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Nicola Willis: Finance Minister on the ongoing trade talks with India · Best of Business

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  Speaker 1: You're listening to a podcast from News talks'b Follow this
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  Speaker 2: Us now as Nikolaulus the Finance Minister, Hi, Nikola Hi? Ever,
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  Speaker 2: are we going to get an FTA with India in
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  Speaker 2: the first half of next year?
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  Speaker 3: I am not going to get cut across the trade
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  Speaker 3: ministers negotiating timeline, but they are pushing very hard and
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  Speaker 3: there has been a heck of a lot of work
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  Speaker 3: happening and they're making good progress.
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  Speaker 2: Okay, what are we going to do about these bank profits?
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  Speaker 3: Well, look, as I've said in the past, there's no
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  Speaker 3: silver bullet to this one. Actually what you want is
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  Speaker 3: a more competitive banking sector, so that the banks are
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  Speaker 3: offering better products and services at better prices to New Zealanders.
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  Speaker 3: Because I think actually a lot of people get it.
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  Speaker 3: It's okay for business to make a profit. But normally,
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  Speaker 3: if you're seeing profits of this level, you'd expect there
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  Speaker 3: to have been a breakthrough new innovation or an incredible
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  Speaker 3: new technology that they're brought market, or a huge number
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  Speaker 3: of new customers have come on board. But none of
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  Speaker 3: that's the case here, and I found it reassuring this
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  Speaker 3: morning to even hear Mike Hosking acknowledge that maybe I've
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  Speaker 3: got a point that more competition is needed, and so
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  Speaker 3: that's why we've been progressing these detailed regulatory reforms that
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  Speaker 3: the Commerce Commission proposed. None of it is going to
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  Speaker 3: fix it overnight, but it's really important that we get
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  Speaker 3: the settings right so that people can come and eat
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  Speaker 3: the lunch of the big guys. They can come in
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  Speaker 3: and cut away at their business because they're big profits.
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  Speaker 2: Okay, so some of the problems and you've identified this
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  Speaker 2: yourself as the capital requirements in the proposals that you're
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  Speaker 2: looking at at the moment, do either of them reduce
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  Speaker 2: how much capital they currently have to hold.
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  Speaker 3: Well, at the moment, they are going to have to
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  Speaker 3: ramp up how much capital they hold into the future.
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  Speaker 3: So the proposals that the Reserve Bank is consulting on
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  Speaker 3: would ease that ramp up. So they would do that
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  Speaker 3: in different ways. They would change the nature of the
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  Speaker 3: capital that they need to hold, and they would make
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  Speaker 3: New Zealand more aligned with other countries we like to
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  Speaker 3: compare ourselves with, but.
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  Speaker 2: Aligning ourselves of the Australians because apparently the Australian banks
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  Speaker 2: have to hold less capital than we're requiring New Zealand
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  Speaker 2: banks to hold.
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  Speaker 3: That is correct, and that's partly because when international observers
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  Speaker 3: look at New Zealand versus Australia, they think that New
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  Speaker 3: Zealand is a riskier banking market, and therefore our banks
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  Speaker 3: should be required to hold more capital so that the
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  Speaker 3: tax payer doesn't end up having to fund a bailout. Now,
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  Speaker 3: there are arguments around how close we should be to Australia,
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  Speaker 3: and that's part of what the Reserve Bank is consulting on.
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  Speaker 2: Do you think the Reserve Bank should consider dropping the
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  Speaker 2: level because the only consideration the moment, from the sounds
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  Speaker 2: of things, is increasing it.
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  Speaker 3: Well, I think that the Reserve Bank should ensure that
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  Speaker 3: banks are holding the minimum level of capital required for
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  Speaker 3: the system to be stable. And that's a balance that's subjective,
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  Speaker 3: isn't it.
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  Speaker 2: I mean that is subjective because Adrian wanted us to
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  Speaker 2: hold a whole lot more capital than we are. If
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  Speaker 2: you're not prepared to say yourself, now, Nichola, if you're
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  Speaker 2: not prepared to say that it should go backwards, then
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  Speaker 2: what you're accepting is we will always play more on
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  Speaker 2: mortgages than the Australians do.
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  Speaker 3: I'm accepting my role, Heather, which is under the way
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  Speaker 3: our legislation works, the Reserve Bank is responsible for prudential
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  Speaker 3: regulation making and decision making about where these rules sit.
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  Speaker 3: What our legislation requires and what I, as the Minister
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  Speaker 3: require is that they do what's needed for financial stability.
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  Speaker 3: What I changed was I said to them, I also
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  Speaker 3: want you to actually think about competition. And my remit
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  Speaker 3: to them is really specific in asking them to think
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  Speaker 3: a lot more about that and efficiency, and I think
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  Speaker 3: that's partly what prompted them to review this. In the
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  Speaker 3: absence of me being Minister, I'm pretty sure they wouldn't
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  Speaker 3: be reviewing it at all.
