- And I'm Simon Shepherd. Nau mai and welcome to Newshub Nation. - On the programme today ` Peeni Henare fresh from meetings of defence ministers from around the globe. - Digital editor Finn Hogan on who's up and who's down in politics online. - And breaking down the downturn ` are we in for a world of financial pain? Bernard Hickey joins us live. www.able.co.nz Copyright Able 2022 - But first ` Tauranga voters will have their say today. 20 voting places have already opened this morning and will stay open until 7pm, with 95% of results due back by 10.30 tonight. - Newshub reporter Imogen Wells is there in Tauranga, and she joins us live now. Imogen, tena koe. It's voting day in Tauranga. Tell us how the turnout's looking so far. - Well, Oriini, we've been outside this voting booth behind me for about half an hour now since it opened at 9 o'clock. There's been a steady trickle of people going in to cast their vote. We're actually standing right by the library, and in fact, the library looks a little bit more popular than that voting booth. But looking at the advanced voting turnout, as of yesterday afternoon, just 13` just under 13,000 people had cast their vote early. Compare that to the equivalent day at the 2020 general election; that number was getting closer to 26,000. So certainly seems to be a lack of enthusiasm here for this by-election. But of course, because it's the final day of voting, candidates cannot be out there campaigning, so you can imagine, after seven long weeks on the campaign trail, some of them will be getting some well-overdue family time and maybe a few childs' sports games or two as well. - (CHUCKLES) Hopefully. Hey, turning to the week in politics now, Imogen, it's been a big week at Parliament with Australia's Penny Wong and Samoa prime minister` Samoa's prime minister Fiame Naomi Mata'afa coming to meet with our PM and Nanaia Mahuta. Tell us ` what were the outcomes of those meetings? - Well, the context here is that geopolitical power play, power struggle playing out in the Pacific, with China sneaking in there ahead of that Pacific Islands Forum, trying to get Pacific nations to sign on to security deals like the ones it secured with the Solomon Islands. Ultimately, though, it was unsuccessful. Pacific nations did send the message that they will not be used as geopolitical pawns. So Foreign Ministers Mahuta and Wong, they talked about the significance of PIF, the Pacific Islands Forum, and the 'security architecture' that is associated with it. They said they'll be using that forum to promote peace and stability, so really getting their ducks in a row ahead of that forum, which will be in Fiji next month. Looking at Samoan Prime Minister Mata'afa's visit, this was more about forging friendships. This was her first ever overseas visit as well, so the fact it was to New Zealand is a good sign and quite significant. Mata'afa is also one of those Pacific leaders that turned China down, so the question now is ` what will New Zealand do to maintain but also improve that relationship there? Looking at the Pacific Islands Forum again, we could expect to see perhaps some ongoing climate change commitments, illegal fishing commitments and even maybe some improvements to the RSC worker scheme. - Right. The other big news to hit this week was, of course, Cabinet's reshuffle. Why did the government call it a 'minor' shuffle? - Yes, it's hard to believe that that happened this week, isn't it? Monday seems so long ago. But we did get a message from the Prime Minister's office early on Monday telling us to expect a 'minor' Cabinet reshuffle. Of course, what unfolded was quite a major Cabinet shake-up. The reason the government was calling it minor, though, was because it centred or was sparked by just two people stepping down ` Kris Faafoi and Speaker of the House Trevor Mallard. But while it was just those two people stepping down, what we saw was this domino effect and this spreading out, shaking up of a wide range of portfolios. For example, Kris Faafoi ` three of his portfolios were handed to three different people. We had a minister outside Cabinet get moved inside Cabinet. We had a new minister appointed, Kieran McAnulty. We even had the COVID-19 portfolio change hands to Ayesha Verrall. But of course, the most major change that we saw on Monday was that police ministerial role ` the Prime Minister taking it from Poto Williams, handing it to her government's 'Mr Fix-It', Chris Hipkins. Poto Williams, of course, has been under fire for weeks if not months now after quite high-profile ram raids, gang activity, even extending back to that parliamentary protest and pressure over how police were handling it in those first few days. I've certainly lost track of all the changes I've just mentioned there, so calling it minor ` bit of a stretch. - Yeah. Thank you very much for that. Imogen Wells live there from Tauranga. - Well, as global tensions continue to grow, the world's defence leaders met in Singapore this week to discuss pressing security issues at the Shangri-La Dialogue. - Among them was Defence Minister Peeni Henare, who sat down for talks with his Chinese counterpart Wei Fenghe. - Fresh from his trip, I asked the Minister whether it feels like an ominous time in defence. - My read of the Shangri-La Dialogue was that there are serious security concerns worldwide, and they have shifted considerably over the pandemic. Pre-pandemic, it looked like this. Now we're two years down the road, and things have changed. But I think what I take from the dialogue most is the optimism of working together ` the fact that, for example, the US and China were in the same room, and we had a plenary session with them, and we got to meet with so many different people for the first time in person, many of us. - OK. - So there was a good optimism. - But, I mean, there's Ukraine. There's the South China Sea, the Pacific. What concerns you the most? - Number one priority has always been the Pacific. When I announced our priorities, I said it was the Pacific, and I'm not shy to say that, at the time, everyone said I got it wrong and it should be South China Sea. But obviously, it's proven that the Pacific needs to be of interest to all of us. And we've made that clear, and I made that clear to the colleagues that I met while I was in Singapore. - All right. We'll talk more about the Pacific in a moment. But is there an increasing pressure from our neighbours for New Zealand to increase its military spend because of the increase in geopolitical tension? - No. I've had multilateral meetings, bilateral, multilateral meetings over the past week. Not one person has raised the spend on defence. - Cos our spend is 1.5% of GDP ` similar nations, 2%. It's higher. - Well, we're higher than Canada, and we've come a long way since the previous National government. But like I've always said` - We're not as high as Australia. It's just across the ditch. - No, we aren't as high as Australia. That's correct. We're also in a very different position to Australia. But I also want to be clear that my discussions with the Deputy Prime Minister from Australia, who's their Defence Minister ` we were quite excited about the opportunity of working together, acknowledging that they have vast more resources than we do. So we've got to be fitting with them and in sync with them. - Have we run out of money? Because I noticed that a new ship project has just been put on hold by Defence. Is that the end of the cash flow? - No, not at all. We've made