The Finance and Growth Minister is confident the economic turnaround will continue.
Latest figures show we're officially out of recession, after our economy grew 0.7% between October and December.
Nicola Willis says we're going to continue to see growth in tourism and agriculture exports.
She told Mike Hosking households should also be getting more disposable income as they switch over to lower mortgage rates, that will flow through into the economy.
Willis says the consensus among forecasters is for growth to accelerate this year.
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Speaker 1 (00:00):
It was a solid piece of good news. I thought anyway,
the government wanted and probably needed it as well. We're
out of recession. Q four zero point seven. Are we
on our way? The Finance Minister Nikola will is with us.
Very good morning to you.
Speaker 2 (00:11):
Good morning mate.
Speaker 1 (00:12):
I was surprised. I don't know if you read the
media or not, but there's a lot of misery around
the number. I think Radio New Zealand said we crawled out.
I mean, zero point seven's a solid number. If you
annualize it out, it's almost three percent.
Speaker 2 (00:24):
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 predicting. 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
(00:46):
it's set to continue. Let's have a positive mindset.
Speaker 1 (00:49):
Well, that was my next question. Is it set to continue?
Q one, what's your sense of it? Manufacturing back into
negative consumers, manufacturing expanding sorry, consumer into negative though. Have
we got continued growth.
Speaker 2 (01:01):
Yes, those tailwinds of tourism up, dairy doing well, our
agricultural export is doing well. That is set to continue.
But we're also going to see households I think, getting
more of their household budget able to be spent because
they're going to be switching on to lower mortgage rates.
So that should continue to flow through into the economy.
And the consensus across the forecasters is growth accelerates this year,
(01:26):
which is exactly what we need because that's when people
are going to start feeling genuinely better off.
Speaker 1 (01:31):
Okay, are we reliant on too few industries? Mind you,
that's an age old question I suppose, isn't it.
Speaker 2 (01:36):
No, I don't think so. I visited this week a
business in Toronga who are doing some of the best
automated vehicles in the world, drones and the like, exporting
around the world, being bought by international defense forces. They're
doing that from New Zealand. I went to Auckland University
yesterday where they are producing medical devices that are world
(01:57):
leading businesses that are growing. So. Yes, we've got dairy, Yes,
we've got tourism. They're fantastic. We shouldn't. We shouldn't be
sad about that. But we've got other industries coming along
as well.
Speaker 1 (02:08):
Our current account, though, which was a number also out
this week at six point two percent of GDP, is bollocks.
When does that get addressed? And in your mind, what
is addressed?
Speaker 2 (02:17):
Well, it is getting better, So that's the first thing
i'd say there because of that growth and the tourism
numbers in the terms of trade being better, the prices
we're getting for our goods being better, that is improving.
The challenge we have is we do have a lot
of multinational business is here, including banks, so their funds
do get repatriated back to those countries, and so that
is always a challenge to our current account. But what
(02:39):
we want to see is export is exporting more for
higher prices, and actually that is set to continue.
Speaker 1 (02:46):
Yeah, it is. And so exports increased by almost let's
call it seven hundred million in the December quarter to
eighteen and a half billion. But our imports increased as well.
Are we importing too much stuff or do we just
not make enough stuff so therefore we have to import stuff.
Speaker 2 (03:02):
Well, we do have to import stuff because we can't
manufacture all of the sophisticated goods o New Zealand consumers want.
But what I'm really encouraged to see is that we
are selling more offshore too. That's the book I think
we really need to focus on, is that export lead
recovery having Our export is selling more products to more
markets at higher prices, and that is happening. Our flexible dollar,
(03:27):
our floating exchange rate is obviously helping with that. It's
ensuring that our exporters remain competitive. And look, I think
there's a positive story there.
Speaker 1 (03:35):
Okay, does the zero point seven on GDP give you
hope that the tail of the jobs which lags, of course,
might end a little bit or peak a little bit
sooner than we thought, or it is what it is.
