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The SME Stream Weekly Wrap - 29 May

As business owners, you know how hard it is keeping up with your business, let alone the news. Join Wilhelmina O'Keeffe each week as she gives you a rundown of the biggest stories that could impact your business, so you can make informed decisions with expert advice.  This week, It's no lolly scramble, but what has Budget Day delivered for business? The OCR holds steady, but for how much longer? … Plus there’s a push for more AI in business so why are Kiwis still sceptical? See omnystudio.com/listener [https://omnystudio.com/listener] for privacy information.

Kerre Woodham: Was holding the OCR the right decision?

So what would you rather? A little bit of pain now or a whole lot more later? The Reserve Bank yesterday opted to keep the official cash rate at 2.25%, but the decision to hold was a close-run thing. And we know that now because of the transparency around the decisions being made and a jolly good thing it is too. Governor Dr. Anna Breman had to use her casting vote. The Monetary Policy Committee was evenly split on whether to raise the rate. The three Reserve Bank officials wanted to hold, the external committee members wanted to hike and therefore Governor Breman had to use her casting vote.  One of the external committee members, economic consultant Carl Hansen, has given an interview with the Newsroom website explaining why he wanted to shift the rate now. He and the other two external committee members argued it would limit the overall magnitude of the increase in the OCR when it settles at the top of the imminent hiking phase. Translated, that means a bit of pain now is better than a whole lot later.   Dr. Breman signalled that a rates rise is very likely when the committee next meets, but how high remains to be seen. And if it starts going up around about July, around about October, which is when the committee meets again, it's not just going to be mortgage holders who feel the pain, the Government will feel the pain too. They don't want to be associated with increased mortgage payments, but that's precisely what will happen. Carl Hansen argues that moving the OCR up a notch now, as in yesterday, would mean rates then wouldn't have to be yanked higher up further down the track. He says the uncertain environment in which we're living and in which we're making decisions won't disappear quickly and he and the other external members felt by going up 2.5% it would be an easier decision to either hold or go up in July.  So if the experts don't know, how the hell do we? You've got six people whose job it is to understand the economy, to read the tea leaves and say, okay, this is what we think's going to happen in 18 months to two years and here are the decisions that we're going to make that we best we feel will best support the economy, the environment, the living conditions. It's going to help keep inflation in check, it's not going to stifle growth, this is what we believe. But if they're divided, it just shows how precarious and uncertain the times in which we live are. I like knowing that it was a 50/50 call and I can understand both sides. I can understand what the external committee members are saying, if we increase it just a teeny tiny bit now, it's not it shouldn't dampen spending, it shouldn't dampen growth and then it won't be such a shock if we do have to yank rates up further down the line. But I can also understand where the Reserve Bank officials are coming from too, it's just too uncertain. We don't know, it might fix itself.  Although even in saying that, I feel like my extra 15 kilos might just drop off too. You know, hope is not a strategy – it's just a reckon. When you've got an election coming up and when you've got an election where nobody's willing to call how it's going to go, whether we go with a National/ACT/New Zealand First coalition or a Labour/Greens/Te Pāti Māori/independent/whoever they can cobble together coalition, it's too close to call from the polls. So there's uncertainty. If you're in business, you're unlikely, I would imagine, to be investing in extra staff, in capital expenditure, you're not going to be going gangbusters while there's uncertainty. So I get I can totally understand both sides of the coin when it comes to the decision made yesterday.  Do you think the call was right? Do you think the Governor was correct in using her casting vote to keep things as they are and that things might come right? That the uncertainty – actually the only thing that is certain is that there will be uncertainty, I think. I cannot see it rectifying itself anytime soon. But was the right call made in holding things steady with an election coming up where nobody's certain what the result is going to be? Is this a time where businesses are just holding tight, keeping steady, not making big investments, not making big decisions, taihoa, wait and see. I'd love to hear from those of you in business, I'd love to hear from those of you with a passing interest in economics and I love being able to see the decisions now. I think it's I think it makes it really interesting. I like the transparency. I am so glad. I don't know. I mean, Governor Breman just seems to be a steady, cool hand which is what we need right now, not some flamboyant rockstar rocking and rolling through the economy because we are still suffering.  See omnystudio.com/listener [https://omnystudio.com/listener] for privacy information.

Shane Jones: NZ First Deputy Leader explains why the party won't budge on New Zealand Super

Finance Minister Nicola Willis has described superannuation as a 'time bomb' that is here now and political parties need to be honest about it. Delivering the Budget today, Willis said National will enter the election with changes to ensure superannuation is affordable.  NZ First's Shane Jones has confirmed the party's not budging on this issue. "The reality is, our economic growth rate...is quite anaemic. Under three percent, that's in the Treasury forecast. We need to do a hell of a lot more as a country, irrespective of who the the Government is, to substantially grow the economy and boost our revenue."  LISTEN ABOVE See omnystudio.com/listener [https://omnystudio.com/listener] for privacy information.

Nicola Willis: Finance Minister says growth and higher wages will come following Budget 2026

The surplus train's left the station early in Budget news today, with the country expected to be out of deficit by 2028/29, a year ahead of predictions. Government Ministers are trumpeting that figure, alongside a focus on health and infrastructure.  The Waikato Expressway will get 12 more kilometres, Whangarei a new hospital wing and new police stations are on the horizon for Whanganui and Greymouth.  The biggest surprise is a tax on banks and insurers, worth roughly $50 million dollars a year.  The bowel cancer screening age will lower to 56 by September and increased health funding aims to increase surgeries and reduce wait times.  $450 million has been set aside for targeted support, in case  the fuel crisis worsens.  Finance Minister Nicola Willis says things are tough - but its not the time for lolly scrambles.  She says the crisis is hitting many hard - but the country will bounce back with growth and increasing wages.  LISTEN ABOVE See omnystudio.com/listener [https://omnystudio.com/listener] for privacy information.

The Huddle: What did we make of Budget 2026?

Tonight on The Huddle, NZ Herald senior correspondent Katie Bradford and Auckland Councillor Maurice Williamson joined in on a discussion about the following issues of the day - and more!  Budget 2026 was unveiled today - what did we make of it? Do we think we'll reach surplus by 2028/29? Will debt really come down? Nicola Willis also says we need to have a discussion around superannuation amid ongoing cost concerns. Do we see NZ First siding with this? Will this lead to another battle? What do we make of the new levy on banks? Is it enough? LISTEN ABOVE See omnystudio.com/listener [https://omnystudio.com/listener] for privacy information.