it clear with the Minister of Finance, and he's made it clear to us that we will still consider every project on a project-to-project basis. We've just invested over $4 billion in more assets to help us with the Defence Force that will also improve our ability to service the Pacific even more. - OK. You also met with Admiral Bauer, who's the chair of the NATO military committee, whilst you were up there. They're inviting New Zealand to the NATO leaders summit. Did he raise the issue of the amount of defence spend? Because their benchmark is 2% of GDP. - No, he didn't. Not at all. Like I said, nobody that I met with at the Shangri-La Dialogue mentioned anything about spend. - So is NATO trying to draw us into them? - No, I don't think so, but I do think that with the strategic challenges worldwide, I think it's important that whether you're in the NATO, or you're in, for example, ASEAN or wherever it might be, that you must continue these discussions. The old, I guess, multilateral set-ups have shifted and changed, and I think the important message that I got, too, from the Shangri-La Dialogue was that we can't give up on multilateralism. - Are you going to the NATO leaders summit? Is Jacinda Ardern going? - Look, I'm not going, and you'll have to ask the Prime Minister if she's going, but` - You're not aware whether she's going? - Well, I'm not aware right now whether or not she's going. I do understand that there's some interest in the NATO meeting. But of course, we've also got the Pacific Islands Forum coming up very soon, I understand, in a few weeks' time, which is of huge importance to us too. - You spent an hour with the Chinese defence minister. You said he came with an agenda. What did you mean by that? - Well, everyone who goes into a meeting wants to make it clear what the priorities of our country or their respective countries are, and he was no different, just like I was. I went in to make it clear that our stance with respect to the Pacific is about independent, sovereign states, and our job is to partner with our whanau, if you like, from the Pacific. - What did he say to you? - His comments, more broadly speaking, without being too specific and in detail, were about the intention of... of what they've embarked on within the Pacific in their recent visits through the Pacific. But also, they wanted to make clear to me that, you know, they wanted to continue to work together. - Is there increasing anxiety in China and by China about our position being drawn towards the US and Australia? - Look, I think that was a theme in a lot of what, um, the Chinese delegation said throughout the whole meeting, but... - Did he raise that with you? - It wasn't a point he laboured with me, but he did touch on it briefly. - And did you push back against their, sort of, push into the Pacific? - Oh, like I said, I made it very clear that we look towards the Pacific, and we value its security and its future prosperity and want to make sure that we support the Pacific as an independent state and to allow them to make decisions for themselves. - So what was your message to China about its recent foray into the Pacific? - Oh, it was directly that ` that we will work with people in the Pacific that have like-minded values, that share the same values that we want for the Pacific. - I mean, they're nice, big, broad terms, but did you say to them we believe it could be a security impact or a security threat if China moves into the Pacific like that? - Like I said, I don't wanna go into the specifics of exactly what we talked about, because I think there was a good mutual respect there in what we shared. - China has signed its security deal with the Solomon Islands, and now New Zealand is negotiating a maritime security work plan. Is that in direct response to the increasing Chinese influence? - Not at all. I met with my Solomon Island counterpart, and I said to him, 'What are the priorities of the Solomon Islands?' And he said, 'Maritime security.' And I looked at our team and said, 'We can help you with that.' And he said, 'We'd appreciate that.' - Would you have asked that question if China hadn't been trying to exert its influence in the Pacific? - Well, I asked the same of most of the people that I met with to make sure that what we're looking towards and what they're looking towards, where it fits, we can work together, and that's very clear in our bilateral dialogue. - So what is the detail of this maritime security pact, plan? - Well, like I said, I literally just asked them, what, five days ago or however long it was ago, within the last week, and they're quite clear that they wanna do a strategy and have a very clear policy on maritime security. But what they said was they didn't feel they had the capacity or the expertise to do that. I looked at our Ministry of Defence and said, 'We've got a strong policy team. 'We should be reaching out to help,' and that's exactly what we're going to do. - Are you happy with the way that you have responded and looked after the Pacific since you've been Defence Minister? - Oh, most definitely, and I've already used the Tonga example. I've already been in touch with my counterparts regularly over the past two years, despite COVID. And, you know, I can appreciate some of the tensions, but I'll give the example of when I walked into the meeting with the Solomon Islands. He called me 'Minister', and at the end of it, he called me 'brother' and gave me a hug. - So, what? Relations are good? - Like the Prime Minister said, we don't have bilateral relationships with the Pacific; we have family relationships. - After Singapore, you went to South Korea. Why is it necessary for the Defence Minister to go to South Korea? - It's one of our long-standing deployments to South Korea to support the UN mission there for security and peace, and I was proud to go along and see our Defence Force personnel, check in on them, to listen to what they're doing in the first instance. But also, what are some of the barriers and challenges that, as a Defence Minister, we might look towards helping? - Is there a geopolitical similarity with South Korea? They have a big US presence. They trade with China, sort of like us. Are we similar to South Korea in being caught in that balancing act? - Well, when I met with two of the ministers from South Korea, they were quite clear to me that we do share similar values. We do share similar principles. And, you know, all of our meetings in my time there was actually really quite progressive. - Right. Are South Korea and New Zealand being courted by NATO? Because they've been invited to the leaders summit as well. - Well, like I said, the NATO commander was actually quite good to me. He was very warm. We talked about some of the areas where we have worked together in the past. But I don't think he put on the charm offensive. But I think in these strategic, geopolitical times, I think it's really important that we are seen to be at the table and we are part of the dialogue. - The speech that you gave up there concerned the New Zealand Defence Force becoming green, you know, and it is working to achieve carbon neutrality. How can that be possible? - Well, it's possible because I know other nations are looking towards the same thing. In my plenary session that we ran, for example, Germany talked about their shift to hydrogen power, to other things that will make their defence force far more green than it is today. But we accept that, in the defence space and in particular