{"id":233038,"date":"2026-01-14T16:43:22","date_gmt":"2026-01-14T16:43:22","guid":{"rendered":"https:\/\/www.newsbeep.com\/nz\/233038\/"},"modified":"2026-01-14T16:43:22","modified_gmt":"2026-01-14T16:43:22","slug":"treasury-boss-iain-rennie-on-whats-required-to-bolster-the-books-in-the-absence-of-high-immigration-and-house-prices","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/nz\/233038\/","title":{"rendered":"Treasury boss Iain Rennie on what\u2019s required to bolster the books in the absence of high immigration and house prices"},"content":{"rendered":"

He made the same observation when the Herald spoke to him a year ago, noting the universality<\/a> of the Government\u2019s contribution to KiwiSaver members. <\/p>\n

In Budget 2025<\/a>, the Government halved the value of this contribution to a maximum of $260 a year and limited its availability to those who earned $180,000 or less a year.<\/p>\n

Rennie believed the Government could go further in targeting other transfers like the Winter Energy Payment, which is available to anyone on NZ Super, a main benefit or other type of welfare, and the Fees Free scheme, which covers tertiary education\/training fees for the final year of students\u2019 tertiary study or final two years of work-based learning.<\/p>\n

He also highlighted the subsidies the Government gives the film and gaming industries.<\/p>\n

\u201cWe want to be weighing up the benefits to those industries relative to the costs that come with other industries carrying a higher tax burden than would otherwise be the case,\u201d he said.<\/p>\n

Treating superannuitants like other beneficiaries would save money<\/p>\n

As for the big issue \u2013 the rising cost of NZ Super as the population ages \u2013 Rennie talked up the savings that could be booked from reducing the rate at which NZ Super payments rise each year. <\/p>\n

Currently, they effectively go up by whichever is greater \u2013 Consumers Price Index (CPI) inflation or wage inflation. <\/p>\n

Rennie suggested that like other benefits, NZ Super could just go up in line with CPI inflation, which tends to be at a lower rate than wage inflation. Alternatively, the measure of wage inflation currently used could be lowered.<\/p>\n

While Treasury has long advocated for the age of entitlement for NZ Super to rise above 65, Rennie believed changes to indexation would also provide significant savings over time.<\/p>\n

However, in its Long-term Fiscal Statement 2025, Treasury said that if NZ Super had been indexed to CPI inflation since 2010, a quarter of those over the age of 65 would be living on less than 50% of median incomes compared to 6% now.<\/p>\n

Rennie wasn\u2019t as hot on means testing NZ Super, noting there was some uncertainty around how this would influence the labour market, and whether there would be decent cost savings to the Crown.<\/p>\n

Govt institutions can\u2019t let themselves go<\/p>\n

The other piece of the puzzle is improving productivity to support economic growth.<\/p>\n

The Government\u2019s books would be in much better shape if growth didn\u2019t undershoot expectations through parts of 2025.<\/p>\n

Rennie believed the Government reforming the Resource Management Act<\/a>, liberalising restrictions on foreign investment, and changing the school curriculum would help. <\/p>\n

Even though New Zealand\u2019s \u201cstock of human capital\u201d was \u201cpretty good\u201d, he was concerned about the flow \u2013 whether enough young people were skilled when they joined the workforce. <\/p>\n

Rennie believed there was an area New Zealand had an advantage it could exploit \u2013 the strength of its institutions. <\/p>\n

\u201cIf New Zealand\u2019s institutions can perform well then New Zealand looks like quite an attractive place in terms of being safe, predictable, and a good place for capital and labour to go to,\u201d he said.<\/p>\n

Indeed, Rennie recently observed credit rating agencies were holding the country\u2019s rating \u201cabove the level of fundamentals … because they trust our fiscal institutions to consolidate over the next few years\u201d.<\/p>\n

Rennie was also confident in the Reserve Bank of New Zealand\u2019s independence from government, especially to when it came to the way its Monetary Policy Committee set the Official Cash Rate.<\/p>\n

\u201cIndependence always has to be earned, and not just asserted,\u201d he said.<\/p>\n

\u201cRelative to the pressures you see on the Federal Reserve, or you look at some of the comments Nigel Farage is making in the UK about the Bank of England \u2013 none of that is happening in New Zealand.<\/p>\n

\u201cSo I think our central bank institution is a lot stronger. But we can\u2019t be complacent when you\u2019ve got these themes globally.\u201d<\/p>\n

A more sustainable recovery than seen in the past<\/p>\n

Looking ahead, Rennie believed New Zealand\u2019s economic recovery would continue to be export-driven.<\/p>\n

High meat, dairy and horticulture prices have supported exporters, as has a weak New Zealand dollar.<\/p>\n

