August 6, 2025 • 7 mins
The Finance Minister says anxiety about tariffs will be playing a part in slowing down New Zealand's economic recovery.
Unemployment's reached a five-year high of 5.2%.
Economists think it could rise even higher before it starts turning around.
Nicola Willis told Mike Hosking tariffs aren't great, but some people may have been more worried than they should be.
She says the tariffs will have affected confidence and investment intentions, but it's important to remember that New Zealand is doing okay compared to the rest of the world.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
The job's five point two, yes, lower than the fire
point three predicted. So the Finance Minister did the glass
half fall and bemow the miners, which is fair enough,
I guess Nichola Willis is back will us a very
good morning to you.
Speaker 2 (00:10):
Good morning right.
Speaker 1 (00:11):
I do worry as should you about Auckland though six
point one is a one big increase and two way
too high.
Speaker 2 (00:20):
Yes it is, and that's why we are so focused
on making sure the conditions that are recovery in Auckland
are in place. We're doing six billion dollars worth of
public infrastructure projects ahead of Christmas that will be real
people in real jobs. Importantly, that lower interest rate means
that I think you are going to see some private
sector construction get going again. The lighted to see Auckland
(00:42):
Port expansion given the green light during the fast track process,
and that fast track process we'll see some big developments
occurring in the near future as well. That'll be a
bit of a help to Auckland. But overall, what we're
seeing here is what you always see after an economy
goes through a difficult period, which is that unemployment is
the last thing to get fixed because it does take
(01:03):
time for those lower interest rates to flow through into the.
Speaker 1 (01:06):
Real economy, and that is one hundred percent correct. Trouble is,
it was supposed to be happening by now, and certainly
happening by the end of twenty five. And as an
economist on the program said, we can really look now
to twenty twenty six because yesterday was not the worst
of it. And I think you admitted that, didn't you.
Speaker 2 (01:21):
Well, I'm going to push back on you because actually
in the first quarter of this year we had growth
at zero point eight percent, which annualized would be over
three percent. That was a wartime in Australia. Well, that
was four times the rate of growth that occurred in
the first quarter in Australia. It is actually a healthy
level of growth. Also, when you look at unemployment compared
to what was being forecast ahead of the election, not
(01:44):
as we are now eight thousand fewer people unemployed than
had been predicted. So we are coming in below the
worst case scenarios. Doesn't thing. We're satisfied and we have
to push all of those things that are going to
support growth. We're having a export lead recovery. That dairy
price is hi. Our exporters are continuing to persevere and
access in your markets, get good value, and the government
(02:06):
for albert is cutting through the red and green cape.
We're ensuring that those public sector construction projects are getting underway.
We've got that investment, this tax policy which is giving
businesses confidence and a reason to invest and grow, and
we are going to keep at it. This country has
great prospects. We buy, make and sell things that the
(02:26):
world wants. We do it really well, we do it
really efficiently. That will continue to be the case. We
don't need a bit of migo bay.
Speaker 1 (02:33):
I agree, so well argued, and you're right, you're one
hundred percent correct. But your zero point eight and this
is where you get too political. Zero point eight was
Q one. Q two I doubt will be much above
zero and Q three is a problem as well, which
off sets you. Let's time zero point eight times four
and come to three point two, because life don't work
that way.
Speaker 2 (02:49):
Nikoler, Well, look, I agree with you. I am very
aware that Q two has been challenging, and you know
Liberation Day in April mark of Q two, and it
is no question I've spoken to many business people who
took caution from that who've been very nervous about it,
and that will have affected confidence, investment intentions, all of
(03:12):
those things. I think I do have a job to do,
which is to say, yes, it's not great to have tariffs,
but actually, relatives to the rest of the world, we're okay.
Our exporters are very resilient. They are continuing to grow
their volumes, and so let's not overdo how bad the
Trump tariffs are going to be for New Zealand and
let it knock our confidence. I think that's what you
(03:33):
saw into too. It will be reflected in the real data.
I agree, but I still have great confidence that the
fundamentals in the economy are good.
Speaker 1 (03:40):
Here's your next problem. Wages at two point four and
now below inflation, we're going backwards.
Speaker 2 (03:45):
Well, you're using a different measure where I use the
average hourly earnings measure, which allows for the fact that
people get promotions and change jobs. That roads were five
percent in the part.
Speaker 1 (03:56):
Yeah, well, if you're changing, Nicholas, this is your two
pit again. I'm just looking at the numbers yesterday. Two
point four is below the rate of inflation that you
know people are going to use that against you. We
are going backwards.
Speaker 2 (04:08):
Well, there are two measures that you can use. The
measure you're using as a valid measure. The measure i'm
referring to allows for the fact that people switch jobs
to take promotions. The exciting thing in their mic that
I'm sure you're welcome is that it's being driven by
private sector wage growth. For a change. We've had a
period in which a lot of the wage growth that
was occurring was through collective bargaining or through what pay
(04:32):
equity settlements and the like, which was the taxpayer paying
public servants more. We now have a situation where it's
the private sector that is able to pay its employees more.