during wartime, that's a very hard target to achieve. But we need to set those targets, and we need to work towards them. - Have you actually` I mean, do you actually know or have you done the calculations as to how much carbon the New Zealand Defence Force actually emits? - I understand there has been a calculation done; I don't know them off the top of my head. But take, for example, on our bases here in New Zealand ` to move away from coal-fired boilers is a no-brainer for us, and that's the work that we're doing. - And I can understand you're also trying to get, you know, electric or hybrid vans and vehicles, but how do you get a green tank? - Well, actually, funny you say that, because the German... member or minister who spoke in my plenary session said they have solar-powered tanks, and they're trialling that technology. It's sort of a hybrid version. But the point is we're all at the bottom of a mountain, and we all want to get to the top. - Defence has a new project to improve its cyber defence capability. It's supposed to go to Cabinet in June. When will that be implemented? - Well, first thing is the defence part is part of a broad government strategy towards cyber security. It's not just a defence matter. But it's been worked on for some time now to develop that proposal. We'll just have to wait for the... whether or not Cabinet agrees when that paper comes up. - Does that mean it will enable a cyberattack capability by our defence force? - Uh, look, I don't want to get into the details of that particular plan, and especially before Cabinet hasn't agreed to it. - Well, it's been worked on for several years. I mean, the public should be able to know whether we have that capability, don't you think? - Well, I think it should be a matter for the all-of-government approach. As a Minister of Defence, we're quite clear that our responsibility is to make sure that the Defence Force itself, in the first instance, has good cyber security plans and ability to stop cyberattacks, so... - But what about cyberattack capability? Is that on the table? - As Minister of Defence, like I said, ours is specifically focused on making sure we're secure in the first instance. But like I said, I don't want to get ahead of whether or not Cabinet agrees to the proposed plan. - Our allies have cyberattack capability, don't they? - Some of our allies and other countries do, yes. And like I said, when I spoke with a number of people over at the Shangri-La Dialogue, cyber security did come up as a matter that many of us are all looking towards in how we deal with that. - In 2018, the Defence Policy Statement said the Defence Force needs to be able to conduct a broader range of cyber operations to respond to activities that threaten our national security. This is urgent now, isn't it? That's four years ago. - Well, I mean, I think we all know that technology changes faster than we can keep up, so there's always an urgency about it. - And this government has condemned Russia's cyberattack capabilities in Ukraine against civilian targets as well as military targets. So, I mean, that's an act of war. If that happens here, is that an act of war? - Well, as far as we're concerned, when it's happened here ` and it has happened, from memory, four occasions in the past ` we've notified the fact that this has happened. - Were they considered an act of war? Were they carried out by a state actor? - Uh, look, there were a cyberattack on our national security and our national interests. It's important that we just prepare ourselves with an expectation that there's going to be more of these in the future. - Right. And cyberattack capability ` will that be part of this? - My friend, you're gonna have to wait till Cabinet decides on the project in the coming weeks. - Defence Minister Peeni Henare, thank you very much for your time. - Thank you. Kia ora. - Well, the four state-sponsored cyberattacks the Defence Minister mentioned there included two by Russia and two by China. Three of the four attacks were against New Zealand targets. None were major national news stories at the time. - And it seems likely the Prime Minister will attend the NATO leaders summit in late June. It's the first time New Zealand has been invited to that hui. If you've got a news tip, get in touch with us. We're on Twitter, Facebook and Instagram. - Or you can email us at nation@tv3.co.nz. - E haere tonu nei ` still to come ` we dissect the week's political news with our panellists Janet Wilson, Hamish McNicol and Sam Sachdeva. - Plus ` who's on top and who's trailing behind? Our digital editor Finn Hogan has the latest numbers in digi-power. - Digital Editor Finn Hogan joined me earlier to discuss how social media is changing our electioneering, and I started by asking who's up and who's down online. - Well, Simon, the situation at the top remains unchanged ` Jacinda Ardern and Winston Peters. But underneath that ` I'm not gonna lie ` it's looking a little lonely for Labour; all Opposition MPs, with the exception of Andrew Little. And, look, this is just reflecting the broader narrative that we're seeing at the moment ` National with wind in its sails ` and I think that's reflected here in the top 10. - Is that Simon O'Connor that I see there? And he's above Christopher Luxon. He's not exactly a social media native, is he? - Well, your eyes do not deceive you, Simon. Yes, that is Simon O'Connor. And, look, he is actually quite savvy on social media. He regularly outperforms more high-profile MPs ` just as you say, including his own leader. And I think one of the aspects of this is the fact that he's not the leader, so he doesn't have the same kind of scrutiny; he can push the envelope out a bit further. The other side of this is that he leans quite heavily into issues of free speech, which are very hot-button on Facebook currently. Remember, as the younger people migrate from Facebook and go to TikTok and go to Instagram, Facebook is skewing older, a little bit more conservative ` more likely to enjoy his content. So I think this is gonna continue into the future. - All right. So, how are the parties doing? - Well, Labour is holding on to that top spot in overall engagement, but only barely, not by a big margin. And what's more interesting, I found, is that they're posting now twice as much as National. Now, if you remember from our previous chats, that's a total reversal of fortune and, I think, a pretty good sign that they realise they're on the back foot. Now, other than that, not as much to report on. We've got the Greens languishing down in fifth place, which is a bit of a shame to see, because they used to be such a weapon in this space. But I think this is just the inevitable result of the fact that they've got one foot in and one foot out of government ` makes it hard to be punchy in this space. - So, the election is inching closer. Has there been a ramp-up in either advertising or even attacks? - There has been. Uh, ACT have actually started to spend big money ` 15 grand this week alone; Labour has started spending large also. So, basically, the online election has begun. Now, political advertising on Facebook is fascinating, because you can be so terrifyingly specific in the demographics that you're targeting. Compare that to traditional political advertising, where you just whack a billboard up and hope the right people see it. So you can hit the people you want all day, all night online, and I think this is part of a broader shift that we're seeing into all-year-round