Nicola Willis: Finance Minister on businesses and economic recovery

The Finance Minister says businesses should be more confident about the economic recovery. 

The Reserve Bank's been weighing up lower-than-expected growth and higher inflation in its decision to keep the Official Cash Rate unchanged at 3.25%. 

Nicola Willis says businesses have been battening down the hatches. 

But she told Heather du Plessis-Allan they’re maybe more wary than they should be. 

Willis says all of the fundamentals in the economy are good. 

She says the Government is business-friendly and is on the side of those wanting to invest, make money, create jobs, and export overseas. 

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Episode Transcript

Speaker 1 (00:00):
So as expected, the Reserve Bank has held the OCR
at three point twenty five percent. They've suggested the next
move is a cut that will happen in about six
weeks time. But it's clear from what they're saying that
the economy is far from roaring at the minute. Nicola
Willis is the Finance Minissum with US. Morning Niccola, Good morning, Heather.
Why isn't the economy doing better?

Speaker 2 (00:18):
Well? We had two quarters of above expected growth, so
that was in the last bit of last year, in
the first three months of this year where the growth
in the economy was faster than all of our forecasts.
But since then, there's been quite a few global developments.
We've had Donald Trump making announcements about tariffs, We've had
global back and forth on trade. We've had global conflict

(00:40):
and that's created uncertainty around the world and it certainly
impacted business confidence and investment intensions here in New Zealand.
Despite that, fundamentals remain good. There's every reason that we
will have kept growing, but maybe not as fast as
we would have liked.

Speaker 1 (00:54):
Okay, I mean, it's fair to say that some of
it has to do with what's going on globally, but
a lot of it is actually just domessed experience, spare
capacity in the domestic economy. Why isn't it firing? I mean,
the reason I'm asking you this question is because you
said in twenty twenty three at the election that you
guys would get the economy back on track. You've had
more than eighteen months and it's far from that.

Speaker 2 (01:13):
Well, there is spare capacity in the economy. And if
you go back to what I was saying earlier, what
we saw at the end of last year and in
the first three months of this year was we were
literally twice as fast in terms of our growth as
had been predicted, four times as fast as Australia was
in the first three months of the year. Then in
April quite a major thing happened and you saw the

(01:33):
same headlines as every business in New Zealand saw, which
said that this is going to be very challenging to
the world, that global growth is going to reduce, there
are going to be all of these impacts, and like
many countries around the world, the reaction and that in
New Zealand has been well, actually we might not betten
down the hatches a bit now, My viewers Okay, that's

(01:54):
the reaction that businesses have had, but actually all of
the fundamentals for growth remain. We've got a business friendly
government that is on the side of those wanting to
invest and make money and create jobs and export overseas.
We are getting rid of rules and the regulations that
have in the past stood in the way and made
things harder. We've been careful with the way that we

(02:14):
are spending taxpayers money. All of those things are the
right things to be doing and is every reason why
New Zealand should be growing in the future.

Speaker 1 (02:23):
Nichola, can I talk to you about this Fonterra meeting?
What are you hoping to get out of it?

Speaker 2 (02:27):
Well, I have had some interesting numbers put to me either,
which is that if you buy some butter at Coal's
and Willworth's right now, if you go online, you can
get that for seven dollars Australia, which is ki we
seven dollars sixty or so. If you buy it at
Walworth's in New Zealand right now, it's about eight dollars fifty.

Speaker 1 (02:47):
So is that a supermarket problem though, or a Fonterra problem.

Speaker 2 (02:50):
That's my question and I don't have an answer for you,
and I want to ask both the supermarkets and Fonterra
for their perspective on what's building into that cost, what's
in that Is there anything the government can be doing
to reduce factors in that price? Because I accept that
the global milk price sets the general price in fairy products.
I get that that's economics. But my question is why

(03:12):
is it seemingly a bit cheaper in Australia than it
is in New Zealand to get a block a better?

Speaker 1 (03:18):
Would it simply not be that? Potentially Coals is using
it as a loss leader.

Speaker 2 (03:23):
Well that seems interesting because of course Coals and will Worths,
you'd think would be facing similar incentives to do that
sort of thing. Why wouldn't that be happening here? And
Coals isn't offering it particularly cheaply in Australia. If you
look at different places in Australia you can get similar
prices to that. So I've just got the question. I've
put that question, of course to supermarkets why is it

(03:45):
so much cheaper seemingly at Australia And they've given me
an answer. I'm going to put it to Fontier and
ask them about it and I'm genuinely interested in their
answers because I'm on side of every Kiva shopper who goes, hey,
there are our price is fair. I think I have
a job to do to explore it.

Speaker 1 (04:01):
Nicholaied families on two hundred and thirty thousand dollars beyond welfare.

Speaker 2 (04:06):
No, they shouldn't be. But I know where you're going
with this.

Speaker 1 (04:08):
Yeah, so why are they?

Speaker 2 (04:10):
They are not families earning that kind of income in
New Zealand. So that's across two earners. Mind you, that's
not just one. You know who are paying a lot
of tax then have to if they have young children,
pay a lot for their childcare in order to work.
It's a cost that they have to take on in
order to often have mum and dad both working full time.

(04:33):
And what we've done with the Family Boost policy is
recognized is taxpayers working hard at a difficult time in life.
We want to make sure that you're well supported in that,
and we're going to give you some of your fees
back forty feeds back up to forty percent.

Speaker 1 (04:48):
That's still wealthie, that's still wealthy because you are giving
money to families who are earning two hundred and thirty
thousand dollars a year. I mean, are you sure that
you just spoke about the fact that you're spending our
money wisely?

Speaker 2 (04:59):
It doesn't well, well, it's a text rebate either. It's
not wellfare, it's not a hand out. It's actually something
you get only if you are able to demonstrate that
you've got those receipts for your early childhood education costs,
and you will get less than you would if you
were on a lower income. We have means tested it,
so once you're as a household earning more than one

(05:21):
hundred and forty thousand dollars, the amount of rebate you
get out of that scheme starts to reduce. But look,
I stand by that family boost policy. It's all about saying,
difficult time in life, high cost of living, Let's make
sure families with young kids are well supported.

Speaker 1 (05:35):
All right, Nicola, thank you for your time. Enjoy your day.
That's Nicolo Willi's finance minister. For more from the Mic
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