Nicola Willis: Finance Minister unveils plan to tackle inflation issues following CPI update

The Finance Minister says the Government has a plan to tackle non-tradeable inflation.

CPI increased 3.3 percent in the year to June, a fall from the 4 percent rise in the year to March.

Nicola Willis says things like higher rents are sticking around.

She says they want to help push that inflation down with more housing supply.

"That's what will ultimately push rents lower - and we are conducting significant reforms to ensure that more homes can be built more cheaply."

Meanwhile, ANZ has already announced cuts to its home loan interest rates.

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Episode Transcript

Speaker 1 (00:00):
So the data is out annual inflation falling to three
point three percent in the June quarter, lifting hopes of
possible interest rate cuts sometime soon, asb now forecasts a
twenty five basis point cut to the OCR in both
October and then again in November fifty basis points this year. However,
non tradable inflation is still worryingly high, according to the data,

(00:21):
five point four percent for the quarter. Finance Minister Nichola
Willis is with us this evening, keilder.

Speaker 2 (00:26):
Good evening, Sure, good evening, Jack.

Speaker 1 (00:29):
Is the cost of living crisis over?

Speaker 2 (00:33):
We are turning the corner. We are making very good progress.
It's not over until inflation is back in the band
and we're seeing interest rates coming down. But today's data
shows us we are on track. We're making very good progress.
Inflation is now the lowest it's been in three years.
It's lower than many we're predicting it would be at
this point, and all signals of it. Our plan is working.

(00:57):
So I'm very pleased by today's data.

Speaker 1 (00:58):
Let's talk about that non catable inflation. We often call
that that the domestic inflation relative to the international forces
at play. Five point four percent is still very high.
What do you put that down to.

Speaker 2 (01:10):
Well, what the data tells us is that the big
components there are rents, insurance rates, and home energy costs.
That is easing. That's down from five point eight percent
in March and down from six point six percent this
time last year. So it clearly needs to move lower.
But overall that picture has improved.

Speaker 1 (01:29):
Rents and rates still a big issue. What can you
do about that?

Speaker 2 (01:34):
Well, we are determined to increase housing supply in New
Zealand because ultimately we want landlords having to keep harder
for tenants. That's what will ultimately push rents lower. And
we are conducting significant reforms to ensure that more homes
can be built more cheaply, both in terms of land
uice and in terms of building consents on rates book.

(01:55):
I've put the challenge out there to councils me as
it doesn't every single household in the country have been
pulling in belts, being very disciplined about budgets. It's time councils,
I think that the same thing.

Speaker 1 (02:08):
So are there are obvious areas where you think councils
should perhaps be trimming their belts a little bit?

Speaker 2 (02:13):
Well, I just think they should do an exercise similar
to the one we've done as a government, which is
go line by line and work out are the bits
that could be trimmed back that no longer look like
the most important thing. When you have new Zealanders, you know,
particularly those on fix thing come superinutence who look at
that rates bill climbing at the rate it is and
it feels very unaffordable. So Council has to step back,

(02:35):
look at their own costs and say is there anything
here that we could be trimming.

Speaker 1 (02:39):
A lot of the cuts that you announced in the
budget haven't yet come into fruition their plan that they
haven't come through all the way yet, So look at
this as critically as you can. Minister. How much credit
can the government really take for this?

Speaker 2 (02:54):
Well, I think that we've had a period where the
government's made it a lot haigh for the Reserve Bank.
They were actively pouring fuel on the inflation via in
the form of rapidly increasing expenditure, and we've put the
handbrake back on and that can only be helpful. And
the direction that we have seat is one in which

(03:15):
we're going to be much more disciplined about government spend there,
which I hope means the Reserve Bank will be able
to reduce interest rates quicker than would otherwise be the case.
We've also honed and on what is actually behind the
cost of living crisis, which for many people is that
their household budget doesn't stretch as far. We're going direct
to the source. We're offering tax release so that people

(03:37):
will have more money in their bank accounts, and that
will be coming on stream in just two weeks.

Speaker 1 (03:42):
Finance Minis Nicola Wellis, thank you for your time, Thank
you for more from Hither Duplessy Allen Drive. Listen live
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