electioneering. Social media allows that to happen every day of the week. And this is what we've seen overseas, and I think it's what the teals used to great effect in Australia. They realised that they didn't have to save up their money until just at election time and do a splurge; they could go all year round. And I think independents globally are gonna follow that strategy, and it's a good thing to keep an eye on next election. - Last time we spoke, Elon Musk had just closed a deal to buy Twitter. What's happening there? - Look, it's pretty dire ` the deal may fall apart. As we've touched on ` massive global economic downturn happening right now, focused on the tech sector, which is, of course, a lot worse for Musk. The deal he made to Twitter is now way worse for him because all of his money is tied up in Tesla stocks; Tesla is haemorrhaging billions of dollars. Basically, can he afford to do this right now while keeping his other very expensive businesses afloat? That remains to be seen. - So will it happen? - I mean, look, Simon, it's a coin flip, but if I was a betting man, I'd say it probably will happen. It would` If he tried to back out now, it would trigger billions of dollars in fees, probably a bunch of court cases as well. Basically, what's happening at the moment is he's making a big song and dance, trying to get them back to the table by threatening to walk and trying to get that price lowered. And at the end of the day, it's a crazy situation that we're in where he's using Twitter to publicly disparage Twitter to try and make it cheaper for himself to buy Twitter. It's a strange snake eating its own tail. - If he goes ahead, what will it mean for our political parties, though? - Well, he's pretty close to a free speech absolutist, so at the end of the day, I think David Seymour would be very happy; the Greens would be a lot less happy. If we ever get this hate speech legislation passed, it could set up a very interesting battle between the world's richest man and our new legislation, but it remains to be seen. - All right. Before we go, as usual ` an honourable mention; who is it? - Well, it could be only one, Simon. It has to be Trevor Mallard. The man is a gift to social media for how much he is a magnet for controversy. And, look, love him or hate him, at least you've got an opinion, and that's what's good for me and my metrics. National probably aren't gonna miss him, but I will. My wraps of the House are probably gonna get a little bit more boring from here on out. May be good for democracy, but bad for me. - And it's all about you, Finn. Finn Hogan, thank you very much. - Thank you. - Up next ` decoding the downturn and what it'll mean for you; Bernard Hickey joins us live. - Plus ` Judith Collins on why she'd make a better innovation minister than Ayesha Verrall. The pandemic hit, but the economic pain didn't. But with stock markets tumbling as inflation keeps rising, is a recession now inevitable? - And fears of a global recession remain tonight, even though our share market arrested its recent run of sharp falls. - It's a historic day on Wall Street. - Manic Monday. - We have turmoil on Wall Street today. - Clearly, we're hitting turbulence. - For those of you watching your KiwiSaver plummet, cryptocurrencies are also taking a hammering. House prices are falling and so are bonds. - Business confidence has tanked. - It is a difficult time, but New Zealand, in amongst that, is as well placed as we could be. - We're very much stretching the economy to its limits. - The US stocks slumped even further overnight. - We are struggling for supply of goods and staff. - Important to know that people don't rush out and make incredibly rash decisions. - Alright, with me now to try and make sense of the economic gloom is business journalist and founder of the Kaka Substack newsletter, Bernard Hickey. Tena koe. Thanks for coming to the studio. - Stock markets tumble globally this week. Why is that happening? - Well, it's all about higher interest rates and fears about inflation. So the 75 basis point increase from the US Federal Reserve, that was the thing that really surprised people as well as the inflation figures in the United States the week before. So we've seen markets down 4% or 5% this week, and we're now officially into bear market territory for global stock markets. - What does bear market territory mean? - So basically down more than 20% from its peak. It's been a rough year for global stocks and, particularly, the more volatile, more valuable tech stocks. They're down more than 30% so far this year. - They're taking a hammering. What does that mean for the New Zealand stock market? Will it be following the same way? - We have followed, but to a slightly lesser extent. We have less of the very highly-valued big tech stocks that you see in the United States, and also many of our companies actually pay quite good cash dividends, so they're not quite so volatile. But the thing that's really worrying people is what's happened to inflation overseas and the potential that central banks will have to keep hiking up and up their interest rates to get inflation under control. - Right. Is it just the war in Ukraine that's pushing this inflation, and is it COVID in China or other factors? - It's really a perfect storm. You've got COVID affecting supply chains globally, which has blown out costs of shipping and times to get things. But also, you've got the Ukraine war pushing up prices of fuel and food and in a really widespread way. For example, fertiliser costs have risen even faster than food, and that's going to affect crops in the next couple of years. And then on top of that, in other countries, we've had lots of problems with COVID ` deaths, sicknesses. A lot of people have left the workforce, and that's left those countries with real labour shortages. We're short of labour too, but the combination of those supply shocks and also real problems with not enough people to do the work. and that's all contributed to higher inflation. - So look, we're about 6.9%, I think, our inflation is. But overseas, it's even higher, isn't it? Could we follow that trend? - Yes. Well, at the moment, we are below the United States, which is 8.6. And just this week, we've heard from Britain where the central bank there are saying they can get 11%. - 11%? - (CHUCKLES) Yeah. Now, that's not what we're seeing. Most expect that our inflation rate starts to fall off from here and gets down towards 3% or 4% next year. And the Reserve Bank, it's its job to get it below 3%. So, at the moment, it's out of the range that the Reserve Bank's supposed to keep it at. - Yeah, I understand that. Is it likely that we're going to be able to achieve that? - Well, the Reserve Bank's last forecast's a little bit old, but last forecast ` we'd get there towards the end of next year or close to that 3% mark. It really depends on what happens to the oil prices and food prices and also how much of a shock lower house prices and asset prices are, not just to investors here but all around the world. Will people who were feeling wealthy six months ago now, now not quite so wealthy, decide not to spend? - All right, we'll talk about housing in just a sec. But with inflation at 6.9% here, I mean, should Kiwis be going to the boss and saying, 'I deserve 6.9% as pay rise?' - Absolutely. - (CHUCKLES) - Because at the moment, you're in hot demand, and, particularly those people with skills who are a bit more mobile, they can go to Australia and get 