it.
You know, we've got a great relationship with our emergen counterparts.
We've already met face to face on the FDA negotiations,
you know, and that's still got lots of momentum, which has.

Speaker 1 (09:13):
Only got one minute left. And this isn't your department,
but it does dovetail into what's.

Speaker 2 (09:17):
Wrong with about Class service number twenty.

Speaker 1 (09:18):
So no, it's not close, though, wyuku four hundred thousand
dollars to build a raised pedestrian crossing. Explain to me
how it costs four hundred thousand dollars to do that.

Speaker 2 (09:29):
Yep, I've got no idea. It's the short answer. But
I've said, for four hundred thousand dollars, I'll go out
and do a working be on the weekend myself.

Speaker 1 (09:36):
But that sees everything that's wrong with this country right now.
It doesn't in terms of prospectivity and expend it.

Speaker 2 (09:42):
You've got to be in the arena trying to turn
it around. And I know it's frustrating, and I get
hit with the stuff each and every day, but by God,
we've got to get more right than wrong, and we've
got to keep trying, keep swinging all rights Relux.

Speaker 1 (09:54):
For more from the mic Asking breakfast, listen live to
news talks it'd be from six am weekdays, or fun
of the podcast on iHeartRadio.
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