The country\u2019s current account deficit has narrowed a lot from 8% of GDP in 2022 (a level deemed concerning by credit rating agencies) to 3.7% in 2025. The deficit is expected to keep shrinking.<\/p>\n

While high levels of immigration and low interest rates had boosted house prices and economic growth after previous downturns, Rennie couldn\u2019t see this happening now. <\/p>\n

\u201cThis is not a recovery that\u2019s happening because of high immigration and strong housing,\u201d he said.<\/p>\n

\u201cThe nature of the recovery we\u2019re seeing at the moment is going to play out like it is for some period to come.\u201d<\/p>\n

While Rennie said there was always a possibility immigration would spike, he believed the regulatory environment was such that houses could be built more easily to match increases in demand. <\/p>\n

He noted there was some spare capacity in parts of the country, like Auckland.<\/p>\n

Furthermore, he couldn\u2019t see interest rates falling to the lows they reached during the pandemic.<\/p>\n

Treasury forecasts annual house price inflation picking up to 1.9% in the year to June 2026, before hovering just below the 7% mark over the following four years.<\/p>\n

Supporting security of energy supply front of mind<\/p>\n

Finally, there were two sectors Rennie believed would be the subject of further regulatory and policy tweaks \u2013 banking and energy.<\/p>\n

The Government is looking at options to procure the building of a terminal to import LNG<\/a>, liquified natural gas. <\/p>\n

It has also made a number of regulatory changes and assured the gentailers it part-owns that they would be given the capital<\/a> they need to invest more in energy generation.<\/p>\n

Rennie identified dry-year risk and the country\u2019s rapidly diminishing supply of gas reserves as issues Treasury was advising the Government on, alongside the Ministry of Business, Innovation and Employment. <\/p>\n

\u201cYour question about \u2013 has enough been done? I think there\u2019s an element of seeing how the market responds to the initiatives that are being put in place and then thinking about \u2013 is that sufficient? Or whether further changes need to be made.<\/p>\n

\u201cIf I take a long view, I think energy will continue to be a focus area for New Zealand governments in coming years.\u201d<\/p>\n

Rennie believed the Government had to strike the right balance between supporting the transition to larger-scale clean energy generation without creating uncertainty to the extent this has a chilling effect on investment. <\/p>\n

Treasury supportive of eased bank capital requirements<\/p>\n

As for banking, the Reserve Bank, in mid-December said it would ease its bank capital requirements<\/a> so banks could hold less high-cost, high-quality capital. <\/p>\n

It was comfortable with banks taking on a bit more risk (especially given the creation of a depositor compensation scheme), saying it expected them to pass the cost savings of less onerous capital requirements onto customers. <\/p>\n

Rennie said Treasury endorsed the Reserve Bank\u2019s direction of travel, and was pleased there wasn\u2019t another feud between the regulator and the banks, as there had been in the past.<\/p>\n

\u201cThe sector would say the [Reserve] Bank engaged really well, even if not everyone in the sector got exactly what they wanted,\u201d he said.<\/p>\n

\u201cOver time, I think capital settings will need to be reviewed. We\u2019re in a global environment where a lot of either regulators or central banks are reviewing settings, and we need to keep thinking about \u2013 are they fit for purpose for the New Zealand context?\u201d<\/p>\n

Jen\u00e9e Tibshraeny is the Herald\u2019s Wellington business editor, based in the Parliamentary Press Gallery. She specialises in government and Reserve Bank policymaking, economics and banking.<\/p>\n

Stay ahead with the latest market moves, corporate updates, and economic insights by subscribing to our Business newsletter<\/a> \u2013 your essential weekly round-up of all the business news you need.<\/p>\n","protected":false},"excerpt":{"rendered":"He made the same observation when the Herald spoke to him a year ago, noting the universality of…\n","protected":false},"author":2,"featured_media":233039,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[59327,6116,95,1558,682,16421,489,4282,138,12974,3914,2959,10053,138233,917,78,5511,50608,111,139,69,1118,90,1523,12937,138234,42912,3045,7811,223,61,6382,25187,14605,379],"class_list":["post-233038","post","type-post","status-publish","format-standard","has-post-thumbnail","category-business","tag-absence","tag-agent","tag-and","tag-been","tag-being","tag-bolster","tag-books","tag-boss","tag-business","tag-change","tag-economist","tag-high","tag-house","tag-iain","tag-immigration","tag-in","tag-just","tag-mantle","tag-new-zealand","tag-newzealand","tag-nz","tag-of","tag-on","tag-over","tag-prices","tag-rennie","tag-required","tag-secretary","tag-since","tag-the","tag-to","tag-took","tag-treasury","tag-whats","tag-year"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/233038","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/comments?post=233038"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/233038\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media\/233039"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media?parent=233038"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/categories?post=233038"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/tags?post=233038"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}