Speaker 2 (03:48):
Well, we have seen the forecasts for unemployment coming off
a little bit since we came to government. As you've said,
employment is the last thing to recover when an economy
goes through a time like New Zealand has. The forecasts
are that it will peak halfway through the year and
then it's going to get better in the second half
of the year. That's consistent with what I'm seeing in
(04:08):
the economy, which is that we are seeing that many
firms are continuing to hire, and we are seeing that
they're still demand for a lot of workers across a
lot of industry. So I think with the stronger number
off the back of last year, we could get a
pretty positive impact for employment as well.
Speaker 1 (04:25):
I'm not sure this is in your wheelhouse, but I'm
reading yesterday in Australia, the Americans have got hold of
the Australian beef situation. So the Australians export a lot
of beef to America. We export a lot of beef
to America as well. The Americans are not happy with
the Australians because it's not reciprocated. They've come up with
a whole bunch of reasons why they can't import a
lot of American beef. Are we in that cart as
well or not?
Speaker 2 (04:46):
I don't think that we are. I want to be
diplomatic about other countries' trade disputes, but one thing New
Zealand has always done well as we play by the
rules internationally. We have low tariffs. We don't use non
tariff barriers to try and exclude people from our market,
and so that does position us well visa the US
(05:08):
because we're not doing naughty things, Mike, So we don't
have anything to get caught out on. And we also
around the world have a number of trading relationships where
we're well respected. So while the global picture on trade
isn't the one that I would prefer, within it, New
Zealand's well positioned.
Speaker 1 (05:25):
Okay, just one more thing, your business of the Reserve Bank,
the amount of money the retail banks have to put
to one side under the Adrian or regime, and your
desire to do something about that, where are you at
with that?
Speaker 2 (05:37):
Well, Look, my observation is a simple one, which is
that everyone said when those higher capteradequacy ratios were put
on that it could dampen GDP, restrict lending and add
to interest rates. So I think it's timely that the
Parliamentary Select Committee is now examining that and asking whether
that has happened. The Reserve Bank will be presented to
(06:00):
that Select Committee next week, and I think it's very
important that they have their say about what's going on,
because of course, ultimately they have options about whether or
not they continue to do this ramp up that has
been the case in recent years.
Speaker 1 (06:13):
All right, appreciate you Tilling. You have a Good Weekend,
Nichola Willis, who is the Finance Minister.
Speaker 2 (06:17):
For more from the Mic Asking Breakfast, listen live to
news talks that'd be from six am weekdays, or follow
the podcast on iHeartRadio
It was a solid piece of good news. I thought anyway,
the government wanted and probably needed it as well. We're
out of recession. Q four zero point seven. Are we
on our way? The Finance Minister Nikola will is with us.
Very good morning to you.
Speaker 2 (00:11):
Good morning mate.
Speaker 1 (00:12):
I was surprised. I don't know if you read the
media or not, but there's a lot of misery around
the number. I think Radio New Zealand said we crawled out.
I mean, zero point seven's a solid number. If you
annualize it out, it's almost three percent.
Speaker 2 (00:24):
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 predicting. 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
(00:46):
it's set to continue. Let's have a positive mindset.
Speaker 1 (00:49):
Well, that was my next question. Is it set to continue?
Q one, what's your sense of it? Manufacturing back into
negative consumers, manufacturing expanding sorry, consumer into negative though. Have
we got continued growth.
Speaker 2 (01:01):
Yes, those tailwinds of tourism up, dairy doing well, our
agricultural export is doing well. That is set to continue.
But we're also going to see households I think, getting
more of their household budget able to be spent because
they're going to be switching on to lower mortgage rates.
So that should continue to flow through into the economy.
And the consensus across the forecasters is growth accelerates this year,
(01:26):
which is exactly what we need because that's when people
are going to start feeling genuinely better off.
Speaker 1 (01:31):
Okay, are we reliant on too few industries? Mind you,
that's an age old question I suppose, isn't it.
Speaker 2 (01:36):
No, I don't think so. I visited this week a
business in Toronga who are doing some of the best
automated vehicles in the world, drones and the like, exporting
around the world, being bought by international defense forces. They're
doing that from New Zealand. I went to Auckland University
yesterday where they are producing medical devices that are world
(01:57):
leading businesses that are growing. So. Yes, we've got dairy, Yes,
we've got tourism. They're fantastic. We shouldn't. We shouldn't be
sad about that. But we've got other industries coming along
as well.