That's more sustainable economy because when the private sector is
choosing to pay their workers more, not only does that
mean that they are feeling profitable, but it also means
we're creating real, sustainable wage growth. So I take a
(04:53):
positive from that. But I'm with you. We do want
to drive all of those measures higher. But it is
not my job to talk to this economy. It's my
job to look at the real data, what's telling us
the positive things that are happening.
Speaker 1 (05:05):
Okay, now, now we're going to run into trouble with
each other again, because I'm at least in part blamed, Well,
I'm blaming the RB. I think Christian Hawksby spends too
much time in a room, and he's wrong and he
will it's two point five as neutral. He needs at
least three more cuts and they've undercooked this and that's
not helping. You tell me I'm wrong.
Speaker 2 (05:23):
Well, well, every bank economist seems to agree with you, Mike,
which is there saying in a couple of weeks the
Reserve Bank needs to reduce interest rates again before casting
at least another reduction by the end of the year,
and on the real data, that would be in line
with the Reserve Bank continuing with its track, which has
continued to be that they should be reducing the official
(05:44):
test rate. Now, obviously they're independent, they make those decisions.
But independent economists can't see any day other than down
for interest rates, and I see that as a positive.
Speaker 1 (05:56):
Well, is it? Because my argument would be if they'd
been more nimble, if they'd been more in touch with
the economy, the real economy, not just wants and numbers,
they would have felt it, seen it and acted sooner.
In acting sooner, it would have turbo charged the place better.
Speaker 2 (06:11):
Well, you've heard my criticisms of the Reserve banks decision
making after COVID. I think they overdid it then and
then we're reasonably slow to recover. But at this point,
what we can see is they've got options, got the
ability to move down. And that's what everyone's expecting to see.
Speaker 1 (06:29):
Yeah, I couldn't do your job. I'd be in as
a year, I'd be giving and what for? By now?
The thing that worries me. Do you see these numbers yesterday?
The number of kids leaving school with no as in,
no qualifications teny six hundred. We've got sixteen percent of
kids leaving school with not a single thing that will
help them for the rest of their lives. How's that?
Speaker 2 (06:48):
And that is why Erica Standard is on a massive
mission to bring back basic literacy, numeracy, reading, writing, maths
into our schools. She's rolling out those textbooks, she's rolling
out that structure curriculum. We're very serious about it. That's
why we're replacing MCA. We know that if you have
children leaving school without those basics, that is a fiscal
(07:09):
disaster and economic disaster. Frankly, it's a moral disaster. So
this idea that schools should be a pick a pass
adventure where we just talk about well being all day.
We've rejected that. We're going back to the orthodoxy, back
to the basics that actually equip young New Zealanders for life.
Speaker 1 (07:24):
I hope it works. Nice to see you, Nichola Willis,
Finance Minister.
Speaker 2 (07:28):
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.
The job's five point two, yes, lower than the fire
point three predicted. So the Finance Minister did the glass
half fall and bemow the miners, which is fair enough,
I guess Nichola Willis is back will us a very
good morning to you.
Speaker 2 (00:10):
Good morning right.
Speaker 1 (00:11):
I do worry as should you about Auckland though six
point one is a one big increase and two way
too high.
Speaker 2 (00:20):
Yes it is, and that's why we are so focused
on making sure the conditions that are recovery in Auckland
are in place. We're doing six billion dollars worth of
public infrastructure projects ahead of Christmas that will be real
people in real jobs. Importantly, that lower interest rate means
that I think you are going to see some private
sector construction get going again. The lighted to see Auckland
(00:42):
Port expansion given the green light during the fast track process,
and that fast track process we'll see some big developments
occurring in the near future as well. That'll be a
bit of a help to Auckland. But overall, what we're
seeing here is what you always see after an economy
goes through a difficult period, which is that unemployment is
the last thing to get fixed because it does take
(01:03):
time for those lower interest rates to flow through into the.
Speaker 1 (01:06):
Real economy, and that is one hundred percent correct. Trouble is,
it was supposed to be happening by now, and certainly
happening by the end of twenty five. And as an
economist on the program said, we can really look now
to twenty twenty six because yesterday was not the worst
of it. And I think you admitted that, didn't you.
Speaker 2 (01:21):
Well, I'm going to push back on you because actually
in the first quarter of this year we had growth
at zero point eight percent, which annualized would be over
three percent. That was a wartime in Australia. Well, that
was four times the rate of growth that occurred in
the first quarter in Australia. It is actually a healthy
level of growth. Also, when you look at unemployment compared
to what was being forecast ahead of the election, not
(01:44):
as we are now eight thousand fewer people unemployed than
had been predicted. So we are coming in below the
worst case scenarios. Doesn't thing. We're satisfied and we have
to push all of those things that are going to
support growth. We're having a export lead recovery. That dairy
price is hi. Our exporters are continuing to persevere and
access in your markets, get good value, and the government
(02:06):
for albert is cutting through the red and green cape.
We're ensuring that those public sector construction projects are getting underway.