30% to 40% higher wages, and they can also get, in many cases, cheaper housing costs. So if you feel like you've got some` something special, and that the boss is a little bit worried you might jump on a plane to Australia, yeah, go and ask. - But 7% as a pay rise? How many people are actually going to get that out of a boss? - Well, it's surprising. If you can't get it from this boss, get it from the next one and get a sign-on bonus as well. What's interesting is that some of the wage figures we're seeing, which appear to show only 3% to 4% wage increases, may not be taking into account things like sign-on bonuses or people who are negotiating better deals for where they do their work. If you're working from home a couple of days a week, that's giving you a couple of extra hours of commuting time. Maybe it's a place you'd prefer to work at home than in the office. So you're getting, in effect, a better pay deal, but maybe without the 10% wage increase. - All right. You just mentioned house prices before. They're dropping, so, 10% at the moment? I mean, what is the` - Depends where you are. So Auckland City and Wellington City, they've seen house prices down 10% to 15% from their peaks in October, November last year. - That's quite a rapid fall in six months, seven months. - That's right. And we're getting towards the end of that fall, according to the forecasts from most banks and the Reserve Bank. So most people are saying that house prices fall between 10% and 20% and then they bottom out towards the end of next year. It really depends on how high those interest rates go, how hard the central banks have to crack down on inflation. - But this has ramifications for everybody. As you say, house prices go up, people feel wealthy and they spend. They're going down rapidly now. What does that mean for our economy? - Well, they don't feel good. If you're a homeowner and you've got a medium priced home, you've actually seen the value of your home drop $100,000 in the last seven months. And we've gotten used to earning more from our homes than from our jobs. - Yeah. - Well, when the house price falls, suddenly, you know, we've made $40,000 or $50,000 from our job, but our house has just fallen $100,000 in value. So that's a big hit. In fact, the Reserve Bank did some research a few years ago which showed that for every dollar extra in the value of your home, you would spend an extra 3 cents. But on the way down, the hit to your spending is more like 6 cents. So... - Right. So you're spending 6 cents less for every dollar. Oh, wow. - Exactly. When you look at the charts showing house prices, consumer confidence, business confidence, actually they started dropping fast around October, November last year. And the correlation` I'm not suggesting a causation` but the correlation is that's when Labour's poll rating really started to come off the boil. So New Zealanders who own homes are unhappy about falling house prices, unhappy about rising interest rates, and it also turns out they're unhappy about the government. - LAUGHS: OK. Just quickly, construction companies are failing. We've had record consents, right, but construction companies are failing that now. Is that related to the house prices going down or is it just total supply side issues? - It really is a perfect storm there as well. You've got house prices falling, higher interest rates, banks pulling back from financing developers. And at the same time, you've got this Gib crisis, which means that a whole bunch of small developers who aren't at the top of the queue to get the precious Gib board from Fletcher Building are not able to complete their homes and therefore get the cash in the door to move on to the next one. So you've got` all around the country, there are all these homes where you can see the wood frame and the Batts, but there's no plasterboard on there. And it's interesting, the last couple of weeks, the pressure on Fletcher Building to perform is intense. We've seen Simplicity Living dump Fletcher Building, Fletcher Building CEO having to meet a delegation of very angry suppliers and shareholders. So this, for the government, is turning into a real problem as well, the Gib crisis, where successive governments have allowed Fletcher Building to build a 95% market share to. - Yeah, incredible. All right, just want to move on. There's lots of jobs around, OK? Unemployment's really low. Government says the books are great, debt is low, but the economy just shrank. So what chance that we're just about to hit recession? - Well, you need two quarters in a row to get recession. Now we've had one quarter, but most people think we're going to bounce back in the current June quarter. - So no recession? - No recession right now. - Uh-huh. - But there's a few people looking ahead towards the end of this year. So the December quarter, March quarter of next year. BNZ, for example, is forecasting a short, quite shallow recession. I think we have to watch what's happening in the rest of the world where the United States is headed very quickly towards a recession, because their interest rates have risen quickly. Their key mortgage rates have gone from 3% to 6% in six months. That's an extraordinarily fast rise in interest rates. Their house` building market is falling off the cliff. - Right. - So potential for a US recession later this` - Does it necessarily mean that we will go into a recession because the US goes into recession? - Well, when the US and Europe are in recession together and when China is having such problems with its COVID elimination strategy, that is a headwind we'll have to face. And if anything, towards the end of this year, early next year, we're headed towards that recessionary era, not, you know, a depression or some sort of massive shock, but certainly a slowdown. - OK. So KiwiSaver balances are falling everywhere. Everybody's hanging on in there. Can you tell us when it's going to get better, Bernard? - Well the key thing is not to look at your KiwiSaver. - LAUGHS: Yeah, OK. - Just ignore it. - Just don't do it. - Come back in a couple of months. But things are expected to stabilise once those interest rates stop rising. - Right. - And that's the key thing. So I get up every morning, and I have a look at what's happening with inflation in the rest of the world. What are the central banks doing right now? - And when will they stop rising? When's that going to happen? - That's expected towards the end of this year. But really, inflation has been such a wildcard. Who knows? - OK. Bernard Hickey from the Kaka Newsletter, thank you so much for your time today. All right. Coming up, the news of the week with our political panel ` Sam Sachdeva, Janet Wilson and Hamish McNicol. Plus, Judith Collins gets 5 minutes to convince who she should be Innovation Minister. Newsroom's National Affairs Editor, Sam Sachdeva, former National press secretary Janet Wilson and National Business Review Co-Editor Hamish McNicol. Tena koutou katoa ` welcome to the show. - Morena. - News just in that the Labour Party President, Claire Szabo, is standing down in November after three years in the role. Janet, do you think she'll stand as an MP? - I think it's inevitable. She's stood before, in 2014. Um, for Labour and the` and its Cabinet, the great resignation clearly is continuing. This is kind of evidence of it in a strange kind of way, isn't it? She's had three` three years, and she was due to step down, so... But I would` I would suspect that she would be looking for a good