Latest / Best of Business / Nicola Willis: Finance Minister unveils plan to tackle inflation issues following CPI update

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Nicola Willis: Finance Minister unveils plan to tackle inflation issues following CPI update · Best of Business

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  Speaker 1: You're listening to a podcast from News Talk st B.
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  Speaker 1: So the data is out, annual inflation falling to three
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  Speaker 1: point three percent in the June quarter, lifting hopes of
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  Speaker 1: possible interest rate cuts sometime soon. ASB now forecasts a
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  Speaker 1: twenty five basis point cut to the OCR in both
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  Speaker 1: October and then again in November fifty basis points this year. However,
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  Speaker 1: non tradable inflation is still worryingly high, according to the data,
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  Speaker 1: five point four percent for the quarter. Finance Minister Nichola
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  Speaker 1: Willis is or with us this evening, Kelder.
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  Speaker 2: Good evening, Sure, good evening, Jack.
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  Speaker 1: Is the cost of living crisis over?
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  Speaker 2: We are turning the corner. We are making very good progress.
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  Speaker 2: It's not over until inflation is back in the band
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  Speaker 2: and we're seeing interest rates coming down. But today's data
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  Speaker 2: shows us we are on track. We're making very good progress.
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  Speaker 2: Inflation is now the lowest it's been in three years.
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  Speaker 2: It's lower than many we're predicting it would be at
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  Speaker 2: this point, and all signals of that our plan is working.
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  Speaker 2: So I'm very pleased by today's data.
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  Speaker 1: Let's talk about that. Non tradable inflation. We often call
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  Speaker 1: that that the domestic inflation relative to the international forces
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  Speaker 1: at play. Five point four percent is still very high.
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  Speaker 1: What do you put that down to.
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  Speaker 2: Well, what the data tells us is that the big
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  Speaker 2: components there are rents, insurance rates, and home energy costs
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  Speaker 2: that is easing. That's down from five point eight percent
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  Speaker 2: in March and down from six point six percent this
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  Speaker 2: time last year. So it clearly needs to move lower.
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  Speaker 2: But overall that picture has improved.
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  Speaker 1: Rents and rates still a big issue. What can you
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  Speaker 1: do about that?
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  Speaker 2: Well, we are determined to increase housing supply in New
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  Speaker 2: Zealand because ultimately we want landlords having to keep harder
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  Speaker 2: for tenants. That's what will ultimately push rents lower. And
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  Speaker 2: we are conducting significant reforms to ensure that more homes
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  Speaker 2: can be built more cheaply, both in terms of land
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  Speaker 2: sand in terms of building consents on rates. Book The
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  Speaker 2: challenge out there are councils. We as a government in
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  Speaker 2: every single household in the country have been pulling in belts,
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  Speaker 2: being very disciplined about budgets. It's time councils, I think
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  Speaker 2: that the same thing.
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  Speaker 1: So are there are obvious areas where you think councils
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  Speaker 1: should perhaps be trimming their belts a little bit.
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  Speaker 2: Well, I just think they should do an exercise similar
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  Speaker 2: to the one we've done as a government, which is
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  Speaker 2: go line by line and work out are the bits
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  Speaker 2: that could be trimmed back that no longer look like
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  Speaker 2: the most important thing when you have New Zealanders, you know,
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  Speaker 2: particularly those on fixed income supernutence, who look at that
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  Speaker 2: rates bill climbing at the rate it is and it
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  Speaker 2: feels very unaffordable. So council has to step back, look
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  Speaker 2: at their own costs and say is there anything here
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  Speaker 2: that we could be trimming.
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  Speaker 1: A lot of the cuts that you announced in the
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  Speaker 1: budget haven't yet come into fruition their plan that they
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  Speaker 1: haven't come through all the way yet, So look at
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  Speaker 1: this as critically as you can, Minister. How much credit
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  Speaker 1: can the government really take for this?
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  Speaker 2: Well, I think that we've had a period where the
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  Speaker 2: governments made it a lot harder for the Reserve Bank.
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  Speaker 2: They were actively pouring fuel on the inflation via in
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  Speaker 2: the form of rapidly increasing expenditure, and we've put the
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  Speaker 2: handbrake back on and that can only be helpful. And
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  Speaker 2: the direction that we have set is one in which
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  Speaker 2: we're going to be much more disciplined about government spend
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  Speaker 2: there which I hope means the Reserve Bank will be
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  Speaker 2: able to reduce interest rates quicker than would otherwise be
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  Speaker 2: the case. We've also honed and on what is actually
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  Speaker 2: behind the cost of living crisis, which for many people
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  Speaker 2: is that their household budget doesn't stretch as far. We're
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  Speaker 2: going direct to the source. We're offering tax release so
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  Speaker 2: that people have more money in their bank accounts and
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  Speaker 2: that will be coming on stream in just two weeks.
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  Speaker 1: Finance Minister Nicholaillis, thank you for your time. Thank you
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