Latest / Early Edition with Ryan Bridge / Nicola Willis: Finance Minister on the Reserve Bank cutting the Official Cash Rate to 2.25%

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Nicola Willis: Finance Minister on the Reserve Bank cutting the Official Cash Rate to 2.25% · Early Edition with Ryan Bridge

• 0:06
  Speaker 1: Good morning New Zealand. It is the dawn of a
• 0:07
  Speaker 1: new day. We've begun our slide down the interest rate curve.
• 0:12
  Speaker 1: The Reserve Bank, with Adrian or at the helm, has
• 0:14
  Speaker 1: cut the OCR twenty five basis points to five point
• 0:17
  Speaker 1: twenty five percent, but economist Brad Olsen reckons we can't
• 0:21
  Speaker 1: trust them after they said just three months ago that
• 0:25
  Speaker 1: we weren't cutting until twenty twenty five and even discussed
• 0:28
  Speaker 1: an increase. Nikola Willis is the Finance minister. She joins
• 0:31
  Speaker 1: me this morning, Good morning minister, good morning line.
• 0:34
  Speaker 2: You played my songs. It's dark as before the dawn,
• 0:38
  Speaker 2: Thank you for that.
• 0:39
  Speaker 1: We're actually discussing is it darkest before the dawn? Isn't
• 0:42
  Speaker 1: it as dark at two am as it is it four?
• 0:45
  Speaker 2: I think we all know that nighttime comes before morning,
• 0:48
  Speaker 2: and I think it is still cloudy out there, but
• 0:51
  Speaker 2: there are rays of light getting through. And we always
• 0:55
  Speaker 2: said with the economy, what we need to see happen
• 0:57
  Speaker 2: as inflation come under control, so interest rates can come
• 1:01
  Speaker 2: down and gross can recover. And what the Reserve Bank
• 1:05
  Speaker 2: emphatically said yesterday is that they think inflation is now
• 1:09
  Speaker 2: under control. They're forecasting it being back and target, and
• 1:13
  Speaker 2: that's given then the confidence they need to actually reduce
• 1:16
  Speaker 2: interest rates. So that's positive news for a lot of people.
• 1:19
  Speaker 1: Isn't the problem that they emphatically said basically the opposite
• 1:22
  Speaker 1: three months ago? Do you trust them?
• 1:25
  Speaker 2: Ah? Look, I do trust the Reserve Bank to do
• 1:27
  Speaker 2: their job, and it's important they let them do their
• 1:30
  Speaker 2: job independently. And when I look at the decision yesterday
• 1:34
  Speaker 2: and the data that backs it up, there are facts there.
• 1:38
  Speaker 2: You know, inflation has come down to three point three percent,
• 1:41
  Speaker 2: that is the lowest it has been in three years.
• 1:45
  Speaker 2: And all I need to do is go around New
• 1:47
  Speaker 2: Zealand at the moment to know the economy has slowed
• 1:51
  Speaker 2: down and so seeing interest rates come down to me
• 1:55
  Speaker 2: is logical. But ultimately, these are independent decisions for the
• 1:58
  Speaker 2: Reserve Bank.
• 1:59
  Speaker 1: And you've got no issues with Adrian or has got
• 2:01
  Speaker 1: three more years on his term. You've also recently reappointed
• 2:05
  Speaker 1: the board chair. You've got no issues there.
• 2:09
  Speaker 2: Well, he does his job. I do my job, and
• 2:11
  Speaker 2: it's really important that we let each other get on
• 2:14
  Speaker 2: and do their job because when the rest of the
• 2:16
  Speaker 2: world looks at New Zealand, one of the things they
• 2:19
  Speaker 2: like about us is that we have good monetary policy
• 2:23
  Speaker 2: independent institutions, and that we've had a long history of
• 2:27
  Speaker 2: Reserve bank governors doing their thing, finance ministers doing their thing,
• 2:31
  Speaker 2: and they're not trying to influence each other too much.
• 2:35
  Speaker 1: Hey, just on the banks while we're there, the retail Variety.
• 2:38
  Speaker 1: That banking report from the Commerce Commissions do out this week,
• 2:42
  Speaker 1: I understand have you read that yet?