place on the list... - Yeah. - ...and to fight an electorate North Shore seat. - All right. Sam, you went to the Shangri-La Dialogue in Singapore last weekend. What`? Or last week, let's say. What was the New Zealand's presence there? Was it significant at all? - Uh, you know, it was. We had the Minister` Defence Minister, Peeni Henare, speaking at this panel; we had` you know, the Asian New Zealand Foundation were represented there as well. So, you know, I think our voice was heard. And the fact that Henare got to speak to a large number of other nations' ministers ` I think probably got into double digits towards the end ` you know, shows we do have value. - Yeah. In that interview with Simon earlier, Janet, he kind of had a subservient tone when referring to NATO admiral the, um` Admiral Bauer. - Yes. Yes, he did, didn't he? - ...by saying, 'He was good to me.' How did you pick up on that? - Um, yeah. And I found it interesting also (CHUCKLES) that he managed to get this meeting with the minister from the Pacific Islands and do this whole deal as a little sort of sidebar issue. And it sounds to me like it was a great history. But I think you can probably tell us more about this... - Ye` - ...and what the background to it all is. - Yeah. No, look, it's fascinating. Obviously, there was a lot of concern in New Zealand, Australia ` probably around large parts of the world ` when China and the Solomon Islands signed that security deal. So I think this is New Zealand showing, 'Look, we are interested; 'We can play a role as well. Come to us.' You know, I think Nanaia Mahuta had said previously that we weren't really sure what the problem was with the Solomon Islands and why they had gone to China, because they hadn't told us. But, you know, I think, as the Minister said, if you have them saying, 'Maritime security is our priority,' then you've gotta jump on that and, you know, do what we can to help. - Mm. - Yeah. Hamish, China's got deep pockets. I mean, can we even compete? - I'm pretty sceptical, to be honest, particularly when we're playing on their game in terms of investment in the region and things like that ` it's pretty hard for us to compete. It's a very delicate topic for us as well, isn't it? I mean, they're our major trading partners. A big chunk of our exports go over there as well. We've got to think about how we can compete with them. We've got long-standing relationships, but at the same time, we, sort of, can't rest on our laurels, I think, at the same time, and, um, have to remember that we need to still pay respect to the other countries there. - Yeah. Could our relationship trump the money, Janet? - I think` And I think that's Nanaia Mahuta is betting on, isn't it? She's betting on our ongoing relationship. And you heard Peeni Henare say in the interview previously that` um, that they are family. So this whole idea of manaakitanga and they are` they are family; they're a member of us. They're a` We're in the whanau. How long and how far that will go will depend on the needs of each individual Pacific nation, though, won't it? - Mm. - Surely. And there's no doubt that China's gonna continue... - Mm. - ...to keep coming back and pressing their case in the Pacific, because it's so enormously strategic in terms of marine resources. It makes up 28% of the world's economic, um, zones. So I` (STAMMERS) Watch that space. - Mm. Sam, is there a colonial spirit present in our desire to remain influential in the Pacific, or is that something China is displaying? - Uh, you know, look, I think (SIGHS) probably guilty to a degree on both counts, really. You know, if you look at the Belt and Road Initiative, which is this trillion-dollar infrastructure project that China's been working on around the world, that very deliberately harks back to, you know, previous centuries, when you had spice trades and` silk flowing through. - Mm. - So there's an element of that. But I think there is a concern, certainly amongst Pacific countries, that they have autonomy; they can make these decisions. They can enter into deals with China and they can not enter into them, as we saw with the security deal. - Mm. - So for New Zealand and Australia to, sort of, be dictating terms and saying, 'No, no, you can't work with them,' I can see how that might be construed by some Pacific leaders as harking back to colonial times. - Right. I want to move the conversation on. Let's talk` touch briefly on the economy, Hamish. Of course, Bernard Hickey there earlier talking about the perfect storm ` twice. There's quite a few perfect storms going on right now. - There's a lot going on, yeah. - Yeah, a lot going on. GDP, of course, fell` dropped by 0.2%. He says ` Bernard says ` there's no recession likely right now but they may be towards the end of the year, early next year. Your predictions? - We have to remember with GDP, particularly quarterly GDP, ir can be quite noisy. If you think back to the March quarter ` January, February, March ` we were, sort of, coming out of the COVID lockdowns in Auckland specifically again, but people were in self-imposed lockdowns as well; we've still had to close borders and the like as well. So it's` it was a pretty quiet quarter, um, as it was. Like Bernard said, you know, you need two in a row for the recession to kick in as the borders, sort of, open up again and things open up more generally in the country and people feel more comfortable coming into the cities and the like. - Yeah. - Auckland CBD has been a lot busier the last few weeks. Um, you know, you would expect to see a bit of a bump, but most people are expecting that these perfect storm of things that are going on as well are here to stay, and so recession is looking pretty likely towards the end of this year, early next year. - So what would your advice be to everyone watching right now in terms of ` do we hunker down and stop spending? Or what's the advice you'd give? - Uh, it's a good chance to take stock of where you're at. Um, like Bernard said, don't look at your KiwiSaver ` he said don't look at it for a couple of months; I would say a couple of years. - You broke that rule. - Yeah. I've been making that mistake repeatedly. - (LAUGHS) Yeah, but` Yeah. - A couple of months is very optimistic. - Yeah. - Yeah. - I would` I mean, particularly, you know, people my age, I wouldn't look at it for 10 years from now. - (JANET LAUGHS) - I just` Just ignore it. You don't` I mean, unless you need it. - CHUCKLES: 'Just ignore it.' - Unless you need it for a house or something like that, just forget about it. That's the whole point of KiwiSaver. It's there for 30, 40 years. - Yeah. - Um` So, yeah. But it is a good chance to, sort of, take stock, think about where you are, try to get a bit more savings away in the bank just for a bit of safety. But, yeah. - Mm. - All right, Janet, I want to quickly brief` uh, talk about this not-so-minor Cabinet reshuffle. - Oh, right. Yep. - Your take on Poto Williams losing the Police Minister ` was that an inevitable? - I think it was. I think, interestingly, Poto had actually done a really good job in the last two or three months. But prior to that, she had been reasonably faceless, nameless within that portfolio; she really hadn't fronted. And it was a growing` Law and order has been a growing issue. We've seen the protests in March and in front of Parliament; we've seen increasing amount of crime hit the headlines. And the fact that she only managed to make herself available in those last months... I think the