Speaker 1 (02:08):
Our current account, though, which was a number also out
this week at six point two percent of GDP, is bollocks.
When does that get addressed? And in your mind, what
is addressed?
Speaker 2 (02:17):
Well, it is getting better, So that's the first thing
i'd say there because of that growth and the tourism
numbers in the terms of trade being better, the prices
we're getting for our goods being better, that is improving.
The challenge we have is we do have a lot
of multinational business is here, including banks, so their funds
do get repatriated back to those countries, and so that
is always a challenge to our current account. But what
(02:39):
we want to see is export is exporting more for
higher prices, and actually that is set to continue.
Speaker 1 (02:46):
Yeah, it is. And so exports increased by almost let's
call it seven hundred million in the December quarter to
eighteen and a half billion. But our imports increased as well.
Are we importing too much stuff or do we just
not make enough stuff so therefore we have to import stuff.
Speaker 2 (03:02):
Well, we do have to import stuff because we can't
manufacture all of the sophisticated goods o New Zealand consumers want.
But what I'm really encouraged to see is that we
are selling more offshore too. That's the book I think
we really need to focus on, is that export lead
recovery having Our export is selling more products to more
markets at higher prices, and that is happening. Our flexible dollar,
(03:27):
our floating exchange rate is obviously helping with that. It's
ensuring that our exporters remain competitive. And look, I think
there's a positive story there.
Speaker 1 (03:35):
Okay, does the zero point seven on GDP give you
hope that the tail of the jobs which lags, of course,
might end a little bit or peak a little bit
sooner than we thought, or it is what it is.
Speaker 2 (03:48):
Well, we have seen the forecasts for unemployment coming off
a little bit since we came to government. As you've said,
employment is the last thing to recover when an economy
goes through a time like New Zealand has. The forecasts
are that it will peak halfway through the year and
then it's going to get better in the second half
of the year. That's consistent with what I'm seeing in
(04:08):
the economy, which is that we are seeing that many
firms are continuing to hire, and we are seeing that
they're still demand for a lot of workers across a
lot of industry. So I think with the stronger number
off the back of last year, we could get a
pretty positive impact for employment as well.
Speaker 1 (04:25):
I'm not sure this is in your wheelhouse, but I'm
reading yesterday in Australia, the Americans have got hold of
the Australian beef situation. So the Australians export a lot
of beef to America. We export a lot of beef
to America as well. The Americans are not happy with
the Australians because it's not reciprocated. They've come up with
a whole bunch of reasons why they can't import a
lot of American beef. Are we in that cart as
well or not?
Speaker 2 (04:46):
I don't think that we are. I want to be
diplomatic about other countries' trade disputes, but one thing New
Zealand has always done well as we play by the
rules internationally. We have low tariffs. We don't use non
tariff barriers to try and exclude people from our market,
and so that does position us well visa the US
(05:08):
because we're not doing naughty things, Mike, So we don't
have anything to get caught out on. And we also
around the world have a number of trading relationships where
we're well respected. So while the global picture on trade
isn't the one that I would prefer, within it, New
Zealand's well positioned.
Speaker 1 (05:25):
Okay, just one more thing, your business of the Reserve Bank,
the amount of money the retail banks have to put
to one side under the Adrian or regime, and your
desire to do something about that, where are you at
with that?
Speaker 2 (05:37):
Well, Look, my observation is a simple one, which is
that everyone said when those higher capteradequacy ratios were put
on that it could dampen GDP, restrict lending and add
to interest rates. So I think it's timely that the
Parliamentary Select Committee is now examining that and asking whether
that has happened. The Reserve Bank will be presented to
(06:00):
that Select Committee next week, and I think it's very
important that they have their say about what's going on,
because of course, ultimately they have options about whether or
not they continue to do this ramp up that has
been the case in recent years.
Speaker 1 (06:13):
All right, appreciate you Tilling. You have a Good Weekend,
Nichola Willis, who is the Finance Minister.
Speaker 2 (06:17):
For more from the Mic Asking Breakfast, listen live to
news talks that'd be from six am weekdays, or follow
the podcast on iHeartRadio
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