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  Speaker 2: Hey, do you know when the Maui gasfield is closing?
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  Speaker 1: No? I do not.
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  Speaker 2: Nobody's told you decender next year.
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  Speaker 3: No, I haven't been advised of that. Actually, don't take
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  Speaker 3: part in kebnet decisions relating to that in adherence with
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  Speaker 3: the case.
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  Speaker 2: Oh of course, because you've got some disclaimers.
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  Speaker 3: There under that.
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  Speaker 1: Yeah.
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  Speaker 3: Luck, we have Cabinet Office rules and I apply them
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  Speaker 3: in this case.
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  Speaker 2: I hadn't thought about it that. Are you worried about
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  Speaker 2: this though? If the Mali gas field closes and their
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  Speaker 2: method ex closes, that's a big loss, isn't it.
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  Speaker 3: Well, this was a huge motivator behind the government's energy reforms,
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  Speaker 3: is that we're looking ahead to a future where we
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  Speaker 3: need to make sure we can keep the lights on,
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  Speaker 3: and in the absence of being able to have guess
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  Speaker 3: and coal, you've got a big problem. So that's why
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  Speaker 3: Huntley now has a big coal mountain outside it, because
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  Speaker 3: actually you need something to spark the lights on, and
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  Speaker 3: you need to make sure that that electricity is increasingly affordable,
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  Speaker 3: not unaffordable.
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  Speaker 2: Hey, listen on the Cox, the leader of the opposition
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  Speaker 2: set there, says this needs to basically be handled by
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  Speaker 2: their prime minister and our prime ministers sitting down with
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  Speaker 2: each other. We prepared to do that.
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  Speaker 3: Well, those discussions are ongoing. I think there's been some
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  Speaker 3: reporting sort of suggesting that they're on ice. That's not
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  Speaker 3: the case that I understand. There's still constructive discussions happening
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  Speaker 3: between the two governments. And we are still continuing a
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  Speaker 3: lot of assistance to the Cook Islands, about thirty five
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  Speaker 3: million in direct support for Cook Island projects. What's on
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  Speaker 3: pause is the direct budget payments. It's a reluctant decision
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  Speaker 3: and we are continuing to progress those discussions and we'll
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  Speaker 3: obviously do that through all the appropriate channels.
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  Speaker 2: Okay, and what about the Prime Minister, because it seems
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  Speaker 2: like it's a Mark Brown v Winnie Pee thing.
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  Speaker 3: Well, I don't see it that way. I actually think
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  Speaker 3: it goes to the trust between the Cook Islands and
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  Speaker 3: New Zealand and everybody and everybody. Yeah, I don't Well, no,
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  Speaker 3: obviously Cook Island does get along very well. No, it's
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  Speaker 3: a Cook Island's government issue in which they broke down
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  Speaker 3: the level of trust between the governments and that has
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  Speaker 3: been damaged because of the way they behaved in relations
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  Speaker 3: to the security agreement with China. And that is a
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  Speaker 3: policy issue rather than a personal issue.
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  Speaker 2: Okay, when are you going to announce what assets you
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  Speaker 2: want to sell after the next election.
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  Speaker 3: Well, we've ruled out asset sales during this term of
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  Speaker 3: government as a consequence of our coalition agreements. However, the
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  Speaker 3: National Party will bring its own policies to the next
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  Speaker 3: election Campaigny.
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  Speaker 2: So is it just going to be announcing the election campaign,
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  Speaker 2: is it?
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  Speaker 3: Well, we continue to do the work that's necessary to
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  Speaker 3: make sure we're managing our balance sheet of assets much
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  Speaker 3: much better than has been the case in the past.
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  Speaker 3: There tends to be a lot of focus on the
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  Speaker 3: commercial assets, but let's remember we've also got hundreds of
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  Speaker 3: billions of dollars worth of social assets, hospitals, schools, roads,
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  Speaker 3: and our government and the National Party are very committed
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  Speaker 3: to building more of those to allow for a growing population,
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  Speaker 3: and so the question becomes, how do you fund those responsibly?
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  Speaker 3: How do you make sure you can build the roads
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  Speaker 3: and schools and the hospitals.
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  Speaker 2: Such a simple question, Nicola, was such a simple question.
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  Speaker 2: You're talking, well, I'm friendly. I'm friendly on this. I
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  Speaker 2: think we need to sell assets. You know you can.
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  Speaker 2: You can just answer the question as much.
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  Speaker 3: But you understand where I'm coming from, which is I've
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  Speaker 3: got a carlos.
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  Speaker 2: Agree and you've got to sell me your lines.
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  Speaker 3: So that's pretty simple. And so when I'm talking to
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  Speaker 3: you as the Finance minister, I have to abide by
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  Speaker 3: my carlos are otherwise I don't get the votes to
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  Speaker 3: do what we need to do.
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  Speaker 2: Thank you, Nicola, look after yourself. We're talking to you
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  Speaker 2: next week. Nicholavella's Finance Minister for.
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