GDP fall shock: Finance Minister Nicola Willis blames economy shrink on Labour

Finance Minister Nicola Willis has promised to “open the books” on the state of the country’s economy, claiming she has “inherited a toxic trifecta”.

Willis told Mike Hosking on Newstalk ZB the state of the country’s economic performance was the previous government’s fault.

GDP (gross domestic product) fell 0.3 per cent in the three months to September - a much worse result than forecast by most economists.

“We’ve inherited a toxic trifecta,” Willis claimed.

The trifecta of tough economic conditions - high interest rates, lingering high inflation and the job and business insecurity of a recession.

The weak economic growth is expected to continue for a while, despite some record-setting recent net migration.

“We will be properly opening the books,” Willis promised following the disappointing result.

She promised that the books would be opened to the public so that the “nasty” things she claimed the previous government was hiding would be clear.

Willis said she was blindsided by the state of the Government’s books only days after stepping into the role, and that it was full of “snakes and snails and all sorts of things”.

Before the election, there were calls for National to front up with costings for tax cuts after economists found “fiscal holes” in their budget.

Both Willis and Prime Minister Christopher Luxon previously defended not releasing their modelling after their foreign buyer’s tax came under scrutiny for being “unrealistic.”

“Grant Robertson poured fuel on the inflation fire,” Willis said to Hosking today.

She blamed the over-regulation of business and industry by the previous government on the recent GDP fall.

“We will be taxing less.”

Hosking said he didn’t understand how the recession would end under National’s plans.

“It would be wrong to try to fix what has been left to waste in one year in six years,” Willis said.

Willis said the solution was to return to “economical fundamentals” which she said was not “over-regulating” and “overspending”.

“It’s not for me to tell the Reserve Bank governor what to do,” the finance minister said.

Hosking asked how the Governor of the Reserve Bank of New Zealand, Adrian Orr, would have to adapt to Willis’ different financial approach with the change in government.

Willis said the change back to only focusing on controlling inflation, and not taking into account employment like the Labour Party introduced previously, would make a difference.

Economists had expected the latest Stats NZ data to show the economy still growing - just.

But they warned that for many people, conditions would feel recessionary, even if the economy grew.

“The potential for recent GDP estimates to jump around quite a bit is a good reason to be cautious in trying to interpret the data,” said ASB economist Nathaniel Keall.