• 2:45
  Speaker 2: I had seen an advanced copy. It's really important. I
• 2:48
  Speaker 2: don't comment on its contents obviously, it's for the Commerce
• 2:51
  Speaker 2: Commission to announce later this week, but the draft report
• 2:55
  Speaker 2: has been in seculation publicly. It's clear, according to the
• 3:00
  Speaker 2: Commis Commission, we have a two tier oligopoly of banks
• 3:04
  Speaker 2: in New Zealand, that there hasn't been enough competition, that
• 3:07
  Speaker 2: there have been sustained levels of high profitability for those
• 3:10
  Speaker 2: big banks. And we are very keen to hear the
• 3:13
  Speaker 2: recommendations of a Commerce Commission and where they make sense,
• 3:17
  Speaker 2: act on them because New Zealanders deserve fair, competitive banking services.
• 3:22
  Speaker 1: Are you still considering partial privatization of Kevybank?
• 3:27
  Speaker 2: Become really keen to see Kiwibank muscle up and grow
• 3:31
  Speaker 2: so it can take on those big Ossie banks, and
• 3:34
  Speaker 2: so we are exploring options for how we could help
• 3:38
  Speaker 2: Kiwibank get bigger. It's no secret time that we don't
• 3:43
  Speaker 2: have a big pile of cash sitting around at the moment,
• 3:46
  Speaker 2: So we are looking at how we can achieve that something.
• 3:50
  Speaker 1: Would that include sorry Minster, would that include foreign investment?
• 3:54
  Speaker 1: Will any foreigner get their hands on Kwibank?
• 3:58
  Speaker 2: Well, look at this stage, the people who are kind
• 4:02
  Speaker 2: of showing interest are New Zealand entities, and it is
• 4:08
  Speaker 2: really possible. I think that there would be New Zealanders
• 4:11
  Speaker 2: who would want to invest in making a new Zealand bank.
• 4:14
  Speaker 2: Figure And I say that because I look at the key.
• 4:17
  Speaker 2: We favor funds that have built up. I look at
• 4:19
  Speaker 2: the money and super funds that's built up. I look
• 4:22
  Speaker 2: at the money that ACC invests. And actually a lot
• 4:25
  Speaker 2: of the time when I talk to people in those funds,
• 4:28
  Speaker 2: they're looking for good New Zealand investments. So it's the
• 4:32
  Speaker 2: first port of call.
• 4:33
  Speaker 1: Yeah, first port of call. But is there a second
• 4:35
  Speaker 1: portal call? Or would you rule out foreign investment in Queybank?
• 4:38
  Speaker 2: Well, look, I'm taking advice on what is needed to
• 4:42
  Speaker 2: get investment into kwibank. And if I say I've said,
• 4:46
  Speaker 2: let's look at what the options are. I think we
• 4:48
  Speaker 2: will also be interested. By the way, I think there
• 4:50
  Speaker 2: could be institutional investors from New Zealand who are interested.
• 4:54
  Speaker 2: So what if that look like, what are the next
• 4:56
  Speaker 2: steps and then we'll take proposals out and we'll talk
• 4:59
  Speaker 2: with New Zealand about them.
• 5:01
  Speaker 1: Minister, we are very short on time, but I just
• 5:02
  Speaker 1: want to quickly put to you that Health New Zealand
• 5:04
  Speaker 1: proposal to cut doctors and nurses. It sounds absolutely mad
• 5:09
  Speaker 1: and goes against everything that you guys said you wanted
• 5:12
  Speaker 1: when it came to cuts. Have you spoken to ministers
• 5:15
  Speaker 1: you're doing anything about this?
• 5:18
  Speaker 2: Well, it did sound absolutely mad, so I was very
• 5:21
  Speaker 2: pleased to see the Commissioner, mister Levy rule it out
• 5:25
  Speaker 2: and in fact expresses frustrations that such numbers were ever
• 5:30
  Speaker 2: put out into the universe because they're so far away
• 5:34
  Speaker 2: from the direction the government has given Health New Zealand
• 5:37
  Speaker 2: and the expectations we've placed on that commissioner, which is
• 5:40
  Speaker 2: we want resources going to the front line. We want
• 5:44
  Speaker 2: our doctors and nurses in a better position to provide
• 5:47
  Speaker 2: care to New Zealanders. That's our focus, and so proposals
• 5:51
  Speaker 2: like that don't have truck with us.
• 5:53
  Speaker 1: That is the Finance Minister, Nichola Willis Nicola, thank you
• 5:56
  Speaker 1: very much for your time this morning, and enjoy the dawn.
• 5:59
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• 6:02
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• 6:05
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