Prime Minister Christopher Luxon has defended Finance Minister Nicola Willis and insisted the economy is beginning to recover despite recent figures showing weak growth.
Speaking at a press conference, Luxon said New Zealand had inherited “the biggest recession in 35 years” and the “longest hangover of Covid of any Western country.” He said global uncertainty, including tariff disputes, had dented business confidence and consumer spending earlier in the year, but the outlook had now improved.
“We’re having to pooper scoop and clean up the mess that was been left behind.”
“We’re growing now. We’re projected to grow more strongly going into the next quarter, and importantly, you’ve seen different economists say we’ll grow faster than Australia over the next two years,” he said.
Luxon dismissed opposition criticism of Willis’ performance, saying she was the best person for the job.
“Absolute rubbish. Nicola Willis is the best person to be finance minister and economic growth minister in this whole country. She is absolutely outstanding. I see how hard she works. I know what she’s wrestling with. She is cleaning it up, and she’s doing an exceptionally good job,” he said.
The Prime Minister said New Zealand was working through the effects of poor management under the previous government.
“But what we’re dealing with is the biggest recession we’ve had in 35 years. And that has happened because when you don’t run the economy well, you don’t control spending, you’ve led to high inflation, high interest rates, and that’s put the economy into recession. And when the economy goes in recession, people start losing their jobs, and that’s why I say, if you care about working New Zealanders, you have to run the economy well,” he said.
He said the government was responding with planning reforms, the fast track consenting process, an investment boost to encourage businesses to invest in plant and equipment, and funds for major events to stimulate the local economy.
“Yes, it’s choppy, yes, we’re coming through a massive recession and coming out of it, and we’re having to poop a scoop and clean up the mess that we’ve been left behind. But we’re working our way through that, and there are much better days ahead of us,” Luxon said.
“If you go to Christchurch, if you go to Otago, if you go to Canterbury, if you go to our rural communities, if you go to our primary industry sectors, if you go to Hawke’s Bay, if you look at what’s happened across dairy, red meat, across horticulture, they’ve had record years. The reason is that exporting in huge quantities into around the world, and so, you know, it feels different. There is obviously more work to do, but you’re seeing those economies. They are growing, and they are experiencing growth. It’s been two speed, as I’ve said, because we’ve got challenges here in Auckland, and it’s coming last to Auckland and Wellington,” he said.
Luxon also pointed to falling inflation and interest rates, a strong export sector, and record years for primary industries in the South Island. He acknowledged conditions remained difficult in Auckland and Wellington, but said policies such as fast track legislation and infrastructure investment would drive further growth.
“We’ve got $7 billion worth of construction projects up and running with shovels in the ground before Christmas,” he said, adding the $1.5 billion Melling Interchange project in Wellington was among the government’s priorities.
He also underlined the government’s relationship with the Reserve Bank, saying it was independent but worked alongside fiscal policy. He said falling mortgage rates would soon benefit many households.
“Forty two percent of New Zealanders are yet to re fix their mortgages within the next six months to get the benefit of the cuts that have already happened,” Luxon said. “We project that there’ll be further cuts between now and Christmas, when New Zealanders with an average mortgage can get back $330 a fortnight into their back pockets.”
Luxon accepted the April to June quarter had been difficult but said more recent data showed momentum was returning.
“A small country like New Zealand gets smacked around big time by the global trade winds. But you know, we’re growing now, and we’re going to grow even stronger from here,” he said.