interesting thing about that shuffle was that it was a lot of smoke and mirrors to demote one minister, and I feel very sorry about that for Poto. But the fact that Trevor Mallard was standing down ` did that necessarily have to be announced at the same time? Because he's not in the Cabinet... - Yeah. - ...strictly speaking. - Right. - What interested me ` yeah, just on Poto Williams ` I think, you know, when she was appointed in the first place, that seemed to be a sort of symbolic gesture, in part, from the Prime Minister that, you know, you didn't necessarily want a tough-on-crime white male minister in that role. And I think that was` was, you know, a valuable idea. But it's sort of a shame in a sense. And, you know, I don't think Chris Hipkins is necessarily going to be tub-thumping in favour of our boys in blue per se, but, yeah, to, sort of, have to move and white Pakeha male into that space is` is, yeah, probably a disappointment for the Prime Minister. - Well, we have Chris Hipkins now who's taking up the role ` Mr Fix-it Minister. - Mm. Mm. - Can he fix crime, though, Janet? - Um, he can appear as if he's fixing crime, and that's what matters. Because is` Does crime need to be fixed in the first place? Maybe not. Um, but, (SIGHS) you know... And for a government that's in its second term, with an electorate that's increasingly fear- and anxiety-ridden, it has to appear as if it's doing so. - Mm. - I was interested... You know, Hipkins is quite` got quite a high profile amongst the public, now, doesn't he? Through the COVID-19 response. Putting him in charge of Police now maybe is a signal from the government as well ` 'Hey, we're also sort of moving on from COVID 'a little bit now as well.' - Yeah. - 'This is our guy. He's` This is now one of our major issues going forward.' - Right. - It plays very nicely for the Opposition. - Does it? - Um, I don't agree with what the` Well, they did a pretty good job of, um, coming up against Poto in the House. They talked` They went to the usual epithet ` soft on crime, yada, yada, yada. That had, clearly, some cut-through for them. I don't necessarily agree with their policies in that regard ` at all ` but I think when you've got, as I say, a fear- and anxiety- ridden electorate, it's gonna have some effect. - All right. We'll have to leave it there. Thank you very much for your time this morning. That's our panel. U tonu mai ` stay with us. We'll be back after the break. From minister to leader, and now spokesperson for Technology, Science and Innovation, Judith Collins has worn many hats during her political career, but now she's calling on the government to get the politics out of science. Reporter Finn Hogan started by asking what her first move would be as Minister. - I think it's really important we take the politics out of science. I mean, we've had this for actually a few decades now of almost mass hysteria around any scientific innovations, when really we need to just understand that our entire economy, agricultural economy, is based on science and research and innovation. And we need to be back there looking right across the spectrum as what we're doing now and saying, 'How can we do better?' - What's one technology you think has massive untapped potential, and what's one technology that you think poses some risk that we need to be concerned about? - It might be, for instance, that we look at whether or not we can look at what's called now precision breeding, which is essentially gene editing of things. And we need to say, 'What is it that we're doing, and why do we want to do it?' and that's really where we need to go, but it needs cross-party support, and that needs, basically, Labour and National to say, 'We're going to put the country first.' - Are you speaking to Labour about this? - Well, we've got a new minister now. I've previously spoken very briefly to Megan Woods, who was the minister. And one of the things I do when we get back to Wellington will be seeking a meeting with Ayesha Verrall, who is the new minister, to see where we can find some common ground. - You've previously called Bitcoin and blockchain technologies incredibly exciting. I just wonder if you could say, why is that exciting? And just give me the briefest explanation of what blockchain is. - I'll tell you, I think it's actually just extraordinary. So it's a little bit like NFTs. It's pretty much that people decide that something's going to be worth something. Not that it actually has intrinsic value based on gold or anything like that, but then again, nor do countries' currencies these days. So it is basically a currency system where people decide that this is going to be worth more. - The blockchain, though, how does that work? This immutable ledger, what does that mean, and why is it transformational? - Well, it is transformational because it's actually changing the way that countries think about things. So maybe we need to start thinking differently about how we operate. But what will happen with anything like this? Countries will not allow private individuals or businesses and people to set up their entire currency systems when they start to become effective. But we've already seen` I'd have to say Bitcoin and all these other cryptocurrencies have had a bit of a loss recently. - The value's gone down, but the technology, the technology itself I think is what's interesting. - The technology is... - Why don't you put some government spending on a blockchain so every taxpayer can see where every dollar is spent? Absolute transparency. You're a fan of fiscal responsibility. - Well, I must say, that's a new idea that I haven't actually heard of before. But I've got to say, it does have some appeal, but I'm not going to promote it as a policy. - Would you consider it, were you Minister? - What I like is transparency. Because my taxes, your taxes, everyone's taxes` - Sure. - We don't know where they would go. - So you would consider that? - No, I'm not going to go down that path. You're just trying to trick me there. But I do think it is important that we have more transparency. And if you think about our ability now to even map and to show where things are going go, money or` it is amazing what we can do now that we couldn't do 30 or 40 years ago. - Let's go for one more concrete example. The videogame sector in New Zealand has been crying out for more government support. If you were minister, is that something that you would investigate? - Well, we're actually at the moment putting together our policies as we go to the next election, and we've got to go through all that process. But what is really clear, is that the countries and the states that have actually really got ahead around technology and using technology are those that have encouraged businesses to set up their` - Got technology; you've got science, and you've got innovation. If we're taking these things seriously, split them out into some individual ministries. For example, Saudi Arabia is one of the only countries that has a Minister for Artificial Intelligence. - Yeah. - Would you say consider` - Well, I did actually have a portfolio called Artificial Intelligence. - Where did it go? - Well, (STAMMERS) it isn't there at the moment. It's part of my technology. - Is that a problem? - No, I think it's` I'm using` doing the artificial intelligence area. People have a Terminator 2 type attitude around artificial intelligence. They think it's going to come back as a robot that's going to come and take out the human race. No, it