Steven Joyce: Former Finance Minister on the predicted economic growth for NZ

New Zealand's on track for stronger economic growth but it could take a while to flow through to house prices. 

Westpac is forecasting New Zealand will outpace Australia's growth over the next few years. 

But New Zealand will still face a higher unemployment rate and lower wage growth, and the recovery's likely to be felt in some regions much sooner than others. 

Former Finance Minister Steven Joyce told Mike Hosking property will be the last sector to see a turnaround. 

He says New Zealand saw property prices go up 40% during the boom, compared to a 30% rise in Australia. 

Joyce says it’ll be an export-led recovery – something we haven't had for a while. 

He says with an export-led recovery, Auckland feels it later than other regions, which is what we're seeing now. 

LISTEN ABOVE 

See omnystudio.com/listener for privacy information.

Episode Transcript

Speaker 1 (00:00):
So if you're listening Monday, we were talking to the
Prime Minister about New Zealand aren't growing Australia. If current
forecasts are correct, if we're on track for two point
simpercinc growth, we're outgrowing Australia.

Speaker 2 (00:10):
Yep.

Speaker 1 (00:11):
That seemed to come as some sort of surprise to
the Prime Minister. But we can back it up this
morning with a new report from Westpac confirms over the
next several years, in fact, we should have a divergence.
So if we outplace Australia on growth, does the brain
drain reverse? In good times? Role in Stephen Joyce, former
Finance Minister of Courses with a Stephen Morning to you money,
Mike con do you well? Thank you?

Speaker 2 (00:30):
Do you believe it generally? Yes? I do. I've had
a look at the report and look at the graphs. Actually,
it's a really cool report because it basically puts the
two countries alongside each other in a whole range of areas,
and it tells the story of basically the whole COVID
period and after that, and I think to summarize it roughly,
we had worse settings during and after the COVID thing

(00:55):
from an economic perspective, and we're getting more sensible pop
settings now. The Australians had a slightly better set of
settings during the COVID period. They weren't as they weren't
as proplygate on the fiscal side. They didn't they didn't
sort of have those huge quick swings in interest rate
policy that we had, and then they did. They were

(01:18):
doing worse since because I've now opened up the fiscal
floodgates and the net effect of all that is that
will come out of it now quicker than them, but
we're further behind.

Speaker 1 (01:28):
Will we see it and feel it and break out funk?

Speaker 2 (01:32):
I think we will. That's my read of it. I've
been early to the downturn. When people have asked me
going through all the COVID period, I was sort of
the negative nelly and probably on one of the first
positive people coming out the other side. In the sense
that I actually do think it's going to turn. It'll
be more like a traditional export lead recovery, and we

(01:55):
haven't had one of those for a while, so we're
not very familiar with it. But with an export lead recovery,
all contends to arrive last to the party, and we're
seeing that here and it's at the moment it's a
it's a bit patchy everywhere else, but it's starting to
come and I think property will be the last to arrive,
largely because we went so nuts during COVID with all

(02:19):
the stimulus that we got. Our property prices up forty
percent and Australians only went up thirty percent, which was
bad enough. So you know we've got that hangover to
deal with.

Speaker 1 (02:27):
Still, do people take that into account when you talk
about things like a brain drain? Do people go to
Australia because they go look at the economy and I mean,
I can cite you a million things with the Australian
economy that are miserable, like the cost of a house
and the cost of groceries and all the other problems
they've got. But do people actually think about that or
it's just a it's a vibe.

Speaker 2 (02:44):
Well it's sort of a vibe, but it's always based
on something, right. So we had a similar sort of
experience when I was in government when we met the
Cannabal earthquakes and a lot of people, particularly from the
South Island left after the Cannibal earthquakes. We had very
bad immigration statistics and then the economy came right and
actually came better than the Australian economy, and yes, people
started to come home. It took a little while for

(03:05):
it to happen, and they stayed Togo. Actually it's better
at home. And I remember going over there and doing
those job expose we did and to encourage people to
come back from Australia because we needed them. And the
Australian media was really confused. It was like why would
you why would people move to New Zealand And that

(03:26):
was the early stages of that, but over time it
happened and I think we're heading into a similar period now.

Speaker 1 (03:31):
Politics of it all makes for interesting reading, doesn't it.
I mean, this time's nicely for an election year.

Speaker 2 (03:37):
Well I could do. Whether it comes in time to
help the government more the normal or less than normal,
that'll be the That'll be the test. Really. I mean
it's the public are we're looking for proof that things
are working. And it has been a really long, really
tough recession for going back three or four years now,

(03:58):
so it has been really difficult. So everybody will be
a bit cynical and you can see that whenever there's
a green tinge on the economy, Well, that's going to
go bad again, and it did happen this year because
the US tariffs really snuffed out the sort of recovery.
And of course he President Trump hangs over the world

(04:19):
economy again now his behavior with the Federal Reserve. So
that's the wild card in all of this is do
we actually get sufficiently settled economic conditions that our recovery
really does take hold.

Speaker 1 (04:32):
Good stuff. Appreciate you times almost Stephen Joyce, former Finance
minister of course. For more from the Mic Asking Breakfast,
listen live to news talks. It'd be from six am weekdays,
or follow the podcast on iHeartRadio.