We've got that investment, this tax policy which is giving
businesses confidence and a reason to invest and grow, and
we are going to keep at it. This country has
great prospects. We buy, make and sell things that the
(02:26):
world wants. We do it really well, we do it
really efficiently. That will continue to be the case. We
don't need a bit of migo bay.
Speaker 1 (02:33):
I agree, so well argued, and you're right, you're one
hundred percent correct. But your zero point eight and this
is where you get too political. Zero point eight was
Q one. Q two I doubt will be much above
zero and Q three is a problem as well, which
off sets you. Let's time zero point eight times four
and come to three point two, because life don't work
that way.
Speaker 2 (02:49):
Nikoler, Well, look, I agree with you. I am very
aware that Q two has been challenging, and you know
Liberation Day in April mark of Q two, and it
is no question I've spoken to many business people who
took caution from that who've been very nervous about it,
and that will have affected confidence, investment intentions, all of
(03:12):
those things. I think I do have a job to do,
which is to say, yes, it's not great to have tariffs,
but actually, relatives to the rest of the world, we're okay.
Our exporters are very resilient. They are continuing to grow
their volumes, and so let's not overdo how bad the
Trump tariffs are going to be for New Zealand and
let it knock our confidence. I think that's what you
(03:33):
saw into too. It will be reflected in the real data.
I agree, but I still have great confidence that the
fundamentals in the economy are good.
Speaker 1 (03:40):
Here's your next problem. Wages at two point four and
now below inflation, we're going backwards.
Speaker 2 (03:45):
Well, you're using a different measure where I use the
average hourly earnings measure, which allows for the fact that
people get promotions and change jobs. That roads were five
percent in the part.
Speaker 1 (03:56):
Yeah, well, if you're changing, Nicholas, this is your two
pit again. I'm just looking at the numbers yesterday. Two
point four is below the rate of inflation that you
know people are going to use that against you. We
are going backwards.
Speaker 2 (04:08):
Well, there are two measures that you can use. The
measure you're using as a valid measure. The measure i'm
referring to allows for the fact that people switch jobs
to take promotions. The exciting thing in their mic that
I'm sure you're welcome is that it's being driven by
private sector wage growth. For a change. We've had a
period in which a lot of the wage growth that
was occurring was through collective bargaining or through what pay
(04:32):
equity settlements and the like, which was the taxpayer paying
public servants more. We now have a situation where it's
the private sector that is able to pay its employees more.
That's more sustainable economy because when the private sector is
choosing to pay their workers more, not only does that
mean that they are feeling profitable, but it also means
we're creating real, sustainable wage growth. So I take a
(04:53):
positive from that. But I'm with you. We do want
to drive all of those measures higher. But it is
not my job to talk to this economy. It's my
job to look at the real data, what's telling us
the positive things that are happening.
Speaker 1 (05:05):
Okay, now, now we're going to run into trouble with
each other again, because I'm at least in part blamed, Well,
I'm blaming the RB. I think Christian Hawksby spends too
much time in a room, and he's wrong and he
will it's two point five as neutral. He needs at
least three more cuts and they've undercooked this and that's
not helping. You tell me I'm wrong.
Speaker 2 (05:23):
Well, well, every bank economist seems to agree with you, Mike,
which is there saying in a couple of weeks the
Reserve Bank needs to reduce interest rates again before casting
at least another reduction by the end of the year,
and on the real data, that would be in line
with the Reserve Bank continuing with its track, which has
continued to be that they should be reducing the official
(05:44):
test rate. Now, obviously they're independent, they make those decisions.
But independent economists can't see any day other than down
for interest rates, and I see that as a positive.
Speaker 1 (05:56):
Well, is it? Because my argument would be if they'd
been more nimble, if they'd been more in touch with
the economy, the real economy, not just wants and numbers,
they would have felt it, seen it and acted sooner.
In acting sooner, it would have turbo charged the place better.
Speaker 2 (06:11):
Well, you've heard my criticisms of the Reserve banks decision
making after COVID. I think they overdid it then and
then we're reasonably slow to recover. But at this point,
what we can see is they've got options, got the
ability to move down. And that's what everyone's expecting to see.
Speaker 1 (06:29):
Yeah, I couldn't do your job. I'd be in as
a year, I'd be giving and what for? By now?
The thing that worries me. Do you see these numbers yesterday?
The number of kids leaving school with no as in,
no qualifications teny six hundred. We've got sixteen percent of
kids leaving school with not a single thing that will
help them for the rest of their lives. How's that?
Speaker 2 (06:48):
And that is why Erica Standard is on a massive
mission to bring back basic literacy, numeracy, reading, writing, maths
into our schools. She's rolling out those textbooks, she's rolling
out that structure curriculum. We're very serious about it. That's
why we're replacing MCA. We know that if you have
children leaving school without those basics, that is a fiscal
(07:09):
disaster and economic disaster. Frankly, it's a moral disaster. So
this idea that schools should be a pick a pass
adventure where we just talk about well being all day.
We've rejected that. We're going back to the orthodoxy, back
to the basics that actually equip young New Zealanders for life.
Speaker 1 (07:24):
I hope it works. Nice to see you, Nichola Willis,
Finance Minister.
Speaker 2 (07:28):
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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