actually enables us to do things so much faster and better. - Does Christopher Luxon take science and technology as seriously as you did when you were leader? - Well, I think he does. I mean, these are the portfolios I asked for. These are the ones I have. - Artificial intelligence isn't in the title anymore. It seems like National's leaning away from science and tech. - I'm someone who's come into technology a few years ago and actually being completely, let's say, wowed by the whole thing about the opportunities. And I've also looked and said, 'Where we really succeeded as a country?' - National's got some wind in its sails now. Is this the portfolio that you're going to gunning for if you're back in Wellington? - Absolutely. - No more aspirations to be leader? - Very happy working I'm doing, and really happy working with really positive people. - So Judith Collins, you will never be prime minister, and that's OK by you? - That's perfectly fine. I just want us to have a country that's going ahead, not going backwards. - Finn Hogan there with Judith Collins. We're back now with our panel ` Sam Sachdeva, Janet Wilson and Hamish McNicol, tena koutou. Let's pick up on what Judith Collins was talking about there. Terminator 2. I mean, innovation and technology, who would have thought, with Judith Collins? But...(CHUCKLES) you're laughing. But Terminator 2, in terms of artificial intelligence, what did you make of her korero there, Janet? - Um... (SIGHS) I thought it was interesting. I think that she would need to get buy-in from the government. There's no way that under opposition that she'll be able to do much. Which I found it interesting that she was going to go and have a talk with the new minister, Ayesha Verrall. Whether in fact they can work together will be the bottom line for her and her success in that opposition. - Mm. She made a statement there, Sam, saying, 'getting the politics out of science,' but what does that actually look like? - Well, I mean, that's a good question. I don't know if you can sort of extricate the two so easily. There are decisions that are made around funding and, you know, what projects you pursue and don't pursue. So, yeah, I mean, I'm sort of curious as to what she meant by that myself, to be honest. - I found that really interesting from a person who likes to put the politics into everything, for her to say she wants to take the politics out of it was perplexing. As perplexed as Sam was, so am I. - Hamish, were you surprised how techy, tech savvy she is? - It was interesting hearing her trying to describe cryptocurrency and the blockchain and the like. In fairness, I'm not sure many people can accurately define what exactly they are. - Can you do that for us? - No. (LAUGHTER) My advice on crypto is to stay well clear. - I will not throw you under the Thank you for that. Hey, let's talk about digital power in terms of Simon O'Connor ranking second, or third, actually, on our Facebook` on Finn's earlier piece there. Janet, a rising star? - Yeah, well, a rising star, who knows? He knows digital very well. And I mean, I know he's got his own podcast as well. Um... He doesn't look as if he would be a natural to the digital world, but he manages to do it quite nicely. - OK. - Very, very active. Yeah, well, look, I've seen` you know, I've talked to Simon a bit, but I've seen his Facebook videos, and he's very prolific. And there's this sort of strange almost walk-and-talk, West Wing-style thing through an Auckland domain. I'm like, 'Does this work?' but you know, apparently it does, but I think there's that natural energy there and, probably, that willingness to jump on the story of the day. - I think the energy is a really important factor for him. He's got a lot of earnestness about him as a person, and I think that works for him in the digital world. - He pop up on your radar, your social media radars? - No, not at all. That's why I thought Finn's point was quite interesting about the changing demographics of Facebook. And maybe as the demographic of Facebook shifts older, he does look like a digital natural to them. But no, I don't really come across him very much. - Interesting what Finn said about politicians spending their advertising budget across the year instead of saving it for campaign season. What do you think of that, Hamish? - (CHUCKLES) Buckle up, yeah, that's going to be fun, isn't it? Yeah, I guess it makes sense, doesn't it? It's` you know, it's a constant rhetoric now. You've got to always be in front of people and make sure that you're constantly in people's consciousness. - Yeah, I mean, it worked for the Teals in Australia, Janet. - Very well. - Do you think we'll get independents trying it here? - I think we'll get more than independents trying it here. I think we'll get candidates who may be seen as outsiders or people who maybe won't be a shoo-in in their various electorates working their own channels by using Facebook, Instagram, even TikTok, trying to reach a younger audience. I mean, that's where the big audiences are, isn't it? - Yeah, absolutely. Your thoughts, Sam? - Yeah. No, look, it's interesting. The Australian system is probably too different to have an exact match here in terms of the way they have preferential voting. And you know, we have MMP, so there's that party vote that is more important than the individual electorate. But I think probably that sort of` he the digital approach they took, plus those sort of messages around the importance of climate change and perhaps not from a left wing view so much as some on the worried right, that that could play out in New Zealand. - Yeah, let's slightly change the tune a little bit. Let's talk about cybersecurity. Defence is planning to increase its cybersecurity capability, but the Minister wouldn't confirm whether that includes an attack capability. Should we have that? - I don't know if we want to put too much money into it, simply because it's unlikely to be where our strengths are and probably not something we would use a lot, maybe counter-attack capabilities more than anything else. - The thing is, all our allies have those capabilities, Janet. Do you think we should have a capability, you know, for what's there? - He was certainly very cagey when he was asked that question, which begs the question, is it on the table but he's just not prepared to announce it yet? Should we have it? How much is it going to cost us? Is the probably the short answer. Can we afford to have it? Is the short answer to that. - Yeah, this is` Sorry to jump in. There's this broader issue around defence spending and defence capability, and the Minister said, you know, 'Look, no one's raised it with me, but I am sure people will be very soon.' You had the Australian Deputy Prime Minister at the Shangri-La Dialogue saying we'll raise our spending to 2% of GDP. The Japanese prime minister said the same. So sooner or later, I think people will be` other countries will be asking questions about, you know, whether we'll put our money where our mouth is. - Mm. Tena ro atu koutou katoa. Thank you very much for your time this week, and we really appreciate it. Sam Sachdeva, Janet Wilson and Hamish McNicol, our panellists for this week. But that's all from us for now. Thank you for watching. Nga mihi nui, and we'll see you again next weekend. Captions by Able. Captions were made with the support of NZ On Air. www.able.co.nz Copyright Able 2022 This show was brought to you by the New Zealand On Air Public Interest Journalism Fund.